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/raid1/www/Hosts/bankrupt/TCR_Public/020910.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 10, 2002, Vol. 6, No. 179 Headlines 3DFX INTERACTIVE: Court Takes Hands Off Winding Up Proceeding 360NETWORKS: Court OKs Settlement Pact with Call-Net & Ledcor AAMES: Further Extends Exchange Offer for 5.5% Notes to Sept. 20 ACOUSTISEAL INC: Files for Chapter 11 Reorganization in Missouri ACOUSTISEAL INC: Chapter 11 Case Summary ADELPHIA COMMS: Intends to Implement CLEC Contract Procedures AIRLEASE LTD: Commences Trading on OTCBB Effective Yesterday ALAMOSA HOLDINGS: Falls Below NYSE Continued Listing Standards AMERICA WEST: Continues Upward Operational Improvement Trend AMERICAN RESTAURANT: Hires PricewaterhouseCoopers as Accountants AMES DEPARTMENT: Court Approves AFCO Insurance Financial Deal ANC RENTAL: Enters into Two Agreements with Rosedale Dodge Inc. ARMSTRONG WORLD: Charles Engle Retires Effective October 1, 2002 AURORA FOODS: Completes Share Distribution Under March '01 Pact BEAR STEARNS: Fitch Affirms Low-B Ratings on Class F and H Notes BETHLEHEM STEEL: Court Okays Indiana Flame Robotic Scarfing Pact BRAINTECH INC: Board Approves 1-For-5 Reverse Stock Split BORDEN CHEMICAL INC: Will Firm-Up New Credit Facility this Month BUDGET GROUP: Bringing-In Latham & Watkins as Finance Counsel CHILDTIME LEARNING: Fails to Beat Form 10-Q Filing Deadline CIRTRAN CORP: June 30 Balance Sheet Upside-Down by $4 Million COLD METAL: Gets Nod to Appoint Kurtzman Carson as Claims Agent COMDISCO INC: Illinois Obtains More Time to File Tax Claims CONDOR TECHNOLOGY: Closes Sale of Gov't Solutions Div. Assets CONSECO: Lenders Waive Cross-Default Provisions Under Loan Pact CONSOLIDATED FREIGHTWAYS: Court Approves 'First Day Motions' CONSOLIDATED FREIGHTWAYS: Obtains Okay to Pay Prepetition Wages CREDIT STORE: Court OKs Neligan Stricklin as Bankruptcy Counsel DELTA AIR LINES: System Traffic Falls 6.8% in August 2002 DIAL CORP: Illinois Plant Workers' Union Nixes 4-Year Contract EMAGIN CORP: Issues 8% Series B Conv. Notes to Two Investors EMAGIN CORP: Conv. Promissory Note Maturity Extended to Sept. 30 EMAGIN CORP: Extends Sackler Secured Notes to September 30, 2002 ENRON CORP: ENA Exclusivity Extension Hearing Set for Sept. 19 EXIDE TECHS: Wins Approval to Create SPV to Finance Receivables FRUIT OF THE LOOM: Claim Objection & Settlement Protocol Okayed GLOBAL CROSSING: Wants Court to Deem Hindery Pact Non-Executory HALLIBURTON CO.: Blaylock Initiates Coverage with 'Hold' Rating HILTON HOTELS: Resolves Insurance Issue re Mortgage Bonds INFINITE GROUP: Sends Letter to SEC to Withdraw Unsold Shares INTEGRATED PACKAGING: Shareholders' Meeting Set for September 24 KAISER ALUMINUM: Wins Nod to Assume 1998 Bauxite Purchase Pact KMART CORP: Gets Okay to Supply Confidential Info to Committees LEAP WIRELESS: May Face Delisting after Shares Issuance to MCG LODGIAN: Asks Court to OK Restructuring Fee Payment to Chilmark LTV CORP: Court Okays Steel Unit to Settle Railway Assets Value MESA AIR: Blaylock Initiates Coverage with Hold Recommendations MONARCH DENTAL: Banks Demand $63.1MM Payment on Credit Facility MTS/TOWER RECORDS: Extends Closing Date for Japanese Asset Sale NATIONAL STEEL: Iron Ore Seeks Stay Relief to Setoff Claims NATIONSLINK: Fitch Affirms Low-B Ratings on 4 Classes of Notes NEOTHERAPEUTICS: Shareholders Okay 25-For-1 Reverse Stock Split OMNI ENERGY: Completes $10M Sr. Credit Facility with PNC Entity OWENS CORNING: Wants to Keep Exclusivity Until January 31, 2003 OWENS CORNING: Hooks Up with Ashland Finland to Distribute Goods PACIFIC GAS: Creditors Accept Debtor's Proposed Chapter 11 Plan PHOENIX GROUP: Asks Court to Approve Walsh Monzack as Attorneys PPL CORPORATION: Forecasts 9% Increase in Core Earnings for 2003 PUBLIC SERVICE: $400 Million Participating Unit Offering Priced RIVERWOOD INT'L: Tender Offers for Various Senior Notes Expire SAFETY-KLEEN: Wins Nod to Lease Texas Bldg. as New Headquarters SAIRGROUP FINANCE: Signs-Up Allen & Overy as Bankruptcy Counsel SEEC INC: Fails to Comply with Nasdaq Listing Requirements SLI INC: Files for Voluntary Chapter 11 Reorganization in Del. SLI INC: Chap. 11 Case Summary & 20 Largest Unsecured Creditors SPORTS CLUB: Comerica Bank Extends Credit Facility to Oct. 31 SUNBEAM CORPORATION: Ex-CEO Al Dunlap Settles SEC Allegations TENNECO AUTOMOTIVE: Will Close Facility in Turkey by Year-End TRANSCARE CORP: Chapter 11 Case Summary & 30 Largest Creditors TRENWICK GROUP: Swiss Re Unit Buys Conv. Preferreds for $40 Mil. UNIROYAL TECHNOLOGY: Turning to Buccino for Financial Advice UNIVIEW TECH.: Nasdaq Will Knock Off Shares Effective Friday US AIRWAYS: Look for Schedules and Statements on September 25 US AIRWAYS: Reaches Tentative Restructuring Agreement with CWA US AIRWAYS: CWA Recommends Proposed Contract Changes Acceptance US AIRWAYS GROUP: Revises Policies on Non-Refundable Fares U.S. STEEL: Files Statement re Issuance of $600MM in Securities WHEELING-PITTSBURGH: Receiver Appointed for Eichleay Properties WILLIAMS COMMS: Has Until Nov. 18, 2002 to File Chapter 11 Plan WILLIAMS COS: Completes Sale of Cove Point LNG Plant to Dominion WORLDCOM INC: Signs-Up Howrey Simon as Special Insurance Counsel WORLDCOM INC: DebtTraders Maintain "Strong Buy" Recommendation ********* 3DFX INTERACTIVE: Court Takes Hands Off Winding Up Proceeding ------------------------------------------------------------- 3dfx Interactive, Inc., (OTCBB:TDFX) announced that its petition requesting that the Superior Court of Santa Clara County in San Jose, Calif., take jurisdiction over its winding up proceeding has been denied. "While we are disappointed in the court's ruling, 3dfx intends to pursue all available judicial and non-judicial avenues necessary to effect its orderly dissolution," said Richard A. Heddleson, President and Chief Executive Officer of the Company. "While we cannot be certain as to the time required to complete the dissolution process, 3dfx will be seeking to complete the process as soon as possible." 360NETWORKS: Court OKs Settlement Pact with Call-Net & Ledcor ------------------------------------------------------------- According to Alan J. Lipkin, Esq., at Willkie, Farr & Gallagher, in New York, some Debtors and their Canadian affiliates -- 360 Group; CNCS Inc., Call-Net Enterprises, Sprint Canada Inc. and Call-Net Technology Services Inc. -- Call-Net Group; and Ledcor Industries (USA) Inc. and LIL Limited -- Ledcor Group, have a three-way relationship due to the construction and delivery of fiber optic cable on routes along the west coast of North America. Relationship With Call-Net The Call-Net Group is one of the largest telecommunications companies in Canada. The 360 Group has worked with the Call-Net Group since shortly after the 360 Group commenced business operations. The Call-Net Group is one of the 360 Group's major customers and their relationship is an important component of the 360 Group's going-forward business plan. Prior to the Petition Date, the 360 Group (and its predecessors) and the Call-Net Group entered into numerous license and other agreements, providing for the monetary and other consideration payable among the parties. Pursuant to an amending agreement, dated May 2, 1998, between certain members of the Ledcor Group and the Call-Net Group, the Ledcor Group agreed, inter alia, to build, sell, and transfer to certain members of the Call-Net Group certain U.S. West Coast fiber optic assets running between cities such as Portland, Sacramento, Oakland, and Los Angeles. Thereafter, the Ledcor Group transferred and assigned the 1998 Amending Agreement to certain members of the 360 Group. On or about April 28, 2000, certain members of the Call-Net Group and the 360 Group entered into a Data Services Agreement. The Call-Net Group and the 360 Group subsequently negotiated an agreement and certain related documents, dated August 25, 2000, concerning the purchase and sale of certain fiber optic assets. Such transactions consisted of, inter alia: (i) the sale of and/or the assignment of indefeasible rights of use and/or the granting of sub-indefeasible rights of use relating to certain fiber optic assets from the Call- Net Group to the 360 Group; (ii) the sale of and/or the assignment of indefeasible rights of use and/or the granting of sub-indefeasible rights of use relating to certain fiber optic assets from the 360 Group to the Call-Net Group; and (iii) certain related transactions. Among the documents in the 2000 Agreement were: (a) a Fiber IRU Agreement between certain members of the Call- Net Group and the 360 Group, dated August 25, 2000 -- the Portland-Sacramento IRU Agreement; (b) the Fiber IRU Agreement between certain members of the Call-Net Group and certain members of the 360 Group, dated August 25, 2000 -- the Sacramento-Los Angeles IRU Agreement; (c) another Fiber IRU Agreement between certain members of the Call-Net Group and the 360 Group, dated August 25, 2000 -- the 360 IRU Agreement; (d) the Canadian Fiber Sale Agreement between certain members of the Call-Net Group and the 360 Group, dated August 25, 2000 -- the 360 Sale Agreement; (e) the Fiber Sale Agreement between certain members of the Call-Net Group and the 360 Group, dated August 25, 2000 -- the Canadian FOTS Agreement; and (f) Reciprocal Sub-License Agreement between certain members of the Call-Net Group and the 360 Group, dated August 25, 2000 -- the "Reciprocal Sub-License Agreement. As part of the 2000 Agreement, the Ledcor Group entered into the Undertaking to be Bound by the Other Members of the WFI Group -- a predecessor-in-interest to the 360 Group, dated August 25, 2000, in favor of certain members of the Call-Net Group. Also pursuant to the 2000 Agreement, certain members of the 360 Group deposited with an escrow agent C$1,000,000 of the purchase price payable to the applicable members of the Call-Net Group. Thereafter, from time to time the applicable members of the 360 Group, as purchasers from the Call-Net Group under the 2000 Agreement, deposited into the escrow additional portions of the purchase price payable to the applicable members of the Call-Net Group. A dispute arose, which led the 360 Group to sue the Call-Net Group for unpaid amounts due for certain routes and the Call-Net Group to assert counterclaims for routes that allegedly included incorrect fiber or were undelivered. The Settlement To wind up the disputed transactions, Mr. Lipkin tells Judge Gropper that the parties negotiated for a global settlement. Accordingly, the Debtors seek the Court's authority to enter into a settlement that will mutually release 360 Group and Call- Net Group. The Settlement Agreement provides that: (a) The Complaint and Counterclaim will be dismissed with prejudice; (b) The Call-Net Group, the 360 Group and the Ledcor Group release each other, as applicable, from any obligations to sell, grant or deliver: -- certain assets pursuant to 1998 Amending Agreement; -- certain assets related to the Portland-Sacramento IRU Agreement; -- certain assets related to the Sacramento-Los Angeles IRU Agreement; and -- certain routes pursuant to the 360 Sale Agreement and the 360 IRU Agreement; (c) The Debtors will release a potential $328,000 preference claim against members of the Call-Net Group; (d) In consideration of the dismissal of the Complaint, CNCS will pay $600,000 to 360 USA and provide to 360 USA space worth $150,000 along certain segments of the CNCS network, which must be used within 24 months from the Effective Date; (e) The 360 Group will pay the Call-Net Group $500,000 in satisfaction of all liabilities owing by the Ledcor Group and the 360 Group pursuant to the Reciprocal Sub-License Agreement in respect of certain licensing fees. The Call-Net Group had asserted a liability exceeding $1,700,000; (f) The 360 Group will pay the Call-Net Group $2,000,000 and the Call-Net Group will pay the 360 Group CDN$230,000; (g) The Call-Net Group will receive $1,840,000 from a prepetition escrow related to the 2000 Agreement; (h) The Call-Net Group agrees to purchase a minimum of $8,000,000 of on-network products and services from the 360 Group over the three-year period from January 1, 2003 through December 31, 2005. If the Call-Net Group's purchases fall below the committed amount, the Call-Net Group will pay the difference to the 360 Group; (i) The applicable members of the Call-Net Group and the 360 Group: -- acknowledge the delivery of certain strands; -- agree to obtain the assignment of certain rights from third-parties; and -- agree to arrange certain fiber swaps with certain third parties; (j) The applicable members of the Call-Net Group and the 360 Group will enter into one or more maintenance agreements in accordance with the 2000 Agreement; and (k) The applicable members of the Call-Net Group and the 360 Group will execute and deliver an amendment to the Data Services Agreement, inter alia, reducing the monthly service rate paid by the 360 Group by CDN$116,000 per month. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Mr. Lipkin contends that the motion should be granted because: (1) the settlement is fair, equitable and in the best interest of the Debtors' estates; (2) the settlement would resolve the payments and other disputes with the Call-Net Group; (3) the settlement would resolve the disputed issues without costly and time-consuming litigation; (4) the settlement would enable the Debtors to fulfill important obligations to other parties, thereby saving the estates from potentially costly damage claims; and (5) the settlement would enable the Debtors to retain an important customer and fulfill important obligations consistent with the Debtors' business plan. * * * Judge Gropper allows the Debtors to enter into the Settlement Agreement with Call-Net Group and the Ledcor Group. Further, the Court orders that: (a) the Debtors will not reject or terminate, or take any steps to reject or terminate any of the Call-Net/360 Agreements pursuant to Section 365 of the Bankruptcy Code; (b) upon the effective date of the Plan of Reorganization in these cases or a sale of all, or substantially all, of the assets of the Debtors to be restructured and operated as a going concert whether by the Debtors or as a third- party buyer, all of the Call-Net/360 Agreements pursuant to which the applicable members of the Call-Net Group are not in material breach of any of their obligations will, as of the US Emergency Date, be deemed assumed by the Applicable Debtors; (c) in connection with the assumption of the Call-Net/360 Agreements in these cases, the Debtors: -- will not be required to make any cure payments to the Call-Net Group pursuant to and in accordance with Section 365 of the Bankruptcy Code; and -- need not take any further steps to provide adequate assurance of future performance to the Call-Net Group to the extent otherwise required by Section 365 of the Bankruptcy Code, provided, however, that this subclause does not extend to any adequate assurance of future performance to be provided by any unrelated third party to whom the 360 Group seeks to assign any of the Call-Net/360 Agreements; (d) to the extent the Debtors do not assume any of the Call- Net/360 Agreements pursuant to Section 365 of the Bankruptcy Code because of a material breach of any of the Call-net Group's obligations as of the US Emergence Date under the agreements, all of the Call-Net Group's right respecting the Call-Net Proofs of Claim to assert prepetition claims relating to the agreements will be preserved; (e) the reference to the potential treatment of any of the agreements as executory contracts is solely for the purposes of the Motion and Order and will not be deemed an admission or determination by either the Debtors, the Call-Net Group or the Ledcor Group as to the characterization of any of the agreements or any of the Debtors' other contracts and agreements as executory contracts, secured financing, true sales, or otherwise; (f) all proceeds received by the Debtors, if any, pursuant to the Settlement Agreement will be held and applied as provided in the Cash Collateral Stipulation; (g) all of the Debtors' rights, titles and interests in, to or against any fibers, conduit, real property, intellectual property and any other assets, including, without limitation, cash that any member of the Call-Net Group is to receive from the Debtors pursuant to the Settlement Agreement will be transferred to the members of the Call-Net Group free and clear of any and all claims, liens, security interests, charges, mortgages or other encumbrances or conflicting claims against the Transferred Assets of any kind whatsoever, whether contractual, statutory or otherwise of any persons, including, without limitation, any Liens held by any lender to any of the Debtors; and (h) all parties rights concerning the allocation of any Proceeds or payments received or paid by the Debtors or their affiliates pursuant to the Settlement Agreement will be reserved. (360 Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) AAMES: Further Extends Exchange Offer for 5.5% Notes to Sept. 20 ---------------------------------------------------------------- Aames Financial Corporation (OTCBB:AMSF) announced that the expiration date of its offer to exchange its newly issued 4.0% Convertible Subordinated Debentures due 2012 for any and all of its outstanding 5.5% Convertible Subordinated Debentures due 2006 has been extended to 5:00 p.m., New York City time, on Friday, September 20, 2002. The Exchange Offer expired Friday, September 6, 2002, at 5:00 p.m., New York City time. The Company reserves the right to further extend the Exchange Offer or to terminate the Exchange Offer, in its discretion, in accordance with the terms of the Exchange Offer. As of Friday, the Company has received tenders of Existing Debentures from holders of approximately $42.7 million principal amount, or approximately 37.5%, of the outstanding Existing Debentures. The next scheduled semi-annual interest payment by the Company on the Existing Debentures is due September 15, 2002. All holders of Existing Debentures on the record date for the interest payment, September 1, 2002, will be entitled to receive the interest payment, including holders who have tendered their Existing Debentures for exchange prior to the record date. The Company is a consumer finance company primarily engaged in the business of originating, selling and servicing home equity mortgage loans. Its principal market is borrowers whose financing needs are not being met by traditional mortgage lenders for a variety of reasons, including the need for specialized loan products or credit histories that may limit the borrowers' access to credit. The residential mortgage loans that the Company originates, which include fixed and adjustable rate loans, are generally used by borrowers to consolidate indebtedness or to finance other consumer needs and, to a lesser extent, to purchase homes. The Company originates loans through its retail and broker production channels. Its retail channel produces loans through its traditional retail branch network and through the Company's National Loan Centers, which produces loans primarily through affiliations with sites on the Internet. Its broker channel produces loans through its traditional regional broker office networks, and by sourcing loans through telemarketing and the Internet. At March 31, 2002, the Company operated 100 retail branches, 5 regional wholesale loan offices and 2 National Loan Centers throughout the United States. * * * As reported in Troubled Company Reporter's June 19, 2002 edition, Moody's Investors Service took several rating actions on Aames Financial Corporation. The investors service lowered the company's Senior Debt Rating to Caa3 from Caa2. It also affirmed its Ca rating on Aames' Subordinated Debenture. Rating outlook stays at negative. It is Moody's belief that potential loss severity to senior unsecured bondholders would increase after Aames started its previously announced exchange offer of its outstanding 5.5% convertible subordinated debentures due 2006. The company's liquidity and financial flexibility remain constrained. It appears that Aames may have difficulty obtaining the necessary resources to pay for its approximately $150 million unsecured senior debt maturing on November 15, 2003. It also has short-term warehouse facilities with financial covenants maturing before October 2003 and which critically needed to be renewed to maintain its limited financial flexibility. ACOUSTISEAL INC: Files for Chapter 11 Reorganization in Missouri ---------------------------------------------------------------- AcoustiSeal, Inc., has filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Western District of Missouri, listing total assets and liabilities of $111 million and $95 million, respectively. The case number is 02-44807. The filing comes a week after the Company settled a lawsuit with principal lender Deutsche Bank Trust Co. Americas. (New Generation Research, September 8, 2002) ACOUSTISEAL INC: Chapter 11 Case Summary ---------------------------------------- Debtor: AcoustiSeal, Inc. 8485 Prospect Avenue Kansas City, MO 64132 Bankruptcy Case No.: 02-44807-fwk Chapter 11 Petition Date: September 04, 2002 Court: Western District of Missouri (Kansas City) Judge: Frank W. Koger Debtor's Counsel: Cynthia Dillard Parres Bryan, Cave LLP 1200 Main St., Suite 3500 One Kansas City Place Kansas City, MO 64105-2122 816-855-3903 Fax : 816-374-3300 Email: cdillard@bryancavellp.com and Mark G. Stingley Bryan Cave LLP 3500 One Kansas City Place 1200 Main St. Kansas City, MO 64105-2152 816-855-3903 Fax : 816-374-3300 Email: mstingley@bryancavellp.com Estimated Assets: $10-50 Million Estimated Debts: $50-100 Million ADELPHIA COMMS: Intends to Implement CLEC Contract Procedures ------------------------------------------------------------- Adelphia Communications Debtors are parties to several hundred Assigned Agreements for leased premises, equipment, and other goods and services relating to the 14 CLECs. Marc Abrams, Esq., at Willkie Farr & Gallagher, in New York, relates that the ACOM Debtors will no longer have any use for these goods and services after they disconnect service to their customers. The ACOM Debtors seek to streamline the process of: -- assuming and assigning those of the ACOM Agreements which may add value to these estates; and -- rejecting Agreements that are of no benefit to the estates and cannot be profitably assumed and assigned to a third party. During the next 90 days, the ACOM Debtors, with the assistance of their professionals and ABIZ, will: -- identify which of the agreements relating to the 14 CLECs are Assigned Agreements; -- identify and transition those agreements that relate to the 14 CLECs that are erroneously in the name of ABIZ; and -- market certain of the ACOM Agreements and determine whether a third party is interested in purchasing the Debtors interest under these agreements. By a motion, the ACOM Debtors seek the Court's authority to implement these procedures relating to the assumption and assignment, or rejection of the Assigned Agreements: -- Any ACOM Agreement determined by the Debtors, in the exercise of their business judgment, to be of no value to the estates will be rejected after 5 business days written notice, via facsimile or overnight mail, to: a. the non-Debtor party to the ACOM Agreement at the last known address available to the Debtors; b. the office of the United States Trustee; c. counsel to the agents of the Debtors' prepetition and postpetition lenders; d. counsel to ABIZ; and e. counsel for the official committees appointed in these cases; -- Unless one or more of the Notice Parties timely files an objection to a Rejection Notice, the applicable ACOM Agreement will be deemed rejected as of the date of the Rejection Notice unless otherwise agreed, in writing, by the Debtors and the non-Debtor party to the ACOM Agreement; -- Claims arising out of the rejection of ACOM Agreements must be filed with the Bankruptcy Court or the claims agent retained in these cases by the later of: a. the deadline for filing proofs of claim established by the Court in these cases; or b. 30 days after the effective date of the rejection of the applicable ACOM Agreement; -- The Debtors will be authorized to assume and assign any ACOM Agreement determined by the Debtors, in the exercise of their business judgment, to be of value to the estates if assigned to a third party following 5 business days written notice, via facsimile or overnight mail, the third party taking assignment of the ACOM Agreement and their counsel, and the Notice Parties; -- Unless one or more of the Notice Parties timely files an objection to an Assignment Notice, including any objection to the Cure Obligation, they will be deemed to have consented to: a. the Debtors' assumption and assignment of the ACOM Agreement as of the date of the Assignment Notice; and b. will be forever barred and estopped from asserting or claiming against the Debtor or the applicable assignee of a respective ACOM Agreement that: * any amounts are due or defaults exist on account of obligations alleged to have accrued prior the date of the Assignment Notice other than the Cure Obligation, or * that any other requirement of Section 365 of the Bankruptcy Code has not been satisfied; -- If an objection to a Notice of Assignment, including any objection to the Cure Obligation; or Notice of Rejection, is filed by a Notice Party and timely served upon counsel to the Debtors prior to the expiration of the 5-day notice period, the Debtors will seek a hearing to consider the objection at the Court's earliest convenience; -- If an Objection is overruled by this Court or withdrawn, the applicable ACOM Agreement will be deemed rejected or assumed and assigned, nunc pro tunc as of the date of the applicable Rejection Notice or Assignment Notice; and -- If the Debtors have amounts on account with the non-Debtor party to the ACOM Agreement pursuant to a prepetition or postpetition security deposit or other arrangement, or due to overpayment, then in any event the non-Debtor party must promptly return those amounts to the Debtors, except to the extent that the non-Debtor party formally requests by motion and receives permission from the Court to retain a portion of those amounts, or hold them in escrow, in which case the non- Debtor party must promptly return the remainder of these amounts to the Debtors. Mr. Abrams assures the Court that the non-Debtor parties to the ACOM Agreements will not be prejudiced by the Procedures because, upon receipt of a Rejection Notice or Assignment Notice, these counter-parties will have received specific advance notice of the Debtors' intent to reject or assume and assign their respective ACOM Agreement and the pre-approved subsequent effective date of the rejection and or assumption. Mr. Abrams contends that the Procedures balance the need for an expeditious reduction of burdensome costs to the Debtors' estates while providing advance notice of the proposed assumption or rejection to parties-in-interest. Mr. Abrams asserts that the disposition of the ACOM Agreements, and the attendant reduction in the estates' administrative costs, reflects the Debtors' exercise of sound business judgment. (Adelphia Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) Adelphia Communications' 9.875% bonds due 2007 (ADEL07USR2) are trading at 43 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL07USR2 for real-time bond pricing. AIRLEASE LTD: Commences Trading on OTCBB Effective Yesterday ------------------------------------------------------------ Airlease Ltd., A California Limited Partnership, (OTC Bulletin Board: AIRL), commenced trading of its limited partnership units on the OTC Bulletin Board (OTCBB) yesterday, September 9, 2002 under the ticker symbol "AIRL". Information about the OTCBB can be found at http://www.otcbb.com The move to the OTCBB followed the Partnership's receipt of notice from the New York Stock Exchange that trading in the Partnership's limited partnership units would be suspended prior to the opening on Monday, September 9, 2002 and that the units will be delisted because the Partnership no longer meets the NYSE's continued listing criteria. ALAMOSA HOLDINGS: Falls Below NYSE Continued Listing Standards -------------------------------------------------------------- Alamosa Holdings, Inc. (NYSE: APS), the largest PCS Affiliate of Sprint (NYSE: FON, PCS) based on number of subscribers, has been formally notified by the New York Stock Exchange that its common stock is "below criteria" for continued listing based on the Company's average stock price and market capitalization for a 30-day trading period. Under NYSE guidelines, Alamosa must return its share price and 30-day average share price above $1.00 by six months following receipt of NYSE's notification subject to certain conditions. To address non-compliance with the market capitalization standard, the Company must submit a business plan showing how the $100 million-market capitalization will be achieved within an 18-month period. The NYSE will review the plan and determine whether the Company's common stock will continue to be eligible for trading on the NYSE. If the Company's shares cease to be listed on the NYSE, the Company believes that an alternate trading venue will be available. The Company will submit a business plan to the NYSE within the time frame required by the Exchange setting forth its strategy to achieve the minimum required levels. "We have already begun discussions with NYSE staff and have developed a good working relationship," said David E. Sharbutt, Chairman & Chief Executive Officer of Alamosa Holdings, Inc. "We are pleased with our progress to date. Our focus on shareholder value is steadfast, and we are committed to returning to compliance with both of the listing requirements. Our overall business is sound, generating positive EBITDA during the first two quarters of 2002, and we believe we have adequate funding to reach positive free cash flow. Moreover, we believe the current sentiment toward the wireless industry will gradually improve throughout the remainder of 2002 as wireless operators report their results." Alamosa Holdings, Inc., is the largest PCS Affiliate of Sprint based on number of subscribers. Alamosa has the exclusive right to provide digital wireless mobile communications network services under Sprint's PCS division throughout its designated territory located in Texas, New Mexico, Oklahoma, Arizona, Colorado, Utah, Wisconsin, Minnesota, Missouri, Washington, Oregon, Arkansas, Kansas, Illinois and California. Alamosa's territory includes licensed population of 15.8 million residents. Sprint operates the nation's largest all-digital, all-PCS wireless network, already serving more than 4,000 cities and communities across the country. Sprint has licensed PCS coverage of more than 280 million people in all 50 states, Puerto Rico and the U.S. Virgin Islands. In August 2002, Sprint became the first wireless carrier in the country to launch next generation services nationwide delivering faster speeds and advanced applications on Vision-enabled Phones and devices. For more information on products and services, visit http://www.sprint.com/mr Sprint PCS is a wholly-owned tracking stock of Sprint Corporation trading on the NYSE under the symbol "PCS." Sprint is a global communications company with approximately 75,000 employees worldwide and $26 billion in annual revenues and is widely recognized for developing, engineering and deploying state-of-the art network technologies. AMERICA WEST: Continues Upward Operational Improvement Trend ------------------------------------------------------------ America West's (NYSE: AWA) on-time performance for July 2002 was 78.7 percent as reported in the Department of Transportation's monthly Air Travel Consumer Report, an improvement over the 74.3 percent reported in July 2001. From January through July, America West ranked second in the industry in on-time performance behind Continental Airlines. America West's percentage of cancelled flights in July was 1.6 percent, a 16- percent improvement over July 2001. "America West continues to provide reliable on-time performance for our customers," said Jeff McClelland, executive vice president, operations. "As our load factors have increased and we've restored our capacity to last year's levels, our employees have done a fantastic job of providing exceptional customer service." America West reported 4.04 mishandled bags per 1,000 passengers, an improvement over the 4.17 reported in July 2001. Customer complaints to the DOT declined by 57 percent from 4.83 per 100,000 passengers in July 2001 to 2.09 in July 2002. The airline's on-time performance in its Phoenix hub improved in July 2002 to 84.6 percent, from 80.0 percent in July 2001. For the period from January to July 2002, America West ranked number one in the industry in on-time performance in Phoenix. America West Airlines is the nation's largest low-fare, hub-and- spoke airline. Founded in 1983, it is the only carrier formed since deregulation to achieve major airline status. Today, America West is the nation's eighth-largest carrier and serves 88 destinations in the U.S., Canada and Mexico. America West is a wholly owned subsidiary of America West Holdings Corporation, an aviation and travel services company with 2001 sales of $2.1 billion. As reported in Troubled Company Reporter's June 6, 2002 edition, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. AMERICAN RESTAURANT: Hires PricewaterhouseCoopers as Accountants ---------------------------------------------------------------- Ameerican Restaurant Group, Inc., engaged PricewaterhouseCoopers LLP as its new independent accountants as of August 30, 2002. American Restaurant Group's Board of Directors approved the action upon recommendation by its Audit Committee. American Restaurant Group operated 193 sundry restaurants in five different flavors, from sports grills (Local Favorite) and casual dining (Spoons) to country cooking (Grandy's) and upscale dining (Spectrum Foods). Today, ARG can lay claim to only one type of eatery -- about 100 steak houses operating under the Stuart Anderson's Black Angus and Stuart Anderson's Cattle Company names. Founded by former CEO Anwar Soliman (who still owns 17%) in 1964, ARG has been burdened with debt. To settle those debts, the firm sold its four concept restaurants to NBACo (Non-Black Angus Concepts, now known as Spectrum Restaurant Group), which is majority-owned by Soliman. American Restaurant Group's July 1, 2002 balance sheet shows a working capital deficiency of about $17 million, and a shareholders' equity deficit of about $170 million. AMES DEPARTMENT: Court Approves AFCO Insurance Financial Deal ------------------------------------------------------------- Ames Department Stores, Inc., and its debtor-affiliates obtained the Court's authority to enter into the Finance Agreement with AFCO Premium Credit, LLC, which will be subsequently assigned to AFCO Credit Corporation, wherein the Debtors will finance payment of the Premium. As previously reported, the Finance Agreement authorizes AFCO to cancel the Policies upon default after giving any required statutory notice. AFCO is also authorized to obtain a return of the gross Unearned Premiums, which may become payable under the Policies for whatever reasons. The Unearned Premiums represent funds that are advanced by AFCO, on behalf of the Debtors and which have not been applied by the insurers toward the purchase price of insurance. The funds would have been otherwise be remitted back to the Debtors in the event the Policies were cancelled. Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, in New York, said that, under the Finance Agreement, the Debtors will make a $946,552 down payment and finance the remaining $1,757,882 of the Premium, which will be paid in eight monthly installments of $223,044. The first Installment was due on August 1, 2002. The annual interest rate charged by AFCO is 4%. The total interest to be paid by the Debtors to AFCO during the seven-month financing period will be $26,473. (AMES Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL: Enters into Two Agreements with Rosedale Dodge Inc. --------------------------------------------------------------- ANC Rental Corporation, Alamo Rent-A-Car LLC, National Car Rental Systems Inc., and Spirit Rent-A-Car Inc., doing business as Alamo Local Market Division, have entered into: -- a Motor Vehicle Lease Agreement with Rosedale Dodge Inc., doing business as Rosedale Leasing, for the lease of a minimum of 30,000 vehicles up to a maximum of 56,500 vehicles manufactured by Mitsubishi; and -- a Security Agreement providing for a $6,000,000 security deposit, securing the Debtors' obligations to Rosedale under the Motor Vehicle Lease Agreement. By this motion, the Debtors ask the Court to approve these agreements. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, relates that the Debtors' entered into these agreements because their business requires them to offer new and high quality vehicles to their customers. The Motor Vehicle Lease Agreement The Debtors obtain new vehicles either by: -- entering into a lease with a manufacturer or other third party supplier, including Rosedale, for a designated period of months and at designated monthly rates, or -- purchasing the vehicles either outright or pursuant to a manufacturer repurchase program through their special purpose non-debtor subsidiaries. Vehicles that are purchased must be financed, which the Debtors' special purpose non-debtor subsidiaries have primarily done through asset-backed financing agreements. Vehicles leased directly to the Debtors by manufacturers or third party suppliers including Rosedale have smaller capital requirements and as a result is a much more cost-effective means of acquiring vehicles for use in the Debtors' rental car businesses. The Debtors typically hold vehicles in their daily rental fleet for up to 12 months, with the average vehicle age being six months -- with the exception of Alamo Local, serving the insurance replacement market, which usually holds vehicles up to 20 months. The Debtors typically return or sell 20,000 vehicles per month under their various agreements with vehicle manufacturers and suppliers. Rosedale is a Minnesota corporation in the business of leasing motor vehicles to rental car companies and independently leases or arranges for the supply of cars of a variety of manufacturers, including vehicles obtained or purchased from Mitsubishi Motor Sales of America. The Debtors' business relationship with Rosedale goes back prior to the Petition Date. The lease between Rosedale and the Debtors is designed to address the Debtors' need to obtain, within the next two years, additional vehicles for their business operations. The Vehicle Lease Agreement provides that the Debtors will lease from Rosedale: * a minimum of 15,000 2003 model year Mitsubishi vehicles and a maximum of 29,000 2003 model year Mitsubishi vehicles, and * a minimum of 15,000 2004 model year Mitsubishi vehicles and a maximum of 27,500 2004 model year Mitsubishi vehicles. Pursuant to the lease, Rosedale will begin delivery of vehicles to the Debtors on or before September 30, 2002. Security Agreement The Security Agreement provides, among other things, that the Debtors will transfer to Rosedale $6,000,000 in immediately available cash as security for the Debtors' obligations under the lease. Upon an Event of Default, Rosedale may use the security to cure any defaults or compensate Rosedale for any damage sustained or to be sustained, including without limitation, amounts due under the Lease. The Security Agreement further provides that the Debtors will grant to Rosedale a security interest in all of their right, title and interest in and to the security deposit and all rights to payment and proceeds thereof. Under the same Security Agreement, upon any drawdown on all or any portion of the security by Rosedale, the Debtors are obligated to replenish the security to its original sum. The parties have agreed that Rosedale may exercise all remedies upon the Debtors' default provided under the Lease and Security Agreement without seeking relief from the automatic stay. Rosedale will file a notice with the Court and deliver the same notice to the Debtors' counsel. Upon the filing and servicing of the Default Notice, Rosedale will be entitled to, and the Debtors will make all efforts to facilitate, an emergency Court hearing no later than five business days thereafter. The sole issue to be determined is whether or not the default identified in the Default Notice occurred. The parties have also agreed that any allowed claims that Rosedale may have under the Lease or Security Agreement will attach as a first priority lien to the proceeds of any sale, transfer or assignment of all or any portion of the Lease, with priority over all other interests in the proceeds pursuant to Section 364(c) of the Bankruptcy Code. (ANC Rental Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG WORLD: Charles Engle Retires Effective October 1, 2002 ---------------------------------------------------------------- On August 30, 2002, Charles Engle, president and CEO of the Armstrong Cabinet Products business unit of Armstrong World Industries, announced his retirement, effective October 1, 2002. Engle is to be succeeded by David E. Gordon, vice president of Marketing for ACP. Armstrong World Industries filed for Chapter 11 reorganization on December 6, 2000, in the U.S. Bankruptcy Court for the District of Delaware. The Company makes interior finishing building materials such as floor coverings and acoustical ceiling and grid systems. Through its Triangle Pacific Corp. and DLW Aktiengesellschaft subsidiaries, Armstrong leads the world in the manufacture of hardwood flooring. The company's other products include cabinets and sports surfaces. Armstrong sells its products to dealers, home center chains, and contractors. The US accounts for about three-fourths of the company's sales. AURORA FOODS: Completes Share Distribution Under March '01 Pact --------------------------------------------------------------- Aurora Foods Inc. (NYSE: AOR), a producer and marketer of leading food brands, has made the final distribution of common stock to members of the shareholder class under the terms of the March 2001 shareholder-settlement agreement. As stipulated in the agreement, this distribution took place after Gilardi & Co., the third-party claims administrator appointed by the court, completed the claims processing and determined the final members of the settlement class. The Company distributed approximately 5.3 million shares of common stock to members of the settlement class on September 6, 2002, as settlement for the remaining $7.5 million portion of the common stock component of the settlement. The distribution was made using treasury shares received in 2001 from former management and through the issuance of an additional 2.7 million common shares. Under terms of the settlement agreement, the common stock component of the total shareholder settlement was $10.0 million. The distribution follows a May 2001 distribution of 465,342 shares, equivalent to $2.5 million, and finalizes the Company's obligations under the shareholder-settlement agreement. Aurora Foods Inc., based in St. Louis, is a producer and marketer of leading food brands including Duncan Hines(R) baking mixes; Log Cabin(R) and Mrs. Butterworth's(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza and Chef's Choice(R) skillet meals. More information about Aurora Foods Inc., may be found on the corporate Web site at http://www.aurorafoods.com * * * At June 30, 2002, Aurora Foods' balance sheet shows a working capital deficiency of about $15 million. As reported in Troubled Company Reporter's July 26, 2002 edition, the Company said that its cost-effectiveness program continued to help improve operating results and drive unnecessary costs out of the business. Major projects include moving distribution and syrup production to the St. Elmo facility, various purchasing savings as well as the previously announced closing of the West Seneca bagel plant. In June, the Company announced $62.6 million of new capital from its banks and major shareholders. At that time, the Company also said it had retained Merrill Lynch and JPMorgan to investigate a range of strategic alternatives, including the sale of certain assets or businesses. Expenses related to the issuance of warrants and previously deferred financing expenses have been reflected in the second- quarter results. BEAR STEARNS: Fitch Affirms Low-B Ratings on Class F and H Notes ---------------------------------------------------------------- Bear Stearns Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates, series 1998-C1, $85.1 million class A-1, $417.2 million class A-2 and interest only class X are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms the following classes: $35.7 million class B at 'AA'; $32.2 million class C at 'A'; $32.2 million class D at 'BBB'; $8.9 million class E at 'BBB-'; $12.5 million class F at 'BB+' and $5.4 million class H at 'BB-'. Fitch does not rate the $12.5 million class G, $17.9 million class I, $4.6 million class J or $5.9 million class K certificates. The ratings affirmations follow Fitch's annual review of the transaction, which closed in June 1998. The ratings affirmations are due to the high weighted average debt service coverage ratio of the pool and low amount of delinquent and specially serviced loans since origination. As of year-end 2001, the weighted average DSCR for the pool has increased to 1.88 times, from 1.85x as of YE 2000 and 1.62x at issuance. The weighted average DSCR was calculated using financial statements collected by the master servicer, ORIX Capital Markets for 100% of the loans remaining in the pool. Since issuance the transaction's aggregate balance has been reduced by 6.2% to $670.1 million from $714.7 million at closing. Currently the pool is collateralized by 144 commercial mortgage loans. Significant property type concentrations include retail (39%), office (17%), multifamily (15%), industrial (9%) and hotel (6%) loans. The properties are well diversified throughout the country with significant concentrations in California (27%), New York (16%) and Florida (9%). Of concern in the transaction is one loan in special servicing and five loans with DSCRs below 1.0x. The loan in special servicing is a $1.4 million Kmart store located in Greensboro, NC which is 30 days delinquent. The store was put on the closing list following Kmart filling bankruptcy earlier this year. Kmart has since moved out of the space and is no longer paying rent. It is likely the special servicer will pursue foreclosure on the property. The five loans with DSCRs below 1.0x representing 1.65% of the pool, all remain current but have occupancy issues. Fitch will continue to monitor these loans for further deterioration. Fitch analyzed each loan in the pool and assumed greater than expected probability and loss severity for loans of concern. The required credit enhancement that resulted from this remodeling of the pool, coupled with the lack of expected losses resulted in the rating affirmations. BETHLEHEM STEEL: Court Okays Indiana Flame Robotic Scarfing Pact ---------------------------------------------------------------- Bethlehem Steel Corporation and its debtor-affiliates obtained permission from the Court to enter into a Robotic Slab Scarfing Agreement with Levy Indiana Slag Company, doing business as Indiana Flame Services. Indiana Flame will provide the robotic scarfing facility, which includes all equipment, tools and related property. Indiana Flame will design, construct, install, commission and test the operability of the Facility. Indiana Flame will continue to own and operate the equipment in the area. The area in Burns Harbor, where the facility will be constructed and operated, will be leased to Indiana Flame. The Scarfing Agreement On July 25, 2002, the Debtors and Indiana Flame entered into an Agreement containing these terms: A. Term: The Agreement shall be for 10 years and may be extended for successive two-year terms unless and until terminated by either party upon 12 months' notice. The Parties may negotiate changes in the contract fees prior to every extension to reflect the amortization of Indiana Flame's fixed assets. B. Construction Job: Indiana Flame shall design, construct, install, commission, test and otherwise do all things necessary to provide the Facility. C. Scarfing Services: Indiana Flame shall perform all the work and provide all goods and services associated with the operation of the Facility, including the furnishing of all materials, tools, equipment, labor and supervision. D. Fees: The Debtors will pay $49,500 per month while the variable fee will be calculated as: -- $4.90 per ton for the first 20,000 tons of slabs scarfed; -- $3.33 per ton for the second 20,000 tons; -- $2.33 per ton for the third 20,000 tons; and -- $2.13 per ton for all additional tons. The Fixed Fee shall be counted beginning on the 91st day after the first prime slab is successfully scarfed, provided that Indiana Flame produces slabs that meet certain quality specifications at the rate of 65,000 tons per month. If Indiana Flame produces Quality Slabs prior to the 90th day, it will be entitled to a bonus the parties would agree on. The Construction Job cost shall not exceed $1,681,350 but not less than $1,375,650, to be paid on a set milestone. E. Changes to Fees: The Debtors shall have the right to increase or decrease the amount of work to be performed by Indiana with the contract fees adjusted accordingly. F. Assignment: Indiana Flame shall not assign its rights under the Agreement without the prior written consent of the Debtors, unless the assignment is to any affiliate or subsidiary of Indiana Flame. The Debtors may assign the Agreement upon written notice to Indiana Flame to any person purchasing Burns Harbor Division or to a purchaser or any joint venture for Burns Harbor Division. If the buyer or joint venture expressly assumes all the Debtors' obligations under the Agreement, the Debtors shall be released from their liabilities and obligations under the Agreement, except for those that arose before the assignment. However, if the buyer or joint venture does not assume all the Debtors' liabilities and obligations under the Agreement as of the sale or transfer, or the Debtors do not make reasonably suitable contractual arrangements to enable Indiana Flame to continue to perform under the Agreement, then the Debtors shall terminate the Agreement for convenience. G. Indemnification: Indiana Flame shall indemnify, defend and save harmless the Debtors from and against all loss or liability for or on account of any injury or damages received or sustained by Indiana Flame or any of its subcontractors: -- arising from the use of any of the Debtors' utilities, tools, equipment, or materials as well as in respect of any failure of the same to be suitable for the intended purpose, regardless of the Debtors' negligence, -- by any act or omission, whether negligent or otherwise, of the Debtors or any of their employees, agents or invitees, or the condition of the Leased Premises or the Debtors' other property, or -- by any act or neglect of Indiana Flame or any of its subcontractors, including any breach or alleged breach of the Agreement. Indiana Flame waives any workers' compensation statutory immunity as it may relate to Indiana Flame's indemnity of the Debtors for employee injuries, death, or damages. The Debtors shall indemnify, defend and save harmless Indiana Flame from and against all loss or liability for or on account of any injury or damages sustained by any with regard to activities on or within the Leased Premises. Certain of the parties' obligations to indemnify shall be limited to $1,000,000 for judgments and settlements in excess of defense costs. H. Termination Without Default: If during the term of the Agreement, new technologies are developed that materially decrease Indiana Flame's cost of performance, the Debtors may give Indiana Flame notice of its desire to renegotiate the fees payable to the Internal Revenue Service. If an agreement is not reached within two months, the Debtors may terminate the Agreement on one year's written notice. If the Debtors change their practices so that Indiana Flame's cost of performance is substantially increased, Indiana Flame may give the Debtors notice of its desire to renegotiate the fees payable to Indiana Flame. If an agreement is not reached within two months, Indiana Flame may terminate the Agreement on one year's written notice. If Indiana Flame's performance is repeatedly and frequently unsatisfactory, the Debtors may terminate the Agreement by three months' prior written notice. If all or any part of the Burns Harbor Division is shut down or substantially curtailed by the Debtors, the Debtors' obligations to purchase Indiana Flame's services under the Agreement may be reduced or the Debtors may terminate the Agreement upon three months' written notice. Either party may terminate the Agreement for convenience at any time upon written notice. I. Termination for Default: If either party defaults in its performance under the Agreement and the default continues for one month after written notice of the default, the non-defaulting party may terminate the Agreement upon one month's written notice. J. Disposition of Property Upon Expiration: In the event of the Agreement's expiration, during the 30-day period prior to the expiration date, the parties shall negotiate the Debtors' purchase of all or any portion of Indiana Flame's spare parts inventory at book value, and the Debtors' purchase of Indiana Flame's fixed assets at the Facility (excluding the Robotic Scarfing Unit, which the Debtors shall not have the right to purchase) at fair market value. After the parties have determined which property the Debtors will purchase, Indiana Flame will remove the remaining property within 180 days. K. Disposition of Property Upon Debtors' Termination Without Indiana Flame Breach, or Indiana Flame Termination Upon Debtors' Change in Practice: If the Debtors terminate the Agreement in the absence of a breach by Indiana Flame, or if Indiana Flame terminates the Agreement after a change in practice by the Debtors, the Debtors shall have the obligation to purchase all of Indiana Flame's fixed assets and spare parts inventory at the Facility, excluding the Robotic Scarfing Unit, at a price equal to the higher of fair market value or book value, calculated on a 10-year straight line basis, so long as Indiana Flame permits the Debtors to continue to use the Robotic Scarfing Unit by paying Indiana Flame $20,000 per month. Indiana Flame shall remove any additional materials not purchased by the Debtors within 180 days. L. Disposition of Property Upon Termination for Convenience by Indiana Flame or Breach by Indiana Flame: In the event of Indiana Flame's termination for convenience or the Debtors' termination for Indiana Flame's breach, the Debtors shall have the right, upon 30 days written notice, to purchase all of Indiana Flame's fixed assets at the Facility (excluding the Robotic Scarfing Unit) at a price equal to book value calculated on a 10-year straight line basis and the right to purchase any of Indiana Flame's spare parts inventory at book value. The Debtors shall also have the right to continue to use the Robotic Scarfing Unit by paying Indiana Flame $20,000 per month. In addition, Indiana Flame shall pay $900,000 to the Debtors as liquidated damages, and not as a penalty. Indiana Flame shall remove any additional materials not purchased by the Debtors within 180 days. M. Disposition of Property Upon Termination for Convenience by Debtors or Breach by Debtors: In the event of the Debtors' termination for convenience or Indiana Flame's termination for the Debtors' breach, the Debtors shall purchase all of Indiana Flame's fixed assets at the Facility (excluding the Robotic Scarfing Unit) and Indiana Flame's spare parts inventory at a price equal the greater of fair market value or book value calculated on a 10-year straight-line basis. In addition, the Debtors shall pay $900,000 to Indiana Flame as liquidated damages, and not as a penalty. Indiana Flame shall remove any additional materials not purchased by the Debtors within 180 days. N. Most Favored Customer: Indiana Flame warrants that the prices, provisions concerning cost reductions, and other terms and conditions of the Agreement are the most favorable offered by Indiana Flame for the services provided in the Agreement for similar services to other domestic customers. O. Legal Compliance: In performing the Work, Indiana Flame shall comply and shall cause its subcontractors, suppliers, agents and invitees to comply with all applicable federal, state and local laws, rules, regulations, permits and Presidential Executive Orders. In addition, all Work delivered under this Agreement shall be in compliance with all applicable federal, state and local laws, rules, regulations, permits and Presidential Executive Orders. P. Title: The Debtors, at all times, will have title to, and exclusive Ownership of, all slabs or steel products on which Indiana Flame is performing work under the Agreement and of the Leased Premises. Any plans and specifications developed, excluding plans and specifications which are proprietary, shall be the Debtors' sole and exclusive property. Indiana Flame shall maintain the Debtors' property, including the Leased Premises, and shall be solely responsible for the protection thereof. Q. No Liens: Neither Indiana Flame nor any assignee, subcontractor, workman, material man, or other person shall file or perfect any lien or attachment against the Debtors' property or against any monies then due or to become due by the Debtors to Indiana Flame for any labor, services, goods, or materials furnished in or for the performance of the Agreement. If any Lien should be filed or perfected, Indiana Flame shall promptly discharge, by bond or otherwise, any Lien or attachment and indemnify, defend, and save harmless the Debtors against any loss or expense in connection therewith. R. Taxes: The Debtors shall pay all federal, state, and local taxes and other assessments that may be levied or imposed upon the Leased Premises. Indiana Flame shall pay all federal, state, and local taxes and other assessments that may be levied or imposed against any machinery, equipment, or supplies or other property of Indian Flame. The Lease Agreement The Debtors and Indiana Flame also entered into the Lease Agreement, dated July 25, 2002, in order for Indiana Flame to exercise its rights and performance of its obligations under the Scarfing Agreement. The terms are: A. Lease: The Debtors will lease to Indiana Flame the Leased Premises, known as the Stripper Building, located in Burns Harbor, Indiana, for the purpose of Indiana Flame's exercise of its rights and performance of its obligations under the Agreement in connection with the construction, operation, and maintenance of the Facility. B. Term: The term of the Lease will extend six months after the Expiration or termination of the Scarfing Agreement. C. Rent: Indiana Flame will pay no monetary rent for the use of the Leased Premises. D. Taxes: Indiana Flame will pay all taxes, levies, and assessments that become due and payable with respect to Indiana Flame's use of the Leased Premises and with respect to any property of Indiana Flame located on the Leased Premises and the easement lands. E. Assignment: Indiana Flame will not sell, assign, or encumber the Lease nor sublet the Leased Premises without the Debtors' prior written consent. (Bethlehem Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1), DebtTraders reports, are trading at 9.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for real-time bond pricing. BRAINTECH INC: Board Approves 1-For-5 Reverse Stock Split --------------------------------------------------------- Braintech, Inc. (OTC-BB:BNTI), announced the Board of Directors has approved a 1-for-5 reverse stock split of its common stock. Under the guidelines of regulatory and company act requirements the Directors deliberated the need for and ratio of the reverse stock split and unanimously agreed that the restructuring is in the best interest of the Company. The consolidated common stock commenced trading effective at the opening on Monday morning, September 9, 2002 under the new trading symbol BRHI. The Company's new Cusip number is 105022206. Owen Jones, CEO, states, "The Company is undergoing a transformation from research and development to a revenue generating operation. Relative to our transformation and general market conditions, the Company is undergoing restructuring initiatives that are intended to position the company for growth. The Board of Directors deems a reverse split as an essential initiative for the long term health of the Company and its shareholders." Braintech's "Vision-Guided Robotic" technologies are revolutionizing manufacturing by giving industrial robots the "eyes" to handle and assemble parts with a high degree of consistent quality and productivity. Braintech's scientific capabilities, engineering expertise and commitment to support have been embedded in the company's VGR development system called "eVF", which provides the means for rapid and rock solid application development, operation and remote support over the Internet. Visit http://www.braintech.com for more information about the company. BORDEN CHEMICAL INC: Will Firm-Up New Credit Facility this Month ---------------------------------------------------------------- As previously reported in Borden Chemical, Inc.'s June 30, 2002 Form 10-Q filing with the Securities and Exchange Commission, the company is in the process of negotiating a new credit facility. Borden Chemical expects the secured facility to be finalized this month, following completion of required documentation. Fleet Bank, the lead bank in the syndication, has advised the company that the facility is substantially committed. Until the facility is finalized, Borden Chemical has the ability to meet its working capital requirements by borrowing from Borden Foods or other affiliates, if necessary. Based in Columbus, Borden Chemical is a leading global source for industrial resins and adhesives, formaldehyde, UV-light curable coatings and other chemical products serving a broad range of markets including the forest products, construction, fiber optics, oilfield, composites, electronics, automotive and foundry industries. You can find Borden Chemical on the Web at http://www.bordenchem.com * * * As reported in Troubled Company Reporter's September 5, 2002 edition, Standard & Poor's Ratings Services placed its ratings on Borden Chemical Inc., including the double-'B'-plus corporate credit rating, on CreditWatch with negative implications. The company has about $569 million in total debt outstanding. "The CreditWatch placement reflects heightened concerns related to the company's credit profile, which has deteriorated due to a sizable debt burden, still challenging conditions in the chemical sector, and the disclosure that the completion of the company's new credit facilities has been delayed beyond earlier expectations," said Standard & Poor's credit analyst Peter Kelly. The CreditWatch placement highlights the risk of a downgrade if new credit agreements are not finalized during September as announced. The new facilities, which will be secured by Borden assets, are believed to be substantially committed and in the final stages of negotiation with a group of banks. Accordingly, Borden Chemical's borrowing capacity is currently limited to arrangements with its affiliate, Borden Foods Holdings. The current ratings reflect Standard & Poor's view that current sources of capital, and cash on the balance sheet, will be sufficient to meet the near-term requirements of the business, but these arrangements are limited in terms of the ongoing transparency necessary to support the current ratings. BUDGET GROUP: Bringing-In Latham & Watkins as Finance Counsel ------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates want to employ and retain Latham & Watkins as its special structured finance counsel in connection with these Chapter 11 cases pursuant to Section 327(e) of the Bankruptcy Code. Robert L. Aprati, the Debtors' Executive Vice President, General Counsel and Secretary, relates that Latham has been the Debtors' counsel with respect to the establishment, development, and ongoing maintenance of the Debtors' multi-million dollar structured automobile fleet financing program for the last two and a half years. The Debtors anticipate that Latham will provide the legal support required by the Debtors in connection with the negotiation, documentation and closing of numerous financing transactions involved with the Debtors' Fleet Financing Program. This support will include, but not be limited to, drafting, reviewing and advising the Debtors on various motions and orders related to the Fleet Financing Program, and making appearances before the Court, as necessary, in connection to these matters. Through their representation of the Debtors, the members of Latham have become uniquely and thoroughly familiar with the Debtors and their business affairs. The members, counsel and associates of Latham who will represent the Debtors in connection with the matters upon which Latham is retained have extensive knowledge and expertise in all aspects of secured finance work and the treatment of any issues in the context of a Chapter 11 bankruptcy. The Debtors believe that Latham's continued representation in connection with their structured finance issues is essential to a successful Chapter 11 process and will provide a substantial benefit to their estates. Latham will charge the Debtors for its legal services on an hourly basis in accordance with its ordinary and customary rates for matters of this type in effect on the date services are rendered. Latham will also seek reimbursement of all costs and expenses incurred in connection with these cases. Latham's hourly billing rates currently range from: Attorneys $725 - $225 Paraprofessionals $190 - $125 These hourly rates are subject to periodic increases in the normal course of Latham's business. Latham partner Laura A. DeFelice, informs the Court that the Firm has received a $250,000 retainer in connection with Latham's representation of the Debtors relating to structured finance matters. This amount will constitute as a retainer in respect to future services to be rendered and future disbursements and charges to be incurred in connection with the Debtors' Chapter 11 cases. In addition to the Retainer, within one year prior to the Petition Date, Latham has received $836,605.97 on account of legal services rendered on behalf of the Debtors, plus an additional $84,000, which will be applied to prepetition fees and expenses. If any amount remains after application to prepetition fees, Latham proposes to add the remaining amount to its current retainer. Ms. DeFelice assures the Court that Latham, its members, counsel and associates do not represent or hold any material adverse interest to the Debtors or their estates with respect to the matters upon which Latham is to be employed and do not have any material connections with the Debtors, their officers, affiliates, creditors or, any other party-in-interest or their respective attorneys and accountants, or the United States Trustee. However, Latham currently represents or has represented these parties in unrelated matters: A. Lenders: Bank of America N.A., BNP Paribas, Cerebus Partners L.P., Credit Industriel Et Commercial, Credit Suisse First Boston, DK Acquisition Partners LP, Dresdner Bank AG, Fleet Bank, General Electric Capital Corp., Goldman Sachs Partners L.P., Merill Lynch Pierce Fenner & Smith Inc., Natexis Banque, Sumitomo Mitsui Banking Corp., SunTrust Bank, The Bank of New York, The Bank of Nova Scotia, The Fuji Bank Ltd., Washington Mutual Bank, Bank of Montreal, Bankers Trust Co., and Imperial Bank; B. Unsecured Creditors: AT&T, Bank of America Securities LLC, Bear Sterns Securities Corp., Cendant Inc., Charles Schwab & Co., Citibank N.A., Computer Science Corp., Credit Suisse First Boston, Deutsche Bank Trust Co., Donaldson Luftkin & Jenrette Securities Corp., Galileo International, Goldman Sachs & Co., JP Morgan Chas Bank, Morgan Stanley & Co. Inc., Morgan Stanley Dean Witter, Perot Systems, Prudential Securities Inc., Sabre Group, Salomon Smith Barney Inc., Bank of New York, TMP Worldwide, UBS Paine Webber Inc., Wachovia Bank and Wells Fargo Bank Minnesota N.A.; C. Insurers: AIG, American Casualty Co., Liberty Mutual, National Union Insurance, Travelers, Zurich Insurance and Lloyds; D. Major Vendors: DaimlerChrysler, Ford Motor Co., General Motors, Hyundai, Kia, Nissan Motors, and Toyota; E. Major Shareholders: Deutsche Bank; F. Indenture Trustees: Chase Manhattan Bank, Credit Suisse First Boston, JP Morgan Chase, The Bank of New York, Wells Fargo Bank Minnesota N.A., and Bankers Trust Co.; G. Professionals: Ernst & Young, Jefferies & Co., KPMG LLP, Lazard Freres & Co. LLC, Pennie & Edmonds LLP, Eversheds, and Sidley Austin Brown & Wood. (Budget Group Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392- 0900) Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1), DebtTraders reports, are trading at 18.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1 for real-time bond pricing. CHILDTIME LEARNING: Fails to Beat Form 10-Q Filing Deadline ----------------------------------------------------------- Childrime Learning Centers, Inc., was unable to file its Quarterly Report on Form 10-Q for the period ended July 19, 2002, as required under Section 13 of the Securities Exchange Act of 1934, in a timely manner due to the time required to prepare financial information required to be disclosed in conjunction with the Company's acquisition of substantially all of the assets of Tutor Time Learning Systems, Inc., on July 19, 2002. The Company has been and is currently analyzing the required disclosures and footnotes to be presented with the Company's Consolidated Financial Statements. In addition, the Company is currently still in the process of evaluating the information needed to accurately present the pro forma information required in accordance with the provisions of SFAS Statement No. 141, Business Combinations. For the sixteen weeks ended July 19, 2002, revenues decreased to $44.9 million from $46.7 million for the sixteen weeks ended July 20, 2001, a 4.0% decrease. The Company anticipates recording an operating loss of approximately $29,000 for the sixteen weeks ended July 19, 2002, as compared to recorded operating earnings of $2,400,000 for the sixteen weeks ended July 20, 2001. The Company anticipates recording a net loss of approximately $0.1 million for the sixteen weeks ended July 19, 2002, as compared to recorded net earnings of $1.4 million for the sixteen weeks ended July 20, 2001. Childtime Learning Centers, Inc., of Farmington Hills, MI acquired Tutor Time Learning Systems, Inc., on July 19, 2002 and is now the nation's third largest publicly traded child care provider with operations in 30 states, the District of Columbia and internationally. Childtime Learning Centers, Inc., has over 7,500 employees and provides education and care for over 50,000 children daily in over 450 corporate and franchise centers nationwide. Childtime's March 30, 2002 balance sheet shows that its total current liabilities exceeded its total current assets by about $5 million. CIRTRAN CORP: June 30 Balance Sheet Upside-Down by $4 Million ------------------------------------------------------------- Cirtran Corporation provides a mixture of high and medium size volume turnkey manufacturing services using surface mount technology, ball-grid array assembly, pin-through-hole and custom injection molded cabling for leading electronics OEMs in the communications, networking, peripherals, gaming, consumer products, telecommunications, automotive, medical, and semiconductor industries. Its services include pre- manufacturing, manufacturing and post-manufacturing services. Through its subsidiary, Racore Technology Corporation, it designs and manufactures Ethernet technology products. Its goal is to offer customers the significant competitive advantages that can be obtained from manufacture outsourcing, such as access to advanced manufacturing technologies, shortened product time-to-market, reduced cost of production, more effective asset utilization, improved inventory management, and increased purchasing power. Cirtran Corporation's condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company sustained net losses of $725,305 and $2,933,084 for the six months ended June 30, 2002 and the year ended December 31, 2001, respectively. As of June 30, 2002 and December 31, 2001, the Company had an accumulated deficit of $13,805,797 and $13,080,492, respectively and a total stockholders' deficit of $4,183,592 and $6,942,377, respectively. In addition, the Company used, rather than provided, cash in its operations in the amounts of $918,652 and $288,724 for the six months ended June 30, 2002 and the year ended December 31, 2001, respectively. Since February of 2000, the Company has operated without a line of credit. Many of the Company's vendors stopped credit sales of components used by the Company to manufacture products and as a result, the Company converted certain of its turnkey customers to customers that provide consigned components to the Company for production. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Continued operations of the Company is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to maintain or replace present financing, to acquire additional capital from investors, and to succeed in its future operations. Abacus Ventures, Inc., purchased the Company's line of credit from the lender. During the six months ended June 30, 2002, the Company has entered into an agreement whereby the Company has exchanged common stock, issued to certain principles of Abacus, for a portion of the debt. The Company's plans include working with vendors to convert trade payables into long-term notes payable and common stock and cure defaults with lenders through forbearance agreements that the Company will be able to service. The Company intends to continue to pursue this type of debt conversion going forward with other creditors. The Company has initiated new credit arrangements for smaller dollar amounts with certain vendors and will pursue a new line of credit after negotiations with certain vendors are complete. If successful, these plans may add significant equity to the Company. There is no assurance that these transactions will occur. COLD METAL: Gets Nod to Appoint Kurtzman Carson as Claims Agent --------------------------------------------------------------- Cold Metal Products, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Kurtzman Carson Consultants, LLC as the official Notice, Claims and Balloting Agent in their chapter 11 cases. Thousands of creditors and other parties in interest involved in the Debtors chapter 11 cases would impose heavy administrative and other burdens on the Office of the Clerk of the Court. Retaining Kurtzman Carson as the notice, claims and balloting agent will relieve the Clerk from these burdens. Kurtzman Carson will: a) prepare and serve required notices in these chapter 11 cases; b) after mailing of a particular notice, prepare for filing with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; c) receive and record proofs of claim and proofs of interest filed; d) create and maintain official claims registers; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers upon request and at agreed upon intervals (typically once per week unless requested more or less frequently by the Clerk's Office); g) act as balloting agent which will include: i) printing ballots including the printing of creditor and shareholder specific ballots; ii) preparing voting reports by plan class, creditor or shareholder and amount for review and approval by the Debtors and their counsel; iii) coordinating mailing of ballots, disclosure statement, plans of reorganization, and any other appropriate materials to all voting and non-voting parties; iv) receiving ballots and record ballots, inspect ballots for conformity to voting procedures, date stamp and number ballots consecutively and tabulate and certify the results; h) maintain an up-to-date mailing list for all entities that have filed a proofs of claim or proof of interest, which list shall be available upon request of a party in interest or the Clerk's Office; i) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; j) record all transfers of claims pursuant to rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of such transfers as required by the Bankruptcy Rule 3001(e); k) comply with applicable federal, state, municipal, and local statutes ordinances, rules, regulations, orders and other requirements; l) provide temporary employees to process claims, as necessary; and m) perform such other administrative and support services related noticing, claims, docketing, solicitation and distribution as the Debtors or the Clerk's Office may request. Kurtzman Carson's hourly Consulting Services fees are: Clerical $ 35 - $55 per hour Bankruptcy Analyst $ 65 - $115 per hour Bankruptcy Consultant $110 - $175 per hour Sr. Bankruptcy Consultant $175 - $225 per hour Technology/Programming Consultant $110 - $175 per hour Cold Metal Products, Inc., is an intermediate steel processor of strip and sheet steel for precision parts manufacturers in the automotive, construction, cutting tools, consumer goods and industrial goods markets. The Company filed for chapter 11 protection on August 16, 2002 in the U.S. Bankruptcy Court for the Northern District of Ohio. Joseph F. Hutchinson Jr., Esq., at Brouse McDowell represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $65,430,000 in assets and $96,484,000 in debts. COMDISCO INC: Illinois Obtains More Time to File Tax Claims ----------------------------------------------------------- With the consent of Comdisco, Inc. Debtors and Illinois Department of Revenue, Judge Barliant extends the bar date for filing income tax claims for another 60 days after the amended Illinois income tax returns are filed with the Illinois Department of Revenue. For purposes of establishing a proper claims reserve for unliquidated claims under the confirmed plan, the Court directs the Debtors to reserve for the potential claim of the Department an amount that is 15% of the amount reserved for the IRS claim. (Comdisco Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONDOR TECHNOLOGY: Closes Sale of Gov't Solutions Div. Assets ------------------------------------------------------------- At a Special Meeting of Stockholders held on August 15, 2002, stockholders of Condor Technology Solutions, Inc., approved the sale of certain assets comprising the Government Solutions Division of the Company to CACI International Inc., for a purchase price of $16,000,000. Of a total of 26,944,424 shares of Company common stock outstanding, a total of 16,605,488 shares, being a majority of the votes cast at the meeting, voted in favor of the CACI Transaction, 610,733 shares voted against it, and 4,635 shares abstained from approval of the CACI Transaction. The sale included the assets and going business of certain of Condor's wholly-owned subsidiaries: Louden Associates, Inc., InVenture Group, Inc., MIS Technologies, Inc., and Federal Computer Corporation. The assets being sold to CACI International Inc., comprised approximately 38% of the total assets of Condor Technology and its subsidiaries and approximately 35% of the consolidated revenue of the Company and its subsidiaries for the three months ended March 31, 2002. The CACI Transaction closed on August 15, 2002, following the Special Meeting of Stockholders. Following the CACI Transaction, Condor Technology Solutions has as ongoing businesses the Infrastructure Services Division located primarily in Langhorne, Pennsylvania and the enterprise resource software reseller business located in Iselin, New Jersey. The Company is currently evaluating its options, which could include seeking approval for the orderly liquidation of its remaining assets through the sale of its business units as going concerns. As a result of the size of its debt obligations (even after repayment of certain debts with the proceeds of the CACI Transaction) and the Company's projections of the amounts it is likely to receive for its remaining business units, if and when such units are sold, no funds generated by the liquidation of its remaining assets will be available for distribution to stockholders. On August 30, 2002, Ms. Ann Torre Grant and Mr. Dennis E. Logue resigned as members of the Board of Directors of the Company. Condor Technology Solutions is a technology and communications company specializing in the organization, analysis and creative distribution of business information. The company's business practices include Web development, business intelligence, contact center services, infrastructure support and marketing communications. Condor Technology Solutions was founded in 1998. CONSECO: Lenders Waive Cross-Default Provisions Under Loan Pact --------------------------------------------------------------- Conseco, Inc., (OTCBB:CNCE) has obtained a temporary waiver from its senior lenders of certain cross-default provisions under the Company's credit agreement, and has received an extension of the temporary waiver previously granted by its senior lenders with respect to the Company's non-compliance with its debt to capitalization ratio covenant as of June 30, 2002, as well as a limited waiver of potential non-compliance as of September 30, 2002. The Company also said that it has obtained temporary waivers of certain cross-default provisions and covenant defaults from the lenders under the D&O loans with respect to the Company's guarantees of these loans. All of these waivers are scheduled to expire on October 17, 2002, are subject to various conditions and may be revoked at any time by a majority in interest of the lenders (on a facility by facility basis). In addition, the Company announced that its finance subsidiary has obtained a temporary waiver of a cross default provision from the one lender whose financing agreement contains a cross default to events of default under the Company's bond debt. The Company's finance and insurance subsidiaries are not borrowers under the Company's senior credit agreement or indentures, and the Company's insurance subsidiaries are not party to any indebtedness that would be subject to any cross-default provisions with respect to defaults under the Company's debt. On August 9, Conseco, Inc., announced that it would exercise the 30-day grace periods on its upcoming bond interest payments, the first of which was due that day, and would commence restructuring discussions with its debt holders. The first of the grace periods expired on September 8, and the Company's failure to make the interest payments on or prior to that date put Conseco, Inc., in default with its bondholders and the holders of its trust preferred securities. Although the Company and its finance subsidiary have obtained waivers of certain cross-default provisions triggered by the failure to make those payments, the Company is not seeking any waivers of the interest payment default from the holders of its bonds or trust preferred securities. On August 20, Conseco announced the formation of an ad hoc bondholders committee to negotiate with the Company with respect to a restructuring of the capital structure of the holding companies. The Company is continuing discussions with its debt holders, and reaffirmed that its goal continues to be to achieve a consensual restructuring. Conseco Inc.'s 10.75% bonds due 2008 (CNC08USR1) are trading at 27 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for real-time bond pricing. CONSOLIDATED FREIGHTWAYS: Court Approves 'First Day Motions' ------------------------------------------------------------ Consolidated Freightways Corp., (Nasdaq:CFWYEQ) has received interim approval from the Bankruptcy Court for $225 million in debtor-in-possession financing. At the same time, the company said it is re-opening certain terminals and bringing back as many drivers and terminal employees as necessary to expedite customer shipments remaining in the CFC system. "With Court approval of our first-day requests, we can continue to work on the issues at hand: satisfying employee obligations, moving remaining freight to customers, and expediting liquidation of the business," said John Brincko, who joined the company as CEO three months ago. "Each of our employees has been notified either in person, by phone or in writing as to the events of the past few days, and we are on the phone with customers working to get their freight to them as quickly as possible." Brincko further stated that "customer service has always been our chief concern, and in rehiring drivers and terminal employees, we have taken positive steps to ensure that all shipments are completed." In orders issued Thursday, the Court approved, on an interim basis, the company's $225 million debtor-in-possession financing line from General Electric Capital Corporation. The final hearing to approve the DIP line will be held in early October. The DIP facility, including approximately $40 million in new financing, will be available to the company to proceed with an orderly liquidation. Thursday the company also obtained approval to pay its employees certain pre-petition wages and to direct the banks to honor employee paychecks. Consolidated Freightways, which is headquartered in Vancouver, Wash., filed for bankruptcy protection Tuesday and plans to liquidate the business in an orderly manner. Its CF AirFreight, Canadian Freightways Ltd. and Grupo Consolidated Freightways, S.A. de RL subsidiaries continue to operate as usual. Additional information about the company's Chapter 11 filings can be obtained online at http://www.cacb.uscourts.gov CONSOLIDATED FREIGHTWAYS: Obtains Okay to Pay Prepetition Wages --------------------------------------------------------------- Consolidated Freightways Corp., (Nasdaq:CFWYEQ) has received Bankruptcy Court approval to pay pre-petition wages to all its employees. Payroll checks will be processed beginning this afternoon and mailed over the next few days to employees' homes. "We are gratified to have received the Court's approval to satisfy this obligation. Checks will be mailed as quickly as possible and these payroll checks will be honored," said John Brincko, who joined the company as CEO three months ago. Consolidated Freightways filed for protection under Chapter 11 of the Bankruptcy Code and plans an orderly liquidation of its business. Its CF AirFreight, Canadian Freightways Ltd. and Grupo Consolidated Freightways, S.A. de RL subsidiaries are continuing to operate as usual. Additional information about the company's Chapter 11 filings can be obtained online at http://www.cacb.uscourts.gov CREDIT STORE: Court OKs Neligan Stricklin as Bankruptcy Counsel --------------------------------------------------------------- The Credit Store, Inc., obtained authority from the U.S. Bankruptcy Court for the District of South Dakota to employ Neligan Stricklin, LLP as its bankruptcy counsel to perform the extensive legal services that will be necessary during the Company's chapter 11 case. Neligan Stricklin is expected to: a) advise the Debtor of its rights, powers, and duties as debtor and debtor-in-possession; b) take all necessary action to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved, and the preparation of objections to claims filed against the estate; c) prepare on behalf of the Debtor, as debtor-in- possession, all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of this estate; d) propose on behalf of the Debtor the plan of reorganization, related disclosure statement, and any revisions, amendments, etc., relating to the foregoing documents, and all related materials; and e) perform all other necessary legal services in connection with this chapter 11 case and any other bankruptcy related representation which Credit Store requires. The names, positions, and current hourly rates of the Neligan professionals expected to have primary responsibility on this case are: Patrick J. Neligan Jr. Partner $400 per hour Mark E. Andrews Partner $375 per hour Bryan C. Ng Associate $165 per hour Andrea L. Niedermeyer Associate $145 per hour The Credit Store, Inc., is primarily in the business of providing credit card products to consumers who may otherwise fail to qualify for a traditional unsecured bank credit card. The Company filed for chapter 11 protection on August 15, 2002. Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP and Mark E. Andrews, Esq., at Neligan Stricklin, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $68 million in assets and $69 million in debts. DELTA AIR LINES: System Traffic Falls 6.8% in August 2002 --------------------------------------------------------- Delta Air Lines (NYSE: DAL) reported traffic results for the month of August 2002. System traffic decreased 6.8 percent on a capacity decrease of 7.3 percent from August 2001. Delta's system load factor was 77.2 percent, up 0.4 points from the same period last year. Domestic traffic in August 2002 decreased 5.9 percent year over year on a capacity decrease of 6.5 percent. Domestic load factor was 76.1 percent, up 0.4 points from the same period a year ago. International traffic decreased 9.7 percent year over year on a 10 percent decrease in capacity. International load factor was 80.6 percent, up 0.3 points from the same period last year. During August, Delta operated its schedule at a 99.4 percent completion rate, compared to 97.2 percent from August 2001. Delta boarded 9,818,180 passengers during the month of August. Delta Air Lines' 9.75% bonds due 2021 (DAL21USR1), DebtTraders reports, are trading at 87.413 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DAL21USR1for real-time bond pricing. DIAL CORP: Illinois Plant Workers' Union Nixes 4-Year Contract -------------------------------------------------------------- On Tuesday, September 3, 2002, the union at The Dial Corporation's Aurora, Illinois manufacturing plant voted down a four-year contract that had been unanimously recommended by the union negotiating committee. The Aurora plant manufactures Dial's personal cleansing products. This union's contract expired at the end of August 2002 and the approximate 300 covered employees currently are working without a contract. While Dial is disappointed that the union voted against this contract, it is continuing to work with the union to try to reach agreement on a mutually acceptable four-year contract. Based on continuing talks with the union, the positive tone of those talks and Dail's belief that there are no significant issues that would preclude from reaching an agreement, Dial currently does not believe that there will be any work stoppage at the Aurora plant. If unable to reach a mutually acceptable agreement however, Dail could experience a work stoppage. Consumer products company Dial makes one of the US's best- selling soaps (Dial), and it has leading brands in each of its four core product segments -- personal care products (Dial, Breck, Tone), laundry products (Purex, Borateem, Sta-Flo), air fresheners (Renuzit), and canned meats. (Its Armour-brand Vienna sausages are #1 in the US.) Dial's products are sold in more than 40 countries, with most of its foreign efforts focused on Argentina, Canada, Mexico, and Puerto Rico. EMAGIN CORP: Issues 8% Series B Conv. Notes to Two Investors ------------------------------------------------------------ On August 21, 2002, eMagin Corporation issued to each of two Investors 8% Series B Convertible Debentures due August 21, 2004 whereby each of the Investors agreed to lend eMagin $121,739 for a total of $243,478. Interest is payable on the Debentures at a rate of 8% per annum and is payable at the earlier of the date of maturity or prepayment of all or a portion of the Debentures. The principal amount of the Debentures, plus any accrued and unpaid interest is convertible into common shares of eMagin at the option of the Investors, whereby the number of common shares to be issued is equal to the principal amount of the Debentures divided by $0.18. In addition, the Debentures are convertible into common shares at the option of eMagin, if the average closing price of the shares traded exceeds $0.49 per share for 10 consecutive trading days, whereby the number of common shares to be issued is equal to the principal amount of the Debentures including any accrued interest, divided by $0.18. eMagin may prepay the Debentures in whole or in part at 105% of the principal amount being prepaid, together with all accrued and unpaid interest thereon to the date of the prepayment. * * * In a letter to the shareholders of eMagin Corporation (AMEX: EMA), Chairman, President, and CEO Gary Jones, remarked on the current status of the company: "First, we are pleased to inform you that we have a backlog of over $10 million in purchase agreements, with another almost $10 million in Letters of Intent for orders to be delivered over the remainder of 2002 and 2003. We have delivered OLED-on-silicon microdisplays to military, industrial, medical, and consumer OEM customers, and currently are continuing to do so. Some customers have indicated that they are planning new product lines, or even new start-up companies, around our OLED microdisplays." Mr. Jones continued, "However, as we have previously stated, sufficient capital is required in order to execute our business plan. As a semiconductor-model company such as eMagin ramps into production it must still support the fixed costs for a high technology cleanroom operation and add the increased cost of building inventory, receivables and other expenses of production. Certain transactions, which we expected to have concluded by now, were either delayed or terminated for a variety of factors, including selling pressure depressing the stock price, certain capital and debt structural issues that had been impeding us, and the overall unfavorable equity and debt market conditions. Lack of operating capital, along with some materials supply delays, took a toll on our ability to realize the volume of shipments we had targeted for completion in the second quarter of 2002, although the volume of orders increased and our yields further improved. Both our customers and we were ready, but the financial markets were not. This, along with cash balance and working capital issues, must be resolved and we are pursuing a number of possible approaches for resolving this serious cash crunch." "It is clear that our payables and debt must be reduced or restructured in order to allow the company to move forward," explained Mr. Jones. "Therefore, we are presently making a serious effort to restructure our payables. While we can assure you that we are making every effort to succeed in this restructuring, we cannot assure you that all of the key creditors will cooperate fully in this effort or that the company will be able to continue operations should we not succeed." EMAGIN CORP: Conv. Promissory Note Maturity Extended to Sept. 30 ---------------------------------------------------------------- On August 30, 2002, eMagin and The Travelers Insurance Company entered into a seventh amendment agreement to amend and extend the maturity date of the Convertible Promissory Note dated August 20, 2001, issued underthe Note Purchase Agreement entered into as of August 20, 2001 between eMagin and Travelers. The amendment agreement extends the maturity date of the Travelers Convertible Note from August 30, 2002 to September 30, 2002. A leading developer of virtual imaging technology, eMagin combines integrated circuits, microdisplays, and optics to create a virtual image similar to the real image of a computer monitor or large screen TV. These miniature, high-performance, modules provide access to information-rich text, data, and video which can facilitate the opening of new mass markets for wearable personal computers, wireless Internet appliances, portable DVD-viewers, digital cameras, and other emerging applications. EMAGIN CORP: Extends Sackler Secured Notes to September 30, 2002 ---------------------------------------------------------------- On August 30, 2002, eMagin and Mr. Mortimer D.A. Sackler entered into an amendment agreement to amend the default provision and extend the maturity date of the Secured Promissory Note dated June 20, 2002, issued under the Secured Note Purchase Agreement entered into June 20, 2002, between eMagin and Sackler. As well, eMagin and Sackler entered into an amendment agreement to amend the default provision and extend the maturity date of the Secured Convertible Promissory Notes, issued under the Secured Note Purchase Agreement entered into November 27, 2001, between eMagin and Sackler, as amended by the Omnibus Amendment, Waiver and Consent Agreement dated January 14, 2002, and the Subscription Agreements dated January 14, 2002. The amendment agreements extends the maturity date of the Sackler Secured Note and the Sackler Secured Convertible Notes from August 30, 2002 to September 30, 2002 and adds certain events of default. A leading developer of virtual imaging technology, eMagin combines integrated circuits, microdisplays, and optics to create a virtual image similar to the real image of a computer monitor or large screen TV. These miniature, high-performance, modules provide access to information-rich text, data, and video which can facilitate the opening of new mass markets for wearable personal computers, wireless Internet appliances, portable DVD-viewers, digital cameras, and other emerging applications. ENRON CORP: ENA Exclusivity Extension Hearing Set for Sept. 19 -------------------------------------------------------------- Judge Gonzalez will convene a hearing on September 19, 2002 to consider Enron North America's request to extend its exclusive periods to file and solicit acceptances of a reorganization plan. The current deadline to file a plan is automatically extended through the conclusion of that hearing. (Enron Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE TECHS: Wins Approval to Create SPV to Finance Receivables --------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained the Court's authority to create a new "special purpose vehicle" to facilitate the financing of the receivables of its Australian and its New Zealand subsidiary and to obtain greater liquidity under the DIP Facility. As previously reported, Exide Technologies, and its debtor- affiliates entered, effective as of the petition date, into the Secured Super-Priority Debtor-in-Possession Credit Agreement with Citicorp USA, Inc., as Administrative and Collateral Monitoring Agent to provide up to $250,000,000 in secured financing to the Debtors and their non-debtor affiliates. On May 10, 2002, the Court entered a final order approving the DIP Credit Agreement. The facility is the primary source of working capital for the Debtors' global operations. The Debtors borrow under the DIP Facility, not only to support its own working capital needs, but also re-lends loan proceeds to non-debtor affiliates. Pursuant to the DIP Credit Agreement, certain assets of those affiliates may be pledged to the DIP Lenders on the Debtors' behalf as collateral to secure the Debtors' borrowings under the DIP Facility. Indeed, the Debtors' ability to borrow sufficient funds under the DIP Facility to be able to lend DIP proceeds to certain non-debtor affiliates is dependent on a sufficient borrowing base of collateral from these affiliates. The Debtors have been unable to effectuate a pledge of the receivables of its non-debtor Australian subsidiary because the DIP Lenders believe that they would be required to establish substantial reserves in Australia to cover priority employee entitlement claims. As a consequence, the Debtors' borrowing base has been negatively impacted, thereby constraining the Debtors' ability to borrow under the DIP Facility. Thus, with the Court's nod, the Debtors will create a special purpose vehicle organized under the laws of the State of Delaware to which the Debtors' non-debtor Australian and New Zealand subsidiary may transfer the Australian Receivables and which will be authorized to pledge these assets on the Debtors' behalf to secure additional borrowings under the DIP Facility. In order to effectuate the purchase of the Australian Receivables from its Australian and New Zealand subsidiaries and in consideration of the pledge granted by the SPV to the DIP lenders on Debtors' behalf, the Debtors would lend sufficient funds to the special purpose vehicle to purchase the Australian Receivables. The Debtors' authority to lend DIP proceeds to affiliates is already set forth in the Final DIP Order, so no further relief is required. (Exide Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) Exide Technologies' 10% bonds due 2005 (EXDT05FRR1), DebtTraders says, are trading at 15 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1 for real-time bond pricing. FRUIT OF THE LOOM: Claim Objection & Settlement Protocol Okayed --------------------------------------------------------------- Judge Walsh has entered an order establishing uniform procedures proposed by the Unsecured Creditors Trust of Fruit of the Loom for objecting to claims and settling claim-related disputes. Claim Objection Protocol Under the approved procedures, the Trust will file and serve objections to Claims based on grounds permitted by the Bankruptcy Code or Rules. Objections will be supported by declaration or affidavit verifying the supporting facts. Subsequent Objections on different grounds may be filed against Claims that are also the subject of a pending or previously resolved Objection. The Trust's failure to assert a ground of Objection against a particular Claim will not bar it from asserting Objections against that Claim at a later time. Responses To Objections In accordance with Bankruptcy Code Sections 102(1), 105, 502(b), and Rules 3007, 9019 and 9029, the holder of a Claim that is the subject of an Objection must file a written response in order to contest the Objection. The Response must: (i) provide a concise statement setting forth all legal and factual reasons why the Claim should not be disallowed, reclassified or otherwise treated in accordance with the relief requested in the Objection, and (ii) include copies of all documents supporting the Response to the objection to Claim. The Claimant must file and serve a Response within 20 days of the service of the Objection or the Claim will be disallowed, reduced, reclassified or otherwise treated, in accordance with the relief requested, without further notice or hearing. If a Claimant timely files and serves a Response complying with the procedure, then a hearing will be held on the Objection and the Response. The hearing may be combined with other hearings on Claims Objections and other matters at omnibus hearing dates. If a Response to the Objection is timely filed, but the respondent fails to include copies of all documents supporting the Claim, the respondent shall have 20 days from the date of Trust's written request to the Claimant to provide pertinent documentation. If the Claimant fails to timely respond to the Document Request by either (i) providing evidentiary support for any portion of the asserted claim or (ii) a concise statement as to why the Claimant cannot produce evidentiary support for the claim, the Claim will be automatically disallowed, reduced, reclassified or otherwise treated in accordance with the relief requested in the Objection, without further notice or hearing as if a Response had never been filed. The Document Request shall also provide the following language: "If you fail to timely respond to this document request by either: (i) providing evidentiary support for the asserted claim or (ii) a concise statement as to why you cannot produce evidentiary support for the claim, your claim will be automatically disallowed, reduced, reclassified, or otherwise treated, in accordance with the relief requested in the Objection, without further notice or hearing as if your Response had never been filed." In the event that the Claimant provides the Debtors with documentation supporting the claim or the Claimant's response indicates that no such documents exist, this provision shall be inapplicable and any remaining objection shall be the subject of a hearing before the Court. Requiring Claimants to file and serve written Responses to the Trust's Objections and respond to the Document Request will assist the Trust and the Court in the claims reconciliation process by allowing them to focus on specifics and possibly resolve claims through informal negotiations. The Trust will amend or withdraw its Objections to Claims when communications with Claimants lead to the conclusion that their Claims are valid. Claim Settlement Protocol Judge Walsh also approved the following procedure to Settle a disputed Claim between the Trust and the Claimant be approved: A. If the difference between the settlement amount and the scheduled amount (or, if not scheduled, the amount asserted in the proof of claim) is equal to or less than $100,000 (or some other amount subsequently agreed to by the Trust and the Unsecured Creditors Trust Advisory Committee), the Trust may settle, resolve and allow a disputed Claim within its sole discretion, with no further notice or order of the Court. B. If the difference between the settlement amount and the scheduled amount (or, if not scheduled, the amount asserted in the proof of claim) is more than $100,000 (or some other amount subsequently agreed to by the Trust and the Committee), the Trust may settle, resolve and allow a disputed Claim in writing. The Trust will serve counsel for the Committee with a written settlement. Within 10 business days of this event, the settlement shall be deemed approved by the Committee. (Fruit of the Loom Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Wants Court to Deem Hindery Pact Non-Executory --------------------------------------------------------------- Matthew A. Feldman, Esq., at Willkie Farr & Gallagher, in New York, recounts that Leo J. Hindery, Jr., was appointed Chairman and CEO of GlobalCenter Inc., then one of Global Crossing Ltd.'s subsidiaries. Pursuant to an Employment Agreement dated December 5, 1999, Mr. Hindery was required to serve a 3-year term as Chairman and CEO of GlobalCenter. On March 1, 2000, Mr. Hindery was also appointed CEO of Global Crossing, a position he held until October 11, 2000, at which time he submitted his resignation and signed a termination agreement. The Termination Agreement effectively severed Mr. Hindery's employment with Global Crossing, while providing for his continued role as Chairman and CEO of GlobalCenter Inc. By this motion, the Debtors seek declaratory relief with respect to the Termination Agreement between Global Crossing and Leo J. Hindery, Jr. Specifically, the Debtors ask the Court to declare that the Termination Agreement is non-executory. In the alternative, the Debtors seek the Court's authority to reject the Termination Agreement pursuant to Section 365 of the Bankruptcy Code. The Termination Agreement provides that upon Mr. Hindery's termination as CEO of Global Crossing and until his resignation as Chairman and CEO of GlobalCenter in January 2001, he is to receive an annual salary of $995,000. In addition, upon his resignation as Chairman and CEO of GlobalCenter, Global Crossing is required to make annual cash severance payments to Mr. Hindery for the remainder of his term under the Employment Agreement. Thus, pursuant to the Termination Agreement, Global Crossing is obligated to make annual severance payments to Mr. Hindery until December 5, 2002. The Termination Agreement also requires Global Crossing to continue to provide Mr. Hindery with an apartment in New York City through October 3, 2002. In exchange for Global Crossing's payment obligations under the Termination Agreement, Mr. Feldman relates that Mr. Hindery agreed to continue to perform his duties as Chairman and Chief Executive Officer of GlobalCenter pursuant to the Employment Agreement. In addition, Mr. Hindery agreed to provide certain consulting services, if needed, to assist the newly appointed Chief Executive Officer in his new role. However, Mr. Hindery has not provided any consulting services -- and no consulting services have been requested -- since early 2001. In addition, Mr. Hindery agreed that for the two years after his resignation, he would neither: -- issue or make any comment that would be construed or intended to disparage or criticize Global Crossing; nor -- violate the terms of his Proprietary Information Agreement with Global Crossing. Mr. Feldman notes that the Proprietary Information Agreement includes a non-competition clause, as well as a provision for non-disclosure of Global Crossing's proprietary information. Additionally, the Proprietary Information Agreement requires that for the two years following his employment, Mr. Hindery is restricted from encouraging or soliciting any employee to leave Global Crossing's employment for any reason. The Debtors firmly believe that the Termination Agreement is not an executory contract. If the Court determines, however, that the Termination Agreement is an executory contract or if the Court refrains from reaching any determination as to the executory nature of the Termination Agreement, the Debtors seek to formally reject the Termination Agreement because it is burdensome to their estates and provides little or no value. Without conceding that the Termination Agreement is an executory contract, the Debtors, in an abundance of caution and in the sound exercise of their business judgment, believe that rejecting the Termination Agreement will benefit their estates by relieving it of an agreement that has provided no benefit since well prior to the Petition Date. In the event that this Court authorizes rejection of the Termination Agreement, the Debtors expressly reserve their rights to dispute and object to any claim asserted under or relating to the Termination Agreement or this Motion on any grounds. Moreover, the Debtors specifically reserve any and all claims and rights they may have against Mr. Hindery arising under or related to the Termination Agreement, including, but not limited to, enforcement and violations of the restrictive covenants under the Termination Agreement. Furthermore, the Debtors ask the Court that any claims against them arising from the Termination Agreement or the rejection of the agreement should be fixed with the Clerk of the Court by the later of: -- 30 days after entry of an order approving this Motion; or -- September 30, 2002, which is the applicable bar date for the filing of proofs of claim in these Chapter 11 cases. The Debtors seek this relief in order to manage and control the claims process in their cases. (Global Crossing Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) HALLIBURTON CO.: Blaylock Initiates Coverage with 'Hold' Rating --------------------------------------------------------------- Blaylock & Partners' equity analyst Brad Handler initiated coverage of oil services company Halliburton (NYSE: HAL) with a "Hold" recommendation. Mr. Handler primarily based his recommendation on concerns that the company's asbestos liability exposure will continue to place downward pressure on the stock in the near-term. In his report titled "Excessive Asbestos Discount Not Enough," Mr. Handler said that, while he believes the stock is being "overly punished" for the asbestos concerns, he foresees becoming more bullish on the company only when there is more evidence that asbestos risk can be quantified and/or limited. Mr. Handler outlines several dates likely happening over the next 12 months that may add to investor confidence in this regard, including updates on HAL and other companies' efforts to reach settlements of asbestos liability with claimants' representatives. Halliburton is currently the defendant in 312,000 asbestos- related claims. As well, Mr. Handler said he would likely take a more favorable stance if investor sentiment on the oil service sector in general turns more positive. He said that the slower-than-expected recovery in North American drilling will continue to adversely impact the oil service group over the near-term. In commenting on the SEC's inquiry into Halliburton's accounting practices, Mr. Handler wrote that the company's "revenue accruals on unapproved claims appear to us to be consistent with industry practice and accounting guidelines, and generally a non-event." Dallas-based Halliburton Co., is one of the largest providers of products and services to the petroleum and energy industries. It is the second-largest oil service company in the world in terms of revenues and fourth largest in terms of market capitalization. Blaylock's ratings system consists of "buy," "hold" and "sell" recommendations. Investment banking stocks have a "not rated" designation. Institutional investors interested in receiving more information should contact Mr. Handler at 212/715-6662 (bhandler@blaylocklp.com). Journalists interested in receiving copies of the research reports should contact Jackie Ruegger at jruegger@starkmanassociates.com. Based in New York, Blaylock & Partners, L.P., has been ranked by Black Enterprise magazine as the number one minority-owned investment banking firm for 1999 and 2000. The firm has co- managed four of the largest most recent IPOs - Travelers Property Casualty Corp., Prudential Financial, Inc., Kraft Foods Inc., and Agere Systems Inc. Blaylock & Partners is a member of the NASD and SIPC. Blaylock & Partners, L.P. is a member of the National Association of Securities Dealers, CRD number 35669 HILTON HOTELS: Resolves Insurance Issue re Mortgage Bonds --------------------------------------------------------- Hilton Hotels Corporation (NYSE:HLT) said that, relative to an event reported in its second quarter 10-Q, it has resolved a property insurance issue with the servicer of its 7.95 percent collateralized mortgage bonds due 2010 ($490 million outstanding principal balance at June 30, 2002). As reported in the 10-Q, the servicer of the bonds asserted that an event of default arose due to an exclusion for terrorist acts. While Hilton disputed whether the insurance was required, the company decided to obtain insurance to resolve the dispute. The company's purchase of insurance in the aggregate of $250 million covering certain terrorist events has, Hilton said, resolved the matter by curing this asserted default. INFINITE GROUP: Sends Letter to SEC to Withdraw Unsold Shares ------------------------------------------------------------- Clifford G. Brockmyre, II, President and Chief Executive Officer of Infinite Group, Inc., has sent a letter to the SEC to withdraw unsold registered shares and to terminate the registration statement. The registration statement covered the resale of shares of Company common stock issuable under an equity line of credit agreement entered into in November 2000. In August 2002, Infinite terminated the equity line of credit agreement, subsequently requesting the withdrawal from registration of 3,278,263 unsold shares covered by the registration statement. Infinite Group is an industry leader in applied photonics, including areas of laser material processing, advanced manufacturing methods and laser applications technology. At December 31, 2001 Infinite had a working capital deficit of approximately $1.7 million, ($1.3 million after eliminating the assets and liabilities of its discontinued operations). The working capital deficit was primarily caused by recurring losses at the former Plastics Group resulting in slow payments to the Company's vendors. A going concern qualification was included in the opinion issued by Infinite's auditors on its 2000 financial statements as a result of one of the Company's primary lenders not having issued its waiver for certain loan covenant violations that existed at December 31, 2000 at the Laser Fare subsidiary. The loan covenants are measured annually at December 31. The loan covenant violations which existed at December 31, 2000 related to failure to meet certain levels of working capital, debt to tangible net worth ratio and exceeding capital expenditure limits. Due to the acquisition of LENS equipment in a non- monetary transaction and acquisition of stent equipment, the Company exceeded the capital expenditure limitations to support the growth of its Laser Group. Subsequent to the issuance of the financial statements and the repayment of a certain portion of the related debt, the bank issued a waiver letter for the violations. INTEGRATED PACKAGING: Shareholders' Meeting Set for September 24 ---------------------------------------------------------------- The Annual Meeting of Stockholders of OSE USA, Inc., (formerly Integrated Packaging Assembly Corporation), will be held on Tuesday, September 24, 2002, at 10:00 a.m., local time, at the Company's offices at 2221 Old Oakland Road, San Jose, California, to consider and take action with respect to the following: 1. To elect five (5) directors to serve for the ensuing year and until their successors are duly elected and qualified. 2. To amend the Company's Certificate of Incorporation to eliminate Article Twelfth, which requires that shareholders may not take action by written consent in lieu of a meeting but must take any actions at a duly called annual or special meeting. 3. To ratify the appointment of Grant Thornton LLP as independent auditors for the Company for the 2002 fiscal year. 4. To transact such other business as may properly come before the meeting or any adjournment thereof. Only stockholders of record at the close of business on July 30, 2002 are entitled to notice of and to vote at the meeting. When it comes to packaging chips, OSE USA stops just short of wrapping them up with a bow. OSE USA (formerly Integrated Packaging Assembly Corporation) receives wafers from its customers, cuts the wafers into individual chips, adds wire leads, and encases each chip in protective plastic, ready for installation into such products as PCs, cars, cameras, and telecommunications equipment. Customers include Atmel (32% of sales), Orbit Semiconductor, and Cirrus Logic. Taiwan-based chip maker Orient Semiconductor Electronics owns three-quarters of OSE USA. As reported in Troubled Company Reporter's Sept. 3, 2002 edition, OSE USA's March 31, 2002 balance sheet records a total shareholders' equity deficit of about $29 million. KAISER ALUMINUM: Wins Nod to Assume 1998 Bauxite Purchase Pact -------------------------------------------------------------- Kaiser Aluminum Corporation and its debtor-affiliates obtained the Court's authority to assume a 1998 Bauxite Purchase Agreement, subject to modifications. * * * As previously reported, the Debtor will assume the 1998 Contract with modifications, so that: A. The price that Kaiser will pay for bauxite under the 1998 Contract will be reduced from $5.15 per LDT to $4.70 per LDT; B. The National Stockpile Center will waive and forgive all interest accrued prior to the date the Court enters an Order permitting Kaiser's assumption of the 1998 Contract. As of that date, no payments will be considered past due; C. The removal and payment schedules and procedures are also modified: 1. Kaiser will make its payments within one month after the end of every calendar quarter within which Kaiser removes the bauxite. Kaiser will pay the contract price for the full quantity taken during that quarter. Should Kaiser fail to remove at least the Minimum Quantity by the corresponding Take or Pay deadline as reflected, Kaiser instead will pay for that period's minimum quantity, rather than the quantity actually taken, not later than the related Payment Due Date: Minimum Take or Pay Payment Quantity (LDT) Deadline Due Date -------------- ----------- -------- 167,645.50 3/31/03 4/30/03 167,645.50 6/30/03 7/31/03 167,645.50 9/30/03 10/31/03 167,645.50 12/31/03 1/31/03 167,645.50 3/31/04 4/30/04 167,645.50 6/30/04 7/31/04 167,645.50 9/30/04 10/31/04 167,645.50 12/31/04 1/31/04 167,645.50 3/31/05 4/30/05 167,645.50 6/30/05 7/31/05 167,645.50 9/30/05 10/31/05 167,645.50 12/31/05 1/30/05 167,645.50 3/31/06 4/30/06 167,645.50 6/30/06 7/31/06 167,645.50 9/30/06 10/31/06 167,645.50 10/31/06 1/30/06 167,645.50 3/31/07 4/30/07 167,645.50 6/30/07 7/31/07 167,645.50 9/30/07 10/31/07 14,735.50 12/31/07 1/30/07 2. The quantities taken by Kaiser will cumulate so that Kaiser will receive credit for excess quantities taken in prior periods against the current period's Minimum Quantity, reducing or eliminating that period's Take or Pay obligation to the extent of any cumulated excess quantities from prior periods; D. Although title to the bauxite will not pass to Kaiser until removal to Kaiser's bauxite storage building, once Kaiser has paid for material, it will not be offered for sale to any other party and Kaiser may direct its disposition; and E. The National Stockpile Center will continue to hold the Louisiana Department of Environmental Quality air permit necessary for mining of bauxite from the Gramercy Stockpile and will work with Kaiser to expand the capacity of that permit as may be required and requested. (Kaiser Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Gets Okay to Supply Confidential Info to Committees --------------------------------------------------------------- Judge Sonderby rules that any information and documents provided by Kmart Corporation and its debtor-affiliates to the statutory committees, the Securities and Exchange Commission or the U.S. Attorney's Office will be deemed confidential information subject to the provisions of the Agreement. No attorney-client, attorney work-product doctrine, or similar privilege is waived solely be reason of the sharing of information. Judge Sonderby believes that the Debtors, their statutory committees, the Securities and Exchange Commission, and the U.S. Attorney's office share a common interest with respect to confidential information and documentation that may aid in the current investigation being conducted. Additionally, the Court gives the statutory committees leeway to exercise their own independent judgment in determining whether to participate in particular meetings and interviews being conducted by the Debtors. However, Judge Sonderby wants the Committees to coordinate their efforts in order to reduce excessive duplication of effort. Judge Sonderby also authorizes the Debtors to investigate any persons or entities pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. However, the Debtors and the Committees must cooperate and consult with one another with respect to discovery to be issued by the Debtors. With respect to any discovery proposed in writing by a Committee that the Debtors believe is objectionable or otherwise inappropriate, Judge Sonderby emphasizes that the Debtors should meet and confer with that Committee to resolve the dispute. If the matter is not resolved in a manner acceptable to the Committee, the Debtors may arrange a telephonic status conference before the Court. The Court will settle the matter. If the Debtors continue to decline to issue that discovery, the requesting Committee will be authorized to issue the discovery on the Debtors' behalf. (Kmart Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) Kmart Corp.'s 9% bonds due 2003 (KM03USR6), an issue in default, are trading at 17 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. LEAP WIRELESS: May Face Delisting after Shares Issuance to MCG -------------------------------------------------------------- Leap Wireless International, Inc. (Nasdaq: LWIN), an innovator of wireless communications services, has paid a purchase price adjustment to MCG PCS, Inc., as ordered by an arbitrator, by issuing approximately 21 million shares of its common stock. Because Leap did not have time to seek shareholder approval of this issuance, it may face delisting from the Nasdaq National Market System. As previously announced, Leap has retained UBS Warburg to assist the Company in exploring new sources of financing and a restructuring of the Company's outstanding indebtedness. UBS has begun contacting interested parties. In advance of formal discussions, some of the lenders under the Company's vendor credit facilities have ceased funding new loan requests, including loan proceeds for interest that had previously been paid through draws under the credit facilities. As a result, Leap has chosen not to pay interest on the loans under these facilities. Leap's issuance of the shares to MCG and failure to pay interest constitute events of default under the credit facilities. These events of defaults provide the credit facility lenders with certain rights under their credit agreements, including the right to declare their existing loans to be due and payable. Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered a wireless service that lets customers make all their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. Leap has begun offering new services designed to further transform wireless communications for consumers. For more information, please visit http://www.leapwireless.com LODGIAN: Asks Court to OK Restructuring Fee Payment to Chilmark --------------------------------------------------------------- The Chilmark Order specifically contemplates that at the time of a "fee event", Lodgian, Inc., and its debtor-affiliates will request payment of the Chilmark Partners LLC fee in connection with seeking Court approval of the underlying fee event. Consummation of the Plan constitutes a "fee event". Accordingly, the Debtors seek the Court's authority to pay Chilmark its restructuring fee in connection with the consummation of the Plan. Chilmark is entitled to receive a restructuring fee of $4,500,000 less 50% of its total monthly fees earned in these cases. (Lodgian Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) LTV CORP: Court Okays Steel Unit to Settle Railway Assets Value --------------------------------------------------------------- As he has the allocation and lien controversies under advisement, Judge Kendig presides over the consideration of LTV's Motion to settle the railway asset values as well. Objections (1) Kvaerner et al Kvaerner Songer Inc., Graycor Industrial Contractors Inc., Graycor Blasting Company Inc., and Morrison Construction Company, clarify that they do no object to the Railroad Settlement Motion filed by LTV Steel Debtor to the extent it seeks to establish the value of the Railroad Assets at $11.25 million. However, Mary K. Whitmer, Esq., at Vorys Sater Seymour and Pease LLP, in Cleveland, Ohio, and Andrew L. Swope, Esq., at Kirkpatrick & Lockhart LLP, in Harrisburg, Pennsylvania, explain that their clients object to the extent that the Debtors are trying to impact or prejudice the Objections to the Notice of Allocation that have not yet been decided. In addition, the Kvaerner parties object to any payment of the value in cash to the Railroad Parties. Ms. Whitmer asserts that it would be "both unfair and improper" for the Railroad Settlement Motion to be construed as having any impact or prejudice on the Court's ultimate decision on the Notice of Allocation and Objections. As a result, Ms. Whitmer contends that any Order on this Motion should clarify that approval of this Motion is without prejudice to the Objections to the Notice. The Kvaerner Parties also object to the Motion to the extent that its approval would include any payment to the Railroads of their share of the allocation of Net Proceeds from the Integrated Steel Sale. Ms. Whitmer argues that there is no basis why the Railroads should receive a full allocation of the cash value of its assets, when other non-debtor parties are being forced to accept only partial allocations. Ms. Whitmer asserts that the Railroads should receive its pro rata distribution of the sale proceeds along with LTV's other creditors. At a bare minimum, the Railroads should be forced to bear their fair share of the costs of the sale. Based on the proposed value of $11.25 million, the Railroads' pro rata share of the costs of the sale is nearly $l million. "Allowing the Railroads to avoid paying the costs of the sale places an improper and unfair burden on LTV's other creditors who are being required to pay these transaction costs," Ms. Whitmer says. The Kvaerner Parties contend that any order granting this motion should address their objections. (2) Meccon Industries et al Meccon Industries Inc., Field Technologies Inc., Hasse Construction Company Inc., JWP/HYRE Electric Company of Indiana, Solid Platforms Inc., Ramirez and Marsch Inc., and Viatec Inc. have valid mechanics' liens against the real estate, improvements and inventory located at LTV Steel's Indiana Harbor Works facility. Since the fair market value of the Indiana Harbor Works exceeds the total amount of tax liens and mechanics' liens against the Indiana Harbor Plant, the Meccon Parties assert that they are entitled to be paid the full amount due for their mechanics' liens, including interest and attorneys' fees. Stephen M. Maish, Esq., and Patrick A. Mysliwy, Esq., at Maish and Mysliwy, in Hammond, Indiana, notes that nothing in the Order authorizing the sale of the Integrated Steel Assets or the Notice of Allocation precludes or limits these Objectors from challenging the valuation of the Indiana Harbor Assets, or the allocation of the total sale proceeds, rather than just the net cash proceeds to these assets. Since these Objectors are not parties to this settlement agreement, that settlement agreement should not limit or impede, or in any way reduce the amounts to which these Objectors are entitled. Mr. Maish argues that Judge Kendig should not approve this settlement if the agreement would allow the Railroad Subsidiaries of LTV to obtain full payment of the fair market value of their assets and thereby further reduce the percentage of recovery for the other lien claimants. Mr. Maish points out that International Steel Group, the buyer of the Integrated Steel Assets, allocated $19.7 million to the Indiana Harbor Plant and $6 million of the cash purchase price to the assets of the Railroad Subsidiaries. The value of the Railroad Subsidiaries' assets in the settlement -- $11.250, amounts to 1.875 of the cash portion of the purchase price in the Buyer's allocation. Thus, Judge Kendig should not approve this settlement until and unless he also finds that the fair market value of the Indiana Harbor Works is at least $36,937,500 -- 1.875 times the $19,700,000 allocation of the cash portion of the purchase price set out in the Buyer's Allocation. Mr. Maish also argues that Judge Kendig should not approve the Motion because the settlement agreement does not apportion a percentage of the selling and related expenses to the assets of the Railroad Subsidiaries. "In effect, if the Settlement Agreement results in full payment to the Railroad Subsidiaries, it will force the lien claimants on the Integrated Steel Assets to pay the entire burden of the selling and related expenses, including the portion that related to the Railroad Assets," Mr. Maish explains. The Meccon Parties also insists that any order granting this Settlement Agreement should clarify that it does not in any way affect the rights, claims and interests of the other lien claimants in the Integrated Steel Assets that were sold. Hunter Corporation supports the objection of the Meccon Parties. * * * After due deliberation, Judge Kendig overrules all objections and grant's the Debtors' motion to approve its settlement with River Terminal Railway Company, Chicago Short Line Railway Company, and The Cuyahoga Valley Railway Company, without including any of the suggested language proposed by the various Objectors. The terms of the settlement include: (1) The Railroad Settlement reflects the good faith, arm's-length negotiations on both parties that resulted in the compromise value that is: (a) $6.45 million less than the independent appraisal value of the Railway Subsidiaries, and (b) $1 million less than the mean average of the competing independent appraisals. (2) The Railroad Subsidiaries Settlement eliminates all uncertainty and the attendant delay associated with a full evidentiary hearing involving the inherent uncertain and imprecise subject of valuation. The time and expense required of the Debtors in other valuation hearings and trials evidence the difficulties and delays that would attend an appraisal hearing in this matter; and (3) The Railroad Settlement benefits the creditors of LTV Steel's estate by: (a) reducing the proposed allocation to the Railroad Assets by $6.45 million, and (b) thus, increasing the pro rata allocation of the net proceeds to the other acquired assets. (LTV Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-00900) MESA AIR: Blaylock Initiates Coverage with Hold Recommendations --------------------------------------------------------------- Blaylock & Partners' airlines and transportation analyst Ray Neidl has initiated coverage of regional airlines SkyWest, Inc. (NYSE: SKYW) and Mesa Air Group, Inc, (NYSE: MESA) with "Buy" and "Hold" recommendations, respectively. Mr. Neidl's favorable recommendation on SkyWest is predicated on several factors, notably its continued profitability and expected annual growth rate of 40%. In his report titled "Strong Growth Continues Using Cost-Plus Contracts," Mr. Neidl reports that "recent uncertainties attached to the major carriers have driven the trading multiple down, making the stock very attractive ... " He also cites SkyWest's fee-per-departure (cost plus) contracts that allow for more predictable earnings and less exposure to seasonal and economic cyclicalities, the airline's strong service reputation, cost-conscious management team, and uncomplicated business model. Mr. Neidl has a $24 price target for this company. SkyWest, Inc., operates an independent regional airline in the United States through its wholly owned subsidiary, SkyWest Airlines, Inc. SkyWest offers scheduled passenger and airfreight service to 86 cities in 23 states and Canada. Its flights are operated as either Delta Connection or United Express, under code-sharing arrangements with Delta Air Lines, Inc. or United Airlines Inc., respectively. Mr. Neidl initiated coverage of Mesa Air Group with a "Hold" rating in light of concerns over ongoing significant market pressure on the regional airline's stock. In his report titled "Short-Term Risks, Long-Term Opportunities," he reports that this pressure is due to several factors, including uncertainties regarding the economy, the health of the airline industry, and the financial viability of some of the company's partners, as well as the unknown outcome to the contract negotiations currently underway with Mesa's pilots. He also said that the bankruptcy filing of partner US Airways offers Mesa "short-term risk, but possible long-term opportunities," as the fee-per- departure contract between the two companies has not been affected by the filing to date. Mr. Neidl said that the market may take a more positive stance on the stock once the aforementioned factors are addressed and the significant amount of risk they present diminished. Mesa Air Group, Inc., is a holding company of subsidiaries that operate as regional air carriers and provide scheduled passenger and airfreight service for the larger network airlines. The Company provides feeder service for America West Airlines, US Airways, Midwest Express Airlines and Frontier Airlines. Mesa Air serves 147 cities in the U.S., Canada and Mexico. Blaylock's ratings system consists of "buy," "hold" and "sell" recommendations. Investment banking stocks have a "not rated" designation. Institutional investors interested in receiving more information should contact Mr. Neidl at 212/715-6627 (rneidl@blaylocklp.com). Journalists interested in receiving copies of the research reports should contact Jackie Ruegger at jruegger@starkmanassociates.com. Based in New York, Blaylock & Partners, L.P., has been ranked by Black Enterprise magazine as the number one minority-owned investment banking firm for 1999 and 2000. The firm has co- managed four of the largest most recent IPOs -- Travelers Property Casualty Corp., Prudential Financial, Inc., Kraft Foods Inc., and Agere Systems Inc. Blaylock & Partners is a member of the NASD and SIPC. Blaylock & Partners, L.P. is a member of the National Association of Securities Dealers, CRD number 35669. MONARCH DENTAL: Banks Demand $63.1MM Payment on Credit Facility --------------------------------------------------------------- Monarch Dental Corporation (Nasdaq:MDDS) announced that the bank syndicate for its Credit Facility has demanded the immediate payment in full of the approximately $63.1 million of outstanding debt under the Credit Facility. As previously announced, the Credit Facility expired on July 1, 2002 and the Company does not have the funds to repay the outstanding debt. The Company's lenders have the right to use cash balances in the Company's bank accounts to set-off a portion of the debt. The Company's financial condition and results of operations would be materially and adversely affected by the lenders' use of its available cash to set-off a portion of the debt. The Company's lenders also have the ability to foreclose on the Company's assets or force the Company into bankruptcy, in which circumstances the Company's equity holders may experience a loss equal to the amount of their investment in the Company's Common Stock. The Company is involved in discussions with its lenders in regard to the Credit Facility. However, there can be no assurance that the Company's lenders will grant a forbearance or agree to an amendment on terms acceptable to the Company or at all. In the event the Company is unable to refinance the indebtedness, the Company is likely to experience a material and adverse effect on its financial condition and results of operations. As previously announced, the Company has engaged Banc of America Securities LLC to explore strategic alternatives such as a sale of the Company, an equity investment in the Company, or a sale of all or a portion of the Company's assets. However, there can be no assurance that the Company will be successful in entering into an agreement to consummate any strategic alternative or that the Company's lenders will agree to any strategic alternative on terms acceptable to the Company or at all. Monarch Dental currently manages 152 dental offices serving 17 markets in 13 states. The Company seeks to build geographically dense networks of dental providers primarily by expanding within its existing markets. MTS/TOWER RECORDS: Extends Closing Date for Japanese Asset Sale --------------------------------------------------------------- On August 30, 2002, MTS, Incorporated, dba Tower Records, entered into an agreement to extend the closing date of the sale of its Japanese operations. This letter agreement amends the stock purchase agreement covering the sale of Tower's Japanese operations and provides for an extension of the closing deadline from August 30, 2002 to September 13, 2002, in order to complete all documentation related to the sale of Tower's Japanese operations and the refinancing of Tower's senior credit facility. MTS, the #2 US specialty retailer of music (after Musicland), owns and franchises more than 180 stores in 10 countries around the world. Its Tower stores offer a wide selection of music, books, and videos. MTS also runs WOW! stores (a joint venture with electronics retailer The Good Guys) and publishes several free music magazines. Facing stiff competition from discounters and online retailers, MTS is continuing overseas expansion (international operations -- including more than 40 stores in Japan -- account for about 40% of sales). Founder and chairman Russell Solomon, a high-school dropout, and his son and CEO Michael, own 99% of MTS. * * * As previously reported, MTS, Incorporated dismissed Arthur Andersen LLP as independent auditors for the Company. The decision to dismiss Andersen and to seek new accountants was approved by the Company's Board of Directors. Effective July 31, 2002, the Company has engaged KPMG LLP to serve as the Company's independent auditors. MTS' balance sheet, at April 30, 2002, shows liabilities exceeding assets by $8 million. The Company lost $29 million on $745 million of revenue in the nine-month period ending April 30, 2002. MTS entered into a THIRD AMENDMENT AND WAIVER dated as of April 30, 2002 (this "Amendment"), to its Credit Agreement with a consortium of lenders led by JPMorgan Chase Bank to relax various financial covenants. MTS anticipates that net proceeds -- 16 billion yen -- from the sale of its Japanese operations will be used to pay down a significant portion of the Credit Facility and the balance of the facility will be refinanced. On June 5, 2002, the Company received a $125 million commitment letter from CIT Group/Business Credit, Inc. NATIONAL STEEL: Iron Ore Seeks Stay Relief to Setoff Claims ----------------------------------------------------------- Iron Ore Company of Canada and National Steel Corporation are parties under: (a) a Second Amended and Restated Pellet Purchase Contract dated May 25, 1995; and (b) a Supplemental Pellet Purchase Contract dated April 1, 1997. Under the Pellet Contracts, Iron Ore sold to National Steel a designated amount of iron ore pellets through and including December 31, 2004. In addition, the Pellet Contracts establish certain payment and delivery terms and conditions. Certain of the Contract Payment Terms have been supplemented by oral agreement between Iron Ore and National Steel. According to Michael C. Rupe, Esq., at Jones, Day, Reavis & Pogue, in Chicago, Illinois, Iron Ore invoiced National Steel for the prepetition amounts due for the pellets under either the Contract Payment Terms or the Supplemental Payment Terms, as applicable. The Original Amount, however, is subject to adjustment at the end of the calendar year in accordance with the Contract Payment Terms or the Supplemental Payment Terms. If the Recalculated Amount is less than the Original Amount, Iron Ore pays to National Steel the difference in the form of a rebate. Conversely, if the Recalculated Amount is more than the Original Amount, National Steel pays the difference to Iron Ore. At the end of year 2001, Mr. Rupe relates that Iron Ore made these adjustments to the Original Amounts in accordance with the Contract Payment Terms and the Supplemental Payment Terms: -- Transition Pellets: Iron Ore made an end-of-the-year adjustment to the Original Amount invoiced to National Steel for those transition pellets National Steel purchased during calendar year 2001. The basis for this adjustment was an increase in Iron Ore's Tranche B pricing for 2001, which was not reflected in the invoices relating to the Original Amount. As a result of this adjustment, National Steel owes Iron Ore an additional $27,631 for the 2001 transition Pellets; -- Limestone Pellets: Similarly, Iron Ore made an end-of-the- year adjustment to the Original Amount invoiced to National Steel for those limestone pellets National Steel purchased during calendar year 2001. The basis for this adjustment was: (a) an increase in Iron Ore's Tranche B pricing for 2001, which was not reflected in the invoices relating to the Original Amount; and (b) a change in the classification of certain of these pellets to either: (i) the supplemental pellets which are priced at the Tranche B price less $.20 per long ton; or (ii) new volume pellets which are priced at the Tranche B priceless $1.00 per long ton. As a result of this adjustment, Iron Ore owes National Steel $114,091 for the 2001 limestone pellets; and -- Stelco Pellets: At the request of National Steel and to accommodate a pellet swap agreement between National Steel and Stelco Inc., Iron Ore sold various pellets to National Steel under the Pellet Contracts at European Price. At the end of calendar year 2001, Iron Ore multiplied the amount of various pellets sold to National Steel at the European Price during the year by the Tranche B Price set forth in the Pellet Contracts. Iron Ore also made necessary adjustments to account for any change in the classification of certain of these pellets to either: (i) the supplemental pellets at the Tranche B price less $.20 per long ton; or (ii) new volume pellets at the Tranche B price less $1.00 per long ton. As a result of these adjustments, Iron Ore owes National Steel $1,023,357 for the 2001 limestone pellets sold in connection with the Swap Agreement. In sum, the Original Amount for 2001 less the Recalculated Amount for 2001 equals $1,109,817. Consequently, Iron Ore owes National Steel a $1,109,817 rebate. The Debtors recently rejected the Pellet Contracts pursuant to an Order from the Bankruptcy Court. As a result, Iron Ore filed a proof of claim against National Steel for $140,818,261. Mr. Rupe explains that this amount reflects Iron Ore's damages arising out of or relating to National Steel's rejection of the Pellet Contracts. Under Sections 365(g) and 502(g) of the Bankruptcy Code, the Iron Ore Claim constitutes a prepetition claim against the Debtors. By this Motion, Iron Ore seek to modify the automatic stay to effect a setoff with National Steel. The setoff will reduce the Iron Ore Claim to $139,708,441 and the National Steel Claim to nil. Mr. Rupe contends that Iron Ore has a valid and enforceable right of setoff with respect to the National Steel Claim and its Claim pursuant to Section 553 of the Bankruptcy Code and applicable non-bankruptcy law. According to Mr. Rupe, the National Steel Claim and the Iron Ore Claim each arose prepetition and involve debts owed between the same parties in the same capacity. Iron Ore Will File Confidential Documents To support its claims, Mr. Rupe informs the Court that Iron Ore has submitted documents, which contains certain confidential and proprietary data related to the pricing of certain Iron Ore products. The Confidential Information was developed at great expense and is kept secret by Iron Ore. It is not publicly available. "The Confidential Information plays a central role in Iron Ore's business and would be of particular interest to its competitors," Mr. Rupe remarks. Mr. Rupe points out that allowing the competitors to review the Confidential Information would not only irreparably harm Iron Ore's business, but would chill future parties' desire to participate in the bankruptcy process knowing that they may be forced to publicly reveal classified business information simply to assert a claim or cause of action against a debtor. Thus, Iron Ore suggests that only the Court, the Debtors and the legal counsel to each of the Debtors and the general unsecured creditors' committee should be permitted to review the Confidential Information. Mr. Rupe further emphasizes that any review should be limited solely for evaluating Iron Ore's request for Setoff and made in the strictest of confidence. (National Steel Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSLINK: Fitch Affirms Low-B Ratings on 4 Classes of Notes -------------------------------------------------------------- NationsLink Funding Corp.'s commercial mortgage pass-through certificates, series 1998-1, have been upgraded as follows: $53.6 million class B certificates to 'AA+ ' from 'AA', $56.1 million class C certificates to 'A+' from 'A', and the $48.5 million class D certificates to 'BBB+ ' from 'BBB'. In addition, Fitch Ratings affirmed the following classes: $71.9 million class A-1 certificates, $81.6 million class A-2 certificates, $433.8 million class A-3 certificates, $587.2 million interest- only class X-1 and $303.7 million interest-only class X-2 at 'AAA'; $51.0 million class F certificates at 'BB', $10.2 million class G certificates at 'BB-', $25.5 million class H certificates at 'B', and the $12.2 million class J certificates at 'B-'. Fitch does not rate classes E and K. The rating affirmations follow Fitch's annual review of the transaction, which closed in March 1998. Fitch upgraded the transaction due to improved credit enhancement levels, which have been the result of loan amortization and payoffs. The certificates are currently collateralized by 187 fixed-rate mortgage loans secured by first lien mortgages or deeds of trust on 187 multifamily and commercial properties. Significant property type concentrations include multifamily (47%), and retail (31%). The properties are located in 30 states, with the largest concentrations in Florida (21%), California (14%), and North Carolina (11%). As of the August distribution date, the pool's aggregate certificate balance was reduced by 12.7% to $890.9 million from $1.02 billion at issuance. Midland Loan Services, the master servicer, collected year-end 2001 property financial statements for 91% of the pool. Based on the properties that reported full year 2001 performance, the pool's weighted average debt service coverage ratio has improved to 1.71x from 1.40x at issuance. Five loans (6% of the pool) had a DSCR below 1.00x, two of the five are current. To date, realized losses have totaled $2.7 million. Five loans, 4% of the pool, are currently in special servicing. Karen Gardens Apartments, a multifamily property located in Elmhurst, NY, representing 0.2% of the pool, is current and performing under a modified note. The loan is being monitored for return to the master servicer within the next 90 days. The Days Suites Kissimmee Lodge, a hotel located in Kissimmee, FL, representing 3% of the pool, has been brought current under a forbearance agreement and is pending return to the master servicer. St. Joseph's Holiday Inn and Conference Center, a hotel located in St. Joseph, MO, representing 0.5% of the pool, is REO and the special servicer is in the process of finalizing the transfer of the Holiday Inn Franchise to the trust. Ogden Medical Center, an office property located in Ogden, UT, representing 0.3% of the pool, was 90+ days delinquent, however the borrower has brought principal and interests payments current and is also in the process of bringing escrows and default interest current. Rialto Shopping Center, a retail property located in Venice, FL, representing 0.3% of the pool, is 60 days delinquent. The property has suffered from large tenant vacancies such as Food Lion, which occupied 40% of NRA, and Eckerds, which occupied 16% of NRA. The borrower is currently marketing the space. Three loans, 1% of the pool, were on the master servicer's watchlist. Fitch Ratings' analysis took into account the specially serviced loans and other underperforming loans. Based on this analysis, Fitch Ratings concluded subordination levels were sufficient to warrant the upgrades. Fitch Ratings will continue to monitor this transaction, as surveillance is ongoing. NEOTHERAPEUTICS: Shareholders Okay 25-For-1 Reverse Stock Split --------------------------------------------------------------- NeoTherapeutics Inc. (Nasdaq: NEOT), announced that its stockholders have approved an amendment to the Company's certificate of incorporation to effect a 25-for-1 reverse split of the Company's common stock. Approximately 86 percent of shares outstanding were voted in favor of the reverse split. Commencing Friday, September 6th, the Company's stock will trade on a post-split basis under the interim trading symbol of "NEOTD" for 20 trading days to assist in making investors aware of the split. After the end of this period, the trading symbol will revert to "NEOT". The stockholders of the Company also approved the raising, as necessary, of up to $10,000,000, through the issuance of the Company's common stock and/or warrants exercisable for the purchase of common stock, up to a maximum of 10,000,000 shares of common stock, potentially at discounts to the then current market price. "We are pleased with the approval of both proposals and the commitment our shareholders have demonstrated to the Company and our management team," said Rajesh Shrotriya, Chairman of the Board, Chief Executive Officer and President of NeoTherapeutics. During the meeting, Dr. Shrotriya provided shareholders with an update of the Company's operations including announcing that the Company has achieved its target to reduce the cash burn rate to below $500,000 per month. In addition, Dr. Shrotriya announced that he and the top two officers of the Company agreed to defer one hundred percent of their salary until the Company obtains additional financings. The Company currently has approximately 39,752,812 shares of common stock outstanding. Following the reverse split, there will be approximately 1,590,112 shares outstanding, subject to rounding for fractional shares. In the reverse stock split, each twenty-five shares of the Company's old common stock issued and outstanding will be automatically converted into one new share of common stock. Fractional shares of stock will not be issued as a result of the reverse split. Stockholders who would otherwise receive a fractional share of common stock will be entitled to receive an equivalent amount of cash in lieu of fractional shares, based on the closing price of the common stock on September 5, 2002. As a result, each stockholder who owns less than 25 shares of common stock immediately before the reverse stock split will no longer be a stockholder after the reverse stock split. Stockholders will receive instructions by mail regarding the method of exchanging the old stock certificates for new stock certificates. U.S. Stock Transfer Corporation, the Company's transfer agent, will act as the exchange agent for the purpose of implementing the exchange of stock certificates in relation to the reverse stock split. In addition, the number of shares of common stock reserved under the Company's stock option plans and for issuance pursuant to warrants to purchase the Company's common stock, the number of shares of common stock subject to those options and warrants and the terms of each outstanding option and warrant to purchase common stock will be adjusted to reflect the reverse stock split. NeoTherapeutics seeks to create value for shareholders through the in-licensing and commercialization of anti-cancer drugs and the discovery and out-licensing of drugs for central nervous system disorders. Satraplatin, the Company's lead oncology drug, is being prepared for a phase 3 study in prostate cancer. Additional anti-cancer drugs are in phase 1 and 2 stages of development for bladder cancer and non-Hodgkin's lymphoma. The Company has pre-clinical neurological drug candidates for disorders such as attention deficit hyperactivity disorder, schizophrenia, dementia, mild cognitive impairment, anxiety and pain. For additional information visit the Company's Web site at http://www.neot.com * * * As reported in Troubled Company Reporter's August 23, 2002 edition, NeoTherapeutics, Inc., (Nasdaq: NEOT) received a notification from NASDAQ that it was not in compliance with NASDAQ's requirement to maintain a minimum market value of publicly held shares of $5,000,000 for continued listing on the NASDAQ National Market. The Company has until November 11, 2002 to regain compliance with NASDAQ's minimum market value requirement. Under NASDAQ rules, NeoTherapeutics may demonstrate compliance by maintaining a minimum market value of publicly held shares of $5,000,000 or greater for a minimum of 10 consecutive trading days by that date. If the Company is unable to demonstrate compliance by that date, the Company may appeal a determination that it be delisted from the NASDAQ National Market, or it may decide to file an application to be transferred to the NASDAQ SmallCap Market prior to November 11, 2002. However, the Company would have to satisfy the continued listing requirements for that market, which include a minimum market value of publicly held shares of $1,000,000. In addition to the minimum market value of publicly held shares requirement, the Company must maintain compliance with certain other quantitative standards for continued listing on the NASDAQ National Market. The Company is currently not in compliance with some of these standards. The Company previously received notice from NASDAQ on June 12, 2002, that it is not in compliance with NASDAQ's minimum bid price per share requirement of $1.00. The Company has yet to regain compliance with that requirement, and has until September 10, 2002 to do so. OMNI ENERGY: Completes $10M Sr. Credit Facility with PNC Entity --------------------------------------------------------------- Omni Energy Services Corp. (Nasdaq: OMNI), announced the completion of a $10.5 million Senior Credit Facility with PNC Business Credit, a member of The PNC Financial Services Group, Inc. (NYSE: PNC). The new credit facility includes a $7.0 million Working Capital Revolving Credit Agreement and a $3.5 million Equipment Term Loan. The proceeds of the new credit facility will be used to retire debt, fund future business expansion and provide working capital. The PNC Financial Services Group, Inc., headquartered in Pittsburgh, is one of the nation's largest diversified financial services organizations, providing regional community banking, corporate banking, real estate finance, asset-based lending, wealth management, asset management and global fund services. "This new credit facility is a critical step in continuing management's strategic initiatives at OMNI," said James C. Eckert, Chief Executive Officer. "This new financing will provide us with the resources necessary to not only meet our current needs but also the flexibility of future expansion. It will also facilitate our strategy to capitalize on certain critical business opportunities that may arise from the difficult market conditions currently burdening the geophysical industry," continued Eckert. "Furthermore, we are really pleased to be associated with such an exceptional lending institution as PNC Business Credit. We believe the association with PNC will be critical to OMNI's ongoing success." Headquartered in Carencro, LA, OMNI Energy offers a broad range of integrated services to both geophysical and production companies engaged in the acquisition of on-shore seismic data. The company provides its services through several business units: Seismic Drilling, Helicopter Support, Permitting and Seismic Survey. OMNI's services play a significant role with geophysical companies who have operations in both marsh, swamp, shallow water and the U.S. Gulf Coast also called transition zones and contiguous dry land areas also called highland zones. * * * As reported in Troubled Company Reporter's June 6, 2002 edition, Omni Energy Services Corp., (Nasdaq: OMNI) received a Nasdaq Staff Determination on May 28, 2002 indicating that the Company failed to comply with the minimum bid price requirement for continued listing set forth in Nasdaq Marketplace Rule 4450(a)(5). Therefore, its securities are subject to delisting from the Nasdaq National Market. OWENS CORNING: Wants to Keep Exclusivity Until January 31, 2003 --------------------------------------------------------------- Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, relates that although Owens Corning and its debtor- affiliates have made significant progress towards reorganization since the Petition Date, they are seeking to extend -- for the fourth time -- their Exclusive Plan Proposal and Solicitation Periods to give them more time to develop a Reorganization Plan. Specifically, the Debtors ask the Court to extend their exclusive periods to file a plan until January 31, 2003 and solicit acceptances of that plan until March 31, 2003, without prejudice to their right to seek additional extensions. In determining whether cause exists to extend the Exclusive Periods, the Courts have routinely examined, among others, these factors: -- the size and complexity of the Debtors' cases, -- the Debtors' progress in resolving issues facing their estates, and -- whether an extension of time will harm the Debtors' creditors. Mr. Pernick asserts that the circumstances in the Debtors' cases satisfy these requirements. The Debtors' Cases Are Complex Mr. Pernick points out that by any reasonable standard, the Debtors' cases are both exceedingly large and complex. As of the Petition Date, the Debtors had scheduled assets exceeding $14,000,000,000, scheduled liabilities over $11,000,000,000 and employed more than 16,000 employees. Apart from their size, the Debtors' cases are extremely complex since they involve 18 debtors and dozens of non-debtor entities, with assets and business operations spread throughout the United States and numerous foreign countries. Compounding the complexity of the Debtors' cases are the complex inter-creditor issues, involving numerous competing creditor groups including bondholders, an unsecured bank group, trade creditors and other parties holding present and future asbestos claims. The asbestos claims in these cases, Mr. Pernick continues, raise many difficult issues for the Debtors' reorganization. Among other things, due to the number of asbestos claims in the Debtors' cases -- which is expected to be hundreds of thousands -- the Debtors face huge logistical issues with respect to the establishment of bar dates, associated to notice issues and the processing of filed asbestos-related claims. The logistical issues also arise in connection with the Debtors' non-asbestos related claims, which are expected to reach tens of thousands. "The valuation of the present and future asbestos claims is also a major issue in this case that the Debtors and each major constituency and their respective experts have been analyzing for a number of months," Mr. Pernick adds. There is Progress Towards Proposing A Plan Mr. Pernick points out that the Debtors have made significant progress in their Chapter 11 cases, including: A. Business Operations: Since the Petition Date, and continuing throughout the Debtors' cases, the Debtors' management has focused on stabilizing and running the Debtors' businesses and responding to the many time-consuming demands that accompany the commencement and management of a Chapter 11 case, including responding to inquiries from vendors, taxing authorities, utilities, landlords, customers, professionals, the Committees, the Future Representative, the Bank Group, and other parties-in-interest; B. Compliance with Administrative Requirements: The Debtors have continued to comply with the various administrative requirements imposed upon Chapter 11 debtors, including the timely filing of monthly operating reports; C. Bank Standstill and Waiver Agreement: The Debtors extensively negotiated and entered into a Standstill and Waiver Agreement, approved by the Court on or about June 19, 2001, with respect to the adversary complaint and accompanying request for injunctive relief filed at the outset of these cases against 47 banks and their assignees and participants. The Debtors continue to negotiate with the three banks which are not parties to this agreement in an effort to enter into a separate standstill and waiver agreement and anticipate reaching standstill and waiver agreements with some, if not all of those banks in the near future; D. Bank Setoff Litigation: The Debtors litigated and eventually settled in a manner favorable to the estates the very complicated issue of the Banks' claimed setoffs of funds of the Debtors. This resulted in the recovery exceeding $18,000,000 for the estates; E. Inter-Creditor Project: In accordance with the Stipulation and Order Regarding Resolution of Inter-Creditor Issues, the Debtors have devoted and continue to devote substantial effort towards the assembly of documents and other information relating to certain inter-creditor issues and have established an information and document depository with respect to this data. The participating parties continue to review and analyze the information and meet monthly regarding the project. Monthly status reports are given to the Court. The Debtors have been developing proposed factual stipulations and proffering them to the participating parties for review and comment. All parties have generally complied with the Court-approved deadlines for the factual stipulations that were previously approved by the Court, which means that the overall timeframe that the Debtors' presented to the Court last February still appears feasible. On November 15, 2002, the participating parties are to submit undisputed factual stipulations and outlines of disputed facts and issues to the Court. A status conference is scheduled for November 25, 2002 to address the factual stipulations, legal issues, and determine a process for proceeding forward. The process has allowed all of the key constituencies to educate themselves about the myriad of factual and legal issues relating to the Bank Guaranties and numerous related issues in a very efficient and comprehensive fashion and in a relatively short timeframe compared to what would have occurred if these issues were handled in a normal litigation framework; F. Business Transactions: The Debtors have sought and obtained Court approval under Section 363(b) of the Bankruptcy Code for various special business transactions; G. Statements and Schedules: The Debtors have amended their schedules of assets and liabilities, in connection with their filing of the motion for the establishment of a bar date for the filing of non-asbestos claims against the Debtors; H. Bar Date: April 15, 2002 was established as the bar date for the filing of non-asbestos claims. The Debtors are in the process of reviewing, analyzing and evaluating the numerous claims filed. The Debtors have sought and obtained omnibus orders disallowing and expunging certain claims. The Debtors will continue to object to disputed claims; I. Executory Contracts and Unexpired Leases: The Debtors are engaged in an ongoing review of their remaining executory contracts and unexpired leases to determine whether the rejection or assumption and assignment of the agreements is in the best interests of their respective estates. The Debtors have sought and obtained Court approval under Section 365 of the Bankruptcy Code to reject various unneeded executory contracts and leases and also to assume, or assume as modified, certain executory contracts; J. Review of Asbestos Claims: The Debtors and the major constituents are performing a substantial analysis and valuation of the asbestos claims asserted against them. The Debtors are exploring the most efficient and effective way of addressing these claims in a Reorganization Plan; K. Vendor Issues: The Debtors have identified various prepetition, mutual obligations with certain vendors and creditors and have continued to negotiate and resolve the setoffs; L. Reclamation Claims: The have Debtors filed their Initial Reclamation Procedures Motion, which was granted on October 6, 2000. As anticipated, the Debtors received a large number of Reclamation Claims -- 220 claims, with a total amount of $33,360,353. The Debtors have devoted substantial time and effort in reviewing and analyzing these claims and have filed four motions to reconcile claims. In certain instances, the Debtors are proceeding with reclamation litigation; M. Avoidance Actions: The Debtors have largely completed an extensive review and analysis of potential preference and fraudulent conveyance actions and have met with the Committees and Future Representative regarding potential avoidance actions and tolling agreements and the Debtors' proposed actions with respect to those actions. The Debtors are in the process of providing the Committees and the Futures Representative with the requested backup information; N. Development of a Reorganization Plan: The Debtors have continued to perform an in-depth review and analysis of a myriad of plan issues and to outline a strategy for the development of a plan of reorganization. The Debtors have prepared their own internal detailed drafts of a plan term sheet, and are in the process of preparing a draft Disclosure Statement. The Debtors have met several times since June 2002 with representatives of the key constituencies to discuss possible plan alternatives. The Debtors have also had numerous meetings and discussions with the Court-appointed mediator, Francis McGovern, in an effort to arrive at a plan term sheet. The Debtors have also continued to work on most of the major prerequisites to the proposal and confirmation of any plan of reorganization. The Debtors informed the Court months ago of their desired plan timeline: a term sheet by September and the filing of a plan and disclosure statement by December 31, 2002. The Debtors continue to work diligently towards that goal. The Debtors continue to hope that the participating parties will over the next couple of months negotiate the terms of a consensual plan and that the Debtors will be in a position to develop a confirmable plan on the aforementioned timetable; and O. Appointment of Mediator: The Debtors have sought and obtained the appointment of Francis E. McGovern as a mediator in these Chapter 11 cases. The mediator has commenced negotiations with the Committees, Future Representative, and the Debtors in an effort to consensually resolve the Debtors' cases. If the current deadline is not extended, Mr. Pernick fears that the Debtors' progress will be severely disrupted. Extension Not Meant To Pressure Creditors Mr. Pernick assures the Court that the requested extension is not a negotiation tactic. "It is merely a reflection of the fact that an extension is required to afford a full and fair opportunity to negotiate, propose, and seek acceptances of a Chapter 11 Plan," Mr. Pernick explains. The Debtors have consistently attempted to work closely and share information with the Committees and the Future Representative to minimize the number of disputed matters requiring the Court's determination and facilitate the consensual resolution of these cases. Face-to-face meetings are regularly scheduled with the Committees, Future Representative, and Bank Group to address specific case matters, including the inter-creditor project, potential avoidance actions, and asbestos valuation issues. The Debtors and their professionals have no intention to discontinue this exchange of information if requested extension is granted. The Court will convene a hearing on September 24, 2002 to consider the Debtors' request. By application of Local Rule 9006-2, the Debtors' exclusive period to file a plan is automatically extended through that date. (Owens Corning Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS CORNING: Hooks Up with Ashland Finland to Distribute Goods ---------------------------------------------------------------- In order to better serve the European market, Owens Corning (NYSE: OWC) has signed a distribution contract with Ashland Finland OY, a subsidiary of Ashland Inc. (NYSE: ASH), to distribute product through Ashland Specialty Chemical Company's Composite Polymers Division. Ashland's Composite Polymers Division is one of the world's largest producers of resins for reinforced plastics and is considered a leader in composite resin technology. This contract ensures a structured cooperation between Ashland Finland OY and Owens Corning Composite Solutions. Ashland, with its net of distributors and sub-distributors, will now be able to offer Owens Corning's renowned composite products. This agreement will allow Ashland's Composite Polymers Division to distribute Owens Corning products in the geographical areas of Finland, Norway, Sweden, Denmark, Austria, Romania, Bulgaria, Estonia, Latvia, Lithuania, Byelorussia, Russia, Ukraine, Kazakhstan, Hungary, Poland, Slovenia and Croatia. In the Nordic countries (Sweden, Norway, Denmark and Finland), Ashland will remain a sub-distributor to Owens Corning Sweden AB. The areas of Southeastern Europe and the Commonwealth of Independent States (the former Soviet Union) are rapidly growing, and offer lucrative business opportunities. "Historically Owens Corning has had a very low sales activity in these European territories and now, together with Ashland, will be able to reach a market which has great potential for the future," said Dick Lantz, president, Owens Corning Composite Solutions Business. "Ashland is a highly successful company and we are pleased to be better associated with them with this business venture." "Ashland targets market segments where high product quality is essential. The leading position in low emission polyesters and gel coats is an example of this strategy. As Owens Corning is a world quality leader in glass fiber product this cooperation ensures availability of a complete, high quality portfolio to our customers," said Olli Piiroinen, product manager, Ashland Composite Polymers Division. The Composite Polymers Division of Ashland Specialty Chemical Company, a division of Ashland Inc., is a leading, worldwide supplier of specialty chemicals serving industries including adhesives, automotive, composites, foundry, merchant marine, paint, paper, plastics, semiconductor, watercraft and water treatment. Visit the Internet Web site at http://www.ashspec.comto learn more about these operations. Ashland Inc., (NYSE: ASH) is a Fortune 225 company providing products, services, and customer solutions throughout the world. Our businesses include road construction, specialty chemicals, lubricants, car-care products, chemical and plastics distribution and transportation fuels. Through the dedication of our employees, we are "The Who In How Things Work(TM)." Find more about the company at http://www.ashland.com Owens Corning is a world leader in building materials systems and composite solutions. Founded in 1938, the company had sales of $4.8 billion in 2001 and employs approximately 19,000 people worldwide. Additional information is available on Owens Corning's Web site at http://www.owenscorning.com/composites Owens Corning's 7.70% bonds due 2008 (OWC08USR1), DebtTraders reports, are trading at 38.75 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=OWC08USR1for real-time bond pricing. PACIFIC GAS: Creditors Accept Debtor's Proposed Chapter 11 Plan --------------------------------------------------------------- Pacific Gas and Electric Company issued the following statement after the independent voting agent, Innisfree M & A, submitted the results of the creditor vote to the U.S. Bankruptcy Court. The final tabulation showed that PG&E's reorganization plan received approval from nine of the ten voting classes: "We are gratified that our plan of reorganization received overwhelming support from equity holders and creditors, including the large financial institutions, capital market participants and other key organizations. "Our plan received approval from nine of the ten voting classes. This outcome is an important vote of confidence that our plan will resolve creditor claims, in a financially feasible manner, without seeking a bailout from customers. The only class voting against our plan was Class 7, Energy Service Providers, a class dominated by claims of Enron Corporation; this class voted against both plans and their negative vote will not prevent the confirmation of our Plan. "Despite a recommendation from the Official Creditors' Committee urging creditors to vote affirmatively for both plans, the CPUC's alternative plan was rejected by seven of the eight voting classes, including the unsecured creditors in Class 5. This group, consisting of sophisticated financial institutions and capital market participants, clearly did not believe that the CPUC's plan is credible, even though it purports to pay all creditor claims. "This vote is a rejection by creditors of the recommendation of the Official Creditors' Committee. In a cover letter sent to all creditors, the OCC urged them to vote affirmatively for both plans. "After the voting period ended, the CPUC amended its alternative plan, based on an agreement with the Official Creditors' Committee, and is seeking to resolicit the votes of certain creditors. PG&E will respond to that motion on September 17th. "However, the CPUC and OCC have declared that their amended plan is, in the words of their counsel, 'not a new plan, it involves relatively minor modifications to our existing plan.' In that case, the overwhelming creditor vote against the CPUC plan would be unlikely to change. "PG&E continues to believe it has developed the only practical solution that allows the utility to emerge from Chapter 11 as an investment-grade company, pays all valid claims in full with interest and achieves these goals without asking the Bankruptcy Court to raise rates or the State for a bailout." PG&E's plan of reorganization also enjoys broad based support from a number of local and statewide organizations, including labor unions, business associations and community groups. The Bankruptcy Court confirmation hearings are scheduled to begin on November 12th. PHOENIX GROUP: Asks Court to Approve Walsh Monzack as Attorneys --------------------------------------------------------------- The Phoenix Group Corporation and Americare Management, Inc., seek permission from the U.S. Bankruptcy Court for the District of Delaware to employ Walsh, Monzack and Monaco, PA, as their counsel to: a) prepare schedules, applications, motions and plan of reorganization and disclosure statement in connection with these cases; b) communicate with Debtors' co-counsel as necessary; c) review applications and motions filed in connection with these cases; d) represent the Debtors at the meeting of creditors; e) provide expertise on the substantive law of the State of Delaware and procedural rules and regulations applicable to these cases; and f) perform all other services for the Debtors that are necessary for counsel to perform in these cases The principal attorneys designated to represent the Debtors and their hourly rates are: Francis A. Monaco, Jr. $350 per hour Joseph J. Bodnar $270 per hour Kevin J. Mangan $240 per hour Paraprofessionals $50 - $110 per hour The Phoenix Group Corporation is a holding company for subsidiaries providing healthcare management and ancillary services to the long-term care industry and business acquisitions in the home health care industry. The Company filed for chapter 11 protection on August 21, 2002 in the U.S. Bankruptcy Court for the District of Delaware Francis A. Monaco Jr., Esq., Joseph J. Bodnar, Esq., at Walsh, Monzack & Monaco, PA and Jeffrey N. Rich, Esq., Robert N. Michaelson, Esq., at Kirkpatrick & Lockhart LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $18,876,457 in assets and $16,693,089 in debts. PPL CORPORATION: Forecasts 9% Increase in Core Earnings for 2003 ---------------------------------------------------------------- PPL Corporation (NYSE: PPL) expects 2003 earnings per share from core operations to increase by about 9 percent over 2002 levels, partly as the result of PPL's assumption of sole ownership of an electricity distribution company that serves 2.5 million customers in the United Kingdom. PPL is reaffirming its 2002 forecast of earnings from core operations of $3.30 to $3.50 per share. "PPL is forecasting 2003 earnings from core operations of between $3.60 and $3.80 per share, primarily from the continued excellent performance of our operating units and our ongoing cost-reduction efforts," said William F. Hecht, PPL's chairman, president and chief executive officer. "Over the longer term, we are forecasting a 5 to 8 percent compound annual growth in core earnings per share, using the midpoint of our existing 2002 forecast of earnings from core operations as the starting point." The 2003 earnings forecast reflects a favorable impact of $0.15 per share that results from PPL's acquisition, for $235 million in cash, of Mirant's (NYSE: MIR) 49 percent equity interest in Western Power Distribution, which serves customers in Southwest England and Southern Wales. PPL previously held a 51 percent interest in WPD. No regulatory approvals were required for this transaction. "This acquisition is consistent with PPL's strategy of operating high- quality electricity delivery systems worldwide," said Hecht. "We are pleased to have full operational control of a business that we know very well and that has been one of the United Kingdom's most successful electricity distribution companies," Hecht added. "We look forward to continuing our work with the excellent management team that will remain in place at WPD." PPL also has announced plans to issue $500 million of common stock under an existing shelf registration with the Securities and Exchange Commission. This is an increase from the previously announced $200 million common stock offering and concurrent issuance of equity-linked securities. The increased amount is the result of the acquisition in the U.K. and PPL's decision to issue additional common stock instead of the equity- linked securities. Hecht said the larger common stock offering, combined with a $300 million reduction in PPL's planned capital expenditures over the next five years, serves to improve PPL's equity ratios and to strengthen the company's credit profile. PPL also expects to receive about $42 million of after-tax cash flow from WPD in 2003. Standard & Poor's, Moody's and Fitch have informed PPL that all of the current debt ratings for the PPL family of companies will be maintained in light of the acquisition. Independent of PPL's acquisition in the U.K., Standard & Poor's has placed PPL Capital Funding, PPL Energy Supply and PPL Montana on negative outlook due to general concerns about weakening energy markets and the possible longer- term impact on those companies. The acquisition of Mirant's interest in WPD will result in the consolidation of WPD into PPL's financial statements, including the addition of an estimated $3.6 billion of assets and $2.1 billion of WPD's debt on PPL's balance sheet. However, the non- recourse nature to PPL of WPD's debt will not change. "We evaluate domestic and international opportunities to either buy or sell assets as they arise," said Hecht. "While our international operations represent a relatively modest part of our portfolio, they are, with the exception of Brazil, contributing positively to earnings from core operations. "We have made real progress since the mid-1990s in terms of operational performance, cost control and customer satisfaction at the electricity distribution companies we own in the United Kingdom and Latin America," Hecht said. WPD has about 2,500 employees and serves about 2.5 million customers in the U.K. The 4,600-square-mile operating territory of WPD (South Wales) is strategically located directly across the narrow Bristol Channel from the 5,600-square-mile operating territory of WPD (South West) in England. "Together, the WPD, PPL and Mirant management team, along with the strong performance of WPD's employees, has brought efficiency and customer focus to the management and operations of WPD in England and in Wales," said Hecht. "These efforts will be continued under PPL's full ownership of WPD." WPD has earned the coveted Charter Mark, the British government's highest seal of approval for excellence in customer service, four times since 1997. WPD's service territory is one of the most rural areas of the U.K., but WPD has the lowest level of customer complaints in the U.K. WPD has made a 52 percent improvement in outage minutes lost per customer since 1995. It also has the U.K.'s highest percentage of customers restored to service within one hour. PPL Corporation, headquartered in Allentown, Pa., controls nearly 11,500 megawatts of generating capacity in the United States, sells energy in key U.S. markets, and delivers electricity to customers in Pennsylvania, the United Kingdom and Latin America. At June 30, 2002, PPL Corp.'s balance sheet shows that its total current liabilities exceeded its total current assets by about $79 million. PUBLIC SERVICE: $400 Million Participating Unit Offering Priced --------------------------------------------------------------- Public Service Enterprise Group (PSEG) has priced an offering of $400 million of participating units. The offering includes an overallotment option of an additional $60 million. The offering of participating units initially consists of 8 million corporate units, each with a stated amount of $50. Up to an additional 1.2 million corporate units may be issued as a result of the underwriters' exercise of the overallotment option. The offering is expected to close on September 10, 2002. The units have been approved for listing by the New York Stock Exchange under the ticker symbol PEG PrP. Each corporate unit includes a purchase contract under which the buyer will agree to purchase shares of PSEG's common stock on November 16, 2005. Each corporate unit will also contain a trust preferred security due 2007 with a liquidation amount of $50. Total annual distributions on the participating units will be at the rate of 10.25%. The contract requires the investor to purchase PSEG common stock based on a range of prices ($33.54 to $40.248) at the settlement date of November 16, 2005. PSEG will use the net proceeds from the transaction to repay short-term indebtedness and to make additional equity investments in certain of its subsidiaries. The offering is being made by a group of underwriters led by Merrill Lynch & Co. and Morgan Stanley as the joint book-running managers. At June 30, 2002, Public Service Enterprise Group's balance sheet shows that its total current liabilities exceeded its total current assets by about $2 billion. RIVERWOOD INT'L: Tender Offers for Various Senior Notes Expire -------------------------------------------------------------- Riverwood Holding, Inc., and Riverwood International Corporation announced the termination of Riverwood International's pending cash tender offers to purchase any and all of its outstanding 10-7/8% Senior Subordinated Notes due 2008 (CUSIP No. 769507AJ3), 10-5/8% Senior Notes due 2007 issued in July 1997 (CUSIP No. 769507AM6) and 10-5/8% Senior Notes due 2007 issued in June 2001 (CUSIP No. 769507AQ7), and the related consent solicitations. Each tender offer expired at 5:00 P.M., New York City time, on Friday, September 6, 2002. Consummation of each tender offer had been subject to certain conditions, including the consummation of the proposed initial public offering of common stock of Riverwood Holding. The tender offers and the related consent solicitations are being terminated as a result of current equity market conditions affecting the timing of the proposed initial public offering by Riverwood Holding. Riverwood Holding continues to pursue its proposed initial public offering, subject to market conditions. There can be no assurance that the proposed initial public offering will be completed. Notes tendered pursuant to the tender offers will be promptly returned to tendering holders or, in the case of Notes tendered by book-entry transfer, will be credited to the account maintained at The Depository Trust Company from which such Notes were delivered. As a result of the termination of the tender offers and the related consent solicitations, the proposed amendments to the indenture for each series of Notes in connection with the tender offers and the related consent solicitations will not become operative. Riverwood, headquartered in Atlanta, Georgia, is a leading provider of paperboard packaging solutions and paperboard to multinational beverage and consumer products companies. * * * As reported in Troubled Company Reporter's June 13, 2002 edition, Standard & Poor's said that its ratings on paperboard producer Riverwood International Corp., including its single-'B' corporate credit rating, remain on CreditWatch with positive implications where they were placed on May 9, 2002, following the company's announcement of a planned initial public offering (IPO) of $350 million of common stock. Following a review of Riverwood's refinancing plans, Standard & Poor's has determined that it would raise Riverwood's corporate credit rating to single-'B'-plus and assign a stable outlook following the IPO and related debt refinancing if they are completed as currently structured. SAFETY-KLEEN: Wins Nod to Lease Texas Bldg. as New Headquarters --------------------------------------------------------------- Safety-Kleen Corporation and Safety Kleen Systems, Inc., obtained permission from the Court to enter into a lease of non- residential real property located at 5400 Legacy Drive in Plano, Texas, known as the "5400 Building", from EDS Information Services LLC, a Delaware limited liability company. The building will house the Debtors' new corporate headquarters. The Lease The Lease, dated July 30, 2002, covers 109,526 rentable square feet of space, being the entire Building 3 located at 5400 Legacy Drive. The lease also includes the use of some office furniture. The salient terms of the Lease are: (1) Term: October 1, 2002 to September 30, 2012; (2) Rent: Base rent will be $1,757,892.30 per year, payable in $146,491.03 per month. Base rent includes all costs related to the operation, management, repair, maintenance and replacement costs. By December 1 of each calendar year, commencing December 1, 2003, or as soon after that date as is reasonably possible, Landlord will give Tenant written notice of the Landlord's estimate of Additional Rent for the following calendar year. The Tenant will pay to the Landlord on January 1, 2004, and on the first day of each calendar month thereafter during the term of this Lease an amount equal to 1/12th of the estimated Additional Rent for the applicable calendar year; (3) Security Deposit: $146,491.03; (4) Indemnification: Tenant will indemnify, defend and hold Landlord harmless from all claims arising from Tenant's use of the premises or the conduct of its business, or from any activity, work or things done, permitted or suffered by Tenant in and about the premises, the building, the campus or the common area, except injury to persons or damages to property caused by the negligence or willful misconduct of Landlord or Landlord's representatives or any other tenant or other tenant's contractor, agent, representative, or employee, and from and against all costs, reasonable attorney's fees, expenses, losses or liabilities incurred in or about such claim or any action, suit or proceeding brought thereon. Tenant shall further indemnify, defend and hold Landlord harmless from all claims arising from any breach or default in the performance of any obligation to be performed by Tenant under the terms of this Lease or arising from any act, neglect, fault or omission of Tenant or its agents, representatives to employees, and from and against all costs, reasonable attorney's fees, expenses or liabilities incurred in or about such claim or any action or proceeding brought thereon; and (5) Option to Renew: Provided Tenant is not then in default under the Leases (beyond the expiration of any applicable notice, cure or grace period), and upon no more than 270 and no less than 180 days' prior written notice before the expiration of this Lease, Tenant shall have the option to extend and renew the premises, for one additional period of five years upon the same terms and conditions as in this Lease. (Safety-Kleen Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) SAIRGROUP FINANCE: Signs-Up Allen & Overy as Bankruptcy Counsel --------------------------------------------------------------- SAirGroup Finance (USA), Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for its stamp of approval to hire Allen & Overy as bankruptcy counsel. The Debtor needs Allen & Overy to: a) advise the Debtor of its powers and duties as a debtor- in-possession; b) assist in the preparation of financial statements, the schedules of assets and liabilities, the statement of financial affairs, and other reports and documentation required by the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure; c) represent the Debtor at all hearings on matters pertaining to its affairs; d) prosecute and defend litigated matters that may arise during the chapter 11 case; e) represent and negotiate on behalf of, the Debtor regarding any asset sales; f) negotiate, formulate, and confirm a plan of reorganization for the Debtor; g) counsel and represent the Debtor concerning the administration of claims and numerous other bankruptcy related matters arising in this case; h) counsel the Debtor about various litigation and liquidation matters relating to this chapter 11 case; and i) perform such other legal services that are desirable and necessary for the efficient and economic administration of the chapter 11 case. The Debtor selected Allen & Overy as its attorneys because of the firm's knowledge of the Debtor's business and financial affairs and its extensive general experience and knowledge, and in particular, its expertise in the field of business reorganization under chapter 11 of the Bankruptcy Code. Allen & Overy's regular hourly rates are: Members $650 to $675 Counsel and Associates $275 to $575 Paraprofessionals $130 to $200 Prior to the petition date, SairGroup Finance (USA), Inc. participated in and assisted with financing transactions on behalf of its parent and sole shareholder, SAirGroup. The Company filed for chapter 11 protection on September 3, 2002. David C.L. Frauman, Esq., at Allen & Overy represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $460,161,000 in assets and $582,888,000 in debts. SEEC INC: Fails to Comply with Nasdaq Listing Requirements ---------------------------------------------------------- SEEC, Inc., (Nasdaq:SEEC) has received notification from The Nasdaq Stock Market that it is not in compliance with the National Market's listing maintenance standards regarding minimum bid prices and minimum market value of publicly-held shares. In accordance with Nasdaq rules, SEEC has 90 days to regain compliance. SEEC will regain compliance if its stock trades above $1 per share and the market value of its publicly-held shares exceeds $5 million for at least 10 consecutive trading days at any time before December 4, 2002. The Company's Board of Directors is evaluating various alternatives to address this issue, including the possibility of moving to the Nasdaq Small Cap Market if SEEC is unable to regain compliance with the National Market continued listing standards. SEEC's balance sheet at June 30, 2002, the first fiscal quarter- end, included cash and short term investments of $13.0 million, or the equivalent of $2.14 per outstanding share of SEEC stock. The comparable amounts at March 31, 2002 were $14.4 million and $2.37 per share. The Company's first fiscal quarter results showed a 37% increase in revenues over the prior year. In the related press release, the Company reported that actions had been taken to increase marketing efforts and re-direct sales resources to cater to demand for SEEC Mosaic(TM) Studio, and to reduce quarterly operating expenses by $500,000, all in order to make more achievable the goal to attain break-even operations. Early last week, SEEC issued a press release that described the cost savings and returns on investment that several customers had realized by automating, integrating and streamlining customer service, sales and back-office functions with SEEC Mosaic(TM) Studio. The Company stated that the growing interest in legacy evolution among large enterprises is a favorable trend for increased demand for SEEC's solutions. SEEC, Inc., (Nasdaq:SEEC) provides software solutions that help insurance, financial services and other companies apply their knowledge and best practices in new ways, evolving their business processes to drive growth and profitability. SEEC's solutions and industry components extend and automate business processes by connecting corporate systems and infrastructure to customers and business partners using XML and Web services technologies, reducing the costs, risks, and time for introducing Web-based business capabilities. SEEC's customers include British Telecom, Canada Life, Nationwide Insurance and other leading companies throughout the world. Based in Pittsburgh, Pennsylvania, SEEC has offices in Chicago, Illinois, High Wycombe, U.K., and Hyderabad, India, plus alliances with independent software vendors and service providers throughout the world. More information is available at http://www.seec.com SLI INC: Files for Voluntary Chapter 11 Reorganization in Del. -------------------------------------------------------------- SLI Inc., announced that in order to facilitate a financial restructuring, the Company and its United States subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Company, one of the world's largest lighting manufacturers, said that the filing would allow it to continue business operations while implementing its restructuring plan. The Chapter 11 filing does not include the Company's non-United States operations, such as those in Europe, Latin America, or Asia. In conjunction with the filing, the Company said that it has secured a commitment from a group of lenders led by Fleet National Bank for $35 million in debtor-in-possession financing. The post-petition financing, which is subject to Bankruptcy Court approval, is expected to provide the Company with funding to support its post-petition trade and employee obligations, as well as the Company's ongoing operating needs during the restructuring process. The Company also announced that its lenders under the Company's prepetition credit agreement have agreed to forbear from exercising any rights or remedies against any of the Company's non-debtor subsidiaries arising from the Chapter 11 filing. SLI has requested that the Bankruptcy Court allow the Company to continue compensation and benefit plans for its employees, maintain its operations, and make post-petition payments due to suppliers in the ordinary course of business. Frank Ward, the Company's Chairman and CEO, stated, "We believe the Chapter 11 process will enable us to address our liquidity issues while providing our customers with continued high quality products and services. The Company does not expect the Chapter 11 process to disrupt our operations and we will continue to meet our post-petition obligations to suppliers, venders, and customers." The Company has already completed workforce reductions and does not anticipate any additional reductions as a result of the Chapter 11 process. The Company has been in contact with many of its suppliers, and believes that they will continue to support SLI during the reorganization period. SLI will provide additional communication to its suppliers, customers, and other interested parties and has set up an information section on its Web site at http://www.sli-lighting.comto provide up to date communication regarding the reorganization process. SLI Inc., based in Canton, MA, is a vertically integrated designer, manufacturer and seller of lighting systems, which are comprised of lamps and fixtures. The Company offers a complete range of lamps (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, LED and special lamps). They also offer a comprehensive range of fixtures. The Company serves a diverse international customer base and markets, has 35 plants in 11 countries and operates throughout the world. SLI, Inc. is also the #1 global supplier of miniature lighting products for automotive instrumentation. For more information, visit the Company's Web site at http://www.sliinc.com SLI INC: Chap. 11 Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: SLI, Inc. 500 Chapman Street Canton, MA 02012 Bankruptcy Case No.: 02-12608 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Chicago Miniature Optoelectronic 02-12599 Technologies, Inc Electro-Mag International, Inc. 02-12600 Chicago Miniature Lamp-Sylvania Lighting 02-12602 International SLI Lighting Products, Inc. 02-12603 SLI Lighting Company 02-12604 SLI Lighting Solutions, Inc. 02-12605 CML Air, Inc. 02-12606 Type of Business: The Debtor and its affiliates operate in multi-business segments as a vertically integrated manufacturer and supplier of lighting systems, which includes lamps, fixtures and ballasts. The Company manufactures and supplies a wide variety of lighting products, including lamps, (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, light emitting diodes, and special lamps), fixtures, ballasts and fiber optic lighting systems. The Company serves a diverse, international customer base and has 35 manufacturing plants in 11 countries. Chapter 11 Petition Date: September 9, 2002 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtors' Counsel: Gregg M. Galardi, Esq. Skadden, Arps, Slate, Meagher One Rodney Square Wilmington, DE 19899 302 651-3000 Fax : 302-651-3001 Total Assets: $830,684,000 Total Debts: $721,199,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Banca Nazionale Del Lavoro $10,000,000 Attn: Carlo Veechi Sr. VP 25 West 51st Street New York, NY 10019 Phone: 212-314-0701 Fax: 212-489-9088 Everlite Electric Ind. $1,761,835 Attn: Eddie Lim 200 Kuang Fu Road Sec 2 Hsincho Taiwan ROC Phone: 011-886-22-267-2000 Fax: 011-886-22-267-6306 Agilent Technologies $1,085,013 Attn: Frank Cerbone 3175 Bowers Avenue Santa Clara, CA 95054 Phone: 408-654-8712 Fax: 408-654-8729 Dong Sung Ind., Co. $495,300 Attn: Bonkyoung Koo 612 Kyodae-Ri Kuan Ho-Up Youngchum-Kun Kyungbuk, Korea Phone: 52-54-334-9737 Fax: 82-54-332-1320 Osram Sylvania, Inc. $452,829 Attn: Jerry Corntrois PO Box 98218 Chicago, Illinois 60693 Phone: 987-750-5703 Fax: 987-750-2279 Tae Yang Electric Co. $281,752 Attn: Scong UK Lee 103-3 Seodu - Ri Sam Ki - Myam Iksan City Chonbuk, Korea Phone: 82-2-777-5593 Fax: 82-2-777-5595 Harison Toshiba Lighting $211,015 Everlight Electric Co. $112,177 Laser Tech Corporation $109,029 Litcom $105,985 Capello Capital Corp. $102,209 Long-beam Enterprise Co. $99,616 Borg Instruments Ag $92,736 Railroad LLC $87,093 Manesa de Mexico $83,486 Sub-Miniature Lamp Industries Ltd. $81,193 Amtech Lighting Services $79,469 Rohm Electronics USA LLC $75,302 Tek-Tron Enterprises, Inc. $74,375 El Paso Tool and Die Company $72,438 SPORTS CLUB: Comerica Bank Extends Credit Facility to Oct. 31 ------------------------------------------------------------- On August 30, 2002, The Sports Club Company, Inc., amended its Loan Agreement with Comerica Bank - California. The amended agreement extends the maturity date of the Company's credit facility until October 31, 2002. All other terms of the agreement remain unchanged, including the credit amount, financial covenants and interest rate. As of August 30, 2002, there were no borrowings outstanding under the credit agreement. $7.4 million was utilized in the form of letters of credit leaving $2.6 million available for future borrowings. The Company remains out of compliance with two of the financial covenants for the June 30, 2002 reporting quarter. The Bank has waived the Company's compliance with such covenants for that quarter. Between now and October 31, 2002, the Company intends on renewing the bank agreement for another year and redefining the financial covenants. The Sports Club Company operates four sports and fitness clubs (the Clubs) under The Sports Club/LA name in Los Angeles, Washington D.C. and at Rockefeller Center and the Upper East Side in New York City. The Company also operates the Sports Club/Irvine, The Sports Club/Las Vegas and Reebok Sports Club/NY. SCC's Clubs offer a wide range of fitness and recreation options and amenities, and are marketed to affluent, health-conscious individuals who desire a service-oriented club. The Company's subsidiary, The SportsMed Company, operates physical therapy facilities in some Clubs. SUNBEAM CORPORATION: Ex-CEO Al Dunlap Settles SEC Allegations ------------------------------------------------------------- According to published reports, former Sunbeam Corp., chief executive officer Al Dunlap has agreed to pay $500,000 for the settlement of allegations made by the Securities and Exchange Commission. The allegations related to alleged improper accounting used to produce "materially false and misleading" results. In addition to the monetary settlement, Dunlap has also agreed to a ban from ever serving as an officer or director of any publicly traded company. Dunlap's settlement neither admits nor denies guilt. (New Generation Research, September 8, 2002) TENNECO AUTOMOTIVE: Will Close Facility in Turkey by Year-End ------------------------------------------------------------- Tenneco Automotive (NYSE: TEN) intends to close its Monroe(R) shock absorber manufacturing facility in Corlu, Turkey by the end of this year. The closure will impact 124 employees currently employed at the facility, which produces shock absorbers for original equipment manufacturers and the aftermarket. The closing is a part of the company's Project Genesis, a worldwide initiative to optimize its manufacturing, distribution and logistics footprint. Project Genesis, announced in December 2001, is designed to help improve efficiency in the company's global operations through consolidation, transferring production between facilities, rearranging operational flow within specific plants and increasing standardization among the company's processes and products. "It is difficult to make decisions that negatively impact employees and we regret the effect of this announcement on those in Corlu," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "However, we are determined to continue our efforts to better integrate our operations and improve our efficiency. We are making fundamental changes through Project Genesis, Six SigmaT and Lean manufacturing to improve our efficiency and quality while seeking to maximize our manufacturing, distribution and supply chain operations." The company remains committed to the Turkish market and will maintain in-country sales and marketing teams to service both its original equipment and aftermarket customers. The company will import ride control products for this market from other Tenneco Automotive facilities in Europe. Tenneco Automotive will continue to distribute aftermarket products from its new distribution center in Istanbul. This announcement marks the last of eight announced facility closings as part of Project Genesis. In addition, the company is streamlining operational flow or relocating capacity at 20 manufacturing and distribution facilities, five of which are already completed. Year-to-date, the company has realized $2 million in savings from Project Genesis, and expects to realize approximately $11 million from this initiative in 2002. Once fully implemented, the company anticipates annualized savings of $30 million beginning in 2004. Tenneco Automotive continues to make solid progress on improving its operations and financial performance. The company reported higher earnings in the second quarter of this year, with reported net income of $19 million, or 45-cents per diluted share compared with net income of $2 million, or 6-cents per diluted share during the second quarter of 2001. The company's strong cash performance during the quarter allowed it to decrease its total debt by $86 million during the quarter and by $94 million year-to-date. Tenneco Automotive is a $3.4 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 21,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) and Monroe(R) Reflex(TM) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(R) performance exhaust products, and Monroe(R) Clevite(TM) vibration control components. * * * As previously reported, Standard & Poor's lowered its corporate credit rating on exhaust systems and ride control products manufacturer Tenneco Automotive Inc. to single-'B' from single- 'B'-plus due to the company's continuing poor operating performance and high debt levels. The outlook is negative. About $1.5 billion in debt is outstanding at the Lake Forest, Illinois-based company. "Despite extensive restructuring actions underway at the company, intermediate term credit protection measures will likely remain below levels factored into previous ratings, while the debt burden will remain substantial," said Standard & Poor's analyst Lisa Jenkins. Tenneco Automotive Inc.'s 11.625% bonds due 2009 (TEN09USS1), DebtTraders says, are trading at 77 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TEN09USS1for real-time bond pricing. TRANSCARE CORP: Chapter 11 Case Summary & 30 Largest Creditors -------------------------------------------------------------- Lead Debtor: TransCare Corporation 5811 Foster Avenue Brooklyn, New York 11234 Bankruptcy Case No.: 02-14385 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- TransCare New York, Inc. 02-14386 TransCare Westchester, Inc. 02-14387 TransCare Pennsylvania, Inc. 02-14388 TransCare Maryland, Inc. 02-14389 TransCare Hartford County, Inc. 02-14390 TC Ambulance Group, Inc. 02-14391 TC Ambulance North, Inc. 02-14392 TransCare Management Services, Inc. 02-14393 TC Ambulance Corporation 02-14394 TCBA Ambulance, Inc. 02-14395 TC Hudson Valley Ambulance Corp. 02-14398 TC Billing and Services Corp. 02-14399 Montgomery County Ambulance, Inc. 02-14400 Chapter 11 Petition Date: September 9, 2002 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtors' Counsel: Matthew Allen Feldman, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 Fax : (212) 728-8111 Estimated Assets: $10 to $50 Million Estimated Debts: More than $100 Million Debtor's 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hancock Mezzanine Bond Debt $7,500,000 Partners L.P., Investment Law Division T-50, ATTN: Steve Blewitt 200 Claredon Street, Boston, MA 02117 617-572-9268 (Fax) Albion Alliance Mezzanine Bond Debt $6,000,000 Fund L.P., c/o Albion Alliance LLC ATTN: James Pendergast 1345 Ave of Americas, 41st Floor, New York, NY 10105 212-969-1545 212-969-1529 (Fax) John Hancock Mutual Bond Debt $4,500,000 Life Insurance Company, Investment Law Division ATTN: Steve Blewitt T-50, 200 Claredon Street, Boston, MA 02117 617-572-9268 (Fax) Signature 3 Limited, Bond Debt $3,000,000 Investment Law Division T-50, ATTN: Steve Blewitt 200 Claredon Street, Boston, MA 02117 617-572-9268 (Fax) Alliance Investment Bond Debt $2,000,000 Opportunities Fund, c/o Albion Alliance LLC, ATTN: James Pendergast 1345 Ave of Americas, 41st Floor, New York, NY 10105 212-969-1545 212-969-1529 (Fax) First Dominion Funding, Bond Debt $2,000,000 c/o Credit Suisse Asset Management ATTN: Nicholas Milovich 466 Lexington Avenue, 14th Floor New York, NY 10017 212-201-9039 (fax) 212-983-4117 Gerard Schultz Note $1,520,000 812 Petem Road Kingsville, New York 21087 410-879-6061 (phone) and Anthony Brown, 3739 Old Georgetown Road Baltimore, Maryland 21227 410-557-6444 410-242-9332 (Fax) William Noble Note $750,000 132 Bella Vista Court, Murrayville, Pennsylvania 15668 724-733-7972 (phone) 412-828-0800 (phone/office) Eugene M. Komondor, Note $650,000 341 Christine Drive, N. Huntington, Pennsylvania 15642 724-864-3172 (phone) G. Jayme Burgman, Note $650,000 1315 Oakview Avenue, White Oak, Pennsylvania 15131 412-672-3299 (phone) 412-672-4763 (fax) Paul Martha, Note $600,000 600 Grant Street Suite 5343, Pittsburgh, PA 15219 412-394-3224 Orlando Orsino Jr. Note $594,000 13904 Glen High Road Baldwin, Maryland 21013 410-592-8014 Sean and Diane McCabe Note $500,000 12 Edgar Avenue Aquebogue, New York 11931 631-722-5911 (phone) 631-722-8301 (fax) Rodd Leeds Note $450,000 TWC Ambulette Service Inc 370 Fetter Avenue Hewlett, New York 11557 and Al Liguori RWC Ambulette Serivce, Inc. 200 Blakcheath Road Lido Beach, New York 11561 516-431-9690 (phone) Albert J. Zawicki Note $396,000 14 Perlin Court Baltimore, Maryland 21234 410-391-9500 (phone) St. Paul Insurance Co. Insurance Premium $385,871 385 Washington Street, MC1GRS - JOANNE St. Paul, Minnesota 55102 800-328-2189 (phone) 651-310-2145 (fax) Susan Witty Note $312,375 2906 Country Lane Ellicott, Maryland 21042 410-461-6262 (phone) 410-461-1819 (fax) H. Robert Coulter Note $300,125 2906 Country Lane Ellicott, Maryland 21042 410-461-6262 (phone) 410-461-1819 (fax) Forty Five-Eighteen Landlord $231,698 Court Sq. L.L.C. Abbey Richmond Ambulance Note $200,000 Service Inc. Whaleco Commerical Div. Trade Debt $111,250 Petro DIXIE USA EMS SUPPLY Trade Debt $52,374 Moore Medical Corp. Trade Debt $50,719 York Claims Service Inc. Trade Debt $44,158 Luberman's Mutual Trade Debt $39,090 Insurance Co. Medtronic Physio Control Trade Debt $34,702 Corp. PAPERMASTERS INT LTD, Trade Debt $26,024 Mystro, Inc. Trade Debt $28,870 Sunbelt Medical Trade Debt $21,677 SARAD MARKETING INC. Trade Debt $18,958 TRENWICK GROUP: Swiss Re Unit Buys Conv. Preferreds for $40 Mil. ---------------------------------------------------------------- Trenwick Group Ltd., (NYSE: TWK) said that European Reinsurance Company of Zurich, a subsidiary of Swiss Reinsurance Company, purchased 550,000 of Trenwick's Series B Cumulative Convertible Perpetual Preferred Shares with a liquidation preference of $100 per share for an aggregate purchase price of $40 million. The purchase was made pursuant to a Second Amended and Restated Catastrophe Equity Securities Issuance Option Agreement between European Re and Trenwick. Concurrently with the purchase of the preferred shares Trenwick and European Re agreed to terminate the pending arbitration proceedings, increase the dividend rate applicable to the preferred shares by 2.0% and reduce the restrictions on European Re's ability to transfer the preferred shares from three years to six months. The preferred shares are convertible after five years into Trenwick's common shares at the higher of Trenwick's book value or common share market value at the time of conversion. W. Marston Becker, Acting Chairman and Acting Chief Executive Officer of Trenwick, stated, "We are pleased to conclude the exercise of the Catastrophe Option Agreement in a manner satisfactory to both Swiss Re and us." Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with three principal businesses operating through its subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's reinsurance business provides treaty reinsurance to insurers of property and casualty risks from offices in the United States and Bermuda. Trenwick's international operations underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis through its London insurer and at Lloyd's. Trenwick's U.S. specialty program insurance business underwrites U.S. property and casualty insurance through specialty program administrators. * * * As reported in Tuesday Edition of Troubled Company Reporter, Standard & Poor's Ratings Services lowered its counterparty credit ratings on Trenwick Group Ltd., and related holding companies to double-'B' from triple-'B'-minus to reflect their reduced business position following declines in the operating companies' performance and the opinion that in the event of constraints in available capital, management will prioritize the distribution of resources among its various operations. Standard & Poor's also said that it lowered the ratings on Insurance Corp., of NY; Dakota Specialty Insurance Co., its wholly owned subsidiary; Trenwick International Ltd.; and Chartwell Insurance Co., because it is no longer giving ratings credit for support from other group members. In addition, Standard & Poor's affirmed its ratings on Trenwick America Reinsurance Corp. and LaSalle Re Ltd. Standard & Poor's also withdrew its ratings on Chartwell Re Corp., at management's request. The outlook on all these companies is negative. UNIROYAL TECHNOLOGY: Turning to Buccino for Financial Advice ------------------------------------------------------------ Uniroyal Technology Corporation and its debtor-affiliates want to sign-up Buccino & Associates, Inc., as their restructuring consultants and financial advisors in their chapter 11 cases. The Debtors submit that the retention of a restructuring consultant and financial advisor is justifiable and necessary to assist and further enable the Debtors to execute faithfully their duties as debtors and debtors-in-possession. Without limitation, Buccino will: a) advise and assist the Debtors in costs and exposure reduction; b) assist with the management of the bankruptcy process, as required; c) assess the Debtors' operations and recommend the restructuring or dispositions of operations as appropriate; d) review the overhead costs and expenses of the Debtors and propose actions necessary to reduce costs where possible; e) assist with the preparation of projections, including feasibility analyses and schedules; f) assist and monitor downsizing operations and/or the orderly liquidation of terminated operations; g) assist the Debtors in the development and negotiations of a chapter 11 plan; h) assist the debtors with compliance with the reporting requirements of the Bankruptcy Code, Bankruptcy Rules and the local rules, including reports, monthly operation statements and schedules; i) assist the analysis and prosecution of reconciliation of claims against the Debtors and the identification and evaluation of bankruptcy avoidance actions; j) consult with all other retained parties, the secure lender, the creditors' committee, and other parties-in- interest as appropriate; k) participate in Court hearings and, if necessary, provide expert testimony in connection with any hearings before the Court; l) monitor the Debtors' financial performance; and m) perform such other tasks as may be reasonably requested by the Debtors or their counsel. Buccino will be compensated on an hourly basis at the Firm's ordinary and customary hourly rates: Gerald P. Buccino $500 per hour William L. McMahon $300 per hour Other Professionals $150 - 200 per hour Uniroyal Technology Corporation and its subsidiaries are engaged in the development, manufacture and sale of a broad range of materials employing compound semiconductor technologies, plastic vinyl coated fabrics and specialty chemicals used in the production of consumer, commercial and industrial products. The Company filed for chapter 11 protection on August 25, 2002 Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $85,842,000 in assets and $68,676,000 in debts. UNIVIEW TECH.: Nasdaq Will Knock Off Shares Effective Friday ------------------------------------------------------------ uniView Technologies Corp., (Nasdaq:UVEW) has been notified that its securities will be delisted from The Nasdaq SmallCap Market at the opening of business on September 13, 2002. Thereafter, the company's securities will be traded on the OTC-Bulletin Board. The company received a Nasdaq Staff determination on September 5, 2002 indicating that the company fails to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4310(C)(4), and that its securities are, therefore, subject to delisting. In addition, the company's stockholders' equity, as shown on its March 31, 2002 10-Q, did not comply with NASDAQ's minimum stockholders' equity requirement of $2.5 million for continued listing set forth in Marketplace Rule 4310(C)(2)(B). The company previously received a notice from Nasdaq indicating that the bid price of its common stock had closed below the minimum $1.00 per share requirement for 30 consecutive trading days. It was provided 180 calendar days, until September 3, 2002, to regain compliance by achieving and maintaining a closing bid price of at least $1 for a minimum of 10 consecutive trading days. The minimum bid price requirement was not met during this period. The company's stockholders' equity has been adversely impacted by GAAP accounting rules for redeemable preferred stock, such as the company's Series 2002-G preferred stock, the redemption of which is outside the company's complete control. These rules were clarified by the recent adoption of Emerging Issues Task Force Topic No. D-98, which is effective for all reporting periods ending after December 15, 2001. Topic D-98 recognizes changes in the redemption value of these securities as they occur. The redemption value of these securities is tied to the market price of uniView's common stock, causing the net income and stockholders' equity to fluctuate with the market - as the stock price goes up, the shareholders' equity goes down, as the stock price goes down, the shareholders' equity goes up. Therefore, if the stock did maintain a price above $1.00, the company would face delisting due to reduction of shareholders' equity. If the terms of Series 2002-G were amended so that the choice to redeem for cash or convert to common stock at June 30, 2004 is at the company's sole option, the preferred could be reclassified from redeemable preferred stock to equity and eliminate the reverse correlation between stock price and stockholders' equity. However, while Brown Simpson Asset Management LLC has been cooperative with the company in the past, it has refused to allow an amendment to the terms of Series 2002-G. The company has therefore determined not to appeal the current delisting. The delisting is likely to affect pending and ongoing business operations in the Asia region as the Nasdaq listing has been a primary consideration in those endeavors. The company therefore plans to continue to reduce operating costs and reassess its ongoing business opportunities and direction. Dallas-based uniView Technologies Corporation -- http://www.uniView.com-- offers enhanced digital media solutions to customers worldwide. Its products deliver the highest quality video, audio and gaming features through broadband networks. In addition, uniView provides companies with enterprise customer service solutions through CIMphony(TM), a suite of computer telephony integration software products and services. CIMphony allows contact centers to customize and incorporate voice, data and Internet communications into their customer interactions. The company markets its products and services to hospitality, utility, banking and telecommunication companies. uniView currently operates in Asia through its majority-owned subsidiary, uniView Asia Limited, based in Hong Kong. US AIRWAYS: Look for Schedules and Statements on September 25 ------------------------------------------------------------- Section 521(1) of the Bankruptcy Code and Rule 1007 of the Federal Rules of Bankruptcy Procedure require all debtors to prepare comprehensive lists of their creditors and equity security holders, detailed schedules of assets and liabilities, schedules of current income and expenditures, a schedule of all executory contracts and unexpired leases to which they are a party and a statement of financial affairs. If a debtor can't or won't disclose this information to the Court and creditors, the sanction is dismissal of the bankruptcy case. John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom, assures Judge Mitchell that US Airways Group Inc., and its debtor-affiliates take these disclosure obligations seriously. Mr. Butler also reminds Judge Mitchell that the Debtors provide regularly scheduled service at over 200 airports in the United States, Canada, Mexico, France, Germany, Italy, Spain, Belgium, the United Kingdom and the Caribbean. During 2001, the Debtors enplaned 56,000,000 passengers, making it the seventh largest air carrier in the United States -- as ranked by revenue passenger miles. Thus, the Debtors have tens of thousands of creditors and other parties-in-interest. Given the size and complexity of the Debtors' operations, and since prepetition invoices have not yet been received or entered into its financial systems, the Debtors have not had the opportunity to gather the necessary information to prepare and file their Schedules and Statements. Accordingly, the Debtors sought and obtained a Court order extending their time to file the Schedules and Statements until September 25, 2002. (US Airways Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AIRWAYS: Reaches Tentative Restructuring Agreement with CWA -------------------------------------------------------------- US Airways reached a tentative agreement with the Communications Workers of America, which represents approximately 8,000 reservations and airport ticketing and gate personnel. The tentative agreement requires ratification by the CWA membership. Votes are expected to be tallied no later than Sept. 17, 2002. "This has been a difficult process, yet US Airways and the CWA together have worked to reach an agreement that meets the target cost reductions," said Jerry A. Glass, US Airways senior vice president of employee relations. "We thank the CWA's leadership and recognize the significance of the sacrifices we are asking our employees to make." Glass said that US Airways will ask the U.S. bankruptcy court for a short delay from its request to seek relief from the CWA's existing contract to allow for an expedited ratification. US Airways currently has restructuring plan agreements in place with its pilots, represented by the Air Line Pilots Association; flight attendants, represented by the Association of Flight Attendants; simulator engineers, dispatchers, and the flight crew training instructors, each represented by the Transport Workers Union; fleet service workers, represented by International Association of Machinists (IAM) District 141; and maintenance training specialists, also represented by the IAM. US Airways Inc.'s 10.375% bonds due 2013 (U13USR2), DebtTraders reports, are trading at 10 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for real-time bond pricing. US AIRWAYS: CWA Recommends Proposed Contract Changes Acceptance --------------------------------------------------------------- The Communications Workers of America has reached a tentative agreement with US Airways on proposed changes to the contract covering about 8,000 passenger service agents. CWA's leadership is recommending acceptance of the proposed changes. Information about the proposed settlement terms is being mailed to members at their homes immediately. The ratification process is being conducted for CWA by the American Arbitration Association, which also is sending information on voting procedures to union members' homes. CWA members will vote on the proposed changes by telephone or via the Internet under the AAA process, with the voting period ending today, Sept. 17. Details on the proposed changes will be available following the vote. US AIRWAYS GROUP: Revises Policies on Non-Refundable Fares ---------------------------------------------------------- US Airways has revised several of the recently announced policy changes for non-refundable fares based on customer feedback. Most importantly, mileage earned on non- refundable fares will continue to count toward Dividend Miles tier status credit, allowing for all base miles earned on all standard non- refundable fares to count toward attainment of the Silver, Gold, and Chairman's Preferred levels. Additionally, for travel on or after Jan. 1, 2003, stand-by travel on non- refundable fares on US Airways and the US Airways Shuttle will be allowed with a $100 fee, with restrictions. The previously announced policy of non- refundable tickets expiring after their planned date of use will continue. Non-refundable tickets can still be changed for other tickets, with the appropriate fees, at any time prior to the scheduled flight. Tickets purchased using fully refundable fares will continue to have no stand-by fees. "We heard from many customers about our changes, and we are responding in a way that should please most of them," said B. Ben Baldanza, US Airways senior vice president of marketing and planning. "Reinstating tier status credit on low-fare tickets is something very important to many customers, and people are open to paying a small premium for the ability to stand by for other flights when using a non-refundable ticket." US Airways' changes for non-refundable fares are a response to the growing use of restricted, low-price tickets by business travelers. "Business travelers are using non-refundable fares as a result of corporate travel polices designed to control costs," said Baldanza. "Given our own efforts to reduce costs, we respect the economic pressures on business travelers and believe that these changes strike a fair balance between the needs of the corporate traveler and the economics of the airline business." U.S. STEEL: Files Statement re Issuance of $600MM in Securities --------------------------------------------------------------- United States Steel Corporation (NYSE: X) has filed a universal shelf registration statement with the Securities and Exchange Commission relating to the possible issuance of up to $600 million in common stock, senior and subordinated debt securities, preferred stock, warrants, stock purchase contracts and stock purchase units. U. S. Steel does not have any commitments or immediate plans to sell securities under the new registration statement. The registration statement provides that U. S. Steel will use proceeds from the sale of any securities for general corporate purposes and may use those funds to repay debt, to finance acquisitions, for stock repurchases, for capital expenditures, for investments in subsidiaries and joint ventures, or for working capital. U. S. Steel is engaged in the production, sale and transportation of sheet, plate, tin mill and tubular steel mill products, coke, taconite pellets and coal; the management of mineral resources; real estate development; and engineering and consulting services in the United States and the production and sale of steel products in Central Europe. * * * As reported in Troubled Company Reporter's August 12, 2002 edition, Fitch Ratings affirmed the senior unsecured long-term ratings of U.S. Steel at 'BB' and assigned a 'BB+' rating to the company's senior secured revolver. The Rating Outlook is Stable. Since the beginning of the year, the prices of hot-rolled and cold rolled steel sheet have risen dramatically and with them U.S. Steel's profits. On shipment increases of 619 thousand tons and price realizations of $12/ton more, U.S. Steel has turned an operating loss of $61 million in the first quarter of 2002 into an operating profit of $47 million in the second quarter. Price increases have been announced effective in August and September; the company's order book is extended into October; and the weaker dollar in concert with 30% disputed steel tariffs should temper future imports. U.S. Steel's seven domestic furnaces are operating at near capacity, and the company is projecting a profit for the year. Liquidity is strong following the company's mid-May stock offering. U.S. Steel will likely somehow figure into the politically encouraged consolidation going on in the steel industry (Nucor/Trico/Birmingham and Corus/CSN). Recent discussions have included a potential combination with National Steel, and U.S. Steel is continuing discussions with third parties. The company purchased U.S. Steel Kosice (Slovak Republic) in November 2000. Any substantive change in the business profile of U.S. Steel could impact the company's ratings. WHEELING-PITTSBURGH: Receiver Appointed for Eichleay Properties --------------------------------------------------------------- Wheeling-Pittsburgh Steel Corp., sought and obtained a Court order granting a 120-day extension of discovery in this case because WPSC has recently received a copy of a Consent Order Appointing Receiver entered in the case of "Citizens Bank of Pennsylvania, NA v. Eichleay Holdings, Inc., et al" pending before the Allegheny County Court of Pleas, State of Pennsylvania. The Consent Order shows that The Meridian Group is appointed Receiver of the property and assets of each of: -- Eichleay Holdings, Inc., a Pennsylvania corporation; -- Eichleay Corporation, a Delaware corporation; -- Eichleay Engineers & Constructors Inc., a Pennsylvania corporation; and -- Eichleay Engineers Inc., a Pennsylvania corporation. Henry G. Grendell, Esq., at Calfee Halter & Griswold, tells the Court that WPSC intends to investigate Eichleay's actual status so WPSC can conserve its own limited assets. (Wheeling- Pittsburgh Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS COMMS: Has Until Nov. 18, 2002 to File Chapter 11 Plan --------------------------------------------------------------- Erica M. Ryland, Esq., at Jones Day Reavis & Pogue, in New York, notes that Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a Chapter 11 case during which a debtor has the exclusive right to file a plan of reorganization. Section 1121(c)(3) of the Bankruptcy Code provides that if the debtor files a plan within the 120-day exclusive period, it has an additional 60 days to obtain acceptance of the plan. In addition, Section 1121(d) of the Bankruptcy Code allows the Court to extend Williams Communications Group, Inc., and its debtor-affiliates' exclusive periods, if sufficient cause is demonstrated. In determining whether "cause" exists for the purpose of extending a debtor's exclusive period, courts consider these factors: -- the size and complexity of the case; -- the necessity of sufficient time to negotiate and prepare adequate information; -- the existence of good faith progress toward reorganization; -- whether the debtor is paying its debts as they come due; -- whether the debtor has demonstrated reasonable prospects for filing a viable plan; -- whether the debtor has made progress negotiating with creditors; -- the length of time the case has been pending; -- whether the debtor is seeking an extension to pressure creditors; and -- whether unresolved contingencies exist. In light of complexity of the Debtors' cases and the progress already made in successfully negotiating and filing a consensual plan of reorganization with the support of the Debtors' key creditor constituencies, the Debtors contend that cause exists to extend the exclusive periods. Accordingly, the Debtors sought and obtained a Court order extending their exclusive plan proposal period through November 18, 2002 and the exclusive solicitation period through January 19, 2003. Ms. Ryland informs the Court that the Debtors' Chapter 11 cases are subject to strict deadlines under the Restructuring Agreement whereby any delay will jeopardize the Debtors' prospect for a successful rehabilitation and reorganization. The Restructuring Agreement requires that the Plan be consummated by no later than October 15, 2002. Ms. Ryland assures the Court that the extension will not prejudice the legitimate interests of any creditor or equity security holder and will afford the parties-in-interest an opportunity to pursue to fruition the beneficial objectives of a consensual reorganization. (Williams Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) Williams Communications Group Inc.'s 10.875% bonds due 2009 (WCGR09USR1) are trading at about 12.5, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCGR09USR1 for real-time bond pricing. WILLIAMS COS: Completes Sale of Cove Point LNG Plant to Dominion ---------------------------------------------------------------- Williams (NYSE: WMB) has completed the sale of its Cove Point liquefied natural gas facility and 87-mile pipeline to a subsidiary of Dominion Resources (NYSE: D). The transaction delivered cash proceeds of $217 million. The sale also eliminates the need for Williams to fund Cove Point's capital expenditure requirements of approximately $105 million over the next two years. "The Cove Point divestiture brings an immediate infusion of cash and represents another important step toward improving our financial strength and flexibility," says Doug Whisenant, president and CEO of Williams' gas pipeline unit. Once reactivated, the LNG facility will serve as another supply source for Williams' 10,500-mile Transco pipeline system that delivers natural gas from the Gulf Coast to markets in northeastern and southeastern states. Williams moves, manages and markets a variety of energy products, including natural gas, liquid hydrocarbons, petroleum and electricity. Based in Tulsa, Okla., Williams' operations span the energy value chain from wellhead to burner tip. Company information is available at http://www.williams.com * * * As reported in Troubled Company Reporter's August 5, 2002 edition, Fitch Ratings revised its Rating Watch Status for The Williams Companies, Inc.'s outstanding credit ratings to Evolving from Negative. Details of the securities affected are listed below. The rating action follows the announcement that WMB has completed a series of transactions which have significantly bolstered its near term liquidity position. Specifically, WMB has obtained cash and/or available credit totaling $3.4 billion through $2 billion of secured credit facilities and net cash proceeds of $1.4 billion from delivered from asset sales. In addition, WMB announced that it has reached an agreement to sell the Cove Point LNG facility in a $217 million cash transaction which could close within 45 days. Moreover, the recent plan of re-organization filed by Williams Communications Group could provide WMB with additional cash proceeds of approximately $225 million later this year. The transactions announced are clearly positive and mitigate the near-term financial hurdles faced by WMB including its ability to meet upcoming debt maturities and ongoing cash collateral calls from energy trading activities. However, the ongoing business, credit, and cash flow profile of WMB continues to evolve. In particular, the announced divestitures, which include key energy assets such as NGL pipelines and E&P properties, have historically been solid cash flow generators for WMB. In addition, the pledged collateral for the new secured credit facilities, which includes substantially all of the oil and gas reserves of Barrett Resources, structurally subordinates WMB's outstanding senior unsecured debt obligations. Critical to the direction of WMB's ratings will be its ability to execute upon its ongoing efforts to sell, monetize, or joint venture its energy marketing and risk management portfolio especially given the significant amount of liquidity and capital being consumed by this business segment. In Fitch's view any potential transaction or arrangement which would assume WMB's contractual obligations under long-term tolling arrangements could have significant positive credit implications. Fitch notes that both the recent agreement in principle related to California power market issues and FERC's acknowledgement that WMB has adequately addressed issues raised in a 6/30/02 show- cause order could expedite this process. Summary of outstanding ratings affected by S&P's action: The Williams Companies, Inc. --'B-' senior unsecured notes and debentures; --'B-' feline PACs; --'B' short-term rating. WCG Note Trust --'B-' senior notes. Northwest Pipeline Corp. --'BB-' senior unsecured notes and debentures. Texas Gas Transmission Corp. --'BB-' senior unsecured notes and debentures. Transcontinental Gas Pipe Line Corp. --'BB-' senior unsecured notes and debentures. WORLDCOM INC: Signs-Up Howrey Simon as Special Insurance Counsel ---------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates seek to employ and retain the law firm of Howrey Simon Arnold & White LLP, nunc pro tunc to the Petition Date, as special insurance counsel. Specifically, Howrey will be employed and retained to act as counsel to assist the Debtors as counsel in connection with insurance coverage matters and advice involving the various claims and litigation pending against the Debtors and also in connection with other significant insurance coverage matters, notably in connection with coverage for certain "right-of-way" claims pending in various locations around the United States. The Debtors assert that the approval of Howrey's retention nunc pro tunc to the Petition Date is fair and equitable in these cases because they had an immediate need for representation with regard to these matters and Howrey began its representation before the terms of this engagement could be approved by the Court. The professional services that Howrey has been and will continue to render in this regard as special insurance counsel include: -- review and analysis of the Debtors' applicable or potentially applicable insurance policies; -- review of the numerous lawsuits pending in various jurisdictions alleging securities law violations, ERISA claims, and other claims in which the Debtors and certain of their current and former officers and directors currently are defendants in an insurance coverage context; -- coordinating and handling dealings with the Debtors' insurers; -- as or if necessary, pursuit and defense of claims against Debtors' insurers and all matters attendant thereto; -- continued pursuit of the Debtors' insurers in connection with pending insurance coverage litigation, including the "right of way" related insurance coverage litigation; -- communicating with personnel of Debtors regarding matters relating to Howrey's retention; and -- other tasks generally incidental to acting as insurance coverage counsel. WorldCom Senior Vice President Susan Mayer relates that the Debtors have selected Howrey as special insurance counsel on the basis of Howrey's considerable experience and knowledge in handling these types of matters. The Debtors have been informed that David Steuber, Kirk Pasich and Linda Kornfeld, partners of Howrey, as well as other members of and associates of Howrey who will be employed in connection with this representation, are members in good standing of the Bar of the State of California and the United States District Court for the Central District of California. The services provided by Howrey as special insurance counsel will not be duplicative of services provided by any other counsel. Howrey will coordinate with the Debtors' other counsels to ensure that there is no unnecessary duplication of services performed for or charged to the Debtors' estates. Howrey member David W. Steuber, Esq., assures the Court that the firm has no connection with the Debtors, their creditors, any other parties-in-interest, or their respective attorneys and accountants, or with the United States Trustee or any person employed in the office of the United States Trustee. In addition, the attorneys at Howrey are not relatives of any of the District Judges or Bankruptcy Judges in this District, or of the United States Trustee. However, Howrey has or had a relationship with these parties: A. Top 50 Unsecured Creditors: Alcatel USA, AMR Corporation, AT&T Broadband, Compaq Computer Corp., Comsat Communications Inc., Electronic Data Systems Inc., Qwest Communications International, Sun Microsystems Inc., Verizon Communications Inc., and Verizon Wireless Inc.; and B. Top 50 Bondholders: J.P. Morgan Chase, Bear Stearns & Co. Inc., Citibank, ABN AMRO, Salomon Smith Barney, Credit Suisse First Boston, Banc of America, Custodial Trust, American Express, UBS Warburg, PNC Bank National Association, and Charles Schwab. Howrey will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new facts or relationships are discovered, Howrey will supplement its disclosure with the Court. The Debtors propose to compensate Howrey on an hourly basis at rates consistent with the rates charged by Howrey in non- bankruptcy matters of this type. The hourly rates proposed to be charged by Howrey in connection with this representation range from: Partners $320 - 680 Associates 200 - 470 Paralegals 85 - 225 Mr. Steuber informs the Court that Howrey has a $157,242.38 prepetition claim billed to the Debtors for work done in connection with certain insurance coverage matters. Howrey also asserts that it performed $38,528.02 in unbilled work for the Debtors prior to the Petition Date. Ms. Mayer clarifies that the Debtors do not seek authority to pay these prepetition amounts. Howrey also holds a $75,000 retainer from the Debtors. (Worldcom Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM INC: DebtTraders Maintain "Strong Buy" Recommendation -------------------------------------------------------------- DebtTraders analyst Matther Breckenridge, CFA (1 212-247-5300), said that DebtTraders continue to maintain its STRONG BUY recommendation (SAFETY 48%; ATTRACTIVENESS 90%) on the WorldCom, Inc., Senior Notes and on the MCI Corporation Senior Notes. Mr. Breckenridge explained that DebtTraders came up with this recommendation after it had determined that recovery to WorldCom, Inc., bondholders will likely range between 24.5% and 53.5% of par with the most likely recovery being closer to approximately 40% of par. Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USA1), DebtTraders reports, are trading at 22.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USA1 for real-time bond pricing. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***