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/raid1/www/Hosts/bankrupt/TCR_Public/020919.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, September 19, 2002, Vol. 6, No. 186 Headlines 724 SOLUTIONS: Nasdaq Okays Listing Transfer to SmallCap Market ADELPHIA COMM: Equity Committee Taps Bragar as Conflicts Counsel ADVANCED LIGHTING: Delays Payment of Interest on Senior Notes ADVANCED TECHNOLOGY: Signs-Up Marcum & Kliegman as Accountants AGRIFOS FERTILIZER: Renewing CFO Luttrell's Employment Pact AMERICAN SOUTHWEST: Fitch Affirms Low-B's on Two Note Classes AMERICREDIT: Fitch Places BB Sr. Debt Rating on Watch Negative ANC RENTAL: Obtains Approval to Hire Brusniak as NTRG Counsel BARTIZAN CAPITAL: Makes Assignment in Bankruptcy in Canada BIONUTRICS: Seeking Additional Funding to Meet Liquidity Needs BIOVEST: Exploring Financing Alternatives to Meet Cash Needs BUDGET GROUP: Asks Court to Approve $15MM Cendant Break-Up Fee CASTELLE: Fails to Meet Nasdaq SmallCap Listing Requirements CHASE COMMERCIAL: S&P Assigns Low-B Ratings to 6 Certs. Classes CIRCUIT RESEARCH: Accountants Issue Going Concern Opinion COLD METAL: Court Approves Up to $48 Million in DIP Financing CTC COMMUNICATIONS: Turns to CXO LLC for Restructuring Services ENCOMPASS SERVICES: Special Shareholders Meeting Set for October ENRON CORP: Asking Court to Stay Duke Partnership Arbitration ETOYS INC: Court to Consider Liquidating Ch. 11 Plan on Sept. 27 FEDERAL-MOGUL: Court to Consider Sale of Wagner Business on Wed. FIREBRAND FIN'L: Cash Resources Insufficient to Meet Obligations GENESEE CORP: Board Declares Partial Liquidating Distribution GENEVA STEEL: Michael J. Yonker Resigns from Board of Directors GLENOIT CORPORATION: Plan Confirmation Hearing Set for Sept. 29 GLOBAL CROSSING: Files Chapter 11 Plan & Disclosure Statement GMAC 2000-C1: Fitch Affirms Low-B Ratings on 5 Classes of Notes GRANITE BROADCASTING: Fails to Meet Nasdaq SmallCap Requirements HOLLEY PERFORMANCE: S&P Keeping Watch After Interest Nonpayment HORIZON MEDICAL: Files Form S-1/A with Unqualified Audit Opinion ICG COMMS: Wants to Sell Maroon Circle Property to MRA Meridian INTERFERON SCIENCES: Wants to Sell Certain Assets to Raise Funds JP MORGAN: Fitch Assigns BB/V4 Fund Rating to HYDI - BB Trusts KMART CORP: UST Names 2 New Fin'l Institutions Committee Members KNOLOGY BROADBAND: Files Prepack. Chapter 11 Petition in Georgia KNOLOGY BROADBAND: Case Summary & 20 Largest Unsec. Creditors MARINER POST-ACUTE: Secures Final Decree Closing Units' Cases MARK NUTRITIONALS: Files for Chapter 11 Protection in Texas MARK NUTRITIONALS: Case Summary & 19 Largest Unsecured Creditors MARTIN INDUSTRIES: Exploring Options Including Bankruptcy Filing MCCRORY CORPORATION: Wants Court to Fix Claims Bar Dates MED DIVERSIFIED: Names Boudreau and Simms to Board of Directors MEDCOMSOFT INC: Secures $680K Private Placement Equity Financing METALS USA: Wants to Sell Indiana Property to Butler for $1.4MM METALS USA: Secures Court Approval of Disclosure Statement MTS/TOWER RECORDS: Extends Closing Date for Japanese Asset Sale NETIA HOLDINGS: Appoints Wojciech Madalski as President and CEO NORTEL NETWORKS: Unefon Sues Company for $900 Million OMNI USA: Fails to Maintain Nasdaq Continued Listing Standards OWENS CORNING: Gets OK to Execute New Minneapolis Facility Lease PACIFIC GAS: Takes Steps to Block Reopening of Voting Period PACKETPORT.COM INC: Ability to Continue Operations Uncertain PLAINS ALL AMERICAN: S&P Rates $150MM Sr. Unsecured Notes at BB PRECISION SPECIALTY: Plan Exclusivity Extended Until November 27 RESOURCE AMERICA: S&P Rates Proposed $125 Mil. Senior Notes at B SAFETY-KLEEN: Restructuring Canadian Loan to SK Services Unit SHENANDOAH RESOURCES: Canadian Court Grants Receivership Status TI AUTOMOTIVE: S&P Assigns BB- Corporate Credit Rating TRANSACTION SYSTEMS: Harlan F. Seymour Named New Board Chairman TYCO: Files Form 8-K Report re Ex-Management's Improper Conduct UNIROYAL TECHNOLOGY: Gets Interim Nod to Use $9 Million Revolver US AIRWAYS: Seeks Okay to Employ Ordinary Course Professionals US AIRWAYS: Passenger Agents Ratify New Contract Settlement US AIRWAYS: Airline Mechanics Ratify Restructuring Agreement V-ONE CORP: Fails to Comply with Nasdaq SmallCap Requirements VALEO ELECTRICAL: Plan Confirmation Hearing Set for September 25 WARNACO GROUP: Wants to Expand BDO Seidman's Engagement Scope WILLIAMS GAS: S&P Places On Watch Dev. After Sale Announcement WORLDCOM INC: Examiner Wants to Retain Kilpatrick as Counsel WORLDWIDE WIRELESS: Inks Pact to Sell Assets & Debts to NextWeb W.R. GRACE: Court Appoints Three PD Committee Special Counsels ZANY BRAINY: Asks Court to Delay Entry of a Final Decree * J. Myers Joins Clear Thinking as Principal & Managing Director * DebtTraders' Real-Time Bond Pricing ********* 724 SOLUTIONS: Nasdaq Okays Listing Transfer to SmallCap Market --------------------------------------------------------------- 724 Solutions (NASDAQ:SVNX; TSX:SVN) announced that The NASDAQ Stock Market has approved the company's application to transfer to The NASDAQ SmallCap Market. 724 Solutions common shares will begin trading on The NASDAQ SmallCap Market on September 18, 2002 and the stock symbol will continue to be SVNX. The company's common shares will also continue to trade on The Toronto Stock Exchange. As previously announced, 724 Solutions applied to transfer to The NASDAQ SmallCap Market after notification that it no longer met NASDAQ's minimum bid price requirement of $1 per share. "We are pleased that our application for transfer to The NASDAQ SmallCap Market has been approved in accordance with our stated goals," said John Sims, chief executive officer, 724 Solutions. "The continuity provided will allow 724 Solutions to execute its strategy for penetrating the mobile operator marketplace through the delivery of reliable, scalable technologies that enable mobile operators to increase their average revenue per user." 724 Solutions Inc., (NASDAQ:SVNX; TSX:SVN) powers the world's largest mobile operators and financial institutions to make the most of m-Business. Our solutions transform business applications into proactive solutions that deliver timely information, invite immediate response and enable effortless mobile transactions. Each implementation provides new convenience to the end-user and strong return on investment to the business owner. With headquarters in Toronto, Canada, the company has development and sales offices around the world. For more information, visit http://www.724.com ADELPHIA COMM: Equity Committee Taps Bragar as Conflicts Counsel ---------------------------------------------------------------- The Official Committee of Equity Security Holders of Adelphia Communications Corporation seeks the Court's authority to retain Bragar Wexler Eagel & Morgenstern LLP as its special conflicts counsel, nunc pro tunc to August 20, 2002. As special conflicts counsel, Bragar will: -- assist and advise the Equity Committee in connection with the investigation and analysis of the claims, liens and security interests asserted by the Debtors' prepetition secured lenders and potential affirmative claims against the Banks, and prosecuting these actions or objections when and if litigation is duly authorized; -- represent the Equity Committee in connection with: 1. any disputes respecting the validity, or avoidability of, the individual claims or interests against the Debtors asserted by Merrill Lynch, AT&T, General Electric, Citibank, Morgan Stanley, Credit Suisse First Boston, Bank One, Lehman, and Bank of America or their affiliates or subsidiaries, all of which have been identified as being "significant clients" of Sidley Austin, 2. litigation against any of the Sidley Austin's Significant Clients individually, 3. any issues relating to the assumption or rejection of any leases or executory contracts between any of the Sidley Austin Significant Clients and any of the Debtors, and 4. similar matters in which the interests of the Equity Committee may be adverse to the particular individual interests of the Sidley Austin's Significant Clients; -- represent the Equity Committee on any issues relating to CIT Communications Finance Corporation or its affiliates or subsidiaries in connection with these cases or the Chapter 11 proceedings involving ABIZ; -- represent the Equity Committee in connection with any issues involving ML Media Management, Inc., an affiliate of Merrill Lynch; and -- perform all other necessary legal services in these cases as appropriate given the purpose and scope of Bragar's retention, and so as not to duplicate the services to be provided by Sidley Austin. Equity Committee Chairperson Van Greenfield tells the Court that they were impressed by Bragar's: -- extensive experience and knowledge in the field of bankruptcy and creditors' rights, -- regular representation of defrauded investors in major securities fraud and class action lawsuits, and -- experience and expertise in other fields of law that are expected to be involved in these cases. Bragar has appeared in numerous proceedings under Chapter 11 of the Bankruptcy Code before this and other Courts. Among other significant bankruptcy representations, Bragar is currently special conflicts counsel for the Official Committee of Unsecured Creditors in the 360networks (USA) Inc. et al. Chapter 11 cases and is acting as bankruptcy counsel to the certified investor class in the Livent Chapter 11 cases. Bragar previously acted as class counsel in connection with the Bennett Funding Chapter 11 cases before the United States Bankruptcy Court for the Northern District of New York. Compensation will be payable to Bragar on an hourly basis, plus reimbursement of actual, necessary expenses incurred, at least during the initial phase of its work on behalf of the Equity Committee, including the investigation relating to the Banks. At the time that the Equity Committee determines to commence litigation against the Banks, the Equity Committee and Bragar intend to negotiate an appropriate contingency fee or other agreement relating to the payment of fees for any litigation by the Debtors' estates at that time. Bragar's hourly rates for work of the nature to be provided to the Equity Committee in this case currently range from: Partners and Counsel $400 - 500 Associates 150 - 350 Paralegals 100 - 150 Peter D. Morgenstern, Esq., a partner of Bragar, assures the Court that the Firm has not otherwise represented the Debtors, their creditors, equity security holders, or any other parties- in-interest, or their respective attorneys, in any matters relating to the Debtors or their estates. Mr. Morgenstern asserts that Bragar: -- does not hold or represent any interest adverse to the Debtors' estates or the Equity Committee or the equity holders the Equity Committee represents in the matters upon which it has been and is to be engaged, and -- is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Morgenstern relates that Bragar has in the past represented General Electric Capital Corporation in connection with two matters that are unrelated to these cases, but has either completed these representations or withdrawn as counsel with the consent of GECC, and may therefore represent the Equity Committee in connection with issues or proceedings involving GECC. Bragar is currently representing Harris County, the City of Houston, Houston Independent School District (ISD), North Forest ISD, Hidalgo County, City of McAllen, Dallas County and Bexar County in connection with the ABIZ Chapter 11 case. Immediately upon retaining Bragar on August 20, 2002, the Equity Committee directed the Firm to commence work on several matters requiring immediate attention in connection with the Debtors' cases, including reviewing various significant motions pending before the Court. Accordingly, the Equity Committee is seeking the nunc pro tunc retention of Bragar. (Adelphia Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADVANCED LIGHTING: Delays Payment of Interest on Senior Notes ------------------------------------------------------------- Advanced Lighting Technologies, Inc., (Nasdaq: ADLT) has entered into an agreement with the banks under the Company's $38 million credit facility, allowing the Company access to its existing revolving credit facility until at least October 10, 2002, despite the Company's default by failure to maintain with the minimum debt service coverage ratio required by the credit agreement. The principal condition for the agreement was that the Company not pay interest due on September 16, 2002 pursuant to the Company's Senior Notes due 2008. The agreement includes additional requirements typical of such agreements, including increased information requirements and covenants regarding its operations during the forbearance period. The Company believes that it will be able to meet these requirements. The Company is currently negotiating with its existing bank group to reach an agreement to permit payment of the Senior Note interest before the Company's 30-day grace period expires. The Company has been in the process of obtaining replacement credit facilities with a structure better suited to the Company's expanded foreign operations. Based on preliminary discussions, management expects that alternative financing sources will be available. Last week, the Company and its existing bank group entered into an amendment to the credit facility to add collateral eligible for guarantees by the Export Import Bank of the United States. The effect of this amendment was to increase the availability under the revolving loan portion of the credit facility. Although the Company's current balance under the facility is only $27 million and it had adequate collateral under the credit agreement to make the Senior Note interest payment of $4 million, the banks declined to permit the payment. Wayne Hellman, ADLT Chairman and Chief Executive Officer, commented, "We believe sales of ongoing operations in our first quarter will be approximately $34 million, up 10% over last year. In addition, preliminary results show that operational cash flow exceeded $2 million in the months of July and August. Positive cash flow over the last five months has allowed us to reduce our bank debt by $4 million. All these factors, in addition to our new lender discussions, give me great confidence that we can conduct a refinancing satisfactory to our banks and Senior Note Holders. Hellman added, "We are obviously very disappointed that our banks did not permit us to make the Senior Note interest payment on time. In the meantime, the Company expects to continue to operate its business: serving its customers and meeting its obligations to suppliers and employees. Although we are only beginning to see the results of our year-long efforts to improve profitability, we believe the results of the quarter ending September 30 will demonstrate our ability to increase operating income in a sluggish economy." Advanced Lighting Technologies, Inc., is an innovation-driven designer, manufacturer, and marketer of metal halide lighting products, including materials, system components and systems. The Company also develops, manufactures and markets passive optical telecommunications devices, components and equipment based on the optical coating technology of its wholly-owned subsidiary, Deposition Sciences, Inc. ADVANCED TECHNOLOGY: Signs-Up Marcum & Kliegman as Accountants -------------------------------------------------------------- Effective September 9, 2002, Advanced Technology Industries, Inc., as a result of the recent merger of several of the Partners of Grassi & Co., CPA's P.C., into Marcum & Kliegman, LLP, engaged Marcum & Kliegman, LLP as its independent accountant. The decision to change accountants was approved by the Board of Directors of the Company. The Grassi & Co., CPA's, P.C., report on the Company's financial statements for the past two years ended December 31, 2001 and 2000 did modify its opinion due to going concern uncertainties. Advanced Technology Industries, Inc., was incorporated under the laws of the State of Delaware on October 25, 1995. On February 1, 2000, the Company changed its name from Kurchatov Research Holdings, Ltd. to Advanced Technology Industries, Inc. The Company was organized to identify, assess and commercialize technologies introduced and developed by scientists throughout the world with particular emphasis on technologies originating in Israel, Germany and Russia. AGRIFOS FERTILIZER: Renewing CFO Luttrell's Employment Pact ------------------------------------------------------------ Agrifos Fertilizer LP and its debtor-affiliates seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas to continue employing Michael E. Luttrell as their Chief Financial Officer. The Debtors remind the Court that they secured authority to employ Mr. Luttrell as their Chief Executive Officer for a period of one year -- expiring September 20, 2002. Under the terms of the current Employment Agreement, Fertilizer pays Luttrell an annual $175,000 salary. In addition, Mr. Luttrell receives $10,000 per month for each month the Debtors are in bankruptcy. Mr. Luttrell also receives an $800 monthly automobile allowance. The Debtors wish to continue Mr. Luttrell's employment on a month-to-month basis until the Company emerges from bankruptcy. The Debtors proposes to continue the terms of the Employment Agreement, as amended, on a month-to-month basis, including paying the additional $10,000 per month for each month the Debtors remain in bankruptcy. The Debtors are producers of phosphate fertilizers that operate a 600,000 thousand ton per year phosphate fertilizer processing plant in Pasadena, Texas and a 1.2 million ton per year phosphate rock mine located in Nichols, Florida. They filed for chapter 11 protection on May 8, 2001. Christopher Adams, Esq., and H. Rey Stroube, III, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP represent the Debtors in their restructuring efforts. AMERICAN SOUTHWEST: Fitch Affirms Low-B's on Two Note Classes ------------------------------------------------------------- Fitch Ratings upgrades American Southwest Financial Securities Corp., commercial mortgage pass-through certificates, series 1995-C1's $9.3 million class B-1 to 'AAA' from 'AA+', interest only class S-2 to 'AAA' from 'AA+' and $14.6 million class B-2 to 'AA' from 'A+'. Fitch also affirms the $14.6 million class B- 3 at 'BB+' and $11.7 million class B-4 at 'B'. Fitch does not rate the class C certificates. The rating actions follow Fitch's annual review of this transaction, which closed in July 1995. The upgrades are primarily attributed to an increase in subordination levels due to loan payoffs and amortization. As of the September 2002 distribution date, the pool's aggregate balance has been reduced by 81%, to $56.2 million from $293 million at issuance. Fifty-seven of the original 74 loans have paid off since issuance leaving the pool heavily concentrated by loan balance, geographic and property type concentration. While Fitch views the increased concentration as a concern it was taken into account in the upgrades. There are currently two specially serviced loans (9.8%), which include one real estate owned loan (3.8%) and one loan with a bankrupt operator (6%). The largest of the specially serviced loans is a loan secured by a hotel property in Pittsburgh, PA. Lodgian, the owner and operator of this hotel, filed for bankruptcy in January 2002, resulting in the loan being transferred to the special servicer. Lodgian is expected to submit a plan of reorganization in October 2002. The REO loan, secured by a multifamily property, Pierson Apartments, was assumed to incur a 100% loss. As of July 17, the loan was deemed non-recoverable by the master servicer, Midland Loan Services. The servicer advances were applied as interest shortfalls as the servicer recovered a portion of their advances. Interest shortfalls were incurred up to class B-2 in August 2002. Classes B-2 and B-3 were repaid in September 2002 and class B-4 continues to incur interest shortfalls, which Fitch expects to be repaid shortly. The property is currently under contract for sale for $460,000 that will likely be applied to the remaining servicer advances. Midland collected year-end 2001 operating statements for 92% of the outstanding pool balance. The YE 2001 weighted average debt service coverage ratio for these loans is 1.37 times, compared to 1.40x at YE 2000 for loans that reported both years operating statements (81%). Two loans (11.7%) reported DSCRs below 1.0x. The borrower of the property securing the largest of the loans below 1.0x (9%) is actively working to improve occupancy at the property. The property securing the second loan (2%) made significant capital improvements over 2001, which contributed to the low DSCR. Fitch will continue to monitor this transaction, as surveillance is ongoing. AMERICREDIT: Fitch Places BB Sr. Debt Rating on Watch Negative -------------------------------------------------------------- Fitch Ratings has placed the 'BB' senior debt rating of AmeriCredit Corp., on Rating Watch Negative. The placement of ACF on Rating Watch Negative reflects the announcement by the company that it has received waivers by Financial Security Assurance raising delinquency trigger levels in its securitizations. Approximately $375 million of debt is affected by this action. Based on current asset quality trends, cumulative loss trigger levels on some of ACF's securitization trusts could be pressured, which would lead to the withholding of cash securitization distributions. FSA has reached an agreement with ACF to raise the delinquency trigger levels to a level in excess of the company's current forecast of pool performance for the six monthly reporting periods from September 2002 through February 2003. Fitch sees the increased trigger levels as temporary relief as the cumulative loss triggers may ultimately become pressured. The credit enhancement requirements for ACF's securitizations are generally established with an initial deposit and further funded through excess cash flows from securitized receivables. In the instance that a performance trigger is breached, the credit enhancement levels are boosted substantially and securitization distributions are held in the trusts until the new enhancement levels are reached. In addition, the enhancement levels for each securitization trust insured by FSA are cross-collateralized to other FSA-insured securitization trusts. As a result excess cash flow from a performing securitization trust insured by FSA may be used to support cash flow shortfalls from a non-performing securitization trust insured by FSA, thereby further restricting excess cash flow available to ACF. Securitization distributions are a significant component of the company's total operating cash flow. The withholding of the majority or all of the securitization distributions would limit ACF's financial flexibility, including posting credit enhancement deposits for future securitizations. In conjunction with the prior announcement, ACF has announced the commencement of a public offering of common stock totaling up to $500 million. Fitch believes it is essential to raise additional common equity to improve the financial flexibility of the company. Successful completion of the equity offering, in this challenging environment, would be viewed favorably by Fitch. Absent successful execution of an equity offering, the ratings of ACF could be negatively impacted. ACF has announced that it will transition its accounting treatment away from 'true sale' structures which required an upfront non-cash 'gain-on-sale'. ACF will now account for securitization transactions as financings on balance sheet and thus no gain-on-sale will be recorded. The transition away from gain-on-sale accounting will result in recognition of revenue as earned by ACF. Although ACF will show a decline in profitability near-term as they transition away from gain-on-sale, the fundamentals of the firm will remain the same. Based in Fort Worth, Texas, ACF has become the largest independent subprime automobile finance company in North America. As of June 30, 2002, ACF maintained $14.8 billion in managed automobile finance receivables. ANC RENTAL: Obtains Approval to Hire Brusniak as NTRG Counsel ------------------------------------------------------------- ANC Rental Corporation, and its debtor-affiliates obtained the Court's authority to employ Brusniak Harrison & McCool P.C., as special counsel on property tax protests, administrative appeals, adversary proceedings and related proceedings involving their taxable properties in various states. With the Court's approval, Brusniak will be working with National Tax Resource Group (NTRG) to address and resolve the Debtors' existing and contemplated property tax disputes. Since Brusniak previously worked with NTRG on other matters similar in nature, the Debtors believe that the firm is well qualified and uniquely able to represent them as special counsel in an efficient and timely manner. Brusniak will render legal opinions to the Debtors and the NTRG, prepare any necessary documents, and take any other action with respect to the Property Tax Disputes, as well as perform other necessary or desirable legal services for the Debtors. Although the Debtors will separately retain Brusniak, the firm will look solely to NTRG for payment of its fees in connection with representation at hand. (ANC Rental Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) BARTIZAN CAPITAL: Makes Assignment in Bankruptcy in Canada ---------------------------------------------------------- Bartizan Capital Corporation announced that as a result of the number of creditor claims that it faces, it has made an assignment in bankruptcy. Collins Barrow Limited of Calgary, Alberta has been appointed as trustee. The first meeting of creditors has been scheduled for September 26, 2002 at which it is anticipated that inspectors will be appointed to supervise the trustee's administration of the estate. After payment of debts, it is not anticipated that there will be any assets available for distribution to Bartizan's shareholders. Information concerning the bankruptcy, including a statement of Bartizan's financial affairs will be available on Collins Barrow Limited's Web site at http://www.corporaterecovery.com BIONUTRICS: Seeking Additional Funding to Meet Liquidity Needs -------------------------------------------------------------- Bionutrics Inc., is repositioning itself as a product development company and as such is engaged in discussions with several potential marketing partners involving future branded products including dietary supplements and functional food products. New products will be based on new technology extending beyond a tocotrienol platform. The Company has announced that it has two new cardiovascular products; Vitenol E is a rice bran extract and is a more effective antioxidant than standard vitamin E. and CARDIO-CIN is based on Bionutrics's patented niacin and soluble fiber composition. These products are targeted to the cholesterol dietary supplement market. However, they are not currently being marketed because of the Company's lack of resources. Consolidated net revenues for the quarter ended July 31, 2002 were $8,000 versus $13,000 for the same quarter in 2001. Cost of revenues for the three months ended July 31, 2002 was $2,000 versus $8,000 for the same quarter in 2001. This reduction is due to lower sales volume of the Company's product, evolvE. Net loss decreased to $431,000 for the three months ended July 31, 2002 from $672,000 for the quarter ended July 31, 2001, due primarily to lower operating expenses. Consolidated net revenues for the nine months ended July 31, 2002 were $24,000 versus $44,000 for the same period in 2001. Cost of revenues for the nine months ended July 31, 2002 was $12,000 versus $56,000 for the same period in 2001 due to decreased sales volume. Additionally, cost of revenues for the nine months ended 2001 was negatively impacted by the write- off of expired inventory held under consignment. Net loss was $2,019,000 for the nine months ended July 31, 2002 compared to $2,129,000 for the same period in 2001. The Company requires additional financing of at least $4,000,000 to achieve its minimum corporate goals over the next 12 months. The Company is currently in negotiations to secure this necessary capital through equity private placements as well as debt financing. The Company does not at this time have any committed sources of financing, other than the Justicia equity line of credit, the terms of which currently prohibit the Company from drawing down any funds. There can be no assurance that additional financing will be attainable on terms acceptable to the Company, or at all, or at such time as the Company's needs may require. Access to additional capital will depend substantially upon prevailing market conditions, and the Company's financial condition and prospects at the time. On July 18, 2001, the Company's common stock was delisted from the Nasdaq SmallCap Market, and the shares are currently quoted on the OTC Bulletin Board. As a result, activity in the Company's common stock has declined substantially, which could adversely affect the Company's ability to raise necessary capital. Such additional financing may not be attainable, or attainable on terms acceptable to the Company. The Company has made application for a loan in the amount of $5,000,000 to a lender that specializes in loans secured by intellectual properties. If the Company were successful in obtaining this loan, it would receive up to $5,000,000 (less closing costs and points estimated to total $350,000) and would be required to place as much or more than $5,000,000 of debt on its financial statement depending on the structure of the loan. The terms of this agreement are presently being discussed. There is no assurance the Company will succeed in obtaining this loan or that, if successful in obtaining the loan that the terms and conditions will be as described here. The loan would be secured by a "pod" of patents owned by the Company's subsidiary, LipoGenics, Inc. If the Company defaults on the loan's interest payments, loan repayment or other material provisions of the loan agreements, the lender would be entitled to foreclose on the collateral and, in such case, the Company would lose such patents and all associated rights. The loss of these patents could have a material adverse effect on the Company. BIOVEST: Exploring Financing Alternatives to Meet Cash Needs ------------------------------------------------------------ Biovest International Inc., is a biotechnology company focused on production and contract manufacturing of biologic drugs and products from small through commercial scale. It has historically developed, manufactured and marketed patented cell culture systems and equipment to pharmaceutical, diagnostic and biotechnology companies, as well as leading research institutions worldwide, and has provided contract cell production services to those institutions. While continuing this business, management has chosen to re-orient the Company's focus, assets and operations to increase contract cell production and biologic drug development and ownership. The Company's first drug product, a personalized immunotherapeutic for the most common and fastest-growing form of hematologic cancer, known as B-cell Non-Hodgkin's lymphoma, is currently in a Phase III FDA-approved pivotal licensing trial. During the nine months ended June 30, 2002 the Company incurred a net loss of $3,506,000. At June 30, 2002 the Company had a deficit in working capital of $2,283,000. The Company has been meeting its cash requirements through the use of cash on hand, the sale of common stock and short-term borrowings, primarily from affiliates. In September 2001, the Company successfully entered into a definitive cooperative Research and Development Agreement with the National Cancer Institute for the development and ultimate commercialization of a patient-specific immunotherapeutic for the treatment of non-Hodgkin's low-grade follicular lymphoma. The terms of the CRADA included, among other things, a requirement for the Company to pay $530,000 quarterly to the NCI for expenses incurred in connection with the ongoing Phase III clinical trials. The Company made the first required payment in the quarter ended September 30, 2001. On May 8, 2002 the Company and the NCI executed an amendment to the CRADA, which requires a single payment of $350,000, due on September 30, 2002, in lieu of the quarterly payments of the original agreement. Successful development of the immunotherapeutic, if approved by the FDA, from Phase III clinical trials through commercialization, will commit the Company to several years of significant expenditures before revenues are expected to be realized. The Company's ability to continue its present operations and meet its obligations under the CRADA is dependent upon its ability to obtain significant additional funding. Such additional financing could be sought from a number of sources, including the sale of equity or debt securities, strategic collaborations or recognized research funding programs. Management is currently in the process of exploring various financing alternatives to meet the Company's cash needs, including additional short-term loans from shareholders and others and the sale of equity securities. Management believes they will be able to raise the necessary funds to continue operations in the near term. There is no assurance that the additional required funds can be obtained on terms acceptable or favorable to the Company. The net losses incurred and the need for additional funding raise substantial doubt about the Company's ability to continue as a going concern. BUDGET GROUP: Asks Court to Approve $15MM Cendant Break-Up Fee -------------------------------------------------------------- Recognizing that Cendant should be given an incentive for taking the risk as a "stalking horse" bidder, Budget Group Inc., and its debtor-affiliates ask the Court to approve the Termination Fee agreed upon by the Debtors and Cendant. Matthew B. Lunn, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that the parties have agreed that if the Agreement is terminated, the Seller Parties, jointly and severally, will pay in cash to Cendant, as a termination fee and as liquidated damages, the applicable percentages of an amount equal to $15,000,000. Percentages of the amount will be paid to Cendant on these circumstances: A. If the Agreement is terminated because no Closing occurred and a binding Alternative Transaction has been entered into and approved by the Court, the Buyer will recover 23.34% of the Termination Amount (i.e., $3,500,000) within two Business Days of the termination and 76.66% of the Termination Amount (i.e., $11,500,000) on or before the earlier of the date of closing of Alternative Transaction and the sixth month anniversary of the termination of the Agreement, respectively; B. If the Agreement is terminated because of breaches by the Seller Parties, the Buyer's recovery will be limited to 23.34% of the Termination Amount (i.e., $3,500,000) if and only if: -- the breaches of representations and warranties by Seller Parties giving rise to the termination do not constitute or have a material adverse effect, -- the representations or warranties of Seller Parties whose breach gives rise to the termination were true and correct when first given or made, -- the representations and warranties of Seller Parties have become untrue or incorrect or occurrence(s) which was and is outside the control of, and which was not and is not caused by or remediable by, any of Seller Parties or their Affiliates, and -- the Seller Parties have not breached any of their covenants in any material respect; C. If the Buyer terminates the Agreement because there has been an incurable breach -- or not cured within 15 days' written notice if the breach is curable -- the Buyer's recovery will be limited to 23.34% of the Termination Amount -- i.e., $3,500,000. But this is only if the breaches giving rise to the termination do not have a material adverse effect on the value of the Acquired Assets or the timely consummation of the transactions contemplated in the Agreement on a timely basis; D. If the Agreement is terminated because the Committee withdraws its support for the sale transaction or the Court approves an Alternative Transaction or a Chapter 11 Plan without incorporating the transaction contemplated by the Agreement, the Buyer's recovery will be limited to 23.34% of the Termination Amount -- i.e., $3,500,000; E. If the Seller Parties terminate the Agreement, the Buyer will be paid 23.34% of the Termination Amount -- i.e., $3,500,000 -- within two Business Days of the termination; and F. If the Buyer terminates the Agreement because the Order approving the Agreement has not been entered into on October 28, 2002, the Buyer will not be entitled to any portion of the Termination Amount if: (a) by October 23, 2002 Seller Parties will have notified Buyer in writing of their desire to extend the October 28, 2002 deadline to November 28, 2002; and (b) Buyer terminates this Agreement prior to November 28, 2002. If an Alternative Transaction is approved by the Court within 275 days after the termination of the Agreement (and that Alternative Transaction was negotiated prior to the Termination Date, the Seller Parties will pay to the Buyer an additional amount in cash equal to 76.66% of the Termination Amount -- i.e., $11,500,000 -- on the date of closing of the Alternative Transaction without need of any written demand by Buyer. (Budget Group Bankruptcy News, Issue No. 6; 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. CASTELLE: Fails to Meet Nasdaq SmallCap Listing Requirements ------------------------------------------------------------ Castelle (Nasdaq:CSTL), a leading provider of fax solutions for Fortune 1000 companies and small to medium-sized businesses, has received a NASDAQ Staff Determination letter dated September 10, 2002 indicating that Castelle has failed to comply with the minimum bid price requirement set forth in Marketplace Rule 4310(C)(4) and that its securities are, therefore, subject to delisting from the NASDAQ SmallCap Market. Castelle has requested a hearing before a NASDAQ Listing Qualifications Panel to review the Staff determination. This hearing will defer the delisting of Castelle's securities pending the Listing Qualification Panel's decision. There can be no assurance that the Panel will grant the Company's request for continued listing on the NASDAQ SmallCap Market. Castelle develops office automation systems that allow organizations to easily implement faxing and printing over local area networks and the Internet. It is a market leader in fax solutions for small to medium-sized workgroups. Castelle's FaxPress fax servers provide a simple way to integrate fax with email, desktop and back-end applications. In addition, the company manufactures the popular LANpress print servers, which enable users to locate printers anywhere on the network. Castelle products are easy to use and maintain, and provide an economical way for companies to share resources over the network. Castelle was founded in 1987 and is headquartered in Morgan Hill, California. Its products are utilized by Fortune 1000 companies and small to medium-sized businesses, and are available through a worldwide network of distributors, value- added resellers, systems integrators, e-commerce retailers, and the Castelle Online Store. Visit Castelle online at http://www.castelle.com CHASE COMMERCIAL: S&P Assigns Low-B Ratings to 6 Certs. Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to classes G, H, I, J, K, and L of Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 2000-1. Concurrently, Standard & Poor's placed its ratings on classes J, K, and L on CreditWatch with negative implications. Prior to these rating actions, Standard & Poor's only publicly rated classes A-1 through F of this transaction. The assigned ratings reflect the subordination levels for each respective class consistent with the loan pool characteristics. The CreditWatch placements reflect the potential losses to the trust resulting from the largest loan in the pool, as well as risks associated with several of the watchlisted loans. The subject property of the largest loan ($41.9 million, or 6.1% of the loan pool) has been REO since February 2002. The loan is secured by a 396,022 square foot retail center built in 1998 and anchored by a Kmart Corp. store, Regal Cinemas, Winn-Dixie Stores Inc., La Ideal Baby Store, The Rag Shop, and The Party Supermarket, located in Pembroke Pines, Florida. The Kmart store is not scheduled to close. In March 2002, the special servicer (Lennar Partners Inc.) received an updated appraisal that valued the property at $38 million. The most recent debt service coverage ratio was 0.99 times with 91% occupancy. No other loans are currently being specially serviced. As of August 2002, the servicer (GEMSA Loan Services L.P.) placed 15 loans ($153.14 million, or 22.4%) on its watchlist for various reasons. The second and sixth largest loans are secured by office properties located in Santa Clara and Costa Mesa, Calif. Both loans are on the watchlist due to several near-term lease expirations. The top 10 loans represent 39.5% of the mortgage pool. Nine of the 10 loans reported a year-end 2001 DSCR of 1.54x. Currently, Standard & Poor's is completing its due diligence on this transaction to determine the potential impact on the credit levels from the REO and watchlisted loans, and if rating changes are warranted at this time. Ratings Assigned and Placed On Creditwatch Negative Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2000-1 Class Rating Credit Support (%) G BB+ 6.62 H BB 5.86 I BB- 4.97 J B+/Watch Neg 3.31 K B/Watch Neg 2.80 L B-/Watch Neg 2.29 CIRCUIT RESEARCH: Accountants Issue Going Concern Opinion --------------------------------------------------------- Circuit Research Labs Inc., develops, manufactures and markets high-quality electronic audio processing, transmission encoding and noise reduction equipment for the worldwide radio, television, cable, Internet and professional audio markets. In recent periods, it has acquired the assets of other companies within its industry or in related industries into which it desires to expand. On May 31, 2000, it acquired the assets of Orban, Inc., a producer of audio editing and processing equipment. On May 31, 2001, it acquired the assets of Avocet Instruments, Inc., a supplier of quality audio receivers and coders for the television and post-production industry. On January 18, 2002, it acquired the assets of Dialog4 System Engineering GmbH, a producer of ISO/MPEG, audio, ISDN, satellite transmission, networking and storage products. Circuit Research Labs incurred losses of $2,046,640 and $2,258,121 during the years ended December 31, 2001 and 2000, respectively. Its deteriorating financial results and reduced liquidity caused it to renegotiate its $8.5 million debt owed to Harman, which it incurred in connection with its acquisition of the assets of Orban. Under the terms of the new agreement, Harman can demand at any time that the Company immediately pay in full the outstanding balance. Should this happen, Circuit Research would immediately be forced to file for protection under Chapter 11 of the United States Bankruptcy Code. Its inability to pay the $8.5 million debt to Harman should payment be demanded, its difficulties in meeting its financing needs and its negative working capital position have resulted in its independent public accountants adding a going concern emphasis paragraph to their report by including a statement that such factors raise substantial doubt about its ability to continue as a going concern. In addition to efforts to reduce costs and increase sales, the Company is currently seeking sources of long-term financing. However, the inclusion of a going concern emphasis paragraph generally makes it more difficult to obtain trade credit, insurance or additional capital through public or private debt or equity financings. COLD METAL: Court Approves Up to $48 Million in DIP Financing ------------------------------------------------------------- Cold Metal Products Inc. (Amex: CLQ), a leading North American intermediate strip steel processor, has secured final U.S. Bankruptcy Court approval for up to $48 million in debtor-in- possession financing. The financing, from a consortium of lenders led by GMAC, will enable Cold Metal to continue serving customers as the company reorganizes under Chapter 11 of the U.S. Bankruptcy Code. Cold Metal also secured court approval to continue its existing wage and benefit programs for active employees. Interim orders approving the financing, wages and benefits were approved earlier. "Securing debtor-in-possession financing was a major step in Cold Metal's reorganization process," said Raymond P. Torok, Cold Metal president and chief executive officer. "We are pleased by the court ruling and by the initial support of our customers, employees and suppliers following the news of our Chapter 11 filing. We look forward to serving our customers as we prepare for Cold Metal's exit from Chapter 11 protection as a stronger company." A leading intermediate steel producer, Cold Metal Products, Inc., provides a wide range of strip steel products to meet the critical requirements of precision parts manufacturers. Through cold rolling, annealing, edge conditioning, oscillate-winding, slitting, and cutting to length, the company provides value- added products to manufacturers in the automotive, construction, cutting tools, consumer goods and industrial goods markets. Cold Metal operates plants in Ottawa, Ohio; Roseville, Mich.; Hamilton, Ont. and Montreal, Quebec. CTC COMMUNICATIONS: Turns to CXO LLC for Restructuring Services --------------------------------------------------------------- CTC Communications Group, Inc., (OTCBB: CPTL) has engaged CXO, L.L.C., to provide corporate and operational restructuring services to CTC and its operating subsidiaries. Michael Katzenstein, a CXO principal, was named interim Chief Executive Officer of CTC and its operating subsidiaries. Robert J. Fabbricatore, the Company's founder, has relinquished the positions of Chairman of the Board of Directors and Chief Executive Officer of CTC and its operating subsidiaries. Richard J. Santagati, a longstanding CTC Board member and Chairman of a Special Negotiating Committee consisting of independent members of CTC's Board of Directors chartered to oversee the restructuring of CTC, said, "CXO's team will join with CTC's Board and management to take steps to improve CTC's liquidity, profitability and attractiveness to investors. The Board appreciates Bob Fabbricatore's distinguished contribution to CTC over the past 21 years." Mr. Katzenstein, in assuming the role as interim CEO, brings directly related experience to the task of restructuring CTC from his role as the President and CEO of OpTel, Inc., a CLEC and integrated communications and cable television provider based in Dallas, TX. Mr. Katzenstein completed the successful restructuring of OpTel, Inc. during his tenure, and brings experience from other CXO restructuring assignments in the telecommunications and technology industries. Mr. Santagati also noted that, as previously reported, CTC has engaged Miller Buckfire Lewis & Co., LLC, to assist in developing a plan to amend, restructure or refinance its existing financing facilities and to raise additional capital. CXO, L.L.C., is a group of experienced operating executives (CEOs, COOs, CFOs, etc.) of public and private telecommunications and technology-based companies. CXO specializes in providing experienced and dynamic management, operational and advisory services to help under-performing telecommunications and technology companies mitigate risk, maximize profitability and generate liquidity events for stakeholders. CXO services include restructuring and crisis management services to domestic and international telecom, technology and media companies, and when requested, members of the CXO team assume management and operating positions within our client organizations. With 27 experienced professionals and 23 current active client engagements, Miller Buckfire Lewis ("MBL") is one of the world's leading global independent investment banking firms providing strategic and financial advisory services in large-scale corporate restructuring transactions. Over the past five years, MBL has been involved in over 100 restructuring transactions, representing companies, creditors and acquirors. Services provided by MBL include valuation and debt capacity analysis, capital structure design, restructuring plan formulation and negotiation and private equity and debt placement services. Clients of MBL have access to the merger and acquisition and capital raising capabilities of Dresdner Kleinwort Wasserstein, one of world's leading investment banks, through a strategic alliance between the two firms. CTC is a "next generation" Integrated Communications Carrier utilizing advanced technology and providing its customers with converged voice, data, Internet and video services on a broadband, packet-based network, called the PowerPath(R) Network. The Company serves medium and larger business customers from Virginia to Maine, which includes the most robust telecommunications region in the world--the Washington D.C. to Boston corridor. CTC's Cisco Powered IP+ATM packet network and its sales and service teams, provide contiguous marketing and technology coverage throughout the Northeast and Mid-Atlantic States. The Company, through its dedicated commitment to exceptional customer service, has achieved an industry-leading market share in the Northeast. CTC can be found on the worldwide web at http://www.ctcnet.com ENCOMPASS SERVICES: Special Shareholders Meeting Set for October ---------------------------------------------------------------- J. Patrick Millinor, Jr., Chairman of the Board of Encompass Services Corporation, is inviting shareholders to attend a special meeting to be held on October , 2002, (date yet to be announced), at 10:00 a.m., Houston time, at the Houston City Club, One City Club Drive, Greenway Plaza, Houston, Texas. At the special meeting, shareholders will be asked to consider and vote upon three proposals: -- To issue $35 million of Company voting securities to Apollo Investment Fund IV, L.P., and Apollo Overseas Partners IV, L.P., in conjunction with Encompass' pending rights offering to all its shareholders at the same effective purchase price per share; -- To amend the Amended and Restated Articles of Incorporation to increase the number of shares of common stock authorized for issue from 200,000,000 to 275,000,000; and -- To approve the grant of discretionary authority to the Board of Directors to amend the Amended and Restated Articles of Incorporation to effect a reverse stock split of Encompass outstanding common stock at a ratio within the range from one- for-five to one-for-fifteen at any time prior to August 1, 2003. Encompass Services Corporation is one of the largest providers of facilities services in the United States. The Company provides electrical and mechanical contracting services and cleaning and maintenance management services to commercial, industrial and residential customers nationwide, including construction, installation and maintenance. Encompass operates in three reportable segments: Commercial/Industrial Services, Residential Services and Cleaning Systems. As reported in Troubled Company Reporter's Aug. 26, 2002 edition, the Company finances its operations and growth primarily with internally generated funds and borrowings from commercial banks and other lenders. During the second quarter of 2002, management anticipated that the Company might not be able to remain in compliance with the financial covenants contained in its primary bank credit facility as of June 30, 2002. Accordingly, the Company entered into negotiations with its senior bank lenders to amend the financial covenants to avoid a possible default as of the end of the second quarter. Effective June 26, 2002, the Company entered into an amended credit facility, which provides financial covenant modifications through February 2005. Management anticipates that the Company's cash flow from operations and existing borrowing capacity under the Amended Facility will be adequate to fund the Company's normal working capital needs, debt service requirements and planned capital expenditures for 2002. The Company intends to sell certain under-performing or non- strategic business units, provided that the Company is able to secure prices, terms and conditions deemed acceptable by it. Including the anticipated tax benefits associated with the sales of some of these businesses, the Company believes that the aggregate cash benefit to be realized from sales of businesses will exceed $50 million. Pursuant to the Amended Facility, the proceeds of any such sales will be used to permanently reduce balances outstanding under the Term Loans and the Revolving Credit Facility, on a pro-rata basis. There can be no assurance that the Company will secure satisfactory offers for any business unit or that some business units will not be sold at a loss. ENRON CORP: Asking Court to Stay Duke Partnership Arbitration ------------------------------------------------------------- Enron Canada Corp., a non-debtor Enron affiliate, is a corporation amalgamated pursuant to the laws of the Province of Alberta and continued federally pursuant to a Certificate of Continuance under the Canadian Business Corporations Act. Enron Canada is engaged primarily in the trading of natural gas, electricity and other energy commodities. Enron Canada is in the process of winding down its operations, paying its outstanding obligations and collecting on its outstanding claims. Enron Canada and Duke Energy Marketing Limited Partnership currently hold cash collateral from each other on account of their respective obligations under various confirmations and gas purchase and sale agreements. Specifically: * Enron North America holds, as agent for Enron Canada, $1,300,000 as collateral to secure Duke Partnership's obligations under the Gas Agreements; and * Duke Partnership, holds $20,787,125 as collateral to secure Enron Canada's obligations under and pursuant to the Gas Agreements. As part of the wind down: * Enron Canada and Duke Partnership agreed to release each other from the Gas Agreements; * Enron Canada agreed to pay $39,749,613 to Duke Partnership as full and final payment of Enron Canada's obligations; * Duke Partnership agreed to deposit the $20,787,125 into Escrow for Enron Canada's benefit. The Escrow Agreement provides that Macleod Dixon LLP will hold the $20 million in trust until: (1) an arbitrator resolved whether Enron Canada consented to Duke Energy applying $4,500,000 of that collateral -- Disputed Collateral -- against Enron Power Marketing Inc.'s obligations to Duke Energy Trading and Marketing LLC under and pursuant to confirmations or transactions entered into between Enron Power and Duke Energy; and (2) the remainder of the Enron Canada Collateral of $16,287,125 is paid pursuant to the direction of Enron Canada, Enron North America and either the Official Committee of Unsecured Creditors or the United States Bankruptcy Court. As part of the arbitration procedure, Duke Energy submitted affidavits on July 1, 2002 that went beyond the agreed scope because they asserted the existence of an alleged oral or written master netting agreement among an undefined group of Duke Energy affiliated entities and an undefined group of Enron- affiliated entities. Duke Energy and Duke Partnership have indicated that the alleged agreement is central to their arbitration position. Pursuant to Section 362(a) of the Bankruptcy Code, the Debtors ask the Court to stay the arbitration involving assets of the estate, or, in the alternative, enjoin arbitration against Duke Energy Trading and Marketing LLC and Duke Energy Marketing Limited Partnership. Melanie Gray, Esq., at Weil, Gotshal & Manges, in New York, fears that an expansive master netting agreement that includes Enron Canada and the Debtors would both raise significant issues under the Bankruptcy Code and directly impact the estate assets. Because Duke Energy and Duke Partnership refuse to identify the Enron entities they allege are parties to the Alleged Netting Agreement, Debtors are left with no other choice but to assume the "Enron Group" includes some or all of the Enron Debtors. Enron Debtors whose interests may be affected by the existence of an Alleged Netting Agreement with Duke Energy and its affiliates, in addition to Enron Power Marketing Inc. and Enron North America, include Enron Gas Liquids, Inc., Enron Liquid Fuels, Inc., Enron Capital & Trade Resources International Corp., Enron Global Markets, LLC, and Enron Energy Services, Inc. Moreover, the very obligation to which Duke Energy and Duke Partnership seek to apply the Disputed Collateral is that of an Enron Debtor -- Enron Power Marketing Inc. On its face, Ms. Gray notes, an arbitration proceeding adjudicating the existence of and parties to the Alleged Netting Agreement will affect the rights and obligations of a debtor, Enron Power. Moreover, if the Alleged Netting Agreement exists, it would impact other debtors who are parties to other agreements with Duke entities. Enron and Duke entities are parties to 40 master agreements. Of equal importance, the enforcement of a netting agreement involving one or more debtors raises significant legal issues under the Bankruptcy code. Section 553 of the Bankruptcy Code allows setoff rights only with respect to debts that are mutual. Thus, Ms. Gray contends, Duke Energy could only offset a debt Enron Power owed to it against its debt to Enron Power. The Alleged Netting Agreement then is not enforceable against the Debtors or to Enron Canada. "Duke Energy's apparent effort to insert these issues into an arbitration is a clear violation of the automatic stay," Ms. Gray asserts. Ms. Gray suggests that if Duke Energy and Duke Partnership want to collect on the alleged obligations of an Enron debtor entity like Enron Power, they should avail themselves of the Bankruptcy Code procedures along with all other creditors of Enron Power. In addition to enforcing the automatic stay, Ms. Gray points out that the Court has the authority to enjoin the proceeding since the arbitration suit will interfere with the Debtors' efforts to reorganize. The Debtors believe that Duke Energy's attempt to litigate the Alleged Netting Agreement is an "end run" around their Bankruptcy Code Protection. (Enron Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders reports, are trading at 11.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 for real-time bond pricing. ETOYS INC: Court to Consider Liquidating Ch. 11 Plan on Sept. 27 ---------------------------------------------------------------- On August 8, 2002, the U.S. Bankruptcy Court for the District of Delaware entered an Order approving the Disclosure Statement prepared by eToys Inc., and its debtor-affiliates. The Court found that the document contained adequate information pursuant to 11 U.S.C. Sec. 1125 and allows creditors to make informed decisions about whether to vote to accept or reject the Company's liquidating chapter 11 plan. The Honorable Mary F. Walrath has scheduled a hearing to consider Confirmation of the Debtors' Chapter 11 Liquidating Plan on September 27, 2002 at 2:00 p.m. (Eastern Time) or thereafter as Counsel can be heard. Any confirmation objections must be served and received by the Court before 4:00 p.m. on September 18, 2002, with copies served on: (i) the Debtors EBC I, Inc. fka eToys, Inc. 400 Continental Boulevard, 6th Floor El Segundo, CA 90245 (ii) Counsel to the Debtors Morris, Nichols, Arsht & Tunnel 1201 N. Market Street PO Box 1347 Wilmington, Delaware 19899-1347 Attn: Robert Dehney, Esq. Gregory W. Werkheiser, Esq. (iii) Co-Counsel to the Official Committee of Unsecured Creditors Traub, Bonacquist & Fox LLP 655 Third Avenue, 21st Floor New York, NY 10017 Attn: Susan Balaschak, Esq. and Jaspan Schlesinger Hoffman LLP 1201 North Orange St., 10th Floor Wilmington, Delaware 19801 Attn: Frederick Rosner, Esq. (iv) Office of the United States Trustee J. Caleb Boggs Federal Building 844 King Street, Suite 2313 Lockbox 35 Wilmington, Delaware 19801 Attn: Mark S. Kenney, Esq. Creditors' Ballots must be received before 5:00 p.m. on September 18, 2002 by the Balloting Agent: Bankruptcy Management Corporation, Attn: eToys Ballot Processing Department 1330 East Franklin Avenue, El Segundo, California 90245. eToys, Inc., now known as EBC I Inc, operated a web-based toy retailer based in Los Angeles, California. The Company filed a Chapter 11 Petition on March 7, 2001 in the U.S. Bankruptcy Court for the District of Delaware. When the company filed for protection from its creditors, it listed $416,932,000 in assets and $285,018,000 in debt. eToys sold its assets and name to toy retailer KB Toys. In an SEC filing on February 28, 2002, the Debtors listed $32,091,918 in total assets and $192,396,702 in total liabilities. Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell and Howard Steinberg, Esq., at Irell & Manella represent the Debtors as they wind-up their financial affairs. FAIRFIELD MANUFACTURING: Opts Not to Pay Dividend on Preferreds --------------------------------------------------------------- Dividend payments for the 11-1/4% Cumulative Exchangeable Preferred Stock of Fairfield Manufacturing Company, Inc., are scheduled to occur on March 15 and September 15 of each year in accordance with the terms of the Certificate of Designations relating to the Preferred Stock. The Board of Directors of the Company had not determined to pay a dividend with respect to the Preferred Stock on September 15, 2002, and accordingly Fairfield Manufacturing did pay a dividend on that date. Dividends will continue to accrue in accordance with the terms of the Certificate of Designations relating to the Preferred Stock. As reported in Troubled Company Reporter's Monday Edition, Fairfield Manufacturing Company, Inc.'s net sales and profits have been adversely affected by the general slowdown in the economy and the recent recession, as well as a result of pricing pressure from foreign competitors, principally due to the strong U.S. dollar. In addition, the Company's profitability has suffered due to an unfavorable product mix, which is a result of the Company's decision to take on new business at lower margins to get through the economic downturn coupled with a decrease in volume on higher margin sales. The Company's current level of sales and profits has strained its liquidity and capital resources, and the present market conditions are expected to continue for the foreseeable future. FEDERAL-MOGUL: Court to Consider Sale of Wagner Business on Wed. ---------------------------------------------------------------- After due deliberation, Judge Newsome finds that Decoma's Letter of Intent offers Federal-Mogul Corp. the highest and best price for its Wagner Lighting Business. The Court will convene a hearing on September 25, 2002 to consider entry of an order approving the sale of the Wagner Business. As previously reported, the Debtors in January received an indication of interest in the Wagner Original Equipment Lighting Products, a division of the Lighting Group, from Decoma International Inc. The Wagner lighting business has 800 employees and produces primarily forward lighting modules. It is owned by Debtor Federal-Mogul Ignition Company. Decoma is a subsidiary of Canadian auto parts supplier Magna International. The salient terms under the Letter of Intent include: Assets: A. Wagner OE assets including personal property at the: 1. manufacturing facilities in Hampton, Virginia and Matamoros, Mexico; 2. distribution center in Brownsville, Texas; and 3. assembly operation in Toledo, Ohio. B. all contract rights of Federal-Mogul Ignition related to the Wagner Assets; C. the Intellectual property rights, with the exception of trademark rights and trade names of Federal-Mogul related to the Wagner Assets; and D. applicable rights to machinery and equipment located at the facilities; The Debtors will retain all cash, accounts receivable, trademarks, intercompany accounts receivable, and certain other assets. Buyer: Decoma International Inc. or its affiliate Price: $5,000,000 to $8,000,000 The amount is subject to a dollar-to-dollar adjustment based on the value of certain inventory at the date of the closing of the transaction. The Buyer will also assume certain liabilities. When including the estimated $10,000,000 in inventory and $13,000,000 in retained net assets, the Debtors value Decoma's offer at $28,000,000 to $31,000,000. The Debtors anticipate setting forth the sale of the Wagner OE assets to Decoma in a definitive sale agreement that will consummate the transaction contemplated by the Letter of Intent. Payment: via a wire transfer at the Closing Deposit: $200,000 The Buyer agrees that, upon the execution of the Definitive Agreement, and provided the LOI is not terminated, it will deliver the refundable deposit to an interest bearing trust account. (Federal-Mogul Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) Federal-Mogul Corp.'s 8.8% bonds due 2007 (FMO07USR1) are trading at 20 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FMO07USR1for real-time bond pricing. FIREBRAND FIN'L: Cash Resources Insufficient to Meet Obligations ---------------------------------------------------------------- Firebrand Financial Group Inc., is primarily engaged in investment banking and asset management services and to a lesser extent retail brokerage. The investment banking business structures and manages private offerings for early stage companies. The asset management business provides asset management services to investors though Dalewood Associates, Inc. which manages a venture capital fund that invests primarily in early stage companies. The retail brokerage business charges commissions for individual and institutional clients for executing buy and sell orders of securities on national and regional exchanges and in the over the counter markets. In February 2001, the Company initiated a line of business through the StreetWide Asset Recovery Group, which provides debt recovery services to broker/dealers in the financial community. In December 2001, the Company added an institutional sales group at EarlyBirdCapital, Inc. The Company's main operating subsidiaries are EarlyBird, Dalewood Associates, Inc., and StreetWide Asset Recovery Group. Firebrand holds a 63.6% ownership interest in EarlyBirdCapital.com Inc., which is the parent company of EarlyBird and Dalewood. In addition, Firebrand directly holds an 80% ownership interest in StreetWide. As a result, a minority interest exists which appears in the Company's Consolidated Statement of Financial Condition. During fiscal 2001, the Company transferred the retail accounts of its wholly owned GKN Securities Corp., full service brokerage subsidiary to other broker/dealers, effectively terminating that activity. In fiscal 2001, EarlyBirdCapital.com wrote off its investment in Angeltips.com Inc., and recognized a loss of $1,363,000, which investment had been initiated earlier in the current fiscal year. The write off represented management's assessment of the impairment to value reflected by marked change in the environment for angel Web sites. In December 2000, the Company's Board approved a plan to dispose of its 53.5% interest in Shochet Holding Corp, whose principal operation, Shochet Securities, Inc. (subsequently renamed SSI Securities Inc.) provided discount retail brokerage services in South Florida). On August 1, 2001 Shochet announced that SSI had signed a definitive agreement to transfer substantially all of its brokers, accounts and operating assets to another independent broker/dealer, BlueStone Capital Corp. This transaction closed on August 31, 2001, leaving Shochet as a public shell. On November 7, 2001 BlueStone announced that it had in turn sold substantially all of its operating assets to another independent broker/dealer, Sands Brothers & Co., Ltd. As of October 1, 2001, EarlyBirdCapital.com sold its ownership interest in EBCapital (Europe) AG. On March 12, 2002, the Company announced that it had signed a definitive agreement to sell all of its interest, except for 52,785 shares of common stock, in Shochet to Sutter Opportunity Fund 2, LLC. This transaction closed on March 28, 2002. In the first quarter of fiscal 2002 the Company established StreetWide. StreetWide is engaged by broker/dealers and other financial institutions to collect debt due to them from prior broker employees or from customers. The broker debts are generated through brokers reneging on employment contracts or brokers generating losses due to their respective firms. The customer debt is usually generated through unsecured margin loans on which the customers have refused to repay the firms. The Company's operations for fiscal 2003 have consumed substantial amounts of cash and have generated significant net losses, which have reduced stockholders' equity to $2,280,000 at July 31, 2002. As noted above, many of the product lines previously offered by the Company have been discontinued. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company's cash resources remain constrained and are not sufficient to meet existing contractual obligations and liabilities. GENESEE CORP: Board Declares Partial Liquidating Distribution ------------------------------------------------------------- Genesee Corporation (Nasdaq: GENBB) announced that its Board of Directors has declared a partial liquidating distribution of $3.00 per share, payable on October 11, 2002 to Class A and Class B shareholders of record on October 4, 2002. The partial liquidating distribution announced today is the fifth paid by the Corporation pursuant to the plan of liquidation and dissolution approved by the Corporation's shareholders in October 2000 and brings the total of liquidating distributions paid to date to $56.1 million. Distributions totaling $30.50 per share were paid to shareholders on March 1, 2001, November 1, 2001, May 17, 2002 and August 26, 2002. Taking into account the $5.00 per share liquidating distribution paid on August 26, 2002 and the $3.00 per share liquidating distribution payable October 11, 2002, the Corporation updated its estimate of net assets in liquidation to $16.5 million, or $9.87 per share, compared to net assets in liquidation at July 27, 2002 of $29.9 million, or $17.87 per share. GENEVA STEEL: Michael J. Yonker Resigns from Board of Directors --------------------------------------------------------------- Effective August 29, 2002, Michael J. Yonker resigned, citing personal reasons, as a member of the Board of Directors of Geneva Steel Holdings Corp., and all committees thereof. Geneva Steel Holdings Corporation is a public holding company which does not have any significant business activities other than its reporting and compliance obligations in accordance with state and federal laws. It owns 100% of Geneva Steel LLC and 100% of each of the Debtors, except CPICOR Management Company, which is wholly owned by Vineyard Management Company. * Geneva owns and operates an integrated steel mill in Vineyard, Utah. The Company manufactures steel plate, hot-rolled coil, pipe and slabs for sale primarily in the Western and Central United States. Geneval Steel Holdings filed for Chapter 11 reorganization on Sept. 13, 2002, in the U.S. Bankruptcy Court for the District of Utah in Salt Lake City. GLENOIT CORPORATION: Plan Confirmation Hearing Set for Sept. 29 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Glenoit Corporation and its debtor-affiliates' Disclosure Statement as containing "adequate information" within the meaning of section 1125 of the Bankruptcy Code. Accordingly, the Court obtained Bankruptcy Court authority to transmit the Disclosure Statement to creditors to solicit votes to accept their chapter 11 Plan. The Court will convene a confirmation hearing on September 26, 2002 at 2:00 p.m., at the United States Courthouse, Court Room 742, 219 South Dearborn Street, Chicago, Illinois 60604. At the Confirmation Hearing, the Court will consider only timely-filed written objections received not later than September 23, 2002 and served on: i) Counsel for the Debtors: Alston & Bird LLP Mathew Levin, Esq. Mark I. Duedall 1201 West Peachtree Street Atlanta, Georgia 30309-3432 Tel: 404 881-7000 Fax: 404 881-7777 Young Conaway Stargatt & Taylor LLP Joel A. Waite, Esq. Edmon Morton, Esq. The Brandywine Building 1000 West Street 17th Floor Wilmington, Delaware 19899 Tel: 302 571-6600 Fax: 302 571-1253 ii) Counsel for the Unofficial Noteholders' Committee: Strook & Stroock & Lavan LLP Chris Donho, Esq. 180 Maiden Lane New York, New York 10038-4982 Tel: 212 806-6209 Fax: 212 806-6006 Pachulski, Stang, Ziehl, young & Jones Bruce Grohsgal, Esq. 919 North Market Street 16th Floor Wilmington, Delaware 19899-8705 Tel: 302 652-4100 Fax: 302 652-4400 iii) Counsel for the Agent for the secured Lenders: Kramer Levin Naftalis & Frankel LLp David Feldman, Esq. 919 Third Avenue New York, New York 10022-3852 Tel: 212 715-9100 Fax: 212 715-8000 Klett Rooney Lieber & Schorling Teresa K.D. Currier Wilmignton, Delaware The Brandywine Building 1000 West Street, Suite 1410 Wilmington, Delaware 19801 Tel: 302 552-4200 Fax: 302 552-4295 iv) The U.S. Trustee Don Beskrone Office of the United States Trustee J. Caleb Boggs Federal Building 844 King Street, Room 2313, Lockbox 35 Wilmington, Delaware 19801 Tel: 302 573-6492 Fax: 302 573-6497 Headquartered in New York City, Glenoit Corporation is a domestic manufacturer of small rugs, knit pile fabrics and an importer and manufacturer of home products such as quilts, comforters, shams, shower curtains, table linens, pillows and pillowcases with operations in North Carolina, Ohio, California and Canada. The Company filed for Chapter 11 protection on August 8, 2000. Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. GLOBAL CROSSING: Files Chapter 11 Plan & Disclosure Statement ------------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates filed on September 16, 2002, a reorganization plan and disclosure statement to emerge from bankruptcy based on the sale of a 61.5% stake to Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte for $250,000,000. Under the Plan, creditors will divide about $300,000,000 in cash, $200,000,000 in new notes and a 38.5% stake in New Global Crossing equity. Full-text copies of the Debtors' Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/1755_ReorganizationPlan.pdf and http://bankrupt.com/misc/1754_DisclosureStatement.pdf The proposed capital structure for New Global Crossing, including the post-Effective Date financing arrangements, is: Instrument Description Comments ------------------- ----------------- ------------------------ New Senior Secured $200,000,000 Plan Securities Notes New Preferred Stock 18 million shares Securities purchased by STT and Hutchison New Common Stock 22 million shares Plan Securities issued to creditors and purchased by the Investors. Option or other 3.5 million shares Plan Securities issued stock-based awards reserved for under Management issuance Incentive Plan In addition, New Global Crossing expects to arrange a $150,000,000 working capital facility in order to fund ongoing working capital needs. As of the Effective Date, New Global Crossing will adopt a new management incentive plan for its officers and other members of senior management. This plan will include a pool of options to purchase and/or stock-based grants of 3,478,261 shares of New Common Stock (8% on a fully diluted basis). The options will be awarded by the board of directors of New Global Crossing based on recommendations by the chief executive officer. The Plan also provides for the establishment of the Estate Representative on the Effective Date. The Estate Representative will be a committee of five individuals, two of whom will be appointed by the holders of the Lender Claims, two of whom will be appointed by the Creditors Committee and one of whom will be appointed by agreement between the holders of the Lender Claims' appointees and the Creditors Committee's appointees. The Estate Representative will take over the functions of concluding the Chapter 11 cases commencing on the Effective Date. In order to facilitate the fulfillment of its responsibilities, it is anticipated that the Estate Representative will have the benefit of a "cooperation agreement" with New Global Crossing. The functions of the Estate Representative are: Making Distributions: The Lender Agent is responsible for receiving the consideration from the Debtors under the Plan and distributing such consideration to the holders of the Lender Claims in accordance with the Credit Agreement. The indenture trustees perform this function for the various holders of the Debtors' public debt. The Estate Representative will perform this role for the class of General Unsecured Claims (and for the class of Convenience Claims). Serving as Liquidating Trustee: The Plan establishes a Liquidating Trust, which will receive certain property on the Effective Date such as causes of action against third parties and (a portion of) certain funds located in a bank account in Bermuda. The holders of certain claims, in turn, will own beneficial interests in the Liquidating Trust. The interests in the Liquidating Trust will not be transferable. The Estate Representative will serve as the trustee for the Liquidating Trust or will designate a trustee for the Liquidating Trust. Resolving Disputed Prepetition Claims: One of the key functions of the Estate Representative is to object to and resolve claims that remain disputed as of the Effective Date. In this regard, the Estate Representative may object to claims, seek to estimate claims, and settle claims. Bringing Avoidance Actions: The Plan of Reorganization preserves certain avoidance actions that the Debtors may possess, such as the ability to recover funds from parties that received preferential transfers under Section 547 of the Bankruptcy Code or fraudulent transfers. Although the Purchase Agreement limits the ability of the Estate Representative to bring these actions against certain current vendors of New Global Crossing, bringing avoidance actions is an important function of the Estate Representative. The Estate Representative may also bring these avoidance actions in the context of a defense or counterclaim to claims asserted by creditors in the Chapter 11 cases. Prosecution of Causes of Action: Under the Plan, the Estate Representative will be responsible for prosecuting and settling the causes of action transferred to the Liquidating Trust. Resolving Disputed Administrative Claims: Most Administrative Expense Claims will be paid by the Debtors in the ordinary course of business. Certain Administrative Expense Claims may remain unliquidated, contingent, disputed, or otherwise unpaid as of the Effective Date. The Debtors will set aside funds to cover these types of Administrative Expense Claims and the Estate Representative will object and or resolve the amounts owed, if any, to the holders of unliquidated, contingent, or disputed Administrative Expense Claims and otherwise pay them as they become due. Mechanics: The Estate Representative will have the authority to retain and compensate professionals to enable it to perform its functions. Cash will be deposited with the Estate Representative to fund its expenses. Any portion of those funds remaining after the Estate Representative has performed its functions must be transferred to New Global Crossing. The Debtors not acquired by New Global Crossing will pay the reasonable fees and expenses of each of the indenture trustees for the publicly issued debt securities of GC Holdings and GCNA, as mutually agreed or determined by the Bankruptcy Court, including the reasonable fees and expenses of its professionals. Although no liquidation analysis has yet been presented, the Debtors believe that the value of any distributions to each class of allowed claims in a Chapter 7 case, including all secured claims, would be less than the value of distributions under the Plan because distributions in a Chapter 7 case would not occur for a substantial period of time. In this regard, there is a risk that distribution of the proceeds of the liquidation could be delayed for one or more years after the completion of the liquidation in order to resolve claims and prepare for distributions. In addition, recovery to creditors may be decreased by any litigation engendered by the claims allowance process. The Court will convene a hearing on October 21, 2002 to consider the adequacy of the Debtors' Disclosure Statement. (Global Crossing Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) GMAC 2000-C1: Fitch Affirms Low-B Ratings on 5 Classes of Notes --------------------------------------------------------------- GMAC 2000-C1 commercial mortgage pass-through certificates, series 2000-C1 have been affirmed by Fitch Ratings as follows: $108.2 million class A-1, $537.2 million class A-2 and $863.1 million class X at 'AAA'; $37.4 million class B at 'AA'; $41.8 million class C at 'A'; $8.8 million class D at 'A-'; $30.8 million class E at 'BBB'; $15.4 million class F at 'BBB-'; $22.0 million class G at 'BB+'; $15.4 million class H at 'BB'; $6.6 million class J at 'BB-'; $8.8 million class K at 'B+'; $11.0 million class L at 'B'; $6.6 million class M at 'B-' and $6.6 million class N at 'CCC'. Fitch does not rate class O. The rating affirmations follow Fitch Ratings' annual review of the transaction, which closed in March 2000. The rating affirmations reflect consistent loan performance and minimal paydown of the pool certificate balance since issuance. The comparable weighted average debt service coverage ratio (DSCR) was 1.46 times as of year-end 2001, 1.44x as of YE 2000, and 1.46x at issuance. The WADSCR was calculated using financial statements collected by the master servicer, GMAC, for 91.9% of the loans remaining in the pool. As of the August 2002 distribution date, the pool's aggregate certificate balance has decreased by 1.9% since issuance to $863.2 million from $879.9 million. The pool is also well diversified by loan balance and geographic location. In addition, approximately 92% of the pool are collateralized by traditional property types. Fitch is concerned with declining performance of the shadow rated loan, Equity Inns Portfolio, representing 5.4% of the pool balance. This portfolio was shadow rated investment grade by Fitch at issuance. The portfolio experienced a decline in revenue per available room (RevPar) as a result of the weakening economy. The weighed average RevPar as of June 2002 ($56.55) is down since the YE 2001 ($59.46) and issuance ($59.14), but it has increased slightly since March 2002 ($54.22). The portfolio is current with debt service and the Fitch stressed DSCR is still considered strong at a 1.74x. Seven loans (5.7%) reported YE 2001 DSCRs below 1.0x, they are all current on debt service. In addition, twenty-five loans (19.13%) are on the watchlist and four loans (2.36%) are in special servicing. All watchlist loans are current. The special servicer filed for foreclosure on two of the specially serviced loans (0.55%); there are no known expected losses at this time. The largest specially serviced loan (1.49%) is an industrial property in Dearborn, MI. The borrower is current on debt service, but is not making escrow payments. Fitch will continue to monitor this transaction, as surveillance is ongoing. GRANITE BROADCASTING: Fails to Meet Nasdaq SmallCap Requirements ---------------------------------------------------------------- Granite Broadcasting Corporation (Nasdaq: GBTVK) has received a letter from Nasdaq stating that its nonvoting common stock did not comply with the $35 million market capitalization requirement for continued listing on the Nasdaq SmallCap Market. In order for Granite's common stock to continue to be listed on the Nasdaq SmallCap Market, the market value of the common stock must be $35 million or more for a minimum of ten consecutive business days on or before October 9, 2002, and the Nasdaq Staff must determine that Granite is in compliance with the rule. If compliance cannot be demonstrated by October 9, 2002, the Nasdaq Staff will provide written notification that the common stock will be delisted and Granite will have the opportunity to request a hearing before the Nasdaq Listing Qualification panel. Granite Broadcasting Corporation is a group broadcasting company founded in 1988 to acquire and manage network-affiliated television stations and other media and communications-related properties. The Company's goal is to identify and acquire properties that management believes have the potential for substantial long-term appreciation and to aggressively manage such properties to improve their operating results. As of December 31, 2001, the Company owned and operated nine network- affiliated television stations: WTVH-TV, the CBS affiliate serving Syracuse, New York; KSEE-TV, the NBC affiliate serving Fresno-Visalia, California; WPTA-TV, the ABC affiliate serving Fort Wayne, Indiana; WEEK-TV, the NBC affiliate serving Peoria-Bloomington, Illinois; KBJR-TV, the NBC affiliate serving Duluth, Minnesota and Superior, Wisconsin; WKBW-TV, the ABC affiliate serving Buffalo, New York; WDWB-TV, the WB Network affiliate serving Detroit, Michigan; KBWB-TV, the WB Network affiliate serving San Francisco-Oakland-San Jose, California; and KNTV, the NBC affiliate serving San Francisco- Oakland-San Jose, California. The Company also owns a sixty percent indirect interest in Channel 11 License, Inc., the permittee of television station KRII, Channel 11, International Falls, Minnesota. On April 30, 2002, the Company sold KNTV to NBC. As reported in Troubled Company Reporter's May 21, 2002 edition, Ernst & Young LLP, New York City independent auditors for Granite, stated, concerning their Auditors Report under date of February 20, 2002: "Since the date of completion of our audit of the accompanying financial statements and initial issuance of our report thereon dated February 20, 2002, which report contained an explanatory paragraph regarding the Company's ability to continue as a going concern, the Company, as discussed in Note 17, has sold KNTV and the proceeds were used to satisfy its obligations under its bank credit agreement, and the Company entered into an amended and restated credit agreement. Therefore, the conditions that raised substantial doubt about whether the Company will continue as a going concern no longer exist." HOLLEY PERFORMANCE: S&P Keeping Watch After Interest Nonpayment --------------------------------------------------------------- Standard & Poor's Ratings Services placed its triple-'C' corporate credit rating on Holley Performance Products Inc. on CreditWatch with negative implications following the company's failure to make its $9.2 million interest payment due September 16, 2002, on its 12.25% senior notes due 2007. Bowling Green, Kentucky-based Holley, a specialty manufacturer of replacement automotive parts, has total debt of about $180 million. "Holley was unable to make the interest payment due to its weak cash flow generation and very limited liquidity," said Standard & Poor's analyst Martin King. Holley had only $7 million available under its revolving credit facility on July 30, 2002, and limited cash. The company's equity sponsor, Kohlberg & Co., has committed to provide $15 million of capital to the company to enhance its liquidity. The investment is conditioned upon bondholders consenting to modifications of the bond indenture that would permit the company to incur additional indebtedness. In addition, Holley is seeking amendments to financial covenant requirements of its credit facility. The indenture governing the notes provides for a 30-day grace period during which the company can make the interest payment and avoid a default. If the consents are not received and the additional investment is not made, Holley would have insufficient liquidity to make the interest payment before the expiration of the grace period, and the ratings would be lowered to 'D'. If the investment is made, the ratings could be affirmed or lowered based on Standard & Poor's assessment of Holley's ability to meet its future debt service requirements when they come due. Standard & Poor's will continue to monitor events as they develop. Holley Performance Products' 12.25% bonds due 2007 (HOLL07USR1), DebtTraders reports, are trading at 60 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HOLL07USR1 for real-time bond pricing. HORIZON MEDICAL: Files Form S-1/A with Unqualified Audit Opinion ---------------------------------------------------------------- Horizon Medical Products, Inc., (AMEX:HMP) announced the filing of an amended Form S-1 Registration Statement with the Securities and Exchange Commission on September 11, 2002, registering for resale shares of common stock issued or issuable in connection with the Company's March 2002 recapitalization. This registration statement, as amended, contains an unqualified audit opinion from the Company's independent auditors. The recently announced sale of the Company's wholly owned subsidiary Stepic Medical has resulted in sufficient funds to allow the Company to extinguish the revolving portion of its senior debt, resulting in the removal of a "going concern" paragraph from the Company's year-end audit opinion contained in its Form 10-K for the 2001 fiscal year. Marshall B. Hunt, the Company's Chairman and CEO, stated, "The recent divestiture of Stepic Medical, the pay down of our senior debt and the receipt of an unqualified audit opinion have dramatically improved our financial flexibility. This will allow us to focus more keenly on our core proprietary vascular access business, while improving our products and developing innovative technology to drive future growth." In a related event, Horizon Medical Products reported results from its Annual Meeting of Shareholders, which was held Tuesday. The Company announced that it received the required shareholder approval of, among other things, proposals to (1) declassify its Board of Directors, thereby reducing director terms from three years to one year; (2) increase the total number of authorized shares of the Company's common stock to 100 million shares from 50 million currently; and (3) issue up to 27 million shares of common stock, which may be issued upon conversion of a portion of the Company's convertible notes. Approval of these three proposals by the Company's shareholders was required under the note purchase agreement entered into in connection with the recapitalization so as to avoid an event of default thereunder. Mr. Hunt concluded, "With the overwhelming support of our shareholders, our new financial flexibility and a superior salesforce in place, we will continue to build out our Company while focusing on shareholder value and long-term growth." Horizon Medical Products, Inc., headquartered in Atlanta, is a leader in the design, development, manufacture and/or sale of technologically advanced, high value added percutaneous vascular and spinal access systems. The Company's oncology product lines include implantable ports, some of which feature VTX(TM) technology; tunneled central venous catheters; and stem-cell transplant catheters used primarily in cancer treatment protocols. VTX(TM) Technology refers to the swirling blood flow produced by a uniquely rounded reservoir design and tangential outlet that substantially reduces thrombosis, or the buildup of sludge from blood and drug byproducts, in the port reservoir and reduces certain complications that require additional surgery. The Company also markets a complete line of acute and chronic dialysis catheters. More information can be found on the Company's Web site at http://www.hmpvascular.com * * * As reported in Troubled Company Reporter's August 28, 2002 edition, the auditor's opinion related to the consolidated financial statements of Horizon Medical Products Inc., states that there is substantial doubt as to the Company's ability to continue as a going concern. Delivery of this opinion would have triggered an Event of Default under the Company's Loan Agreement and Note Purchase Agreement, as originally executed, because both agreements require audited financial statements to be delivered within 90 days of December 31, 2001 with an auditor's opinion that does not contain such going concern language. However, the default provisions relating to the audit opinion in the Loan Agreement and the Note Purchase Agreement have been waived. ICG COMMS: Wants to Sell Maroon Circle Property to MRA Meridian --------------------------------------------------------------- Brighton Shops LLC has backed out if its $1,700,000 deal. Since the time that the ICG Communications Debtors agreed to terms with Brighton, the market value of the Maroon Circle Property has been adversely affected by a continued decline in the Denver office leasing market. In addition, as a result of additional diligence, potential purchasers have raised their estimates of maintenance and tenancy costs associated with the Maroon Circle Property, and have reduced their offers accordingly. The Debtors' broker has confirmed that the market rent for property similar to the Maroon Circle Property has dropped significantly in the previous four months. This decline has reduced the broker's estimate of the market value of the Maroon Circle Property. With Brighton out of the picture, the Debtors now propose to sell the Maroon Circle Property for $1,250,000 cash to the highest remaining offeror, MRA Meridian Greens LLC. The Maroon Circle Property is subject to a commercial note and deed of trust dated September 2, 1994. The Bank of Denver holds the commercial note in the original principal amount of $1,300,000, which is secured by the deed of trust. The outstanding principal balance of this note as of July 1, 2002 is $928,666.16. Pursuant to the Loan, the Bank of Denver holds a properly perfected security interest in the Maroon Circle Property. Accordingly, upon sale of the Property, ICG Holdings -- the Property's fee simple owner and the borrower under the loan -- will utilize the sale proceeds to pay off the Bank of Denver. After payoff of the mortgage, the Debtors will net approximately $321,333.84, less sales costs and related expenses, from the sale of the Property. The Debtors have evaluated the terms and benefits of the offer to buy the Maroon Circle Property, as well as the benefits of other alternatives, including retention of the property. In their business judgment, the Debtors have determined that this offer and price represents the greatest overall benefit to their estates. The Debtors further note that: (a) The property is a surplus asset, which requires weekly upkeep even though it is empty and provides no benefit to the Debtors; (b) The Debtors' broker predicts that the commercial real estate market in Colorado will remain flat for some time and may deteriorate further given Colorado's current economic conditions; and (c) Based on the offers received in 2002 and the estimates provided by the Debtors' broker, the offer is within the range that the market perceives for the Property. The Debtors assert that neither the further marketing of the Maroon Circle Property nor the submission of the Maroon Circle Property to an auction process will produce any better offer. The salient terms of the sale of this Property to MRA Meridian are: Purchase Price: $1,250,000, paid in cash, with an earnest money deposit of $85,000 paid in escrow upon contract execution, and an additional $35,000 paid upon completion of an inspection period. Assets Included: The proposed sale will include all of the Debtors' right, title, and interest in the Maroon Circle Property, as well as the UPS system, emergency generator, Liebert cooling units, certain furniture, fixtures and the security system. Closing: The closing of the purchase and sale of the Maroon Circle Property shall be held no later than 15 days after the end of the inspection period upon which the remaining $1,130,000 is to be paid in cash. Conditions to Closing: This purchase and sale is subject to completion of customary due diligence. (ICG Communications Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ICG Services Inc.'s 13.50% bonds due 2005 (ICGX05USR1) are trading at 4.5 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ICGX05USR1 for real-time bond pricing. INTERFERON SCIENCES: Wants to Sell Certain Assets to Raise Funds ---------------------------------------------------------------- Interferon Sciences Inc., has experienced significant operating losses since its inception in 1980. As of June 30, 2002, the Company had an accumulated deficit of approximately $141.8 million. For the six months ended June 30, 2002 and the years ended December 31, 2001, 2000 and 1999, the Company had losses from operations of approximately $2.4 million, $7.8 million, $4.5 million and $5.4 million, respectively. Also, the Company has limited liquid resources. These factors raise substantial doubt about the Company's ability to continue as a going concern. Although the Company received FDA approval in 1989 to market ALFERON N Injection in the United States for the treatment of certain genital warts, it has had limited revenues from the sale of ALFERON N Injection to date. For the Company to operate profitably, the Company must sell significantly more ALFERON N Injection. Increased sales will depend primarily upon the expansion of existing markets and/or successful attainment of FDA approval to market ALFERON N Injection for additional indications, of which there can be no assurance. There can be no assurance that sufficient quantities of ALFERON N Injection will be sold to allow the Company to operate profitably. At June 30, 2002, the Company had approximately $250,000 of cash and cash equivalents, with which to support future operating activities and to satisfy its financial obligations as they become payable. Based on the Company's estimates of revenues, expenses, the timing of repayment of creditors, and levels of production, management believed that the Company had sufficient resources to enable the Company to continue operations until the end of August 2002. However, actual results, especially with respect to revenues, may differ materially from such estimate, and no assurance can be given that additional funding will not be required sooner than anticipated or that such additional funding, whether from financial markets or collaborative or other arrangements with corporate partners or from other sources, will be available when needed or on terms acceptable to the Company. Management plans to pursue raising additional capital by either (i) issuing securities in a private or public equity offering or (ii) licensing the rights to its injectable, topical or oral formulations of natural alpha interferon. Management is seeking to enter into mergers, joint ventures or other collaborations that could provide the additional resources necessary to advance the Company's most valuable programs. There can be no assurances, however, that the Company will be successful in obtaining an adequate level of financing, on terms that are acceptable to the Company, needed to continue operations. Insufficient funds will require the Company to further delay, scale back, or eliminate certain or all of its activities or to license third parties to commercialize products or technologies that the Company would otherwise seek to develop itself. In addition, the Company is continuing its efforts to sell the ALFERON N Injection business or license the rights to sell ALFERON N Injection, and is in preliminary discussions with several parties. Due to the Company's precarious financial position, if such a transaction cannot be completed in a reasonably short period of time, the Company would reevaluate its options which would include a substantial curtailing or complete cessation of the ALFERON N Injection business. JP MORGAN: Fitch Assigns BB/V4 Fund Rating to HYDI - BB Trusts -------------------------------------------------------------- Fitch Ratings assigns a 'BB/V4' bond fund credit and volatility rating of to HYDI - BB TRUSTS HYDI - BB $94 million credit- linked trust certificates due May 17, 2007 (HYDI - BB). Bond funds rated in the 'BB' category meet speculative standards with respect to the credit quality of the fund's underlying assets. The weighted average default probability of the fund's portfolio is consistent with the default probability of a 'BB' rated fixed-income obligation. Bond funds rated in the 'V4' category are considered to have moderate market risk. Total returns perform consistently over intermediate to long-term holding periods, but will exhibit some variability over shorter periods due to greater exposure to interest rates and changing market conditions. Bond fund volatility ratings are assigned on a scale of 'V1' (least volatile) through 'V10' (most volatile). Volatility ratings reflect the relative sensitivity of the fund's total return and market price to changes in interest rates and other market conditions. HYDI - BB is a credit-linked structure whereby the certificate holders obtain $94 million of credit exposure to a portfolio of U.S. high yield credits. The trust achieves credit exposure to HYDI - BB via a $94 million basket of credit default swaps with J.P. Morgan Chase Bank. The trust will use the certificate proceeds to purchase a $94 million par value guaranteed investment contract (GIC) issued by FGIC Capital Market Services, Inc. and guaranteed by General Electric Capital Corporation. The scheduled maturity date for HYDI - BB is May 17, 2007. Any subsequent ratings assigned following the removal of a reference entity from the trust's portfolio will only address the ultimate receipt of interest and principal on the adjusted outstanding certificate balance for the trust. The new rating will be based on the average credit quality of the remaining un- defaulted reference entities in the trust's then-current portfolio and will not reflect the credit risk of any reference entities removed from the trust's portfolio upon the occurrence of a credit event. As HYDI - BB approaches its maturity date, it is expected that its market risk exposures will be reduced. Therefore, the volatility rating assigned to HYDI - BB is expected to be lower over time. HYDI - BB will be held in trust by Wachovia Trust Company, National Association, as trustee, while J.P. Morgan Chase Bank will serve as grantor and swap counterparty. KMART CORP: UST Names 2 New Fin'l Institutions Committee Members ---------------------------------------------------------------- Ira Bodenstein, United States Trustee for Region 11, adds two new members to the Official Committee of Financial Institutions appointed in Kmart's chapter 11 cases: (1) Third Avenue Value Fund 767 Third Avenue New York, NY 10017 Attn: Brandon G. Stranzl (2) ESL Investments, Inc. One Lafayette Place Greenwich, CT 06830 Attn: Edward Lampert Third Avenue and ESL Investments are bond and bank-debt traders, which have accumulated more than $1,000,000,000 of Kmart's debts in between them. ESL Investments has invested on more than $1,000,000,000 of Kmart debts while Third Avenue holds $180,000,000 of Kmart bonds and trade claims. Press reports suggest these big-name distressed-debt investors are expected to stir things up in Kmart's reorganization and want to see a rapid emergence from chapter 11. (Kmart Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6), DebtTraders reports, are trading at 17 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. KNOLOGY BROADBAND: Files Prepack. Chapter 11 Petition in Georgia ---------------------------------------------------------------- On September 18, 2002, Knology, Inc., and its subsidiary, Knology Broadband, Inc., announced that they were seeking court approval of a consensual, prepackaged plan of reorganization of Broadband. Under the terms of the reorganization, all of the existing 11-7/8% Senior Discount Notes due 2007 issued by Broadband, amounting to $444.1 million principal amount at maturity, would be exchanged for an aggregate of $193.5 million of newly issued 12% Senior Notes due 2009 of Knology and shares of newly authorized preferred stock of Knology representing approximately 19.3% of Knology's outstanding stock, on an as- converted basis, after giving effect to the reorganization. As previously announced, Knology and Broadband had negotiated the prepackaged plan with Broadband's bank lenders and certain holders of the existing Broadband notes and solicited acceptances of the prepackaged plan. The prepackaged plan was accepted by 100% of those voting. As a result, Knology and Broadband believe they have received the acceptances necessary to obtain the court's approval of the prepackaged plan. Broadband has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code to obtain court approval of the plan and thereby bind all creditors to the plan, even if they did not vote on the plan. "We appreciate the overwhelming support we received from our major shareholders, our banks, and the vast majority of our bondholders throughout this process. Their endorsement has enabled us to implement the final pieces of our reorganization plan. Regrettably, we have to go the prepackaged route versus the consensual exchange route because of a few holdouts. We are excited, however, to bring closure to this process and concentrate on growing our business," said Rodger Johnson, Knology's President and Chief Executive Officer. Broadband is the only debtor in this proceeding. Knology and the operating subsidiaries of Knology and Broadband, including Interstate Telephone Company, Valley Telephone Co., Inc., Knology of Knoxville, Inc., and the Broadband subsidiaries operating in Augusta and Columbus, Georgia; Huntsville and Montgomery, Alabama; Panama City, Florida; and Charleston, South Carolina, are not involved in the proceeding. During the restructuring, Knology's operations will continue uninterrupted, customer service will be unaffected, suppliers and other trade creditors will be paid in full, and Knology's current management team and employees will remain in place. The securities discussed in this news release to be issued pursuant to the prepackaged plan will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. A copy of the Offering Circular and Solicitation Statement of Knology and Broadband describing the prepackaged plan was filed with the Securities and Exchange Commission by Knology pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 on July 25, 2002. Knology and Broadband, headquartered in West Point, Georgia, are leading providers of interactive voice, video and data services in the Southeast. Their interactive broadband networks are some of the most technologically advanced in the country. Knology and Broadband provide residential and business customers over 200 channels of digital cable TV, local and long distance digital telephone service featuring the latest enhanced voice messaging services, and high speed Internet service, which enables consumers to download video, audio and graphic files at fast speeds via a cable modem. Broadband was initially formed in 1995 by ITC Holding Company, Inc., a telecommunications holding company in West Point, Georgia, and South Atlantic Venture Funds, and Knology was formed in 1998. For more information, please visit the Company's Internet site at http://www.knology.com KNOLOGY BROADBAND: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: Knology Broadband, Inc. 1241 O.G. Skinner Drive West Point, Georgia 31833 aka Knology Holdings, Inc. Bankruptcy Case No.: 02-11514 Type of Business: Debtor provides services to certain of its affiliates which are providers of cable TV, telephone and high speed Internet access to business and residential customers. Chapter 11 Petition Date: September 18, 2002 Court: Northern District of Georgia (Newnan) Judge: W. Homer Drake Debtor's Counsel: Barbara Ellis-Monro, Esq. Michael S. Haber, Esq. Ronald E. Barab, Esq. Smith, Gambrell & Russell, LLP Suite 3100, Promenade II 1230 Peachtree Street, N.E. Atlanta, GA 30309-3592 (404) 815-3500 Total Assets: $43,646,524 Total Debts: $473,814,416 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of New York Bond debt $437,429,573 Indenture Trustee 101 Barclay Street New York, NY 10286 Attn: Corporate Trust Dept. Knology, Inc. Unsecured note $10,000,000 1241 O.G. Skinner Dr. West Point, GA 31833 CB&T Card Service Trade debt $114,022 Interstate Telephone Company Utilities $95,155 Air Travel King Trade debt $34,113 Morrison, Cohen, Singer Professional services $26,768 & Weins Jes Search Firm, Inc. Trade debt $10,000 United Business Forms & Trade debt $8,659 Supplies Communicorp, Inc. Trade debt $7,909 Softchoice Trade debt $7,733 JMS Trading Trade debt $6,647 ITC Holding Co. Trade debt $6,631 Dello Janitorial Cleaning services $6,152 White and Williams, LLP Professional services $5,817 Symon Communications Trade debt $4,586 Netiq Trade debt $4,459 Cybernetics Trade debt $4,335 Golden Gate Software, Inc. Trade debt $4,237 Blackhawk Inc. Trade debt $3,865 Eagle Technology Trade debt $3,506 Consultants MARINER POST-ACUTE: Secures Final Decree Closing Units' Cases ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware enter a final decree closing each now-administered Mariner Post-Acute Network, Inc.-subsidiary chapter 11 cases. The Court orders the Debtors to pay the United States Trustee $59,500 in post-confirmation fees. The disputed amount of any fees that the U.S. Trustee contends is due will be added to the escrow account previously established, for $734,500. Payments are due not later than September 18, 2002. (Mariner Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) MARK NUTRITIONALS: Files for Chapter 11 Protection in Texas ----------------------------------------------------------- Mark Nutritionals, Inc., the maker of Body Solutions, has filed a Chapter 11 reorganization case in the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division. The company has asked for the protection of the Bankruptcy Court while it develops an operating plan that will allow it to repay its creditors and continue to thrive as a national business. Mark Nutritionals' Body Solutions products enjoy strong brand loyalty and sales in the retail market have grown rapidly in recent months. The Chapter 11 filing will allow Mark Nutritionals, Inc., some breathing room in which to develop and implement its business plan going forward. The company has hired an experienced reorganization specialist to run the company and work out issues with its creditors, which include the many radio stations with which it has advertised in the past. Management is confident that negotiations with media creditors will be successful and allow Mark Nutritionals, Inc., to continue direct and retail marketing of its Body Solutions product, creating a win-win situation for the media companies, as well as Mark Nutritionals, Inc. Mark Nutritionals, Inc.'s management believes therefore the company will achieve a successful reorganization. MARK NUTRITIONALS: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Mark Nutritionals, Inc. 13311 San Pedro Avenue San Antonio, Texas 78216 dba Body Solutions Bankruptcy Case No.: 02-54469 Chapter 11 Petition Date: September 17, 2002 Court: Western District of Texas (San Antonio) Judge: Leif M. Clark Debtor's Counsel: William H. Oliver, Esq. Pipkin, Oliver & Bradley, LLP 1020 N.E. Loop 410 Suite 810 San Antonio, TX 78209 (210) 820-0082 Fax : (210) 820-0077 Estimated Assets: $1 to $10 Million Estimated Debts: $10 to $50 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Aloe Commodities Intl., $638,187 Inc. 2161 Hutton Drive, Suite 126 Carrollton, TX 75006 (972) 241-2451 American Factors Corp. $613,611 2323 Bryan Street, Suite 2121 Dallas, TX 75201 (214) 969-9090 Clear Channel Outdoor Advertising Services $1,164,172 15260 Ventura Boulevard 5th Floor Sherman Oaks, CA 91403 (818) 377-5300 D&A Advertising, L.P. Advertising Services $5,906,472 13311 San Pedro San Antonio, TX 78216 (210) 357-2779 Dickinson Wright, PLLC $250,654 215 South Washington Square, #200 Lansing, MI 48933 (517) 371-1730 HealthTech Development, $1,225,000 Inc. 4900 Broadway, Suite 700 San Antonio, TX 78209 (210) 601-6922 KFI-AM Radio Advertising Services $247,630 KIIS-FM Advertising Services $246,700 KMEL-FM Advertising Services $191,730 KYLD-FM Advertising Services $195,094 Kenyon & Kenyon $1,034,350 One Broadway, 12th Floor New York, NY 10004 (212) 425-7200 MJ1 Properties $2,363,279 13311 San Pedro San Antonio, TX 78216 (210) 357-2779 Metro Networks $2,068,970 2800 Post Oak Boulvard, #4000 Houston, TX 77056 (713) 407-6000 Premiere Radio Networks, Advertising Services $389,000 Inc. 15260 Ventura Boulevard, 5th Floor Sherman Oaks, CA 91403 (818) 377-5300 The Harrell Group $199,852 Viacom Outdoor $750,200 275 Madison Avenue P.O. Box 33056 New York, NY 10016 (212) 599-1100 WCCO-AM Advertising Services $311,110 625 Second Avenue South, 2nd Floor Minneapolis, MN 55402 (612) 370-0611 WFAN-AM Advertising Services $226,890 Westwood One Companies $2,845,600 7557 Rambler Road, Suite 1462 Dallas, TX 75231 (214) 373-0022 MARTIN INDUSTRIES: Exploring Options Including Bankruptcy Filing ---------------------------------------------------------------- Martin Industries, Inc. (OTCBB:MTIN), a manufacturer of premium gas fireplaces and home heating appliances, has suspended manufacturing operations due to its lack of working capital. As previously reported, the Company has been operating under severe cash constraints and has been aggressively searching for alternative financing. However, it has not been successful to date and the lack of adequate funding has forced the Company to suspend operations while it continues discussions with its primary lender as to the options available, which include securing additional financing, selling some or all of the Company's manufacturing operations or liquidating the Company and may entail filing a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. However, there is no assurance that the Company will be able to resume or continue operations given its lack of operating capital. Martin Industries designs, manufactures and sells high-end, pre- engineered gas and wood-burning fireplaces, decorative gas logs, fireplace inserts and gas heaters and appliances for commercial and residential new construction and renovation markets in the U.S. Additional information on Martin Industries and its products can be found at its Web site: http://www.martinindustries.com MCCRORY CORPORATION: Wants Court to Fix Claims Bar Dates -------------------------------------------------------- McCrory Corporation and its debtor-affiliates want the U.S. Bankruptcy Court for the District of Delaware to fix the deadline by which creditors must file their proofs of claim or be forever barred from asserting that claim. The Debtors propose that the Court set December 6, 2002 as the Bar Date for administrative claims and January 6, 2003 as the General Bar Date for prepetition claims. The Debtors report that they are conducting going out of business sales and liquidating other assets, including certain unexpired nonresidential real property leases. Currently, there are several assets the Debtors are attempting to liquidate. The Debtors intend to propose a liquidating chapter 11 plan which necessitates resolving the issues surrounding the nature, amount and status of all claims to be asserted against each of the respective estates, including prepetition and administrative claims. The Debtors identify four types of administrative claims, which are excluded in the Administrative Bar Date: i) claims of Debtors' and Committee's professionals retained by the estates during the pendency of these cases; ii) U.S. Trustee's claims; iii) claims whom scheduled by the Court to a later bar date; and iv) claims previously allowed by the Court. Any entity whose lease or executory contract has not yet been rejected by the Debtors should also file their proofs of claim on or before December 6, 2002. Exemptions to the General Prepetition Claims Bar Date are proposed for: i) claims already properly filed with The Altman Group or the Clerk of Court; ii) claims listed in the Schedules as not contingent, unliquidated or disputed; iii) claims previously allowed by this Court; and iv) claims of Debtors against other Debtors. Additionally, holders of issued and outstanding equity interests in the Debtors need not file proofs of claim or interest solely on account of any such equity interest. All proofs of claim must be filed with the Court-approved Claims Agent, Altman Group, on or before 4 p.m. of the Bar Date at: The Altman Group, Inc. 60 East 42nd Street New York, NY 10165 Attn: McCrory Claims Processing McCrory Corporation filed for chapter 11 protection on September 10, 2001. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young & Jones P.C., represents the Debtors MED DIVERSIFIED: Names Boudreau and Simms to Board of Directors --------------------------------------------------------------- Med Diversified, Inc. (PINK SHEETS: MDDV), a leading provider of home and alternate site health care services, announced Richard J. Boudreau and Gregory J. Simms have accepted and been appointed to the Company's now five-member board of directors. Boudreau, an expert in finance and capital restructuring, and Simms, a veteran sales and marketing executive, will bring a wealth of operational expertise to the Company. Boudreau currently is the founding and managing partner of Massachusetts-based Boudreau & Associates, LLC, a law firm specializing in debt restructuring, as well as the founder and principal of Cypress Capital Partners, LLC, which raises and manages funds to purchase debt instruments. He is also an officer and director of Boudreau & Associates Consulting, Inc., which assists numerous health care providers in the collection of their outstanding claims. Previous to his current positions, Boudreau founded and served as managing partner of the Massachusetts-based law firm Boudreau, Mitchell & Davis for 12 years. He has a J.D. from New England School of Law and B.S. degrees from Boston University and Massachusetts Maritime Academy. He has been a member of the Massachusetts Bar since 1987. "After conducting extensive due diligence on Med Diversified," said Boudreau, "I'm convinced the Company is poised to execute on its strategic goals and objectives. I am looking forward to working with its CEO Frank Magliochetti and the entire Med Diversified management team to help the company attain a leadership position within the home health services market." Gregory J. Simms will fortify the board with his more than 20 years of experience in sales and marketing in the technology and medical industries. He currently serves as vice president of sales and marketing for Vision2Reality, a software company that provides business performance management and strategy execution solutions. In this role, he helped create the company's signature software, known as Vision2Change, and he developed the business plan to market and sell this software. Simms has an M.B.A. from Northern Illinois University and a B.S. from Western Illinois University. "Med Diversified has established a solid reputation in the home health sector," said Simms. "It's my opinion that the company is well positioned to capitalize on its assets, and I eagerly anticipate helping Med Diversified's management team chart a path towards consistent sales growth." Med Diversified operates companies in various segments within health care industry, including pharmacy, home infusion, multi- media, management, clinical respiratory services, home medical equipment, home health services and other functions. For more information, see http://www.meddiversified.com As reported in Troubled Company Reporter's July 19, 2002 edition, Med Diversified is expecting that its total shareholders' equity deficit will reach $190 million. MEDCOMSOFT INC: Secures $680K Private Placement Equity Financing ---------------------------------------------------------------- MedcomSoft Inc. (TSE - MSF) has closed approximately $680,000 Private Placement Equity financing. The Private Placement consisted of the issue of common shares in the capital of MedcomSoft Inc. Each common share was issued at $0.18 per share. These common shares have a four-month hold period from the closing date after which they are freely tradable. "The funds obtained from the financing will be used to supply adequate training and software support to new and existing customers, and to provide sufficient support to the growing US sales and marketing activities conducted through an expanded and improved distribution channel." said Dr. Sami Aita, Chairman and Chief Executive Officer "After a successful cost reduction effort, MedcomSoft is now entering a consolidation and stabilization phase that will allow the company to slowly settle its remaining liabilities and build the solid foundation for expected future growth". MedcomSoft expects to release its 2002 fiscal year end financial statements along with its fiscal 2003 first quarter results prior to the end of October 2002. MedcomSoft Inc., designs, develops and markets software solutions for healthcare providers that are changing the way the healthcare industry captures, manages and exchanges patient information. As a result of MedcomSoft innovations, physicians and managed care organizations can now easily and securely build and exchange complete, structured, and codified electronic patient medical records. * * * As reported in the March 7, 2002 issue of the Troubled Company Reporter, MedcomSoft Inc., (TSE - MSF) initiates steps to substantially reduce of its cash burn rate through temporary layoffs of a large number of employees in both of its Canadian and US operations and the implementation of severe cost reduction measures in an effort to maintain an adequate operation in all departments, align expenditures to current sale levels and preserve cash. Faced by a sluggish market after the tragic events of September 11th and longer than expected sale cycles, and after the completion of the latest release of its flagship product MedcomSoft(R) Record version 1.2, MedcomSoft decided to tailor its operation to current market conditions and eventually re- grow the Company as sales start to materialize at a faster pace. In addition, MedcomSoft has engaged several financial advisors and interested institutions in the United States to help secure additional financing for future growth. METALS USA: Wants to Sell Indiana Property to Butler for $1.4MM --------------------------------------------------------------- As part of the efforts to relieve themselves of the burden of maintaining unprofitable assets, Metals USA, Inc., and its debtor-affiliates ask the Court to approve the sale of miscellaneous real and personal property to Butler Properties LLC, free and clear of liens, claims and encumbrances. The assets to be sold are in the Debtors' Butler, Indiana facility, used as a metal service center for the processing of metals. The Debtors are not reaping any profits from the operation of this facility. Hence, the Debtors decided to sell the facility. The Debtors undertook these marketing activities: 1. Efforts to sell the Butler Indiana Property began over a year ago; 2. The Debtors engaged Colliers Bennett & Kahnweiler Inc. as the broker; 3. Sale of the Butler Indiana Property has been advertised extensively; and 4. The Broker has shown the Butler Indiana Property to several potential buyers. Zack A. Clement, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, tells the Court that the Debtors and Butler first entered into an Asset Purchase Agreement on October 1, 2001. But Butler terminated the first Agreement on March 4, 2002. The parties drafted a second Agreement on August 7, 2002, with these terms: A. Real Property to be purchased: The real property situated at 4211 County Road 61 in Dekalb County, Indiana, together with certain fixtures, equipment, and other personal property; B. Proposed Buyer: Butler Properties, LLC, an Indiana limited liability company; C. Purchase Price: $1,425,000. The Purchase Price consists of two components, which include: -- $1,350,000 for the real property and other fixtures, equipment and personal property, and -- $75,000 for the Stamco Slitter, which is a large item of equipment used in metal work; D. Broker Commissions: 2.5% of the purchase price. By this motion, the Debtors ask the Court to approve the sale of the Indiana Assets to Butler. (Metals USA Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) METALS USA: Secures Court Approval of Disclosure Statement ---------------------------------------------------------- PR Newswire Sept 18 Metals USA, Inc., a Houston-based metals processor and distributor, announced that the disclosure statement with respect to its plan of reorganization was approved by the Bankruptcy Court at a hearing held on September 18, 2002. J. Michael Kirksey, Metals USA's chairman, president and chief executive officer, stated, "We are pleased our company is moving forward with the solicitation of its plan of reorganization. Attractive financing options are in place which we believe will put us in a position to emerge from bankruptcy at the end of October or early November. Looking forward, we intend to use our customer-focused capabilities, strong management teams and excellent financial position to provide outstanding customer solutions. We owe a great deal of gratitude to our dedicated employees, as well as our loyal customers, suppliers, and lenders for their support and commitment to Metals USA, Inc., throughout this reorganization process." Metals USA, Inc., indicated that the approval by the Bankruptcy Court of the disclosure statement and related balloting procedures was a significant milestone in its efforts to emerge from Chapter 11 bankruptcy protection. According to the Company, the approval of the disclosure statement will allow the Company to begin solicitation of its plan of reorganization. The plan of reorganization, as previously announced, provides for the conversion of in excess of $380 million of Pre-Petition indebtedness into equity reducing leverage and interest expense. The plan of reorganization contemplates that the Company will emerge from bankruptcy on or about October 31, 2002. Metals USA, Inc., is a leading metals processor and distributor in North America. Metals USA provides a wide range of products and services in the Carbon Plates and Shapes, Flat-Rolled Products, and Building Products markets. For more information, visit the Company's Web site at http://www.metalsusa.com MTS/TOWER RECORDS: Extends Closing Date for Japanese Asset Sale --------------------------------------------------------------- On September 13, 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 concerning the sale of Tower's Japanese operations, providing an extension of the closing deadline from September 13, 2002 to September 27, 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. * * * 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. NETIA HOLDINGS: Appoints Wojciech Madalski as President and CEO --------------------------------------------------------------- Netia Holdings S.A. (Nasdaq: NTIAQ/NTIDQ, WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, announced that the Company's supervisory board unanimously approved the appointment of Mr. Wojciech Madalski as the new President of the Company's management board. Mr. Kjell-Ove Blom, the acting president of the Company, submitted his resignation notice from his post on the management board. As another important step in the restructuring process, the supervisory board members selected Mr. Wojciech Madalski as President and Chief Executive Officer of the Company. Mr. Madalski's track record and extensive international management experience, especially concerning the restructuring of companies and strengthening their market position, drove their selection. Mr. Madalski's task will be to continue the Company's restructuring program. Mr. Madalski thanks Mr. Kjell-Ove Blom, who performed the function of acting president for the last 12 months, for his service to the Company during the past 5 years. "I am very pleased that Wojciech Madalski has joined our organization. I am convinced that under his management Netia will continue to strengthen its position as the largest alternative fixed-line telephony operator in Poland," commented Morgan Ekberg, chairperson of the Company's supervisory board. "Netia is a dynamically developing company with a huge potential and strong market position. I look forward to completing the difficult restructuring process and working towards continued company growth for our shareholders," said Wojciech Madalski, the new president of the Company's management board. Netia Holdings SA's 13.125% bonds due 2009 (NETH09NLN1), DebtTraders says, are trading at 18 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09NLN1 for real-time bond pricing. NORTEL NETWORKS: Unefon Sues Company for $900 Million ----------------------------------------------------- TV Azteca, S.A. de C.V. (NYSE: TZA)(BMV: TVAZTCA), one of the two largest producers of Spanish language television programming in the world, announced that Unefon, S.A. de C.V. (BMV: UNEFON), a Mexican mobile telephony operator 46.5% owned by the company, filed a lawsuit against Nortel Networks Limited, Unefon's major equipment supplier and lender, for US$900 million. As a consequence of the dispute, TV Azteca will postpone the spin off of the company's investment in Unefon to allow Unefon time to resolve its disagreements with Nortel. TV Azteca previously announced that its board of directors has approved the spin off of the company's investment in Unefon, as a distribution of Unefon shares to TV Azteca shareholders before year-end. Unefon has been seeking to restructure its debt and to negotiate a procurement agreement with Nortel since the first quarter of 2002. As part of this intention, last August, Unefon announced that it did not make a US$6 million interest payment to Nortel. Nortel responded with a notice of default to Unefon and warned that a spin off would be interpreted as a change in the firm's control, equivalent to an additional default. Further, Nortel decided to accelerate Unefon's indebtedness to Nortel, which could result in a foreclosure of the guarantees of the loan, comprised of Unefon's assets and concessions. On September 9, Unefon filed a lawsuit for US$900 million against Nortel alleging that Nortel has failed in its obligation to syndicate portions of Unefon's indebtedness, which would have triggered availability to Unefon of additional financing under its agreement with Nortel. The suit alleges that Nortel's failure to "apply its best efforts" to syndicate the indebtedness "in a diligent and timely manner" has resulted in lost profits, a diminution in equity value, and has caused Unefon to default as a consequence of Nortel's initial alleged default. "Had Unefon been able to make use of the entire US$618 million credit facility as originally agreed with Nortel, Unefon would certainly be in a different business position," said Pedro Padilla, TV Azteca's Chief Executive Officer. "We believe Unefon's current financial situation is a direct consequence of the lack of financing, and that its claims against Nortel have merit." "Therefore, we are pushing back our original schedule to give Unefon the opportunity to resolve its negotiations or legal case with Nortel. We would prefer not to negatively impact Unefon by granting a distribution of shares in a manner that could result in a broader legal dispute with its main supplier and lender," added Mr. Padilla. TV Azteca noted that it intends to submit the spin off for approval by its shareholders in the future in the same manner approved by its board of directors. The company stated that, effective Tuesday, TV Azteca stops its US$80 million financing support granted on behalf of Unefon in July 2001. As of August 30, Unefon had used US$48 million of the guarantee. TV Azteca will not allow Unefon to access the remaining US$32 million of the facility until satisfactory resolution of the dispute. TV Azteca will continue to be subject to its commitment regarding a US$35 million support to cover possible funding gaps through December 2002, as agreed in year 2000 by TV Azteca and Moises Saba. TV Azteca has not received any demand for payment from Unefon under this commitment. TV Azteca noted it does not have any direct obligations with Nortel. Even though TV Azteca believes the lawsuit of Unefon has merit, it cannot give assurances that Unefon will win it, and in the event of winning it, it cannot give assurances that the courts will grant a judgment in the amount requested. TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. OMNI USA: Fails to Maintain Nasdaq Continued Listing Standards -------------------------------------------------------------- Omni USA, Inc., (Nasdaq: OUSA) has received notice from the Nasdaq that the Company's securities have not met the minimum market value of publicly held shares of $1,000,000 required under Marketplace Rule 4310(C)(7). On June 19, 2002, the Company was also notified by Nasdaq that the Company's bid price for the Common Stock had closed below $1 per share, and therefore did not comply with Marketplace Rule 4310(C)(4). Under Marketplace Rule 4310(C)(8)(B), on June 7, 2002, the Company was provided 90 days to regain compliance, or until September 18, 2002. The Company has submitted an Appeal to the Nasdaq for a hearing by written submission which will stay the delisting procedures pending the Appellate staff determination. The Company will submit its plan to comply with the Marketplace Rules; however, the Company can not guaranty the Nasdaq Panel determination. The Company does not know when the hearing will take place, nor does the Company know the anticipated determination date. The Company board of directors, together with Company management, think the Company Common Stock has been unduly affected by outside factors and that the present Common Stock bid price reflects an excellent value and appropriate use of Company resources. On September 10, 2002, the Company board of directors approved a Stock Repurchase Plan for up to 500,000 shares of the Company's Common Stock. The Repurchase of Common Stock are to be market purchases and will be made based on market price and available resources. The Repurchase Plan shall not otherwise impair the Company's ability to fund operations or future operations. The Company will provide additional releases concerning the Nasdaq determination as they become available. OWENS CORNING: Gets OK to Execute New Minneapolis Facility Lease ---------------------------------------------------------------- Owens Corning and its debtor-affiliates obtained approval from the Court to execute an Indenture of Lease with Lexington Minneapolis LLC and a Development Agreement with Lexington and Jones Development Company LLC. The agreements are for the construction and lease of a warehouse and distribution facility that is to be constructed directly behind the Owens Corning's shingles manufacturing plant in Minneapolis, Minnesota. The Indenture of Lease gives Owens Corning the option to purchase the property after five years: Lease Year Exercise Date Price ---------- ------------- ---------- 5 11/1/07 $5,000,000 6 11/1/08 5,100,000 7 11/1/09 5,202,000 8 11/1/10 5,306,040 9 11/1/11 5,412,161 10 11/1/12 5,520,404 11 11/1/13 5,630,812 12 11/1/14 5,743,428 Owens Corning is also obligated to make an offer, which may be rejected, to purchase the Property if the plant is sold to an unrelated third party, or if the plant is shutdown for more than 30 consecutive days without plans for restoring operations. The purchase price would then be: Lease Year Exercise Date Price ---------- ------------- ---------- 1 11/1/03 $4,784,250 2 11/1/04 4,688,565 3 11/1/05 4,594,794 4 11/1/06 4,502,898 5 11/1/07 4,412,180 6 11/1/08 4,324,583 7 11/1/09 4,238,091 8 11/1/10 4,153,330 9 11/1/11 4,070,263 10 11/1/12 3,988,858 11 11/1/13 3,909,081 12 11/1/14 3,830,899 (Owens Corning Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Takes Steps to Block Reopening of Voting Period ------------------------------------------------------------ PG&E Corporation (NYSE: PCG) and Pacific Gas and Electric Company today filed their opposition to a request by the California Public Utilities Commission and the Official Creditors' Committee to reopen the voting period and allow creditors and equity holders to revote on competing plans of reorganization in PG&E's bankruptcy proceeding. Last week, the results of the voting by creditors were submitted to the U.S. Bankruptcy Court, which showed PG&E's plan of reorganization received overwhelming support from creditors, and the CPUC's alternative plan did not. PG&E's plan received approval in nine of the ten voting classes, while the CPUC's alternative was approved by only one of the eight voting classes, despite the Committee's recommendation that creditors vote for both plans. In its filing Tuesday, PG&E noted that the CPUC and Creditors' Committee have provided no new financial projections or new evidence from their financial advisors in support of the modifications they propose to the CPUC's plan. Nearly a month after announcing their amended competing plan, the CPUC and Committee still have not provided the financial details or projections to support their modifications. Simply stated, there is "no there there" in the modifications. PG&E, in its filing, also told the Bankruptcy Court that there is no reason to have creditors and equity holders revote. The modifications made by the CPUC and the Creditors' Committee do not meet the Bankruptcy Code requirements for a resolicitation. For example: -- The reorganization agreement entered into by the CPUC and Creditors' Committee is not a material change because the agreement is nearly identical to language in the CPUC's original plan. -- Issuing preferred stock rather than common stock is not a material change because the CPUC's original plan allowed issuance of either common or preferred stock, and in any event, Class 14 (Equity Interest Holders of PG&E) remains impaired by the issuance of preferred under the amended plan. -- The Creditors' Committee already had recommended creditors vote for both plans. The Committee's indication of a preference for the CPUC's plan is a change of opinion and not a material change to the CPUC's plan under the Bankruptcy Code. Even the CPUC and the Creditors' Committee have declared their amended plan is, in the words of their counsel, "not a new plan. What this involves is really relatively modest changes to the existing Commission plan." The CPUC's failure to provide any detailed information on the amended plan is particularly significant because it now recognizes the need to raise an additional $2.7 billion to resolve objections from mortgage bondholders, bringing the total amount of debt the amended plan needs to raise to more than $6.5 billion. The additional debt load further compounds the financial feasibility problems with the CPUC's plan. PG&E's filing also noted the CPUC and the Committee's amended plan also backs away from their previous guarantee that the securities will receive an investment-grade rating. They have changed their plan to say the securities will be "similar to" investment-grade securities, but not necessarily investment grade. The Bankruptcy Court is scheduled to hear this issue on September 20. PACKETPORT.COM INC: Ability to Continue Operations Uncertain ------------------------------------------------------------ PacketPort.com, Inc., is engaged in the business of manufacturing and marketing computer peripheral hardware and software products for IP Telephony solutions and services that are used for a wide range of telephony applications for the Internet, telecommunications and other data networking industries. PacketPort.com incurred a net loss of $683,498 during the six months ended July 31, 2002. In addition, cash available at July 31, 2002 is unable to support the Company's operations at present levels through the completion of fiscal year 2003 without the Company raising more capital through public or private financing or extending certain terms with certain vendors. The Company does not know if additional financing will be available or, if available, whether it will be available on attractive terms. If the Company does raise more capital in the future, it is probable that it will result in substantial dilution to its stockholders. These factors create substantial doubt as to the Company's ability to continue as a going concern. Management plans on obtaining sufficient working capital from planned Private Placements in the near term, setting up strategic partners to reduce future development costs and the expansion of revenue earnings for customers utilizing its existing products. The ability of the Company to continue as a going concern is dependent upon the success of the capital offering or alternative financing arrangements. The Company recorded a net loss of $309,791, on revenues of $23,226, for the three months ended July 31, 2002 as compared to a net loss of $862,022 on revenues of $6,935 for the comparable period ended July 31, 2001. Additionally, the Company recorded a net loss of $683,498, on revenues of $60,110, for the six months ended July 31, 2002 as compared to a net loss of $1,913,508 on revenues of $13,250 for the comparable period ended July 31, 2001. At July 31, 2002, the Company had a working capital deficit of $761,568 as compared to a working capital deficit of $693,521 at January 31, 2002. At July 31, 2002, the Company had cash and cash equivalents of approximately $1,548. Cash used in operating activities of $309,745 for the six months ended July 31, 2002 primarily consisted of the net loss, offset by non-cash charges for depreciation, amortization and common stock issued for services. The Company also invested $112,989 in software and licenses. Cash used in operating and in investing activities was financed by Microphase Corporation, which advanced the Company an additional $424,244 during the six month period. The Company's ability to continue as a going concern and its future success is dependent upon its ability to raise capital in the near term to: (1) satisfy its current obligations, (2) continue its development of products, and (3) successfully implement its plans to market the products through co-venturers and commissioned sales representatives. Management of the Company does expect that, in connection with the anticipated growth of the Company's products, it will be able to generate some increase in revenue and raise additional funds through the public or private offering of its common stock or otherwise obtain financing. However, there can be no assurance that the Company's efforts to attain profitability will be successful, that the Company will generate sufficient revenue to provide positive cash flows from operations or that sufficient capital will be available, when required, to permit the Company to realize its plans. Management expects operating losses and negative cash flow for the foreseeable future as PacketPort.com must invest in marketing and promotional activities, acquisitions, technology and operating systems. There is no certainty when, and if, PacketPort.com will achieve sufficient revenues in relation to expenses to become profitable. PLAINS ALL AMERICAN: S&P Rates $150MM Sr. Unsecured Notes at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its double-'B' rating to Plains All American Pipeline L.P.'s $150 million senior unsecured notes due 2012. In accordance with Standard & Poor's criteria on notching for unsecured debt, the notes are rated one notch lower than Plains All American's corporate credit rating because of the substantial amount of secured bank debt the partnership has outstanding. Ratings on Plains All American remain on CreditWatch, where they were placed with positive implications on June 27, 2002, following the announcement by its 29% owner Plains Resources Inc. of its plans to restructure. Houston, Texas-based Plains All American has about $600 million in outstanding debt. Plains Resources intends to spin off substantially all of its oil and natural gas exploration and production assets into a new entity, Plains Exploration & Production Co. L.P. "Historically, because Standard & Poor's viewed Plains Resources as having effective control of Plains All American, ratings on Plains All American were constrained to a level no higher than one notch above the ratings on Plains Resources due to concern that Plains Resources could voluntarily file Plains All American into bankruptcy if needed," said Standard & Poor's credit analyst John Thieroff. Following the spin-off, the constraint on Plains All American's ratings will be lifted because it will no longer be effectively controlled by the surviving, lower-rated oil and gas E&P entity. Once freed of this limitation, ratings on Plains All American will likely be raised to investment-grade. The CreditWatch listing will be resolved when the spin-off of Plains Exploration & Production is complete. PRECISION SPECIALTY: Plan Exclusivity Extended Until November 27 ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, Precision Specialty Metals, Inc., obtained an extension of its exclusive periods. The Court gives the Debtors, until November 27, 2002, the exclusive right to file its plan of reorganization and until January 25, 2003 to solicit acceptances of that Plan. Precision Specialty Metals is a specialty steel conversion mill engaged in re-rolling, slitting, cutting and polishing stainless steel and high-performance alloy hot band into standard or customized finished thin-gauge strip and sheet product. The Company filed for Chapter 11 protection on June 16, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Laura Davis Jones, Esq., at Pachulski, Stang, Ziebl, Young & Jones P.C., represents the Debtor on its restructuring efforts. RESOURCE AMERICA: S&P Rates Proposed $125 Mil. Senior Notes at B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its single-'B' senior unsecured rating to Philadelphia, Pennsylvania-based, Resource America Inc.'s proposed $125 million senior notes due 2010. At the same time, Standard & Poor's affirmed all ratings on asset-management company Resource America. The outlook is stable. "Resource America will have approximately $160 million of debt outstanding, proforma for the new notes and the completed tender offer for its $65.6 million senior notes due 2004," noted Standard & Poor's credit analyst Paul B. Harvey. The ratings on Resource America reflect its small reserve base (129 billion cubic feet equivalent (bcfe)) and a high debt level relative to earnings (approximately 4 times EBITDA). This is offset by the earnings support provided by recurring earnings and a commitment to maintain a strong cash position. Resource America is a proprietary asset management company with interests in Appalachian natural gas and oil fields, real estate, and leasing. Of these, the most important is the oil and gas operations, which contributed roughly 77% of EBITDA for fiscal year-end 2001. Resource America's oil and gas operations are conducted through investment partnerships, which typically reduce the company's portion of drilling costs to an average 25% interest. Once drilling is completed, Resource America receives the benefit of an extra 7% interest in the partnership (33% in total), which yields a 29% interest in the well's production. Resource America's drilling program features low-risk wells (98% success rate) and reliably producing properties with an average reserve life of 17.5 years. At 129 bcfe, Resource America's reserve pool is small; but good success rates plus slow and steady production, averaging 6.6 bcfe per year, should help maintain reserve and production levels. Finding and development costs net to Resource America are a low, $0.48 per million cubic feet equivalent (mcfe), reflecting the partnership structure of the company's drilling program, fees received for drilling the well, and reimbursements for general and administrative expenses. However, before these adjustments, gross F&D costs would have averaged a very high $1.49 per mcfe. The stable outlook reflects the moderate debt leverage and the support of recurring income, dividends, and service fees, to be maintained by the company. These strengths are offset by high debt relative to earnings that limits future improvements on the rating. SAFETY-KLEEN: Restructuring Canadian Loan to SK Services Unit ------------------------------------------------------------- Safety-Kleen Corp., and its debtor-affiliates obtained the Court's authority to restructure and reclassify the secured obligations of Safety-Kleen Services Inc., under the Canadian loan facilities established or contemplated under that certain amended and restated credit agreement dated April 3, 1998, in aid of consummation of the sale of substantially all of the assets and certain equity interests of the Debtors' Chemical Services Division to Clean Harbors, Inc. The Court permits Safety-Kleen Services Inc., to assume all liability of the Canadian Borrower to the Canadian Lenders under the Prepetition Credit Agreement and to TD Canada under the Canadian Operating Facility. The Court awards each of the Lenders its pro rata share of an administrative claim against Services and the other Debtors in the amount of C$71,892,450.07, plus interest of C$16,638,979. * * * The Proposed Restructuring As a requirement to consummate the Sale, Services must satisfy the Canadian Release Condition by restructuring the outstanding obligations of SK Ltd. under the Canadian Facility so as to relieve SK Ltd., of its obligations thereunder. To satisfy the Canadian Release Condition, the Debtors propose that: (1) Services would become the primary obligor to repay the obligations under the Canadian Facility in substitution for SK Ltd. -- obligations for which Services is already liable, and (2) these obligations would be allowed as an administrative expense claim, provided that the administrative expense claim would be satisfied solely through a distribution to the Lenders under the Canadian Facility of the same form of consideration that would be distributed to the Lenders under the U.S. Facility. (Safety-Kleen Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) SHENANDOAH RESOURCES: Canadian Court Grants Receivership Status --------------------------------------------------------------- Shenandoah Resources Ltd., (CDNX: "SNN") has been placed into receivership effective September 17, 2002 pursuant to a consent order of the Court of Queen's Bench of Alberta. Effective September 17, all directors and officers of Shenandoah have resigned. TI AUTOMOTIVE: S&P Assigns BB- Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services assigned its single-'B' rating to TI Automotive Finance plc's proposed $215 million senior unsecured notes due 2012. In addition, Standard & Poor's assigned its double-'B'-minus corporate credit rating to the company's parent, U.K.-based automotive components supplier TI Automotive Limited, which will guarantee the notes on a senior subordinated basis. TI Automotive has total debt of about $1 billion. The outlook is stable. "The ratings reflect TI Automotive's fair business profile as a leading provider of automotive fuel storage, carrying, and delivery systems, and its fair degree of revenue diversity," said Standard & Poor's analyst Martin King. The business profile is constrained by the highly competitive and cyclical nature of the global automotive supply industry. The ratings also incorporate TI Automotive's weak financial profile, characterized by a heavy debt load and thin cash flow protection. Proceeds from the new debt issue will be used to repay existing debt. TI Automotive is the largest provider of fuel and brake lines in North American and Europe, and is a leading provider of plastic fuel tanks, fuel pumps and modules, and powertrain components. TI Automotive has developed technologically innovative products to meet increasingly stringent design and regulatory requirements. The company is the only global vertically integrated supplier of fuel storage and delivery systems, providing all components between the fuel cap and engine. TI Automotive received amendments to its 2002 bank financial covenants. Concurrent with the proposed debt offering, future financial covenant requirements will be loosened to enhance flexibility. TI Automotive is expected to make small niche acquisitions to enhance its product or manufacturing capabilities and to increase its market positions and geographic scope, which may limit future debt reduction. TRANSACTION SYSTEMS: Harlan F. Seymour Named New Board Chairman --------------------------------------------------------------- Transaction Systems Architects, Inc., (Nasdaq:TSAIE) a leading global provider of enterprise e-payments and e-commerce solutions, announced that Harlan F. Seymour has been appointed chairman of its board of directors. Mr. Seymour has been a TSA board member since May 15, 2002. Mr. Seymour has held a wide range of senior executive positions in the health care and information services industries. He is currently active investing in business through his Limited Liability Corporation, HFS LLC. Prior to starting HFS, Mr. Seymour served on the board of directors and as executive vice president of ENVOY Corporation, a provider of EDI and transaction processing services to participants in the health care market. Prior to his work with ENVOY, Mr. Seymour held various senior management positions with Trigon Blue Cross Blue Shield of Virginia, First Financial Management Corporation and DSI Corporation. Mr. Seymour holds a B.A. in Mathematics from the University of Missouri and a Masters of Business Administration from the Keller Graduate School of Management. "I am excited to take on this role with TSA," said Mr. Seymour. "The company has a wonderful franchise in the e-payments software space, an enviable customer base and tremendous potential for the future. I look forward to working with the board and management team to make sure we fulfill that potential on behalf of all of our stakeholders." TSA's software facilitates electronic payments by providing consumers and companies access to their money. Its products are used to process transactions involving credit cards, debit cards, secure electronic commerce, mobile commerce, smart cards, secure electronic document delivery and payment, checks, high- value money transfers, bulk payment clearing and settlement, and enterprise e-infrastructure. TSA's solutions are used on more than 1,750 product systems in 71 countries on six continents. * * * As reported in Troubled Company Reporter's August 19, 2002 edition, Transaction Systems Architects received a letter from The Nasdaq Stock Market, Inc., informing the Company that it is in violation of NASDAQ Marketplace Rule 4310(C)(14), which requires the Company to obtain a review of interim financial information from the Company's independent auditors. The Company announced on August 14, 2002 that the Company's auditors have advised them they will not be able to complete their review of the Company's financial statements for the three and nine-month periods ended June 30, 2002 until its re-audit of fiscal years 1999, 2000 and 2001 is complete. The re-audit process has begun and the Company is working with KPMG LLP to complete this process. While the NASDAQ letter points out that a continuation of this violation could subject the Company's securities to delisting, the Company will request a hearing on this matter. TYCO: Files Form 8-K Report re Ex-Management's Improper Conduct --------------------------------------------------------------- Tyco International Ltd., (NYSE: TYC, BSX: TYC, LSE: TYI) filed a Form 8-K report with the Securities and Exchange Commission on its investigation, review and analysis of transactions between and among the Company and its subsidiaries and the Company's officers and directors, including the improper conduct of its former Chief Executive Officer, former Chief Financial Officer and former Chief Corporate Counsel. The Company said the improper conduct and the related misuse of Company funds by its former management does not require material adjustments to Tyco's prior financial statements because the expenditure of these funds, while unauthorized, has already been expensed in its financial statements. The Company also said the improper conduct of its former management has damaged Tyco. The amount of money improperly diverted by Tyco's former senior executives from the Company to themselves is very small in comparison with Tyco's total revenues and profits, but it is very large by any other relevant comparison; and the extent of the former executives' misconduct has harmed Tyco's reputation and credibility with investors, lenders and others. In the interest of restoring confidence in the Company, the Company's disclosures in the 8-K filing go beyond what the law requires, or what would ordinarily be disclosed in such a filing. The Company said that this pattern of improper and illegal activity occurred for at least five years prior to June 3, 2002, when former CEO L. Dennis Kozlowski resigned, and that this activity was concealed from the Board and its relevant committees. The nature of such conduct, to the extent it is now known by Tyco, is described in the filing. The areas covered in this filing include: -- Relocation Programs, under which certain executive officers, including Mr. Kozlowski, former CFO Mark Swartz and former Chief Corporate Counsel Mark Belnick used the Company's relocation program to take non-qualifying interest-free loans and unauthorized benefits that were not generally available to all salaried employees affected by relocations. Under the program, Mr. Kozlowski improperly borrowed approximately $61,690,628 in non-qualifying relocation loans to purchase real estate and other properties, Mr. Swartz borrowed approximately $33,097,925 and Mr. Belnick borrowed approximately $14,635,597. -- The "TyCom Bonus" Misappropriation, in which Mr. Kozlowski caused Tyco to pay a special, unapproved bonus to 51 employees who had relocation loans with the Company. The bonus was calculated to forgive the relocation loans of 51 executives and employees, totaling $56,415,037, and to pay compensation sufficient to discharge all of the tax liability due as a result of the forgiveness of those loans. This action was purportedly related to the successful completion of the TyCom Initial Public Offering. The total gross wages paid by the Company in this mortgage forgiveness program were $95,962,000, of which amount Mr. Kozlowski received $32,976,000 and Mr. Swartz received $16,611,000. These benefits were not approved by, or disclosed to, the Compensation Committee or the Board of Directors. However, the employees who received these bonuses were led by Mr. Kozlowski to believe that they were part of a Board-approved program. -- The "ADT Automotive Bonus" Misappropriations, in which Mr. Kozlowski authorized Tyco to pay cash, award restricted shares of Tyco common stock and purportedly forgive additional loans and make related tax payments to approximately 17 Tyco officers and employees -- even though the relocation loans of each of these 17 persons had already been paid in full. Mr. Kozlowski and Mr. Swartz received cash bonuses, restricted shares and "relocation" benefits valued approximately $25,566,610 and $12,844,632 respectively. These benefits were not approved by or disclosed to the Compensation Committee or the Board of Directors. As with the TyCom unauthorized bonus, other senior executives were misled by Mr. Kozlowski to believe that the ADT Automotive award of restricted shares was a Board-approved program. -- The Key Employee Loan (KEL) Program, in which certain executive officers borrowed money for purposes other than the payment of taxes due upon the vesting of restricted shares, or borrowed in excess of the maximum amount they were permitted under the program. Mr. Kozlowski was, by a large margin, the greatest abuser of this program. By the end of 2001, Mr. Kozlowski had taken over 200 KEL loans -- some for millions of dollars and some as small as $100 -- and his total borrowings over that time exceeded $250 million. Approximately 90% of Mr. Kozlowski's KEL loans were non-program loans, which he used to fund his personal lifestyle, including speculating in real estate, acquisition of antiques and furnishings for his properties (including properties purchased with unauthorized "relocation loans") and the purchase and maintenance of his yacht. Mr. Swartz also borrowed millions in non-program loans. Like Mr. Kozlowski, Mr. Swartz used those unauthorized loans to purchase, develop and speculate in real estate; to fund investments in various business ventures and partnerships; and for miscellaneous personal uses having nothing to do with the ownership of Tyco stock. Tyco is currently evaluating the KEL program in light of recent enactment of a prohibition upon loans by public companies to directors and executive officers. -- Attempted Unauthorized Credits to Key Employee Loan Accounts, in which Mr. Kozlowki and Mr. Swartz attempted to erase an outstanding $25 million KEL indebtedness to Mr. Kozlowski and $12.5 million in KEL indebtedness to Mr. Swartz without the knowledge or approval of the Compensation Committee. Mr. Kozlowski, through his attorneys, has acknowledged to Tyco that he sought no approvals for these credits and that, if they were entered as a credit to his KEL account, it was done so improperly, and that he is therefore obligated to repay these amounts to Tyco. Mr. Swartz has also agreed to repay his forgiven indebtedness with interest and has repaid most of the amounts. Tyco has reversed these entries and a related unauthorized entry, thereby increasing the outstanding balances for the key employee loan accounts of each individual involved. -- Executive Compensation, including authorized and unauthorized compensation to Mr. Belnick, which totaled $34,331,679 for the years 1999-2001. Belnick's compensation resulted from a secret agreement that tied Mr. Belnick's compensation to Mr. Kozlowski's compensation, thereby giving Mr. Belnick an undisclosed incentive to aid and facilitate Mr. Kozlowski's improper diversion of Company funds to Mr. Kozlowski's personal benefit. The undisclosed terms of Messrs. Kozlowski's and Belnick's agreement were incorporated in a letter dated August 19, 1998 and signed by Mr. Kozlowski. Mr. Kozlowski and Mr. Belnick agreed that the letter would not be disclosed to the Tyco Board, the Board's Compensation Committee or the Tyco Human Resources department. Mr. Belnick did, however, keep a copy of the undisclosed agreement in his personal office. -- Perquisites in excess of $50,000 per year for Mr. Kozlowski and Mr. Swartz. These perquisites were required to be reported in a proxy to the extent they exceeded $50,000. However, these amounts were not reported in the proxy because Mr. Kozlowski and Mr. Swartz represented that they would reimburse the Company for amounts in excess of $50,000. However, in most cases Messrs. Kozlowski and Swartz failed to reimburse the Company for all perquisites in excess of $50,000. Mr. Kozlowski also caused Tyco to make available to him various properties that the Company owned for his purported business use. Tyco has now discovered that Mr. Kozlowski periodically made personal use of properties in North Hampton, NH, Boca Raton, FL, New York City and New Castle, NH. -- Self-Dealing Transactions and Other Misuses of Corporate Trust, including Tyco properties purchased by or from Mr. Kozlowski without disclosure to or authorization by the Compensation Committee. For example, Mr. Kozlowski and others caused a Tyco subsidiary to purchase property in Rye, New Hampshire from Mr. Kozlowski on July 6, 2000 for $4,500,000. After an appraisal in March 2002 valued the property at $1,500,000, Tyco wrote down the carrying value of the property to the appraised value and charged Mr. Kozlowski's $3,049,576 overpayment to expense. Mr. Kozlowski also used millions of dollars of Company funds to pay for his other personal interests and activities, including a $700,000 investment in the film "Endurance"; more than $1 million for an extravagant birthday party celebration for his wife in Sardinia; over $1 million in undocumented business expenses, including a private venture; jewelry, clothing, flowers, club membership dues and wine; and an undocumented $110,000 charge for the purported corporate use of Mr. Kozlowski's personal yacht, "Endeavour." Mr. Kozlowski also tampered with evidence under subpoena, purchased a New York City apartment at its depreciated rather than its market value, and took personal credit for at least $43 million in donations from Tyco to charitable organizations. -- Information Concerning Other Transactions Between Tyco and its Directors, which includes detail about transactions between the Company and certain directors. Actions Taken by the Company The 8-K also includes previous announcements of actions taken by Tyco to address the issues the Company has been facing. These include: -- A lawsuit against Mr. Kozlowski for breach of fiduciary duties, fraud and other wrongful conduct. This suit seeks to recover actual and consequential damages, including misappropriated or otherwise unauthorized payments fraudulently made at Mr. Kozlowski's direction to himself, a former director and other senior executives and key managers; repayment of outstanding loans made to Mr. Kozlowski by a Company subsidiary; disgorgement of all compensation paid to Mr. Kozlowski from 1997 through 2002; forfeiture of all benefits awarded to Mr. Kozlowski from 1997 through 2002; and compensatory, consequential, special and punitive damages suffered by Tyco as a result of Mr. Kozlowski's wrongful conduct, including his breaches of fiduciary duties and misappropriations of Tyco funds and assets. -- A lawsuit against Mr. Belnick for a broad pattern of misconduct, including using Company funds for personal gain. -- A lawsuit against former director Frank Walsh for breaching his fiduciary responsibilities by taking a $20 million "finders fee" in connection with the CIT acquisition, without the knowledge or approval of the Board. -- The appointment of John A. Krol, former Chairman and CEO of E.I DuPont, to the Board of Directors. -- The appointment of Eric Pillmore as Senior Vice President for Corporate Governance, a newly-created position. -- The appointment of David FitzPatrick, the former Chief Financial Officer of United Technologies, as Tyco's new CFO. -- The appointment of William Lytton, the former General Counsel of International Paper, as Tyco's new General Counsel. -- The nomination of five leading figures in the business community to fill expected vacancies on the Board before the Company's next annual meeting. -- The Board's vote not to nominate or support for re- election at the Company's 2003 annual meeting any of the nine current members of the Board who were members of the Board prior to July 2002. As disclosed in its 10-Q report filed on August 14, 2002, Tyco's new Chief Executive Officer Ed Breen believes that one of his immediate priorities is to restore the credibility of Tyco with investors and regulators. For that reason, Mr. Breen has directed Boies, Schiller & Flexner LLP and the forensic accounting firm of Urbach Kahn & Werlin Advisors, in conjunction with the Company's auditor, PricewaterhouseCoopers LLP, to perform an in-depth review of Tyco's accounting beginning with fiscal year 1999 and extending into the fourth quarter of the current fiscal year. This review will include, but is not limited to, reviewing Tyco's revenues, profits, cash flow and internal auditing procedures as well as past and present accounting for acquisitions and reserves. Management notes that Tyco currently has no reason to believe that there are any material adjustments necessary to the Company's financial results. However, Mr. Breen believes that, in view of recent events at the Company, this in-depth review of accounting practices is important if the Company is to provide further assurance to shareholders and regulators that accounting decisions made at Tyco have been appropriate and consistent with Generally Accepted Accounting Principles. If this internal review were to reveal any material adjustments necessary to the Company's financial results, the Company of course would promptly disclose such adjustments. Tyco International Ltd., is a diversified manufacturing and service Company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. Tyco International Group's 6.875% bonds due 2002 (TYC02USR1), DebtTraders reports, are trading at 96 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TYC02USR1for real-time bond pricing. UNIROYAL TECHNOLOGY: Gets Interim Nod to Use $9 Million Revolver ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its stamp of approval to Uniroyal Technology Corporation and its debtor-affiliates to obtain secured postpetition financing from The CIT Group/Business Credit, Inc., for up to $9,000,000, on an interim basis pending final hearing. The Debtors admit they owe CIT approximately $6.4 million plus accrued interest and fees at the Petition Date. The Debtors submit that the Prepetition Obligations are secured by valid, nonavoidable, enforceable liens and security interests. Therefore, all of the Debtors' cash constitutes proceeds of the Prepetition Collateral, which is cash collateral of CIT. As of the Petition Date, CIT asserts that the value of the Prepetition Collateral exceeds the amount of the Prepetition Obligations. Without the DIP Financing, the Debtors tell the Court they wouldn't have sufficient available sources of working capital and financing to carry on the operation of their businesses until an orderly reorganization can be effectuated. The ability of the Debtors to finance their operations, and the availability of sufficient working capital and liquidity are essential to the Debtors' continued viability and successful reorganization. In the absence of such financing, serious and irreparable harm to the Debtors and their estates would occur. The Bankruptcy Court finds that the Debtors' critical need for financing is immediate. The Debtors have sought, but have been unable to obtain, unsecured credit allowable the Bankruptcy Code as an administrative expense. At this time, the Debtors are unable to obtain secured credit on terms and conditions more favorable to the interests of Debtors and their creditors than the terms and conditions of the DIP Loan Agreement. The Bankruptcy Court will convene a hearing to consider entry of a final DIP Financing order on September 23, 2002. Upon entry of a Final Order, the Debtors will be authorized to borrow from CIT an amount not to exceed $15,000,000 until the Termination Date, pursuant to the Debtors' Consolidated Cash Flow Projections: Week Ending ----------- 14-Sept 21-Sept 28-Sept 5-Oct ------- ------- ------- ----- Total Cash Receipts $ 885 $ 885 $1,100 $ 987 Total Cash Disbursements 1,027 600 826 1,404 Net Cash (142) 285 274 (632) Beginning Revolver 7,349 7,491 7,206 6,932 Ending Revolver 7,491 7,206 6,932 7,564 12-Oct 19-Oct 26-Oct 2-Nov ------ ------ ------ ----- Total Cash Receipts 987 987 1,092 1,061 Total Cash Disbursements 918 1,105 986 1,404 Net Cash 69 (118) 106 (343) Beginning Revolver 7,564 7,495 7,613 7,507 Ending Revolver 7,495 7,613 7,507 7,850 9-Nov 16-Nov 23-Nov ----- ------ ------ Total Cash Receipts 1,061 1,061 1,514 Total Cash Disbursements 915 1,103 988 Net Cash (69) (42) 526 Beginning Revolver 7,850 7,919 7,961 Ending Revolver 7,919 7,961 7,435 US AIRWAYS: Seeks Okay to Employ Ordinary Course Professionals -------------------------------------------------------------- John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, relates that US Airways Group customarily retains the services of attorneys, accountants, and other professionals in the ordinary course of business. During the course of these bankruptcy cases, additional Ordinary Course Professionals have been and may be retained. Thus, the Debtors seek the Court's authority to employ the Ordinary Course Professionals pursuant to Sections 105(a) and 327 of the Bankruptcy Code, and compensate them for services rendered, without additional Court approval. Mr. Butler informs the Court that prior to the Petition Date, the Debtors employed Ordinary Course Professionals for services on tax preparation and other tax advice, employee relations and compensation, corporate legal advice, legal representation on issues like personal injury and commercial matters, real estate consulting, and other matters requiring the expertise and assistance of professionals. Mr. Butler explains that it is too costly and inefficient for the Debtors to submit individual application and proposed retention orders of the numerous Ordinary Course Professionals. In addition, Mr. Butler speculates that many Ordinary Course Professionals might be unwilling to render services if they may be paid only through a formal application process. If the expertise and background knowledge of these Ordinary Course Professionals are lost, Mr. Butler says, the Debtors' estates will undoubtedly incur additional and unnecessary expenses because the Debtors will be forced to retain other professionals that are not so familiar with their business and operations. It would take additional time and effort to properly orient other professionals. The Debtors propose to pay, without formal application to the Court, 100% of the postpetition interim fees and disbursements to each Ordinary Course Professional when an invoice is submitted providing reasonable detail of the services rendered. The interim fees and disbursements should not exceed $40,000 per month per Ordinary Course Professional. All payments to Ordinary Course Professionals will become subject to approval upon application to the Court for allowance of compensation and reimbursement of expenses pursuant to Sections 330 and 331 of the Bankruptcy Code if the payments exceed $40,000 per month. Excluding Key Ordinary Course Professionals, the Debtors anticipate that the total fees paid to Ordinary Course Professionals will be between $450,000 and $550,000 per month. At the present time, the Debtors employ two Key Ordinary Course Professionals that may receive over $40,000 per month: (a) Fried, Frank, Harris, Shriver & Jacobson, and (b) Groom Law Group. When the fees payable to a Key Ordinary Course Professional exceed the $40,000 monthly limit, on the month following the invoice, the firm will submit a monthly statement for additional compensation to: * US Airways Group, Inc. 2345 Crystal Drive Arlington, VA 22227 Attn: Michelle V. Bryan * Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606 Attn: John Wm. Butler, Jr. * McGuireWoods LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 Attn: Lawrence E. Rifken * The United States Trustee 115 South Union Street, Plaza Level, Suite 210 Alexandria, Virginia 22314 * Counsel to the Debtors' postpetition lenders * Counsel to any official committee formed in these cases These parties will have 20 days to review the Monthly Statement and object to the fees requested by the Key Ordinary Course Professionals. If any of the Parties object, then the Key Ordinary Course Professionals will be required to submit a formal application to the Court. Furthermore, the Debtors ask the Court to exempt Ordinary Course Professionals from submitting separate applications for proposed retention. Instead, the Debtors propose that each attorney Ordinary Course Professional will file with the Court and serve upon the Parties an Affidavit. The United States Trustee, any creditors' committee, and the postpetition lenders will have 20 days after the receipt of each Ordinary Course Professional's Affidavit to object to the retention. The objecting party will serve objections upon the Parties and the Ordinary Course Professional on or before the Objection Deadline. If an objection cannot be resolved within 20 days, the matter will be scheduled for hearing before the Court at the next regularly scheduled omnibus hearing date. If no objection is received within 20 days after the filing of an Affidavit, the Debtors will be deemed authorized to retain Professional. The Debtors promise to file a statement with the Court every 120 days and serve the statement on the United States Trustee, counsel for their postpetition lenders, and counsel for any official committees, containing: (a) the name of such Ordinary Course Professional; (b) the aggregate amounts paid as compensation and reimbursement of expenses incurred during the 120 days; and (c) a general description of the services rendered by each Ordinary Course Professional. (US Airways Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392- 0900) US AIRWAYS: Passenger Agents Ratify New Contract Settlement ----------------------------------------------------------- US Airways passenger service agents have ratified a new contract settlement which will help the troubled airline through wage and other concessions while giving employees access to new jobs and setting up a process to strengthen retirement security. The group, including 8,000 active employees, is represented by the Communications Workers of America, and includes reservations agents, ticket counter and gate agents and employees at US Airways Club locations. The settlement was approved by 75 percent of those who participated in the ratification balloting, which was overseen by the American Arbitration Association. The new contract, which runs through Jan. 1, 2009, sets a top salary rate of $20.05 per hour (an 8-percent cut) along with a 25-cent per hour customer contact premium. There are no salary reductions for those earning less than $30,000 a year. Salaries will begin increasing on Jan. 1, 2005, rising in increments by 8.75 percent over the next four years. The employees agreed to other concessions -- most of them temporary -- in the areas of health care, overtime pay, vacation pay and holidays -- but were also able to make gains in other areas. These include improvements in the 401(k) savings plan, a 2-percent distribution of post-bankruptcy stock, new jobs at US Airways Express and Internet services, and union recognition at Mid Atlantic Airways, a new airline created by US Airways. The settlement also calls for a joint task force to explore development of a defined benefit pension plan as close to Jan. 1, 2003 as possible. The agents lost their previous pension plan 12 years ago before they had union representation. More details on the settlement can be found at: http://www.cwa.net CWA represents a total of 700,000 workers overall in telecommunications, journalism, broadcast and cable TV, electronics manufacturing, and the public sector, as well as the airline industry. US AIRWAYS: Airline Mechanics Ratify Restructuring Agreement ------------------------------------------------------------ US Airways' mechanics and related workers, represented by the International Association of Machinists District 141-M, ratified the agreement on the Company's restructuring with 57 percent voting to support the proposal. "The ratification of this last remaining employee agreement provides us with tremendous momentum to secure our financing, complete our restructuring plan, and emerge from bankruptcy early in 2003. We have the elements in place to become a competitive and successful airline, and ultimately our mechanics and related employees recognized that some painful tough decisions now can lead to success and opportunities," said Jerry A. Glass, US Airways senior vice president of employee relations. "All of our employees deserve credit for their willingness to work with us to restructure the company, preserve pensions and benefits, and give US Airways a new lease on life." US Airways has restructuring plan agreements in place with all of its employees, including 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 District 141; maintenance training specialists, also represented by the IAM, and reservations and airport ticketing and gate workers represented by the Communications Workers of America. V-ONE CORP: Fails to Comply with Nasdaq SmallCap Requirements ------------------------------------------------------------- V-ONE Corporation (Nasdaq:VONE) has received a Nasdaq Staff Determination indicating that the Company fails to comply with the minimum $2,000,000 net tangible assets or the minimum $2,500,000 stockholder's equity requirements for continued listing set forth in Marketplace Rule 4310(C)(2)(B). Accordingly, the Company's common stock is subject to delisting from the Nasdaq SmallCap Market. V-ONE Corporation will be requesting an oral hearing before the Nasdaq Listing Qualifications Panel to appeal the Staff Determination. While there can be no assurance that the Panel will grant the Company's request for continued listing, the Company is exploring all possible avenues to preserve the Nasdaq listing. Pending a final ruling, delisting will be stayed and V-ONE's common stock (Nasdaq:VONE) will continue to be listed on the Nasdaq SmallCap Market. Providing enterprise-level network security protection since 1993, V-ONE Corporation's flagship product is SmartGate(TM) VPN, a client/server Virtual Private Network technology. Fortune 1000 corporations, health care organizations and sensitive government agencies worldwide use SmartGate for their integrated authentication, encryption and access control. With its patented client deployment and management capabilities, SmartGate is a compelling solution for remote access intranets and secure extranets for electronic business between trading partners, for both conventional and wireless networks. V-ONE is headquartered in Germantown, MD. Product and network security information, white papers and the Company's latest news releases may be accessed via V-ONE's World Wide Web site at http://www.v-one.com VALEO ELECTRICAL: Plan Confirmation Hearing Set for September 25 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on September 25, 2002 at 10:00 a.m., to consider confirmation of the Joint Plan of Reorganization of Valeo Electrical Systems, Inc., and its affiliate, Valeo Electrical Systems Sales and Marketing, LLC. The Honorable Stuart M. Bernstein directs that, to be counted, creditors' ballots to accept or reject the plan must be received by the Debtors' Balloting Agent, Bankruptcy Services LLC, no later than 5:00 p.m., on September 19, 2002. Ballots may be sent by mail or by hand. All confirmation objections must be filed and served by 12:00 noon on September 19. Objections must be filed with the Office of the United States Trustee with foregoing copies also sent to the (i) Debtors' Counsel, and to the (ii) Counsel to the Official Committee of Unsecured Creditors. Valeo Electrical Systems Sales & Marketing, LLC filed for chapter 11 protection on December 14, 2001 in the U.S. Bankruptcy Court for the Southern District of New York. Richard Steven Miller, Esq., and Thomas J. Weber, Esq., at Greenberg Traurig, LLP represent the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed and estimated assets and debts of more than $100 million. WARNACO GROUP: Wants to Expand BDO Seidman's Engagement Scope ------------------------------------------------------------- The Warnaco Group, Inc., and its debtor-affiliates seek the Court's authority to further expand the scope of BDO Seidman's employment to include certain analysis and examination of the assumptions underlying the financial projections utilized in formulating a plan of reorganization, nunc pro tunc to August 2, 2002. Stanley P. Silverstein, Vice President, General Counsel and Secretary of Warnaco, tells Judge Bohanon that the expanded scope of employment include: (1) Receiving briefings from the corporate officers, group presidents and divisional CFO's or other representatives concerning historical and projected operating and financial performance; (2) Obtaining the most recent historical financial data for each division; (3) Obtaining the most recent prospective financial statements for each division with all underlying assumptions to the forecasts or projections; (4) Working with divisional and corporate management to understand the planning process and the documentation used to form the bases for the plan numbers. This will involve evaluating the assumptions used to consolidate the divisional numbers into the corporate plan as well as the assumptions used at the corporate level for items like capital structure, interest rates, cash flow requirements; and (5) Comparing each divisional set of assumptions to the historical data for the same division and for comparable companies and industries in the marketplace. BDO will utilize readily available data from recognized sources and cite same. BDO's focus will be on the quality and level of support for the operational factors contributing to the plan EBITDAR an net income numbers, specifically gross and net revenues, cost of goods sold, gross and net profit margins, SM&A, depreciation and amortization, interest, taxes and other items. Bruce B. Bingham, a Partner at BDO, reports that BDO will charge the Debtors for its Plan Assumption Analysis Services on an hourly basis, in accordance with its ordinary and customary rates for matters of this type in effect on the date the services are rendered. BDO will also seek reimbursement of all costs and expenses incurred in connection with these Chapter 11 cases. The current BDO rates are: Partners $450 - 525 Senior Managers 295 - 385 Managers 215 - 300 Associates and staff 165 - 210 Mr. Bingham estimates that the fees for the additional services will be $365,000 plus expenses. (Warnaco Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS GAS: S&P Places On Watch Dev. After Sale Announcement -------------------------------------------------------------- Standard & Poor's Ratings Services placed its single-'B'-plus rating on Williams Gas Pipelines Central Inc., on CreditWatch with developing implications. Tulsa, Oklahoma-based Central has about $175 million in outstanding debt. The action is based on parent The Williams Cos. Inc.'s announcement that it has signed a definitive agreement to sell Central to Southern Star Central Corp., a subsidiary of AIG Highstar Capital L.P., for $380 million in cash and assumption of $175 million in debt. The sale is expected to close within 60 days, subject to completion of Hart-Scott-Rodino review. "The developing CreditWatch listing reflects the uncertainty surrounding the disposition of the $175 million of senior notes at Central," according to Standard & Poor's credit analyst Jeffrey Wolinsky. "Assuming that the transaction closes, the rating could be raised, lowered, or withdrawn, depending on how the new owner structures the acquisition," he added. WORLDCOM INC: Examiner Wants to Retain Kilpatrick as Counsel ------------------------------------------------------------ Dick Thornburgh, the Examiner appointed in these cases, seeks the Court's authority to retain Kirkpatrick & Lockhart LLP as legal counsel in Worldcom Inc.'s Chapter 11 cases, nunc pro tunc to August 6, 2002. Mr. Thornburgh tells the Court that Kilpatrick will assist him in his duties as Examiner. Mr. Thornburgh relates that Kilpatrick attorneys have the experience and expertise sufficient to perform the tasks necessary to his examinations. As counsel, Kilpatrick is expected to: -- take all necessary actions to assist the Examiner in his examination; -- prepare on behalf of the Examiner all reports, pleadings, applications and other necessary documents in the discharge of the Examiner's duties; -- assist the Examiner in the other tasks that may be directed to be undertaken by the Court; and -- perform all other necessary legal services in connection with the Case. The Examiner understands that Kilpatrick will charge its standard hourly rates for the engagement, which are subject to periodic adjustments to reflect economic and other conditions. The current hourly rates for Kilpatrick attorneys and paraprofessionals range from: Partners $230 - 600 Counsel 150 - 600 Associates 130 - 325 Paraprofessionals 40 - 210 Mr. Thornburgh informs Judge Gonzalez that the Kilpatrick attorneys are admitted to practice before the Courts of the Commonwealths of Pennsylvania and Massachusetts, the states of New York, New Jersey, Florida, Texas and California, as well as the District of Columbia and various bankruptcy, district, and appellate courts across the country. The Kilpatrick attorneys have experience in bankruptcy practice and other areas of practice that may be necessary to the examination and are well qualified to represent the Examiner. Kilpatrick Partner Stephen G. Topetzes, Esq., assures the Court that the Firm does not hold any disqualifying interest adverse to the Debtors' estates in matters upon which the law firm is to be engaged by the Examiner. However, the Firm and certain of its partners, counsel and associates may represent or may have in the past represented creditors or equity security holders of the Debtors in connection with matters unrelated to the matters on which the Examiner seeks to employ Kilpatrick. These include: A. Significant Creditors: Qwest Corporation, Verizon Credit Corp., Wilmington Trust, Sun Trust, Deutsche Bank AG, ABN Amro Bank N.V., Metropolitan Life Insurance Co., and New York Life; B. Unsecured Creditors: Citibank N.A., BNP Paribas, Fleet National Bank, Mitsubishi, Credit Lyonnais, Bank One N.A., Mellon Bank N.A., Wells Fargo Bank, AMR, and Hewlett Packard; C. Bondholders: JP Morgan Chase, Bear Sterns, Bank of New York, State Street Bank, Morgan Stanley, Citibank, Boston Safe Deposit Trust Co., Northern Trust, UBS Warburg, Wells Fargo, Salomon Smith Barney, Chase Securities, Lehman Bros., Banc of America, BT Alex Brown, FUNB-Philmain, Merill Lynch, Bank of New York Clearing Services, Morgan Stanley Dean Witter, American Express, UBS PaineWebber, PNC Bank, Charles Schwab, Prudential, First Union, Neuberger Berman, LaSalle Bank, Barclays Capital, Lehman Bros. International, and JP Morgan Chase Investors. (Worldcom Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) 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. WORLDWIDE WIRELESS: Inks Pact to Sell Assets & Debts to NextWeb --------------------------------------------------------------- Worldwide Wireless Networks Inc., (OTCBB: WWWN) has signed a Definitive Agreement with NextWeb, Inc., to acquire the operating assets and certain liabilities of the Company through the Chapter 11 restructuring process. The Company states that this action to sign a Definitive Agreement with NextWeb was chosen after very careful consideration of all potential prospects and alternatives. WWWN believes that this option represents the best solution all stakeholders in the Company. WWWN stresses that during the interim, all operations will continue as normal. The Company will continue to provide full services to all of its current customers, as well as any new subscribers. The Company also plans to continue servicing all current liabilities, including lease obligations and payments to current vendors and employees, in the normal course of business. Definitive Agreement Signed as Best Option For the past year, the Company has been seeking ways to restructure its debt load. Due to the recent downturn in the telecommunications industry, Chapter 11 restructuring has been a necessary process that has helped many firms to get back on their feet. NextWeb, Inc., has provided the best financial, operational and strategic proposal to combine the businesses and produce a very strong, viable wireless Internet service provider. NextWeb brings significant stability to an industry fraught with uncertainty, due to the collapse of capital markets, on-going technology challenges and intense competitive pressures. NextWeb is a solid, US-based, wireless Internet service provider, backed by established household names such as Kaiser Permanente, Tenet Healthcare and other institutional investors. NextWeb plans to invest heavily in Worldwide Wireless Network Inc, to increase the reliability and performance of the Company's network. "The core of any business is its customer base. In order to be competitive and achieve growth goals, a company must provide excellent value and ensure complete customer satisfaction. WWWN's existing customer base is the key asset of the Company. The business combination with NextWeb will leverage this asset to obtain maximum value," stated Mr. Jerry Collazo, President and acting CEO of Worldwide Wireless Networks. "NextWeb can not only provide financial investment, but operational and strategic support as well. NextWeb has achieved success in the same business, and has built a large carrier-class network throughout the San Francisco Bay Area and Silicon Valley with no debt. They have achieved high margins, as we have, through proper operational management. To my knowledge, combined we will be the largest fixed wireless broadband provider in the US." "I am excited for the customers," added Mr. Collazo. "Not only will we enhance our network reliability, but we will be able to invest in new technology to provide large bandwidth customers with the performance they need. Also, we will be able to resume our expansion to other Southern California areas with the proper support from investors." Mr. Collazo concluded that, "The future prospects for our operations and customers now look better than ever. As we proceed down this path we will continue to announce significant milestones in our progress as we endeavor to maximize value for our stakeholders." Chapter 11 of the US Bankruptcy code allows companies to continue operating and managing their assets in the ordinary course of business. Congress enacted Chapter 11 to encourage and enable a debtor business to continue operations as a going concern, to preserve jobs and to maximize the recovery of all stakeholders. For the Chapter 11 proceedings, the Company is being represented by Mr. R. Gibson Pagter Jr. of Pagter and Miller. NextWeb, Inc., is a broadband network service provider delivering local access and advanced IP applications to corporate users over its next-generation fixed-wireless network. NextWeb's network covers over 300 square miles with access to over 15,000 business locations throughout the San Francisco Bay Area and Silicon Valley. NextWeb is a privately held company located in Freemont, California. Investors include Monet Capital, Kaiser Permanente, and Tenet Healthcare, and Healthcare Property Investments, Inc. For more information, visit them on the Web at http://www.nextweb.net Worldwide Wireless Networks is a data-centric wireless communications company headquartered in Orange, California. The Company specializes in high-speed, broadband Internet access using an owned wireless network. Other products and services include frame relay, collocation services and network consulting. The Company serves all sizes of private and public sector accounts. For more information, visit them on the Web at http://www.wwwn.com W.R. GRACE: Court Appoints Three PD Committee Special Counsels -------------------------------------------------------------- The ZAI Claimants, in the chapter 11 cases involving W. R. Grace & Co. and its debtor-affiliates, present Judge Fitzgerald with a revised, proposed designation of Special Counsel and Additional Special Counsel. The ZAI Claimants want Edward J. Westbrook, Esq., at Richardson, Patrick, Westbrook & Brickman, in Charleston, South Carolina, as the Lead Special Counsel and Darrell W. Scott, Esq., at Lukins & Annis, P.S., in Spokane, Washington, as Additional Special Counsel. The ZAI Claimants also seek the Court's authority to retain local bankruptcy counsels for purposes of performing local bankruptcy functions. The present local bankruptcy counsel, for these purposes, is William D. Sullivan, Esq., at Elzufon, Austin, Reardon, Tarlov & Mondell, in Wilmington, Delaware. The ZAI Claimants want to add to the list: -- Thomas Sobol, Esq., at Hagens Berman LLP, in Boston, Massachusetts, to perform work pertaining to discovery centered in the State of Massachusetts; and -- the law firm of Lieff, Cabraser, Heimann & Bernstein, in San Francisco, California, to perform work pertaining to discovery centered in the State of California. They are also expected to work on specific trial plan issues when their retention will promote cost-efficient preparation for the ZAI Science Trial. Fees and costs of Special Counsel (including other counsel as authorized by this Court to perform services for Special Counsel) will be capped at $1,500,000 for fees and $500,000 for costs. This fee and cost cap is subject to modification, if events prove it advisable, upon further petition to and approval of this Court. Special Counsel will submit, on a quarterly basis, verified applications for payment of fees and costs to be paid by W.R. Grace. Detailed time records of Special Counsel may be submitted, in camera. Special Counsel will submit a projected litigation budget to provide Judge Fitzgerald with general guidance as to the nature and amount of anticipated litigation costs. While it is anticipated that litigation costs will fall within the general categories and budget ranges contained in this budget projection, it is recognized that actual and ongoing litigation developments will shape the categories of costs and their amounts. Subject always to the cost cap Judge Fitzgerald imposes and Judge Fitzgerald's ultimate approval of any item of cost, Special Counsel may incur costs of the type and in the amounts that prove appropriate to prosecution of ZAI Claimants' interests. Budget Projection For ZAI Science Trial: Fees $1,500,000 Discovery phase activities (including case analyses and preparation, expert witness development, discovery re fact witnesses, expert witnesses, document production and review, and depositions). $900,000 Pre-trial motion practice, including Daubert/ In Limine/Summary Judgment motions. $200,000 Trial preparation and Trial $400,000 Costs $500,000 Expert Costs (including testing, surveys, inspections, consulting, preparation of and analysis of expert witness reports, and fees for depositions and trial testimony for approximately 5 testifying experts) $250,000 Other Litigation Expenses (including travel, lodging, copying and document imaging, deposition costs, transcription costs, phone, faxing, postage, fed ex expenses, trial exhibit costs). $250,000 Debtors Respond Grace contends that any litigation must necessarily be based on assumptions concerning the yet-to-be developed litigation. The Debtors propose to pay the ZAI Claimants' reasonable, out-of- pocket expenses -- so long as they do not exceed $250,000. The Debtors propose to pay professional fees to lawyers and paralegals representing the ZAI claimants at the rate of 75% of their standard hourly rates, but not to exceed $100 per hour. The professionals representing the ZAI Claimants will be entitled to the remaining 25% of their standard hourly rate, or the excess of the fees over $100 per hour, plus an additional 10% of their standard hourly rates, for total compensation of 110% of their standard hourly rates) in the event that the ZAI Claimants are successful in prevailing in the science trial. * * * After due deliberation, Judge Fitzgerald appoints these firms as special counsel to the PD Claimants: (1) Eluzufon Auston Reardon Tarlov & Mondell, in Wilmington William D. Sullivan, Esq., and Charlie Brown, III, Esq.; (2) Richardson, Patrick, Westbrook & Brickman, in Charleston, South Carolina -- Edward J. Westbrook, Esq. and Robert M. Turkewitz, Esq.; and (3) Lukins & Annis PS, of Spokane, in Washington -- Darrell W. Scott, Esq. and Burke D. Jackowich, Esq. In addition, the Court approves the Litigation Budget proposed by the ZAI Claimants for the science trial. (W.R. Grace Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) ZANY BRAINY: Asks Court to Delay Entry of a Final Decree -------------------------------------------------------- Zany Brainy, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to delay entry of a final decree in chapter 11 case number 01-1749 until March 3, 2003. The Debtors tell the Court that a delay is necessary to afford Zany sufficient time to complete the evaluation of all outstanding claims and interests filed against the estates and to resolve certain other outstanding matters pending before this Court. Furthermore, other matters remain outstanding with respect to Zany's chapter 11 case. Specifically: - a hearing to consider the Debtors' motion approving the assumption of the nonresidential real property lease for the space located at Fremont Hub Shopping Center in Rosville, California, is scheduled for October 29, 2002. - Zany expects that the Court will be required to adjudicate certain matters relating to the various disputes between the Debtors, FAO, Inc. and Ingram Book Company. Zany Brainy was a leading specialty retailer of high quality toys, games, books and multimedia products for children. The company filed for chapter 11 protection on May 15, 2001. Mark D. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, P.A., represent the Debtors. When the Company filed for protection from its creditors, it listed $200,862,000 in assets and $131,283,000 in debts. * J. Myers Joins Clear Thinking as Principal & Managing Director ---------------------------------------------------------------- Clear Thinking Group, Inc., the retail, consumer products, and manufacturing turnaround consultancy, announced that Joseph E. Myers, a business credit and enterprise management executive, has joined Clear Thinking Group as Principal and Managing Director. Mr. Myers most recently led the Turnaround Insolvency department at Global Credit Services, Inc. "We are very excited that Joe has joined Clear Thinking Group. His consulting experience, credit management and financial background, and senior management experience will be invaluable to Clear Thinking Group and in turn, our clients," said Stuart Kessler, CEO of Clear Thinking Group. "Our primary asset to our clients is the caliber of our principals and Joe is no exception -- he is a seasoned executive who is widely respected, published, and considered an expert in his field," Mr. Kessler added. Mr. Myers is an experienced credit professional with a 35-year career in business credit and enterprise management. Myers' varied experienced includes Regional Credit Manager for Jim Walter Corp. (Building Trades); Director of Credit at Triangle PWC (Wire and Cable); and various executive credit positions with Royal Doulton, Polo Ralph Lauren and Escada. Joe was Assistant Treasurer of Warnaco Inc. and was responsible for Accounts Receivable and Accounts Payable. He served as Managing Director, COO and CFO of Beach Patrol Inc. and CFO of AGX Corp. Joe is a CCE and a Certified Expert Witness. Joe is published in The Credit Research Foundation, including his most recent article on "Imaging for The Credit Department." Joe, a graduate of St. Peter's College, has also served on the Board of Directors of a major NACM affiliate and has lectured widely. Clear Thinking Group is a national consulting organization that provides trustworthy advice and actionable solutions to its clients. Their wide range of services help clients achieve their objectives with innovative operating and financial strategies. This side-by-side approach not only drives companies toward growth, it helps accelerate the turnaround process for Clear Thinking Group clients. Clear Thinking Group is based in Hillsborough, NJ with offices in Atlanta, and Florida. Clear Thinking Group is a wholly owned subsidiary of Liquidation World, Inc. (TSX: LQW) (NASDAQ: LIQWF). * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 24 - 26 0 Finova Group 7.5% due 2009 31 - 33 0 Freeport-McMoran 7.5% due 2006 90 - 92 0 Global Crossing Hldgs 9.5% due 2009 1.5 - 2.5 +1 Globalstar 11.375% due 2004 2.5 - 4.5 0 Lucent Technologies 6.45% due 2029 37 - 39 -20 Polaroid Corporation 6.75% due 2002 5.5 - 7.5 0 Terra Industries 10.5% due 2005 78 - 80 0 Westpoint Stevens 7.875% due 2005 36 - 38 -2 Xerox Corporation 8.0% due 2027 41 - 43 +2 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 ********* 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 ***