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/raid1/www/Hosts/bankrupt/TCR_Public/021029.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 29, 2002, Vol. 6, No. 214 Headlines ADELPHIA COMM: Options Delisted from Philadelphia Stock Exchange AES CORPORATION: Attempts to Beat the Refinancing Curve AGERE SYSTEMS: Richard L. Clemmer and Krish Prabhu Joining Board AMES DEPT.: Wins Nod to Implement Wind-Down Employee Program ANC RENTAL: Consolidating Operations at Hartsfield-Atlanta ASPECT COMMS: S&P Keeping Watch on Lower-B and Junk Ratings ASSET SECURITIZATION: S&P Junks Class B-6 Pass-Through Certs. ASSOCIATED MATERIALS: Will Publish Q3 2002 Results on Friday BELL ACTIMEDIA: S&P Rates Corp. Credit & Sr. Secured Debt at BB- BESTNET COMMUNICATIONS: Semple & Cooper Airs Going Concern Doubt BETHLEHEM STEEL: PECO Wants Prompt Decision on Rate Contracts CMS ENERGY: Closes Sale of Oil & Gas Assets in Colombia to CEPSA CLEARLY CANADIAN: Launches Private Placement of Debenture Units COMDISCO INC: Davidson Kempner, et. al. Disclose 9% Equity Stake CONTOUR ENERGY: Cash Collateral Use Extended Until December 27 COVANTA ENERGY: Wants Exclusive Period Extended Until March 27 CREDIT STORE: Committee Taps Baker & McKenzie as General Counsel DLJ MORTGAGE: Fitch Affirms Low-B Ratings on Classes B-3 and B-4 DOW CORNING: Reports Improved Profitability for Third Quarter ENRON CORP: Court Okays Sale of LNG-Pipeline Assets to Tractebel EOTT ENERGY: Turns to Glass & Associates for Financial Advice FIRST PROFESSIONALS: S&P Hatchets Ratings to BBpi from BBBpi FOUNDATION RESERVE: S&P Junks Ratings Over Low Current Liquidity FRIENDLY ICE CREAM: Will Hold Q3 Conference Call on Thursday FRISBY TECHNOLOGIES: Considering Potential Merger or Asset Sales GENTEK INC: Wants to Pay $3 Mill. in Prepetition Shipping Claims GENUITY INC: Secures Another Two-Week Standstill from Lenders GLOBAL CROSSING: Files Amended Disclosure Statement in New York GMAC COMMERCIAL: Fitch Junks Ratings on Class M and N Notes GS MORTGAGE: Fitch Ratchets Low-B Class E & F Ratings Up A Notch HORSEHEAD INDUSTRIES: Committee Gets Nod to Hire Blank Rome HYPERTENSION DIAGNOSTICS: Noteholders Waive Registration Default HYSEQ PHARMACEUTICALS: Working Capital Deficit Widens to $3 Mil. INTERLIANT: Seeking Open-Ended Lease Decision Period Extension KMART CORP: Wants to Assume Consignment Pact with M. Fabrikant KNOLOGY BROADBAND: Georgia Court Confirms Prepack. Reorg. Plan LB COMMERCIAL: Fitch Affirms Low-B and Junk Ratings on Six Notes LLS CORP: Goldsmith Closes Asset Sale to Precise Tech. For $130M LODGIAN: Wins Approval to Implement Management Incentive Program LOGIMETRICS INC: Board Appoints Recognition Group as Liquidator LTV CORP: Gets Go-Signal to Abandon Interest in 6 Foreign Units METALS USA: Asks Court to Estimate Unliquidated Foam Claims MIM CORP: Working Capital Deficit Tops $7.5 Million at June 30 NATIONAL STEEL: Transferring Donner-Coke Plant to Steelfields NEXTEL COMMS: Retires $1.5B in Debt & Preferred Securities in 3Q NORTEK INC: Look for Third Quarter Earnings Results Today NOVEX SYSTEMS: Independent Auditors Express Going Concern Doubt NTL: Committee Taps Quest to Render Advice re Euroco Business OGLEBAY NORTON: Raises $75 Million in Private Transaction ONLINE GAMING: Sets Annual Shareholders' Meeting for November 21 O'SULLIVAN INDUSTRIES: 1st Quarter Conference Call Set for Today OWENS CORNING: Sues AT Plastics et. al. to Recover Transfers PANACO: Committee Turns to Petrie Parkman for Financial Advice PPM AMERICA: Fitch Junks Class A-3 and B Notes' Ratings PREMIUM STANDARD: S&P Affirms BB Credit & Sr. Unsecured Ratings PRIMUS TELECOMMS: Brener Int'l Discloses 4.2% Equity Stake RED BUTTE ENERGY: Canglobe Dev't Acquires Controlling Interest RELIANCE GROUP: Liquidator Sues Deloitte & Touche and J. Lommele RUSSIAN TEA ROOM: Asks Court to OK Access to $400K DIP Financing SAFETY-KLEEN: Wants to Renew National Union Insurance Program SINCLAIR BROADCAST: S&P Rates $125MM Sr. Subordinated Notes at B STAR MULTICARE: Holtz Rubenstein Issues Going Concern Opinion STARWOOD HOTELS: Reports Improved Results for Third Quarter 2002 SUMMIT CBO: Fitch Junks Ratings on Class B, C & D-1 Notes UNIFORET INC: Red Ink Continues to Flow in Third Quarter 2002 US AIRWAYS: S&P Puts Non-Defaulted Ratings on Watch Developing U.S. CAN CORP: Balance Sheet Insolvency Widens to $263 Million USG CORPORATION: Dean Trafelet Proposes Amended CIBC Agreement VSOURCE INC: Completes Sale of Securities for $7.5 Million WILLIAMS COMMS: Fitch Rates Senior Secured Bank Facility at B WORLDCOM INC: Court Approves Proposed Claims Settlement Protocol W.R. GRACE: Dec. 2 Trial Date Set for Fraudulent Transfer Suits YOUTHSTREAM INC: Fails to Comply with Nasdaq Listing Guidelines ********* ADELPHIA COMM: Options Delisted from Philadelphia Stock Exchange ---------------------------------------------------------------- The Philadelphia Stock Exchange sought and obtained permission from the Securities and Exchange Commission, pursuant to Section 12(d) of the Securities Exchange Act of 1934 and Rule 12d2-2(c), to strike from listing and registration on the Philadelphia Stock Exchange the call and put option contracts issued by the Options Clearing Corporation with respect to Adelphia Communications Corp.'s securities. Philadelphia Exchange Rule 1010 provides generally that, whenever the Exchange determines that an underlying security previously approved for option transactions on the Exchange should no longer be approved, whether because it does not meet the standards for continued approval or for any other reason, the Exchange will not open any additional options series of that class for trading, and may take steps thereafter to prohibit opening purchase transactions in options series of that class previously opened to the extent it deems these actions appropriate. When an underlying security becomes no longer approved for option transactions, the Exchange may apply to strike the related option contracts from listing and trading once all option contracts have expired. Under this provision, the Philadelphia Exchange has determined to strike from listing and trading the call and put options issued by the Options Clearing Corp. relating to the common stock of ACOM. (Adelphia Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) AES CORPORATION: Attempts to Beat the Refinancing Curve ------------------------------------------------------- Standard & Poor's believes that the largest credit concern in the energy merchant sector today is liquidity and refinancing risk. Recently, Standard & Poor's estimated the volume of refinancing needs in the sector to be about $30 billion to $50 billion between now and 2006. As energy companies struggle with upcoming maturities, they are being forced to pay higher interest rates, offer security, or both. U.S.-based electricity provider AES Corp., is no exception, and is one of the first of many players that will be forced to address these concerns. Its recent announcement of a proposed bank/bond transaction that would lock up virtually its entire asset base as security in exchange for pushing off nearly all of its upcoming debt maturities through 2005, is indicative of industry challenges. AES' near-term parent level maturities include: - $300 million senior unsecured note due December 2002, - $850 million revolving credit facility due March 2003, - $200 million senior unsecured note due June 2003, - $425 million term bank loan due August 2003, and - $262.5 million secured equity linked bank loan due October 2003. AES is offering $350 million in senior secured exchange notes coupled with a $1.6 billion senior secured bank facility. The securities will refinance all of this outstanding debt, and are secured by all of AES' equity in its domestic businesses and 65% of its equity in its foreign businesses. In addition, some proceeds from asset sales are committed to paying down the bank facility and exchange notes. The transaction is contingent on 75% participation by the unsecured noteholders in the exchange offer. The $350 million exchange notes will be used to refinance the unsecured notes coming due. AES is offering 50% of face value ($150 million) at closing in cash and 50% of face value ($150 million) in the senior secured exchange note for the $300 million senior unsecured notes due December 2002. AES is offering 100% of face value in the new exchange notes for the $200 million senior unsecured notes due June 2003. The new exchange notes would mature in December 2005. The $1.6 billion senior secured bank facility would refinance the revolving credit facility and bank loans. The bank facility would include a number of tranches. There would be a $500 million senior secured revolver and a $350 million term loan facility that would refinance the current $850 million revolving credit facility due in March 2003. There would be an additional o52.25 million letter of credit that was previously outside of the revolver and would now be included in this new facility. Also, there would be a $425 million term loan facility that refinances the $425 million bank term loan due August 2003, and a $262.5 million bank term loan facility that refinances the $262.5 million secured equity linked bank loan due October 2003. The bank facilities would mature at the earliest of three years after close, shortly before the exchange notes, or June 2005, if a $150 million junior subordinated unsecured note due in June 2005 has not been refinanced. The bank facility would allow for an additional $225 million in secured debt. AES had been hoping to pay down some of these maturities as they came due out of operating cash flow and from asset-sale proceeds. When the proposed transactions were announced, Standard & Poor's lowered its corporate credit rating on AES to 'B+' from 'BB-', reflecting lower-than-expected operating cash flow and slower-than-expected progress on asset sales, resulting in AES needing to refinance rather than pay off these maturities. Apparently, banks are uncomfortable with the idea of some creditors being paid while they wait. The 'B+' rating is in line with Standard & Poor's expected cash flow compared with AES' debt burden. AES' corporate credit rating is on CreditWatch with negative implications because the rating could fall precipitously if AES were unable to execute this transaction. Standard & Poor's preliminary 'BB' rating on the bank loan and exchange notes is two notches above the corporate credit rating. This reflects Standard & Poor's high degree of confidence that the collateral package provides enough value for lenders to realize 100% recovery in a likely default or stress scenario. This rating assumes that a bankruptcy court would give priority to the secured creditors in a bankruptcy. The preliminary rating would become final when the transaction closes and Standard & Poor's receives final documentation. The successful execution of this transaction would give AES much-needed flexibility by eliminating the immediate liquidity pressure and pushing out any substantial maturities until 2005. The reliance on bank financing could present risks as banks may exert increasing control over AES' financing and operations if AES is unable to execute its deleveraging plans. Bank facility terms have yet to be finalized, but it is likely that there will be covenants that include cash maintenance requirements and asset sale targets that could restrict AES' control over cash outflows to and from subsidiaries, or affect AES' ability to pay dividends to preferred holders. Excessive debt, aggressive expansion in Latin America, weak power markets in the U.S. and the U.K., and a difficult capital markets environment have all hurt AES and its contractual counterparties, resulting in their current situation. Over the past several months, AES has taken steps to shore up its balance sheet and strengthen its liquidity. In February 2002, AES began to scale back its construction plans, reducing capital expenditures from a planned $1.2 billion in capital expenditures in 2002 to about $800 million. Also, AES has embarked on an asset sale program whose goal is to raise a total of $1 billion to $1.5 billion. AES has a contract to sell CILCORP Inc., to Ameren Corp., which is expected to raise $510 million, and AES has sold NewEnergy Inc., a retail electricity seller, raising $260 million. AES will need to continue to execute on its asset sale program and pay down debt to stabilize its rating. As assets are sold and debt is paid down, the rating could change, reflecting a revised cash flow profile and debt burden. If AES successfully executes this transaction, it would put its refinancing issues temporarily behind it and will either sink or swim based on its ability to successfully execute asset sales and generate cash flow to pay down the secured debt. By pledging its entire asset base, AES will have given nearly all it has to offer for future financing needs. However, they will have bought much-needed time to delever to a more manageable capital structure, a necessary move to allow AES to regain capital markets access. DebtTraders reports that AES Corporation's 9.375% bonds due 2010 (AES10USR1) are trading at 38 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES10USR1for real-time bond pricing. AGERE SYSTEMS: Richard L. Clemmer and Krish Prabhu Joining Board ---------------------------------------------------------------- Krish Prabhu, a partner with Morgenthaler Venture, and Richard L. Clemmer, president, CEO and chairman of PurchasePro, would join Agere Systems' (NYSE: AGR.A, AGR.B) board of directors. Clemmer will join the board immediately, while Prabhu will become a board member effective January 1, 2003. Prior to joining Morgenthaler, Prabhu held a number of key positions at Alcatel, including his role as the chief operating officer of Alcatel worldwide and as the CEO of Alcatel USA. Prabhu also previously served as the head of R&D at Rockwell International's Network Systems Transmission Division. In his current position at Morgenthaler, a venture capital and buyout firm based in Menlo Park, Calif., Prabhu focuses on the firm's telecommunications investments. Clemmer's experience includes his tenure at Texas Instruments, where he served as the senior vice president and chief financial officer of the company's Semiconductor Group. In this role, he spearheaded the company's joint ventures with firms like Hewlett-Packard and Hitachi. Clemmer served as the executive vice president and chief financial officer of Quantum Corp before joining PurchasePro in 2001. PurchasePro, which is based in Las Vegas, Nev., provides electronic procurement and strategic sourcing solutions to businesses worldwide. In September, the company announced its intention to sell substantially all its assets to Perfect Commerce Inc. "We are delighted that we are adding to our board two highly regarded executives with strong management experience and solid industry expertise," said John Dickson, president and chief executive officer, Agere Systems. "Krish and Rick have played strategic roles at major public companies and bring more than 20 years of business knowledge to Agere's board. Their unique perspective, particularly Krish's operational insights and Rick's financial background, will be invaluable as we work to grow our business in a dynamic and challenging environment." Prabhu holds a bachelor's degree in physics from Bangalore University (India), a master's in physics from the Indian Institute of Technology (Bombay, India), as well as a master's and doctorate in electrical engineering from the University of Pittsburgh. Clemmer holds a bachelor's degree in business administration from Texas Tech University and a master's in business administration from Southern Methodist University in Dallas. Other members of the Agere board include Dickson; Rajiv L. Gupta, CEO of Rohm and Haas Co.; Rae F. Sedel, managing director of Russell Reynolds Associates; and John A. Young, former president and CEO of Hewlett-Packard. H.A. Wagner, former president and CEO of Air Products and Chemicals, is the chairman of the board. Agere Systems is a premier supplier of advanced integrated circuit solutions that access, move and store network information. Agere's access portfolio includes Agere's IC solutions form the building blocks for a broad range of communications and computing applications. The company is the leader in providing storage solutions for hard disk drives with its read-channel chips, preamplifiers and system-on-a-chip solutions, and the number-two provider of Wi-Fi solutions for wireless LAN applications. For network equipment providers, Agere is a leading supplier of ICs for wired communications, network switching and access and ATM and SONET/SDH solutions. In addition, Agere is the number-two supplier of application- specific ICs (ASICs) for communications applications. More information about Agere Systems is available from its Web site at http://www.agere.com * * * As reported in the June 4, 2002 edition of Troubled Company Reporter, Standard & Poor's assigned a 'B' rating to Agere Systems Proposed $220 million Convertible Notes. AMES DEPT.: Wins Nod to Implement Wind-Down Employee Program ------------------------------------------------------------ The Union of Needletrades Industrial and Textile Employees, Local 624 doesn't like Ames Department Stores, Inc.'s proposed wind-down compensation program to the extent that it overrides the severance provisions of a collective bargaining agreement with Ames Merchandising Corporation, which took effect on January 1, 2001 and will expire on December 31, 2003. UNITE Local 624 is the collective bargaining representative of unit employees in the Debtors' warehouse/distribution center located at Mansfield, Massachusetts. The unit consisted of 230 persons performing ticketing, packing, shipping and related general warehouse services supporting the Debtors' retail stores in Eastern Massachusetts and adjacent states. The Mansfield facility ceased operations on September 20, 2002. John F. McMahon, Esq., at Angoff, Goldman, Manning, Wanger & Hynes, P.C. in Boston, Massachusetts, contends that, "until a debtor or trustee rejects a collective bargaining agreement through the steps established, [Ames] must abide by the agreement's terms." Mr. McMahon tells the Court that the Mansfield bargaining unit's population is 1% of the class. Therefore, the enforcement of their collectively bargained severance benefits will not impair or frustrate adequate recoveries for the creditors or impair Debtors' wind-down. According to Mr. McMahon, the Ames/Local 624 collective bargaining agreement provides that in the event that the Debtors decide to permanently close the Mansfield warehouse or the Jewelry unit, any union member whose employment is terminated will receive a severance allowance in accordance with this schedule: Length of Service Payment ----------------- ------- Less than 6 months 1 week 6 months - 12 years 1/2 week per year minimum 2 weeks/ maximum 6 weeks 13 years or more 7 weeks A week's severance allowance will be determined based on the employee's average regular hours, up to a maximum of 40, at the employee's regular rate of pay as of the date of termination. A year's entitlement will be determined as a full 12 months of service based on the employee's service date. Debtors Reply Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, clarifies that the Debtors are not asking that any obligations under the Collective Bargaining Agreement be discharged. Nor are the Debtors asserting that the terminated employees will never receive more than 40% of their severance. On the contrary, Mr. Bienenstock explains, the Motion merely acknowledges that the Debtors may not pay more than 40% of the severance to terminated employees at this time. "At some point, the Debtors hope to complete the severance payments to terminated employees so as to equal the same percentage recovery as other administrative expense creditors," Mr. Bienenstock tells Judge Gerber. * * * Accordingly, Judge Gerber permits the Debtors to implement the Wind-Down Severance, Retention, and Incentive Program. Four Components Under the Wind-Down Severance, Retention, and Incentive Program A. Severance Pay Program The accrued vacation and severance payments covers 21,000 store-level employees, home office employees, and field staff terminated on or after August 14, 2002. This Program provides that employees will initially receive: (a) 100% of their accrued vacation; and (b) a severance payment equal to: (i) 40% of their severance amount calculated based on the Debtors' historical severance policy for non-officers; and (ii) 25% of their severance amount calculated based on the Debtors' historical severance policy or contracts, where applicable, for officers. The aggregate amount of payment obligations under the Severance Pay Program will not exceed $25,600,000. However, it was noted that: -- to the extent of the estate's financial capacity, at the conclusion of the wind-down process, participants to this Program will ultimately receive severance and vacation payments up to the full amount due pursuant to the Debtors' current severance plan or by contract, not to exceed $56,800,000 in total; -- to the extent the estate is administratively insolvent, the Participants will receive less than the full amount due to them. However, they will receive their pro rata portion of obligations due under the Severance Pay Program and will be treated as having allowed claims for any unpaid balance; and -- should additional severance payments be made, those officers who initially received 25% of severance will first be brought to the 40% level before additional pro rata payments are made to other participating employees. B. Key Employee Retention Program This Program provides for cash payments to 120 Key Employees in the form of enhanced base salary, calculated on a weekly basis, commencing on November 1, 2002. These 120 Key Employees are considered the Debtors' wind-down team and work in areas like: * Asset Protection * Finance * Information Technology * Human Resources * Real Estate * Legal -- for salaried employees, compensation under this Program will be one week's base salary for each week worked during the wind-down period; and -- for hourly employees, compensation under the Program will be 1/2 week's base salary for each week worked during the wind-down period, not to exceed a 40-hour work week. Retention Payments will vest upon the earlier of: (a) employment termination, other than for cause; or (b) completion of the wind-down period. Payments will be made upon termination. Any Key Employee who voluntarily leaves the Debtors' employ prior to his release date will forfeit his rights under the Key Employee Retention Plan and Severance Pay Program. But if a Key Employee is released by the Debtors for any reason other than cause prior to his original release date, that Key Employee will be paid his severance and retention award earned to the earlier release date. The Key Employee will receive half of the retention amount that would have been earned for the period not actually worked. The base pay would not continue but would cease at the termination date. Under this Program, Key Employees, if any, who are asked to stay beyond August 31, 2003 will be entitled to receive on September 1, 2003 half of the amount of Retention Payment then accrued. The balance of the Retention Payment will be payable when the Key Employee's services are no longer required and employment is terminated by the Debtors. To the extent applicable, the Debtors will ensure that the Key Employees retained after November 1, 2002 will continue to receive their medical benefits or have available substantially similar medical benefits to those that were in effect prior to August 14, 2002. In addition, those officers terminated whose contracts entitle them to one year of continued medical benefits will have the right to similar medical benefits as provided in their respective employment agreements. C. Performance Incentive Program The Performance Incentive Program is designed for a limited number of Key Employees to provide additional incentive awards to maximize the recovery for unsecured claimholders. The Program will provide for a pool of funds based on the expected recovery percentage for administrative and general unsecured creditors. The pool will be administered solely by the President of Ames Department Stores, Inc., who will determine what awards are to be made subject to agreed upon targets and goals to be set by the Committee. The program will be submitted for Court approval as promptly as possible. D. Key Management Executives Program Key management employees will be guaranteed to receive a minimum of one year's base salary plus a retention bonus equal to an additional year's base salary, regardless of the date on which they are terminated. The key management employees are: -- Rolando de Aguiar, President of Ames Department Stores Mr. de Aguiar's employment is guaranteed for a minimum of one year commencing September 1, 2002. Upon termination, other than for cause or voluntary resignation, Mr. de Aguiar's severance arrangement will be the greater of: (a) 25% of the severance to which he is currently entitled pursuant to his Employment Agreement with the Debtors dated March 23, 1999, as amended; or (b) the level of severance paid to other officer-level executives. Mr. de Aguiar also will be paid Retention Payments on a weekly basis. Additionally, Mr. de Aguiar will be entitled to an incentive payment based on the Debtors' expected recovery percentage, to be determined based on objectives to be set by the Committee. This incentive payment will be separate and apart from the pool of funds to be established. Mr. de Aguiar will not participate in the Performance Incentive Program. Mr. de Aguiar's outstanding loan with the Company -- as of September 1, 2002, with a balance of $106,857.17 plus principal and interest -- will be amortized and forgiven over a one-year period commencing September 1, 2002. Any and all tax consequences as a result of loan forgiveness will be the sole obligation of Mr. de Aguiar. Should Mr. de Aguiar's employment be terminated for cause or as a result of his voluntary resignation, any then outstanding loan balance will become due and payable. -- David H. Lissy, Esq., Senior Vice President and General Counsel of Ames Department Stores, Inc. Mr. Lissy's employment is guaranteed for a minimum of one year, commencing on November 1, 2002. He will be paid Retention Payments on a quarterly basis based on the weeks worked each quarter. Upon termination, other than for cause or voluntary resignation, Mr. Lissy's severance arrangement will be the greater of: (a) 25% of the severance to which he is currently entitled; or (b) the level of severance paid to other officer-level executives. Mr. Lissy will participate in the Performance Incentive Program. -- Joseph Ettore, Chairman and CEO Effective November 3, 2002 through November 2, 2003, Mr. Ettore will become a consultant to the Debtors. He will provide services as required at a $160,000 fee for one year, payable monthly. The Debtors will be entitled to apply those monthly payments to offset Mr. Ettore's outstanding loans. The amount of his loans outstanding as of September 1, 2002, including principal and interest, is $169,678. Through November 3, 2003, Mr. Ettore will also be entitled to receive medical benefits substantially similar to those to which he was entitled pursuant to the Employment Agreement dated as of June 1, 1998, as amended. Beginning November 3, 2002, Mr. Ettore will be entitled to severance equal to the greater of: (a) 25% of the severance to which he is entitled pursuant to his Employment Agreement; or (b) the level of severance paid to other officer-level executives. (AMES Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL: Consolidating Operations at Hartsfield-Atlanta ---------------------------------------------------------- ANC Rental Corporation wants to operate both National and Alamo from a single location. Thus, the Debtors seek the Court's authority to: -- reject the Alamo Concession Agreement, and -- assume the National Concession Agreement and assign it to ANC Rental Corporation. The agreements relate to the operation of the two brand names at the William B. Hartsfield-Atlanta International Airport in Atlanta, Georgia. The agreements were entered into by the Debtors and Atlanta City. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, informs the Court that to date, National owes Atlanta City $315,254 in prepetition obligations while Alamo owes $284,316. There are no postpetition expenses outstanding for either Alamo or National. In exchange for Atlanta City's consent to the proposed consolidation, the Debtors agreed to increase its Minimum Annual Guarantee Payment under the terms of the National Concession Agreement from $1,222,800 to $1,972,800. The Debtors also agreed to pay the amounts outstanding under the Alamo Concession Agreement. ANC will enter into interim agreements with the other rental car companies at the Atlanta Airport, to commence on January 1, 2003, and will terminate on the date of occupancy of the new consolidated rental car facility at the Atlanta Airport. Aware that Alamo still shows in its records unamortized costs for its service facility at the Atlanta Airport, Atlanta City agrees to make a reasonable effort to re-let the service facility leased to Alamo pursuant to the Alamo Concession Agreement. Upon re-letting the service facility, Atlanta City will facilitate a discussion between the Debtors and any new tenant of the premises on the new tenant's willingness to reimburse the Debtors for Alamo's unamortized costs of improvements for the service facility. Ms. Fatell tells the Court that approval of the request will result in savings exceeding $4,768,000 per year in fixed facility costs and other operational cost savings. (ANC Rental Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) ASPECT COMMS: S&P Keeping Watch on Lower-B and Junk Ratings ----------------------------------------------------------- Standard & Poor's Rating Services placed its single-'B' corporate credit and triple-'C'-plus subordinated debt ratings on Aspect Communications Corp., on CreditWatch with negative implications. The action followed the announcement made by Aspect that it expects to take cash-based restructuring charges when it releases its earnings results for the quarter ended September 30, 2002. The San Jose, California-based provider of call-center and customer-relationship management software and consulting services had $189 million of debt outstanding as of June 30, 2002. Preliminary comments on results indicate that the company will take a $24 million restructuring charge to cover headcount reductions, facilities consolidation, and asset write-downs. "We are concerned that the cash-based portion of the charges, combined with weakened operating performance, will negatively affect liquidity," said Standard & Poor's credit analyst Joshua G. Davis. Aspect faces a potential cash liability of $154 million in August 2003 from the put of its outstanding convertible bond. The company indicated that cash balances were approximately $145 million, net of a $7 million portion of the $24 million charge, as of Sept. 30, 2002, and the company currently has access to an undrawn $25 million revolving bank line. Standard & Poor's will other accounting actions Aspect is considering, including potential prior-period revenue and cost restatements and asset write-downs, to determine if there are any credit implications. ASSET SECURITIZATION: S&P Junks Class B-6 Pass-Through Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B-6 of Asset Securitization Corp.'s commercial mortgage pass- through certificates series 1997-D4 to triple-'C' from single- 'B'-minus. Concurrently, all other rated classes in this transaction are affirmed. The lowered rating reflects deterioration in class B-6's credit enhancement to 1.12% from 1.50% at issuance. Further deterioration is expected upon the liquation of the sole REO asset in the pool. The affirmations reflect adequate credit enhancement for the current rating levels, the increased weighted average debt service coverage of the pool, and the defeasance of 10% of the mortgage pool. These positive characteristics are offset by a watchlist that represents one-fifth of the pool by balance and contains two of the top 10 loans. As of the October 2002 distribution date, there are no delinquent loans. The aforementioned REO asset is a 144-room Ramada Inn in Nashville Tenn. The asset became REO in October 2001. The REO has a current outstanding balance of $2 million, and has a total outstanding exposure of $2.5 million. Standard & Poor's expects a significant loss upon disposition. Since issuance, six loans have liquidated or had a discounted payoff. The cutoff balances of the six mortgage loans represented 2.7% of the pool balance at securitization. The weighted average loss severity of the liquidated loans was 19.4%. The certificates are collateralized by a pool of 116 mortgage loans with an aggregate balance of $1.3 billion, down from 122 loans at securitization with an aggregate balance of $1.4 billion. The servicer, CapMark Services L.P., provided year-end 2001 net operating income data for 97.9% of the pool (excluding defeased loans). Based on this information, Standard & Poor's calculated the WADSC to be 1.71 times. Trailing 12-month information was provided for the same percentage of the pool. The TTM WADSCR was calculated as 1.70x. This compares favorably to the 1.42x pool WADSCR reported at securitization, as well as the WADSCR of the outstanding non-defeased loans at issuance, 1.41x. However, 8.7% of the pool reported TTM debt service coverage (DSC) of less than 1.10x. The pool largely consists of hyperamortizing loans, at 96.6%. The balance is fully amortizing. All of the loans bear fixed interest rates, with a weighted average coupon of 8.16%, down from 8.66% at issuance. The next anticipated repayment date is Nov. 11, 2003. The related loan, representing (0.33% of the pool) reflected a TTM DSC of 1.98x at March 2002. Forty seven percent of the loans are secured by properties located in multiple states. The balance of the loans is secured by properties located in California (21%), New York (7%), Massachusetts (6%), Florida (5%), and New Jersey (4%), with the remainder secured by defeasance collateral. Significant property concentrations include retail (34%), office (17%), hotel (14%), and multifamily (13%). The servicer's watchlist comprises 21 loans, which equates to 19% of the pool. The watchlist includes all specially serviced assets (four), which equate to 2.5% of the pool. Significant watchlist loans include: -- A $66 million loan (5.2%) secured by six office buildings near Boston, Mass. It is the second largest loan in the pool. The June 2002 TTM DSC declined to 1.06x from 1.40x at December 2001. Year-end occupancy was reported at 55%. One of the properties lost its sole tenant in September 2001, which held all 217,500 square feet of the building. Another property, which comprises 162,300 square feet, is 31% occupied. -- A $59 million loan (4.7%) secured by two Kmart distribution warehouses. It is the fourth largest loan in the pool. The June TTM DSC was 1.24x. The warehouses are in operation and there are no subleases. Kmart has verbally indicated to the borrower that the locations will not close, and the loan is current. The only other known Kmart exposure in the pool is a $5 million loan secured by a retail property in Maryland. The lease has not been rejected for this property, in which Kmart occupies 55% of gross leasable area. The loan is current. The balance of the watchlist appears because of debt service and bankrupt tenant issues. The specially serviced assets consist of the previously mentioned REO and three other loans. The largest of these is a $25 million loan (1.9%) secured by three factory outlet centers in Arizona, Oregon, and Idaho. The borrower is an affiliate of Prime Retail, a self managed REIT that has been experiencing financial difficulties, which operates 40 outlet centers in the U.S. and Puerto Rico. The overall coverage of the loan slipped below 1.0x as of March 2002. The loan was then transferred to the special servicer due to imminent default as well as the borrower's indication to the servicer that he would seek an alternative use for the Idaho property. The three properties' DSC, based on allocated debt service, on a TTM basis at March 2002, were 1.17x, 1.79x, and .34x for the Arizona, Oregon, and Idaho properties, respectively. The loan is current. Although the second largest and fourth largest loans appear on the servicer's watchlist, the WADSCR of the top 10 loans (based on TTM NOI) is 1.55x, compared to 1.40x at origination. The DSC excludes the largest loan in the pool, with a balance of $66.6 million, which has been defeased. Standard & Poor's stressed the watchlist and specially serviced loans. The resulting credit enhancement loans adequately supported the lowered and affirmed ratings. Standard & Poor's will continue to monitor these assets. Rating Lowered Asset Securitization Corp. Commercial mortgage pass-thru certs series 1997-D4 Rating Class To From Credit Support (%) B-6 CCC B- 1.12 Ratings Affirmed Asset Securitization Corp. Commercial mortgage pass-thru certs series 1997-D4 Class Rating Credit Support (%) A-1B AAA 34.92 A-1C AAA 34.92 A-1D AAA 34.92 A-6 BBB 14.98 A-8 BBB- 11.65 B-1 BB+ 8.88 B-2 BB 6.11 B-3 BB- 5.00 B-4 B+ 3.34 B-5 B 2.23 ASSOCIATED MATERIALS: Will Publish Q3 2002 Results on Friday ------------------------------------------------------------ Associated Materials Incorporated announced that its third quarter earnings conference call will be held on Friday, November 1, 2002, at 11 a.m. Eastern Time. You are invited to listen to the call, which is available for telephone dial-in and will be broadcast live over the Internet. Company President and Chief Executive Officer Michael J. Caporale and Chief Financial Officer D. Keith LaVanway will participate. The earnings press release will be issued the morning of the conference call. What: Associated Materials Third Quarter Earnings Conference Call When: November 1, 2002, at 11 a.m. ET Where: Live over the Internet: http://www.associatedmaterials.com Simply log on to http://www.associatedmaterials.com click on Investor Information, and then click on the Conference Call icon which will appear at the top of the Overview page and the top of the Calendar of Events page. Conference Call: Dial in to: (866) 297-6399 Contact: Darlene Pecek (330) 922-2033 If you are unable to listen to the live webcast, the call will be available for replay on both the above website and at the following number: (888) 843-8996 (Conference ID #6067454) through November 8, 2002. Associated Materials is a leading manufacturer of exterior residential building products, which are distributed through 89 company-owned Supply Centers across the country. The Company produces a broad range of vinyl siding and vinyl window product lines as well as vinyl fencing, vinyl decking and vinyl garage doors. * * * As previously reported, Standard & Poor's revised the CreditWatch implications on building products manufacturer Associated Materials Inc.'s 'BB' corporate credit rating to negative from developing. Ratings on Associated Materials were placed on CreditWatch on December 20, 2001, following the company's announcement that it was pursuing strategic alternatives, including a possible sale of the company. The revision of the CreditWatch implications stems from the completion of Standard & Poor's review of the company's proposed capital structure pending its sale to Harvest Partners Inc. The transaction, valued at $468 million, will be financed with $296 million of cash and debt and $172 million of equity. If the acquisition is completed as currently structured, Standard & Poor's expects to lower its corporate credit rating on Associated Materials Inc., to double-'B'-minus, reflecting a more leveraged capital structure. The outlook will be stable. In addition, Standard & Poor's expected to assign a single-'B' rating to the company's proposed $165 million subordinated notes due 2012 to be issued under Rule 144A with registration rights. The company's existing $75 million 9-1/4% subordinated notes due 2008 are expected to be redeemed, and rating on these notes will be withdrawn when the transaction closes. BELL ACTIMEDIA: S&P Rates Corp. Credit & Sr. Secured Debt at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its double-'B'-minus long-term corporate credit and senior secured debt ratings to directories publisher Bell ActiMedia Inc. At the same time, the double-'B'-minus senior secured debt rating was assigned to the company's C$1.64 billion bank facility, and the single-'B' subordinated debt ratings were assigned to the Montreal, Quebec- based company's C$600 million senior subordinated loans due 2012. The outlook is stable. Bell ActiMedia's aggregate C$1.64 billion bank facility is rated the same as the corporate credit rating. The facility is secured by all the tangible and intangible assets of the company, which include trademarks. Although the facility derives strength from its secured position, under Standard & Poor's simulated default scenario it is unclear that a distressed enterprise value would be sufficient to fully cover the entire loan facility. The bank loan and subordinated debt issue will be used to partially fund Kohlberg Kravis Roberts & Co.'s and the Ontario Teachers' Pension Plan Board's C$3.0 billion purchase price of Bell ActiMedia from Bell Canada. As a part of the transaction, BCE Inc., will acquire a 10% ownership interest in the new company, while KKR will own 60% and OTPPB will own 30%. "The ratings on Bell ActiMedia reflect the company's leading market position as Canada's largest directory publisher, and its strong brand equity and intellectual property ownership," said Standard & Poor's credit analyst Linli Chee. The ratings also take into consideration Bell ActiMedia's predictable revenue and EBITDA stream, and its commitment to maintaining a prudent capital structure through planned deleveraging in the medium term. These positive factors are mitigated by the company's moderate EBITDA base and limited geographic focus outside of the provinces of Ontario and Quebec, as well as by the low growth industry in which it operates. With an annual circulation of 17 million, Bell ActiMedia produces more than 209 revenue-generating directories, which support a pro forma revenue and EBITDA base of C$612 million and C$342 million, respectively. The company's customer base is located mainly in Ontario and Quebec, where it has long maintained market shares of 92% and 95%, respectively. Revenues are derived from advertising dollars, representing a local customer base of about 258,000 advertisers (or a 43.4% penetration rate) consisting of small to midsize businesses. The company also derives revenues from national accounts, Internet directory advertising, and an ownership interest in Aliant ActiMedia Inc., the dominant directories publisher in the Atlantic provinces. Local businesses represent about 90% of total print directory revenues, as directories tend to be their only form of advertising. The predictable revenue stream reflects high revenue renewal rates of around 87%. With total debt to EBITDA at 6.25 times, pro forma leverage is high for the current rating. Nevertheless, Standard & Poor's expects internally generated funds will be applied toward lowering total debt to EBITDA to around 5.05x by the end of 2004. BESTNET COMMUNICATIONS: Semple & Cooper Airs Going Concern Doubt ---------------------------------------------------------------- BestNet Communications Corp., a Nevada corporation, (formerly Wavetech International, Inc.) is currently conducting minimal operations while actively pursuing the implementation of its business strategy of providing Internet telephony services. The Company has recorded net operating losses in each of the previous eight years and does not anticipate realization of full operations until its strategy is fully implemented. In the Auditors Report of October 19, 2001, of Semple & Cooper, LLP, of Phoenix, AZ, the auditors had this to say about the Company: "[T]he Company has incurred significant losses from operations, anticipated additional losses in the next year and has insufficient working capital as of August 31, 2001 to fund the anticipated loss. These conditions raise substantial doubt as to the ability of the Company to continue as a going concern." Subsequent to August 31, 2001, the Company managed to raise an additional $409,250, net of expenses for working capital purposes. With these funds management believes the Company has sufficient capital to fund operations for a period of four to six months. Management is in the process of arranging for additional funding and a possible strategic partner. However, there is no certainty that such additional funding will be available. These conditions were raised in the fiscal year ended August 31, 2001, and reported to the SEC on October 16, 2002. BETHLEHEM STEEL: PECO Wants Prompt Decision on Rate Contracts ------------------------------------------------------------- In 1996, PECO Energy Company and Bethlehem Steel Corporation, also known as Lukens, Inc., entered into a 10-year Special Rate Contract for the provision of electric service to the Debtors' two large industrial facilities in Coatesville and Conshohocken, Pennsylvania. Robert T. Barnard, Esq., at Thompson Hine LLP, in New York, relates that the rate for electricity under the Contract is below market rate. Hence, the Debtors realized as much as $22,574,993 in postpetition savings. But despite the savings, Mr. Barnard notes that the Debtors failed to pay a $2,126,088 prepetition obligation under the Contract. Thus, late fees at 2% per month continue to accrue on the debt and already totals $464,167. PECO would have been willing to forego the payment of adequate assurance of payment in late 2001 if the Debtors immediately agreed to assume the Special Rate Contract and promptly pay the cure amount. But the Debtors continue to refuse to make a decision whether to assume or reject the Special Rate Contract. Thus, PECO asks the Court to compel the Debtors to assume or reject the Special Rate Contract. Since the Debtors have already made payments of at least $106,000,000 to certain prepetition creditors, Mr. Barnard tells Judge Lifland that it is not unreasonable to require the Debtors to assume or reject the Special Rate Contract at this time. The Debtors, Mr. Barnard notes, have had one full year to assess the importance and value of the Special Rate Contract to their ongoing business. "If the Debtors indeed intend to reorganize, there is no question that they will assume the Special Rate Contract," Mr. Barnard says. Otherwise, Mr. Barnard notes, it would be highly inequitable to force PECO to continue to provide the Debtors with substantial postpetition benefits, well in excess of the prepetition amounts the Debtors owe to PECO. Mr. Barnard advises the Court that if the Debtors reject the Special Rate Contract, PECO will assert an administrative expense claim for the difference between the market rate and contract rate for the postpetition period. (Bethlehem Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1), DebtTraders reports, are trading at 7 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for real-time bond pricing. CMS ENERGY: Closes Sale of Oil & Gas Assets in Colombia to CEPSA ---------------------------------------------------------------- CMS Energy Corporation (NYSE: CMS) -- whose senior unsecured debt is currently rated by Fitch at B+ -- has closed the sale of its oil and gas assets in Colombia to Compania Espanola de Petroleos S.A. of Spain (CEPSA) for an undisclosed price. The transaction is part of a previously announced sale of all of CMS Energy's exploration and production business for approximately $232 million. The closing marks the completion of CMS Energy's exit from the oil and gas exploration and production business. Cash proceeds from the sale will be used to continue paying down a $295.8 million revolving credit facility for CMS Energy due March 31, 2003. In September, CMS Energy paid off a $150 million CMS Enterprises term loan due in December 2002. CMS Energy Corporation is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, independent power generation, and energy marketing, services and trading. For more information on CMS Energy, please visit its Web site at http://www.cmsenergy.com CLEARLY CANADIAN: Launches Private Placement of Debenture Units --------------------------------------------------------------- Clearly Canadian Beverage Corporation (TSX: CLV; OTCBB: CCBC) announced a proposed private placement of debenture units, raising gross proceeds of approximately $600,000. Each debenture unit would consist of a secured convertible debenture in the principal amount of $1,000 and 1,250 share purchase warrants of the Company. The debentures would be repayable after one year from closing, subject to acceleration in the event of a default and subject to the Company's right to prepay the debentures at any time. Interest on the debentures would be calculated and payable monthly in arrears at a rate of 10% per annum. The debentures would be convertible into common shares of the Company at the election of the holder at any time prior to repayment, based on a conversion price of $0.80. As security for the debentures, the Company would grant investors a general security interest in all of its present and future assets, which security will be subordinate to existing indebtedness. Each warrant issued as part of the debenture units would entitle its holder to purchase one common share of the Company at a price of $0.80 for a period of two years. Subject to the receipt of regulatory and board approvals, it is expected that the debenture unit financing will be completed on or before November 30, 2002, and it is further expected that the debenture units will be purchased by insiders and arm's length parties. Proceeds from the financing will be used for working capital purposes. Based in Vancouver, B.C., the Company markets premium alternative beverages and products, including Clearly Canadian(R) sparkling flavored water, Clearly Canadian O+2(R) and Tre Limone(TM), which are distributed in the United States, Canada and various other countries. The Company also holds the exclusive license to manufacture, distribute and sell certain Reebok beverage products in the United States, Canada and the Caribbean. Additional information on the Company may be obtained on the world wide web at http://www.clearly.ca * * * As previously reported, Clearly Canadian Beverage Corporation concluded the engagement of McDonald Investments as its investment banker and financial advisor. Working with McDonald Investments, Clearly Canadian completed a strategic restructuring in 2001 and the first quarter of 2002, highlighted by the Company's U.S. subsidiary's divestiture of its U.S.-based production facility assets and bottling plant and its branded water and private label bottled water business - initiatives that Clearly Canadian anticipates will reduce costs while improving its financial and operational position. Clearly Canadian Beverage Corp., at December 31, 2001, reported a working capital deficit of about $400,000, and a total shareholders' equity deficiency of close to $49 million. COMDISCO INC: Davidson Kempner, et. al. Disclose 9% Equity Stake ---------------------------------------------------------------- Davidson Kempner et al advise the Securities and Exchange Commission of their ownership in Comdisco's Common Stock, par value $0.01 per share. Shares Equity Shareholder Owned Stake ----------- ------ ------ Davidson Kempner International, Ltd. 151,984 3.60% Davidson Kempner Institutional Partners, LP 134,160 3.20% Davidson Kempner Partners 76,745 1.80% M.H. Davidson & Co. 6,128 0.15% M.H. Davidson & Co., LLC 401(K) Plan 389 NA Davidson Kempner International Advisors, LLC 160,172 3.80% Davidson Kempner Advisers, Inc. 134,160 3.20% MHD Management Co. 76,745 1.80% Marvin H. Davidson 377,576 9.00% Thomas L. Kempner, Jr. 377,956 9.00% Stephen M. Dowicz 377,749 9.00% Scott E. Davidson 377,965 9.00% Michael J. Leffell 377,630 9.00% Timothy I. Levart 377,594 9.00% Robert J. Brivio, Jr. 377,594 9.00% Marvin H. Davidson Foundation, Inc. 318 NA Susan and Scott Davidson Foundation 106 NA Marvin H. Davidson, Trustee, Trust U/W Sally Davidson 53 NA Thomas Kempner and Thomas L. Kempner, Jr., Trustee, Trust FBO Thomas Nathaniel Kempner 5 NA Thomas L. Kempner Jr., Foundation, Inc. 285 NA Thomas L. Kempner, Jr., Trustee, Trust FBO Trevor M. Kempner 5 NA Sexton Freund 1984 Family Trust 26 NA Thomas L. Kempner, Jr., Trustee, Trust FBO Jessica S. Kempner 5 NA Thomas L. Kempner, Jr., IRA 36 NA Michael and Lisa Leffell Foundation 36 NA Each of the Principals may be deemed to beneficially own an aggregate of 377,205 Shares as a result of their voting and dispositive power over the 377,205 Shares beneficially owned by Davidson Kempner International Advisors, Davidson Kempner International, Ltd., Davidson Kempner Institutional Partners, Davidson Kempner Partners, and M.H. Davidson & Co. Each of the Principals, other than Marvin H. Davidson, may be deemed to beneficially own an aggregate of an additional 389 Shares as a result of their serving as trustees of the 401(K) Plan. Davidson Kempner International Advisors may be deemed to beneficially own the 151,984 Shares beneficially owned by Davidson Kempner International, Ltd. and an additional 8,188 Shares held in an account over which Davidson Kempner International Advisors has discretionary authority as a result of its voting and dispositive power over those Shares. Davidson Kempner Advisers Inc. may be deemed to beneficially own the 134,160 Shares beneficially owned by Davidson Kempner Institutional Partners as a result of its voting and dispositive power over those Shares. MHD may be deemed to beneficially own the 76,745 Shares beneficially owned by Davidson Kempner Partners as a result of its voting and dispositive power over those Shares. As President of MHD Foundation and Trustee of Davidson Trust, Marvin H. Davidson may be deemed to beneficially own the 318 Shares beneficially owned by MHD Foundation and the 53 Shares owned by Davidson Trust as a result of his voting and dispositive power over those Shares. As President of SSD Foundation, Scott E. Davidson may be deemed to beneficially own the 106 Shares beneficially owned by SSD Foundation as a result of his voting and dispositive power over those Shares. As Trustee of each of the TNK Trust, TMK Trust, JSK Trust and SF Trust, President of TLK Foundation and grantor of IRA, Mr. Kempner may be deemed to beneficially own the 5 Shares beneficially owned by TNK Trust, the 5 Shares beneficially owned by TMK Trust, the 5 Shares beneficially owned by JSK Trust, the 26 Shares beneficially owned by SF Trust, the 285 Shares beneficially owned by TLK Foundation and the 36 Shares owned by IRA, as a result of his voting and dispositive power over those Shares. As President of Leffell Foundation, Mr. Leffell may be deemed to beneficially own the 36 Shares beneficially owned by Leffell Foundation as a result of his voting and dispositive power over those Shares. Based on calculations made in accordance with Rule 13d-3(d), and there being 4,200,000 Shares outstanding as of October 10, 2002 as a result of Comdisco's reorganization: (i) each of the Principals may be deemed to beneficially own approximately 9.0% of the outstanding Common Stock, (ii) Davidson Kempner International, Ltd. may be deemed to beneficially own approximately 3.6% of the outstanding Common Stock, (iii) Davidson Kempner Institutional Partners may be deemed to beneficially own approximately 3.2% of the outstanding Common Stock, (iv) Davidson Kempner Partners may be deemed to beneficially own approximately 1.8% of the outstanding Common Stock, (v) M.H. Davidson & Co. may be deemed to beneficially own approximately 0.15% of the outstanding Common Stock, (vi) each of the Plan, MHD Foundation, SSD Foundation, Davidson Trust, TNK Trust, TLK Foundation, TMK Trust, SF Trust, JSK Trust, IRA and Leffell Foundation may be deemed to beneficially own significantly less than 1.0% of the outstanding Common Stock, (vii) Davidson Kempner International Advisors may be deemed to beneficially own approximately 3.8% of the outstanding Common Stock, (viii) Davidson Kempner Advisers Inc. may be deemed to beneficially own approximately 3.2% of the outstanding Common Stock, and (ix) MHD may be deemed to beneficially own approximately 1.8% of the outstanding Common Stock. By virtue of the relationships between and among the parties: (i) each of the Principals may be deemed to share the power to direct the voting and disposition of the 377,205 Shares beneficially owned by Davidson Kempner International Advisors, Davidson Kempner International, Ltd., Davidson Kempner Institutional Partners, Davidson Kempner Partners and M.H. Davidson & Co., (ii) each of the Principals, other than Marvin H. Davidson, may be deemed to share the power to direct the voting and disposition of an additional 389 Shares beneficially owned by the Plan, (iii) Davidson Kempner International Advisors may be deemed to share the power to direct the voting and disposition of the 151,984 Shares beneficially owned by Davidson Kempner International, Ltd., (iv) Davidson Kempner Advisers Inc. may be deemed to share the power to direct the voting and disposition of the 134,160 Shares beneficially owned by Davidson Kempner Institutional Partners, (v) MHD may be deemed to share the power to direct the voting and disposition of the 76,745 Shares beneficially owned by Davidson Kempner Partners, (vi) Marvin H. Davidson may be deemed to share the power to direct the voting and disposition of an additional 318 Shares beneficially owned by MHD Foundation and an additional 53 Shares owned by Davidson Trust, (vii) Scott E. Davidson may be deemed to share the power to direct the voting and disposition of an additional 106 Shares beneficially owned by SSD Foundation, (viii) Mr. Kempner may be deemed to share the power to direct the voting and disposition of an additional 5 Shares beneficially owned by TNK Trust, an additional 285 Shares beneficially owned by TLK Foundation, an additional 5 Shares beneficially owned by TMK Trust, an additional 5 Shares beneficially owned by JSK Trust, an additional 26 Shares beneficially owned by SF Trust and an additional 36 Shares beneficially owned by IRA, and (ix) Mr. Leffell may be deemed to share the power to direct the voting and disposition of an additional 36 Shares beneficially owned by Leffell Foundation. The partners, members or stockholders of each of Davidson Kempner International, Ltd., Davidson Kempner Institutional Partners, Davidson Kempner Partners, M.H. Davidson & Co., Davidson Kempner International Advisors, Davidson Kempner Advisers Inc. and MHD, the persons participating in the Plan, and the beneficiaries of the Davidson Trust, TNK Trust, TMK Trust, SF Trust, JSK Trust, MHD Foundation, SSD Foundation, TLK Foundation and Leffell Foundation have the right to participate in the receipt of dividends from, or proceeds from the sale of, the securities held for the account of such Reporting Person in accordance with their ownership interests in such Reporting Person. (Comdisco Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONTOUR ENERGY: Cash Collateral Use Extended Until December 27 -------------------------------------------------------------- Judge William Greendyke of the U.S. Bankruptcy Court for the Southern District of Texas approved Contour Energy and its debtor-affiliates' request to continue using their Lender's cash collateral until December 27, 2002. The Official Committee of Unsecured Creditors and Wells Fargo Bank Minnesota, National Association agreed to the extension. Without the use of the Cash Collateral, the Debtors disclose that they will have insufficient funds necessary to continue the operation of their business, to pay postpetition payroll obligations, to pay payroll taxes, overhead, development and other drilling expenses and other expenses necessary for the reorganization of their businesses. The ability of the Debtors to operate their businesses and any realistic prospect to reorganize under a Chapter 11 plan depends upon the Debtors' ability to use the Lender's Cash Collateral. The Debtors believe that the extension is necessary to preserve the estates and avoid irreparable harm. More importantly, this will pave the way for the confirmation of the Debtors' First Amended Joint Plan of Reorganization on December 4, 2002. The Debtors may use the Cash Collateral pursuant to the Budget: Week Ending ----------- 25-Oct. 1-Nov. 8-Nov. ------- ------ ------ Beginning Cash $14,431,261 $16,266,918 $14,759,888 Receipts 4,594,400 743,800 635,000 Disbursements 2,758,743 2,250,830 870,843 Ending Cash $16,266,918 $14,759,888 $14,524,045 15-Nov. 22-Nov. 29-Nov. ------- ------- ------- Beginning Cash $14,524,045 $12,344,825 $11,578,139 Receipts 25,000 195,000 5,300,704 Disbursements 2,204,220 961,686 2,610,076 Ending Cash $12,344,825 $11,578,139 $14,268,767 6-Dec. 13-Dec. 20-Dec. ------ ------- ------- Beginning Cash $14,268,757 $13,565,514 $12,970,291 Receipts 1,449,168 40,000 195,000 Disbursements 2,152,421 635,223 1,909,145 Ending Cash $13,565,504 $12,970,291 $11,256,146 27-Dec. ------- Beginning Cash 11,256,146 Receipts 5,951,208 Disbursements 2,188,254 Ending Cash $15,019,100 Contour Energy Co., a company engaged in the exploration, development acquisition and production of oil and natural gas primarily in south and north Louisiana, the Gulf of Mexico and South Texas, filed for chapter 11 protection on July 15, 2002. John F. Higgins, IV, Esq., and Porter & Hedges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $153,634,032 in assets and $272,097,004 in debts. COVANTA ENERGY: Wants Exclusive Period Extended Until March 27 -------------------------------------------------------------- James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that since the Petition Date, the Debtors and their professionals have continued to make key steps toward a successful and consensual resolution of these Chapter 11 cases. Substantial progress has been made to address some of the most significant issues facing their estates. Particularly, the Debtors have: (a) undertaken a thorough public relations program with their municipal clients and employees to provide information on the stability of their core business, while completing multiple planned plant outages successfully and on-budget and providing their standard high level of service; (b) negotiated and obtained final Court approval, over various objections, of their postpetition credit facility to provide, if necessary, adequate liquidity to find their operations in these proceedings and over $200,000,000 of letters of credit vital to the energy business; (c) obtained interim and final Court approval, over numerous objections, for the use of cash collateral; (d) responded to, and resolved, various motions by certain creditors and potential claimants seeking relief from the automatic stay, and commenced various adversary proceedings; (e) filed their voluminous schedules and statement of affairs with respect to the filing entities; (f) begun to reviews and assess the numerous claims filed by creditors in these cases; (g) completed a bottom-up review of all their businesses, including: -- creating a 20-year forecast for the more than 60 core operating projects; -- assembling a five-year business plan for use by the various creditors and others; and -- beginning implementation of that business plan by initiating a 25% reduction of overhead expense in the core energy businesses through a significant reduction in force, office closures and a management restructuring; (h) engaged in sales of various non-core assets and continued to pursue sales or pre-sale marketing efforts for other, exceptionally complicated non-core assets; (i) reviewed existing contracts and obtained Court approval to assume or reject certain executory contracts and unexpired leases; (j) negotiated and obtained Court approval to implement employee retention and severance programs; and (k) provided the creditors' representatives and other, including KKR, with detailed information about the Debtors' business. Despite all the achievements so far, Mr. Bromley tells Judge Blackshear that the Debtors still need additional time to permit them to develop and negotiate with the major constituencies a Plan and Disclosure Statement that would enable them to successfully emerge from these Chapter 11 proceedings. Thus, the Debtors ask the Court to extend the period during which they have the exclusive right to file a plan or plans of reorganization through March 27, 2003 and the exclusive right to solicit acceptances of that plan or plans through and including May 26, 2003. Mr. Bromley contends that the law supports granting the extension since: -- the Debtors' cases are large and complex; -- the Debtors are not seeking extension to delay the reorganization for some speculative event or to pressure creditors to accede to a plan unsatisfactory to them; -- the requested extensions will not prejudice the legitimate interest of any creditor or equity security holder; and -- the requested extensions will afford the parties the opportunity to pursue to fruition the beneficial objectives of a Plan. (Covanta Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) CREDIT STORE: Committee Taps Baker & McKenzie as General Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Dakota gave its stamp of approval to the Official Committee of Unsecured Creditors' application to employ Baker & McKenzie as General Counsel, in The Credit Store, Inc.'s chapter 11 case. Baker & McKenzie's normal hourly billing rates are: Partners $330 to $485 per hour Associates $215 to $325 per hour Paraprofessionals $215 to $325 per hour The professionals who will be responsible in this retention and their hourly rates are: Ali M.M. Mojdehi Partner $425 per hour Peter W. Ito Partner $365 per hour Marc Horwitz Associate $295 per hour Stephanie George Paralegal $150 per hour Catherine Chapple Paralegal $125 per hour As general counsel to the Debtors, Baker & McKenzie is expected to: a) advise the Committee with respect to its statutory powers and duties in this case; b) advise the Committee and consult with the Debtor consulting with the Debtor concerning the administration of this case; c) advise the Committee regarding the formulation of a plan of reorganization for the Debtor; d) prepare, on the Committee's behalf, any and all necessary and appropriate legal papers; e) represent the Committee in matters before this Court; and f) perform other legal services as may be necessary and appropriate to protect and advance the position of the Committee and its constituents. The Credit Store, Inc., is primarily in the business of providing credit card products to consumers who may otherwise fail to qualify for a traditional unsecured bank credit card. The Company filed for chapter 11 protection on August 15, 2002. Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP and Mark E. Andrews, Esq., Patrick J. Neligan Jr., Esq., at Neligan Stricklin, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $68 million in assets and $69 million in debts. DLJ MORTGAGE: Fitch Affirms Low-B Ratings on Classes B-3 and B-4 ---------------------------------------------------------------- DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-CF1 are affirmed by Fitch Ratings as follows: $1.5 million class A-1A, $197.4 million class A-1B, and $28.2 million class A-2 and interest-only class S at 'AAA'; $33 million class A-3 at 'AA', $30.5 million class B-1 at 'A-' and $9.4 million class B-2 at 'BBB'. Fitch also affirms the $30.6 million class B-3 at 'BB' and $22.3 million class B-4 at 'B'. The $20 million class C is not rated by Fitch. The affirmations follow Fitch's annual review of the transaction that closed May 1996. The affirmations are attributed to overall stable performance and increased subordination levels resulting from paydown. As of the October 2002 distribution date, the collateral balance has been reduced by 20.7% to $372.9 million from $470.1 million at issuance. Fifteen loans have paid off, bringing the number of loans to 78 from 93 at issuance. The deal is geographically diversified with concentrations in Texas (20.3%), California (17%), Michigan (11.5%), and Florida (10.9%). While the diversification is seen as a strength, Fitch is concerned that 40.6% of the collateral is secured by retail properties and 14.7% is secured by hotel properties given the current outlook for these industries. The master servicer, GMAC Commercial Mortgage Corp., collected year-end 2001 operating statements for 86% of the pool by outstanding collateral balance. The weighted average debt service coverage ratio for these loans slightly decreased to 1.59 times at year-end from 1.62x at YE 2000, but increased from 1.38x at issuance. Only one loan in the pool is currently in special servicing. This loan, representing 5.8% of the pool, is collateralized by a hotel property located in Kissimmee, Fla. The loan transferred to the special servicing because the borrower filed for bankruptcy. The cash flow from the property is sufficient to fund escrows for taxes, insurance, and replacement reserves, but is insufficient to fund the debt service. The loan is over 90 days delinquent. The appraisal exceeds the debt, and no losses are expected at this time. There are currently 16 loans, representing 20.78% of the pool, on the servicer's watch list. The largest loan on the watch list, representing 3.84% of the pool, is secured by a retail property located in Las Vegas, Nev. In April 2001 the anchor store, Homebase, consisting of 46.11% of the property's total net rentable area, vacated its space. The property manager is actively marketing the space, but does not have any prospective tenants at this time. The loan is current. Fitch will continue to monitor the high concentration of loans collateralized by retail and hotel properties and loans of concern as surveillance is ongoing. DOW CORNING: Reports Improved Profitability for Third Quarter ------------------------------------------------------------- Dow Corning Corp., reported consolidated net income of $46.8 million for the third quarter of 2002, a substantial increase from the $14.4 million reported in same quarter of 2001, excluding unusual items in both periods. Net income was $116.1 million for the first three quarters of 2002, up 50 percent from $77.6 million in the same period last year, excluding unusual items in both periods. Third quarter 2002 sales were $679.7 million, 14 percent growth over sales of $596.2 million in last year's third quarter. Sales were $1.91 billion for the first three quarters of 2002, a 3 percent increase from sales of $1.86 billion in the same period last year. Including unusual items, Dow Corning reported consolidated net income of $45.0 million for the third quarter of 2002 and $76.5 million for the first three quarters of 2002. Unusual items consisted of restructuring costs in both years, implant insurance settlements in 2001, and Chapter 11 interest expense adjustments in 2001. "Profitability has improved significantly, despite the difficult economic environment," said Dow Corning's vice president for planning and finance and chief financial officer Gifford E. Brown. "Two factors were key to the improved results. Successful restructuring of the organization has reduced our operating costs, and the benefits realized from the recent acquisition of the global polymer compounder Multibase S.A., have increased our revenue." Dow Corning -- http://www.dowcorning.com-- develops, manufactures and markets diverse silicon-based products and services, and currently offers more than 7,000 products to customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. ENRON CORP: Court Okays Sale of LNG-Pipeline Assets to Tractebel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Enron Global LNG, LLC, Calypso Pipeline LLC and Enron LNG Marketing's proposed Purchase and Sale Agreement dated August 29, 2002 with Tractebel Calypso Pipeline Inc., Tractebel Calypso LNG Marketing LLC and Tractebel Bahamas LNG Limited -- Tractebel. To recall, the Assets to be sold, contracts to be assumed and assigned, applications and licenses relating to the Projects are: A. On October 19, 2001, Hawksbill entered into a license agreement, with the Grand Bahamas Port Authority ("GBPA"), for a business license. Any business operating in the area controlled by the GBPA must apply for and receive a business license from the GBPA. The Business License was negotiated to satisfy that requirement; B. On November 17, 2000, Enron Bahamas entered into an option agreement with Bahamas Cement Company to buy land for the site of the LNG Terminal Project. The Option Agreement expires at the end of 2002; C. Enron Calypso entered into various agreements and applications: (1) On May 17, 2001, an environmental services agreement with Birkitt Environmental Services, Inc.; (2) The Federal Energy and Regulatory Commission -- FERC -- Application for a certificate of public convenience and necessity, filed on July 20, 2001, which approval from FERC is required before the Pipeline can be constructed and operated; (3) On August 13, 2001, the environmental services agreement with Entrix, Inc. Entrix was selected by FERC to perform the Environmental Impact Assessment in support of Enron Calypso's CPCN Application. Pursuant to the Environmental Service Agreement, Entrix will submit their work, to be paid for by Calypso, to FERC. (4) Application and request for a Presidential Permit, filed on September 19, 2001. An approval from FERC is required before the Pipeline can be constructed and operated; (5) Application for the underwater portion of the Pipeline in United States' waters to MMS -- MMS Right of Way Application, filed July 16, 2001; (6) On September 28, 2001, Enron Calypso submitted an easement application for John U. Lloyd State Park. The Pipeline must cross the John U. Lloyd State Park. The application describes the Pipeline's route and requests a right-of-way; (7) On August 20, 2001, Enron Calypso submitted a joint application for an environmental resource permit and license to use submerged land, owned by the state of Florida, and federal dredge and fill permit. A permit for authorization to use the land, dredge and fill is necessary for the construction of onshore and nearshore portions of the Pipeline and subsequent service to the Florida, and potentially other, markets; (8) On August 30, 2001, Enron Calypso submitted the Broward County pipeline easement letters of interest regarding a pipeline license agreement between Enron Calypso and Broward County. Much of the Pipeline's onshore route is owned by Broward County. The Broward County Pipeline Easement Letters facilitate the resolution of the granting of a right-of-way and any associated costs; D. On May 29, 2001 Enron Calypso and Enron Marketing entered into a precedent agreement. Pursuant to the Precedent Agreement, Calypso will provide for the eventual commencement of Services related to the transportation, via the Pipeline, of Enron Marketing's LNG; E. On August 14, 2000, Enron Global entered into a consulting services agreement with URS Corporation. The Consulting Services Agreement procured URS to provide environmental and permitting support for the various federal, state and local permits for the Pipeline's route in U.S. territory. F. All books, records, files, correspondences and papers related to the Assumed Contracts and the Assigned Applications, whether in hard copy or computer format; G. All marketing, financial or technical studies, engineering information, technical information, analyses and data relating to the Assets, whether in hard copy or in computer format; H. All claims, causes of action, choses in action, rights of recovery and rights of set-off and recoupment of any kind, whether known or unknown, in favor of the Sellers or any of their affiliates and pertaining to, arising out of, or relating to the Assets, or offsetting any assumed liabilities; I. Rights of the Sellers under any and all guaranties, sureties, letters of credit and other documents, instruments or other collateral, if any, guarantying or security the Seller's rights under the Assets; and J. Rights of the Sellers to enforce covenants of nondisclosure or confidentiality entered into by any party in connection with the Assets or any potential bid to purchase the Assets and all rights, titles and interests of Sellers or any Seller in and to the names "Calypso", "Calypso Pipeline", "Hawksbill", "Hawksbill Creek" and "Hawksbill Creek LNG", including any trade names, trademarks, service marks and logos in which the names are used or incorporated. The salient terms and conditions to the Sale are: A. Purchase Price. $11,000,000 B. Escrow Arrangements. Tractebel will deposit by wire transfer to JP Morgan Chase Bank, as escrow agent, $1,100,000 within five days after the Court approval of the sale; C. Contingent Consideration. Within five days from the Court approval of the Sale, Tractebel will: -- notify the Sellers that the Project Development Date has occurred; and -- pay to the sellers the Contingent Consideration by wire transfer in immediately available funds to the account specified by the Sellers. Notwithstanding anything contained in the Sale Agreement, to the contrary: (1) Tractebel will have the right, in the exercise of their sole discretion, to determine whether or not they will proceed, or at any time, continue to proceed to develop the Projects; (2) Tractebel will have no obligation or liability whatsoever to pay Contingent Consideration unless and until the Project Development Date has occurred; and (3) Tractebel will have the right, at its sole discretion, to pay to the Sellers $25,000,000 to be applied to the Contingent Consideration at any time prior to the fifth business day after the Project Development Date has occurred, whether before or after the date that a notice to proceed is issued with respect to the Projects; D. Interest. If any of the Deposit, the Closing Date Payment or the Contingent Consideration is not paid in full promptly when due in accordance with the Sale Agreement, the unpaid amounts will accrue interest on a daily basis equal to the lesser of: -- a floating rate equal to the sum of interest rate per annum publicly announced from time to time by JP Morgan Chase Manhattan Bank as its prime rate in effect at its principal office in New York, plus 200 basis points; and -- the maximum interest rate from time to time allowed by any law, compounded quarterly until the unpaid amount has been paid in full; E. Adequate Payment Support. Tractebel will deliver to the Sellers certain financial support, in the form of an irrevocable standby letter of credit, a guaranty with any natural person, general or limited partnership, company, corporation, firm, association or other legal entity and a guaranty from Tractebel North America, Inc. to guarantee: -- the making of the Deposit, -- the performance of Tractebel of its obligations, and -- Tractebel's all payment obligations; Tractebel will cause the Adequate Payment Support to be maintained in full force and effect until the earlier to occur of: -- the Seller's receipt of the Contingent Consideration; or -- Tractebel's Board of Directors resolving to permanently abandon the development of any and all businesses or other operations conducted, proposed to be conducted or which could be conducted by, or which otherwise relate to, the Assets, and Tractebel having provided to each Seller a resolution of each of the of the Board of Directors; or -- the Business License expires or is terminated and is not otherwise renewed or reissued to Tractebel or its affiliate thereof; and -- the Certificate of Public Convenience and Necessity is not issued or, if issued is terminated and is not otherwise renewed or reissued to Tractebel or any of its affiliates thereof, provided, however, that in the event Tractebel sell, lease or otherwise dispose of all or significantly all of the Assets in any one or more related transactions, Tractebel will require to cause to be maintained the Adequate Payment Support until the assignee or other beneficiary of the transaction has provided Adequate Payment Support; F. Assumption of Liabilities. Upon the Closing Date, Tractebel agree to assume and to pay, perform and fully discharge and fully satisfy when due only those liabilities, duties and obligations of the Sellers under or pursuant to the Assumed Contracts; G. Actions by Parties. Enron Calypso agrees to execute and deliver to Tractebel these letters: -- a letter to the United States Department of Interior, MMS, Gulf of Mexico and Atlantic OCS Region, inform the MMS that Enron Calypso is transferring to Tractebel Calypso the MMS Right of Way Application; -- a letter to the Broward County Department of Planning and Environmental Protection that Enron Calypso is transferring to Tractebel Calypso the application for the Broward County Environmental Resource Permit, accompanied by documentation evidencing the assignment and new Addendum to the Joint Application; -- a letter to the Florida Department of Environmental Protection requesting that the identity of the applicant be changed and providing evidence of the transfer; and -- a letter to the appropriate district office of the U.S. Army Corps of Engineers informing of the assignment and providing supporting evidence, all in accordance with law and in form and substance reasonably satisfactory to Tractebel; H. Sellers' Closing Conditions. The Sellers may proceed with the Closing of the Sale Agreement when: -- all of their obligations under the Sale Agreement have been performed; -- no Action is pending or threatened before any Governmental Authority of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing; -- the U.S. Bankruptcy Court approves the transaction; and -- the Cayman Islands Court approves the transaction; I. Tractebel's Closing Conditions. Tractebel may proceed with the Closing when: -- their obligations under the Sale Agreement have been performed; -- no Action is pending or threatened before any Governmental Authority of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing; -- the U.S. Bankruptcy Court approves the transaction; -- the Cayman Islands Court approves the transaction; -- no material adverse effect on the physical condition of the Site, Freeport Harbor or Port Everglades, Florida that results in a decrease in the value of the property of at least $3,000,000 or that is reasonable likely to cause delay of more than six months in the Project Development Dates; and -- all transfer requirements are satisfied; and J. Closing. The Closing will be at the offices of Andrews & Kurth LLP a 600 Travis Street, Houston, Texas. Pursuant to Section 363 of the Bankruptcy Code, Mr. Sosland contends, the sale should be granted because: (a) it is an exercise of the Debtors' reasonable business judgment; (b) the Debtors are not aware of any liens on the Assets and if there are, the liens will be transferred and attached to the net proceeds; (c) Tractebel is a good faith purchaser; and (d) the sale will bring more cash in the Debtors' estate, thereby aiding in their liquidation or rehabilitation efforts. (Enron Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders reports, are trading at 12 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 for real-time bond pricing. EOTT ENERGY: Turns to Glass & Associates for Financial Advice ------------------------------------------------------------- Dana R. Gibbs, President and CEO of EOTT Energy Corp., informs the Court that on August 12, 2002, EOTT Energy Partners, L.P., and its debtor-affiliates retained Glass & Associates, Inc. to provide crisis management and restructuring consulting services. Glass also provided advice and assistance to the Debtors' Restructuring Committee and their counsel, Patton Boggs LLP. The Debtors wish to continue their retention and employment of Glass in these bankruptcy cases under substantially similar terms and conditions set forth in the Consulting Agreement they signed prepetition. Accordingly, the Debtors sought and obtained the Court's authority to employ and retain Glass as their financial advisor. As financial advisor, Glass will: (a) assist the Debtors in analyzing the business, operations, financial conditions and prospects of the Debtors as requested; (b) consult with the Debtors and assist in the development and implementation of strategic business plans; (c) assist in cash management, including analysis of cash receipts and disbursements; (d) assist the Debtors in streamlining operations and improving operating performance; (e) assist the Debtors in the review or development of labor and employee compensation arrangements; (f) assist the Debtors in negotiations with customers and vendors; (g) assist the Debtors in the identification of and, to the extent requested, consultation related to the implementation of internal cost reduction plans; (h) attend meetings with lenders, bondholders and any creditors' committee that may be appointed in these cases as requested by the Debtors; (i) assist the Debtors in evaluation of offers, if any, to acquire the Debtors' assets and assist in bringing the matters to closure; (j) attend meetings of the Debtors management and counsel focused on coordination of resources relating to the ongoing bankruptcy reorganization efforts; (k) assist the Debtors in analyzing additional sources of funding including debtor-in-possession financing and equity infusion; and (l) at the request of the Debtors, provide additional management consulting services deemed appropriate and necessary for the benefit of the estates. Judge Schmidt permits the Debtors to pay Glass based on the hourly rates of these professionals: Sandford R. Edlein $375 Deborah Midanek 425 Jack R. Stone 400 If other professionals will be utilized in the course of performing the services, Glass will charge the Debtors based on these hourly rates: Principal $375 to 450 Case Director 275 to 350 Senior Associate 225 to 325 Consultant 175 to 300 Clerical/Administrative 50 to 90 In addition, Glass will apply to the Court for reimbursement of out-of-expenses including costs of travel and travel-related expenses, printing and reproduction, long-distance communications, courier, overnight and other delivery services. According to Sanford R. Edlein of Glass & Associates, Inc., pursuant to the terms of the Consulting Agreement, the Debtors paid Glass a $100,000 retainer, which is held in a separate Glass bank account for client deposits. In addition, Glass was paid $480,244 for the Debtors' pre-bankruptcy workout and restructuring services pursuant to the Consulting Agreement and for advice and assistance to the Restructuring Committee. Mr. Edlein relates that the Consulting Agreement also provides for the possibility of a Success Fee to be paid to Glass in the same manner that the Debtors would provide incentives to senior executives of the Debtors' operating team. Glass will present to the Debtors a specific proposal for a Success Fee when Glass deems it appropriate for consideration and the Debtors will seek approval from this Court with respect to any Success Fee to be paid to Glass. To the best of his knowledge, Mr. Edlein tells the Court, Glass has no connection with the Debtors, their creditors, parties-in- interest or affiliates, or attorneys or accountants for any of them, the United States Trustee, or any person employed in the Office of the United States Trustee, except as disclosed. Moreover, Glass does not represent or hold any interest adverse to the Debtors or their estates or to any class of creditors or equity security holders in the matters upon which Glass is to be engaged, and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. (EOTT Energy Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) Eott Energy Partners/Fin.'s 11% bonds due 2009 (EOT09USR1) are trading at 57 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for real-time bond pricing. FIRST PROFESSIONALS: S&P Hatchets Ratings to BBpi from BBBpi ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on First Professionals Insurance Co., and its inter-affiliate pool members -- Anesthesiologists' Professional Assurance Co., Interlex Insurance Co., and Intermed Insurance Co. -- to double-'Bpi' from triple-'Bpi'. The rating action reflects the pool's marginal operating performance, potential liquidity issues at the holding and operating companies, high geographic and product line concentrations, and an elevated level of agent balances, offset in part by adequate capitalization at year-end 2001. Headquartered in Jacksonville, Florida, FPIC derives more than 90% of its premium revenue from medical malpractice insurance, primarily written on a claims-made basis. Just under 90% of the group's direct premiums are from Florida, Texas, Missouri, Pennsylvania, and Tennessee. Its products are distributed primarily by means of direct marketing and agencies. FPIC began business in 1976, is licensed in 15 states, and is the lead company of FPIC Insurance Group Inc., a publicly traded (NASDAQ: FPIC) insurance holding company. APAC markets exclusively to anesthesiologists, Interlex Insurance Co., specializes in lawyers' professional liability insurance, and Intermed Insurance Co., writes medical malpractice insurance (claims-made) for physicians and dentists. FOUNDATION RESERVE: S&P Junks Ratings Over Low Current Liquidity ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Foundation Reserve Insurance Co., Inc., to triple-'Cpi' from single-'Bpi' because of the company's reduced capitalization, low current liquidity, and historically weak operating performance. Based in Albuquerque, New Mexico, Foundation Reserve writes mainly private passenger auto insurance and homeowners insurance on low-to-medium-value dwellings. It also writes automobile risks that do not warrant placement in the assigned risk pool but that otherwise do not qualify for coverage in the voluntary marketplace. All of the company's business is currently in New Mexico and Arizona, and its products are distributed primarily through independent general agents. The company, which began business in 1957, is a member of New Mexico Mutual Group, a mid-sized insurance group with 2001 surplus of $48.4 million. In July 1997, the company was acquired by New Mexico Mutual Casualty Co., a New Mexico-based workers' compensation writer. Another affiliate is Southwest Casualty Co., which is fully reinsured by New Mexico Mutual Casualty Co. Although the company is a member of New Mexico Mutual Group, the rating does not include additional credit for implied group support. FRIENDLY ICE CREAM: Will Hold Q3 Conference Call on Thursday ------------------------------------------------------------ Friendly Ice Cream Corporation (AMEX:FRN) will hold its 2002 third quarter conference call on Thursday, October 31, 2002 at 10:00 a.m. Eastern Time. This call is being webcast by CCBN and can be accessed at the Company's website at www.friendlys.com under the Investor Relations section. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at http://www.companyboardroom.comor by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password- protected event management site, StreetEvents -- http://www.streetevents.com Friendly Ice Cream Corporation is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in more than 550 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 3,500 supermarkets and other retail locations. With a 67-year operating history, Friendly's enjoys strong brand recognition and is currently revitalizing its restaurants and introducing new products to grow its customer base. Additional information on Friendly Ice Cream Corporation can be found on the Company's Web site http://www.friendlys.com At June 30, 2002, Friendly Ice Cream's balance sheets show a total shareholders' equity deficit of about $93 million. FRISBY TECHNOLOGIES: Considering Potential Merger or Asset Sales ---------------------------------------------------------------- Frisby Technologies, Inc., (Nasdaq: FRIZ) is continuing to pursue financing to fund its operations, but as of press time it has not been successful in securing the additional capital required for the Company to continue its current operating plan after early December, 2002. The Company has received a proposal from an institutional investor to provide up to $1 million in financing. This proposed financing is subject to further negotiation and the Company satisfying a number of prescribed conditions. No assurance can be given that the Company will be able to satisfy these conditions or to complete the financing on acceptable terms, in a timely manner or at all. If completed, funding is not expected to be available prior to January 2003. This will require that the Company obtain bridge financing to fund operations pending completion of the proposed financing, which it may not be able to obtain. Even if the Company is able to secure the necessary bridge financing and to complete the proposed financing, it would likely be required to make significant revisions to its operating plan and organizational structure, which will likely include workforce related reductions. In addition, the Company is currently considering the possibility of a merger and/or the potential sale of some or all of its assets. No assurance can be given that the Company will be able to identify a buyer or an acceptable merger partner or will be able to complete such a transaction on acceptable terms, in a timely manner or at all. In the event the Company is unable to complete any of the aforementioned transactions or otherwise secure sufficient financing on acceptable terms or in a timely manner, the Company may voluntarily seek protection from its creditors under federal bankruptcy laws, which would have a material adverse effect on the Company's business, financial condition and prospects. The Company intends to provide further updates, if any, regarding its financial condition in its Form 10-QSB for the quarter ended September 30th, 2002, which is expected to be filed with the SEC on or before November 14th, 2002. GENTEK INC: Wants to Pay $3 Mill. in Prepetition Shipping Claims ---------------------------------------------------------------- GenTek Inc., and its debtor-affiliates seek Judge Walrath's permission to pay prepetition shipping, warehousing and distribution charges to third parties, either directly or through third party freight brokers, freight forwarders or invoice administrators. The Debtors want to pay these obligations to the extent they determine that the payment is necessary to secure the delivery, distribution and sale of their goods to customers throughout the United States and abroad. The Debtors expect to pay $3,000,000 in prepetition shipping, warehousing and distribution charges. Normally, the Debtors pay distribution charges to third-party shippers, haulers, common carriers and other transporters, independent operators of distribution centers and public warehousemen to: (a) deliver goods to and from the Debtors' facilities; (b) deliver finished products to the Debtors' domestic and foreign customers; and (c) store the goods and finished products, as necessary, during the distribution process. Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, explains that many of these Shippers, Distributors and Warehousemen do not have contracts with the Debtors for the services provided. Some have contracts that are terminable for any reason on short notice. Hence, the Debtors sometimes prepay these entities for their services. In most cases, however, these parties periodically invoice the Debtors, or one of the Debtors' third-party freight brokers or freight-invoice administrators for the services they rendered. According to Mr. Chehi, the Debtors want to pay the Distribution Charges for several reasons: -- Many of the Shippers, Distributors and Warehousemen likely will assert possessory or other liens on goods currently in their possession if their prepetition claims are not paid. The value of these goods likely exceeds the amount of the outstanding Distribution Charges and, thus, the Debtors believe that most of the Shippers, Distributors and Warehousemen will ultimately be entitled to be paid in full for the prepetition Distribution Charges. But the mere assertion of possessory or other liens will delay delivery of goods both to the Debtors' plants and to their customers, thus severely, if not irreparably, damaging the Debtors' businesses and prospects for a successful reorganization; -- These Shippers, Distributors and Warehousemen may refuse to perform additional services for the Debtors. As a result, the Debtors will incur significant additional expenses to replace these parties. The incurred amounts likely will exceed the amount of unpaid prepetition Distribution Charges; -- Locating entities to replace the Shippers, Distributors and Warehousemen will be difficult, if not impossible. At the very least, replacing a Shipper, Distributor or Warehouseman will delay the transport and delivery of goods to the Debtors' facilities and customers; and -- In return for the payment of Distribution Charges, the Shippers, Distributors and Warehousemen are required to continue to provide services to the Debtors during the pendency of these Chapter 11 cases on as good or better trade terms as existed on December 31, 2001. Indeed, if any Shipper, Distributor or Warehousemen accepts the payment but does not continue to provide the services to the Debtors on the same trade terms, then any payments made will be deemed an unauthorized postpetition transfer under Section 549 of the Bankruptcy Code. Those payments, therefore, will be avoidable and recoverable by the Debtors in cash on written request. (GenTek Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Secures Another Two-Week Standstill from Lenders ------------------------------------------------------------- Genuity Inc., a leading provider of enterprise Internet Protocol networking services, is continuing to negotiate with its lenders in an effort to restructure its debt, and that the company has received another two-week extension, or "standstill," from its lenders. As part of this latest extension agreement with its global consortium of banks and Verizon Communications Inc., Genuity will make a payment of $12.5 million to the bank group. "These extensions have provided us with valuable time as we work hard to complete these negotiations and reach an agreement that is satisfactory to all parties," said Paul R. Gudonis, chairman and CEO of Genuity. "During the next two weeks, we will continue to work aggressively toward reaching a resolution." Friday's announcement follows a 15-day extension agreement that was announced on October 11, 2002. This new extension, which runs through November 12, 2002, was agreed upon by all of the banks that provided the $723 million in funding that Genuity received in July 2002 as part of its $2 billion line of credit, as well as by Verizon, which previously loaned Genuity $1.15 billion. To date, Genuity has repaid the banks $200 million of its outstanding debt. Genuity, the bank group and Verizon have agreed to several extension agreements following Verizon's decision on July 24, 2002, to relinquish its option to acquire a controlling interest in Genuity. That action resulted in an event of default for Genuity as part of its separate credit facilities with the banks and Verizon. Genuity is a leading provider of enterprise IP networking services. The company combines its Tier 1 network with a full portfolio of managed Internet services, including dedicated and broadband access, Internet security, Voice over IP, and Web hosting to provide converged voice and data solutions. With annual revenues of more than $1 billion, Genuity (NASDAQ: GENU and NM: Genuity A-RegS 144) is a global company with offices and operations throughout the U.S., Europe, Asia and Latin America. Additional information about Genuity can be found at http://www.genuity.com GLOBAL CROSSING: Files Amended Disclosure Statement in New York --------------------------------------------------------------- In an attempt to resolve the issues on a consensual basis, Global Crossing Ltd., and its debtor-affiliates have drafted and included in the Disclosure Statement additional information that is responsive to the objections. A free copy of the Debtors' Amended Disclosure Statement is available at: http://bankrupt.com/misc/1993_disclosure_statement.pdf A free copy of the Debtors' Amended Reorganization Plan is available at: http://bankrupt.com/misc/1994_reorg_plan.pdf The material modifications to the Disclosure Statement include: -- The creditors' estimated recoveries makes these assumptions: * The new debt instruments to be issued under the Plan are worth their face value; * The estimated total equity value for New Global Crossing on the Effective Date is $407,000,000; and * The cash that is expected to be available for distribution from the Bermuda Account will be $12,000,000; -- Priority Non-Tax Claims (Class A): The Debtors estimate that the aggregate allowed amount of the claims in this Class will be $2,629,000; -- Other Secured Claims (Class B): At the option of the Investors, the Debtors will pay these secured claims in full, reinstate the debt, return the collateral, or provide periodic cash payments having a present value equal to the value of the secured creditor's interest in the Debtors' property. Any claims in this Class that the Debtors choose to pay in full will be paid by the Debtors or the Estate Representative, after the Effective Date; -- Lender Claims (Class C): The claims in this Class total $2,247,700,000. Holders of claims under the Credit Agreement assert that these claims are secured by: * $300,562,307.50 from the sale by the Debtors of IPC one month before the Petition Date; and * pledges of the stock of certain of the other Debtors and certain non-Debtors by certain Debtors and non-Debtors. The holders of the Lender Claims will receive, in accordance with the terms of the Credit Agreement, their proportionate share of: * $305,000,000 in cash; * $175,000,000 of New Senior Secured Notes; * 6% of the New Common Stock; * 50% of the beneficial interests in the Liquidating Trust; * 100% of any recovery on a $7,500,000 reimbursement claim against one of the Debtors' directors and his wife; and * $6,000,000 in cash from the Bermuda Account, plus 50% of any amount remaining after completion of the Bermuda reorganization/liquidation process. The $305,000,000 cash distribution will include $300,562,307.50 received from the sale of IPC, plus net interest earned and accumulated in the bank account where the proceeds from the sale of IPC were deposited. The Debtors estimate that interest will total $4,437,692.50 as of December 31, 2002; -- GC Holdings Notes Claim (Class D): Subject to the reserve for Class F, the holders of the GC Holdings Notes Claims will receive their pro rata portion of: * $18,975,000 of New Senior Secured Notes, * 24.67% of the New Common Stock (after taking into account conversion of the New Preferred Stock, but before any dilution for the exercise of options granted under the Management Incentive Plan), * 37.95% of the beneficial interests in the Liquidating Trust, and * $4,554,000 in cash from the Bermuda Account, plus 37.95% of any amount remaining after completion of the Bermuda reorganization/liquidation process; -- GCNA Notes Claim (Class E): The claims in this Class total $632,523,250, which includes $12,523,250 prepetition interest. Subject to the reserve for Class F, the holders of the GCNA Notes Claims will receive their pro rata portion of: * $3,080,000 of New Senior Secured Notes, * 4% of the New Common Stock, * 6.16% of the beneficial interests in the Liquidating Trust, and * $739,200 in cash from the Bermuda Account, plus 6.16% of any amount remaining after completion of the Bermuda reorganization/liquidation process; -- General Unsecured Claims (Class F): The total amount of General Unsecured Claims timely filed against the Debtors exceeds $74,300,000,000. A very large portion of these claims will not be allowed for a variety of reasons, including that many of these claims are duplicates, are not supported by the Debtors' books and records, have already been reduced by agreement, are covered by insurance, or are subject to other objections. It is too early in the claims resolution process to determine the exact amount of claims in this class. The Debtors' books and records show potential claims of $621,273,000. However, this amount does not include litigation-related and other unliquidated claims, as well as claims that may arise on the rejection of certain IRU-related contracts. Taking all of these factors into account, the Debtors currently believe that aggregate claims in Class F may be in the range of $1,000,000,000 to $1,900,000,000. Subject to the reserve for Class F, the holders of the General Unsecured Claims will receive their pro rata portion of: * $2,945,000 of New Senior Secured Notes, * 3.83% of the New Common Stock, * 5.89% of the beneficial interests in the Liquidating Trust, and * $706,800 in cash from the Bermuda Account, plus 5.89% of any amount remaining after completion of the Bermuda reorganization/liquidation process; -- Convenience Claims (Class G): The Debtors estimate that over 20,600 creditors have claims of $100,000 or less. The vast majority of these claims are those of suppliers and vendors. The Plan provides that each holder of a General Unsecured Claim whose claim becomes allowed in the amount of $100,000 or less will receive a cash distribution rather than participating in the distributions for Class F. The Debtors estimate that allowed claims of $75,000,000 will fall within this Class. Each holder of an allowed claim in Class G will receive a cash payment equal to the lesser of 5% of the claim or its pro rata share of $3,000,000; and -- Intercompany Claims of the Debtors (Class H): Class H consists of the intercompany claims of GCL or GC Holdings against any other Debtors or any Subsidiary against GCL. Unless the Debtors and the Investors agree otherwise, intercompany claims will be eliminated and discharged by offset, the distribution, cancellation, or contribution of the claim, or otherwise, as determined by the Debtors, subject to the approval of the Investors. These intercompany claims will not receive any of the property distributed to other claimholders under the Plan. All other intercompany claims will be reviewed by the Debtors and the Investors and will be adjusted, continued, or discharged as determined by the Debtors with the approval of the Investors as appropriate, taking into account the distribution of consideration under the Plan and the Schemes of Arrangement and the economic condition of the reorganized company and its subsidiaries. (Global Crossing Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says, Global Crossing Holdings' 9.625% bonds due 2008 (GBLX08USR1) are trading at 1.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1 for real-time bond pricing. GMAC COMMERCIAL: Fitch Junks Ratings on Class M and N Notes ----------------------------------------------------------- Fitch Ratings downgrades GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2000-C2, $4.8 million class M to 'C' from 'B-' and $4.8 million class N to 'C' from 'CCC'. The following classes are affirmed by Fitch: $111.1 million class A-1, $485.5 million class A-2, and interest-only class X at 'AAA'; $31 million class B at 'AA'; $28 million class C at 'A'; $10.6 million class D at 'A-'; $19.3 million class E at 'BBB'; and $9.7 million class F at 'BBB-'. Fitch does not rate classes G, H, J, K, L, and O certificates. The rating affirmations follow Fitch's annual review of the transaction, which closed in August 2000. The downgrades reflect continuing deterioration of the pool due to five loans (3.1%) secured by stand-alone Kmart stores. Two of the stores have rejected their leases: one in Chicago, Illinois (1%) is 30 days delinquent and one in Aurora, Illinois (0.9%) is 60 days delinquent. Losses are expected on both loans. The leases for the remaining three stores have not been rejected to date. In addition, there are three other delinquent loans (0.9%): one that is 30 days (0.5%) and two that are 90+ days (0.4%). The certificates are collateralized by 130 mortgage loans on 158 multifamily and commercial properties. The collateral also includes an $88.7 million Freddie Mac guaranteed multifamily gold mortgage participation certificate secured by two loans (11.7%) on five multifamily properties, considered to be 'AAA' in Fitch's analysis. The pool consists mainly of multifamily (30%), retail (30%), and office (24%) properties. There are large geographic concentrations in California (19%) and New Jersey (16%). As of the August 2001 distribution date, the pool's aggregate principal balance has been reduced by approximately 1.6%, to $761.1 million from $773.8 million at closing. Excluding the Freddie Mac loans which are not required to report financials, GMAC Commercial Mortgage Corp., the master servicer, collected year-end 2001 financials for 107 loans, which represent 85.7% of the pool balance. According to the information provided, the 2001 weighted average debt service coverage ratio is 1.51 times, compared to 1.36x at issuance. Fitch will continue to monitor this transaction, as surveillance is ongoing. GS MORTGAGE: Fitch Ratchets Low-B Class E & F Ratings Up A Notch ---------------------------------------------------------------- Fitch Ratings upgrades the GS Mortgage Securities Corp. II, commercial mortgage pass-through certificates, series 1996-PL, as follows: $19.2 million class B to 'AAA' from 'AA+'; $17.6 million class C to 'AA' from 'A+'; $17.6 million class D to 'A' from 'BBB+'; $15.7 million class E to 'BBB-' from 'BB+'; and $19.6 million class F to 'BB-' from 'B+'. In addition, Fitch affirms the $37.7 million class A-1, $74.2 million class A-2, and interest-only classes X-1, X-2, and X-3 at 'AAA'. Fitch does not rate the $21.9 million class G certificates. The ratings actions follow Fitch's annual review of the transaction, which closed in March 1996. The upgrades reflect an increase in the credit enhancement levels resulting from prepayments. As of the October 2002 distribution date, the pool's principal balance has been reduced by approximately 60%, to $223.5 million from $552.1 million at closing. A total of 108 loans have paid off, including 28 since last year's annual review. The certificates are paid based on a modified pro-rata pay structure, where scheduled principal is distributed pro-rata to classes A-1 through F; all unscheduled principal (i.e., prepayments) is distributed as standard sequential pay. Any losses incurred would be distributed first to the class G certificates. The current credit enhancement levels are well above the required levels for the transaction to continue its modified pro-rata schedule. The pool's property concentration is dominated by retail properties (95%), although this exposure is mitigated by the fact that the centers are well diversified by tenants, mostly grocery and pharmacy stores, signed to long-term leases. Three loans(9%) have exposure to Kmart, however all three loans remain current. Protective Life, the master servicer, collected year-end 2001 financials for 94% of the pool by balance. According to the information provided, the 2001 weighted average debt service coverage ratio is 1.30 times, compared to 1.32x at YE 2000 and 1.29x at issuance. Two loans representing 2.5% of the outstanding balance are currently in special servicing. The larger loan in special servicing is a $4.5 million retail property located in Baton Rouge, LA. The largest tenant at the property declared bankruptcy and rejected its lease; current occupancy is 20%. The other loan in special servicing, also a retail property, is expected to be returned to the master servicer. Aside from the specially serviced loans, six loans (6.2%) have year-end 2001 DSCRs below 1.00x. No loans are currently delinquent. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Even under these stress scenarios, the resulting subordination levels were sufficient to upgrade the designated classes. Fitch will continue to monitor this transaction, as surveillance is ongoing. HORSEHEAD INDUSTRIES: Committee Gets Nod to Hire Blank Rome ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Horsehead Industries, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Blank Rome Comisky & McCauley LLP (known in New York as Blank Rome Tenzer Greenblatt LLP), as its counsel. In addition to acting as primary professional spokesperson for the Committee, Blank Rome's services will include: a) administration of these cases and the exercise of oversight with respect to the Debtors' affairs including all issues arising from or impacting the Debtors or the Committee in these Chapter 11 cases; b) preparation on behalf of the Committee of all necessary applications, motions, orders, reports and other legal papers; c) appearances in Bankruptcy Court and at statutory meetings of creditors to represent the interests of the Committee; d) negotiation, formulation, drafting and confirmation of any plan of reorganization and matters related thereto; e) exercising oversight with respect to any transfer, pledge, conveyance, sale or other liquidation of the Debtors' assets; f) any investigation the Committee may desire concerning, among other things, the assets, liabilities, financial condition and operating issues concerning the Debtors that may be relevant to these cases; g) communication with the Committee's constituents and others as the Committee may consider desirable in furtherance of its responsibilities; and h) performance of all of the Committee's duties and powers under the Bankruptcy Code and the Bankruptcy Rules and the performance of such other services as are in the interests of those represented by the Committee or as may be ordered by the Court. Blank Rome will receive compensation on an hourly basis. Presently, Blank Rome's hourly billing rates are: Partners $285 - $565 Associates $175 - $360 Legal Assistants, Law Clerks $110 - $210 and Paraprofessionals The attorneys who will be primarily responsible for this retention and their hourly rates are: Marc E. Richards $510 Michael Brownstein $510 Horsehead Industries, Inc., d/b/a Zinc Corporation of America, the largest zinc producer filed for chapter 11 protection on August 19, 2002. Laurence May, Esq., at Angel & Frankel, PC represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $215,579,000 in assets and $231,152,000 in debts. HYPERTENSION DIAGNOSTICS: Noteholders Waive Registration Default ---------------------------------------------------------------- Hypertension Diagnostics, Inc., (Nasdaq: HDII) reconvened its Special Meeting of Shareholders at 3 p.m. local time Friday at the Company's offices at 2915 Waters Road, Suite 108, Eagan, Minnesota 55121. The Special Meeting had been adjourned from the original meeting date of September 25, 2002. The Special Meeting was called for the purposes of allowing the Company's shareholders to consider and approve Proposal 1: The issuance of Common Stock equal to 20% or more of the outstanding Common Stock of the Company upon (a) conversion of $2,000,000 aggregate principal amount of 8% Convertible Notes due March 27, 2005 and (b) exercise of certain Common Stock Purchase Warrants. Since a majority of the Company's shares were represented at the reconvened Special Meeting Friday, a quorum was present. Proposal 1 was approved by a majority of the shares present in person or represented by proxy at the Special Meeting. Accordingly, Proposal 1 has been adopted by shareholders of the Company. As announced earlier, by a letter dated October 15, 2002, each of the holders of the Company's 8% Convertible Notes due March 27, 2005 has agreed to waive certain existing covenant defaults under the Notes if, in exchange, the Company hires a proxy solicitor for its Special Meeting of Shareholders and on or before October 25, 2002, obtains shareholder approval of the proposal put forth at the Company's Special Meeting. With today's approval of Proposal 1 by the Company's shareholders, the Company has met the two conditions for the effectiveness of the waiver. The waiver only relates to the following events of default: (a) the failure of the Company to obtain the Approval on or before the Approval Date; (b) the failure of the Company to comply with the requirement for continued listing on The Nasdaq SmallCap Market for a period of seven (7) consecutive trading days because the minimum bid price of its Common Stock was less than $1.00; and (c) the receipt by the Company on August 27, 2002 of a notice from The Nasdaq Stock Market, Inc., stating that the Company is not in compliance with the requirements for continued listing because of the failure of the Company's Common Stock to maintain a minimum bid price of $1.00 for a period of thirty (30) consecutive trading days. No other events of default are waived. The failure of the Company to comply with any of the covenants of the Notes will result in an event of default under the Notes. Upon an event of default, a Note holder, at its option, may demand cash repayment of 130% of the then- outstanding principal amount of the Note and any accrued but unpaid interest. There can be no assurance that the Company will comply with the Note covenants in the future. There can also be no assurance that the Company will successfully obtain a waiver of any future event of default, if any event of default should occur. Noteholders Waive Registration Default The Note holders have also agreed to waive a covenant default, if any such default exists, relating to the Company's registration of its Common Stock for resale if, in addition to hiring a proxy solicitor and obtaining approval of its Shareholders as outlined above, the Company files a registration statement to register 750,000 additional shares of its Common Stock on or before November 15, 2002. HYSEQ PHARMACEUTICALS: Working Capital Deficit Widens to $3 Mil. ---------------------------------------------------------------- Hyseq Pharmaceuticals, Inc. (Nasdaq: HYSQ), announced results for the quarter ended September 30, 2002. For the three months ended September 30, 2002, Hyseq reported a net loss of $1.4 million compared to a net loss of $10.0 million for the same period in 2001. For the nine months ended September 30, 2002, Hyseq reported a net loss of $28.5 million, compared to a net loss of $25.1 million for the same period in 2001. Revenues for the third quarter of 2002 were approximately $11.0 million, compared to revenues of $5.9 million for the same period in 2001. Revenues for the nine-month period ended September 30, 2002 were $22.9 million compared to revenues of $17.5 million for the same period in 2001. The increase was primarily due to the accelerated completion of Hyseq's agreement with BASF Plant Sciences GmbH, scheduled to end approximately January 31, 2003. Net loss for the nine months ended September 30, 2002 included a one-time non-cash expense of $10.0 million for the issuance of warrants to collaboration partner, Amgen, as part of Hyseq and Amgen's agreement to develop and market the novel thrombolytic drug, alfimeprase, for the treatment of peripheral arterial occlusion (PAO) and other cardiovascular indications. Excluding the one-time non-cash charge, Hyseq reported a pro forma net loss of $18.5 million for the first nine months of 2002, compared to a net loss of $25.1 million for the same period in 2001. As of September 30, 2002, Hyseq had approximately $4.3 million in unrestricted cash compared to approximately $12.3 million at December 31, 2001. In addition, as of September 30, 2002, Hyseq had $16.0 million available through a line of credit from George Rathmann, Ph.D., chairman of Hyseq's board of directors. Hyseq also expects to receive approximately $7.3 million in cash payments over the next four months from BASF. Also, at September 30, 2002, Hyseq recorded a working capital deficit of about $3.1 million. "As we move into the fourth quarter, we continue to push forward with clinical programs, collaborations and financial strategies," said Dr. Ted W. Love, president and chief executive officer of Hyseq Pharmaceuticals. "Development of our lead product candidate, alfimeprase, is on schedule, expected to begin Phase II trials in the first half of 2003, and we continue to pursue revenue generating business development opportunities as well as a variety of financial strategies to bring additional funding into the company." Company Highlights -- Granted its fifteenth gene-related patent from its proprietary collection of rarely expressed full-length human gene sequences. -- Callida Genomics, Inc., a majority-owned subsidiary of Hyseq, signed an agreement with SurroMed and the National Institute of Standards and Technology to develop a genome-wide SNP scoring system. -- Signed license agreement with UCSF and Celera Diagnostics granting Celera Diagnostics non-exclusive access to a large-scale cardiovascular patient DNA sample collection for use in diagnostics. -- Initiated Phase I trial for its lead product candidate, alfimeprase, for the treatment of peripheral arterial occlusion. As noted in our first quarter conference call, we have readjusted our conference call schedule, conducting calls periodically around major news events and milestones, and holding one call at the end of the fiscal year instead of on a quarterly basis. We will be updating the investing public regularly on our progress through press releases and in conjunction with presentations at investor meetings and conferences in compliance with Regulation FD. Hyseq Pharmaceuticals, Inc., is engaged in research and development of novel biopharmaceutical products from its collection of proprietary genes discovered using its high- throughput screening-by-hybridization platform. This platform provided a significant advantage in discovering novel, rarely- expressed genes, and assembly of one of the most important proprietary databases of full-length human gene sequences. Hyseq intends to further elucidate the physiological roles of its proprietary novel genes. Hyseq's database includes genes which encode a number of therapeutically important classes of molecules including chemokines, growth factors, stem cell factors, interferons, integrins, proteases, hormones, receptors, and other potential protein therapeutics or drug targets. Information about Hyseq Pharmaceuticals is available at http://www.hyseq.comor by phoning 408-524-8100. INTERLIANT: Seeking Open-Ended Lease Decision Period Extension -------------------------------------------------------------- Interliant, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for more time to decide on their unexpired leases. The Debtors request an extension of the time within which they may assume, assume and assign, or reject the Unexpired Leases through and including the date on which the Court enters an order confirming the Debtors' plan of reorganization. It is irrefutable, the Debtors say, that the Unexpired Leases are valuable assets of the Debtors' estates and are integral to the continued operation of their businesses. However, the Debtors have, to date, been unable to make reasoned decisions whether to assume or reject all the Unexpired Leases. The Debtors disclose that they cannot operate their businesses without the Unexpired Leases. The properties leased by the Debtors under the Unexpired Leases include the Debtors' corporate headquarters, data centers and office spaces. In the short term, it is impossible for them to find suitable replacements for these Unexpired Leases, the Debtors add. Since the Commencement Date, the demands on the Debtors and their personnel and professionals have been great. These obligations are further magnified as a result of the Debtors' workforce reduction since the Commencement Date. Despite the burdens placed upon the Debtors' personnel, the Debtors have been working diligently to further the Chapter 11 process and have been engaged in, among others: -- Implementing the relief granted by the Court on the Commencement Date; -- Negotiating and implementing an Interim Cash Collateral Order; -- Preparing motions for the rejection of unexpired leases and entering into new leases which are described more fully above; -- Working with the recently appointed Creditors' Committee in respect of the general background and administration of these Chapter 11 cases; -- Negotiating and implementing debtor-in-possession financing; -- Negotiating stipulations with parties in interest; and -- Reaching a deal on the sale of a portion of the Debtors' business operations to Sprint Communications, Inc. Interliant, Inc., is a provider of Web site and application hosting, consulting services, and programming and hardware design to support the information technologies infrastructure of its customers. The Company filed for chapter 11 protection on August 5, 2002. Cathy Hershcopf, Esq., and James A. Beldner, Esq., at Kronish Lieb Weiner & Hellman, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $69,785,979 in assets and $151,121,417 in debts. KMART CORP: Wants to Assume Consignment Pact with M. Fabrikant -------------------------------------------------------------- Kmart Corporation and its debtor-affiliates want to assume an Amended and Restated Consignment Agreement, dated October 1, 2002 with M. Fabrikant & Sons, Inc., under which the Debtors receive jewelry on consignment. M. Fabrikant is considered a leader in this area and provides a wide selection of good quality jewelry. M. Fabrikant and the Debtors have maintained their trade relationship for more than ten years. Even before, M. Fabrikant has provided moderately priced diamond and precious gem jewelry, like diamond rings, earrings, and necklaces. According to Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom, M. Fabrikant provides jewelry to the Debtors based on a "perpetual" consignment relationship. Under that relationship, M. Fabrikant gives the Debtors an initial, agreed-upon amount of consignment "credit." As of the Petition Date, M. Fabrikant has accorded the Debtors $3,908,292 in consignment credit. With this arrangement, Mr. McDermott says the Debtors have obtained $3,908,292 in consigned jewelry without having to pay for it until the Agreement is terminated. The Debtors estimate that a total of $532,353 of the inventory had been sold before the Petition Date, with an additional $3,375,939 of the inventory on hand. "It is customary for retailers like the Debtors to take full advantage of the consignment credit in this fashion," Mr. McDermott tells Judge Sonderby. The Debtors could always acquire from M. Fabrikant additional jewelry, but they must pay for amounts in excess of the credit in accordance with ordinary trade terms. Under the Amended Consignment Agreement, Mr. McDermott continues, the Debtors and M. Fabrikant agree to increase the amount of the consignment credit by roughly $1,950,000 from $3,908,292 to $5,862,438. The consignment relationship will remain perpetual. Thus, this credit will persist until the consignment relationship is either altered or terminated. Once the additional consignment credit amount is in place, Mr. McDermott points out that the Debtors will not owe M. Fabrikant any money until they receive more than $5,862,438 of merchandise. As a result, the Debtors can carry and earn revenues on $5,862,438 of merchandise without paying M. Fabrikant anything. The Agreement will continue until either of the parties elects to terminate the Agreement upon 60 days notice, but in no event prior to March 31, 2003. In addition, M. Fabrikant may not terminate the Agreement during the Debtors' fiscal fourth quarter. In the event a party issues a notice of termination, Mr. McDermott relates that M. Fabrikant must continue to provide merchandise on consignment for the 60 days preceding the termination. Following the termination, the Debtors will have another 60 days as Closeout Period to continue to sell the Consigned Merchandise. Within 30 days after the Closeout Period, the Debtors may elect to return some or all of the Consigned Merchandise for credit. If any amount remains due, then the Debtors must pay that amount. The Debtors, at their sole discretion, may also return Consigned Merchandise for credit throughout the term of the Agreement. "One of the most important advantages of assumption of the Agreement at this time is the significant increase in the consignment credit that M. Fabrikant has agreed to provide," according to Mr. McDermott. As a result, Mr. McDermott notes that the Debtors have received $1,950,000 of additional financing. The assumption also cements a relationship with a key jewelry consignor, thereby preserving the consignment financing for the benefit of these estates. "Furthermore, the Debtors will not have to 'cure' any prepetition defaults, as a condition of the assumption," Mr. McDermott adds. At this time, according to Mr. McDermott, the Debtors have no present intention of terminating the relationship insofar as they rely on the jewelry supplied by M. Fabrikant to stock their stores and provide customers with a full range of jewelry choices. (Kmart Bankruptcy News, Issue No. 36; 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: Georgia Court Confirms Prepack. Reorg. Plan -------------------------------------------------------------- Knology, Inc., and Knology Broadband, Inc., announced that the United States Bankruptcy Court for the Northern District of Georgia confirmed Broadband's prepackaged plan of reorganization without modification. The confirmation is a major milestone following Knology and Broadband's announcement on September 18, 2002, that they were seeking court approval of a consensual, prepackaged plan of reorganization of Broadband. "This is tremendous news for Knology, our customers and our employees," said Rodger Johnson, President and CEO of Knology and Broadband. "The completion of our restructuring puts us in a position to continue our growth and to capitalize on our operational successes." Closing of the restructuring is subject to certain conditions, all of which the company expects to be satisfied. 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 ITS Internet site at http://www.knology.com LB COMMERCIAL: Fitch Affirms Low-B and Junk Ratings on Six Notes ---------------------------------------------------------------- LB Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1998-C1 are affirmed by Fitch Ratings as follows: $125.2 million class A-1, $308 million class A-2, $642.3 million class A-3 and interest-only class IO at 'AAA'; $86.4 million class B at 'AA'; $86.4 million class C at 'A'; $90.7 million class D at 'BBB'; and $34.6 million class E at 'BBB-'. Fitch also affirms $51.8 million class F at 'BB+'; $34.6 million class G at 'BB'; $17.3 million class H at 'BB-'; $43.2 million class J at 'B'; $17.3 million class K at 'B-'; and $17.3 million class L at 'CCC'. The rating affirmations follow Fitch's annual review of the transaction which closed in March 1998. The rating affirmations are the result of the overall steady performance of the mortgage pool since issuance. GMAC Commercial Mortgage Corp., as master servicer, collected 96.9% of year-end 2001 operating statements by outstanding loan balance. The weighted average debt service coverage ratio for those loans remained flat at 1.49 times at YE 2001, compared to 1.49x at YE 2000 and 1.35x at issuance. Approximately 9.2% of the transaction had DSCRs less than 1.00x compared to 4.3% at YE 2000. As of the October 2002 distribution date, the collateral balance has been reduced by 8.3%, to $1.59 billion from $1.73 billion at issuance. Fifteen loans have paid off, bringing the number of loans to 243 from 259 at issuance. The deal is geographically diversified, with properties located in 30 states with major concentrations in Florida (9.9%), New York (9.7%), California (8.1%), Texas (7.9%) and Pennsylvania (6.1%). The geographic diversification is seen as a strength, however, Fitch is concerned that 46.5% of the transaction is collateralized by retail loans and 6.5% is collateralized by hotel loans. The five largest loans comprise only 10.9% of the transaction's loan balance. The weighted average DSCR for these loans increased to 1.41x at YE 2001 from 1.36x at YE 2000 and 1.32x at issuance. The loan size diversification of the transaction is seen as another strength of the pool, however, one of the five largest loans is on the servicer's watchlist which is a concern. Fitch considers 15 loans, representing 7.2% of the pool, to be of concern. There are four loans, representing 2.2% of the pool, in special servicing. The largest of these loans is collateralized by a full service hotel (1.2% of the pool) located in Kissimmee, Florida, approximately one mile from the Disney World main gate. The loan transferred to special servicing due to debt service payment default, and GMACCM has filed for foreclosure. The decline in performance is due to an overdeveloped market and a drop in the tourism industry. The second largest specially serviced loan is secured by an office property (0.7% of the pool) located in Skokie, Illinois. The loan transferred to the special servicer because of payment default. The property is 43% occupied due to several tenants vacating when their leases expired. The property is real estate owned. There are two additional loans (0.28%) in special servicing. The first loan, representing 0.14% of the pool, is secured by a retail property located in Orlando, Florida. The loan transferred to the special servicer because of poor management resulting in occupancy problems. A new manager is now in place and the GMACCM is considering a forbearance agreement. The loan is currently 90 days delinquent. The second loan, representing 0.14% of the pool is secured by an industrial property located in Riverside, New Jersey. The loan transferred to special servicing after the largest tenant vacated. The borrower transferred the property to GMACCM via a deed in lieu. There is a prospective buyer and GMACC is in preliminary negotiations. The loans of concern were defaulted in various stress scenarios. The resulting subordination levels were sufficient to affirm the current ratings. Fitch will continue to monitor the high concentration of loans collateralized by retail and hotel properties and loans of concern as surveillance is ongoing. LLS CORP: Goldsmith Closes Asset Sale to Precise Tech. For $130M ---------------------------------------------------------------- Goldsmith Agio Helms has completed sale of its client, LLS Corp., to Precise Technology, Inc. The sale marks the 48th transaction in the plastics industry completed by Goldsmith Agio Helms' Plastics Group. Precise Technology will pay approximately $130 million to acquire 100% of the stock of U.S. LLS Corp. Funding for the acquisition includes new equity from Code Hennessy & Simmons and new senior and subordinated debt from a syndicate of lenders led by Wachovia Securities. LLS Corp., filed a Chapter 11 bankruptcy petition on January 16, 2002. In April, the U.S. Bankruptcy Court in St. Louis, Missouri approved LLS Corp.'s request that the Company be allowed to seek a buyer through a public auction process to be managed by the investment banking firm of Goldsmith Agio Helms. The Company announced on August 22, 2002 that it had signed a definitive agreement with Precise Technology, and that LLS Corp.'s senior secured lenders had entered into a binding lock-up agreement to vote in support of the sale. U.S. Bankruptcy Court in St. Louis, Missouri, approved the purchase agreement on August 22, 2002 and confirmed the Plan of Reorganization on September 25, 2002. David Solomon, Managing Director and Member of Goldsmith Agio Helms, and the leading banker on the transaction commented, "Goldsmith Agio Helms, with the consent of the debtor and its lenders, undertook an unusual privately negotiated marketing process designed to incent buyers to reach higher valuations than they would in a public forum." "[Fri]day's announcement is an important step for the customers, suppliers and employees of LLS Corp.'s operating subsidiaries, Courtesy Corporation and Creative Packaging," said David M. Sindelar, Chief Executive Officer. "The sale to Precise Technology will end the uncertainty regarding their future." John R. Weeks, CEO of Precise Technology, stated, "This acquisition will leverage the vast manufacturing resources, facilities and technologies of both companies, enabling Precise- Courtesy to advance it's commitment to represent the top value global producer of sophisticated plastic packaging and healthcare components." Brian P. Simmons, a Partner at Code Hennessy & Simmons LLC, said, "We are excited to be able to support Precise Technology's outstanding management team with a substantial additional equity investment. We believe in their strategy, focus, and talents, and are confident of their ability to deliver results." LLS Corp., used the law firm of Lewis, Rice & Fingersh, L.C., for all legal matters relating to the bankruptcy restructuring and sale. Chanin Capital Partners served as financial advisor to LLS Corp. Precise Technology was advised by the law firm of Kirkland & Ellis. LLS Corp., is headquartered in Buffalo Grove, Illinois. Through it's operating subsidiaries Courtesy Corporation, Creative Packaging Corp., and Courtesy Sales Corp., LLS Corp., is a leading designer and manufacturer of precision injection-molded plastic components, closures, and dispensing systems used in the healthcare, packaging, and consumer products market segments. LLS Corp., generated sales of approximately $140 million in its fiscal year ended September 30, 2002, and is well-known as a one-stop provider of concept development, tooling, product manufacturing, assembly, and just-in-time distribution. Its facilities are some of the most advanced in the world and include clean room environments for molding and automated assembly. The Company's closure and dispensing systems are used to cap or dispense well-known products such as Gatorade, Heinz Ketchup, Kraft Parmesan Cheese, Hershey's Chocolate Syrup, and Mennen Speed Stick Deodorant. The Company's medical and pharmaceutical components are used by companies such as Abbott Laboratories, Schering-Plough, Johnson & Johnson, Baxter International, and Eli Lilly in many medical devices, including asthma inhalers, insulin pens, medical trays, and test packs for pregnancy, hepatitis, and strep throat. Precise Technology, Inc., headquartered in North Versailles, Pennsylvania, is also a manufacturer of precision and injection- molded plastic components, serving similar market segments with complementary manufacturing disciplines. Precise Technology is majority owned by Code Hennessy & Simmons LLC, a Chicago-based private investment firm. Code Hennessy & Simmons LLC manages approximately $1.5 billion in capital and makes controlling equity investments in manufacturing, distribution, and service companies. Goldsmith Agio Helms -- http://www.agio.com-- is the nation's leading private investment banking firm that specializes in representing sellers of public and private middle market businesses, having completed more than one hundred transactions in the past three years. The firm provides sell-side M&A advisory, private placements of debt and equity, distressed company advisory, special purpose valuations, and fairness opinions, through its offices in Minneapolis, New York, Chicago, Los Angeles, and Naples, Florida. LODGIAN: Wins Approval to Implement Management Incentive Program ---------------------------------------------------------------- Lodgian, Inc., and its debtor-affiliates obtained permission from the Court, pursuant to Sections 105 and 363 of the Bankruptcy Code, to implement its management incentive program in connection with the confirmation of the Debtors' Joint Plan of Reorganization in these Chapter 11 Cases. To recall, the Management Incentive Program was negotiated with the Committee and reflects a consensual compensation and incentive Plan that: -- compensates certain members of Management for their dedication towards a speedy resolution of these Chapter 11 Cases, and -- continues to incentivize members of Management towards an expeditious and orderly emergence from Chapter 11. The salient terms of the Management Incentive Program are: A. Reorganization Bonuses for Management: On or as soon as reasonably practicable after the Effective Date, the reorganized Debtors will pay bonuses to these members of the Debtors' management: Plan is confirmed -------------------------------------------- by 11/15/02 11/16/02-12/15/02 after 12/15/02 ----------- ----------------- -------------- David Hawthorne $1,000,000 $950,000 $900,000 President & CEO Richard Cartoon 500,000 450,000 400,000 CFO Mike Amaral 500,000 450,000 400,000 COO In addition, on or as soon as reasonably practicable after the Effective Date, five members of the Debtors' management will share in a $500,000 bonus pool funded by the Reorganized Debtors. The amount to be paid to these five members of Management does not vary based upon the Plan confirmation date; B. Modification of David Hawthorne's Employment Contract: By Order dated April 17, 2002, this Court previously approved the Debtors' assumption of an employment contract with Mr. Hawthorne as their President and Chief Executive Officer. As part of the proposed program negotiated between the Debtors and the Committee, Mr. Hawthorne's Employment Contract will be modified so that the minimum severance payment Mr. Hawthorne will receive from the Debtors upon termination of his employment for death, disability, or retirement, should be equal to his base salary for a period of 24 months. Additionally, if Mr. Hawthorne and the Board of Directors of the Reorganized Lodgian, Inc. do not reach an agreement on a mutually satisfactory long-term contract and long-term incentive compensation agreement within six months from the Effective Date, it has been agreed that Mr. Hawthorne may, at his discretion, voluntarily terminate his employment and collect an amount equal to his severance, as provided by the Employment Contract, as if he were terminated without cause; C. Discretionary Bonuses for Employees: On or as soon as reasonably practicable after the Effective Date, Reorganized Lodgian, Inc., will have a $200,000 discretionary emergence bonus pool to reward certain other employees who are not members of Management for their services throughout the Chapter 11 Cases. It is currently contemplated that not less than ten employees would be eligible to participate in the Discretionary Bonuses and that no individual employee would receive more than $30,000. Management will not be entitled to receive any portion of the Discretionary Bonuses and the Discretionary Bonuses will require Board approval prior to issuance. (Lodgian Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOGIMETRICS INC: Board Appoints Recognition Group as Liquidator --------------------------------------------------------------- LogiMetrics, Inc., (OTCBB: LGMTA) said that its Board of Directors has appointed a Recognition Group, LLC entity to effect the liquidation of the Company's business. Last month, the Company announced that, based on the recommendation of a Special Committee of its Board of Directors, the Board had approved the liquidation and winding up of the Company's business. In connection with the appointment of the liquidator, all of the Company's current officers and directors have resigned effective immediately and have been replaced by representatives of the liquidator. Interested parties should contact Recognition Group, LLC at the following address: Recognition Group, LLC 114 5th Avenue, 4th Floor New York, NY 10011 Tel: (212) 886-8650 As previously announced, the Company does not expect that stockholders will receive any liquidating dividend or distribution in connection with the liquidation of the Company's business. LTV CORP: Gets Go-Signal to Abandon Interest in 6 Foreign Units --------------------------------------------------------------- The LTV Corporation and its debtor-affiliates obtained the Court's authority to abandon their ownership interests in six non-debtor, foreign affiliates: 1. Chateaugay Corporation; Debtor Reomar, Inc., owns 100% of the issued and outstanding shares of capital stock of Chateaugay Corporation, a Republic of Panama corporation. 2. Inmobiliaria Nueva Icacos, S.A. de C.V.; Debtor Investment Bankers, Inc., owns 100% of the issued and outstanding shares of capital stock of Inmobiliaria Nueva Icacos, S.A. de C.V., a Mexico corporation. 3. LTV International, N.V. LTV owns 100% of the ownership interests in LTV International N.V., a Netherlands Antilles limited liability company. Antillean Management Corporation acts as the "managing director" of LTV International. AMACO bills LTV for management services provided by AMACO and for annual fixed fees. 4. Repsteel Overseas Finance, N.V. LTV owns 100% of the ownership interests in Repsteel Overseas Finance N.V., a Netherlands Antilles limited liability company. Curacao Corporation Company N.V. acts as the "managing director" of Repsteel. Curacao has notified LTV that it will resign as managing director of Repsteel if LTV does not pay its invoices for management services by September 30, 2002, and that such resignation would cause Repsteel to forfeit its good standing under the laws and regulations of the Netherlands Antilles. 5. Varco-Pruden Exports, Ltd., Debtor VP Buildings, Inc. owns 100% of the ownership interests in Varco-Pruden Exports, Ltd., a Bahamas company. 6. Varco-Pruden International de Chile Debtor Varco Pruden International, Inc., owns 100% of the ownership interests in Varco Pruden International de Chile Limitada, a Chilean limited liability company. (LTV Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-00900) DebtTraders says that LTV Corporation's 11.75% bonds due 2009 (LTVC09USR1) are trading at half a penny on the dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LTVC09USR1 for real-time bond pricing. METALS USA: Asks Court to Estimate Unliquidated Foam Claims ----------------------------------------------------------- For purposes of allowance under the Plan of Reorganization, Metals USA, Inc., and its debtor-affiliates ask the Court to estimate these unliquidated foam litigation claims pursuant to Section 502(c) of the Bankruptcy Code: Claimant Claim No. -------- --------- Bridget Hayes, et al. 4254 Jay P. Hayes, et al. 4256 Bridget Hayes 4260 Jay P. Hayes 4259 Jay P. and Bridget Hayes 4258 Ruth Rogers, et al. 944 Ruth Rogers, et al. 4255 The fixing or liquidation of these Unliquidated Foam Claims after October 30, 2002, would unduly delay the administration of Debtors' Chapter 11 cases. Thus, it is necessary to estimate these Unliquidated Foam Claims now so that the Debtors can determine how much New Common Stock to withhold in the Disputed Claims and Interests Reserve. The Debtors have already objected to various other foam litigation claims and are withholding for those Disputed Claims the full amounts claimed pending resolution in order to avoid imposing on the Court to estimate those claims before the initial distribution. These claims include: Creditor Name Claim # Amount --------------------------- ------- ---------- Backyard Display Center Inc 1642 $236,000 Barnhart, Charles 1278 350,000 Escott, Ward 3587 350,000 Goins, Polly 3588 350,000 Green, Zepher 3590 350,000 Richter, Peter 3592 350,000 ---------- Total $1,986,000 The Debtors ask the Court to find that the $1,986,000 currently held back in the Disputed Claims and Interests Reserve on account of the Other Foam Claims is sufficient holdback for both the Other Foam Claims and the Unliquidated Foam Claims addressed in this motion. The Debtors believe that the Other Foam Claims and Unliquidated Foam Claims addressed in this Motion will not exceed $1,986,000. (Metals USA Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) MIM CORP: Working Capital Deficit Tops $7.5 Million at June 30 -------------------------------------------------------------- MIM Corporation (NASDAQ:MIMS) (CBOE:OQX) (AMEX:OQX), a pharmaceutical healthcare organization, reported third quarter and nine month results for 2002. Financial Highlights -- Third quarter Specialty revenues grew 350% compared to the third quarter of 2001 -- Third quarter operating income, excluding a special gain in 2001, increased 78% over the prior year -- Cash flow from operations for the nine months rose to $18.2 million, a $15.7 million increase over the prior year -- Excluding special gains in 2002 and 2001, EBITDA for the nine months increased 50% over the prior year -- Mail and Specialty prescriptions filled in the nine months increased 82% over the same period of 2001 Third quarter net income was $4.5 million, compared to net income of $3.4 million, excluding 2001 special gains of $0.06 per diluted share and the $0.02 impact of amortization of goodwill for the third quarter of 2001. Average diluted shares outstanding for the third quarter increased by 1.2 million to 23.8 million shares. At June 30, 2002, the Company's balance sheets show a working capital deficit of about $7.5 million. Revenues for the third quarter increased 16% to $138.5 million from $119.9 million a year ago. In the second quarter of 2002, the Company changed the terms of some of its PBM customers, where the Company no longer accepted credit risk on these customers. After giving effect to that change, current accounting rules required the Company to classify $20.4 million of gross PBM Services revenue in the current quarter on a net basis. That change had the effect of reducing the gross PBM Services revenue and cost of revenue by $20.4 million. That resulting change had no effect on reported gross profit. Specialty revenues increased 350% in the current quarter to $43.7 million from $9.7 million in the third quarter of 2001 due to the inclusion of Vitality's revenues from February 2002 and continued growth in each of the BioScrip injectable and infusion therapy programs. Revenues from PBM Services decreased 14% to $94.8 million in the current quarter compared to $110.2 million in the third quarter of 2001. This decrease was principally the result of decreases in revenue associated with the Company's classification of certain PBM revenues from gross to net, the liquidation of Access MedPLUS in the fourth quarter of 2001, and the Company's termination of certain unprofitable PBM accounts. EBITDA for the third quarter 2002 totaled $7.3 million, compared to $6.6 million for the same period last year. EBITDA for 2001 includes a special gain of $1.5 million. Operating income for the third quarter of 2002 increased 22% over the same period last year to $5.8 million. 2001 operating income includes a benefit of $1.0 million (special gain offset by the amortization of goodwill). Richard H. Friedman, Chairman and Chief Executive Officer commented: "The quarter's improved results were driven by growth in Specialty and mail prescriptions, both supported by solid recurring volume in PBM services. The period further reflects our efforts to penetrate our customer base and better leverage our existing infrastructure." The applicable income tax rate in the third quarter of 2002 was 20% compared to 8.6% for the third quarter of 2001 as a result of higher taxable income offset by the utilization of net operating loss carryforwards. Cost of revenue for the third quarter of 2002 was $120.6 million, compared with $106.2 million for the same period last year. This increase reflects the growth of the Company's Specialty Pharmaceutical and mail service businesses and the inclusion of Vitality since February 2002. Overall increases in cost of revenue were offset by decreases in PBM cost of revenue due to the Company's classification of certain PBM revenues from gross to net, the loss of revenue due to the liquidation of Access MedPLUS and the Company's termination of certain unprofitable PBM accounts. Gross profit for the quarter increased 31% to $18.0 million from $13.7 million in the prior year, primarily due to growth in the Company's Specialty Pharmaceutical and mail service operations and the inclusion of Vitality's financial results. These increases were offset by the loss of gross profit as a result of the liquidation of Access MedPLUS and the Company's termination of certain unprofitable PBM accounts. The gross profit percentage for the third quarter of 2002 was 13.0% compared with 11.4% for the same period a year ago. Selling, general and administrative expenses increased to $11.7 million for the third quarter of 2002 from $9.8 million for the same period a year ago. This increase is principally the result of the inclusion of Vitality's expense in the Company's results since February 2002, additional expenses incurred to support the growth of the Company's businesses as well as higher insurance premiums. During the quarter the Company announced that its BioScrip division had signed a contract with Allianz Healthcare Re, the healthcare reinsurance unit of Allianz Life Insurance Company of North America (Allianz Life). Allianz Life is one of the leading health reinsurers in the United States. Through the agreement, BioScrip will offer specialty pharmaceutical distribution and management services including compliance monitoring programs targeted at high cost injectable therapies that service the chronically ill and genetically impaired. Net income for the nine months was $13.6 million or $0.57 per diluted share, compared to net income of $10.0 million or $0.47 per diluted share, excluding 2002 and 2001 special gains of $0.03 and $0.10 per diluted share, respectively, and the $0.06 impact of amortization of goodwill in the same 2001 period. EBITDA for the nine months of 2002 grew 34% to $23.1 million, compared to $17.3 million in the previous year's period. EBITDA includes special gains of $0.9 million and $2.5 million for 2002 and 2001 respectively. Operating income for the nine months ended September 30, 2002 increased 55% to $18.5 million from the same period last year. Operating income includes a special gain of $0.9 million in 2002 and a benefit of $1.1 million in 2001 (special gains offset by the amortization of goodwill). Revenues for the nine months increased 28% to $426.0 million from $332.8 million for the same period in 2001. Specialty revenues increased 318% in the nine-month period to $119.1 million from $28.5 million in 2001 for the reasons discussed above. PBM and mail service revenues for the nine months were flat, primarily as a result of the Company's classification of certain revenues from gross to net, the loss of revenue due to the liquidation of Access MedPLUS and Company's termination of certain unprofitable PBM accounts. Cost of revenue for the nine months totaled $374.5 million compared to $294.0 million for the same period last year. This increase was offset by decreases in cost of revenue from the Company's classification of certain PBM revenues from gross to net, the loss of revenue due to the liquidation of Access MedPLUS and the Company's termination of certain unprofitable PBM accounts. Gross profit for the nine months was $51.4 million compared to $38.7 million in the nine months of 2001, primarily due to growth in the Specialty Pharmaceutical business. Increases in gross profit were offset by the loss of revenue due to the liquidation proceeding of Access MedPLUS and the Company's termination of certain unprofitable PBM accounts. The gross profit percentage increased to 12.1% for the nine months 2002 period compared to 11.6% for the same period in 2001. Nine month selling, general and administrative expenses increased to $32.8 million from $27.6 million in the first nine months of 2001, an increase of $5.2 million or 19% for the same reasons previously discussed. Expenses as a percentage of revenue decreased to 7.7% from 8.3% for the prior year. The Company appointed James S. Lusk to the position of Chief Financial Officer at the end of the third quarter. Mr. Lusk comes to MIM with more than 20 years of financial experience at major corporations including Lucent and AT&T. Mr. Friedman noted that one of Mr. Lusk's most important duties would be shareholder communications and that MIM is dedicated to improving transparency and credibility. Days sales outstanding have improved from 57 days at December 31, 2001 to 45 days at September 30, 2002. Inventories have grown commensurate with revenue growth and the inclusion of Vitality. The Company generated a total of $18.2 million in operating cash flow in the nine-month period of 2002. The outstanding bank borrowings under the working capital line of credit were $5.6 million as of September 30, as compared to $11.7 million at the end of the second quarter. In addition, total stockholders' equity grew 43.6% in the nine months. James S. Lusk, Chief Financial Officer, commented that the Company continues to demonstrate consistent growth in operating cash flow. "We again ended the quarter with a strong balance sheet, which gives us the ability to fuel continued growth." "The fundamental strength of our business plan, execution and market potential remains solid," added Mr. Friedman. "As the US healthcare system continues to look for savings, our customers are seeking more integrated services and demonstrable cost benefits. Looking to the future, we plan to continue to find ways to increase shareholder value by leveraging our customer base and the growth drivers in our industry." MIM Corporation -- http://www.mimcorporation.com-- is a pharmaceutical healthcare organization delivering innovative pharmacy benefit and healthcare solutions that provide results beyond expectations. We excel by harnessing our clinical expertise, sophisticated data management, and therapeutic fulfillment capability, and combine it with our dedicated, responsive team of professionals that understands our partners' needs. The result is cost-effective solutions enhancing the quality of patient life. NATIONAL STEEL: Transferring Donner-Coke Plant to Steelfields ------------------------------------------------------------- Mark P. Naughton, Esq., at Piper Marbury Rudnick & Wolfe, recounts that National Steel Corporation and its debtor- affiliates have previously obtained authority to transfer certain real property located in Buffalo, New York, to Steelfields LLC. The property covers 84 acres of real property that is commonly known as the former Donner-Hanna Coke Plant. The Property is jointly owned by The Hanna Furnace Corporation, a debtor-affiliate, and LTV Steel Company, Inc. Hanna and Steelfields have no business relationship other than this transaction. Accordingly, the Debtors now want to effect the Court-approved Consent Order and assign the Donner-Hanna Coke Plant in accordance with the Property Transfer Agreement among Hanna, LTV and Steelfields. The salient terms of the Property Transfer Agreement are: Transfer: The property is transferred free and clear of tax Liens. Reservations, Restrictions & Exceptions: The Transfer Agreement and the Property are subject to: (a) any rights of way, easements, liens or encumbrances apparent from a reasonable inspection of the Property or which an accurate and commercially reasonable survey would reveal; (b) zoning, subdivision and other governmental restrictions or requirements, which could affect, or could reasonably be expected to have a material effect on, the use, enjoyment and development of the Property; and (c) any liens or encumbrances of record affecting the Properties -- except for delinquent real estate taxes and tax liens. The Deeds: The Property will be transferred by one or more Quitclaim Deeds. Closing: The Closing will occur at the offices of Coluci & Gallagher, P.C. in Buffalo at 9:00 A.M. local time on a business day agreed to in writing by the Parties. The Closing Date will not be later than later than 30 days after satisfaction of these conditions: (a) Approval of the Transfer Agreement by the Bankruptcy Courts; (b) Entry of the Consent Order; (c) Agreement upon and execution of the Administrative Order on the Consent Order with the State of New York Department of Environmental Conservation. Under the Administrative Order, Hanna and LTV will contribute specified assets and assign certain insurance rights into an escrow fund to be used for remediation of the Property by Steelfields; (d) Agreement upon and execution of the Voluntary Cleanup Agreement between Steelfields and the Department of Environmental Conservation; and (e) Agreement upon and execution of a final Escrow Agreement establishing the Escrow Account. If despite their efforts, one or more of the conditions to the Closing are not satisfied or waived by any of the Parties in whose favor it was established, then any of the Parties may terminate the Agreement. If any of the Parties elect to terminate the Agreement and if none of the Parties are in breach, then no Party will have any further liability under the Agreement to any other Party. Survey Title Commitments: (a) Steelfields may, at its sole cost, obtain an update of existing surveys or another survey and the title insurance as it deems necessary or desirable; and (b) After execution of this Agreement and before the Closing, neither Hanna nor LTV will grant or enter into any lease, easement or other document, which would convey an interest in, or create a restriction on the Property without the consent of Steelfields. Default, Failure To Close: If the transactions contemplated do not close as a result of: (a) Steelfields' breach, default or failure to perform its obligations under the terms of the Agreement, the sole and exclusive remedy of LTV and Hanna will be to pursue specific performance against Steelfields and reasonable, actual attorneys' fees; and (b) the default or non-performance by either LTV or Hanna of their obligations under the Agreement, Steelfields' will be entitled either: -- to terminate the Agreement in full and final satisfaction of all of Hanna's and LTV's obligations to Steelfields; or -- to pursue specific performance against Hanna and LTV and reasonable, actual attorneys' fees. Denial of Bankruptcy Court or other Court approval of, or failure to reach agreement upon, any of the specified Conditions Precedent will not be considered a breach, default or failure to perform by either Parties. Neither Party may terminate the Agreement unless and until the non-defaulting Party gives notice to the defaulting Party stating the breach upon which the termination is predicated and the defaulting Party fails to cure that breach within 30 days. Pro-ration: The Parties will, as of the Closing Date, prorate: (a) all real estate taxes and assessments, both general and special; and (b) all water and sewer charges, except for special assessments arising from any actions or petitions by Hanna or LTV, which will be Steelfields sole responsibility. Expenses: (a) LTV and Hanna will pay their own expenses incurred in the course of performing their obligations under the Agreement; and (b) Steelfields will pay: -- All real estate transfer taxes; -- The cost of any Title Commitment or Title Policy it desires; -- The fees for filing and recording the Deeds and other documents which Steelfields may reasonably deem to be necessary; -- The cost for any new or updated survey; and -- All other expenses it incurred in the course of performing its obligations under the Agreement. Indemnification: Steelfields Transferee agrees to indemnify, defend and hold harmless LTV and Hanna, from any and all liabilities and claims asserted by any local, state or federal agency or governmental authority or by a private party for or relating to: (a) Steelfields' failure to satisfy the terms and conditions of the Voluntary Cleanup Agreement or the DEC-approved Workplans, as they may be amended from time to time; (b) Conditions, which existed on the Property before, on or after the Closing; (c) Conditions from the Property to the extent that they emanate from the Properties after the Closing; and (d) Steelfields' failure to comply with applicable regulatory or public safely requirements pertaining to the Property after the Closing. Steelfields will not assume any liability or obligation with respect to: (i) any Claims that are discharged through Hanna's or LTV's pending or previous bankruptcy proceedings; (ii) conditions from the Property to the extent that they emanated from the Property before the Closing; and (iii) exposures to conditions on the Property, which occurred before the Closing. Notices: All notices, consents and approvals required under the Agreement will be in writing and will be deemed to have been given or made: (a) if sent by U.S. certified or registered mail, with appropriate postage attached on the second business day after deposit; (b) if sent by hand, upon delivery; (c) if by prepaid overnight courier service on the next business day following delivery to that service; and (d) if sent by fax, upon confirmation of receipt of that fax. Notices must be addressed to: -- If to LTV: LTV Steel Company, Inc. 6801 Brecksville Road Independence, OH 44131 Attn: Secretary With copy to: Squire, Sanders & Dempsey LLP 1300 Huntington Center 41 South High Street Columbus, OH 43215 Attn: Van Carson, Esq. Phone: (216) 479-8559 Fax: (216) 479-8776 -- If to Hanna: The Hanna Furnace Corporation 4100 Edison Lakes Parkway Mishawaka, IN 46545-3440 Attn: Ronald J. Werhnyak Vice President & Gen. Counsel Phone: (574) 273-7601 Fax: (574) 273-7609 With copy to: Babst, Calland, Clements Two Gateway Center Pittsburgh, PA 15222 Attn: Donald C. Bluedorn Phone: (412) 394-5450 Fax: (412) 394-6576 -- If to Transferee: Steelfields LLC Paul H. Werthman, P.E. Turn Key Environmental Restoration, LLC Key Tower, Suite 1350 50 Fountain Plaza Buffalo, New York 14202 Phone: (716) 856-0635 Fax: (716) 856-0583 (National Steel Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXTEL COMMS: Retires $1.5B in Debt & Preferred Securities in 3Q ---------------------------------------------------------------- Nextel Communications, Inc. (NASDAQ:NXTL), announced record financial results for the third quarter of 2002 including income of $526 million. Revenue was $2.3 billion, a 26% increase over last year's third quarter. Domestic operating cash flow was $878 million, increasing by 67% over the same period last year. Nextel retired approximately $1.5 billion in debt and preferred stock during the third quarter, bringing total debt and preferred stock retirements to $2.6 billion thus far this year. Nextel added approximately 480,000 domestic subscribers during the third quarter, finishing the quarter with approximately 10.1 million domestic subscribers. "Nextel continues to attract high value customers at a healthy pace. We are growing market share with the best product and service portfolio in the industry and our cash flow margin improved to 41%," said Tim Donahue, Nextel's CEO. "Our base of more than 10 million customers continues to grow due to strong add-on sales, strong business customer referrals and growth in targeted segments including construction and government sectors. At the same time, Nextel is improving its back-office systems, scaling network expenditures, and keeping our network quality and customer satisfaction at high levels while reducing customer churn. Nextel will continue to expand our Direct Connect capabilities, add new products to our portfolio and continue to pursue our smart growth strategies." Nextel's average monthly service revenue per domestic subscriber remained at $71, significantly higher than other national wireless carriers. Customer churn was approximately 2% during the quarter and is the best among the national wireless carriers. Nextel's consolidated income available to common stockholders during the third quarter was $526 million, or $0.58 per basic share. Gains of $401 million or $0.44 per basic share were recognized during the quarter related to gains on retirement of debt and preferred stock. Net of these gains and a $3 million reduction in investment fair value, Nextel's income available to basic common stockholders was $128 million or $0.14 per share. "[Thurs]day's financial results show that Nextel continues to deliver on our business plan. We are driving top-line growth by focusing on high-value customers. We are simultaneously driving higher EBITDA margins by creating operating efficiencies in the business and we have instilled a more disciplined approach to capital spending. Together these actions are driving greater cash flow, which is enabling Nextel to significantly reduce our debt and preferred stock obligations," said Paul Saleh, Nextel's EVP and CFO. "During the third quarter, Nextel retired approximately $1.5 billion in principal amount of debt and preferred securities. Thus far during 2002, we have retired approximately $2.6 billion in principal amount of our securities. These transactions allow Nextel to avoid payments of approximately $4.4 billion in principal, interest and dividends over the life of these securities, or approximately $235 million in interest and dividend savings annually." For the quarter ended September 30, 2002, Nextel retired $1.5 billion in principal amount of its outstanding debt and mandatorily redeemable preferred stock in exchange for approximately 83 million newly issued shares of Class A common stock and approximately $394 million in cash. Thus far this year, Nextel has retired approximately $2.6 billion in principal amount of debt and mandatorily redeemable preferred stock. Nextel may from time to time as it deems appropriate enter into similar transactions which in the aggregate may be material. Domestic capital expenditures were $401 million in the third quarter of 2002. Total domestic system minutes of use on the Nextel National Network increased 40% during the quarter when compared with the same period in 2001 to approximately 19.2 billion total system minutes of use. Nextel Communications, a Fortune 300 company based in Reston, Va., is a leading provider of fully-integrated wireless voice and data communications services including Nextel Direct Connect(R)--the long-range digital walkie-talkie feature; high quality digital cellular services; Nextel Online(R) wireless data content and business solutions; and two-way messaging services. Nextel and Nextel Partners, Inc. have built the largest guaranteed all-digital wireless network covering 197 of the top 200 U.S. markets. Nextel's wireless voice and packet data communications services are available today in areas of the U.S. where approximately 239 million people live or work. * * * As previously reported, Fitch Ratings changed the Rating Outlook on Nextel Communications Inc., to Negative from Stable. The Negative Rating Outlook applies to Nextel's senior unsecured note rating of 'B+', the senior secured bank facility of 'BB' and the preferred stock rating of 'B-'. NORTEK INC: Look for Third Quarter Earnings Results Today --------------------------------------------------------- Nortek, Inc., (NYSE: NTK) will provide an audio Webcast of its quarterly conference call over the Internet on today, October 29, at 9 a.m. EST. The Company will announce its final results for the third quarter of 2002 at approximately 8 a.m., also today. Instructions for joining the audio webcast can be found at http://www.nortek-inc.com An audio replay of the Webcast will also be available for 15 days at http://www.nortek-inc.com For more information, contact Joe Grillo or Bob Guenther at Nicolazzo & Associates in Boston, Mass. at 617-951-0000, or Nortek Investor Relations at 401-751-1600. Nortek is a leading international manufacturer and distributor of high-quality, competitively priced building, remodeling and indoor environmental control products for the residential and commercial markets. The Company offers a broad array of products for improving the environments where people live and work. Its products include range hoods and other spot ventilation products; heating and air conditioning systems; vinyl products, including windows and doors, siding, decking, fencing and accessories; indoor air quality systems; and specialty electronic products. * * * As reported in Troubled Company Reporter's Thursday edition, Moody's Investors Service assigned and confirmed ratings to Nortek, Inc., with Stable outlook. Rating Actions * B1 senior implied rating * B1 Issuer rating * Ba3 on the $200 million senior secured revolving credit facility due 2007 * B1 on $175 million of 9.25% senior notes due 3/15/2007 * B1 on $310 million of 9.125% senior notes due 9/1/2007 * B1 on $210 million of 8.875% senior notes due 8/1/2008 * B3 on $250 million of 9.875% senior subordinated notes due 6/15/2011 The ratings reflects Nortek's high debt leverage due to its acquisition-based growth strategy and its negative tangible equity of about $370 million at June 29, 2002. NOVEX SYSTEMS: Independent Auditors Express Going Concern Doubt --------------------------------------------------------------- Novex Systems International, Inc., evolved from the development stage in mid-1998 and any evaluation of the Company and its business should only be made after having given careful consideration to the following risk factors. The Company's limited operating history makes it difficult for investors to evaluate its business based on past performance - Novex has only had manufacturing operations and related revenues since April 1998 and it has only owned the Por-Rok business since August, 1999 and the Sta-Dri business since August, 2000. As a result, it may be difficult for investors to evaluate its business and its prospects based on prior performance. Novex has had losses and may not be able to achieve profitability. Novex has recorded net losses for each year of operation (1994-2002). In addition, a significant portion of its assets are attributable to goodwill. In August, 2000, Novex purchased all the assets of The Sta-Dri Company, which resulted in goodwill of $149,000 and is being amortized on a straight- line method over 10 years. As of May 31, 2002, goodwill net of accumulated amortization amounted to $628,784. Amortization expense charged to operations for the fiscal year 2002 was approximately $49,452. Management will periodically review the recoverability of goodwill to determine if it has been impaired. Events that may cause an impairment would be Novex's future intentions with regard to the operations, and the operations forecasted undiscounted cash flows. Effective June 1, 2002, any reduction in the value of goodwill would be to the extent that the fair market value is less than the carrying amount of goodwill. This analysis may result in a complete or partial write-off or acceleration of the amortization period. A write- down of part or all of this would hurt Company results of operations and make it even more difficult to achieve profitability in the future. Going forward, Novex anticipates incurring significant expenses, including product and service development expenses, sales and marketing costs and administrative expenses, as well as other problems, expenses, delays and other uncertainties inherent in a business with a relatively short history of operations which is seeking to expand its operations. Accordingly, these factors will also make it more difficult to achieve profitability in the near future. If Novex cannot expand its limited product line, its ability to increase revenues and become profitable will be hampered. In the construction products industry, end-users would prefer to use one manufacturer's products in any given construction project and distributors generally prefer to stock an expanded rather than a limited product line. Novex currently markets only a limited number of products and needs to acquire companies with complementary products, or it needs to have other companies private label products using its brand names and their own formulations and/or develop new products. Because of the uncertainties associated with obtaining acquisition financing and with closing these transactions, Novex may not achieve its objective to expand its product line this year. Furthermore, it does not currently know when new products under development will be ready for manufacturing, generate revenues, or whether they can be successfully marketed. If unable to acquire new products or develop new products, the Company's ability to achieve profitability through increased sales from an expanded product line would be delayed. If Novex cannot obtain additional financing, it could default on its debt obligations, lose the Por-Rok facility and suffer a decrease in revenues. Novex is required to make monthly payments on the $890,000 Secured Term Loan Promissory Note in favor of Dime Commercial Corp. In addition, it has bridge loans outstanding in the amount of $1,011,000 that have matured on September 15, 2001 and are still outstanding, which notes are secured by its assets, but subordinated to the loans owed to Dime Commercial Corp. The Company's ability to pay off the debt owed to Dime Commercial Corp., and the bridge loan holders will be dependent to a large extent upon a successful refinancing of the Company's entire business. If the revenues generated by its sales and marketing efforts are not sufficient to pay off the debt owed to Dime Commercial Corp., and the bridge loan holders, Novex will need to obtain financing from an outside source. If Novex shall need additional financing for working capital it does not have any assets to pledge, therefore any future financing would have to be in the form of unsecured debt financing that would be subordinated to current secured loans, or equity financing such as the sale of preferred or common stock. If Novex had to raise capital through unsecured debt the interest rate would be much higher than secured financing and could be as high as 15%-20%. It may also require the issuance of common stock or a warrant to purchase common stock at less than favorable prices. On the other hand, if Novex had to raise financing through the sale of preferred stock the dividend rate on the stock would likely be in the 10%-15% range. A potential investor could also require that the preferred stock be convertible into common stock at a future date on terms that are not favorable to current common shareholders. Lastly, Novex could offer to sell common stock to a prospective investor, however since the Company has yet to become profitable it is likely that this form of financing would be very dilutive to current shareholders. If Novex is unable to obtain additional financing, it could default on the loans made by Dime Commercial Corp. and the bridge loan holders. Failure to make any of the payments to Dime Commercial Corp. could result in a re-transfer of the Por-Rok facility to Dime Commercial Corp. Any such re- transfer would reduce Novex's operations substantially, adversely effect its financial condition and results of operation and make it even more difficult to achieve profitability in the future. Because Novex has no patent protection for its product formulae, its competitors could copy its products and market them under another name which could decrease Novex's revenues and hamper its ability to achieve profitability. Since the formulae would become public knowledge if Novex were to obtain patent protection, Novex has chosen not to obtain patents on any of its proprietary technology. Therefore, the absence of patent protection represents a risk in that Novex will not be able to prevent other persons from developing competitive products. If Novex's competitors were to learn of the secret formulae for making its products, they could easily duplicate the products and offer them to Novex's customers without any suggestion of patent infringement. As a result, Novex's revenues would decline and its ability to achieve profitability would be hampered. Novex has only one executive officer who performs multiple functions and may not be able to handle all financial and executive responsibilities required. Novex relies considerably on the services of Mr. Daniel W. Dowe, its President. At present, Mr. Dowe is the Company's only executive officer, in that the Company's chief financial officer recently left the Company. Mr. Dowe is now directly handling all sales and marketing function and oversees financial and legal responsibilities. To the extent that the services of Mr. Dowe become unavailable, it would be very difficult to attract or retain personnel who would be able to adequately perform the functions previously performed by Mr. Dowe and the Company's ability to continue its operations until a replacement is hired would be substantially hampered. Because Novex' stock is presently considered to be a "penny stock", the applicability of "Penny Stock Rules" could make it difficult for investors to sell their shares in the future in the secondary trading market. Federal regulations under the Exchange Act regulate the trading of so-called "penny stocks", which are generally defined as any security not listed on a national securities exchange or NASDAQ, priced at less than $5.00 per share, and offered by an issuer with limited net tangible assets and revenues. In addition, equity securities listed on NASDAQ that are priced at less than $5.00 per share are deemed penny stocks for the limited purpose of Section 15(b)(6) of the Exchange Act. Therefore, during the time which the common stock is quoted on the NASDAQ OTC Bulletin Board at a price below $5.00 per share, trading of the common stock will be subject to the full range of the Penny Stock Rules. Under these rules, broker dealers must take certain steps prior to selling a "penny stock," which steps include: (i) obtaining financial and investment information from the investor; (ii) obtaining a written suitability questionnaire and purchase agreement signed by the investor; and (iii) providing the investor a written identification of the shares being offered and in what quantity. If the Penny Stock Rules are not followed by the broker-dealer, the investor has no obligation to purchase the shares. Accordingly, the application of the comprehensive Penny Stock Rules may be more difficult for broker-dealers to sell the common stock, and purchasers of the shares of common stock offered hereby may have difficulty in selling their shares in the future in the secondary trading market. If a trading market is not maintained, holders of the common stock may experience difficulty in reselling such Common Shares or may be unable to resell them at all. The Common Shares of the Company are presently quoted on the NASDAQ Over-The-Counter (OTC) Bulletin Board. The independent auditors for the Company have indicated that the Company has suffered from recurring losses from operations, including a net loss of $965,481 for the year ended May 31, 2002, and has a negative working capital and shareholder deficiency as of May 31, 2002. These factors raise substantial doubt the Company's ability to continue as a going concern. NTL: Committee Taps Quest to Render Advice re Euroco Business ------------------------------------------------------------- The Official Committee of Unsecured Creditors of NTL Incorporated and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Southern District of New York for an authority to contract Quest Turnaround Advisors, LLC as its management services consultants, nunc pro tunc to August 30, 2002. The Committee reminds the Court that the Debtors' Plan currently contemplates that upon consummation of the Plan, the Debtors will divide their current businesses and investments into two new groups, the holding companies for which are referred to in the Plan as New NTL and Euroco. Euroco will be the holding company for the substantially all of the Debtors' businesses and investments in continental Europe (excluding France) as well as holding certain other various investments. The Committee believes that it is in the best interest of the Debtors, their estates, and their creditors to employ and retain Quest to provide to the Committee management consulting services with respect to the future businesses, management and operations of Euroco. The Committee further points out that a new business entity like Euroco has numerous requirements and the Committee believes that Quest is qualified to provide the management consulting services that it requires. Quest will render management consulting services to the Committee in order to maximize and realize the value of Euroco. Quest will: i) provide management consulting services; ii) ensure that Euroco has all necessary transitional IT and back office service agreements in place necessary to conduct its affairs; iii) oversee of the development and implementation of a cohesive communication plan for managers and employees in operating subsidiaries and for partners/co-investors to convey managerial control and direction; and iv) provide advice and guidance relating to the operations of Euroco post-consummation. The Debtors agree to pay Quest at its current hourly rate of $400 per hour plus all of the fees and expenses incurred by Quest in performing its management consulting services. NTL is the largest cable television operator and a leading provider of business and broadcast services in the UK, and the owner of 100% of Cablecom in Switzerland and Cablelink in Ireland. Kayalyn A. Marafioti, Esq., Jay M. Goffman, Esq., and Lawrence V. Gelber, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their U.S. Bankruptcy proceedings and Jeremy M. Walsh, Esq., at Travers Smith Braithwaite serves as U.K. Counsel. On December 31, 2001, the Company's books and records reflected, on a GAAP basis, $16,834,200,000 in total assets and $23,377,600,000 in liabilities. OGLEBAY NORTON: Raises $75 Million in Private Transaction --------------------------------------------------------- Oglebay Norton Company (Nasdaq: OGLE) has executed $75 million in senior secured notes in a private transaction. In conjunction with the secured notes transaction, the company has entered into an agreement with its existing bank group to extend the maturity on the company's senior secured credit facility until October of 2004. John N. Lauer, Oglebay Norton Chairman and Chief Executive Officer, said, "We are pleased to announce the successful execution of a $75 million senior secured notes financing. This transaction allows us to reduce the amount of our bank facility and extend its terms. We believe this transaction has stabilized our capital structure and allows our management team to focus on executing our integrated strategy over the next couple years. We intend to continue to place emphasis on improving operating fundamentals and controlling costs in order to increase cash flows and improve our profitability." Julie A. Boland, Vice President, Treasurer and Chief Financial Officer, added, "We are very pleased to have been able to execute the notes transaction with a group of top-tier investors while at the same time working hand-in-hand with our existing bank group to extend our senior credit facility. "We now have the time and financial flexibility to continue to improve our operating performance, pay down debt and explore other financing alternatives at a future time when market and economic conditions are more favorable," Boland concluded. The $75 million senior secured notes mature in October 2008, with scheduled amortization in 2007 and 2008 (50% of original principal in each year). Interest on the notes includes a 13% per annum cash payment, payable quarterly, and a 5% per annum payment-in-kind. Oglebay Norton Company, a Cleveland, Ohio-based company, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. Building on a 149-year heritage, our vision is to become the best company in the industrial minerals industry. The company's Web site is located at http://www.oglebaynorton.com * * * As reported in Troubled Company Reporter's August 8, 2002 edition, Standard & Poor's lowered its corporate credit and bank loan ratings on Oglebay Norton Co., to single-'B' from single- 'B'-plus due to difficult end-market conditions, the company's weak financial performance, and its limited free cash-flow generation, which will continue to result in high debt levels. The outlook is negative. The ratings reflect Oglebay's very high debt leverage, cyclical end markets, high capital spending requirements relative to operating cash flow, and refinancing risk. The ratings also reflect the company's diversified business segments and a focus on productivity and operational improvements. ONLINE GAMING: Sets Annual Shareholders' Meeting for November 21 ---------------------------------------------------------------- The annual meeting of shareholders of Online Gaming Systems, Ltd., shall be held on November 21, 2002, at 10:00 a.m., Pacific time, in the offices of the Corporation, in the City of Las Vegas, Nevada. The shareholders will deliberate and take action on the following matters: 1. To elect directors to serve for the ensuing year or until their respective successors are duly elected and qualified. The nominees are John Copelyn, Gavin Chamberlain, Lawrence P. Tombari, and Marcel Golding. 2. To approve an amendment to the company's articles of incorporation to increase the number of shares of common stock which the company is authorized to issue from 100,000,000 to 200,000,000. 3. To approve amendments to the company's 1999 stock option plan 4. To ratify the appointment of Moore Stephens, P.C., as independent accountants of the company for the fiscal year ending December 31, 2002. 5. To transact such other business as may properly come before the meeting or any adjournment thereof. The board of directors has fixed the close of business on October 9, 2002 as the shareholder of record date. Only those shareholders, which were shareholders of record at the close of business on October 9, 2002, will be entitled to vote in person at the meeting or any adjournment thereof. Online Gaming Systems, Ltd., develops and markets Internet and private network transaction based products that it only offers to licensed gaming operators inregulated jurisdictions. These products include Internet Casino Extension, a growing suite of casino games, webSports, a sports wagering system, Lotto Magic a lottery system for private, government and fund raising purposes, and Bingo Blast a multi-player system for charity and private organization use. The Company also offers wireless and portable gaming devices through Excel Design. At June 30, 2002, Online Gaming Systems' balance sheets show a working capital deficit of about $1.2 million, and a total shareholders' equity deficit of about $5.1 million. O'SULLIVAN INDUSTRIES: 1st Quarter Conference Call Set for Today ---------------------------------------------------------------- O'Sullivan Industries Holdings, Inc., (OTC Bulletin Board: OSULP) a leading manufacturer of ready-to-assemble furniture, will hold a conference call to review its first quarter results for fiscal 2003. Date: October 29, 2002 Time: 10:00 A.M. Central Number: 719-457-2625 Pass Code 613856 Open To: Analysts, investors and all interested parties To participate in the call, please call five to ten minutes prior to the scheduled start time. The conference moderator will establish your participation on the call. For those unable to participate in the conference call, playbacks are scheduled for 3:00 p.m. (central) on October 29th and 10:00 a.m. (central) on October 30th. Please call (719) 457-2703 and reference the conference pass code of 310689. For your convenience, an audio webcast of the conference call will be available on the O'Sullivan Web site at http://www.osullivan.com The confirmation number is 613856 and leave the pass code field blank. In O'Sullivan Industries' June 30, 2002 balance sheets, the Company recorded a total shareholders' equity deficit of about $55 million. OWENS CORNING: Sues AT Plastics et. al. to Recover Transfers ------------------------------------------------------------ Owens Corning and its debtor-affiliates made preferential transfers of property to these entities 90 days prior to the Petition Date: Transferees Amount ----------- ------ AT Plastics Inc. $219,135 AC Leadbetter & Son Inc. $407,520 Nextiraone LLC $392,795 (formerly known as Williams Communications Solutions LLC) Accordingly, the Debtors ask the Court: -- for an order pursuant to Section 547 of the Bankruptcy Code avoiding the Preferential Transfers, net of any subsequent new value, and -- to enter a money judgment pursuant to Section 550 of the Bankruptcy Code in their favor against the transferees in the amount of the Preferential Transfers, together with interests and costs of suit, including attorneys' fees incurred in connection with these adversary proceedings. (Owens Corning Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) PANACO: Committee Turns to Petrie Parkman for Financial Advice -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Panaco, Inc., asks for authority from the U.S. Bankruptcy Court for the Southern District of Texas to engage Petrie Parkman & Co., Inc., as its Financial Advisor, nunc pro tunc to September 26, 2002. The Committee seeks to retain Petrie Parkman to: a) meet with the Committee to develop an understanding of the Committee's objectives; b) meet with Panaco management to develop an understanding of Panaco's operational and financial objectives; c) meet with the management and consulting engineering firm of Panaco, as appropriate, to allow Petrie Parkman to gain a thorough understanding of the Panaco assets; d) review Panaco's historical financial and operating statements to allow Petrie Parkman to develop a perspective on Panaco's performance; e) review Panaco's business plan and capital budget to allow Petrie Parkman to develop a perspective on Panaco's business prospects; f) review the marketing process undertaken by Energy Capital Solutions prior to the filing of the case and the marketing process of the Debtor during the Chapter 11 case and advise the Committee; g) assist the Committee in developing a perspective on Panaco's assets and operations; h) assist the Committee in formulating, considering, and proposing various transaction structures designed to achieve the Committee's objectives with respect to the Reorganization; i) develop a preliminary analysis indicating potential reference values of Panaco; j) present Petrie Parkman's analysis to the Committee; k) assist the Committee in assessing the likely reaction of the capital markets to the Reorganization and/or one or more of the Potential Transactions; l) advise and assist the Committee in developing a negotiating strategy; m) advise and assist the Committee in the course of its negotiations during the Reorganization and participate in such negotiations; n) provide testimony as reasonably requested; and o) render other advisory services as may reasonably requested by the Committee in connection with this engagement. Thomas B. Hensley, Jr., co-head of the Restructuring Group of Petrie Parkman, tells the Committee that Petrie Parkman will be entitled to: (a) a monthly advisory fee of $50,000, commencing September 30, 2002 through February 28, 2003. Thereafter, Petrie Parkman shall receive a monthly advisory fee of $40,000 commencing March 31, 2003 throughout the term of its engagement; and (b) a Success Fee equal to $250,000. Panaco, Inc., is in the business of selling oil and natural gas produced on properties it leases to third party purchasers. The Company filed for chapter 11 protection on July 16, 2002. Monica Susan Blacker, Esq., at Neligan Stricklin LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $130,189,000 in assets and $170,245,000 in debts. PPM AMERICA: Fitch Junks Class A-3 and B Notes' Ratings ------------------------------------------------------- Fitch Ratings affirms two tranches of notes and downgrades two tranches of notes issued by PPM America High Yield CBO I Company Ltd. In conjunction with this action, Fitch removes all of the rated notes from Rating Watch Negative. The following rating actions are effective immediately: -- $422,472,564 Class A-1 Notes affirmed at 'AA-'. -- $22,000,000 Class A-2 Notes affirmed at 'AAA'. -- $55,700,000 Class A-3 Notes downgraded to 'CCC+' from 'BBB-'. -- $73,100,000 Class B Notes downgraded to 'C' from 'B'. PPM America High Yield CBO I Company Ltd., is a collateralized bond obligation established in March 1999 and is managed by PPM America. Due to the increased levels of defaults and deteriorating credit quality, Fitch has reviewed in detail the portfolio performance of PPM America High Yield CBO I Company Ltd. In conjunction with this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios. As a result of this analysis, Fitch has determined that the ratings currently assigned to the class A-3 and B notes no longer reflect the current risk to noteholders. PPM America High Yield CBO I Company Ltd., has been consistently failing its overcollateralization test since Fitch reviewed and downgraded the Class A-1, A-3 and B notes in November 2001. As of the latest Trustee's report dated October 16, 2002, the overcollateralization level was 90.3%. PPM America High Yield CBO I Company Ltd.'s cumulative defaulted assets represented 21.8% of the current portfolio collateral. Excluding defaulted assets, assets rated 'CCC-' or worse represented 19.2% of total committed investments. PPM America High Yield CBO I Company Ltd., incorporates an interest default test which if failed diverts interest proceeds from the class A-3 and B notes to redeem class A-1 principal. This test is tripped if cumulative gross defaults exceed the applicable cumulative default percentage. Currently, cumulative gross defaults are 21.8%. Once tripped, this test can never be corrected. The required stress tests for the class A-1 notes causes this test to trip and therefore turbo out the class A-1 notes to the detriment of the class A-3 and B notes. The class A-2 notes having already been defeased, are not affected by this test. PREMIUM STANDARD: S&P Affirms BB Credit & Sr. Unsecured Ratings --------------------------------------------------------------- Standard & Poor's revised its outlook on Premium Standard Farms Inc., to negative from stable. At the same time, Standard & Poor's affirmed its double-'B' corporate credit and senior unsecured debt ratings. About $175 million in debt is rated. "The outlook revision reflects the impact of the recent downturn in hog prices, higher grain costs, and Standard & Poor's expectation that results will not begin to improve until the second quarter of 2003 (the first quarter of Premium Standard Farms' fiscal 2004 results)," said Standard & Poor's credit analyst Jayne M. Ross. Although hog prices have improved somewhat in the last several weeks, they are still well below 2001 prices. In addition, Standard & Poor's is concerned that the firm's vertically integrated operations have not reduced the degree of volatility in Premium Standard Farms' operations as originally anticipated. The ratings for Kansas City, Missouri-based Premium Standard Farms reflect the highly competitive, commodity-based and cyclical nature of the swine industry, the high fixed costs of pork processing operations, and the firm's short track record as a vertically integrated hog processor. These factors are mitigated by the firm's position as one of the leading processors in the U.S. with an emphasis on higher-end, value- added products, the firm's premium niche position, and an experienced management team. Premium Standard Farms is the second largest hog producer and seventh largest processor with operations in Missouri, North Carolina, and Texas. The firm's Missouri and Texas hog production facilities supply all of the Missouri hog processing operations' needs. In North Carolina, the firm produces about 68% of the hogs it slaughters and secures the remaining 32% of its needs through supply agreements with local farmers. This vertical integration, combined with the firm's access to genetically developed breeding stock, ensures that the company has access to a reliable supply of high-quality hogs. Further, this structure results in increased efficiencies relative to Premium Standard Farms' competitors. However, vertical integration has not mitigated, to the extent previously expected, the impact of hog price cycles on the company's operating and financial performance. PRIMUS TELECOMMS: Brener Int'l Discloses 4.2% Equity Stake ---------------------------------------------------------- Brener International Group, LLC, beneficially owns 2,722,500 shares of the common stock of Primus Telecommunications Group, Inc., representing 4.20% of the outstanding common stock of the Company. Brener has sole and shared power to vote and/or dispose of the stock held. PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) is a global facilities-based Total Service Provider offering bundled voice, data, Internet, digital subscriber line, Web hosting, enhanced application, virtual private network, and other value-added services. PRIMUS owns and operates an extensive global backbone network of owned and leased transmission facilities, including over 300 IP points-of- presence throughout the world, ownership interests in over 23 undersea fiber optic cable systems, 21 international gateway and domestic switches, a satellite earth station and a variety of operating relationships that allow it to deliver traffic worldwide. PRIMUS has been expanding its e-commerce and Internet capabilities with the deployment of a global state-of-the-art broadband fiber optic ATM+IP network. Founded in 1994 and based in McLean, VA, PRIMUS serves corporate, small- and medium-sized businesses, residential and data, ISP and telecommunication carrier customers primarily located in the North America, Europe and Asia Pacific regions of the world. News and information are available at PRIMUS's Web site at http://www.primustel.com At June 30, 2002, PRIMUS' balance sheets show a total shareholders' equity deficit of about $151 million. Primus Telecommunications Group's 12.75% bonds due 2009 (PRTL09USR2) are trading at 48 cents-on-the-dollar, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=PRTL09USR2 RED BUTTE ENERGY: Canglobe Dev't Acquires Controlling Interest -------------------------------------------------------------- Effective Oct. 22, 2002 Canglobe Development Inc., has completed the acquisition of its controlling interest in Red Butte Energy Inc. (OTCBB:RDBT). In addition, Red Butte Energy Inc., announces the resignation of Mr. X.M. Liang as Director and has appointed Mr. Chris Stewart of Calgary, Alberta to the board of directors. Canglobe Development Inc., has developed the solution to the universal problem of the disposal of rubber waste and/or by- products. This turnkey solution is both environmentally friendly and economically profitable. The process allows Canglobe to recycle a current environmentally hazardous waste into an end product, which will be used in mainstream rubber applications. The company's objective is not only to be successful in the business of recycling, but also to lead the way with environmentally sound stewardship and leading edge technology. Discarded tires and other rubber waste can now be recycled to the point where the end product is re-used in mainstream rubber manufacturing. Canglobe Development Inc., will emerge as the global leader in providing cost effective, ambient or cryogenically reduced non- activated rubber powder, and its patented re-activated (de-vulcanized) rubber powder to a broad spectrum of industries through the worldwide distribution of its trademark (SACRUP(TM)) rubber base products. Heinz Lueders, Chairman and CEO, and founder of the company will head a seasoned executive team. Heinz Lueders has earned his marks as a successful entrepreneur and builder of businesses. Red Butte Energy Inc.'s June 30, 2002 balance sheets show a total shareholders' equity deficit of about $266,000. RELIANCE GROUP: Liquidator Sues Deloitte & Touche and J. Lommele ---------------------------------------------------------------- M. Diane Koken, Pennsylvania Insurance Commissioner and Liquidator of Reliance Insurance Company, files a complaint before the Commonwealth Court against Deloitte & Touche and its appointed actuary on the account, Jan A. Lommele. In a scathing introduction, Ms. Koken states that, "While Reliance's collapse progressed rapidly in the last years of its existence, its deterioration was hidden from its policyholders, creditors, regulators and the public by financial statements audited by Deloitte and actuarial opinions issued by Deloitte and [Mr.] Lommele that falsely attested to Reliance's financial status." "Whether motivated by the desire to increase fee income from an important client, or blinded to their professional and contractual responsibilities by loyalty to a lucrative account, or hopelessly conflicted by undertaking the dual roles of auditors and appointed actuaries for both [RIC] and its cash- starved parent companies, Deloitte and Lommele, [RIC]'s allegedly independent auditors and appointed actuary, propped up [its] reported financial position, deflected regulatory scrutiny, and permitted [RIC] to pay out cash to its unregulated parent companies and undertake additional policyholder and other obligations . . . when [RIC] was seriously financially troubled and was or would shortly be insolvent." Ms. Koken alleges that if Deloitte and Mr. Lommele fulfilled their professional duties, they would have investigated and disclosed RIC's deteriorating financial condition. Not only did the Professionals ignore red flags, they allowed RIC to continue writing policy obligations that it would never likely have the ability to fulfill. Those obligations have now been dropped in the Liquidator's lap and have caused erosion to the estate. Furthermore, Ms. Koken adds, "The actuarial work performed by Deloitte and Lommele fell far below the applicable standards which govern the actuarial profession. They used methods for calculating a range of loss reserves that were unreasonable and not accepted in the actuarial profession." This allowed RIC to book its loss reserves at an inappropriately low level, producing an illusory surplus that permitted upstream cash distributions and staved off regulatory action. In calculating RIC's reserves, Ms. Koken notes that Deloitte and Mr. Lommele employed a methodology known as "summing." This methodology: -- is not accepted in the actuarial profession, -- results in an unreasonably wide range of reserve values, and -- was expressly disavowed by Mr. Lommele in a published professional paper. Summing produces higher highs and lower lows of reserve estimates, allowing RIC to justify an abnormally low loss reserve. The combined effect of these multiple errors was a reduction of the reserve range for RIC by more than $500,000,000. Ms. Koken argues that if the reserve had been properly calculated, it would have been "hundreds of millions of dollars above the high end of the range. . ." Ms. Koken notes that Deloitte received $6,500,000 in fees for its 1998 and 1999 audits of RIC and RGH. Deloitte continues to earn "substantial" fees from the RGH bankruptcy estate and for the 2000 audit, which Deloitte has yet to deliver to the Liquidator. Count I Professional Negligence & Malpractice as Actuary Ms. Koken points out that Deloitte and Mr. Lommele were required to audit RIC's financial statements in accordance with Statutory Accounting Principles and opine on loss reserve adequacy levels. Deloitte and Mr. Lommele knew that numerous parties-in-interest and stakeholders would rely on this opinion. Deloitte and Mr. Lommele employed actuarial methods that produced a lower required level of loss reserves for RIC and were in violation of accepted actuarial standards and principles, including: a) the intentional, reckless or negligent use of unsound and inadequate methods; b) the intentional, reckless or negligent use of unsupported and unreasonable assumptions; and c) the commission of fundamental errors and simple miscalculations. Count II Professional Negligence & Malpractice as Auditor Deloitte was engaged to audit financial statements for the various Reliance parties in accordance with the Statutory Accounting Principles and the Generally Accepted Accounting Principles. Deloitte knew that numerous outsiders would rely on these financial statements and its conclusions about RIC's financial condition. In performing the 1998 and 1999 audits of RIC and RGH, Deloitte failed to comply with professional standards of conduct including: a) Deloitte failed to identify RIC's understated loss reserves; b) Deloitte relied on RIC's faulty and weak system of internal controls; c) Deloitte failed to question or exclude recorded assets resulting in the overstatement of RIC's statutory surplus; and d) Deloitte failed to issue "going concern" warnings when it was in the best make this determination. Count III Breach of Contract as Actuary RIC and Deloitte entered into valid and enforceable contracts for actuarial services in 1998, 1999 and 2000. Deloitte's erroneous calculation of the range of reasonable reserves breached its contractual obligations and representations. This damaged RIC because it prevented regulators from taking timely action that would have averted large losses to RIC, its policyholders and creditors. It also damaged the estate in the amount paid to Deloitte for actuarial services. Count IV Breach of Contract as Auditor Deloitte's erroneous audits of the financial statements also breached its contractual obligations and representations. This damaged RIC because it prevented regulators from taking timely action that would have averted large losses to RIC, its policyholders and creditors. It also damaged the estate in the amount paid to Deloitte for audit services. Count V Misrepresentation on Behalf of RIC Deloitte and Mr. Lommele made false and material representations concerning: a) the fairness and accuracy of RIC financial statements, including the reasonableness of loss reserves; b) RIC's internal audit controls; and c) services performed satisfied the governing standards of professional practice in the respective fields. Deloitte and Mr. Lommele owed to RIC a duty to perform services in accordance with the accepted standards of professional practice for auditors and actuaries and breached this duty by making false and material representations. Count VI Negligent Misrepresentation Deloitte and Mr. Lommele owed RIC, the Commissioner and others, the duty to exercise care and professional competence in performing services. They knew that several interested parties would rely on their opinions. However, Deloitte and Mr. Lommele made several representations that were false and material to an understanding of RIC's financial condition. Count VII Aiding and Abetting RIC officers and directors were required to act with the utmost good faith in carrying out RIC's interests and were required to act only for RIC's benefit. These individuals owed RIC, its policyholders and other creditors fiduciary duties including care, loyalty, candor and disclosure. The officers and directors, acting as RIC fiduciaries, were required to ensure that all transactions were fair to RIC. However, these officers and directors engaged in activities that did not meet the required standard of care and were contrary to the interests of RIC. They failed to adequately monitor RIC's financial condition, exercise appropriate control over the investment portfolio, continued to operate during what was essentially insolvency and authorized cash transfers that jeopardized and contributed to RIC's demise. Deloitte and Mr. Lommele were aware of the breaches of fiduciary duties and provided substantial assistance and encouragement by failing to perform their duties to RIC in accordance with their professional obligations. For these reasons, Ms. Koken demands judgment against Deloitte and Mr. Lommele for unspecified compensatory and punitive damages. (Reliance Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) RUSSIAN TEA ROOM: Asks Court to OK Access to $400K DIP Financing ---------------------------------------------------------------- Russian Tea Room Realty LLC and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the Southern District of New York to obtain unsecured credit from Tavern On the Green Limited Partnership up to an aggregate principal amount of $400,000. The Debtors hope to obtain the Court's authorization to use cash collateral to meet part of the Maintenance Expenses. The RTRR Debtor does not believe, however, that cash collateral is sufficient to pay all Maintenance Expenses in the Budget for a period of more than a couple of weeks. JPMorgan Chase, the RTRR Debtor's prepetition senior lender, is unwilling to extend additional, postpetition credit to the RTRR Debtor under Bankruptcy Code section 364 on terms at least as favorable as those set forth in the DIP Loan Agreement with Tavern. The DIP Loan offered by Tavern is the Debtor's only other source of funds to pay for the Maintenance Expenses. The Debtors relate to the Court that unless Maintenance Expenses are met, the estate's assets will be in immediate jeopardy of deteriorating. The DIP Loan will mature at the earliest of: 1) December 31, 2002; 2) the appointment of a Chapter 11 trustee; 3) the effective date of a confirmed plan of reorganization; 4) conversion of the RTRR Debtor's case to one under Chapter 7; 5) dismissal of the RTRR Debtor's case; and 6) the appointment of an examiner with power to manage or operate the financial affairs of the RTRR Debtor; or at Tavern's discretion upon the occurrence of an event of default. Debtor's obligations under the DIP Loan constitutes allowed superpriority administrative expense claims with priority over all costs and expenses of administration of the Chapter 11 case incurred under the Bankruptcy Code but subordinate to: (a) the administrative expense claims granted to JPMorgan Chase in connection with the RTRR Debtor's use of cash collateral; (b) accrued and unpaid compensation for services rendered by professionals retained by the Debtor and any official committee appointed in this Chapter 11 case; (c) United States Trustee's fees. The Court authorized the Debtors to obtain unsecured credit under the DIP Loan Agreement for purposes of paying the Maintenance Expenses critical to maintain the integrity and value of the primary assets: Maintenance Expenses -------------------- Expense Item Weekly Monthly Six Months ------------ ------ ------- ---------- Security $ 2,016 $ 8,736 $ 52,146 Gas 200 867 5,200 Electric 2,000 8,667 52,000 Water 200 867 5,200 Repairs & Maintenance 1,850 8,017 48,100 Liability Insurance 2,308 10,000 60,000 Property Insurance 4,615 20,000 120,000 Cleaning 500 2,167 13,000 Security Deposits for Utilities 1,923 8,333 50,000 Sales Taxes due 8/20/02 47,764 ------- -------- -------- Total $15,612 $115,417 $453,680 The Debtor, a Delaware limited liability company, owns the Russian Tea Room, one of New York City's most famous and distinguished restaurants. As of the Petition Date, the Debtor believes that its aggregate unsecured debt - comprised mostly of trade debt, banquet deposits, and unsecured loans - is approximately $6,000,000. Jordan A. Kro, Esq., and Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey LLP represent the Debtors in their restructuring efforts. SAFETY-KLEEN: Wants to Renew National Union Insurance Program ------------------------------------------------------------- Safety-Kleen Corp., and its debtor-affiliates historically procured insurance by virtue of being named as an additional insured under the insurance policy of its 44% equity holder, Laidlaw, Inc. The various Laidlaw policies under which the Debtors were named as additional insureds expired on August 31, 2000. Accordingly, the Debtors sought to replace, on a stand- alone basis, the insurance previously provided under the Laidlaw policies. At the time the Debtors sought to replace the Laidlaw insurance, National Union Fire Insurance Company of Pittsburgh, PA, and other related companies affiliated with American Insurance Group, Inc., were the only suitable companies that offered a proposal for workers' compensation coverage, general/product liability coverage, and automobile liability coverage. After significant negotiation, AIG and the Debtors agreed to the terms for an insurance program. The Insurance Program For 2000-2001 On September 27, 2000, the Debtors filed a motion seeking the Bankruptcy Court's authorization to enter into the insurance program with AIG, which would provide the Workers' Compensation Program, the General Liability Program, and the Auto Liability Program from September 1, 2000 until September 1, 2001. Under the Insurance Program, AIG agreed to provide the Debtors primary workers' compensation coverage for their employees. Under the Workers' Compensation Program, the Debtors agreed to pay a $500,000 deductible per claim and the policy limits would vary by state according to state statute. The total annual premium for the Worker's Compensation Program was approximately $1,700,000. AIG had also agreed to provide general liability, including products liability, coverage to the Debtors under the Insurance Program. The General Liability Program had a self-insured retention component of $500,000 and a $500,000 deductible thereafter. The policy limits of the General Liability Program varied according to the type of claim involved, but were in the range of $500,000 to $2,000,000. The annual premium for the General Liability Program was approximately $200,000. Finally, under the Auto Liability Program, AIG agreed to provide primary automobile liability coverage for the automobiles used by the Debtors. Under the Auto Liability Program, the Debtors paid a deductible of $500,000 for each claim. The policy limit of the Auto Liability Program was $2,000,000 per claim. The premium for the Auto Liability Program was approximately $2,500,000. By order dated November 9, 2000, Judge Walsh authorized the Debtors to enter into the Insurance Program and granted the Debtors authority to enter into renewals of the Insurance Program without the need for a further Court order. The Insurance Program For 2001-2002 Pursuant to the November 9 Order, the Debtors entered into a first renewal of the Insurance Program for the period from September 1, 2001 to September 1, 2002. The first renewal of the Insurance Program included coverage under the same terms as the original Insurance Program with the exception of: (i) a change in premiums, (ii) an increase in the deductible for the Auto Liability Program from $500,000 to $1,000,000 for each claim, and (iii) an increase in the policy limit of the Auto Liability Program from $2,000,000 to $3,000,000 per claim. Based on an analysis conducted by the Debtors' insurance brokers' analysts, the Debtors determined that it was more cost- effective to increase the policy limit and the deductible for the Auto Liability Program than to pay the higher premiums requested by AIG if the deductible and policy limits remained the same as for the original Insurance Program. The premiums for the period from September 1, 2002 to September 1, 2003 are adjusted to take into account the sale of the Debtors' Chemical Services Division to Clean Harbors, Inc., which closed on September 10, 2002. The Insurance Program For 2002-2003 The Debtors signed a second renewal of the Insurance Program for the period from September 1, 2002 to September 1, 2003 and are seeking the Court's approval for the renewal. The second renewal of the Insurance Program would be governed by the same terms as the previous policy period, with the exception that, under the Workers' Compensation Program, the Debtors would be responsible to pay a $1,000,000 deductible per claim, as opposed to the $500,000 deductible previously agreed. Section 363(c)(1) of the Bankruptcy Code provides that a debtor- in-possession may enter into a transaction "in the ordinary course of business, without notice or a hearing, and may use property of the estate in the ordinary course of business without notice or a hearing." 11 U.S.C. 363(c)(1). Additionally, Section 105(a) permits this Court to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code.]" In Safety- Kleen's case, the Debtors believe that the entry into the second renewal of the Insurance Program is authorized by the Bankruptcy Court's order dated November 9, 2000, which specifically provided that "[t]he Debtors are authorized to enter into further renewals of the Insurance Program without further order of this Court and this Order shall govern such renewals." Nevertheless, AIG has indicated that, unless a Bankruptcy Court order is obtained approving the second renewal of the Insurance Program, AIG may exercise their option to cancel the Insurance Program or restate and re-price, with higher premiums, the Insurance Program retroactive to September 1, 2002 with a $500,000 deductible retention for the Worker's Compensation Program. The Debtors contend that ample authority exists to authorize them to enter into the second renewal of the Insurance Program, even if the renewal is found to be outside the ordinary course of business and outside the scope of the November 9 Order. Under the "business justification" test, Courts have applied four factors in determining whether a sound business justification exists: (i) whether a sound business reason exists for the proposed transaction; (ii) whether fair and reasonable consideration is provided; (iii) whether the transaction has been proposed and negotiated in good faith; and (iv) whether adequate and reasonable notice is provided. The Debtors assert that the "sound business justification" test is satisfied. The necessity of insurance for the Debtors is without question. Indeed, without certain forms of insurance, namely workers' compensation insurance and auto liability insurance, the Debtors are not legally able to continue to operate. Given the Debtors' financial position, the initial procurement of insurance from AIG was a difficult task. Because the Debtors had previously satisfied their insurance needs as an additional insured on Laidlaw's policy, at the time they entered into the initial Insurance Program, the Debtors were, in effect, procuring insurance coverage as a separate entity for the first time. Furthermore, the Debtors believe that continuing insurance coverage through AIG by entry into the second renewal of the Insurance Program is in the Debtors' sound business judgment. First, given the Debtors' financial position, the Insurance Program is reasonably priced. As previously presented to the Court when seeking initial entry into the Insurance Program, the Insurance Program is a standard program for an enterprise of the Debtors' size. Furthermore, the Court has already determined that the Debtors' entry into the Insurance Program was in the exercise of their sound business judgment. The Debtors are now seeking the Court's authority to enter into the second renewal of the Insurance Program, pursuant to which, aside from the annually adjusted premium rates, the deductible for the Workers' Compensation Program is increased from $500,000 to $1,000,000 per occurrence. The Debtors believe that from a cost-benefit analysis, there is more than adequate business justification to enter into the second renewal. The Debtors, in fact, determined that raising the deductible from $500,000 to $1,000,000 would be more cost efficient than paying the increased premiums to account for the projected additional losses. Thus, while the Debtors had the option to maintain a $500,000 deductible per claim under the Workers' Compensation Program, the premium savings that resulted from an increase in the deductible were greater. (Safety-Kleen Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) SINCLAIR BROADCAST: S&P Rates $125MM Sr. Subordinated Notes at B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its single-'B' rating to TV station operator Sinclair Broadcast Group Inc.'s proposed $125 million offering of 8% senior subordinated due 2012. The notes are an additional issuance related to the company's existing 8% subordinated notes due 2012. Proceeds from the offering plus existing cash and $25 million from the revolving credit facility, will be used to redeem the company's $200 million 9% notes due 2007. All ratings on Sinclair, including the double-'B'-minus corporate credit rating, are affirmed. Sinclair, based in Hunt Valley, Maryland, has about $1.56 billion debt plus $372.5 million in debt-like preferred stock. The company has one of the largest non-network-owned TV station groups. Its stations reach 23.9% U.S. of households through 62 stations in 39 markets ranked between 13 and 112. Most of the stations are affiliated with the Fox, WB, and UPN Television Networks and are primarily UHF, which has weaker signal and audience reach than VHF. Standard & Poor's said that its ratings on Sinclair continue to reflect the company's large television audience reach, cash flow diversity, and strong margin and discretionary cash flow potential. Offsetting factors include the company's high financial risk from aggressive, debt-financed TV station acquisitions, and mature long-term growth prospects for TV advertising. About one-third of Sinclair's total revenue is derived from generally lower-ranked stations affiliated with the still-developing WB and UPN TV networks. STAR MULTICARE: Holtz Rubenstein Issues Going Concern Opinion ------------------------------------------------------------- Star Multi Care Services, Inc., is in the business of providing professional and paraprofessional home health care personnel services to elderly, ill and physically challenged individuals in their homes, and to a lesser extent the Company provides health care facility staffing services for hospitals and skilled nursing facilities. As of the close of the Company's fiscal year the Company was licensed and/or certified in five states to provide a full array of health care personnel services, which included Registered Nurses, Licensed Practical Nurses, Home Health Aide, Nurse Aide, and Personal Care Aide services. In some states the Company was also licensed and/or certified to provide Physical Therapy, Speech Therapy, Occupational Therapy, Respiratory Therapy, and Medical Social Work services. The Company was established in 1938 in Brooklyn, New York and was purchased by present management in 1986 at which time the primary focus of the organization was the provision of facility staffing and private duty nursing services. After the Company was acquired management successfully secured, in 1989, New York State Department of Health approval as a Licensed Home Care Services Agency. This expanded the Company's scope of services into the home care market. Management initiated an IPO in 1991 with the Company becoming publicly traded on the NASDAQ SmallCap Market, and in 1995 the Company began trading on the NASDAQ National Market. On November 11, 1999 the Company reverted to trading on the NASDAQ SmallCap Market, and on July 10, 2002, it began trading on the NASD OTC Bulletin Board. In addition, the Company has maintained accreditation by the Joint Commission on Accreditation of Health Care Organizations (JCAHO) since 1992 and was most recently awarded in May 2002 Joint Commission accreditation with Commendations, attesting to the Company's commitment to the delivery of high quality health care services. In conjunction with the Premier Asset Purchase Agreement, the New York and New Jersey locations/operations of the Company were fully transferred to Premier. At fiscal year end, the Company maintained 5 licensed offices within the three remaining states it operates in, which include Pennsylvania (3 offices), Ohio (1 office), and Florida (1 office). In the Ohio and Pennsylvania locations, the Company also maintains, as a provision of State licensing and contracting requirements, Medicare Certified Home Health Agency operations in these states. Star maintains full functionality for service provision across the Company 7 days a week, 24 hours a day. As of the fiscal year end, the Company employed over 1,000 full-time and part-time employees and services over 1,000 clients annually. Additionally, the Company also has its corporate facilities and executive offices in Huntington Station, New York. Net revenue for the year ended May 31, 2002 decreased $23,602,,or 61.0%, to $15,077,134, compared to $38,679,374 for the year ended May 31, 2001. This decrease was primarily attributable to the sale and closing of the Company's New York and New Jersey facilities, as well as the closing of one of its Pennsylvania facilities and, to a lesser extent, the elimination of poor margin contracts in its remaining five facilities. Gross profit margin percentages for the years ended May 31, 2002 and 2001 were 35.4% and 33.3%, respectively. The increase in the gross profit margin is primarily attributable to an elimination of low profit margin contracts. The Company's net loss for the fiscal year ended May 31, 2002 was $1,084,508, as compared to the net loss for the fiscal year ended May 31, 2001 of $9,759,170. In fiscal 2000 the net loss was $664,491. The Company believes that can meet its cash requirements for the next twelve months through its existing credit sources. To the extent that such sources are inadequate, the Company will be required to seek additional financing. In such event, there can be no assurance that additional financing will be available to the Company on satisfactory terms. On July 11, 2001 the Company entered into a Settlement Agreement with the United States Department of Justice and the Office of Inspector General of the Department of Health and Human Services. According to the Company, in order to avoid the delay, uncertainty, inconvenience, and the expense of protracted litigation of the claims, both parties mutually agreed upon a settlement amount of $1,000,000 payable by Star by November 8, 2001. On that date, the Company renegotiated the payment of its obligation, making an installment of $250,000, with the balance due in quarterly, non-interest bearing installments of $250,000 each, through August 5, 2002. The aforementioned level of cash used in operating activities has made it difficult for the Company to meet its renegotiated obligation, and the parties again agreed to a modification of the payment terms. As of August 23, 2002, the remaining obligation is $250,000, which is payable in two $125,000 installments through April 5, 2003. The Company believes it will have the available funds necessary to complete the payment by the required dates. Holtz, Rubenstein & Co., LLP, of Melville, New York, states in its August 23, 2002, Auditors Report: "[T]he Company's significant recurring operating losses and working capital deficiency raise substantial doubt about its ability to continue as a going concern." STARWOOD HOTELS: Reports Improved Results for Third Quarter 2002 ---------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) -- whose $1.3 billion bank facility is currently rated by Fitch at BB+ -- reported results for the third quarter of 2002. Third Quarter Financial Results - EPS was $0.26 excluding special items, an increase of 62.5% compared to $0.16 in 2001. EPS including special items was also $0.26, an increase of 85.7% compared to $0.14 in 2001. - Total revenues of $970 million, excluding other revenues from managed and franchised properties, increased slightly when compared to 2001 levels. REVPAR for Same-Store Owned Hotels decreased 2.7% in North America and 2.4% worldwide when compared to 2001. - Total Company EBITDA was $276 million, a decrease of 4.2% compared to $288 million in 2001. EBITDA at Comparable Owned Hotels worldwide decreased 6.2% to $211 million. EBITDA at Comparable Owned Hotels in North America decreased 7.4% to $132 million. - Total Company EBITDA margin was approximately 28.5% in the third quarter of 2002 compared to 29.8% in 2001. Third Quarter Ended September 30, 2002 EPS was $0.26, excluding special items of approximately $2 million (after-tax), an increase of 62.5% compared to EPS of $0.16 in 2001, which excluded $3 million (after-tax) of special items. EPS, including these special items, was also $0.26 in 2002, an increase of 85.7% compared to $0.14 in 2001. Total revenues increased $5 million to $970 million when compared to the same period of 2001. Operating income was $130 million compared to $135 million in the same period of 2001 and income from continuing operations was $52 million as compared to $30 million in the same period of 2001. Results continued to be adversely impacted by the weakened worldwide economic environment. Results benefited from a reduced tax rate and from a $16 million after-tax reduction in goodwill amortization as a result of a new accounting rule pertaining to goodwill and intangible assets that became effective on January 1, 2002, offset by an increase in depreciation expense of $15 million pretax or 13.8% when compared to the third quarter of 2001 due to prior year's renovation programs, the repositioning and acquisition of certain hotels and investments in technology. Nine Months Ended September 30, 2002 For the nine months ended September 30, 2002, total revenues were $2.9 billion when compared to $3.1 billion in the same period in 2001. EPS excluding net benefits for special items of $4 million (after-tax) in 2002 and net charges of $8 million (after-tax) in 2001 was $0.76, compared to EPS of $1.00 in the corresponding period in 2001. EPS including these special items was $0.78 compared to $0.96 in 2001 and EPS including discontinued operations was $1.29 compared to $0.96 in 2001. Income from continuing operations decreased to $160 million compared to $199 million in the same period of 2001. Comments from the CEO Barry S. Sternlicht, Chairman and CEO said, "The global economic environment is challenging as business and trans-oceanic travel remain depressed. In the third quarter, the absence of these sectors hit our urban portfolio particularly hard. Given the uncertainty, we are more focused than ever on the risks and rewards of our capital and investment spend, and managing our cost structure as we enter 2003. As booking patterns remain short and transient demand is buffeted by news events, we expect to drive earnings and cash flow through additional cost containment and strategic spend while we continue to strengthen our brands. Though we are not pleased with every brand's performance in the quarter, our overall company market share actually increased slightly since December of 2001." "To that end, in mid-September we introduced the Sheraton Service Promise where we guarantee customer satisfaction to wide customer acclaim. Though it's too early to draw firm conclusions, in the first three weeks of October, Sheraton's REVPAR index has improved 200 basis points." Concluding, Mr. Sternlicht said, "With our recent internal reorganization into essentially a real estate and an operating company, we are more committed than ever to unlocking the considerable value in our asset base through increased divestitures and careful investment spending. A significant bright spot for our company is our rapid expansion of our distribution base across Asia where this year alone we have signed 10 full service hotel agreements in addition to our sector leading 85 operating hotels. We expect to increase that pace of growth across all our brands going into 2003 with minimal capital investment." Operating Results At the Company's Comparable Owned Hotels worldwide, revenues for the third quarter of 2002 decreased approximately $15 million to $775 million from $790 million in 2001 and EBITDA for the period decreased 6.2% to $211 million from $225 million in 2001. EBITDA at the Company's Comparable Owned Hotels in North America decreased 7.4% to $132 million in the third quarter of 2002 when compared to the same period of 2001. EBITDA at the Company's Comparable Owned Hotels internationally decreased 4.1% to approximately $80 million in the third quarter of 2002 when compared to the same period of 2001. The positive effects of foreign exchange in Europe and Asia Pacific were offset by the devaluation of currencies in South America. Excluding the effects of foreign exchange, EBITDA at the Company's Comparable Owned Hotels internationally decreased 7.2% in the third quarter of 2002 when compared to the same period in 2001. The decline in operating results at Comparable Owned Hotels when compared to 2001 reflects the impact of lower REVPAR primarily attributable to the weakened global economies. REVPAR at Same-Store Owned Hotels worldwide decreased 2.4% in the third quarter of 2002 when compared to the same period of 2001 as a result of a decline in occupancy rates of 40 basis points to 65.5% and a decline in ADR of 1.7% from the prior year. REVPAR at Same-Store Owned Hotels in North America decreased 2.7% to $91.42 when compared to the same period of 2001 as a result of a decrease in ADR of 4.0% to $134.90, offset by increases in occupancy rates to 67.8% from 66.9% in the prior year. REVPAR at system-wide hotels (Same-Store Owned, managed and franchised) in North America decreased 1.7% when compared to the same period of 2001 as a result of a decrease in ADR of 4.2% offset by increases in occupancy rates to 66.2% from 64.5%. Internationally, Same-Store Owned Hotel REVPAR decreased 1.4%, with Europe up 3.7% and Asia Pacific up 7.4% offset by declines in Latin America of 24.2% when compared to 2001. EBITDA margins at Comparable Owned Hotels worldwide were 27.3% in the third quarter of 2002 when compared to 28.5% in the same period of 2001. In North America, EBITDA margins at Comparable Owned Hotels were 24.3% when compared to 25.7% in the same period of 2001. Internationally, EBITDA margins at Comparable Owned Hotels were 34.1% when compared to 35.0% in the same period of 2001. During the third quarter of 2002, the Company signed seven management and franchise contracts representing more than 2,500 rooms. New hotel openings in the fourth quarter of 2002 include: the Sheraton Wild Horse Pass (approximately 500 rooms) in Phoenix, Arizona; the Westin Kierland Resort & Spa in Scottsdale, Arizona (approximately 750 rooms); the Westin Times Square (approximately 863 rooms) in New York; the W San Diego (approximately 260 rooms) in California; the Sheraton Overland Park Hotel (approximately 412 rooms) in Overland Park, Kansas; the Westin Detroit Airport Hotel (approximately 404 rooms) in Detroit, Michigan; the Hotel Bora Bora Nui (approximately 120 rooms), a Luxury Collection Hotel, in French Polynesia; the Westin Shanghai (approximately 450 rooms) in Shanghai, China and the Sheraton Krabi Beach resort (approximately 246 rooms) in Krabi, Thailand. Including these properties, through the end of 2003, the Company expects 50 new full service hotels and resorts around the world, with approximately 115,000 rooms to commence operations. Starwood Vacation Ownership, Inc., is currently selling VOI inventory at ten resorts and engaged in pre-opening sales at two others currently under construction (Westin Mission Hills Resort Villas in Rancho Mirage, California and Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii). Contract sales in the third quarter increased approximately 22.4% when compared to the same period in 2001 and sales were particularly strong at the Maui and Mission Hills resorts. SVO will begin construction of its fourth Westin-branded interval ownership resort later this year featuring 158 villas located adjacent to the Westin Kierland Resort & Spa in Scottsdale, Arizona. SVO sold, on a non-recourse basis, approximately $24 million of notes receivable originated by the vacation ownership operations in the third quarter of 2002, recognizing a pretax gain of $3 million in operating income compared to a gain of $3 million in the third quarter of 2001. Dispositions The Company continues to review its portfolio for disposition candidates, placing additional emphasis on its domestic portfolio. In July 2002, the Company signed a letter of intent to sell its assets in Sardinia, Italy, part of the CIGA portfolio of luxury hotels and resorts, to a consortium of Italian investors. The Company is continuing such negotiations and has commenced discussions with other potential purchasers for these and other CIGA assets. Capital During the third quarter of 2002, the Company invested approximately $112 million in hotel and VOI capital assets, including VOI construction at Westin Mission Hills Resort Villas in Rancho Mirage, California and Westin Ka``anapali Ocean Resort Villas in Maui, Hawaii, the acquisition of 18.5 acres of zoned land for a new Westin timeshare development in Princeville, Hawaii, as well as the ongoing development of the St. Regis Museum Tower in San Francisco (269 rooms and 102 condominiums). Progress also continues on the flexible new build Sheraton and Westin prototypes, details of which were recently unveiled. Other major projects included the renovation of approximately 370 rooms at the Sheraton New York, the Westin Excelsior in Rome, Italy, the Westin Galleria and Oaks in Houston, Texas the Phoenician in Scottsdale, Arizona and the roll out of the Sheraton Sweet Sleeper bed. Additionally, the Company spent approximately $25 million to acquire an interest in the Westin Savannah Harbor Resort and Spa in Savannah, Georgia. Financing On September 30, 2002, the Company had total debt of $5.347 billion and cash and cash equivalents of $229 million, or net debt of $5.118 billion, compared to net debt of $5.301 billion at the end of the second quarter of 2002. Following the end of the third quarter, the Company refinanced its senior credit facility, which consisted of a $1.1 billion revolving credit facility and a $174 million term loan and was scheduled to mature in February 2003. The new credit facility is a four-year facility (with a one-year extension option) comprised of a $1.0 billion revolving credit facility and a $300 million term loan, each bearing an initial interest rate of LIBOR +1.625%. Giving effect to the refinancing, at the end of the third quarter of 2002, the Company's debt was approximately 56% fixed rate and 44% floating rate and its weighted average maturity was 6.4 years. As of September 30, 2002, the Company had cash and availability under its domestic and international revolving credit facilities of approximately $843 million and the Company's debt had a weighted average interest rate of 5.86% (assuming the refinancing had occurred as of September 30, 2002). The Company expects to record approximately $2 million in early debt extinguishment costs in the fourth quarter of 2002 related to this refinancing. In September 2002, the Company terminated its existing fixed-to- floating interest rate swaps and immediately entered into new fixed-to-floating interest rate swaps on the same underlying debt. This resulted in a $78 million cash payment to the Company, which was used to pay down debt outstanding under the Company's revolving credit facility. At September 30, 2002, Starwood had approximately 203 million shares outstanding (including partnership units and exchangeable preferred shares). Dividend In 2002, the Company has shifted from a quarterly dividend to an annual dividend. The final determination of the amount of the dividend will be subject to economic and financial considerations and Board approval in the fourth quarter of 2002. At this time, the Company expects the annual dividend to be $0.84 per share. Special Items The Company recorded charges of $8 million (pretax) offset by credits of $8 million (pretax) for special items in the third quarter of 2002 when compared to net charges of $5 million (pretax) in the same period of 2001. The net charges in the third quarter of 2002 primarily represent $5 million of estimated costs (before any recovery from insurance and other claims) associated with construction remediation at an unconsolidated joint venture and $3 million (pretax) foreign exchange loss in Argentina, offset by a net $6 million (pretax) gain from the sale of investments primarily related to a gain on the sale of Starwood's investment in Interval International, a timeshare exchange company. Future Performance All comments in the following paragraphs and certain comments in this release above are deemed to be forward-looking statements. These statements reflect expectations of the Company's performance given its current base of assets and its current understanding of external economic and political environments. Actual results may differ materially. The weakness in North American and European economies, combined with the current political environment in South America, the Middle East and other parts of the world and their consequent impact on travel in their respective regions and on the rest of the world, make it difficult to predict future results with any degree of precision. - The Company currently expects full year 2002 REVPAR to decline 5-6% from 2001 levels, full-year EBITDA of approximately $1.090 to $1.110 billion and EPS of approximately $0.95 to $1.00 with an effective tax rate of approximately 15%, which is predicated on a dividend in 2002 of $0.84 per share. Based on these assumptions and assuming no further asset sales for modeling purposes, approximate quarterly EPS for 2002 is expected to be as follows: 2002 ---- First quarter (actual)........... $ 0.08 Second quarter (actual).......... $ 0.41 Third quarter (actual)........... $ 0.26 Fourth quarter (estimate)........ $0.20-0.25 ----------------------- Full year (estimate)............. $0.95-1.00 - REVPAR at Same-Store Owned Hotels in North America for the fourth quarter of 2002 is now expected to be up 7 to 9% when compared to the fourth quarter of 2001. - The Company currently expects total capital expenditures in 2002 to be less than $400 million. - Free cash flow for 2002 for dividends and other Corporate uses (after cash interest expense of no more than $350 million, cash taxes of no more than $100 million, approximately $220 million of hotel and corporate capital expenditures, approximately $75 million of timeshare inventory and other timeshare capital investments and approximately $100 million of acquisitions and investments) is expected to exceed $250 million. - For full year 2003, the Company currently expects REVPAR to be up 2% to 5% when compared to 2002, EBITDA of $1.150 billion to $1.200 billion and EPS of $1.15 to $1.30. Starwood Hotels & Resorts Worldwide, Inc., is one of the leading hotel and leisure companies in the world with more than 750 properties in more than 80 countries and 110,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis(R), The Luxury Collection(R), Sheraton(R), Westin(R), Four Points(R) by Sheraton, W(R) brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit http://www.starwood.com SUMMIT CBO: Fitch Junks Ratings on Class B, C & D-1 Notes --------------------------------------------------------- Fitch Ratings has downgraded the ratings of three classes issued by Summit CBO I, Ltd., a collateralized bond obligation backed predominantly by high yield bonds. The following securities' ratings have been downgraded: --$37,000,000 class B notes to 'C' from 'BB'; --$40,861,242 class C notes to 'C' from 'CC'; --$7,557,012 class D-1 notes to 'C' from 'CC'. The latest monthly report for Summit CBO I, Ltd. shows $41.1 million (17.07%) of the deal's collateral invested in defaulted assets. The deal also invests in a significant number of assets rated 'CCC+' or below. The class D-1 notes have deferred interest payments for the previous four payment periods while the class C notes have deferred interest payments for the previous three payment periods. The proceeds from deferred interest were used to pay down the class A notes. The class A/B OC test is failing at 101.7% with a trigger of 120%, while the class C OC test is also failing at 86% with its trigger at 107%. The current cash negative position of the interest rate hedge strategy is also contributing to negative cash outflows. In reaching its rating actions, Fitch reviewed the results of its cash flow model runs after running several different stress scenarios. Also, Fitch had conversations with the portfolio manager, Summit Investment Partners, Inc., regarding the portfolio. Fitch will continue to monitor this transaction. UNIFORET INC: Red Ink Continues to Flow in Third Quarter 2002 ------------------------------------------------------------- Uniforet Inc., has incurred a net loss of $14.0 million for its third quarter ended September 30, 2002, which compares to a net loss of $12.0 million for the corresponding period in 2001. Results for the third quarter of 2002 reflect the pronounced weakness in the lumber market stemming on the one hand from output in excess of demand, and on the other from the application of countervailing duties of 27.2% on all lumber shipments to the United States carried out during the quarter. The Canadian dollar weakened against the U.S dollar by 6% during the quarter - which, in accordance with the new accounting policy concerning foreign currency translation on long-term assets and liabilities denominated in foreign currencies, gave rise to a pre-tax loss of $8.8 million in the third quarter of 2002. Furthermore, given the context prevailing in the lumber industry, the Company re-estimated its valuation allowance of the future income tax assets. Excluding the effect of foreign exchange-rate fluctuations on long-term assets and liabilities denominated in foreign currencies, the pre-tax loss for the third quarter ended September 30, 2002, amounted to $5.2 million, compared to a pre-tax loss of $5.6 for the same period last year. For the nine-month period ended September 30, 2002, the net loss was $5.4 million, which compares to a net loss of $71.1 million for the same period of the previous fiscal year. Excluding non- recurring items and the effect of foreign exchange-rate fluctuations on long-term assets and liabilities denominated in foreign currencies, the pre-tax loss for the first nine months of 2002 was $6.0 million, compared to a pre-tax loss of $17.2 million for the same period last year. The accompanying consolidated financial statements for the quarters ended September 30, 2002 and 2001 have been compiled on the same basis as the consolidated financial statements for the year ended December 31, 2000, using the going-concern assumption. In addition, these consolidated financial statements do not include any value adjustment or reclassification of assets, liabilities or operating results that may be appropriate in light of recent events and pursuant to the implementation or the non-implementation of a potential plan of arrangement with creditors or any other plan bearing on reorganization of the Company's activities, especially for indicated values for fixed assets and future income tax assets. Sales Sales for the third quarter of 2002 showed a slight decrease, down by 1.5% to $38.0 million, compared to those of the same quarter last year, although sales in the lumber sector improved by 12.1% thanks to a 21.5% increase in lumber shipments while the net selling price of lumber was dropping by 2.7%. There were no sales in the pulp sector during the third quarter of 2002; sales in this sector for the corresponding period last year were $4.7 million. For the nine months ended September 30, 2002, sales amounted to $121.3 million, down by 7.4% from those of the same period in 2001. Predominantly responsible for the drop was the shutdown, on February 16, 2001, of operations at the pulp mill, which recorded sales of $26.1 million over the same period in 2001. Sales in the lumber sector rose by 15.5% to $121.3 million thanks primarily to an increase of 15.0% in the net selling prices of lumber accompanied by a 4.3% increase in shipments. Also contributing to improved sales for the period was a 14.5% increase in woodchips shipments to outside markets. Operating Income (Loss) Operating income for the third quarter of 2002 was $0.4 million, which compares to an operating income of $1.0 million for the same quarter last year. Operating income from the lumber sector amounted to $1.6 million compared to $3.2 million for the corresponding period last year, the result of the drop in lumber and woodchips net selling prices even though shipments were up in volume. Unit costs of products sold remained stable as compared with the corresponding period for the last fiscal year. Following the pulp mill closure, the operating loss from the pulp business amounted to $1.2 million for the third quarter of 2002, compared to $2.2 million for the same quarter last year. Operating income for the first nine months of 2002 was $11.1 million, compared to an operating loss of $0.3 million for the same period last year. Operating income from the lumber sector doubled to $14.6 million compared to the last corresponding period owing to the improvement in lumber net selling prices and the increase in lumber and woodchip shipments. Unit costs of products sold increased by 5.0%, one reason being higher fibre use. Operating loss from the pulp sector amounted to $3.5 million, compared to $7.6 million for the same period last year. Cash Position Operations for the third quarter of fiscal 2002 required funds of $2.9 million, compared to $4.0 million for the same period in 2001. Net repayments on long-term debt were $0.4 million, compared to 0.8 million for the same period last year. Additions to fixed assets amounted to $1.7 million, compared to $1.6 million for the corresponding period in 2001. For the nine months ended September 30, 2002, operations generated funds of $7.6 million, compared to $21.4 million for the corresponding period in 2001, when the Company recovered the amounts invested in pulp accounts receivable and inventories following the shutdown of the pulp mill's operations in February 2001. Net repayments of long-term debt were $1.2 million for each of the two periods. Additions to fixed assets amounted to $2.9 million, compared to $2.7 million for the same period in 2001. As at September 30, 2002, the Company's cash and cash equivalents totaled $7.6 million with a working capital deficiency of $27.9 million, for a ratio of 0.63:1, compared to a ratio of 0.63:1 as at December 31, 2001 without considering the default mentioned in note 2 of the attached financial statements. Overview Of Operations Since May 22, 2002, all shipments of lumber to the United States have been subject to countervailing duties of 27.2%. Imposition of those duties, which are being contested by the Canadian government and by the Canadian lumber industry, has considerably weakened the competitiveness of Canadian lumber producers, and it is anticipated that the legal remedies being sought will produce no result in the short or medium term. The two sawmills operated normally throughout the third quarter, with the exception of a week's stoppage at the Port-Cartier sawmill, necessary for annual maintenance. The Port-Cartier pulp mill remained closed throughout the quarter. Outlook On October 23, 2002, the Superior Court of Montreal has dismissed the proceedings instituted by a group of US Noteholders who were contesting the composition of the class of US Noteholders-creditors and has authorized the Company to call the meeting of that class to vote on the Company's amended plan of arrangement. The Company intends to call the meeting of the class of US Noteholders-creditors as soon as possible as the next step towards the conclusion of its plan of arrangement with its creditors. Most analysts are predicting that net selling prices for lumber will continue to fall over the months ahead given the seasonal decline in construction activities. World commercial pulp inventories are on the rise, and producers will have to slow production rates to avoid creating an imbalance in that market. In that context, there are no plans for an eventual reopening of the Port-Cartier pulp mill. Uniforet Inc., is an integrated forest products company that manufactures softwood and lumber bleached chemi-thermomechanical pulp. It carries on its business through subsidiaries located in Port-Cartier (pulp mill and sawmill) and in the Peribonka area (sawmill). Uniforet Inc.'s securities are listed on the Toronto Stock Exchange under the trading symbol UNF.A for the Class A Subordinate Voting Shares, and under the trading symbol UNF.DB for the Convertible Debentures. The unaudited consolidated balance sheets as at September 30th 2002 and December 31st, 2001 and the unaudited consolidated statements of income and deficit and cash flows for the three periods ended September 30th 2002 and 2001 have been prepared using the same accounting principles and policies as for the annual financial statements for the year ended December, 31st 2000 described therein, including the going concern assumption about the Company's operations. Defaults The Company is currently in default on payment of interest under its 11.125% US senior notes and its unsecured subordinated convertible debentures. Under generally accepted accounting principles, these long term liabilities may have to be reclassified in current liabilities given the Company's default. Uniforet Inc., is currently in default under its bank credit agreement. US AIRWAYS: S&P Puts Non-Defaulted Ratings on Watch Developing -------------------------------------------------------------- US Airways Group Inc. (D), parent of US Airways Inc. (D), disclosed in a SEC filing that it had told creditors earlier this week that it needs to cut costs by an annual average of $1.4 billion to $1.6 billion, exceeding the $1.3 billion already targeted, in order to complete its bankruptcy reorganization and restore profitability. With labor cost cuts already negotiated, the added savings are to come mostly from aircraft ownership costs. The airline is in ongoing negotiations with aicraft lessors and secured creditors, seeking to renegotiate numerous financings of Boeing aircraft. The company's presentation to creditors emphasized the decline in market value for many of those planes, as well as the costs that would be incurred to repossess and sell them, pressing its case for negotiated rental or debt service reductions. Standard & Poor's Ratings Services said its ratings on US Airways Inc., obligations (mostly aircraft-backed debt) that have not yet defaulted remain on CreditWatch with developing implications. US Airways Inc.'s 10.375% bonds due 2013 (U13USR2), DebtTraders reports, are trading at 10 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for real-time bond pricing. U.S. CAN CORP: Balance Sheet Insolvency Widens to $263 Million -------------------------------------------------------------- U.S. Can reported net sales of $205.5 million for its third quarter ended September 29, 2002 compared to $204.2 million for the corresponding period of 2001, a 0.6% increase. The increase is primarily attributable to increased U.S. aerosol unit volume and a positive foreign currency impact on sales made in Europe. The increases were partially offset by volume decreases in our paint, plastic and general line and custom and specialty operations. For the first nine months of 2002, net sales increased to $595.1 million from $588.7 million for the same period in 2001. The increase is primarily due to higher aerosol volume throughout the year coupled with a positive foreign currency impact on sales made in Europe, offset by decreases in our paint, plastics and general line operations and custom and specialty volume. Paint and general line sales were negatively impacted by closed facilities. For the third quarter, U.S. Can reported gross income of $19.8 million or 9.6% of sales, compared to $23.7 million or 11.6% of sales in 2001. Year-to-date, 2002 gross income was $61.7 million or 10.4% versus $74.5 million or 12.7% for the first nine months of 2001. Although gross income has been positively impacted by increased U.S. aerosol volume, it was not sufficient to overcome the negative impact of manufacturing inefficiencies and volume declines in custom and specialty, operating cost inefficiencies resulting from our plant consolidation in the U.K., including the closing of its Southall U.K. operation September of 2002, and production inefficiencies at its manufacturing facility in Germany. At September 29, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $263 million. As of September 29, 2002, the Company has substantially completed the restructuring programs initiated in 2001. In these programs the Company offered voluntary termination programs to corporate office salaried employees, consolidated two Georgia plastics facilities into a new facility, and completed closure of four manufacturing facilities. A fifth, the Burns Harbor, Indiana lithography facility will be closed in the fourth quarter, completing the facility closure program. The Company has also reassessed its reserves related to the 2001 restructuring programs and has recorded an additional charge of $5.1 million in the third quarter of 2002, primarily due to additional employee separation costs and updated estimates of facility carrying costs. Selling, general and administrative expenses were $2.2 million lower than the same quarter of 2001 and $6.1 million lower for the year-to-date period. These lower costs are primarily due to the elimination of goodwill amortization in 2002 in connection with the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), and positive results from Company-wide cost savings programs initiated in 2001. The Company completed its initial goodwill impairment tests in the second quarter of 2002 as required under SFAS 142 and determined that a non- cash impairment charge is required for the Custom and Specialty and international segments. The Company is currently measuring the amount of the impairment charge and will report the charge, retroactive to the first quarter of 2002 as a cumulative effect of a change in accounting principle. Decreased interest expense of $1.2 million for the third quarter of 2002 and $2.5 million for the first nine months of the year is due to lower interest rates offset by higher average borrowings. Earnings before interest, taxes, depreciation and amortization as calculated under our Credit Agreement was $19.2 million for the third quarter of 2002. U.S. Can was in compliance with all financial and non-financial covenants under the agreement as of the end of the third quarter. At September 29, 2002, $66.7 million had been borrowed under the $110.0 million revolving loan portion of the Senior Secured Credit Facility. Letters of Credit of $10.4 million were also outstanding securing the Company's obligations under various insurance programs and other contractual agreements. The net loss before preferred stock dividends was $5.2 million for the quarter ended September 29, 2002 compared to a net loss of $1.4 million for the quarter ended September 30, 2001. The net loss before preferred stock dividends on a year-to-date basis for 2002 was $8.5 million compared to $2.3 million for the same period of 2001. U.S. Can Corporation is a leading manufacturer of steel containers for personal care, household, automotive, paint and industrial products in the United States and Europe, as well as plastic containers in the United States and food cans in Europe. USG CORPORATION: Dean Trafelet Proposes Amended CIBC Agreement -------------------------------------------------------------- Dean M. Trafelet, Esq., legal representative for future claimants, reiterates that the fundamental aim of these Chapter 11 cases involving USG Corporation and its debtor-affiliates, is to obtain confirmation of a plan(s) of reorganization resulting in the creation of trust established to "deal with asbestos claims and demands in accordance with Section 524(g) of the Bankruptcy Code and an injunction will be issued under that Section channeling all asbestos liabilities to that trust." Mr. Trafelet emphasizes "no constituency in these Chapter 11 cases has a larger or more vital stake in the Debtors' reorganization process than the future claimants." Mr. Trafelet asserts that it is likely a vast number of individuals who will ultimately make future claims "aggregating billions of dollars." Compounding the difficulty in representing these individuals is that they are presently unidentifiable. As they are not presently aware of their claims, they cannot represent their interests in these proceedings. That is the job of the Futures Representative and his retained professionals. CIBC has the necessary resources and is well qualified to provide the investment banking and financial advisory services required in these cases. Mr. Trafelet explains the financial advice he receives must be independent if the future claimants' interests are to be effectively represented. Fundamentally, each constituency wants to maximize its own recovery from the Debtors' finite asset pool. In contrast to most constituencies who are "principally interested in short term recoveries and accelerated distributions, the future claimants are principally interested in the long-term funding of the Section 524(g) trust. They want similar distributions as current claimants. It is necessary for the Futures Representative to obtain financial advice from advisors with no allegiance except to future claimants. "It is not reasonable to expect the other constituencies to share with the Futures Representative all of the work product and confidential advice their own financial advisors have generated," Mr. Trafelet says. Nor would it be possible for the Futures Representative "to prudently and vigorously represent" the future claimants' interests while relying on the data generated by another constituency's financial advisor. Also, Mr. Trafelet notes, failure to afford future claimants independent financial advice might well raise due process issues which would jeopardize the efficacy of the Section 524(g) injunction, the heart of the Debtors' reorganization effort, clouding the "fresh start" they are attempting to establish. According to Mr. Trafelet, The future claimants should be treated no differently than other constituencies, given the "magnitude and complexity" of these cases. Other constituencies have their own financial advisors. The future claimants should be allowed the same. CIBC's retention is in the future claimants' best interest, Mr. Trafelet asserts. Thus, the Futures Representative presents the Court with an Amended Letter Agreement for the CIBC's retention. The salient terms of the Amended Letter Agreement are: Term: The Amended Letter Agreement has an initial term commencing July 29, 2002 for a period of six months; provided however, the Futures Representative as the right subject to Bankruptcy Court approval, to continue CIBC's retention after the First Period pursuant to a subsequent retention application and engagement letter. During the Second Period, either the Futures Representative or CIBC may terminate the Amended Letter Agreement with 30 days advance written notice. Fees: As compensation for its services to the Futures Representative, CIBC proposes to charge the Debtors' estates a $25,000 monthly fee commencing July 29, 2002 for a period of six months. If the Futures Representative calls on CIBC to provide additional services, the services will be provided at a different rate. The Amended Fee will be mutually agreed upon by the Futures Representative and CIBC, subject to Bankruptcy Court approval. Expenses: The Debtors will be obligated to reimburse CIBC for its reasonable out-of-pocket expenses incurred by CIBC in connection with any legal or administrative action commenced against any Indemnified Person. Key Persons: The Amended Letter Agreement provides that CIBC will make available to the Futures Representative the services of Joseph J. Radecki, Jr. and Stan Pillman. If either ceases to be employed by CIBC, the Futures Representative is entitled to terminate the Agreement. Indemnity: CIBC and its affiliates, any employee, agent, officer, director, attorney, shareholder or anyone who controls CIBC are entitled to be indemnified from and against certain losses and liabilities arising out of or related to performance of its services on behalf of the Futures Representative. This will not cover any liability "judicially determined to have resulted from the gross negligence, fraud, lack of good faith, bad faith, willful malfeasance, or reckless disregard of the obligations or duties of CIBC." (USG Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) VSOURCE INC: Completes Sale of Securities for $7.5 Million ---------------------------------------------------------- Vsource, Inc. (OTC Bulletin Board: VSRC), a leader in providing customized business process outsourcing services to Fortune 500 and Global 500 companies operating across Asia-Pacific, announced the completion of a sale of 3,750 shares of new Series 4-A Preferred Stock, and warrants to purchase 25 million shares of common stock, to Capital International Asia CDPQ Inc., and an affiliate of CDP Asia for a total purchase price of $7.5 million. Vsource may require CDP Asia to purchase an additional 1,250 shares of new Series 4-A Preferred Stock, and warrants to purchase 8.33 million shares of common stock, for a total purchase price of $2.5 million, if Vsource satisfies certain conditions. All of the securities sold or to be sold to CDP Asia were or will be sold in an offshore transaction pursuant to Regulation S under the Securities Act of 1933. CDP Asia is the Asia-based subsidiary of CDP Capital, headquartered in Montreal, Quebec, Canada. CDP Capital is one of the world's largest institutional investors with over US$80 billion in assets invested globally. Over the past few years CDP Asia has significantly enhanced its presence in Asia with investments in a broad range of industries operating across the Asia-Pacific region, including manufacturing, business services, telecommunications, media infrastructure and real estate as well as expanding its physical footprint to five Asian countries. In connection with the sale to CDP Asia, and as required by CDP Asia as a precondition to its purchase, certain existing shareholders of Vsource exchanged all of their preferred stock and convertible notes in the company, and certain warrants issued in connection with the convertible notes, for an aggregate of 13,222 shares of Series 4-A Preferred Stock. These shareholders were Phillip Kelly; Dennis Smith; John Cantillon; a private equity fund advised by Baring Private Equity Partners Asia, a unit of ING Group (Baring Asia); Mercantile Capital Partners I, L.P.; and Asia Internet Investment Group I, LLC. All of the preferred stock issued in the exchange was issued either in an offshore transaction pursuant to Regulation S or in a private placement to accredited investors under Regulation D under the Securities Act. "This financing agreement is another important milestone for Vsource," said Phillip Kelly, chairman and CEO of Vsource. "The additional capital raised in this financing significantly enhances our ability to attract and execute major new outsourcing contracts for Fortune 500 and Global 500 clients operating across Asia-Pacific. CDP Asia, as part of one of the world's largest institutional investor groups with an extensive network of global relationships, will be a strong complement to our shareholding base." Jean Lesotho, president of CDP Asia Investments Inc., noted, "We believe the demand for BPO services across Asia will continue to grow as multi-national companies operating in Asia begin to adopt outsourcing as an essential element of their business operations. We have already seen this occur in North America and Europe during the past decade. Vsource is an early leader in providing value-added BPO services. The Company, which has a management team with deep experience, has moved quickly to establish a unique position as a leading pan-Asian provider of BPO services. We are pleased to be able to provide Vsource with additional capital and support to accelerate its growth." Dennis Smith, Vsource's chief financial officer, added, "In today's uncertain economic environment, a strong balance sheet is essential to succeed. This new financing materially improves our balance sheet and simplifies our capital structure, placing us in an excellent position moving forward. With this agreement, our capital structure improves with the addition of $7.5 million in new funding in the form of preferred stock from CDP Asia. Further, the exchange by several of our current investors of $7.5 million of outstanding convertible loans into preferred stock has significantly reduced our outstanding debt." The parties signed the purchase and exchange agreements on Oct. 23, 2002, and the transactions were completed on Oct. 25, 2002. Vsource will use the proceeds from the financing for working capital to facilitate its expansion in the business process outsourcing business in Asia, strengthen its balance sheet and pay expenses related to the financing and exchange. In connection with these transactions, Scott T. Behan and Nathaniel C.A. Kramer have resigned from Vsource's Board of Directors, and the Board has appointed Bruno Seghin and Jean Salata to fill the vacancies. Biographies of Seghin and Salata are provided at the end of this press release. Under the terms of the financing and exchange, Vsource is further required to use its reasonable efforts to cause the remaining holders of its different classes of preferred stock, convertible debt and certain warrants to exchange their securities for shares of Series 4-A Preferred Stock or, with respect to one class of preferred securities, to sell such securities to Vsource for cash. These holders may also choose not to participate in any such exchange or sale, in which case they may continue to hold their existing securities. In connection with these transactions, Vsource's Board of Directors has approved a 20-to-1 reverse stock split of all issued and outstanding common stock, which will become effective at 4:30 p.m. (EST) on Nov. 20, 2002. The reverse stock split will not cause a reduction in the authorized number of shares of common stock. Holders of fractional shares resulting from the reverse stock split will receive cash in an amount equal to the fraction multiplied by the closing price of the common stock on the effective date of the reverse stock split. Terms of the Series 4-A Preferred Stock The Series 4-A Preferred Stock will have a liquidation value equal to its original issue price, and rank senior to Vsource's common stock in liquidation preference and payment of dividends. If certain defined liquidity events have not occurred prior to March 31, 2006, then each holder of the Series 4-A Preferred Stock shall have the right, at any time after March 31, 2006, and on or before Sept. 30, 2006, to require Vsource to purchase all, but not less than all, of the Series 4-A Preferred Stock held by such holder at a price per share equal to 150% of the original issue price. Each share of Series 4-A Preferred Stock is convertible into that number of shares of common stock equal to the original issue price, which is currently $2,000 per share, divided by the conversion price, which is initially $0.10 per share. Upon the occurrence of certain specified liquidity events, each share of Series 4-A Preferred Stock will automatically convert into common stock. Holders of Series 4-A Preferred Stock will have preemptive rights with respect to future sales by Vsource of common stock or securities convertible into common stock, except in limited circumstances. The Series 4-A Preferred Stock votes on an as-converted basis and holders are entitled to vote on any matter upon which the holders of common stock have the right to vote. Terms of the Warrants The warrants have an initial exercise price of $0.01 per share. The warrants are only exercisable between April 1, 2003, and March 30, 2006, and only if certain specified liquidity events have not occurred by March 30, 2003. Upon the completion of the 20-to-1 reverse stock split, the warrants will be automatically exchanged for new warrants with an initial exercise price of $0.01 per share (on a post-reverse stock split basis). The new warrants will only be exercisable between April 1, 2005, and March 30, 2006, and only if certain specified liquidity events have not occurred by Jan. 31, 2005, or Vsource has failed to achieve specific consolidated net income thresholds. Terms of the Stockholders Agreement In connection with the sale to CDP Asia, and as required by CDP Asia as a precondition to its purchase, Vsource has entered into a stockholders agreement with CDP Asia and the participants in today's exchange. Under the terms of the stockholders agreement, each of CDP Asia, Baring Asia and Mercantile have the right to nominate a candidate for election to the Board of Directors. Under the same terms, Vsource has agreed to nominate Phil Kelly and Dennis Smith for election as long as they are employees of Vsource. The parties to the stockholders agreement have agreed to vote all of their Series 4-A Preferred Stock in favor of the election of these nominees. A nominee of each of CDP Asia, Baring Asia and Mercantile is entitled to sit on the compensation committee of Vsource's board. The size of the Board of Directors has been fixed at seven members, and a quorum must include at least two members nominated by CDP Asia, Baring Asia or Mercantile. The parties to the stockholders agreement have also received inspection rights, information rights, and the right to participate as an observer at Board and operational meetings. Under the stockholders agreement, Vsource must obtain the approval of CDP Asia and a majority in interest of the other parties to the stockholders agreement in order to engage in certain major corporate transactions, such as the incurrence of debt or disposal of assets. Vsource must also obtain the approval of a majority of the Board, including the affirmative vote of the director nominated by CDP Asia, to engage in similar major corporate transactions. Vsource and the parties are also subject to other restrictions and obligations under the terms of the stockholders agreement. New Directors' Biographies Jean Salata Jean Salata is the founding Managing Partner of Baring Private Equity Partners Asia, a unit of ING Group, which is the investment adviser to the Baring Asia private equity program, which has over $560 million in capital committed for investment in Asia. Baring Asia, through BAPEF Investments XII Ltd., is a major shareholder of Vsource and is a participant in Friday's exchange. Salata has been responsible for the investment activity of Baring Asia since its launch in 1997. He has a broad range of investment experience, including early-stage VC investments, expansion capital and buyouts across a wide range of sectors. Salata, who has lived in Asia since 1989, previously was a Director of AIG Investment Corp. (Asia), where he made regional investments as part of AIG's Asian private equity group. Prior to that, he was an executive vice president of finance of a Hong Kong-based industrial concern and a management consultant with Bain & Company in Hong Kong, Australia and Boston. Salata graduated magna cum laude from the Wharton School of the University of Pennsylvania with a bachelor's degree in finance and economics. Bruno Seghin Bruno Seghin is the Managing Director of CDP Asia Partners, Inc. and previously was the Managing Partner of Quilvest Asia Limited, and affiliates of CDP Asia. He has more than 19 years of finance and investment management experience, including 16 years in Asia, eight of which were in private equity, as a vice president with Drexel Burnham, senior partner with Cortez Capital and senior partner with Euro Pacific Advisors. Seghin, who is based in Hong Kong, graduated from Universite Catholique de Louvain in Belgium with a law degree and MBA. Vsource, Inc., based in San Diego, Calif., provides business process outsourcing (BPO) services -- under the Vsource Versatile Solutions(TM) trade name -- to Fortune 500 and Global 500 organizations across the Asia-Pacific region. Vsource Versatile Solutions include Integrated Technical Service Solutions, Payroll and Claims Solutions, Sales Solutions and Vsource Foundation Solutions(TM), which include Financial Services, Customer Relationship Management (CRM) and Supply Chain Management (SCM). Vsource operates shared customer service centers (Vsource Customer Centers) in Malaysia and Japan and has offices in the United States, Hong Kong and Singapore. Vsource clients include ABN AMRO, Agilent Technologies, EMC, Gateway, Haworth, Network Appliance and other Fortune 500 and Global 500 companies. For more information, visit the Vsource Web site at http://www.vsource.com At July 31, 2002, Vsource's balance sheets showed a total shareholders' equity deficit of about $3.9 million. WILLIAMS COMMS: Fitch Rates Senior Secured Bank Facility at B ------------------------------------------------------------- Fitch Ratings has assigned a 'B' rating to Williams Communications, LLC's senior secured bank facility. Williams Communications, LLC is a wholly owned subsidiary of Wiltel Communications, Inc., which recently emerged from Chapter 11 bankruptcy proceedings. The rating has been removed from Rating Watch Negative and Fitch has assigned a Negative Rating Outlook. Additionally, Fitch has withdrawn the senior unsecured debt and preferred stock ratings of Williams Communications Group, Inc. Fitch's rating reflects the industry and business risks Wiltel faces as it emerges from bankruptcy. Namely the low demand for voice and data long distance transport services. Fitch anticipates that the low growth in demand will continue to persist for at least the short term and in Fitch's view will continue to pressure the company's pricing strategy and operating margins. Considering these factors, Fitch expects that the company may find it difficult to drive significant profit improvements within its network over the immediate term. Fitch recognizes the revenue growth potential stemming from the company's strategic relationship with SBC. The revenue growth potential of this relationship will be enhanced as SBC receives regulatory approvals to provide in region long distance services in California and the former Ameritech states. However the company's revenue base continues to have exposure to some struggling telecom carriers. Fitch notes that while the SBC revenue base continues to grow, revenue growth within the company's Network Sector from sources other than SBC remained stagnant during the first half of 2002. Pursuant to the company's Plan of Reorganization, 54% of Wiltel's newly issued common stock will be owned by its former unsecured creditors and 44% will be owned by Leucadia National Corporation, who invested $150 million into Wiltel. The Leucadia investment has funded into escrow pending receipt of FCC approval of the transfer of certain licenses. Fitch expects Wiltel's debt structure to consist primarily of the $375 million secured bank facility and debt related to its corporate headquarters building. A key component of the restructuring included the $600 million reduction of the company's bank facility. Fitch's rating is supported by the favorable amortization schedule of the company's debt and its sizable cash position. There is no significant debt amortization scheduled until 2005. Fitch would expect that if business conditions persist or deteriorate, the company could minimize its capital expenditures and other cash requirements so that existing balance sheet cash could possibly carry the company into 2004. WORLDCOM INC: Court Approves Proposed Claims Settlement Protocol ---------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates obtained the Court's authority to settle certain threatened or actual claims and causes of action asserted by or asserted against their Chapter 11 estates pursuant to certain settlement procedures. With the Court approval, the Debtors will implement a three-tier Settlement Procedures, based on the proposed settlement amount agreed to by the parties and the documented difference. The Documented Difference is the difference between: -- with respect to claims asserted against the Debtors, the estimated value of the claim as determined in good faith by the Debtors or, with respect to claims asserted by the Debtors, the amount initially sought to be recovered, and -- the proposed amount for which the Debtors are seeking to settle the claim. The terms of the settlement procedures are: A. With Respect To Claims Asserted By Worldcom: 1. If the Documented Difference is less than $1,000,000, the Debtors will be authorized to settle the claim without prior approval of the Court or any other party-in- interest. 2. If the Documented Difference is greater than or equal to $1,000,000 but less than $5,000,000: -- WorldCom will provide: a. the U.S. Trustee, b. the attorneys for the postpetition lenders, and c. the attorneys for the Committee, a summary of the terms of a proposed settlement. -- A Settlement Summary should set forth: a. the Settlement Amount, b. the name of the parties to the settlement, c. a summary of the dispute, including a statement of the Debtors' Amount and the basis for the controversy, d. an explanation of why the settlement of the claim is favorable to the Debtors, its estates, and its creditors, and e. a copy of any proposed settlement agreement. -- If any of the Notification Parties object within 10 days after the date of transmittal of the Settlement Summary, the Debtors, in their sole discretion, may: a. seek to renegotiate the proposed settlement and may submit a revised Settlement Summary in connection therewith, or b. file a motion with the Court pursuant to Bankruptcy Rule 9019 requesting approval of the proposed compromise and settlement. -- In the absence of an objection to a proposed settlement by the Notification Parties, the Debtors will be deemed authorized, without further order of the Court, to enter into an agreement to settle the claim at issue, as provided in the Settlement Summary. 3. If the Documented Difference is greater than or equal to $5,000,000, WorldCom will file a Rule 9019 Motion. B. With Respect To Claims Asserted Against WorldCom: 1. If the Settlement Amount is less than $1,000,000, the Debtors will be authorized to settle the claim without prior approval of the Court or any other party-in- interest. 2. If the Documented Difference is greater than or equal to $1,000,000 but less than $5,000,000: -- The Debtors will provide the Notification Parties a Settlement Summary; -- If any of the Notification Parties objects within 10 days after the date of transmittal of the Settlement Summary, the Debtors, in its sole discretion, may: a. seek to renegotiate the proposed settlement and may submit a revised Settlement Summary, or b. file a Rule 9019 Motion with the Court seeking approval of the proposed settlement; and -- In the absence of an objection to a proposed settlement by the Notification Parties, the Debtors will be deemed authorized, without further order of the Court, to enter into an agreement to settle the claim at issue, as provided in the Settlement Summary. 3. If the Documented Difference is greater than or equal to $5,000,000, the Debtors will file a Rule 9019 Motion. 4. If the Settlement Amount with respect to any individual proposed settlement is equal to or greater than $10,000,000, the Debtors will file a Rule 9019 Motion. WorldCom obtained the Court's authority to pay and to issue customer credits on account of the settled claim, in the ordinary course of operating its businesses, if the Settlement Amount is $10,000 or less. For the compromise or settlement of any claims by or against an insider, the Debtors will be required to file a motion with the Court requesting approval of the compromise and settlement pursuant to Bankruptcy Rule 9019. The Debtors will also file with the Court reports of all settlements entered into. The Debtors will serve copies of these reports on: -- the U.S. Trustee, -- the attorneys for the Debtors' postpetition lenders, and -- the attorneys for the Committee. (Worldcom Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392- 0900) Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USR4), DebtTraders reports, are trading at 16.625 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4 for real-time bond pricing. W.R. GRACE: Dec. 2 Trial Date Set for Fraudulent Transfer Suits --------------------------------------------------------------- Sealed Air Corporation (NYSE:SEE) announced that the court has set a new trial date of December 2, 2002 for the fraudulent transfer proceeding originally scheduled for September 30, 2002. The court has ordered the trial to proceed with all the parties as originally configured, that is, with the claims asserted against Sealed Air by creditors committees in the W. R. Grace bankruptcy proceeding. The court had postponed the September 30 trial date in order to review how the Sealed Air trial should proceed in light of a ruling by the U.S. Court of Appeals for the Third Circuit in an unrelated case. The Third Circuit had held in the Cybergenics bankruptcy case that a creditor or creditors committee may not assert a fraudulent transfer claim in a bankruptcy proceeding and that only a debtor-in-possession or an appointed trustee may bring such an action. The court has also granted the parties permission to ask the Third Circuit to hear an immediate appeal of this order. Sealed Air is currently reviewing the court's ruling and the Company's next steps. The 1998 transaction that combined Sealed Air with the Cryovac packaging business of W. R. Grace was designed to create a world-leading packaging company. Sealed Air believes that Grace was solvent at the time of the transaction even if claims arising after 1998 are taken into account. The Company remains confident in the integrity of the deal. Sealed Air Corporation is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems, including such widely recognized brands as Bubble- Wrap(R) air cellular cushioning, Jiffy(R) protective mailers and Cryovac(R) food packaging products. For more information about Sealed Air Corporation, please visit the Company's Web site at http://www.sealedair.com YOUTHSTREAM INC: Fails to Comply with Nasdaq Listing Guidelines --------------------------------------------------------------- YouthStream Media Networks, Inc., (NASDAQ: YSTM) has received notice from NASDAQ that it does not comply with either the minimum $2,000,000 net tangible asset requirement or the alternative minimum $2,500,000 stockholders' equity requirement necessary for continued listing on NASDAQ's SmallCap Market, and that the Company's common stock is subject to delisting. The Company has requested a hearing before a NASDAQ Listings Qualifications Panel but cannot provide assurance that the Panel will grant the Company's request for continued listing. Under NASDAQ rules, delisting will be stayed pending the outcome of the hearing. YouthStream Media Networks, Inc. operates a retail business, Beyond the Wallr (also known as Trent Graphics), which sells decorative wall posters and related items through a chain of retail stores and on-campus sales events. At June 30, 2002, YouthStream Media Networks' balance sheets show a working capital deficit of about $17.4 million, and a total shareholders' equity deficit of about $5.8 million. ********* 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. 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