/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/021112.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, November 12, 2002, Vol. 6, No. 224 Headlines AMERICAN MEDIA: Reports Improved Fin'l Results for 2nd Quarter AMES DEPARTMENT: Selling Designation Rights to Shaw's for $48.5M APPLIED DIGITAL: Commences Trading on Nasdaq SmallCap Market ARMSTRONG HOLDINGS: NYSE Suspends Trading & Pursues Delisting ARMSTRONG HOLDINGS: 3rd Quarter Net Sales Climb-Up to $846 Mill. ASPEON INC: L. Brucw Madsen Discloses 5.5% Equity Stake BUDGET GROUP: Asks Court to Enjoin Cicero from Taking Actions CAMPBELL SOUP: Q1 2003 Earnings Conference Call Tomorrow Morning CHELL GROUP: Nasdaq Nixes Appeal and Decides to Delist Shares CHIEF CONSOLIDATED: Fails to Meet Nasdaq SmallCap Requirements CELEXX CORP: Taps Arete to Aid in Designing Restructuring Plan CENTERPOINT ENERGY: Berkshire & CSFB to Provide $1.3BB Financing CLAXSON INTERACTIVE: Completes Exchange Offer for 11% Sr. Notes COMMUNICATION DYNAMICS: Court OKs Continued Cash Collateral Use CONTOUR ENERGY: Wants to Continue Deloitte & Touche Engagement CORAM: Trustee Hires SSG Capital and Ewing Monroe as Advisors DEX MEDIA: Fitch Assigns BB- Rating to $1.5-Bill. Bank Facility ECHOSTAR COMMS: Completes Exchange Offer for 10-3/8% Sr. Notes ENRON CORP: Wants to Expand Stephen Cooper's Engagement E.SPIRE COMMS: Asks Court to Extend DIP Facility through Dec. 31 EXIDE: Debtors Argue to End Committee's Right to Challenge Liens FEDERAL-MOGUL: Committee Has Until Nov. 21 to Commence Actions FISHER COMMS: Retains Goldman Sachs to Evaluate Alternatives FRUIT OF THE LOOM: Creditors Trust Gets Nod to Establish Reserve GENERAL DATACOMM: Cash Collateral Pact Continues Until Nov. 30 GENTEK INC: Wins Nod to Pay $6 Million of Foreign Vendor Claims GLOBAL CROSSING: Court Approves Settlement with Juniper Networks GROUP TELECOM: Competing Bidders Shut Out of Talks Until Friday HA-LO INDUSTRIES: Estate Pursues Starbelly Fraudulent Conveyance HAYES LEMMERZ: Committee Urges Court to Modify Final DIP Order INTEGRATED HEALTH: Exclusive Period Hearing Set for Tomorrow KMART CORP: Court Okays Signature's Engagement as Estate Broker LA PETITE ACADEMY: Gets Covenant Waiver Extension Until Friday LAIDLAW INC: Wants to Bring-In Kevin Benson as New CEO & Pres. LODGIAN INC: Resolves License Pacts Disputes with Holiday Inn LTV CORP: Proofs of Claim against Copperweld Due by December 3 MARTIN INDUSTRIES: Selling All Assets to Monessen for $4.4 Mill. METATEC INT'L: Sept. 30 Net Capital Deficit Widens to $11 Mill. MICROCELL: Secured Bank Lenders Agree to Forbear Until Dec. 23 MILACRON INC: Narrows Third Quarter Operating Loss to $3.4 Mill. MILITARY RESALE: Ability to Continue Operations Uncertain MISSISSIPPI CHEMICAL: Credit Facility Extended to Nov. 10, 2003 MORTON HOLDINGS: Wants to Appoint Donlin Recano as Claims Agent NATIONAL AIRLINES: Mercury Minimizes Impact of Airline Shutdown NATIONAL STEEL: Plan-Filing Exclusivity Stretched Until April 7 NATIONAL STEEL: Q3 2002 Results Show Significant Improvement NORTEL: Revises Breakdown of Enterprise & Wireline Revenues NOVA CDO: S&P Hatchets Notes' Ratings to Low-B and Junk Level NRG ENERGY: Lenders Declare $1.1-Billion Debt Due and Payable NRG ENERGY: Denies Reports re Filing for Chapter 11 Protection ONLINE GAMING: Ahead Investments Discloses 81.7% Equity Stake OWENS CORNING: Wants to Restructure Chinese JV's Debts PORTLAND GENERAL: Fitch Maintains Watch on Low-B Ratings RFS ECUSTA: Seeking Authority to Pay Critical Vendors' Claims SALIENT 3 COMMS: Reports Decrease in 3rd Quarter Net Asset Value SIERRA PACIFIC: Schedules Q3 Earnings Webcast for Thursday TANDYCRAFTS: Has Until Jan. 10 to Make Lease-Related Decisions TELETOUCH COMMS: Shareholders Okay Debt Restructuring Proposals TELSCAPE INT'L: Trustee Has Until January 15 to Decide on Leases TENDER LOVING CARE: Files for Chapter 11 Protection in E.D.N.Y. TREND TECHNOLOGIES: Files for Chapter 11 Protection in Delaware TREND HOLDINGS: Case Summary & 30 Largest Unsecured Creditors UNITED AIRLINES: Sees Need to Furlough Flight Attendants by Jan. UNITED AIRLINES: Reaches Tentative Agreement with AFL-CIO US AIRWAYS: Institutional Creditors File Claim Intention Notices US AIRWAYS: Gets OK to Continue Mesa Regional Jet Codeshare Pact USG CORP: Court Approves Leydig Voit as Debtor's Patent Counsel US WIRELESS: Maintains Exclusive Right to File Plan until Dec. 2 WARNACO: Silver Sands Asks Court to Modify Store Closing Order WESTAR ENERGY: Applauds Kansas Regulator's Order re Workout WHEELING-PITTSBURGH: Court Okays FTI Consulting as Fin'l Advisor WISER OIL COMPANY: Will Hold Q3 2002 Conference Call Tomorrow WORLDCOM INC: Verestar Gets Stay Relief to Setoff Obligations XCEL ENERGY: Receives Temporary Equity Ratio Waiver from SEC XCEL ENERGY: Pays Down $400-Million Bank Line Due Nov. 8, 2002 XCEL ENERGY: Fitch Places Ratings on Watch Negative XCEL ENERGY: Selling Viking Gas Assets to Focus on Core Ops. ********* AMERICAN MEDIA: Reports Improved Fin'l Results for 2nd Quarter -------------------------------------------------------------- American Media, Inc., whose subordinated notes are currently rated at B- by Standard & Poor's, announced results for the second quarter and six months ended September 23, 2002. Revenues for the September 2002 fiscal quarter were $92,092,000 compared to $94,636,000 for the prior year quarter. Overall revenues declined $2.5 million (2.7%) primarily due to a 4% decline in unit sales for the tabloids, we believe, in part, due to the anthrax incident last October. This decline in unit sales was partially offset by cover price increases and by an increase in revenues for Distribution Services, Inc. Despite the revenue shortfall, EBITDA (net income (loss) before interest expense, income taxes, depreciation and amortization, other income, loss on insurance settlement and temporary rent expense of $381,000) for the September 2002 fiscal quarter increased to $34,124,000 versus $34,003,000 in the prior year as a result of management's initiatives to reduce variable operating expenses. Net income was $7,986,000 for the September 2002 fiscal quarter compared to a net loss of $4,520,000 in the prior year fiscal quarter. The increase in net income was due to the elimination of the amortization of goodwill and certain intangibles due to our adoption of SFAS No. 142 during the current fiscal year, lower interest expense and a reduction in variable operating expenses as mentioned above. Revenues for the six months ended September 23, 2002 were $180,915,000 compared to $186,340,000 for the prior year period. Overall revenues declined $5.4 million (2.9%) primarily due to a 5.1% decline in unit sales for the tabloids we believe, in part, due to the anthrax incident last October. Advertising revenues increased 6.4%, from $18.2 million to $19.4 million, despite a weak industry-wide advertising climate. For the nine months ended September 2002 versus the prior year period, the National Enquirer and Star are up 20.8% in pages, while the industry is down 10.7%. EBITDA (net income (loss) before extraordinary charges, interest expense, income taxes, depreciation and amortization, other income, loss on insurance settlement and temporary rent expense of $381,000) for the six-month period was $66,015,000 versus $65,857,000 in the prior period. Net income was $16,038,000 for the six months ended September 23, 2002, compared to a net loss of $9,105,000 in the prior year period. This increase in net income was due to the elimination of the amortization of goodwill and certain intangibles due to our adoption of SFAS No. 142 during the current fiscal year, lower interest expense and a reduction in variable operating expenses mentioned above. The Company's Boca Raton headquarters, which housed substantially all editorial operations (including its photo, clipping and research libraries), executive offices and certain administrative functions, was closed on October 7, 2001, by the Palm Beach County Department of Health when traces of anthrax were found on a computer keyboard following the death of a photo editor of the Sun from inhalation anthrax. In response to the closure of the Boca facility, the Company immediately implemented its hurricane disaster plan to produce all the weekly publications as originally scheduled. It temporarily moved its editorial operations into a facility leased on a short-term basis, which expired in February 2002. As a result of the uncertainty on the timing of being able to return to the Boca Raton headquarters, the Company entered into a two-year lease for a 53,000 square foot facility two blocks from its current Boca Raton headquarters. The Company will remain in this leased facility until the Palm Beach County Health Department, OSHA (Occupational Safety and Health Administration) and NIOSH (National Institute for Occupational Safety and Health) deems the Boca Raton facility is safe to return to, or if it is unable to return, the Company will extend the lease term on this new facility or seek an alternative location. In February of 2002, the Palm Beach Health Department quarantined the building for an additional 18 months or until the building has been remediated. Management is currently evaluating its options regarding its headquarters' building and its contents and has not yet committed to a remediation plan. In May of 2002, the Company reached a final compromised agreement with its insurance company, and received the compromised payment. The Company reports, "We believe as a result of the anthrax incident, we have experienced a decline in circulation. When the incident first occurred, there were specific concerns and consumer discomfort and lack of knowledge with respect to the safety of our magazines. We quickly responded to safety concerns with an extensive public relations effort to educate consumers that there was no health risk in buying our magazines. Since the first issues following the anthrax incident, we have witnessed a steady improvement in unit sales, although they remain below normalized levels. David J. Pecker, American Media's Chairman, President and CEO said, "We are pleased with our results of $34.1 million and $66.0 million of EBITDA for the three and six months ended September 23, 2002, which is slightly ahead of prior year, considering the continued difficult economic environment for the publishing industry in terms of both advertising and circulation." American Media Operations, Inc., owns and publishes the National Enquirer, Star, Weekly World News, Globe, National Examiner, Sun, Country Weekly, Country Music Magazine, MIRA! and Auto World Magazine. AMI also owns Distribution Services, Inc., the leading in-store supermarket and drugstore newspaper and magazine distribution company. Evercore Partners, based in New York and Los Angeles, makes private equity investments through its Evercore Capital Partners affiliate and venture investments through its Evercore Ventures affiliate. Evercore also provides strategic, financial and restructuring advisory services. Evercore Capital Partners' investments include: American Media, Vertis, Resources Connection, Energy Partners, Continental Energy Services and Telenet/Callahan Associates International. Ventures investments include Boingo, Panasas, USBX, Go2Systems, Business.com and Atheros. Recent advisory work includes advising Readers' Digest on its recapitalization (pending) and General Mills on its acquisition of Pillsbury from Diageo plc. AMES DEPARTMENT: Selling Designation Rights to Shaw's for $48.5M ---------------------------------------------------------------- Because of the impending conclusion of the GOB Sales and Ames Department Stores, Inc., and its debtor-affiliates' concomitant obligation to fund occupancy costs, the Debtors, together with Kimco Funding LLC, began marketing their unexpired leases for nonresidential real property and fee-owned property. The Debtors engaged in extensive negotiations with various third parties for the sale of the real property interests. The proposed sales, according to Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, may be in the form of: (i) direct sales of the Debtors' real property interests to end-users; or (ii) the sale of the right to designate the sale of the Debtors' real property interests to end-users. Mr. Bienenstock reports that the Debtors received initial expressions of interest for the sale of their Designation Rights. However, after subsequent discussions, the Debtors decided to enter into an agreement with Shaw's Supermarket, Inc. Thus, the Debtors seek the Court's authority to sell their Designation Rights with respect to 16 leases and two parcels of fee-owned property to Shaw's pursuant to the parties' Designation Rights Agreement, subject to higher and better offers. Shaw's has tendered a $48,500,000 consideration for the Designation Rights. The salient provisions of the Designation Rights Agreement are: A. Purchase and Sale Shaw's will purchase the Designation Rights for these Leased Premises free and clear of all interests, liens, encumbrances: Lease location Store No. -------------- --------- Dayville, Connecticut 233 Beverly, Massachusetts 2117 Dedham, Massachusetts 2148 Fall River, Massachusetts 2122 Stoneham, Massachusetts 737 Sturbridge, Massachusetts 1 Waltham, Massachusetts 2128 Worcester, Massachusetts 2105 Saco, Maine 2165 Wiscasset, Maine 257 Peterborough, New Hampshire 43 Stratham, New Hampshire 70 North Kingstown, Rhode Island 2192 Barre, Vermont 44 Derby, Vermont 211 Springfield, Vermont 301 B. Owned Real Property -- This includes the Debtors' right, title and interest in, to and under the real properties owned by the Debtors that are located in: Location Store No. -------------- --------- Woodsville, New Hampshire 432 Lewiston, Maine 2139 -- Shaw's will pay the Carrying Costs for the Owned Real Property to the Debtors. C. Purchase Price -- $48,500,000; -- Shaw's has deposited $5,000,000 to a title insurance company specified by the Debtors, which will be non-refundable, except pursuant to the terms of the Designation Rights Agreement; -- At the Closing, the Debtors will be entitled to receive the Deposit from the escrow agent and Shaw's will pay the remaining $43,500,000; -- Interest on the Deposit will be disbursed by the escrow agent to Shaw's. C. Designation Properties -- During the Designation Period, Shaw's will have the exclusive right to select, identify, and designate: (a) which Leases will be assumed and assigned or subleased and to whom; (b) which Properties will be excluded; and (c) any Purchaser Affiliate or any other party as designee; -- The Designation Rights will expire with respect to each Property on the later of: (a) the date of expiration of the extension period for the assumption or rejection of the applicable Lease; or (b) June 1, 2003. Until the expiration of the Designation Period, the Debtors will not reject any Lease unless it is excluded from this transaction by Shaw's; -- Within 5 days after the Debtors receive a written notice of assumption and assignment of a particular lease from Shaw's, the Debtors will notify the Affected Parties to the Lease. The Notice will: (a) state the identity of Shaw's designee; (b) state the proposed use of the Lease by the designee; (c) provide documentation from the designee relating to "adequate assurance of future performance" by the designee; and (d) set forth: (1) a list of the Lease and any documents amending the Lease; (2) a list of any subleases and any documents amending the Subleases; and (d) a list of any reciprocal easement agreements to which the Debtors are a party and any documents amending the agreements; -- If an objection is filed which would prohibit or prevent a Property Closing from occurring, the Debtors will request a hearing on the objection. If the objection is: (a) overruled or withdrawn, the Property Closing Date will occur; (b) upheld by Bankruptcy Court, Shaw's will retain the Designation Rights to that Property and the Purchase Price will not be reduced; and -- If a Sale Order includes a finding that there are any amendments to any Lease or Sublease or Seller Party Reciprocal Easement Agreement that are not listed in the notice sent to Affected Parties and those amendments adversely affect Shaw's or its designees' ability to operate the Property, Shaw's may terminate the Agreement with respect to that Property. Consequently, the Purchase Price will be reduced to account for the price of that Property. E. Designation Rights To the extent any of Shaw's designees fail to close on the assignment of a Lease, Shaw's will have the right to direct the Debtors to assume and assign or sublease a Lease directly to an alternate designee. The Designation Rights Agreement does not preclude the Debtors from confirming a Chapter 11 plan during the Designation Period, provided the plan is consistent with the Designation Rights. F. Exclusion of Property -- Shaw's will have the right to exclude any Property by providing written notice to the Debtors and the Unsecured Creditors Committee. The Purchase Price will not be reduced by that exclusion unless it was a result of the Debtors' failure to satisfy a Property Closing Condition; and -- After a Property has been excluded, the Debtors will be entitled to retain all proceeds from the disposition of that Property. G. Additional Consideration -- Shaw's will be responsible for all obligations specifically attributed to the Properties from the date that is one day after the Auction occurs -- Carrying Cost Date -- provided Shaw's has been selected as the successful bidder for all the Properties at the Auction; -- The obligations include the rent, ground lease rent, common area maintenance, utilities, real estate taxes, insurance, security, and other actual out-of-pocket costs under any Lease or REA incurred by the Debtors for each of the Properties for the period commencing on the Carrying Cost Date; -- Shaw's obligation for Carrying Costs will terminate on the earliest of: (a) the expiration of the Lease Decision Period; (b) the rejection date of the applicable Lease; (c) 10 days after an Exclusion Notice is given to the Debtors, plus two business days after that; or (d) the Property Closing provided Shaw's designee is responsible for all Carrying Costs thereafter; -- During the period Shaw's is paying Carrying Costs, Shaw's will be entitled to receive and retain all lease rentals, sublease rentals, and other income generated from the Properties when received by the Debtors until the Properties are sold, assigned, or excluded. The amounts will accounted for by Shaw's and constitute an offset against Carrying Costs; and -- Shaw's Carrying Cost obligations will not include debt service or adequate protection payments on any indebtedness secured by any of the Properties or any tax obligations incurred prior to the Carrying Cost Date -- regardless of when the bill for payment may be received for the taxes. H. Cure Costs The Debtors will cure all monetary defaults arising before the Carrying Cost Date under each of the Leases. I. Default and Remedies -- In the event of a material breach or default under the Designation Rights Agreement before the Closing by: (a) the Debtors, Shaw's will be entitled to seek specific performance or terminate the Agreement and obtain the immediate return of the Deposit; or (b) Shaw's, the Debtors will be entitled to terminate the Agreement and retain the Deposit as liquidated damages or seek specific performance; and -- If the breach or default occurs by either parties after the Closing, the aggrieved party will be entitled to seek specific performance. J. Taxes, Recording Charges -- The Debtors will shoulder all taxes or special assessments and all other costs of operation and maintenance relating to the Properties which arise or are attributable before the Carrying Cost Date -- whether the obligations are due and payable before or after the applicable Property Closing; and -- Taxes or special assessments and all other costs of operation and maintenance that are attributable to the period on or after the Carrying Cost Date will be the responsibility of Shaw's or its designee. K. Increase to Purchase Price Shaw's acknowledges that the Debtors will conduct an auction sale of the Designation Rights. Hence, after a competitive bidding at the Auction, should the Debtors accept Shaw's or its affiliate's bid, which is higher than the Purchase Price under the Agreement, the Agreement will remain in full force and effect and the Purchase Price will be deemed to increase. L. Post-Closing Lease Expenses All obligations with respect to each Lease assigned to Shaw's designees will be the sole responsibility of Shaw's designee from and after the Property Closing Date. But other than with respect to the Carrying Costs, Shaw's designees will not be liable for any monetary obligations or liabilities relating to the Properties, which are attributable to the period prior to the Property Closing Date. M. Conditions to Assignment The Debtors must cure any prepetition default in base rental or additional rental payments and all other monetary defaults under the Lease that are not in dispute. However, the Debtors will not be obligated to cure any default that is in dispute as of the Property Closing Date if an escrow is established pursuant to a Bankruptcy Court order. N. Brokerage Commissions and Fees The parties warrant that no brokerage commissions or fees are due any real estate broker. Mr. Bienenstock asserts that the sale of the Designation Rights is advantageous to the Debtors and their estates because: -- the estates will recover a significant distribution of the first proceeds from the disposition of their real property interests and will share in substantial net proceeds thereafter; -- the estates will be immediately relieved of significant occupancy, carrying, and marketing costs since Shaw's will be obligated to pay necessary obligations associated with the Leases after the Auction; -- the up-front cash outlay paid by Shaw's will assist in funding the costs of administering these Chapter 11 cases during the Wind-Down Period; and -- the Debtors' real property interests will be sold in an orderly manner, avoiding diminished recoveries resulting from dumping millions of square footage of retail store space onto an already saturated retail real estate market. Mr. Bienenstock indicates that the Debtors will promptly cure any defaults on the closing of the ultimate assumption, assignment, and sale of the respective Leases. The postpetition amounts owing under the Leases accruing before the Auction will be paid by the Debtors. The postpetition amounts owing under the Leases accruing from and after the Carrying Cost Date will be paid by Shaw's. Mr. Bienenstock assures the Court that Shaw's can adequately perform future obligations with respect to the Leases. Shaw's financial statements demonstrate that its financial condition and operating performance are substantially better than that of the Debtors' as of the time the Debtors became the lessees under the Leases. For the fiscal years ended March 2, 2002 and March 3, 2001, Shaw's and its affiliates reported over $500,000,000 in stockholders' equity and annual sales of over $4,000,000,000 in each fiscal year. "Ames has never achieved these financial results," Mr. Bienenstock says. (AMES Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) APPLIED DIGITAL: Commences Trading on Nasdaq SmallCap Market ------------------------------------------------------------ Applied Digital Solutions, Inc. (Nasdaq: ADSX), an advanced technology development company, announced that its securities began trading on the Nasdaq SmallCap Market effective Tuesday, November 12, 2002, under its existing stock symbol: ADSX. Commenting on the move to Nasdaq SmallCap, Scott R. Silverman, President of Applied Digital Solutions, stated: "Since January 2, 2002 - when Nasdaq reinstated certain listing requirements following the terrorist attacks on 9/11 - the Nasdaq rules allow companies the opportunity to transfer to the SmallCap Market if, like Applied Digital, they are not in compliance with the $1.00 per share minimum bid price requirement. If Applied Digital continues to comply with the other SmallCap listing requirements, it expects to have until July 2003 to get its share price above $1.00 for more than 10 consecutive trading days to maintain its SmallCap listing. Also, if the Company continues to comply with all other National Market continued listing requirements, the Nasdaq rules will allow it to regain its National Market listing if its share price exceeds $1.00 for over 30 consecutive trading days." Silverman continued: "With the recent FDA ruling, revenue opportunities for VeriChip, domestically and internationally, as well as progress in the remainder of our business lines, we are optimistic that we can regain National Market listing within the prescribed time frame." VeriChip is a miniaturized radio frequency identification device that can be used in a variety of security, financial, emergency identification and healthcare applications. About the size of a grain of rice, each VeriChip product contains a unique verification number and will be available in several formats, some of which will be insertable under the skin. The verification number is captured by briefly passing a proprietary scanner over the VeriChip. A small amount of radio frequency energy passes from the scanner energizing the dormant VeriChip, which then emits a radio frequency signal transmitting the verification number. "Getting chipped" is a simple, outpatient procedure that lasts just a few minutes and involves only local anesthetic and insertion of the chip. VeriChip Corporation is a wholly owned subsidiary of Applied Digital Solutions. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. The Company's Advanced Technology Group offers a complete CRM solution to commercial and government customers, as well as a full array of security- related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is the beneficial owner of a majority position in Digital Angel Corporation (AMEX: DOC). For more information, visit the Company's Web site at http://www.adsx.com * * * As reported in Troubled Company Reporter's October 8, 2002 edition, Applied Digital Solutions executed an amendment to the Third Amended and Restated Term Credit Agreement with its senior lender, IBM Credit Corporation. Under the terms of the amendment dated September 30, 2002, certain financial covenants for the quarter ending September 30, 2002, and the fiscal year ending December 31, 2002, were revised. The June 30, 2002 balance sheets of Applied Digital Solutions show that its total current liabilities exceeded its total current assets by about $96 million. ARMSTRONG HOLDINGS: NYSE Suspends Trading & Pursues Delisting ------------------------------------------------------------- Armstrong Holdings, Inc., and Armstrong World Industries, Inc. announced that the New York Stock Exchange, Inc., has determined to suspend trading and pursue delisting AHI's common stock (NYSE: ACK) and of AWI's 9.75% Debentures due April 15, 2008 and 7.45% Senior Quarterly Interest Bonds due October 15, 2038 (NYSE: AKK). The NYSE reached its decision following AWI filing its Plan of Reorganization with the U.S. Bankruptcy Court on November 4, 2002. Leonard A. Campanaro, Armstrong Senior Vice President and Chief Financial Officer stated that "Armstrong is disappointed in the Exchange's decision regarding continued listing." AHI expects that its common stock will be quoted on the OTC (over-the-counter) Bulletin Board within the next several days. The OTCBB is a regulated quotation service that displays real- time quotes, last-sale prices and volume information in OTC equity securities. Information about the OTCBB may be found on the Internet at http://www.otcbb.com In addition, AWI expects that its 9.75% Debentures and 7.45% Senior Quarterly Interest Bonds will also be trading on an alternative market in the near future. Investors should be aware that trading in Armstrong's equity and debt issues through market makers and quotation services may involve different execution from the NYSE. Armstrong intends to issue a press release when such trading commences. However, the initiation of trading is not within the control of Armstrong. AHI is the publicly held parent holding company of AWI. AHI became the parent company of AWI on May 1, 2000, following AWI shareholder approval of a plan of exchange under which each share of AWI was automatically exchanged for one share of AHI. AHI was formed for purposes of the share exchange and holds no other significant assets or operations apart from AWI and AWI's subsidiaries. Stock certificates that formerly represented shares of AWI were automatically converted into certificates representing the same number of shares of AHI. The publicly held debt of AWI was not affected in the transaction. Armstrong is a global leader in the design and manufacture of floors, ceilings and cabinets. In 2001, Armstrong's net sales totaled more than $3 billion. Founded in 1860, Armstrong has approximately 16,000 employees worldwide. More information about Armstrong is available on the Internet at http://www.armstrong.com Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1), DebtTraders says, are trading at 58.50 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for real-time bond pricing. ARMSTRONG HOLDINGS: 3rd Quarter Net Sales Climb-Up to $846 Mill. ---------------------------------------------------------------- Armstrong Holdings, Inc., (NYSE: ACK) reported 2002 third quarter net sales of $846.0 million, as compared to $804.9 million in the third quarter of 2001, an increase of 5.1%. Increases in Wood Flooring, Building Products, Resilient Flooring and Cabinets were partially offset by a decline in Textiles and Sports Flooring. Operating income of $52.4 million in the third quarter of 2002 increased from $32.9 million in the third quarter of 2001. Earnings from continuing operations for the third quarter of 2002 were $29.4 million, as compared to $14.3 million for the third quarter of 2001. Commenting on the third quarter performance, Armstrong Chairman and CEO Michael D. Lockhart said, "We are showing progress in our operations with the Wood Flooring business performing very well and the Building Products business continuing a solid performance. At the same time, a weak economy in Europe and cost increases related to medical benefits and pensions continue to negatively affect our results." The third quarter of 2001 included a non-cash pre-tax charge of $16.0 million related to probable asbestos-related insurance recoveries, a net restructuring reversal of $1.1 million and $5.7 million of goodwill amortization, which as a result of adopting FAS 142, is no longer amortizable and has no corresponding cost in 2002. The Company recorded a restructuring reversal of $0.6 million in the third quarter of 2002 in its Textiles and Sports Flooring business. More details on the Company's performance can be found in its Form 10-Q, filed with the SEC Friday last week. Segment Highlights (using operating income prior to asbestos, restructuring, and goodwill amortization) Resilient Flooring net sales of $314.6 million in the third quarter of 2002 increased 3.8% from $303.2 million in the third quarter of 2001. This primarily resulted from an increase in the Americas net sales of 3.7%, due to volume gains in laminate and improved product mix in commercial sheet and linoleum, partially offset by an unfavorable product mix in certain residential products. Excluding the effects of favorable foreign exchange rates, Europe decreased 6.3%, primarily due to lower sales of linoleum products. Operating income of $21.5 million in the third quarter of 2002 compared to $28.3 million in the third quarter of 2001. This decrease was primarily due to higher selling expenses and unfavorable price and mix in the Americas, partially offset by higher sales and lower advertising expenses. Building Products net sales of $225.8 million in the third quarter of 2002 increased 5.1% from $214.9 million in the third quarter of 2001. Excluding the effects of favorable foreign exchange rates, net sales increased 1.8%, primarily due to favorable product mix partially offset by lower volume in the U.S. commercial market. Operating income increased 10.9% percent to $34.6 million in the third quarter of 2002 from $31.2 million in the prior year due to increased net sales, lower energy costs and lower selling expenses. Wood Flooring net sales of $180.3 million in the third quarter of 2002 increased 13.5% from sales of $158.9 million in the third quarter of 2001, driven primarily by increased volume and pricing in the independent channel. Operating income of $10.0 million in the third quarter of 2002 compared to break even performance in the third quarter of 2001. The increase in operating income was driven by higher net sales, improved production efficiencies, lower lumber costs and lower selling expense, partially offset by increased personnel and medical costs, and costs associated with exiting a product line and a provision for an accident. Cabinets net sales of $56.7 million in the third quarter of 2002 increased from net sales of $55.8 million in the third quarter of 2001 due primarily to increased volume. An operating loss of $0.3 million in the third quarter of 2002 compared to operating income of $3.2 million in the third quarter of 2001. The decrease was primarily related to increases in costs for material, labor and supply chain inefficiencies and management changes. Textiles and Sports Flooring net sales of $68.6 million decreased 4.9% in the third quarter of 2002 compared to $72.1 million in the third quarter of 2001. Excluding the effects of favorable foreign exchange rates, net sales decreased 13.8% due to the weak European market. An operating loss of $1.7 million in the third quarter of 2002 compared to an operating loss of $6.9 million in the third quarter of 2001. The change was primarily due to a fixed asset impairment charge of $8.4 million in 2001 and the unfavorable impact of lower net sales. Unallocated corporate expense of $12.8 million in the third quarter of 2002 compared to $2.5 million in the third quarter of 2001. The increase is primarily due to a reduced pension credit of $4.6 million, higher professional and advertising expenses, and management changes in 2002. Chapter 11 Update Armstrong World Industries, the main operating subsidiary of Armstrong Holdings, Inc., continues to operate under Chapter 11 of the U.S. Bankruptcy Code throughout 2002. On November 4, 2002, AWI filed a Plan of Reorganization with the Bankruptcy Court. The POR has been endorsed by AHI's Board of Directors and is supported by the Asbestos Personal Injury Claimants' Committee, the Unsecured Creditors' Committee and the Future Claimants' Representative. The POR is available at http://www.armstrongplan.comwhere additional information will be posted as it becomes available. Armstrong Holdings, Inc., is the parent company of Armstrong World Industries, Inc., a global leader in the design and manufacture of floors, ceilings and cabinets. In 2001, Armstrong's net sales totaled more than $3 billion. Founded in 1860, Armstrong has approximately 16,000 employees worldwide. More information about Armstrong is available at http://www.armstrong.comon the Internet. ASPEON INC: L. Brucw Madsen Discloses 5.5% Equity Stake ------------------------------------------------------- L. Brucw Madsen has reported the beneficial ownership of 500,000 shares of the common stock of Aspeon, Inc., representing 5.5% of the outstanding common stock of Aspeon. Mr. Madsen has sole power to vote or to direct the vote of the entire 500,000 shares, and shares that same power over 3,500 such shares with his wife Caroline. The same distribution of dispositive powers is held, sole power over 500,000 shares, but shared power over 3,500 of those shares. Mr. Madsen disclaims beneficial ownership of the shares owned by his wife Caroline. Aspeon is a leading manufacturer and provider of point-of-sale systems, services and enterprise technology solutions for the retail and foodservice markets. At March 31, 2002, Aspeon recorded in its balance sheet a total shareholders' equity deficit of about $19 million. BUDGET GROUP: Asks Court to Enjoin Cicero from Taking Actions ------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates ask the Court for declaratory and injunctive relief against 5331 Cicero LLC in order to stay the prosecution of a civil action against Peter H. Wemple, Vice President of Airport Affairs, Properties and Facilities of Budget Group. The civil action is pending before the Circuit Court of Cook County, Illinois, styled as 5331 Cicero, LLC v. Peter Wemple, Case No. 02L-010909. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, tells the Court that Mr. Wemple is primarily responsible for negotiating and finalizing the Debtors' airport concession agreements, airport leases, inter- company car rental agreements, airport facilities and environmental matters. Mr. Wemple is also responsible for the Debtors' non-airport vehicle rental properties and facilities as well as the Debtors' corporate and administrative properties and facilities. Mr. Brady relates that the civil action stems from a November, 2001 transaction involving Mr. Wemple, Midway Holdings LLC, and Debtors Budget Group and Budget Rent A Car Systems. Midway was the owner of a certain real estate located at 5331 S. Cicero Avenue in Chicago, Illinois. In January 1998, Midway and Budget entered into a Lease Agreement whereby Midway leased certain portions of the property to Budget. Budget Rent A Car Systems executed the Lease as tenant, with Budget Group as guarantor. The term of the lease commenced on August 1, 1998 and will expire on July 31, 2003. Cicero's complaint alleges that on August 14, 2001, Midway entered into a Real Estate Purchase Contract with Mr. Wemple. Subject to the lease, Mr. Wemple agreed to purchase the property from Midway. The closing of the purchase was contingent upon, among other things, a tenant estoppel certificate, signed by Budget, representing that Budget did not have "any knowledge of insolvency or bankruptcy or any planned or pending plan to file a petition for relief under the bankruptcy or other similar laws of the United States on behalf of [Budget]." Mr. Wemple signed an estoppel certificate on Budget's behalf in his capacity as Vice President of Airport Affairs, and closed the transaction on November 15, 2001. After the Petition Date, the Debtors concluded that the lease for the property was of inconsequential value and should be rejected to avoid the ongoing obligation to pay postpetition rent. Accordingly, Cicero filed its action on August 26, 2002 with Mr. Wemple as its sole defendant asserting three causes of action, for damages that Cicero suffered as a result of the Debtors' rejection of the Lease. The action charges Mr. Wemple with fraud, consumer fraud, and negligent representation based on his execution of the Estoppel Certificate and alleged oral representations he made on Budget's behalf. The action seeks at least $3,000,000 in compensatory damages, $9,000,000 in punitive damages, and attorney's fees and costs incurred in pursuing the action. According to Mr. Brady, the continued prosecution of Cicero's action will adversely affect the Debtors' estates by exposing them to indemnification claims during the reorganization process. Based on Budget Group's By-Laws and applicable Delaware law, Mr. Wemple is entitled to indemnity by the Debtors for any costs and liabilities resulting from Cicero's action. Since all of Mr. Wemple's actions were done in his official capacity as Budget's Vice President, if he is found liable for Cicero's claims, his liability could expose the Debtors to both vicarious liability under the doctrine of respondeat superior and the risk of being collaterally estopped from denying liability for their agent's actions. Mr. Brady points out that the Debtors' Chapter 11 cases are at "a critical stage". Given the sheer magnitude and complexity of the Debtors' business operations, Mr. Brady says, the day-to-day administration of these Chapter 11 cases demands the constant attention of the Debtors' senior management personnel, including Mr. Wemple. The continued prosecution of Cicero's action would distract Mr. Wemple's time and energy from the Debtors' business affairs and reorganization efforts. If Cicero's action is allowed to proceed, other key members of the Debtors' management may be required to devote substantial time and effort to the discovery process. Thus, the Debtors ask the Court to: -- declaring that the automatic stay applies to Cicero's action in its entirety, and -- enjoin Cicero from further prosecution of the action pending the resolution of the Debtors' Chapter 11 cases. (Budget Group Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1) are trading at 19 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for real-time bond pricing. CAMPBELL SOUP: Q1 2003 Earnings Conference Call Tomorrow Morning ---------------------------------------------------------------- Campbell Soup Company (NYSE:CPB) invites interested shareowners, investors and consumers to listen to its First Quarter 2003 earnings conference call live over the Internet on Wednesday, November 13, 2002, at 10:00 a.m. Eastern Time. WHAT: Campbell Soup Company Presentation to Securities Analysts, Shareowners and Media WHEN: Wednesday, November 13, 2002, 10:00 a.m. Eastern Time WHERE: http://www.campbellsoup.com HOW: Simply log on to the Web at the above address several minutes prior to the start of the call. A replay of this broadcast will be available at the same Web site. Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverage, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include "Campbell's" soups worldwide, "Erasco" soups in Germany and "Liebig" soups in France, "Pepperidge Farm" cookies and crackers, "V8" vegetable juices, "V8 Splash" juice beverages, "Pace" Mexican sauces, "Prego" pasta sauces, "Franco-American" canned pastas and gravies, "Swanson" broths, "Homepride" sauces in the United Kingdom, "Arnott's" biscuits in Australia and "Godiva" chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the "Batchelors," "Oxo," "Lesieur," "Royco," "Liebig," "Heisse Tasse," "Bla Band" and "McDonnells" brands. The company is ably supported by 24,000 employees worldwide. For more information on the company, visit Campbell's Web site on the Internet at http://www.campbellsoup.com * * * Campbell Soup's July 28, 2002 balance sheet shows a working capital deficit of about $1.4 billion. Campbell Soup is insolvent with a shareholder deficit topping $100 million. Campbell Soup has $900 million of bond debt coming due this year and next. The notes evidencing those obligations trade slightly above par. Campbell Soup common stock trades north of $20 per share. CHELL GROUP: Nasdaq Nixes Appeal and Decides to Delist Shares ------------------------------------------------------------- Chell Group Corporation, a technology holding company in business to acquire and grow undervalued technology companies, recently received the decision of the Nasdaq Listing and Hearing Review Council affirming the decision of the Nasdaq Listing Qualifications Panel to delist the Company's securities from the Nasdaq SmallCap Market. Chell Group Corporation is a technology holding company in business to acquire and grow undervalued technology companies. Chell Group's portfolio includes Logicorp http://www.logicorp.ca NTN Interactive Network Inc. http://www.ntnc.com GalaVu Entertainment Network Inc. http://www.galavu.com Engyro Inc. (investment subsidiary) http://www.engyro.com and cDemo Inc. (investment subsidiary) http://www.cdemo.com For more information on the Chell Group, visit http://www.chell.com Liquidity and Capital Resources At May 31, 2002, the Company had a working capital deficit of $2,924,235 -- about half as bad as it was at August 31, 2001. CHIEF CONSOLIDATED: Fails to Meet Nasdaq SmallCap Requirements -------------------------------------------------------------- Chief Consolidated Mining Company (NasdaqSC: CFCM) has received a Nasdaq Staff Determination, dated November 1, 2002, indicating that Chief fails to comply with the independent director and audit committee listing requirements of the Nasdaq SmallCap Market set forth in Marketplace Rules 4350(C) and 4350(d)(2), respectively, and that its securities are therefore subject to delisting as of the opening of business on November 12, 2002. In addition, the Company is in violation of Marketplace Rule 4310(C)(13) as it has failed to pay certain fees to Nasdaq. Chief's Common Stock will be eligible for trading on the Over- the-Counter Bulletin Board. The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last sale price, and volume information in over-the-counter equity securities. OTC Bulletin Board securities are traded by a community of market makers that enter quotes and trade reports through a highly sophisticated computer network. Investors work through a broker/dealer to trade OTC Bulletin Board securities. Information regarding the OTC Bulletin Board, including stock quotations, can be found on the internet at http://www.otcbb.com Chief's ticker symbol will remain "CFCM" on the OTC Bulletin Board. However, some internet quotation services add an "OB" to the end of the symbol and will use "CFCM.OB" for the purpose of providing stock quotes. Chief will consider reapplying for a Nasdaq listing if it meets the listing standards in the future, although no assurances in this regard can be given. As was previously reported, Chief has held several discussions with some of its significant stockholders in connection with a plan to recapitalize the Company. Richard R. Schreiber, acting President and Chief Executive Officer of Chief noted, "While there is no assurance of a satisfactory outcome, we are pleased with the progress of our discussions to date and we hope to recapitalize Chief, reduce our payables and continue to pursue potential joint venture partners for our mining properties in the near term." * * * Chief Consolidated Mining's June 30, 2002 balance sheets show working capital deficit of about $1.67 million. In its Form 10QSB filed on August 19, 2002, with the Securities and Exchange Commission, the Company reported, thus: "We have an immediate cash need and we are in the process of seeking additional funding in the form of borrowing secured by a portion of our land holdings or the sale of a portion of our surface real estate holdings. We have retained the Salt Lake City office of CB Richard Ellis to market the non-mining real estate for sale, focusing initially on the real estate located north of Highway 6. We would anticipate that funds from any such sale could be used to help reduce our accounts payable, cover corporate expenses, and help fund exploration and development of mining properties if we pursue such operations. As mentioned above, the proceeds from any funding or sales of excess mining equipment that we may receive could also be used to help reduce accounts payable, cover corporate expenses, and help fund exploration and development of mining properties if we pursue such operations. No assurance can be given that we will be able to raise the necessary funds, or if the funds are raised, that we will pursue mining operations or that we will be able to sell a portion of the surface real estate as currently planned on acceptable terms. "We have restructured some of our accounts payable and continue to seek to restructure other payables and have also been in discussions with potential investors to raise capital. Additionally, we have been contacted by former senior executives of the Company who have expressed an interest in raising funds. We would anticipate that such funds could be used to re-start certain mining operations and provide for future development of the mining properties. We are supportive of such efforts. We cannot assure, however, that such new financing will be available on acceptable terms, or that any capital will be raised from investors, or that the restructuring of our accounts payable will adequately reduce short-term cash needs. In the event that we are unable to obtain such additional financing or restructure our financial obligations, there would be a material adverse effect on our financial condition, and a restructuring, sale or liquidation could be required in whole or in part. "Our financial statements have been prepared assuming that we will continue as a going concern. We have suffered net losses of $577,170 and $1,413,737 for the three and six months ended June 30, 2002, and our operating activities used $642,762 of cash for the six months ended June 30, 2002. Additionally, as of June 30, 2002, we have a working capital deficit of $1,666,782 and an accumulated deficit of $30,607,598. These matters raise substantial doubt about our ability to continue as a going concern. "As of June 30, 2002, the Company has $2,586,511 of land and mining claims and properties and $2,991,403 in related machinery and equipment, representing approximately 89 percent of total assets. The realization of our investment in land and mining claims and mining related buildings and equipment is dependent upon various factors, including: (i) our success in exploration efforts to discover additional mineral resources and in proving the technical feasibility and commercial viability of the identified mineral resources, (ii) our ability to obtain necessary funding to continue exploration of the mining properties and to finance operations while we pursue real estate development alternatives for portions of our land, (iii) our success in finding a joint venture partner to provide capital funding for continued exploration of our mining properties, (iv) our ability to profitably lease the Tintic Mill or our mining claims to outside entities, and (v) our success in selling or developing certain of our land holdings to fund continued mining and exploration activities." CELEXX CORP: Taps Arete to Aid in Designing Restructuring Plan -------------------------------------------------------------- Arete Industries, Inc., (OTCBB:ARET) has been retained by Celexx Corporation, of Coral Springs, Fla., an OTCBB-traded company, to assist it in designing and executing a restructuring and turn- around plan for this publicly held holding company, and to help design, finance and execute a roll-up and spin-out strategy for Celexx's wholly owned subsidiary, Pinneast.com, Inc. Thomas Raabe, Arete CEO, stated that, "This agreement is the first of possibly further ventures with Celexx and/or its subsidiary, to exploit certain synergies and resources among the two companies. This is also the first of many possible business development and investment banking projects to be launched since completion of our own recapitalization and restructuring in July of this year. We are indeed very fortunate to launch our business development plan with a Client like Celexx that has a talented and experienced team of managers and professionals, and which has developed exciting opportunities in the field of computer and on-line based learning and training systems. The project provides an excellent opportunity for Arete to generate fee-based compensation and equity participation in the businesses that are ultimately developed through the referenced agreement, as well as the opportunity to build a track record of success to attract new projects to the Company and to develop a sustainable revenue stream." David Langle, CEO/CFO of Celexx, believes that the relationship with Arete and its affiliates is the key to resolving certain financial issues at the holding company level and will provide the financial and professional resources necessary to develop and exploit key opportunities to maximize its shareholder value. CENTERPOINT ENERGY: Berkshire & CSFB to Provide $1.3BB Financing ---------------------------------------------------------------- CenterPoint Energy, Inc. (NYSE: CNP) -- whose credit ratings and the ratings of its gas distribution subsidiary have been downgraded by Moody's Investors Service to Ba1 from Baa2 -- announced that Berkshire Hathaway Inc., (NYSE: BRK.A; BRK.B) and Credit Suisse First Boston have agreed to provide CenterPoint Energy Houston Electric, LLC, the company's electric utility subsidiary, with a $1.310 billion senior secured credit facility. David M. McClanahan, CenterPoint Energy's president and chief executive officer, stated, "This transaction is an important milestone for us. It removes all uncertainty around the refinancing of maturing debt at our electric utility, and it removes the immediate acceleration requirement contained in our recent $4.7 billion bank credit facilities. "Perhaps most importantly, it moves us significantly forward on our road to deleveraging the company in 2004-2005, when we will receive a multi-billion dollar cash infusion from the sale of our generation assets and the recovery of our stranded investment under the provisions of the Texas restructuring law." The proceeds will be used to repay all amounts outstanding under the electric utility's existing $850 million bank credit facility dated October 10, 2002, to repay $400 million of debt, which includes $300 million of senior debentures of CenterPoint Energy FinanceCo II LLP due to mature on November 15, 2002, and $100 million of debt of CenterPoint Energy, Inc., and to pay any fees and related expenses. The Facility has a three-year term, and carries an interest rate of LIBOR plus 9.75 percent, subject to a minimum LIBOR rate of 3 percent. The Facility will be secured by Second Mortgage Bonds of the electric utility. The transaction has been approved by CenterPoint Energy's Board of Directors, and is subject to final documentation. It is expected to close November 12, 2002. "We are gratified that Berkshire Hathaway and CSFB have demonstrated their confidence in our business operations and financial plan by participating in this significant debt financing to CenterPoint Energy's electric utility unit," McClanahan added. CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, and Texas. Assets total nearly $19 billion. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit our Web site at http://www.CenterPointEnergy.com Berkshire Hathaway Inc., is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted on both a direct and reinsurance basis through a number of subsidiaries. Credit Suisse First Boston is a leading global investment bank serving institutional, corporate, government and individual clients. CSFB's businesses include securities underwriting, sales and trading, investment banking, private equity, financial advisory services, investment research, venture capital, correspondent brokerage services and retail online brokerage services. CSFB operates in over 89 locations across more than 37 countries on 6 continents. The Firm is a business unit of the Zurich-based Credit Suisse Group, a leading global financial services company. CLAXSON INTERACTIVE: Completes Exchange Offer for 11% Sr. Notes --------------------------------------------------------------- Claxson Interactive Group Inc., (Nasdaq: XSON) has completed the exchange offer and consent solicitation related to all U.S.$80 million outstanding principal amount of the 11% Senior Notes due 2005 (144A Global CUSIP No. 44545HHA0 and Reg S Global ISIN No. USP52800AA04) of its subsidiary, Imagen Satelital S.A. The Company received valid tenders from holders representing U.S.$74.5 million of the principal amount of Old Notes which represents 93.1% of the issue. Accordingly, pursuant to the Exchange Offer, the Company will issue U.S.$41.3 million of new 8-3/4% Senior Notes due 2010. The Company expects to close and settle the New Notes Friday last week. "We are pleased that in light of the challenging economic situation in Argentina, Imagen's bondholders have rallied in support of the restructuring plan," said Jose Antonio Ituarte, Chief Financial Officer of Claxson. Imagen is among the few Argentine companies that have successfully renegotiated their debt since the devaluation of the peso in January. "We thank management for its dedication to this process and commitment to working out a solution with the Imagen bondholders. Closing this transaction reaffirms our confidence in Claxson's future." The New Notes have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States or to any U.S. persons absent registration or an applicable exemption from the registration requirements of the Act. The New Notes have been authorized by the Argentine Comision Nacional de Valores for their public offering in Argentina. Claxson (Nasdaq: XSON) is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed in a merger transaction, which combined El Sitio, Inc., and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc., and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero-American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. * * * As reported in Troubled Company Reporter's August 20, 2002 edition, the independent auditors report with respect to Claxson's financial statements included in Claxson's Form 20-F filed with the Securities and Exchange Commission included a "going concern" explanatory paragraph, indicating that its potential inability to meet its obligations as they become due, raises substantial doubt as to Claxson's ability to continue as a going concern. In an effort to improve its financial position, Claxson is taking certain steps, including the restructuring of its subsidiaries' debt and renegotiation of applicable covenants. Its failure or inability to successfully carry out these plans could ultimately have a material adverse effect on its financial position and its ability to meet its obligations when due. Update on Debt Renegotiation On April 30, 2002, Imagen Satelital S.A., an Argentina-based Claxson subsidiary, announced that it would not make an interest payment of US $4.4 million on its 11% Senior Notes due 2005. On June 27, 2002, Claxson announced that it had commenced an exchange offer and consent solicitation for all US$80 million outstanding principal amount of these notes. Further, on August 1, 2002 Claxson announced the extension of the pending exchange offer and consent solicitation. The expiration date for the exchange offer was extended from July 31, 2002, to August 14, 2002.. Simultaneously with this release, the Company has announced the further extension of the offer until August 28, 2002. Claxson is currently not in compliance with the coverage ratios required under its Chilean syndicated credit facility, primarily as a result of the 17% decrease in the value of the Chilean Peso against the U.S. Dollar in 2001. Failure to comply with the financial covenants set forth in the Chilean syndicated credit facility could result in the acceleration of all amounts due and payable thereunder. Claxson has been actively negotiating with the lenders to amend the credit facility to modify this financial covenant in order to bring it into compliance. Until negotiations are final, this debt will be classified as short term in the balance sheet. COMMUNICATION DYNAMICS: Court OKs Continued Cash Collateral Use --------------------------------------------------------------- Communication Dynamics, Inc., the parent company of TVC Communications, has received Bankruptcy Court approval to continue using its lenders' cash collateral on an interim basis to purchase inventory. The Company is authorized to use up to $35 million between Nov. 6, 2002 and Jan. 21, 2003. "The Court's approval of our continued use of cash collateral is a positive development in our restructuring case and we are gratified by the continued cooperation of our bank lenders," said Robert W. Ackerman, CDI's president and chief executive officer. "This is good news for TVC, as it underscores that we have been operating successfully and will continue buying the same high quality products from our vendors and providing the same level of service to our customers." "We are also making solid progress outside the courtroom. Our employees have worked hard to increase our sales significantly. In fact, October was the strongest month we have had since May of this year," said Ackerman. "The Company is operating favorable to its cash collateral budget as sales have been higher and expenditures have been lower than expected. We believe the combination of these factors positions the Company for a strong year-end." Separately, the Company is marketing Clifford of Vermont for potential sale. Clifford of Vermont is a national distributor of products related to outside telephone connections, broadband, IMSA signal and communications, premise, voice, video, data, sound, security, fire alarm, instrumentation, tray and power cables. "As we reorganize TVC Communications, we intend to focus more on its core business of cable-television-parts distribution. Clifford of Vermont primarily sells wire and cable products to customers who are outside of TVC's core CATV offerings," said Ackerman. "While we work with our strategic advisors to facilitate the sale, day-to-day business operations will continue as usual at the subsidiary." Communication Dynamics, Inc., is the parent company of TVC Communications. TVC provides the products and services that have helped build the communications infrastructure in the United States, Canada, South America and Europe. Founded in 1952, TVC is backed by close working relationships with top manufacturers and a deep understanding of the technology behind the products it sells. TVC has proven itself to be a valued partner to both the broadband cable and telecommunications industries. CONTOUR ENERGY: Wants to Continue Deloitte & Touche Engagement -------------------------------------------------------------- Contour Energy Co., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas for authority to employ Deloitte & Touche LLP as independent accountants and auditors. The Debtors relate that Deloitte & Touche has provided audit and business advisory services for them since fiscal year 1995: (a) Deloitte & Touche has audited the Debtor's annual financial statements as well as the annual financial statements of the Kelly Partners 1992 and 1994 Development Drilling Programs, for which the Debtor serves as the general partner. (b) Deloitte & Touche from time to time provided services related to various registration statements of the Debtor, as well as general accounting assistance as the Debtors' management or counsel deemed necessary. This retention has afforded Deloitte & Touche a familiarity on the Debtors' business which makes Deloitte & Touche uniquely qualified to assist the Debtors in these Chapter 11 cases. Since Deloitte & Touche has previously functioned prepetition as the Debtors' independent auditors and accountants, and Deloitte & Touche's postpetition retention will continue to be within the same scope of services: (a) Auditing and reporting on the Debtors' annual financial statements for the year ending December 31, 2002, including SAS 71 review procedures required on the quarterly financial statements. (b) As may be agreed to by Deloitte & Touche, rendering other professional services on general accounting matters as the Debtors may request, including auditing and reporting on the Kelly Partner 1992 and 1994 Development Drilling Program's annual financial statements for the year ending December 31, 2002, including SAS 71 review procedures required on the quarterly financial statements of such entities, for which the Debtor serves as the general partner. The Debtors agree to compensate Deloitte & Touche at its current hourly rates: Partners/Principals $330 to $660 per hour Managers $230 to $550 per hour Seniors and Staff $140 to $325 per hour Administrative Staff $ 40 to $ 65 per hour 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. CORAM: Trustee Hires SSG Capital and Ewing Monroe as Advisors ------------------------------------------------------------- Arlin M. Adams, the Chapter 11 Trustee for the bankruptcy estates of Coram Healthcare Corp., and Coram, Inc., asks for permission from the U.S. Bankruptcy Court for the District of Delaware to retain and employ SSG Capital Advisors, LP and Ewing Monroe Bemiss & Co., as his investment bankers and restructuring advisors. The Trustee relates that SSG Capital specializes in workout, Chapter 11 and other special situations, having completed over 90 successful sales, restructurings, refinancings, and private placements for middle market companies facing challenges, including numerous Chapter 11 cases before this Court. Ewing Monroe specializes in healthcare transactions having completed over 35 successful sales, refinancings, and private placements for middle-market healthcare companies. Ewing Monroe has particular expertise in companies that provide home healthcare services, such as the Debtors. "Both SSG Capital and Ewing Monroe will jointly serve as the Advisors taking advantage of their respective expertise to attempt to market the Debtors' business as a going concern," the Trustee tells the Court. The Trustee proposes to retain the Advisors as a team to effectively provide investment banking services focusing on a sale of all or part of the Debtors' assets, or to assist the Trustee with a financial restructuring in these bankruptcy cases. As a team, SSG Capital and Ewing Monroe will: a) Prepare an Offering Memorandum describing the Debtors, their historical performances and future prospects, including existing contracts, marketing and sales, labor force and management and anticipated financial results; b) Work with the Trustee and the Debtors to develop a list of suitable potential buyers of Debtors' businesses; c) Coordinate the execution of confidentiality agreements by potential buyers wishing to review the Offering Memorandum; d) Assist the Trustee and the Debtors to coordinate site visits for interested buyers, and working with the Trustee and the Debtors' management team to develop appropriate presentations for such visits; e) Solicit competitive offers from potential buyers; f) Advise and assist the Trustee and the Debtors in structuring a transaction and negotiating transaction agreements; g) Upon execution of a letter of intent or similar documents, assist the Trustee in negotiating the transaction and assisting the Trustee's attorneys, as necessary, through closing; h) Advise the Trustee, his attorneys and accountants, as required, regarding documentation; i) Provide expert testimony in the Bankruptcy Court on valuation or in support of a sale; j) Participate in the closing of any Sale through either a Section 363 process or through a confirmed Plan of Reorganization; k) Assist the Trustee and his counsel in negotiating with various stakeholders including, but not limited to, Goldman Sachs & Co., Cerberus Capital Management, L.P. and Foothill Capital Corporation, general unsecured creditors, represented by a Creditors' Committee, and other creditors and shareholders, represented by the Equity Committee, in regard to the possible restructuring of existing notes, claims and equity; and l) Provide to the Trustee one or more Opinions as to the fairness of the terms of any proposed Restructuring or Sale of the Debtors' businesses. The Trustee assures the Court that SSG Capital and SSG Capital and Ewing Monroe do not hold or represent any interest adverse to the Estates, and are both a "disinterested person" as that phrase is defined in the Bankruptcy Code. The Advisors shall be paid with: a. Monthly fees of $100,000 for the first two months of the Engagement. The Monthly Fees for the third and fourth months shall be $75,000 per month and the Monthly Fees shall be $50,000 per month thereafter. b. Advisory Fee, upon the Closing of a Sale or transfer of the equity of the Company and a Sale of all, or any portion of, the assets of the Company to any party, equal to the greater of: (i) 1.0% of Total Consideration; or (ii) $1.0 million. c. Advisory Fee equal to $950,000, in the event that the Existing Stakeholders agree to the restructuring of their Claims. d. Opinion Fee equal to $50,000 per Opinion, in the event the Trustee requests in writing one or more Opinion(s) as to the fairness, from a financial point of view, of any proposed Sale or Restructuring of the Company, or a valuation of the Company. Coram Healthcare, a provider of home infusion-therapy services filed for Chapter 11 bankruptcy protection on August 8, 2000. Kenneth E. Aaron, Esq., at Weir & Partners LLP and Barry E. Bressler, Esq., at Schnader Harrison Segal & Lewis LLP represent the U.S. Trustee in these proceedings. DEX MEDIA: Fitch Assigns BB- Rating to $1.5-Bill. Bank Facility --------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to Dex Media East, LLC's $1.49 billion senior secured credit facility. The secured bank facility consists of a $100 million 6-year revolving facility, $690 million 6-year term A loan and a $700 million 6.5-year term B loan. Proceeds from the bank facility are expected to fund the acquisition of Dex Media East. The Rating Outlook is Stable. Fitch rated the company's offering of seven year $450 million of senior unsecured notes 'B' and the ten year $525 million senior subordinated notes 'B-'. Fitch expects that the company will have the ability to reduce leverage using free cash flow to repay secured borrowings. Fitch's ratings reflect the company's strong market position as the incumbent directory publisher within its service territory, the stability and consistency of its revenue stream, strong operating margins and anticipated free cash flow generation. The company's revenue stability is supported by a high advertiser retention rate and the contractual nature of the company's revenues. The contracts the company has with its advertiser base provide the company with significant revenue visibility as a large portion of the company's annual revenue is confirmed early in the year. In Fitch's view, revenue generated by yellow page publishers is not as sensitive to cyclical economic conditions as other forms of advertising. Fitch's ratings are further supported by the geographic and customer diversity of its revenue stream and the anticipation of low ongoing capital expenditures to support its business. Fitch's rating of the secured bank facility also recognizes the senior position the facility has in the company's capital structure and the large amount of capital junior to the bank facility. The senior secured credit facility represents approximately 44% of the company's capital structure. Upon the closing of the second stage of the Qwest Dex, Inc., acquisition, the company expects to continue to realize cost benefits stemming from the allocation of certain centralized services to its sister company. These rating considerations are balanced against the high degree of leverage used to finance the acquisition, and execution risks centered on operating as a stand alone entity. Fitch recognizes the potential impact on the company's operating margins stemming from independent directory publishers that compete on price. New market entrants, however typically increase the market size as advertisers hope to increase exposure. Long term risks relate to potential changes in the buying patterns of advertisers or a shift in the effectiveness of yellow page advertising relative to other media as well as the success of new product innovations launched by the company. Dex Media East, LLC was formed by the private equity firms of Welsh, Carson, Anderson & Stowe and The Carlyle Group to acquire a portion of Qwest Dex, Inc., the yellow page publishing business from Qwest Communications International. The Qwest Dex, Inc. acquisition, valued at $7.05 billion is structured with two stages. Upon the close of the first stage, Dex Media East will operate yellow page directory business in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, and South Dakota. Stage one is expected to close by the end this month. The second stage, representing the balance of Qwest Dex business is anticipated to close during 2003. ECHOSTAR COMMS: Completes Exchange Offer for 10-3/8% Sr. Notes -------------------------------------------------------------- EchoStar Communications Corporation announced that its EchoStar DBS Corporation subsidiary completed its offer to exchange all of the $1 billion principal outstanding of EchoStar Broadband Corporation 10-3/8% Senior Notes due 2007 for substantially identical notes of EDBS. Tenders have been received from holders of over 99% of the EBC Notes. Per the terms of the indenture related to the EBC Notes, if at least 90% in aggregate principal amount of the outstanding EBC Notes have accepted the exchange offer, then all of the then outstanding EBC Notes shall be deemed to have been exchanged for the EDBS Notes. EchoStar Communications dishes out a smorgasbord of entertainment. The #2 US direct broadcast satellite TV provider (behind DIRECTV), the company operates the DISH Network, providing programming to nearly 6.5 million subscribers in the continental US. Subsidiaries develop DBS hardware such as dishes and integrated receivers and deliver video, audio, and data services. EchoStar has teamed up with Gilat Satellite Networks (a partner with Microsoft) and Colorado startup WildBlue to develop satellite-based two-way broadband Internet access. Echostar Communications' June 30, 2002 balance sheet shows a total shareholders' equity deficit of about $827 million. Echostar Broadband Corp.'s 10.375% bonds due 2007 (DISH07USR1), DebtTraders says, are trading at 104.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DISH07USR1 for real-time bond pricing. ENRON CORP: Wants to Expand Stephen Cooper's Engagement ------------------------------------------------------- On April 4, 2002 the Court authorized Enron Corporation and its debtor-affiliates' retention of Stephen Cooper and Stephen Forbes Cooper, LLC to provide them with 15 individuals to serve as Associate Directors of Restructuring, nunc pro tunc to January 28, 2002. Partly due to the management efforts of these Associate Directors, the Debtors have made substantial progress in their cases and have established a fast track for the ultimate resolution of these Chapter 11 cases. However, the Debtors still need at least eight additional employees to efficiently and effectively carry out Cooper's duties with respect to preference and fraudulent conveyance causes of action. Accordingly, the Debtors ask the Court to expand the Cooper's retention order, nunc pro tunc to September 1, 2002 to provide 15 additional Associate Directors to work for the Debtors, eight of which are of immediate need. The Debtors propose to pay Cooper $864,000 annually for each Additional Employee on the basis of 160 hours per month as a full time equivalent. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the employment of the Additional Employees will able the Debtors and Cooper to address the significant work requirements presently existing in the litigation support area in a cost-effective manner. These Additional Employees will manage and work with the Debtors' personnel, enabling the reduction of over 30 outside professionals the Debtors presently employ. For the commodity trading business, the Debtors have a present need for one director or a very experienced manager, and three managers or very experienced associates. The sheer complexity and volume of these transactions require that they be categorized to avoid performing unnecessary work on transactions that have been harbored pursuant to the Bankruptcy Code. The remaining potential preference and fraudulent conveyance causes of action will be identified in large categories. Prior to analysis, Cooper will continue to work with the professionals retained and involved in these cases to determine the scope, level of detailed analysis and the strategy for going forward with an avoidance action or global or limited settlement with a counterparty. In addition, Ms. Gray says, the Debtors are in immediate need for four professionals for the non-commodity trading aspect of the preference and fraudulent conveyance project. Cooper is in the process of performing a reconciliation process between items appearing on the Debtors' numerous bank statements and that of Enron's general ledger system. Cooper will then identify, gather documentation and analyze those transactions individually and consider the totality of their interrelation with other relevant transactions. The purpose of these services is to identify potential preference and fraudulent conveyance causes of action that have not been recorded on the previously filed Statement of Financial Affairs. These tasks will require at least: -- one director or a very experienced manager; -- two managers or very experienced associates; and -- one manager or a very experienced associate to perform detailed test analysis on preference based on both ordinary course and new value added analyses. Ms. Gray contends that the immediate need of these professionals is due to the fact that Cooper only has 15 months to complete the first phase of this project in accordance with the time limitations established in Section 546(a) of the Bankruptcy Code. Moreover, Ms. Gray asserts that the expanded retention is in the best interest of the Debtors, their estate and creditors pursuant to Section 363, given that: -- Cooper has substantial knowledge and experience managing large companies and assisting troubled companies stabilize financial condition, analyzing their operations and developing an appropriate business plan to accomplish the necessary restructuring of their operations and finances; -- based on Cooper's performance so far, the services their personnel provided to the Debtors greatly benefited the estates; -- Cooper has stabilized the Debtors' day-to-day operations within the Chapter 11 process; and -- the Additional Employees will be able to maximize the chances that the Debtors will be able to confirm a plan of reorganization in the shortest time possible with the least cost. * * * Accordingly, Judge Gonzales permits the Debtors to utilize up to an additional 15 Associate Directors of Restructuring, provided by Cooper, on the terms of the Cooper Agreement dated January 28, 2002. Without further notice or approval, the Debtors are authorized to use eight of the Additional Employees, consistent with the experience and credentials of these persons: Employee Position Hourly Rate Hours Per Week -------- -------- ----------- -------------- James Agar Manager $375 55+ W. Clay Busker Manager 375 55+ Adam Greene Manager 350 55+ C. Kim McLeod Manager 400 55+ Xavier Oustalniol Manager 400 55+ Marta Brisco Associate 325 55+ Regina Lee Associate 325 55+ Judge Gonzalez emphasizes that the utilization of the Additional Employees will be subject on these terms: (a) The Debtors are required to provide 20 days advance written notice to the Official Committee of Unsecured Creditors prior to the utilization of more than eight Additional Employees; (b) If no objection is received by the Debtors from the Committee prior to the expiration of the 20-day period, the Debtors are deemed authorized to use the Additional Employees without further notice or approval; and (c) If a timely objection is received by the Debtors from the Committee, then the Debtors will have the option to withdraw the request or seek Bankruptcy Court approval of the Additional Employees by motion on 10-days notice. Except as modified by this Order, the Court rules that the Original Order remains in full force and effect. (Enron Bankruptcy News, Issue No. 47; 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. E.SPIRE COMMS: Asks Court to Extend DIP Facility through Dec. 31 ---------------------------------------------------------------- e.spire Communications, Inc., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Delaware to further extend and modify their Debtor-In-Possession financing. The Debtors' DIP Facility is provided by Foothill Capital Corporation as agent, Ableco Finance LLC and George F. Schmitt, Chairman of the Board and former CEO of the Debtors -- who committed to lend in his individual capacity $10 million of the DIP Facility -- and certain other lenders. The Proposed Fifth Extension and Modification to the Debtor-In- Possession Financing further modifies and extends the DIP Credit Agreement and DIP Facility as well as the DIP Lenders' continued forbearance from exercising remedies as a result of certain of the Debtors' defaults. Pursuant to this agreement, the term of forbearance is extended to December 31, 2002. The Lender is willing to provide the Debtors with a $49,414,738.46 Maximum Revolver Amount and $65,000,000 Maximum Credit Line. The DIP Financing Agreement will mature at the earliest of: (i) the date of substantial consummation of a plan of reorganization in these Chapter 11 Cases, (ii) December 31, 2002, (iii) the conversion of these Chapter 11 Cases in the Bankruptcy Court to cases under Chapter 7 of the Bankruptcy Code, (iv) the appointment of a trustee under Chapter 11 of the Bankruptcy Code, and (v) the appointment of an examiner with expanded powers under the Bankruptcy Code. The Debtors assert that the DIP Amendments are clearly for the benefit of the Debtors' estates and creditors as the means of continuing the funding the Debtors' operating expenses. The DIP Amendment preserve and enhance the Debtors' going concern value, while the Debtors completed a closing on the sale of their assets, and continue the process of winding-down their remaining business activities. Moreover, the Debtors pointed out that the continued availability of credit under the DIP Credit Agreement will give the Debtors' vendors and suppliers the necessary confidence to resume ongoing relationships with the Debtors and be viewed favorably by the Debtors' employees and customers. The Debtors assure the Court that the Prepetition Lenders are Adequately Protected by: a) payment to the Prepetition Agent all accrued and unpaid prepetition and postpetition interest and expenses under or in connection with the Pre-Petition Credit Agreement; b) grant to the Prepetition Agent valid, perfected, first priority postpetition security interests in and liens, subordinate only to the liens of the DIP Lenders; and c) grant to the Prepetition Agent an administrative claim under Bankruptcy Code section 507(b) to the extent there shall be any diminution in the value of the Pre-Petition Collateral. e.spire Communications, Inc., is a facilities-based integrated communications provider, offering traditional local and long distance internet access throughout the United States. The Company filed for chapter 11 protection on March 22, 2001. Domenic E. Pacitti, Esq., Maria Aprile Sawczuk, Esq., and Mark Minuti at Saul Ewing LLP represents the Debtors in their restructuring effort. EXIDE: Debtors Argue to End Committee's Right to Challenge Liens ---------------------------------------------------------------- Exide Technologies and its debtor-affiliates believe that the Committee should be given a reasonable period of time to investigate and perfect potential claims and defenses to the validity, extent and priority of the liens, indebtedness and claims of the Debtors' prepetition lenders. The Debtors do not believe that the recent decision of the United States Court of Appeals for the Third Circuit in Cybergenics Corp. v. Chinery should be permitted to eliminate this review or the prospect of the claims and defense being asserted on behalf of the estates, if appropriate. However, the Debtors do not believe that an indefinite extension of the current November 18, 2002 deadline for the commencement of an action by the Committee is necessary or appropriate at the present time. James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones P.C., in Wilmington, Delaware, tells the Court that counsel to the Debtors have engaged in productive discussions with counsel to the Committee and counsel to the Prepetition Lenders. The Debtors believe that it is possible for the parties to reach a consensual agreement on procedures for completing and perfecting the investigation of potential claims and defenses that is consistent with the original intent of the establishment of the Objection Deadline and also consistent with the constraints imposed by the Cybergenics decision. While the parties have not settled on the procedures at the present time, the Debtors believe that it would be premature to grant an open-ended extension of the Objection Deadline. Instead, the Debtors suggest that: -- the Committee be directed to file and deliver by November 18, 2002 a detailed statement of the claims and defenses that the Committee has identified and believes should be brought on behalf of the estates; and -- the Objection Deadline be extended to November 27, 2002, the next scheduled omnibus hearing in these cases. The Debtors believe that this approach meets the interests of the Prepetition Lenders to have timely knowledge whether potential claims and defenses exist, while also meeting the interests of the Committee to preserve the ability to have an action on the claims and defenses brought on behalf of the estate. By the November 27, 2002 omnibus hearing, the Debtors believe the parties are capable of identifying an approach to allow the pursuit of any claims and defense identified by the Committee in their November 18 statement in a manner consistent with the limitation suggested by the Cybergenics decision. (Exide Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Committee Has Until Nov. 21 to Commence Actions -------------------------------------------------------------- On September 20, 2002, the U.S. Court of Appeals for the Third Circuit handed a decision in The Official Committee of Unsecured Creditors of Cybergenics Corp. v. Kathleen Chinery. The decision, according to Charlene D. Davis, Esq., at The Bayard Firm, in Wilmington, Delaware, may require changes in the practices previously employed in this District concerning the commencement of avoidance actions. Among other things, the decision would preclude the commencement of an "avoidance action" by (1) Official Committee of Unsecured Creditors; (2) Official Committee of Asbestos Claimants; and (3) Legal Representative of Future Asbestos-Related Claimants against Federal-Mogul Corporation's prepetition lenders pursuant to the Final DIP Order. In order to afford the parties-in-interest more time to address the structuring of any potential proceedings in the light of the Cybergenics decision, the Committees and the Future Representatives mutually agreed with the Prepetition Agent, on behalf of the Existing Lenders and the holders of Tranche C Loans, as well as the Surety Bond Issuers to a fifth extension of the Committees' and the Representative's deadline to initiate adversary proceedings against the Prepetition Lenders. The parties agree to move the deadline until November 21, 2002. The extension will also give the parties more time to fully explore a consensual plan of reorganization. In the adversary proceeding, the Committees and the Representative will seek to: -- challenge the amount, validity, enforceability, perfection, or priority of the Existing Obligations or the liens on the Existing Obligations Collateral in respect thereof; or -- assert any claims or causes of action, against the Prepetition Agent, the Existing Lenders, the Surety Bond Issuers or the holders of the Tranche C Loans. Thus, the Unsecured Creditors Committee asks the Court to approve the stipulation extending the Litigation Commencement deadline to November 21, 2002. The extension of the Litigation Commencement deadline is without prejudice to the right of the Prepetition Agent, the Existing Lenders, the holders of Tranche C Loans and the Surety Bond Issuers to, at any time, initiate an action to establish the amount, validity, enforceability, perfection, or priority of the Existing Obligations or the liens on the Existing Obligations Collateral with respect to the Tranche C Loan. (Federal-Mogul Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) Federal-Mogul Corporation's 8.80% bonds due 2007 (FMO07USR1) are trading at 16 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FMO07USR1for real-time bond pricing. FISHER COMMS: Retains Goldman Sachs to Evaluate Alternatives ------------------------------------------------------------ Fisher Communications (Nasdaq:FSCI) announced that the company has retained Goldman, Sachs & Co., as financial advisor to assist in reviewing its strategic alternatives. In announcing its decision to review strategic alternatives, the company issued the following statement: "Our Board of Directors is fully committed to acting in the best interests of the company and its shareholders. Accordingly, and in light of industry conditions, we have determined that it is appropriate at this time to review a range of strategic alternatives for the company. As always, we remain focused on creating long-term value for shareholders and acting in the interest of the company's constituencies." Fisher Communications, Inc., with $600 million of assets on its balance sheet at Dec. 31, 2001, is a Seattle-based communications and media company focused on creating, aggregating, and distributing information and entertainment to a broad range of audiences. Its 12 network-affiliated television stations are located in the Northwest and Southeast, and its 28 radio stations broadcast in Washington, Oregon, and Montana. Other media operations include Fisher Entertainment, a program production business, as well as Fisher Pathways, a satellite and fiber transmission provider, and Fisher Plaza, a digital communications hub located in Seattle. FRUIT OF THE LOOM: Creditors Trust Gets Nod to Establish Reserve ---------------------------------------------------------------- The Unsecured Creditors Trust, in the chapter 11 cases involving Fruit of the Loom, Ltd., and debtor-affiliates, obtained Court authority to establish the appropriate reserve for all unliquidated and contingent claims that have not yet been resolved and allowed. As previously reported, Fruit of the Loom, Ltd.'s Unsecured Creditors Trust, was established pursuant to the April 30, 2002 Unsecured Creditors Trust Agreement. The Plan Agreements provide that the Trust will complete the claims analysis and objection process for Class 4A Claims and make an Initial Distribution no later than 180 days after the Effective Date. Additionally, the Trust will prosecute, settle or resolve the Creditors' Committee Action. The Plan also provides that on the initial Distribution Date, the Trust will "establish a separate Disputed Reserve" for disputed claims consisting of "ratable proportion of all cash or other property allocated for distribution on account of each disputed claim based upon the asserted amount," or an amount agreed to by the claimholder and the Trust, or as determined by the Court. On the Effective Date, there were approximately 3,450 Class 4A Claims. The Trust has been filing objections to these claims since August 6, 2002. Numerous claims have been disallowed by the Court, there are approximately 2,925 Class 4A Claims remaining, of which 565 have been allowed. The Trust is currently holding $16,459,967 for potential distribution. The Trust also holds $2,705,000 that is allocated for case administration. With the Court's approval, the Trust will reserve $1,000,000 for fees and expenses associated with the potential litigation against former directors and officers. This will leave $15,459,967 available for distribution to Class 4A Claims. The aggregate amount of Initial Allowed Claims is $72,159,284. Of the disputed claims, 2,064 are asserted in liquidated amounts aggregating $186,471,989, leaving 264 unliquidated disputed claims. The estimated amount that the Trust will establish as the Disputed Reserve is $134,784,756.86: Estimate of Claims No. of Claims Category for Disputed Reserve ------------- -------- -------------------- 20 Stated Amounts $59,676,345 9 Otherwise Liquidated $50,208,912 172 Vacation Pay $7,249,500 28 Executives $10,500,000 32 Miscellaneous $7,150,000 (Fruit of the Loom Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENERAL DATACOMM: Cash Collateral Pact Continues Until Nov. 30 -------------------------------------------------------------- General DataComm Industries, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to continue using their lenders' cash collateral to providing working capital financing through November 30, 2002. The Court determined that the Debtors have immediate cash needs in order to meet payroll, to pay for other customary and necessary day to day expenses, and to prevent immediate and irreparable harm to the estates. The Debtors have little unencumbered cash available, and are therefore dependent on collection of their accounts and the proceeds of the sale of their inventory to provide cash to fund ongoing operations. Foothill Capital Corporation, as agent for the lenders under the Prepetition Financing Agreement, provided the Debtors a revolving line of credit, term loan and letter of credit facility. The Lender asserts, and the Debtors acknowledge, that the Prepetition Obligations are secured by fully perfected, non- avoidable first priority security interests and liens in substantially all of the Debtors' assets. Consequently, The Lender consents to the Debtors' use of the Cash Collateral. The Debtors declare that, as of the Petition Date, the Prepetition Obligations arising under the Prepetition Loan Documents were in the aggregate amount of approximately $31,000,000. General DataComm Industries, Inc., a worldwide provider of wide area networking and telecommunications products and services, filed for Chapter 11 protection on November 2, 2001. James L. Patton, Esq., Joel A. Walte, Esq., and Michael R. Nestor, Esq., represent the Debtors in their restructuring efforts. In their July 2002 monthly report on form 8-K filed with SEC, the Debtors account $19,996,000 in assets and $77,445,000 in liabilities. GENTEK INC: Wins Nod to Pay $6 Million of Foreign Vendor Claims --------------------------------------------------------------- In an Interim Order, Judge Walrath rules that GenTek Inc., and its debtor-affiliates can make payments to foreign vendors provided that these vendors are not their affiliates. Aside from obtaining permission from JPMorgan to make those payments, Judge Walrath also directs the Debtors to obtain the approval of the official committee of unsecured creditors, if any. If no creditors committee has been appointed, the Debtors must seek approval from the unofficial committee of senior subordinated noteholders. All payments, nonetheless, will be subject to these conditions: (a) Before making any payment of a Foreign Claim, the Debtors may, in their absolute discretion, settle all or some of the prepetition claims of that Foreign Vendor for less than their face amount without further notice or hearing; (b) If the proposed payment to any single Foreign Vendor exceeds $175,000, the Debtors must seek approval from JPMorgan Chase Bank, the administrative agent to the Debtors' senior secured lenders, or its financial advisor; and (c) If the Debtors submit to JPMorgan the request for approval of a particular Foreign Claim payment, JPMorgan will approve or reject the request by 12:00 p.m. on the next business day. Absent receipt of the approval or rejection, the Debtors' request to make the particular Foreign Claim payment will be deemed approved and may be made by the Debtors; provided, however, that the payments will not exceed the maximum aggregate Foreign Vendor payment authority set by the Court. (GenTek Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Court Approves Settlement with Juniper Networks ---------------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates obtained Court approval to enter into Settlement Agreement with Juniper Networks, Inc. To recall, Juniper provides the Debtors with routers, software and maintenance on an ongoing basis throughout the world, enabling the Debtors to aggregate customer connections and provide a worldwide solution for its core IP network. Juniper is regarded as a strategic vendor going forward for the Debtors' worldwide IP/Virtual Private Network. The salient terms of the Juniper Settlement Agreement are: A. Parties: Global Crossing Ltd.; GC Pan European Crossing Holdings B.V.; and Juniper Networks; B. Payments by GCPEC to Juniper: $1,008,268.99 to be paid according to this schedule: -- $250,000 within 10 business days of the Effective Date; -- $150,000 within the later of 10 business days of the Effective Date and August 15, 2002; -- $392,190 by November 15, 2002 and -- $216,078.99 by February 15, 2003; C. Allowed General Unsecured Claim: Juniper will have a single allowed general unsecured claim in an aggregate amount not to exceed $4,241,621.44 against GC Pan European Crossing; D. Global Crossing Release: As of the Effective Date, the Debtors will release Juniper from all claims relating to the Purchase Orders; E. Juniper Release: As of the Effective Date, Juniper will release the Debtors from all any and claims, other than certain limited exceptions; and F. Assumption of Executory Contracts: The Debtors will assume the Purchase Orders, as provided in the Juniper Settlement Agreement, provided that no payments will be required in connection with the assumption. (Global Crossing Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX08USR1) are trading at 1.75 cents-on-the-dollar, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1 GROUP TELECOM: Competing Bidders Shut Out of Talks Until Friday --------------------------------------------------------------- GT Group Telecom Inc., (TSX: GTG.B, GTG.A) has sought and received the authority of the Ontario Superior Court of Justice to accept the leading bid received during its merger and acquisition process. In conjunction with this authority, the Company has also received authority to enter into an exclusivity agreement with the leading bidder for a period of seven calendar days, expiring at the close of business on November 15, 2002. The application for such approval was made with the support of the Company's Monitor, PricewaterhouseCoopers, and Group Telecom's senior lenders. Group Telecom also sought and received an extension of protection under the Companies' Creditors Arrangement Act until December 11, 2002. "We have been very encouraged by the quality of the proposals received, and are pleased to be able to enter into an exclusive negotiating period with the leading bidder," commented David Baird, Chair of the Company's Special Committee. "The Company is committed to settling definitive agreements and implementing the leading proposal in a timely manner." As agreed, the identity of the leading bidder will not be disclosed until such time as definitive agreements are agreed upon for Court approval. The parties are committed to working towards completion of such agreements within the seven-day exclusive negotiating period. Group Telecom also announced that none of the proposals received, including that of the leading bidder, would produce an economic return in respect of the common equity or the unsecured notes of the Company. Outstanding claims of Group Telecom's unsecured creditors will be dealt with in a CCAA Plan of Arrangement that is expected to be proposed in connection with the implementation of its transaction with the leading bidder. Group Telecom is Canada's largest independent, facilities-based telecommunications provider, with a national fibre-optic network linked by 454,125 strand kilometres of fibre-optics, at March 31, 2002. Group Telecom's unique backbone architecture is built with technologies such as Gigabit Ethernet for delivery of enhanced network performance and Synchronous Optical Network for the highest level of network reliability. Group Telecom offers next-generation high-speed data, Internet, application and voice services, delivering enhanced communication solutions to Canadian businesses. Group Telecom operates with local offices in 17 markets across nine provinces in Canada. Group Telecom's national office is in Toronto. HA-LO INDUSTRIES: Estate Pursues Starbelly Fraudulent Conveyance ---------------------------------------------------------------- On October 22, 2002, HA-LO Industries, Inc., filed a complaint in the Bankruptcy Court against the recipients of consideration in HA-LO's acquisition of Starbelly.com, Inc., in 2000, for fraudulent transfer under Illinois state law in connection with the acquisition and for unspecified damages. HA-LO remains a debtor, with two of its subsidiaries, Lee Wayne Corporation and Starbelly.com, Inc., in three separate, although jointly administered, Chapter 11 cases in case number 02 B 12059, and continues to work towards emerging from bankruptcy. To date, although discussions have commenced between the Debtors and the Official Committee of Unsecured Creditors regarding the form and content of a plan or plans of reorganization, no plan or plans of reorganization have been filed or confirmed by the Bankruptcy Court. The parties have not yet agreed upon any terms and conditions of any consensual plan. Even with the discussions to date, the holders of equity interests in HA-LO remain unlikely to receive or retain anything of value on account of their interests in HA-LO in the bankruptcy. Persons interested in more information concerning the Cases, or the Debtors' financial performance, are encouraged to review the pleadings, reports and other papers on file in the Office of the Clerk of the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, Everett McKinley Dirksen Federal Building, 219 S. Dearborn Street, Chicago, Illinois. HAYES LEMMERZ: Committee Urges Court to Modify Final DIP Order -------------------------------------------------------------- Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling, in Wilmington, Delaware, recounts that in late September, the Third Circuit Court of Appeals issued an opinion that could have a profound and detrimental impact on the proper adjudication of Hayes Lemmerz International, Inc.'s Chapter 11 cases. In Cybergenics, the Third Circuit cast doubt on the legal authority, which has been supported by a substantial body of case law and the practice of the bankruptcy courts of this district, to vest another party -- in many instances, the official creditors' committee -- with the right to pursue litigation on behalf of a Chapter 11 estate to the extent a debtor was not willing or able to prosecute the claim. In doing so, the Cybergenics panel called into question certain provisions of the Final DIP Order that authorized the Debtors to relinquish their right to prosecute valuable Estate Claims, but provided that parties with an actual economic interest in the litigation could seek a judgment from this Court. Without appropriate remediation of the Final DIP Order, Mr. Schnabel is concerned that Cybergenics could be a catastrophic development for the Debtors' unsecured creditors and result in a substantial windfall to the Prepetition Banks. After an exhaustive investigation, the Committee has uncovered compelling evidence establishing that the Prepetition Banks bear considerable risk in the allowance of their claims and liens. Estate Claims against the Prepetition Banks sound in preference and fraudulent conveyance and will result in the avoidance of very valuable transfers by the Debtors before their Chapter 11 filings. The Debtors' unsecured creditors are the direct beneficiaries of the avoidance of these transfers. However, without appropriate modifications to the Final DIP Order, Cybergenics could be read to mean that no party-in-interest has the right to prosecute Estate Claims, and the Prepetition Banks would be accidentally shielded from estate litigation -- a proposition antithetical to the most fundamental tenets of bankruptcy law. Accordingly, by this motion, the Official Committee of Unsecured Creditors asks the Court to modify the Final DIP Order that strike the whitewash admissions by the Debtors, as well as their waiver of standing to prosecute valuable Estate Claims against the Prepetition Banks. The Cybergenics decision mandates not only rescission of the Debtors' waiver of the primary right to commence action against the Prepetition Banks, it also requires additional procedural and substantive safeguards to ensure the preservation and zealous prosecution of the Estate Claims. Since the Debtors do not have an economic stake in this litigation, Mr. Schnabel contends that they are not particularly well-suited to champion the Estate Claims. In the Final DIP Order, the Debtors gave the surest indication that they do not want to prosecute this litigation -- they specifically relinquished and waived the right to pursue litigation against the Prepetition Banks. Nevertheless, if the Debtors consent to prosecute the Estate Claims promptly, the Court may ensure proper handling of the Estate Claims without upsetting the holding of Cybergenics by entering a Case Management Order that: -- authorizes the Committee to intervene as co-plaintiff in this action; and -- prohibits the Debtors from settling Estate Claims without the Committee's consent. Alternatively, the Court may appoint a Chapter 11 trustee with limited powers, or an examiner with expanded powers, solely to prosecute the Estate Claims against the Prepetition Banks and, at the same time: -- authorize the Committee to intervene as co-plaintiff in the trustee/examiner's lawsuit against the Prepetition Banks; and -- prohibit the trustee/examiner from settling Estate Claims without the Committee's consent. Mr. Schnabel assures the Court that in seeking this alternative relief, the Committee is not seeking to dispossess the Debtors of their role as debtors-in-possession with respect to the operation of their businesses, but, rather, solely with respect to the Estate Claims against the Prepetition Banks. (Hayes Lemmerz Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) Hayes Lemmerz Int'l Inc.'s 11.875% bonds due 2006 (HLMM06USS1), DebtTraders reports, are trading at 45 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1 for real-time bond pricing. INTEGRATED HEALTH: Exclusive Period Hearing Set for Tomorrow ------------------------------------------------------------ Judge Walrath will convene a hearing in Wilmington tomorrow, Nov. 13, to consider a request by Integrated Health Services, Inc. for a further extension of its exclusive period. The extension is hotly contested by Omega Healthcare Investors, Inc. Omega argues that Integrated management is abusing exclusivity and the plan process should be opened-up to allow creditors to consider competing plans of reorganization. KMART CORP: Court Okays Signature's Engagement as Estate Broker --------------------------------------------------------------- Kmart Corporation and its 37 debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to retain and employ Signature Associates as broker and disposition consultant. Signature Associates will market and sell the leases, fees and other real estate ownership interests of the Debtors in the Sheffield Office Building located at 3270 West Big Beaver Road in Troy Michigan. Signature Associates has the exclusive right to market the property before September 30, 2002. That right is being extended on a per month basis until either of the parties decides to terminate the Retention Agreement. Pursuant to their Agreement, Signature Associates will provide these services: (a) Evaluate all viable alternatives for the disposition of the Sheffield Office Building; (b) Market the Sheffield Office Building in an organized and efficient manner; and (c) facilitate the negotiation and execution of a contract for the disposition of the Sheffield Office Building. In consideration for its services, the Debtors and Signature Associates agree to this compensation scheme: A. In the event of a lease or subleases: -- If a tenant or tenants obtained by Signature Associates or anyone for the Debtors, including the Debtors, leases the property within 180 days after the expiration of the Agreement, the Debtors will pay Signature Associates a: * 5% commission of the first five years of the lease; and * 2-1/2% percent thereafter of the aggregate gross rental. However, the commission will, in no event, be less than the first month's rent; -- In case another broker is involved on behalf of a buyer/lessee, the aggregate commission will be paid to the cooperating broker and: * an additional 2-1/2% of the first five years: and * 1-1/2% of the total aggregate gross rental thereafter will be paid to Signature Associates; -- The commission will be due at the time the lease is executed and payable -- 1/2 upon lease execution and the balance upon occupancy of the premises by the tenant. The brokerage fee, in the aggregate, will in no event be greater than $10 per square foot of leased space; -- The Debtors will pay Signature Associates a commission for any additional rent collected as a result of the tenant's expansion of its space requirements within the first 24 months of the lease term. That commission will be due at the time the expansion space is delivered to the tenant; -- If the tenant exercises an option to extend the lease term, then the Debtors will pay Signature Associates a commission at the same rate set forth based upon a term consisting of the original term plus all additional option periods, less the commission previously paid by the Debtors to Signature Associates. The commission will be due and payable upon the commencement date of each option period; -- If the lease contains an option to purchase, the commission on the sale will be payable to Signature Associates when the option to purchase is consummated at the stated price, or other terms agreed upon. The commission will be at the rate of 4% of the negotiated sale price, less the unearned commission for the unexpired portion of the Lease. B. In the event of a sale transaction: -- If a purchaser is obtained in accordance with the terms of the Agreement, the Debtors will pay Signature Associates a commission of 5% of the sale price in the event a cooperative broker is involved in the transaction -- with Signature Associates and the cooperative broker to mutually agree on their respective shares of the aggregate commission; -- In the event Signature Associates is the only broker involved in the transaction, a commission of 4% of the sale price will be paid. The commission will be due and payable at the time of the initial closing of the transaction; and -- If a sale is consummated between the Debtors and the owners of the buildings adjacent to the Sheffield Office Building, then the fees for that transaction will be 2% of the sale price. No fee will be due to Signature Associates if the Debtors enter into new or existing leases or any lease expansions by existing tenants within the building, including Penske, Sedgwick, and Sunguard. (Kmart Bankruptcy News, Issue No. 37; 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. LA PETITE ACADEMY: Gets Covenant Waiver Extension Until Friday -------------------------------------------------------------- As previously disclosed, La Petite Academy was not in compliance with certain of the financial covenants contained in the Credit Agreement for the third quarter ended April 6, 2002 and had received limited waivers thereunder on May 20, 2002 and August 15, 2002 through the periods ended August 15, 2002 and September 30, 2002, respectively. In addition, the Company was not in compliance with certain of the financial and informational covenants contained in the Credit Agreement for the fourth quarter ended June 29, 2002. On September 30, 2002, the Company and its parent, LPA Holding Corp., received a limited waiver of noncompliance with such financial and informational covenants through the period ended November 1, 2002. On November 1, 2002, the Company and LPA Holding Corp., obtained an extension of the September 30, 2002 waiver. The extension received on November 1, 2002 provides that the lenders will not exercise their rights and remedies under the Credit Agreement with respect to such non-compliance during the period through November 15, 2002. In addition, the Company expects that it will not be able to comply with certain of the financial covenants contained in the Credit Agreement for the first quarter of fiscal 2003. The Company and LPA Holding Corp. expect to continue discussions with the lenders under the Credit Agreement (a) to obtain a permanent waiver of the covenant non- compliance for the quarterly periods ending April 6, 2002 and June 29, 2002, (b) to obtain a permanent waiver of the covenant non-compliance (if any) occurring if the Company is required to restate its financial statements for prior periods, the possibility of which restatement was previously disclosed in the Company's current report filed on September 16, 2002, and (c) to amend its financial covenants, commencing with the quarterly period ending on June 29, 2002, based on the Company's current operating conditions and projections. There can be no assurance that the Company and LPA Holding Corp., will be able to obtain such a permanent waiver and/or amendment to the Credit Agreement. The failure to do so would have a material adverse effect on the Company and LPA Holding Corp. The company is the nation's No. 2 for-profit operator of preschool and childcare facilities, behind KinderCare Learning Centers. La Petite Academy operates about 725 centers that enroll some 70,000 children ranging in age from six-week-old infants to 12-year-olds. The academies are located across the country in 36 states and Washington, DC. Founded in 1968, La Petite provides both full- and part-time childcare, educational and developmental programs, workplace childcare, and Montessori schools. J.P. Morgan Partners owns a controlling interest in the company. LAIDLAW INC: Wants to Bring-In Kevin Benson as New CEO & Pres. -------------------------------------------------------------- Laidlaw Inc., and its debtor-affiliates seek the Court's authority to employ Kevin E. Benson as the new Chief Executive Officer and President of Laidlaw Inc., effective as of September 16, 2002. Mr. Benson will replace John R. Grainger, who served as LINC CEO on an interim basis. Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, anticipates that Mr. Benson's significant management experience will be instrumental in the success of the reorganized Debtors as they emerge from these Chapter 11 cases. With Mr. Benson's employment, the needed guidance and stability will surely be provided to the Debtors at a time when these needs are critical. The Debtors' Board of Directors has thoroughly checked Mr. Benson's credentials and found him to be "particularly well suited" to serve as Laidlaw Inc.'s President and CEO. Mr. Benson has 25 years of experience, including extensive experience in implementing initiatives and other business strategies to improve financial performance of various companies. Prior joining Laidlaw Inc., Mr. Benson was President and CEO of the Insurance Corporation of British Columbia. In that position, Mr. Benson led the company in a transformation with a view of preparing the company for increased competition and the potential for the deregulation and privatization of the automobile insurance sector. Mr. Benson also held major positions in several other companies. Mr. Graber relates that Mr. Benson and the Debtors have entered into an employment agreement on September 16, 2002. Accordingly, Mr. Benson agrees to devote his full time and attention to the position as President and CEO of LINC. Mr. Benson will report directly to the LINC board of directors. Other salient terms of the Agreement are: Compensation & Benefits: An $600,000 annual base salary, subject to yearly adjustments Mr. Benson will also be entitled to: (a) receive a performance bonus as provided in the Short Term Incentive Plan being developed by LINC for the fiscal years commencing September 1, 2002. The target bonus is 75% of the base salary and the maximum bonus is 150% of the base salary; (b) participate in the Supplemental Executive Retirement Plan sponsored by LINC for the benefit of it employees; (c) a $1,200 monthly automobile allowance; (d) reimbursement of business expenses; (e) 5 weeks of vacation per year; (f) standard health and welfare benefits; (g) reimbursement of initial fees up to $50,000 for professional and recreational club memberships plus annual dues thereafter; (h) tax preparation and planning reimbursement of up to $10,000 per year; and (i) reimbursement of relocation expenses form his home in Vancouver, British Columbia to LINC's corporate Headquarters. Equity Incentives: Mr. Benson will be eligible to receive grants of stock options. Termination: By the Debtors: The Debtors may, at any time, terminate Mr. Benson provided that the Debtors will pay Mr. Benson 24 months salary and benefits if he is terminated without cause; and By Mr. Benson: Mr. Benson may terminate the agreement upon 90 days notice to LINC. For a period of 24 months after termination, Mr. Benson may not engage in any business that competes with the Debtors. Change of Control: In lieu of any severance payments, Mr. Benson will be entitled to a lump sum payment equal to two times his base salary and incentive pay, plus other benefits, if his employment is terminated under certain circumstances involving the change of control of LINC. (Laidlaw Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) LODGIAN INC: Resolves License Pacts Disputes with Holiday Inn ------------------------------------------------------------- Michael J. Edelman, Esq., at Cadwalader Wickersham & Taft, in New York, informs the Court that Lodgian, Inc., and its debtor- affiliates own and operate Hotels that are currently operated as franchises of the Holiday Inn, Holiday Inn Express and Crowne Plaza pursuant to license agreements by and between the Debtors and Holiday Hospitality Franchising Inc. Numerous issues arose with respect to the franchisor's treatment under the Plan and in the reorganization cases and with respect to the cure obligations of the franchisees in the License Agreements. To resolve the issues in an efficient and cost-effective manner, the parties entered into negotiations to reach a comprehensive settlement of these issues. As a result of their negotiations, the parties negotiated a settlement to resolve these disputes. The parties agree to settle the disputes between them regarding the license agreements to avoid the further risk, expense, uncertainty, inconvenience and distraction of litigation. In addition, the stipulation will minimize the losses incurred by the Debtors' estates if this matter continues unresolved, thereby continuing to consume the Debtors' time and attention and risk a less satisfactory outcome as the result of litigation. The Stipulation also provides for the terms on which each of the Assumed License Agreements are being assumed by the franchisee. The terms and conditions contained in the Stipulation are the result of arm's-length negotiations conducted between the parties. The salient terms of the Court-approved stipulation are: -- Pursuant to the terms of the Stipulation, Franchisor will issue a new License Agreement to the respective Franchisees to replace the Santa Fe License Agreement, the Palm Desert License Agreement, the Phoenix-West License Agreement and the Phoenix-Airport License Agreement. Each New License Agreement * will be substantially in the form as contained in Franchisor's current Uniform Franchise Offering Circular; * will be effective as of the Plan Effective Date; * will expire on the tenth anniversary of the Plan Effective Date; and * will be issued with a new Product Improvement Plan; -- The Stipulation specifies the terms and cure amounts upon which the Assumed License Agreements are being assumed under the Plan. The cure amounts for the assumed agreements are: Hotel Location Cure Amount ------------------ -------------------- ----------- Holiday Inn Select Phoenix, Arizona 90,003 Holiday Inn Palm Beach, Florida 70,923 Holiday Inn Rolling Meadows, Illinois 93,767 Holiday Inn Windsor, Ontario 64,209 Holiday Inn DFW, Texas 74,742 Crowne Plaza Houston, Texas 96,518 Holiday Inn Greentree, Pennsylvania 51,768 Holiday Inn Strongsville, Ohio 67,441 Crowne Plaza Albany, New York 122,748 Holiday Inn St. Louis, Missouri 73,600 Holiday Inn Lansing, Michigan 50,921 Holiday Inn BWI Airport, Maryland 110,693 Holiday Inn Baltimore, Maryland 160,795 Holiday Inn Silver Spring, Maryland 81,634 Holiday Inn Worcester, Massachusetts 93,406 Crowne Plaza Cedar Rapids, Iowa 64,122 -- The Stipulation sets forth the capital improvement required for the Hotels and the timeframes for completing these capital improvements; -- The Stipulation provides that Lodgian is granted a $500,000 credit that reduces the amount of the Franchisees' cure obligations; -- The Stipulation provides that these three Rejected License Agreements are being rejected in accordance with the terms set forth in the Stipulation and the rejection damages associated with these contracts are: Prepetition Contingent Hotel & Location Claim Claim ------------------------------- ----------- ---------- Holiday Inn -- Augusta, Georgia $25,325 $770,576 Holiday Inn -- Wichita, Kansas 41,065 674,343 Holiday Inn -- Richfield, Ohio 24,988 789,854 If, by February 28, 2003, Franchisor enters into a new license agreement for any Rejected Hotel for at least the remaining term of the particular Rejected License Agreement, then there will be no contingent liquidated damage claim against the Franchisee relating to the Rejected Hotel. Otherwise, there will be a contingent liquidated damage claim against the Franchisee; and -- The Stipulation does not resolve issues other than with respect to the Franchise Agreements for the CCA Debtors. Mr. Edelman asserts that, given the uncertainty of success in any litigation regarding the matters in dispute, the possibility of the cost of litigation to the estates, and the material economic benefits conferred on the estates from the global resolution of all claims between the Franchisees and Franchisor, approval of the Stipulation is in the best interests of the Debtors' estates. Among other factors, the Stipulation resolves all issues between the Debtors and its largest franchisor, thereby furthering the Debtors' overall reorganization efforts and facilitating the ultimate confirmation of the Debtors' Chapter 11 Plan. (Lodgian Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) LTV CORP: Proofs of Claim against Copperweld Due by December 3 -------------------------------------------------------------- Copperweld Corporation and the remaining The LTV Corporation Debtors notify the Court and all parties-in-interest that claims bar date for all but LTV Steel is December 3, 2002. LTV Corporation's 11.75% bonds due 2009 (LTVC09USR1), DebtTraders says, 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. MARTIN INDUSTRIES: Selling All Assets to Monessen for $4.4 Mill. ---------------------------------------------------------------- Martin Industries, Inc. (OTCBB: MTIN.OB), a manufacturer of premium gas fireplaces and home heating appliances, has entered into a letter of intent with Monessen Hearth Systems Company to sell substantially all of its assets and business to Monessen for a purchase price of approximately $4.4 million. The purchase price includes a variable component that is, among other things, dependent upon the inventory and receivables on hand at the time of closing. The real estate of the Company is not included in the assets to be purchased; however, under the letter of intent, Martin would lease its manufacturing facility in Athens, Alabama to Monessen for a period of at least one year. The proceeds from the sale will be used by Martin to pay down secured bank debt owed to its primary lender. It is contemplated that the proposed sale will be accomplished through a Chapter 11 reorganization, in which case it would need approvals required under the U.S. Bankruptcy Code. The proposed sale is subject to certain other conditions including completion of a definitive purchase agreement by November 29, 2002. The sale is anticipated to close during the latter half of the first quarter of 2003. In conjunction with the signing of the letter of intent, Monessen has provided a deposit of $100,000. This deposit and the letter of intent address conditions imposed on Martin by its primary lender for an extension of Martin's line of credit to November 29, 2002. Pending completion of the proposed sale, the Company expects to continue manufacturing to fill existing and future customer orders, with certain operational assistance from Monessen. As previously reported, the Company continues to engage Philip + Company Inc., to oversee its operations. Philip + Company is a consulting company that specializes in assisting businesses that are in under-funded or distress situations. The Company also announced today that three of its Directors, Jim D. Caudle, Sr., John L. Duncan and Charles R. Martin, have resigned from the Company's Board of Directors. Mr. Caudle and Mr. Duncan are principals in MTIN, LLC, a secured creditor of the Company. Each of the three resigning Directors have advised the Company that they are supportive of the Company's restructuring efforts and the proposed sale of its assets to Monessen. In light of these resignations, the Board has set the number of Directors at three and elected William Neitzke as a Director. The Board also has promoted Mr. Neitzke to the position of President and Chief Financial Officer to replace Mr. Duncan and James W. Truitt, respectively, who have resigned their positions with the Company. Mr. Neitzke is a Senior Vice President of Philip + Company Inc. As previously disclosed, the Company had appointed Mr. Neitzke as Executive Vice President, a position he has now relinquished in connection with assuming his new position as President and CFO. Martin Industries designs, manufactures and sells high-end, pre- engineered gas and wood-burning fireplaces, decorative gas logs, fireplace inserts and gas heaters and appliances for commercial and residential new construction and renovation markets in the U.S. Additional information on Martin Industries and its products can be found at its Web site at http://www.martinindustries.com METATEC INT'L: Sept. 30 Net Capital Deficit Widens to $11 Mill. --------------------------------------------------------------- Metatec International, Inc., (OTCBB:META) announced improved results for the quarter and nine months ended Sept. 30, 2002, compared to the same periods last year. The improved results were due to continued cost-reduction and refocusing efforts initiated in 2001. Operating earnings for the quarter ended Sept. 30, 2002, were $191,000, compared to an operating loss of $2.3 million for the third quarter of 2001. The net loss for the quarter ended Sept. 30, 2002, which included losses from discontinued operations involving the previously announced sale of the company's European operations, was $2.9 million, compared to a net loss of $3.5 million for the third quarter last year. Net loss from continuing operations for the quarter ended Sept. 30, 2002, was $526,000, compared to $3.2 million for the same period last year. Third quarter revenues in 2002 were $12.2 million compared with $15.5 million in the third quarter of 2001. Sales declined principally because of decisions made in 2001 to close the company's Silicon Valley facility and to discontinue servicing certain lower-margin optical disc customers. Operating earnings for the first nine months of 2002 were $163,000, versus an operating loss of $4.6 million for the same period in the prior year. Net loss for the first nine months of 2002, which included losses from discontinued operations involving the sale of the company's European operations, was $2.7 million, or 41 cents per share fully diluted, compared with a net loss of $7.5 million for the first nine months of 2001. Net loss from continuing operations for the nine months ended Sept. 30, 2002, was $1.1 million compared to $7.2 million for the equivalent period last year. Revenues for the first nine months of 2002 were $37.3 million compared to $49.8 million for the same period a year ago due to the Silicon Valley facility closing and the discontinuation of service to certain low-margin customers. At September 30, 2002, the Company's balance sheets show a total shareholders' equity deficit of approximately $11 million. Recent Achievements Include New Supply Chain Services Contracts Christopher A. Munro, president and chief executive officer, reported that the company continues to show improved performance in its continuing operations compared to last year. Consistent with the company's focus on providing niche supply chain services, Metatec signed new assembly work and earned a significant distribution contract from its interactive entertainment customers. In addition, one of Metatec's largest and oldest business software customers renewed its contract for supply chain services. Munro said that Metatec continues to excel in the areas of quality and accuracy of service in its supply chain service operations with delivered-as-intended and inventory accuracy consistently averaging 99.9 percent. Munro also announced the recent addition of Katy F. Keane as vice president of Supply Chain and Technology Solutions. Keane is responsible for driving the development of supply chain solution design and solution set capabilities for customers. Keane offers more than 15 years of supply chain planning and demand forecasting experience with firms such as The Limited and Borden. Metatec enables companies to streamline the process of delivering products and information to market by providing technology driven supply chain solutions that increase efficiencies and reduce costs. Technologies include a full range of supply chain management services, secure Internet-based software distribution services and CD-ROM and DVD manufacturing services. Extensive real-time customer-accessible online reporting and tracking systems support all services. More information about Metatec is available by visiting the company's Web site at http://www.metatec.com MICROCELL: Secured Bank Lenders Agree to Forbear Until Dec. 23 -------------------------------------------------------------- Microcell Telecommunications Inc., (TSX:MTI.B) announced its consolidated financial and operating results for the third quarter and nine months ended September 30, 2002. Total revenues for the third quarter of 2002 were $154.5 million, compared with $146.4 million for the same quarter last year, while total operating expenses before depreciation and amortization were reduced 9% to $128.0 million from $141.0 million. Consolidated EBITDA (defined as operating income or loss, excluding restructuring charges, impairment of intangible assets, and depreciation and amortization) increased nearly five-fold to $26.6 million from $5.4 million in the third quarter of 2001. This brought consolidated EBITDA to $66.2 million for the first nine months of 2002, compared with negative $23.1 million for the same period last year, an improvement of $89.3 million. At September 30, 2002, Microcell's balance sheets show a total shareholders' equity deficit of about C$1.1 billion. "We maintained a disciplined focus on operations during the third quarter, while we continued to review and evaluate possible alternatives in addressing the Company's financial situation," said Andre Tremblay, President and Chief Executive Officer of Microcell Telecommunications Inc. "Given this context, aggressive cost control and cash preservation is essential. Accordingly, in the third quarter, we improved our operating cash flow proactively through rigorous expense management and service revenue improvement. This resulted in our best-ever quarterly EBITDA performance. In addition, despite reduced capital spending to preserve our financial resources in these difficult financial markets, we continued to enhance network quality and customer service. Going forward, as we continue our capital structure review process, balancing strict financial discipline against operational performance will be our top operating priority." In addition, Microcell ended the quarter with 1,194,733 retail Personal Communications Services customers and also provided digital PCS services to 22,062 wholesale subscribers. Other operating and financial highlights in the third quarter include the following: -- Total retail gross customer activations were 150,805, a decrease of 6% from the previous year, representing an estimated 21% market share where Fido(R) Service is offered. Postpaid subscriber additions represented 39% of the total gross additions in the quarter, while prepaid accounted for the remaining 61%. -- New retail net additions, which totalled 5,978 for the third quarter, were composed entirely of prepaid customers. In the same quarter last year, of the 66,698 new customers added, prepaid customers accounted for 15% of the total number acquired. The lower net subscriber additions year-over-year were due primarily to substantially higher churn, particularly within the postpaid customer base. -- The average monthly blended churn rate for the quarter increased to 3.9% from 2.8% in the same quarter of the previous year. Higher churn was driven primarily by an increase in Company-initiated deactivations brought about by the effects of certain programs and policies from past quarters devised to increase postpaid customer acquisition. -- Postpaid average monthly revenue per user decreased to $61.27 from $66.28 in the third quarter of 2001. The decrease resulted from lower billable minutes due to certain promotional weeknight and weekend airtime offers, and from lower roaming revenues. Although prepaid ARPU increased for the third consecutive quarter to $19.34, it was lower than the $20.94 achieved in the same quarter last year. Accordingly, blended ARPU for the quarter was $41.50, compared with $44.19 for the third quarter of 2001. -- The retail cost of acquisition improved 19% to $251 per gross addition for the third quarter, compared with $311 per gross addition for the same quarter in 2001. The year-over-year improvement was due to reduced handset subsidies and careful management of marketing-related costs, despite a lower number of gross activations. -- Capital expenditures in the quarter were reduced to $12.6 million. The amount spent was primarily related to upgrading existing infrastructure, coverage in-filling, and improving signal strength in areas where digital service is currently provided. -- As of September 30, 2002, the Company had cash, cash equivalents, short-term investments and marketable securities totalling $125.2 million, which included $28.9 million from the unwind of certain cross-currency foreign exchange rate swaps during the third quarter. Excluding the $28.9 million in cash received from the swap monetization, the Company used $25.6 million in cash in the third quarter of 2002, of which $16.4 million was for debt service. -- The Company posted a net loss of $152.3 million for the third quarter, compared with a net loss of $142.9 million for the same quarter last year. The year-over year increase was due primarily to a higher foreign exchange loss. Management's Discussion and Analysis Going-concern uncertainty The unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles on a going-concern basis, which presumes the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The Company continues to experience additional growth-related capital requirements arising from the funding of network capacity and maintenance and the cost of acquiring new PCS customers. The Company expects that it will continue to experience, for a certain period of time, operating losses and negative cash flows from operations. The Company's ability to continue as a going concern is dependent upon its ability to generate positive net income and cash flow in the future and the continued availability of financing. Achieving and maintaining positive net income and cash flow will depend upon various factors, including the level of market acceptance of its services, the degree of competition encountered by the Company, the cost of acquiring new customers, technology risks, the future availability of financing, the results of its equity investments, general economic conditions and regulatory requirements. As of September 30, 2002, the Company had cash and cash equivalents of $87.0 million and short-term investments and marketable securities of $38.3 million (excluding the short-term investment of $3.3 million in Argo II discussed in note 4 of the unaudited interim financial statements for the three- and nine- month periods ended September 30, 2002). In addition, the Company has a $257.3 million senior secured revolving credit facility, the availability of which is subject to certain conditions. The Company is subject to certain covenants in its long-term debt agreements. Unless the Company can successfully renegotiate some of these covenants, the Company believes that it will not be in compliance with these covenants in the next twelve-month period, and that such non-compliance could occur as early as the fourth quarter of 2002. If one or more covenants are not met, the Company will be in default of its long-term debt agreements, in which case the senior secured lenders may choose not to provide the Company with further access to funds under the senior secured revolving credit facility. This may also result in an acceleration of debt repayment. Given this context, there is significant uncertainty regarding the Company's ability to continue as a going concern; the Company's ability to continue as a going concern depends, in addition to elements previously mentioned, on its ability to reduce its financing costs and improve its liquidity and operating performance. The Company retained the services of a financial advisor and formed a Special Committee of its Board of Directors, composed of independent directors. In light of the going-concern uncertainty, the mandate of the Special Committee is to review and evaluate the alternatives of the Company with a view to reducing its financing costs and improving its liquidity. These may take the form of a debt restructuring, recapitalization, potential capital infusion, or other types of transactions, including a court supervised reorganization. To this end, the Special Committee will obtain the advice and recommendations of the Company's financial advisor. The Company continues to evaluate the possible alternatives to reduce its financing costs and improve its liquidity and is currently in discussions with a steering committee of its existing secured bank lenders, as well as an ad hoc committee of its existing unsecured high-yield note holders. Subsequent to the end of the third quarter, the Company entered into a forbearance and amending agreement with its secured bank lenders in which they have agreed to forbear until December 23, 2002, subject to certain conditions, the exercise of any rights with respect to certain possible defaults. The covenants to which the forbearance agreement applies relate to the possibility of non- payment of interest on the Company's senior discount notes due 2006 and non-payment to a vendor under a material contract. The Company has not made any decision as to whether to make these payments and continues to evaluate the situation. These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue in business. Company Overview The following is a discussion and analysis of the consolidated financial condition and results of operations of Microcell Telecommunications Inc., for the three- and nine-month periods ended September 30, 2002 and 2001, and should be read in conjunction with the consolidated financial statements of Microcell for the year ended December 31, 2001. Microcell was incorporated under the laws of Canada by articles of incorporation dated October 16, 1992, and conducts its business through five wholly owned subsidiaries which are: Microcell Capital II Inc., Microcell Connexions Inc., Microcell Labs Inc., Microcell Solutions Inc., and Inukshuk Internet Inc. The Company carries out its operations through three strategic business segments: Personal Communications Services, Wireless Internet and Investments. Under its PCS business segment, the Company is a provider of PCS in Canada under one of the two national 30 MHz PCS authorizations awarded in Canada in 1995 and renewed for five years in March 2001. The terms and conditions for the renewal of the PCS License are identical to those established for the first term of the PCS License in April 1996. Through its Wireless Internet business segment, the Company provides mobile Internet services to its PCS subscribers and plans to build a high-speed Internet Protocol-based data network using Multipoint Communications Systems technology in the 2500 MHz range. The Company plans to build the MCS network through Inukshuk. However, due to the current financial context and to the fact that building this type of network would require significant additional financing from external sources, the Company has decided to suspend indefinitely the building of its MCS network. Finally, under its Investments business segment, the Company invests in various wireless or high technology companies and, as a result, is exposed to normal market risk fluctuation, which may be significant. Microcell Telecommunications Inc., is a major provider of telecommunications services in Canada dedicated solely to wireless. The Company offers a wide range of voice and high- speed data communications products and services to more than 1.2 million customers. Microcell operates a GSM network across Canada and markets Personal Communications Services (PCS) and General Packet Radio Service (GPRS) under the Fido(R) brand name. Microcell Telecommunications has been a public company since October 15, 1997, and is listed on the Toronto Stock Exchange under the stock symbol MTI.B. MILACRON INC: Narrows Third Quarter Operating Loss to $3.4 Mill. ---------------------------------------------------------------- Milacron Inc. (NYSE: MZ) -- whose corporate credit rating is affirmed by Standard & Poor's at 'double-B-minus' -- announced that its loss from continuing operations - plastics technologies and industrial fluids - narrowed to $3.4 million before restructuring charges in the third quarter, down from $7.3 million in the third quarter a year ago and from $5.9 million in the second quarter this year on relatively steady sales and orders. During the third quarter, the company also reduced its debt net of cash by more than $300 million. Third Quarter Net Earnings Milacron had third quarter net earnings of $14.5 million, or $0.43 per share, which included an after-tax gain of $29.4 million, on the sale of its Valenite insert cutting tool subsidiary. This compared to a net loss of $18.4 million in the third quarter of 2001. Third Quarter Results From Continuing Operations New orders from continuing operations - plastics technologies and industrial fluids - in the third quarter were $179 million, essentially flat after currency translation effects with $175 million a year ago. Sales were $173 million versus $176 million in 2001. The loss from continuing operations before restructuring charges was $3.4 million in the third quarter of 2002, compared to a loss of $7.3 million in the third quarter a year ago. After-tax restructuring charges for continuing operations were $1.1 million in the third quarter of 2002, compared to $3.2 million in the year-ago quarter. In accordance with newly adopted accounting rules, amortization of goodwill is excluded from earnings in 2002 but had the effect of reducing third- quarter 2001 earnings from continuing operations by $1.9 million after tax. "We had a number of significant accomplishments in the third quarter," said Ronald D. Brown, chairman and chief executive officer. "We completed two major divestitures and used the cash proceeds to reduce our debt and strengthen our balance sheet. Positive effects from our recent restructuring actions were reflected in improved operating results. And, through intensified focus on Lean and working capital management, we continued to achieve positive free cash flow in a difficult environment," he said. Manufacturing margins in the third quarter of 2002 were 18.2%, a substantial improvement from year-ago levels. Operating cash flow or EBITDA (earnings before interest, taxes, depreciation and amortization) before restructuring costs also improved significantly to $5.5 million from a negative $0.1 million in the third quarter last year. For the first three quarters of 2002, EBITDA before restructuring costs totaled $14.9 million, while net cash provided by operations including cash restructuring costs exceeded $22 million. Proceeds from divestitures and cash generated from operations were used to reduce Milacron's total debt net of cash to $182 million from $488 million at the beginning of the quarter. The company ended the quarter with $114 million in cash and only $42 million of debt borrowed under its $110-million revolving credit facility. Segment Results Plastics Technologies - New orders in the quarter of $154 million were flat with $151 million a year ago after adjusting for currency translation. Sales of $149 million were down $3 million from the reported third quarter of 2001 and down $8 million after adjusting for currency translation. Shipments of injection molding machines and related parts and services held steady while there were declines in blow molding machines, and mold bases primarily in Europe. Helped by restructuring measures implemented over the past year, profitability improved considerably. On a pre-tax operating basis before restructuring charges, the segment earned $0.6 million compared to a loss of $9.5 million in the year-ago quarter. Industrial Fluids - New orders and sales of $25 million were flat with those of the third quarter a year ago after adjusting for currency translation. Pre-tax operating earnings were $3.4 million. This compared to $5.5 million in the third quarter of 2001, which, however, included favorable metalworking group adjustments. Excluding these adjustments, operating earnings in the third quarter of 2002 were slightly higher than the year-ago levels. Discontinued Operations In August, Milacron sold its North American metalcutting insert tool business, Valenite, to Sandvik for $175 million and its European and Indian metalcutting tool businesses, Widia and Werko, to Kennametal Inc., for 128>188 million. Both sale prices remain subject to post-closing adjustments and related transaction costs. Milacron's round tool and grinding wheel operations have also been classified as "discontinued," reflecting the company's intention to find strategic solutions for those businesses in the near future. In the third quarter, the round tool and grinding wheel businesses had after-tax operating losses of $2.9 million on $18 million in sales. Combined after-tax losses in the quarter from all discontinued operations - Valenite, Widia, Werko, round tools and grinding wheels - were $10.4 million on sales of $70 million. Pension Plan Assets Financial market declines have reduced the asset value of Milacron's primary U.S. defined benefit plan and will likely result in a non-cash charge to equity in the fourth quarter, which, if measured as of September 30, would be approximately $90 million after tax. The charge will have no effect on 2002 net income. Given the plan's lower asset value, Milacron expects little or no pension income in 2003, compared to approximately $9 million in 2002. At the plan's current funding level, the company will not be required to make any cash contribution before 2004, and, based on current projections, the 2004 contribution required would be less than $10 million. Estimated Charge for Goodwill Impairment As previously announced, in accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," Milacron will take a charge for goodwill impairment in 2002. The charge is now estimated between $200 million and $210 million before tax, or $155 million to $165 million after tax. The company intends to announce the specific charge, which is retroactive to the beginning of 2002, when it releases fourth quarter results in early 2003. Outlook "We have yet to see convincing signs of a recovery in our markets," Brown said. "On the other hand, there has been no further deterioration either, as order rates have generally stabilized for the past several quarters. We remain committed to returning Milacron to profitability, even at these low levels of demand. Through continued cost cutting and efficiency improvements we still expect to approach break-even in the fourth quarter. "Looking to 2003, we face a number of obstacles. In addition to continued low levels of capital spending due to the lingering recession in the manufacturing sector, the stock market remains depressed by economic and political uncertainties worldwide, which has contributed to declines in pension income and increased insurance costs among other things. While we can't control these macro factors, we will concentrate on what we can control. We are currently finalizing plans for further cost reductions and consolidation of our manufacturing operations. And we continue to focus on better serving our customers through new products, enhanced services and faster response times - all of which go hand in hand with improved operating efficiency. Given these measures and their expected benefits, but assuming no strong economic recovery in the near term, at this time we believe 2003 will be a break-even year for Milacron. "It's important to note that in these difficult times we are strengthening our competitive position as a global leader in plastics and industrial fluids, which will enhance our ability to respond quickly and fully to the upturn when it comes and will help us maximize shareholder value in the long run," he said. First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. For further information, visit http://www.milacron.com MILITARY RESALE: Ability to Continue Operations Uncertain --------------------------------------------------------- Prior to November 15, 2001, Military Resale Group Inc., did not generate any signification revenue, and accumulated no significant assets, as it explored various business opportunities. On November 15, 2001, the Company acquired 98.2% of the issued and outstanding capital stock of Military Resale Group, Inc., a Maryland corporation, in exchange for a controlling interest in MRG-Maryland's publicly-held "shell" corporation. For financial reporting purposes, MRG-Maryland was considered the acquirer in such transaction. As a result, the historical financial statements for any period prior to November 15, 2001 are those of MRG-Maryland. Total revenue for the three months ended June 30, 2002 of $1,721,912 reflected an increase of $557,030, or approximately 47.8%, compared to total revenue of $1,164,882 for the three months ended June 30, 2001. Revenues are derived in either one of two ways: in the majority of instances, the Company purchases products from manufacturers and suppliers for resale to the commissaries it services. In such cases, the Company resells the manufacturer's or supplier's products to the commissaries at generally the same prices it pays for such products, which prices generally are negotiated between the manufacturer or supplier and the Defense Commissary Agency. Revenue is recognized as the gross sales amount received by Military Resale Group from such sales, which includes (i) the purchase price paid by the commissary plus (ii) a negotiated storage and delivery fee paid by the manufacturer or supplier. In the remaining instances, the Company acts as an agent for the manufacturer or supplier of the products it sells, and earns a commission paid by the manufacturer or supplier, generally in an amount equal to a percentage of the manufacturer's or supplier's gross sales amount. In such cases, revenue is recognized as the commission received on the gross sales amount. Gross profit for the three months ended June 30, 2002 increased by $96,469, or approximately 57.5%, compared to the three months ended June 30, 2001, from $167,742 for the three months ended June 30, 2001 to $264,211 for the three months ended June 30, 2002. This increase was attributable primarily to the addition of new products that the Company purchases for resale to the commissaries it services. Military Resale Group Inc., incurred a net loss of $336,715 for the three months ended June 30, 2002 as compared to a net loss of $36,819 for the three months ended June 30, 2001. Total revenue for the six months ended June 30, 2002 of $3,139,170 reflected an increase of $883,881, or approximately 39.2%, compared to total revenue of $2,255,289 for the six months ended June 30, 2001. Resale revenue for the six months ended June 30, 2001 of $3,015,024 reflected an increase of $941,648, or approximately 45.4%, compared to resale revenue of $2,073,376 for the six months ended June 30, 2001. For the six months ended June 30, 2002, approximately 71.9% of gross profit was derived from sales involving resale revenue compared to approximately 36.6% for the six months ended June 30, 2001. These increases were attributable primarily to the addition of the new products the Company began offering during the 2001 period, as well as the implementation of Military Resale's long term strategy to increase the ratio of sales on a resale basis rather than a commission basis. Gross profit for the six months ended June 30, 2002 increased by approximately $155,817, or approximately 54.3%, compared to the six months ended June 30, 2001, from $286,731 for the six months ended June 30, 2001 to $442,548 for the six months ended June 30, 2002. Primarily as a result of increased operating and interest expenses the Company incurred a net loss of $730,655 for the six months ended June 30, 2002 as compared to a net loss of $134,241 for the six months ended June 30, 2001. At June 30, 2002, Military Resale Group had a cash balance of approximately $6,000. Its principal source of liquidity has been borrowings. Since November 2001, it has funded its operations primarily from borrowings of approximately $410,000. In the fourth quarter of 2001 and the first and second quarters of 2002, it issued $260,000 aggregate principal amount of convertible promissory notes that mature on December 31, 2002 and bear interest at the rate of 8% per annum prior to June 30, 2002 and 9% per annum thereafter. In April 2002, $150,000 aggregate principal amount of 9% Convertible Notes (and $2,380 accrued interest thereon) was converted by the holders into an aggregate of 1,993,573 shares of Company common stock. The remaining 9% Convertible Notes are convertible at any time and from time to time by the noteholders into a maximum of 1,153,900 shares of Company common stock (subject to certain anti- dilution adjustments) if the 9% Convertible Notes are not in default, or a maximum of 2,307,800 shares of common stock (subject to certain anti-dilution adjustments) if an event of default has occurred in respect of such notes. The terms of the 9% Convertible Notes require Military Resale Group to register under the Securities Act of 1933 the shares of its common stock issuable upon conversion of the 9% Convertible Notes not later than December 31, 2002. The Company's current cash levels, together with the cash flows generated from operating activities, are not sufficient to enable it to execute its business strategy. As a result, Military Resale Group intends to seek additional capital through the sale of up to 5,000,000 shares of its common stock. In December 2001, it filed with the Securities and Exchange Commission a registration statement relating to such shares. Such registration statement has not yet been declared effective, and there can be no assurance that he Securities and Exchange Commission will declare such registration statement effective in the near future, if at all. In the interim, the Company intends to fund operations based on its cash position and the near term cash flow generated from operations, as well as additional borrowings. In the event it sells only a nominal number of shares (i.e. 500,000 shares) in its proposed offering, the Company believes that the net proceeds of such sale, together with anticipated revenues from sales of its products, will satisfy capital requirements for at least the next 12 months. However, the Company would require additional capital to realize its strategic plan to expand distribution capabilities and product offerings. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Actual financial results may differ materially from the stated plan of operations. Assuming that Military Resale Group receives a nominal amount of proceeds from its proposed offering of common stock, it expects capital expenditures to be approximately $200,000 during the next twelve months, primarily for the acquisition of an inventory control system. It is expected that its principal uses of cash will be to provide working capital, to finance capital expenditures, to repay indebtedness and for other general corporate purposes, including sales and marketing and new business development. The amount of spending for any particular purpose is dependent upon the total cash available to it and the success of its offering of common stock. At June 30, 2002, it had liquid assets of $529,076, consisting of cash and accounts receivable derived from operations, and other current assets of $336,367, consisting primarily of inventory of products for sale and/or distribution. Long term assets of $166,690 consisted primarily of warehouse equipment used in operations. Current liabilities of $1,638,116 at June 30, 2002 consisted of approximately $1,108,770 of accounts payable and $339,755 for the current portion of capitalized leases and notes payable, of which approximately $210,000 was payable to officers or other affiliates. The Company's working capital deficit was $772,673 as of June 30, 2002. MISSISSIPPI CHEMICAL: Credit Facility Extended to Nov. 10, 2003 --------------------------------------------------------------- Mississippi Chemical Corporation (NYSE: GRO) and its existing bank group, led by Harris Trust and Savings Bank, have executed a commitment letter to amend and restate the company's current secured credit facility. Pursuant to the commitment letter, the credit facility will be extended to Nov. 10, 2003, and will reduce the total amount available to borrow under the facility to $165 million from $200 million. As of Nov. 7, 2002, the current amount outstanding under the credit facility was approximately $119 million. It is anticipated that closing the extended credit facility will be effected by mid-November at which time an 8-K will be filed with the Securities and Exchange Commission to provide details of the amended and restated credit facility. The commitment letter is subject to various conditions, including definitive loan documentation satisfactory to the banks. Charles O. Dunn, president and chief executive officer, said, "We are pleased to have extended our relationship with our current lenders with a credit facility which we believe will provide adequate working capital over the next year." Mississippi Chemical Corporation, through its wholly owned subsidiaries, produces and markets all three primary crop nutrients. Nitrogen, phosphorus and potassium-based products are produced at facilities in Mississippi, Louisiana and New Mexico, and through a joint venture in The Republic of Trinidad and Tobago. At March 31, 2002, Mississippi Chemical's balance sheets show a working capital deficit of about $18 million. MORTON HOLDINGS: Wants to Appoint Donlin Recano as Claims Agent --------------------------------------------------------------- Morton Holdings, LLC and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Delaware to hire Donlin, Recano & Company, Inc., as Claims, Noticing and Balloting Agent. The Debtors tell the Court that their creditor body would be burdensome for the Clerk of Court, and the most effective and efficient manner of noticing of noticing these creditors and interested parties is to hire an independent third party to act as agent of the Court. As Claims Agent, Donlin Recano is expected to: a) prepare and serve required notices in these chapter 11 cases; b) within 5 business days after the service of a particulart notice, file with the Clerk's Office a certificate or affidavit of service that includes: i) a copy of the notice served, ii) an alphabetical list of persons on whom the notice was served, along with their addresses, and iii) that date and manner of service; c) maintain copies of all proofs of claim and proofs of interest filed in this case; d) maintain official claims registers in this case by docketing all proofs of claim and proofs of interests in a claims database; e) implement necessary security measures to ensure the completeness and integrity of the claims register; f) transmit to the Clerk's Office a copy of the claims register on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interests and make such list available upon request to the Clerk's Office or any party in interest; h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in this case without charge during regular business hours; i) record all transfers of claims and provide notice of such transfers as requires by Rule 3001(e); j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k) provide temporary employees to process claims as necessary; l) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and m) provide such other claims processing, noticing, balloting and related administrative services as may be requested periodically by the Debtors. Donlin Recano will charge the Debtors at its professional hourly rates, ranging from $65 per hour to $210 per hour for principals. Morton Holdings, LLC and its debtor-affiliates are in the contract manufacturing business, specifically in connection with highly-engineered plastic components and sub-assemblies for industrial, agricultural and recreational vehicle original equipment manufacturers. The Company filed for chapter 11 protection on November 1, 2002. Jeremy W. Ryan, Esq., and Norman L. Pernick, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million each. NATIONAL AIRLINES: Mercury Minimizes Impact of Airline Shutdown --------------------------------------------------------------- Mercury Air Group, Inc., (Amex: MAX; PCX) announces that National Airlines, Inc., ceased operations effective November 6, 2002. Mercury, through its wholly owned subsidiary MercFuel, Inc., has been providing fuel to National since May 1999. In December 2000, National filed for bankruptcy protection and Mercury continued to sell fuel to National on a secured basis under the auspices of the bankruptcy court and consequently the remaining accounts receivable of approximately $375 thousand is adequately secured. "With the cessation of National's operations, we have lost a good business partner," stated Joseph Czyzyk, CEO and President of Mercury Air Group, Inc. "As a result of our improved credit policies, we took the necessary precautions to minimize our risk and, except for the loss of future business, we do not anticipate any significant losses as a result of this business closure. We have taken appropriate action to redistribute the fuel supply to existing clients and new ones as well." Los Angeles-based Mercury Air Group (Amex: MAX; PCX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates four business segments worldwide: Mercury Air Centers, MercFuel, Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please visit http://www.mercuryairgroup.com NATIONAL STEEL: Plan-Filing Exclusivity Stretched Until April 7 --------------------------------------------------------------- National Steel Corporation, its debtor-affiliates, and the Official Committee of Unsecured Creditors jointly obtained Court approval to extend the exclusive filing and solicitation periods for another five months. Accordingly, the Court granted the Debtors the exclusive right to file a Plan until April 7, 2003, and the exclusive right to solicit acceptances of that Plan from their creditors until June 9, 2003. National Steel Corporation, a Delaware corporation, is one of the largest integrated steel producers in the United States and is engaged in the manufacture and sale of a wide variety of flat rolled carbon steel products, including hot-rolled, cold-rolled, galvanized, tin and chrome plated steels. National Steel targets high value-added applications of flat rolled carbon steel for sale primarily to the automotive, construction and container markets. The Company filed for Chapter 11 reorganization on March 6, 2002, in the U.S. Bankruptcy Court for the Northern District of Illinois Eastern Division. NATIONAL STEEL: Q3 2002 Results Show Significant Improvement ------------------------------------------------------------ National Steel Corporation (OTC Bulletin Board: NSTLB) reported net income of $3.5 million for the third quarter of 2002. This represents a significant improvement over the net loss of $34.0 million for the second quarter of 2002 and the net loss of $152.8 million for the third quarter of 2001. The third quarter 2002 reported net income includes a $3.2 million gain on the sale of undeveloped real estate finalized during the quarter and an $8.3 million charge for the annual planned maintenance outage at its pellet operation. The third quarter 2001 results were negatively impacted by a $10.9 million charge related to the write-off of a portion of a new computer system. "Our return to profitability is the result of not only recent demand and price improvements but also our focus on improving our product mix and quality and our continuing cost reduction efforts," stated Mineo Shimura, chairman and chief executive officer. Net sales for the current quarter were $694.2 million, an increase of 9% from the third quarter of 2001, while steel shipments for the quarter of 1,327,000 tons were 12% lower than the year-earlier period. The lower shipment levels were primarily the result of continuing to keep one of its blast furnaces at the Great Lakes operations idled. The Company achieved a $93 per ton improvement in average selling price from the third quarter of 2001 and a $24 per ton improvement over the second quarter of 2002. This improvement was achieved by increasing the shipment of value-added products to 63% of total prime shipments in the third quarter of 2002 as compared to 52% in the third quarter of 2001 and by capitalizing on increases in spot market prices for the Company's products. "Our customers continue to support our efforts to emerge from Chapter 11. We have significantly improved our sales to the automotive market, which is one of our key strategies. Our shipments were over 60% higher than the prior year to this market," stated Mr. Shimura. The average selling price improvement along with lower raw materials costs, better yields and lower overall spending resulted in the Company reporting an operating profit of $8.2 million before reorganization items for the third quarter of 2002. This is an improvement of $124.2 million from the year- earlier quarter. In addition, EBITDA (earnings before interest, taxes, depreciation and amortization) was $48.6 million for the third quarter of 2002. The Company has generated positive EBITDA for five consecutive months and has a positive EBITDA for the year to date. Financial Position and Liquidity Total liquidity from cash and availability under the Company's DIP credit facility, after adjusting for all required reserves and letters of credit outstanding, amounted to $237 million at September 30, 2002 an increase of $24 million as compared to June 30, 2002. Total borrowings under the DIP facility amounted to $96 million at September 30, 2002 as compared to $78 million at June 30, 2002. The increase in borrowing levels during the third quarter 2002 is primarily the result of increased raw materials inventory levels in anticipation of increased steel production at the Great Lakes operations and steel inventory increases to support the Company's sales and marketing efforts. At September 30, 2002, the Company's balance sheets show a total shareholders' equity deficit of about $392 million. "Our liquidity position continues to improve and remains at a high level. This reflects our focus on cash flow and the support we are receiving from the vendor community. Many of our vendors and suppliers have returned us to normal payment terms. This should provide great comfort to our vendors, customers and employees," stated Mr. Shimura. During the third quarter 2002 the Company funded $6 million in capital expenditures. Total capital spending for the first nine months of 2002 amounted to $14 million. It is expected that total capital spending for 2002 will be approximately $45 million with the increased spending in the fourth quarter of 2002 occurring at the Great Lakes blast furnace and as part of other scheduled maintenance outages throughout the Company. Outlook It is anticipated that steel shipments in the fourth quarter of 2002 will be at approximately the same level as the third quarter of 2002. Average selling prices could decline by 2% - 3% for the quarter given the restarting of several competitors' idled facilities affecting overall steel supply. Additionally, the Company anticipates a seasonal decline in the automotive and container markets, which will negatively affect product mix. Several maintenance outages are scheduled for the fourth quarter which are anticipated to negatively impact costs by $15 to $20 million as compared to the third quarter of 2002. The combination of these items is expected to result in a net loss for the fourth quarter. Borrowings under the DIP facility are expected to increase during the fourth quarter primarily as a result of the planned maintenance outages, increases in capital spending and the normal seasonal build-up of raw materials inventories. It is expected that availability under the DIP facility will be in excess of $200 million at the end of the year providing strong liquidity as the Company goes into 2003. As a result of continuing declines in the financial markets, which have negatively impacted the value of pension assets and the utilization of a lower interest rate to measure pension liabilities, the Company expects to increase its minimum pension liability at December 31, 2002. This will result in a non-cash charge to other comprehensive income of approximately $450 million during the fourth quarter of 2002. Headquartered in Mishawaka, Indiana, National Steel Corporation is one of the nation's largest producers of carbon flat-rolled steel products, with annual shipments of approximately six million tons. National Steel Corporation employs approximately 8,200 employees. Please visit the Company's Web site at http://www.nationalsteel.comfor more information on the Company and its products and facilities. National Steel Corp.'s 9.875% bonds due 2009 (NSTL09USR1) are trading at 39 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NSTL09USR1 for real-time bond pricing. NORTEL: Revises Breakdown of Enterprise & Wireline Revenues ----------------------------------------------------------- Nortel Networks Corporation (NYSE:NT) (TSX:NT.) announced a revised breakdown of historical revenues for its Wireline Networks and Enterprise Networks segments. As a result of a change effected in the third quarter of 2002 in the structure of its business, Nortel Networks first reported segment information that included a breakdown of revenues between the Wireline Networks and Enterprise Networks segments on October 17, 2002. Prior to that time, these two segments had formed a single segment in Nortel Networks financial statements. The breakdown of revenues between these two segments appeared in Nortel Networks Current Report on Form 8-K dated October 22, 2002. The attached table includes a revised breakdown of historical revenues between the Wireline Networks and Enterprise Networks segments that reflects a reclassification for periods prior to the third quarter of 2002 of certain amounts between Wireline Networks and Enterprise Networks. Overall Nortel Networks consolidated revenues and revenues for the Wireless Networks and Optical Networks segments for the periods indicated were not impacted. After giving effect to this reclassification, and compared to the second quarter of 2002, Enterprise Networks segment revenues decreased 3 percent, and Wireline Networks segment revenue decreased 18 percent, in the third quarter of 2002. Compared to the same period last year, Enterprise Networks segment revenues decreased 15 percent, and Wireline Networks segment revenues decreased 46 percent, in the third quarter of 2002. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2) are trading at 53 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for real-time bond pricing. NOVA CDO: S&P Hatchets Notes' Ratings to Low-B and Junk Level ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class C-1, C-2, D-1, and D-2 notes issued by NOVA CDO 2001 Ltd., an arbitrage CBO transaction originated in 2001, and removed them from CreditWatch with negative implications, where they were placed Oct. 16, 2002. At the same time, the rating on the class B notes is affirmed and removed from CreditWatch due to the level of overcollateralization remaining to support them. Additionally, the rating on the class A notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The lowered ratings on the class C and D notes reflect factors that have negatively affected the credit enhancement available to support the rated notes since the transaction was originated in May 2001. These factors include par erosion of the collateral pool securing the rated notes and deterioration in the credit quality of the performing assets within the pool. Standard & Poor's notes that $14.5 million (or approximately 5%) of the assets currently in the collateral pool come from obligors rated 'D' or 'SD'. As a result of asset defaults and credit risk sales at distressed prices, the overcollateralization ratio for the transaction has deteriorated since the transaction was originated. As of the Oct. 16, 2002 trustee report, the class D overcollateralization ratio test was failing, with a ratio of 99.7%, versus the minimum required ratio of 100%. The credit quality of the collateral pool has also deteriorated slightly since the transaction was originated. Currently, $39.7 million (or approximately 14%) of the performing assets in the collateral pool come from obligors whose ratings are on CreditWatch negative. Of the performing assets in the pool, $10 million (or approximately 3.4%) come from obligors with ratings in the triple-'C' range. Standard & Poor's has reviewed current cash flow runs generated for NOVA CDO 2001 Ltd., to determine the level of future defaults the transaction can withstand under various stressed default timing scenarios while still paying all of the rated interest and principal due on the class C and D notes. After comparing the results of these cash flow runs with the projected default performance of the current collateral pool, Standard & Poor's determined that the ratings assigned to the class C and D notes were no longer consistent with the credit enhancement available, resulting in the lowered ratings. Standard & Poor's will continue to monitor the future performance of the transaction to ensure that the ratings assigned to the notes remains consistent with the credit enhancement available. Ratings Lowered and Removed from Creditwatch Negative NOVA CDO 2001 Ltd. Fixed- and floating-rate notes Rating Balance (Mil. $) Class To From Original Current C-1 B+ BB-/Watch Neg 3.5 3.5 C-2 B+ BB-/Watch Neg 9.7 9.7 D-1 CCC B-/Watch Neg 9.4 9.4 D-2 CCC B-/Watch Neg 3.6 3.6 Rating Affirmed and Removed from Creditwatch Negative NOVA CDO 2001 Ltd. Fixed- and floating-rate notes Rating Balance (Mil. $) Class To From Original Current B BBB BBB/Watch Neg 17.1 17.1 Rating Affirmed NOVA CDO 2001 Ltd. Fixed- and floating-rate notes Balance (Mil. $) Class Rating Original Current A AAA 237 237 NRG ENERGY: Lenders Declare $1.1-Billion Debt Due and Payable ------------------------------------------------------------- On November 6, lenders to NRG Energy, Inc., a wholly owned subsidiary of Xcel Energy (NYSE:XEL), accelerated approximately $1.1 billion of NRG's debt under a construction revolver financing facility, rendering the debt immediately due and payable. This action terminated the cash collateral call extension letter in effect between NRG and its major lenders. The extension letter was previously scheduled to expire November 15. Based on discussions with the construction revolver lenders, it is NRG's understanding that the administrative agent, Credit Suisse First Boston, issued the acceleration notice to preserve certain rights under the construction revolver financing agreements. NRG believes that the administrative agent intends to forbear in the immediate exercise of any rights and remedies against the company. "We do not believe that the construction revolver lenders' action will affect the course of NRG's restructuring discussions," said Richard C. Kelly, NRG president and chief operating officer. "We do not believe that this action will adversely impact NRG's ongoing restructuring efforts and we will continue working with our lenders toward an overall restructuring of NRG's debt." NRG Energy develops and operates power-generating facilities. Its operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. The company provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth- largest combination natural gas and electricity company in the United States. Company headquarters are located in Minneapolis. NRG Energy Inc.'s 8.625% bonds due 2031 (XEL31USR1), DebtTraders reports, are trading 19 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL31USR1for real-time bond pricing. NRG ENERGY: Denies Reports re Filing for Chapter 11 Protection -------------------------------------------------------------- In response to an article in Friday's Wall Street Journal, NRG Energy, Inc., a wholly owned subsidiary of Xcel Energy (NYSE:XEL), stated NRG has not filed for Chapter 11 and has no imminent plans to file for bankruptcy protection. Acknowledging that the article accurately portrayed elements of the restructuring proposal NRG presented to representatives of its bank lenders and bondholders earlier this week, Richard C. Kelly, NRG president and chief operating officer, said, "We have begun the process of negotiating with our various bank and bondholder constituencies regarding specific points in the restructuring proposal. We anticipate that those negotiations will take several weeks. Consistent with what we have said previously, a Chapter 11 filing may ultimately be the means to implement any restructuring proposal agreed to with our creditors." "Our customers and vendors should be reassured that NRG has sufficient cash and liquidity to meet its current operating obligations," Kelly continued. "Any Chapter 11 filing should have little, if any, impact on employees and plant operations as we would continue to run our businesses and plants in the same manner as before and without interruption." NRG Energy, a wholly owned and unregulated subsidiary of Xcel Energy, develops and operates power generating facilities. NRG's operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. The company provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth- largest combination natural gas and electricity company in the U.S. Company headquarters are located in Minneapolis. ONLINE GAMING: Ahead Investments Discloses 81.7% Equity Stake ------------------------------------------------------------- Ahead Investments, Ltd., beneficially owns 78,698,120 shares of the common stock of Online Gaming Systems, Ltd., with sole powers of voting and disposing of all stock held. The total amount of 78,698,120 shares represents 81.7% of the outstanding common stock of Online Gaming. Ahead Investments, Ltd, ia a South Africa corporation and a 100% owned subsidiary of Hosken Consolidated Investments Ltd. HCI is a South Africa-based investment holding company that focuses its activities in telecommunications and information technology, media and broadcasting, interactive gaming and entertainment and financial services. HCI is a publicly traded company on the Johannesburg Stock Exchange. The registered offices for HCI are at 3rd Floor, M B House, 641 Ridge Road, Durban, 4001 South Africa. All of HCI's Directors are South African citizens. The Executive Chairman (Golding) and Chief Executive Officer and Director (Copelyn) of HCI are Directors of Online Gaming Systems, Ltd., and Copelyn is the Chief Executive Officer of Online Gaming Systems, Ltd. HCI has funded the operating shortfalls of Online Gaming Systems, Ltd. via convertible notes issued by Ahead. Generally, HCI issues equity on the Johannesburg Stock Exchange, and provides funds to Online Gaming via loans from Ahead. During the first quarter of 2002, HCI converted $3,600,000 of its convertible debt into 60,000,000 shares of Online Gaming Systems' common stock. Prior to the conversion, Ahead owned 18,698,120 shares of Online Gaming, or about 55 percent of the then outstanding shares. These shares were purchased or converted at higher price levels than during the first quarter of 2002. The conversion price was set at $.06, the closing price of Online Gaming's common stock on November 27, 2001 when it informed Online Gaming Systems Ltd. of its intention on conversion of certain of its convertible notes. Ahead has acquired the additional shares for investment purposes, and may seek to acquire additional shares as it deems appropriate. 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. OWENS CORNING: Wants to Restructure Chinese JV's Debts ------------------------------------------------------ Owens Corning and its debtor-affiliates ask the Court to: A. authorize and approve the Standstill and Amendment Agreement by and among Owens Corning, Owens-Corning (Guangzhou) Fiberglas Co. Ltd., Owens-Corning (Shanghai) Fiberglas Co., Ltd., and certain lenders consisting of Standard Chartered Bank, Societe Generale and KBC Bank NV; B. authorize the consummation of the transactions and the execution of the agreements contemplated in the Standstill Agreement; and C. grant the Lenders an allowed, prepetition general unsecured claim against the Debtors for $22,000,000, conditioned on the closing of the Standstill Agreement. Chinese Joint Ventures Maria Aprile Sawczuk, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the Court that the Debtors currently hold an indirect 100% common equity interest in Owens Corning (China) Investment Company Ltd. through its wholly owned non-Debtor subsidiary, Owens-Corning Cayman (China) Holdings. The Debtors also directly and indirectly controls 97.57% of the common equity of OC Guangzhou and 90% of the common equity of OC Shanghai. Ms. Sawczuk explains that OC Guangzhou and OC Shanghai are companies organized under the laws of China for the purpose of manufacturing, marketing, distributing and selling fiberglass insulation products used for residential and commercial purposes. The two companies have plants that are environmentally sound and are state-of-the art. OC Guangzhou is currently capable of producing 8,000 tons of glasswool products per year while OC Shanghai is currently capable of producing 12,000 tons of glasswool products per year. Prospects for Chinese Businesses Ms. Sawczuk relates that while the long-term outlook for OC Guangzhou and OC Shanghai are positive, their financial conditions have been negatively impacted by lower industry demand, lower worldwide prices than initially anticipated and a proliferation of competition. These factors have resulted in OC Guangzhou and OC Shanghai being unable to service their current debt repayment schedule, prompting the need to restructure OC Guangzhou's and OC Shanghai's financial obligations to prevent them from being forced into liquidation proceedings in China. Since the Petition Date, the Debtors have been engaged in ongoing negotiations with Lenders to effectuate the continued servicing of a revolving loan facility and to settle certain setoff rights asserted by Standard Chartered Bank. This is to permit the Debtors to realize future value and profits from OC Guangzhou and OC Shanghai. Debt Structure The financial obligations of OC Guangzhou and OC Shanghai stem from: A. The March 12, 1998 $45,000,000 Revolving Loan Facility: The Debtors are guarantors with respect to the Revolving Loan Facility. As of the Petition Date, OC Guangzhou has a $15,000,000 outstanding principal balance while OC Shanghai has a $7,000,000 outstanding principal balance under the Revolving Loan Facility. Since the Petition Date, the Lenders have consented to rollover the outstanding loans, but limited the maximum amount to the $22,000,000 outstanding principal balance. OC Guangzhou and OC Shanghai have paid, and continue to pay, interest on a current basis. Under the Revolving Loan Facility, each borrowers' liability is several and limited to its share of the loan proceeds. The Debtors, as the guarantors, are jointly and severally liable for all amounts borrowed under the Revolving Loan Facility. The Revolving Loan Facility includes a cross default provision, which provides that a default occurs under the Revolving Loan Facility if OC Guangzhou, OC Shanghai or the Debtors default under the agreement creating an obligation of OC Guangzhou, OC Shanghai or the Debtors for the payment of borrowed money, and the obligation was accelerated. B. The Letter Agreement dated September 30, 1999: Pursuant to the Letter Agreement, Standard Chartered Bank agreed to issue $10,000,000 in letters of credit to Owens Corning (China) Investment, as Borrower, and OC Guangzhou, OC Shanghai, OC Nanjing, and OC Anshan, as co-borrowers, for the purpose of facilitating local Renminbi borrowing from local Chinese banks. The Debtors are the guarantors with respect to the Letter Agreement. Owens Corning (China) Investment is liable for all amounts owed to Standard Chartered Bank in connection with the Letters of Credit issued on its behalf or on behalf of its co-borrowers. The Letter Agreement was modified by a Letter Agreement dated as of June 23, 2000, which increased the amount available for letters of credit up to $20,000,000. Under the Letter Agreement, there remained: -- Letters of Credit for 19,000,000 RMB or $2,300,000 for OC Shanghai; -- Letter of Credit for 5,000,00 RMB or $600,000 for OC Guangzhou; and -- Letter of Credit for 5,000,000 RMB or $600,000 for OC Anshan. Ms. Sawczuk relates that as of the Petition Date, Standard Chartered Bank imposed an administrative freeze on $7,270,000 in an account of Owens Corning (China) Investment and $500,000 in an account of OC Nanjing. On June 2001, Standard Chartered Bank released the funds of OC Nanjing. All of the Letters of Credit outstanding, totaling $3,500,000 as of November 2001, were presented by local Chinese banks for payment and were then paid by Standard Chartered Bank. According to Ms. Sawczuk, the presentment of the Letters of Credit by the local Chinese banks was an event of default under the Revolving Loan Facility. The Chinese State Administration of Foreign Exchange has authorized Owens Corning (China) Investment to pay 50% of its obligations under the Letter of Credit Facility. Thus, Standard Chartered Bank has only been able to draw $1,762,861 (50% of the $3,500,000) from Owens Corning (China) Investment's account. The balance remains subject to an administrative freeze. Debt Restructuring Since the Petition Date, the Debtors, Owens Corning (China) Investment, OC Guangzhou and OC Shanghai have been engaged in ongoing negotiations with the Lenders to: -- effectuate the continued servicing of the Revolving Loan Facility; -- settle the set off rights asserted by Standard Chartered Bank; -- restore OC Guangzhou and OC Shanghai's financial and operational viability; and -- preserve equity value for Owens Corning. OC Guangzhou and OC Shanghai are strategically important to the Debtors' long-term business strategy in China. OC Guangzhou and OC Shanghai provide valuable production support to the Debtors' global insulation business and improve the Debtors' ability to meet the demand for insulation products both inside and outside of China. The Standstill Agreement Ms. Sawczuk relates that after a series of meetings held in New York and numerous conference calls, the Debtors, OC Guangzhou, OC Shanghai and the Lenders agreed on the key terms of a Standstill Agreement, which permit the servicing of the Revolving Loan Facility and settlement of the setoff rights being asserted by Standard Chartered Bank. The key terms of the Standstill Agreement are: A. The Lenders have agreed to extend the term of the Revolving Loan Facility from March 12, 2003 to December 31, 2005; B. OC Guangzhou and OC Shanghai have agreed to pay interest on obligations owed to the Debtors and the outstanding principal owed to the Lenders at the rate of LIBOR plus 2.5%, pursuant to these terms: -- LIBOR plus 1% paid monthly in arrears on a current basis, provided that with respect to OC Guangzhou only, the maximum interest payable to the Lenders and the Debtors on a current basis is capped at $400,000 per year, and -- The remaining 1.5% will be accrued on a PIK basis until December 31, 2005, at which time the "PIKed" portion will become due and payable together with the outstanding principal; C. OC Guangzhou and OC Shanghai have agreed to pay trade payables owing to the Debtors on a current ongoing basis; D. The Debtors have agreed that obligations owed by OC Guangzhou and OC Shanghai as of the effective date, including principal and interest on inter-company loans and advances, royalties, and inter-company payables, will be deferred and paid on December 31, 2005. This is provided that interest will be payable on all these obligations on a current ongoing basis; E. The Debtors agree that royalties coming due and owing by OC Guangzhou after the effective date will be deferred and paid on December 31, 2005. This is provided that interest will accrue and be payable on a current ongoing basis; F. The Debtors agree that royalties coming due and owing by OC Shanghai after the effective date will be paid on a current ongoing basis; G. Standard Chartered Bank has agreed to release the funds subjected to an administrative freeze to permit payment of the amounts owing under the Letter of Credit Facility and to release any balance to Owens Corning (China) Investment; and H. In exchange for an allowed unsecured claim against the Debtors' estate on account of the $22,000,000 guarantee, the Lenders have agreed to: -- waive existing defaults under the Revolving Loan Facility, -- permanently reduce the principal balance outstanding under the Revolving Loan Facility dollar for dollar on a pro rata basis between OC Guangzhou and OC Shanghai based on the principal amounts outstanding at that time, and -- release OC from the guarantee. The Debtors believe that it will realize substantial future benefits from its proposed restructuring of OC Guangzhou and OC Shanghai. Ms. Sawczuk notes that OC Guangzhou and OC Shanghai are low-cost, state-of-the-art production facilities situated in a strategic location for cost-effective service to the Asia Pacific region and are designed to permit efficient expansion of capacity, as and when needed. The proposed restructuring will permit the Debtors to continue its ownership in OC Guangzhou and OC Shanghai, which are key sources of insulation products in the Debtors' manufacturing business, as well as sources of significant upside value for the Debtors' estate. On a present basis, the proposed restructuring provides for OC Shanghai to pay the Debtors ongoing royalty payments of 3% of net sales, plus certain other payments like technology assistance fees. Separately, the proposed restructuring will eliminate the risk of litigation arising from the financial condition of OC Guangzhou and OC Shanghai. Finally, the proposed restructuring of OC Guangzhou and OC Shanghai will help avoid potential OC Guangzhou and OC Shanghai insolvency proceedings and the risk that OC Guangzhou and OC Shanghai could be acquired by a competitor of the Debtors. (Owens Corning Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) Owens Corning's 7.70% bonds due 2008 (OWC08USR1), DebtTraders reports, are trading at 30 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=OWC08USR1for real-time bond pricing. PORTLAND GENERAL: Fitch Maintains Watch on Low-B Ratings -------------------------------------------------------- Fitch Ratings has affirmed the ratings of Portland General Electric's debt securities. The securities remain on Rating Watch Negative, where they were placed on November 29, 2001. Portland General's ratings are as follows: senior secured 'BB+'; senior unsecured 'BB-'; and, preferred 'B'. The rating affirmation reflects the company's recently improved near-term liquidity position but also the continuing uncertainty pending resolution of Enron Corp.'s efforts to sell PGE. The ratings also consider the negative overhang from the ENE bankruptcy, contingent liability issues, and exposure to ongoing investigations into the manipulation of western energy prices. Favorable considerations include PGE's strong stand alone credit profile, constructive regulatory relations, and certain ring- fence provisions that insulate the company from involuntary consolidation. In addition, the company has a 48% minimum common equity requirement by the Oregon Public Utility Commission. On October 10, 2002, PGE issued $150 million of 8-1/8% First Mortgage Bonds, maturing in February 2010. The bonds were issued in a private placement led by Lehman Bros. On October 28, 2002, PGE issued $100 million of 5.6675% FMBs, maturing October 2012, with an insurance guarantee. The insurance wrap will add 150 basis points to the annual interest costs. Proceeds from the issuance will be used to repay short-term revolving bank debt and current maturities of long term debt. The company currently has cash of about $60 million and borrowing capacity of $190 million. Although PGE's liquidity appears adequate through May 2003, when $142 million of Pollution Control Revenue Bonds become putable to the company, PGE's ability to refinance $222 million of secured revolving credit facilities, which mature in June ($72 million one-year revolver) and July of 2003 ($150 million three-year revolver), and $40 million of FMBs, which mature in August 2003, is a significant concern given the bankruptcy overhang and a difficult industry financing environment. Fitch Ratings will continue to monitor ongoing efforts by Enron to sell its ownership interest in PGE, along with eleven other of its solvent businesses. The auction process is underway and final offers are expected to be announced late this year or early in 2003. If an agreement to sell PGE is negotiated, regulatory approvals would be required from the Oregon Public Utility Commission, FERC, the SEC, and others in order to complete any proposed sale. If an agreement can be struck to sell the company to a strong buyer or if the company's plan to transfer PGE to a SPE insulated from the bankruptcy is approved by the bankruptcy court and implemented timely, a change in Rating Watch and/or an upgrade to investment grade creditworthiness is possible. The potential economic impact of the ongoing investigations into manipulation of western energy markets remains a concern. Moreover, Enron-related contingent liability issues stemming from pensions, health care, and taxes may not be remedied by a sale or transfer to a SPE, reducing traction for future upgrades. RFS ECUSTA: Seeking Authority to Pay Critical Vendors' Claims ------------------------------------------------------------- RFS Ecusta Inc., and RFS US Inc., ask for authority from the U.S. Bankruptcy Court for the District of Delaware to pay the prepetition claims of certain Critical Environmental Service Providers that are necessary for maintenance of the Debtors' business operations. The total amount of pre-petition claims for which the Debtors seek authority to pay is approximately $222,000. The Debtors tell the Court that they rely heavily on the Critical Environmental Service Providers to provide services that are vital to the preservation of the Debtors assets. The Debtors believe that if they are unable to pay the pre-petition claims of these Critical Environmental Service Providers, there is a substantial risk that the services of these creditors would be withheld, and the Debtors would be irrevocably harmed and their reorganization efforts jeopardized. It would be extremely difficult and extraordinarily costly, if not impossible, to identify alternative sources of supply for these key services if the Critical Environmental Service Providers were to refuse future service, the Debtors contend. Quite simply, if the Critical Environmental Service Providers refuse future service, the Debtors' business operations will cease. The Debtors report that they must submit various environmental and monitoring reports to the State of North Carolina to maintain and renew certain business permits that are vital to the continuing operation of the Debtors' business. The Debtors utilize these Critical Environmental Service Providers to prepare the documentation, studies, drawings, and general information necessary to timely complete the Reports: (A) Neo Corporation has prepared the information needed to submit notification of removal activity required to keep the Debtors' Permit NC 13020 active; (B) Sevee & Maher Engineers, Inc. has begun preparing the engineering drawings and documentation necessary for the renewal of the Debtors' Ash Landfill Permit 88-01. The remaining work to be completed by SME includes completion of a operations manual and construction of a documentation report; (C) Environmental Testing Solutions, LLC has prepared the information necessary for the Debtors to complete monitoring reports required under the Debtors' NPDES Permit N00000078 and the Ash Landfill Permit 88-01 and to assure compliance with November well testing requirements; and (D) Kubal-Furr & Associates has also prepared information necessary for the Debtors to complete monitoring reports required under the Debtors' NPDES Permit N00000078 and the Ash Landfill Permit 88-01. These Critical Environmental Service Providers refuse to release the information required to complete the Reports without the Debtors' payment of all outstanding prepetition amounts owed. If the Debtors do not pay the claims of these Critical Environmental Service Providers and obtain the information gathered by each, the Debtors will be unable to prepare and timely submit the Reports. Failure to timely submit the Reports would jeopardize the Debtors' permits and the Debtors' ongoing business operations, as well as possibly result in permit violations, fines as high as $100,000 per day, and permit expirations. RFS Ecusta Inc., and RFS US Inc., were leading manufacturers of high quality premium paper products for the tobacco and specialty and printing paper products. The Company filed for chapter 11 protection on October 23, 2002. Christopher A. Ward, Esq., at The Bayard Firm and Joel H. Levitin, Esq., at Dechert represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed estimated debts and assets of more than $10 million each. SALIENT 3 COMMS: Reports Decrease in 3rd Quarter Net Asset Value ---------------------------------------------------------------- Salient 3 Communications, Inc., (OTC Bulletin Board: STCIA) announced that as of the end of its third fiscal quarter, ended September 27, 2002, its estimated net assets in liquidation per outstanding share were $1.34. This value represents a decrease of $0.18 per share from the estimated net assets in liquidation of $1.52 as of June 28, 2002, reported in the Company's Form 10-Q as filed with the Securities and Exchange Commission for the second quarter. The third quarter decrease in net assets in liquidation per share primarily results from a reduction in the estimated realizable value of the building in Aurora, CO that the Company has been attempting to sell since mid 2000. Due to the unfavorable real estate market, the offering price was reduced and the Company has signed a letter of intent to sell the building at the reduced valuation. The reduction in the building's valuation, less the related tax and other adjustments, caused a decrease in net assets in liquidation of $1,148,000, or $.18 per share. The Company expects to close the sale transaction in December 2002. The Company cautioned that under liquidation basis accounting, all values of realizable assets and settlement amounts of liabilities are estimates, subject to continual reassessment based on changing circumstances. Therefore, it is not presently determinable whether the amounts realizable from the remaining assets or the amounts due in settlement of obligations will differ materially from the amounts shown on the statement of net assets in liquidation as of September 27, 2002. The Company expects to make further distributions as specific events provide available cash at a level where the Board of Directors can properly authorize a distribution, consistent with its obligations under Delaware rules and regulations governing companies in liquidation. In accordance with SEC Regulation FD (Fair Disclosure), Salient 3 will not respond to individual investor inquiries regarding the timing, process or ultimate outcome of its liquidation process. The Company will, however, issue announcements whenever material events occur in its liquidation process that could have a potential impact on its net assets in liquidation. SIERRA PACIFIC: Schedules Q3 Earnings Webcast for Thursday ---------------------------------------------------------- Senior management of Sierra Pacific Resources (NYSE: SRP) will discuss the company's third quarter financial results during a live webcast on Thursday, Nov. 14, at 7 a.m. Pacific Standard Time. Interested parties can access the webcast at: http://www.on24.com/clients/default/audioevent.html?eventid=1150&key=9EA659B 49 7FA7FFC1A20BF1E067976B5 or on the company's Web site at: http://www.sierrapacificresources.com/investors/news/ An archived version will remain on the Sierra Pacific Resources' web site for approximately one month following the live webcast. Those who would rather listen to the recording by telephone should call 1-888-211-2648. Use conference ID number 2620485 to access the recording. Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power, the electric utility for most of southern Nevada, and Sierra Pacific Power, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power also distributes natural gas in the Reno-Sparks area of northern Nevada. A third subsidiary, the Tuscarora Gas Pipeline Company, owns a 50 percent interest in an interstate natural gas transmission partnership. * * * As reported in Troubled Company Reporter's October 14, 2002 edition, Standard & Poor's Ratings Services reaffirmed its single-'B'-plus corporate credit ratings on Sierra Pacific Resources and its utility subsidiaries Nevada Power Co., and Sierra Pacific Power Co. Standard & Poor's also affirmed the double-'B' ratings on the senior secured debt at the two utilities. All ratings remain on CreditWatch with negative implications. TANDYCRAFTS: Has Until Jan. 10 to Make Lease-Related Decisions -------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, Tandycrafts, Inc., and its debtor-affiliates obtained a fifth extension of their lease decision period. The Court gives the Debtors until the earlier of: (a) January 10, 2003; or (b) the effective date of any plan of reorganization of the Debtors; to determine whether to assume, assume and assign, or reject their unexpired leases. Tandycrafts, a leading manufacturer and marketer of picture frames, mirrors and other wall decor products, filed for chapter 11 protection on May 15, 2001. Mark E. Felger, Esq., at Cozen and O'Connor, represents the Debtors in their restructuring efforts. Michael L. Vild, Esq., at The Bayard Firm and Jeffrey D. Prol, Esq., at Lowenstein Sandler PC serve as counsel to the Official Unsecured Creditors Committee. When the Company filed for protection from its creditors, it listed assets of $64,559,000 and debts of $56,370,000. TELETOUCH COMMS: Shareholders Okay Debt Restructuring Proposals --------------------------------------------------------------- Teletouch Communications, Inc., (Amex: TLL) announced that stockholders overwhelmingly approved the proposals in the Company's proxy statement that change the capital structure, Certificate of Incorporation and increased the number of common shares authorized at the Annual Meeting. "Shareholder approval of the proxy proposals marks a significant step forward in the restructuring of Teletouch that will benefit all shareholders," stated Robert M. McMurrey, Chairman of the Board of Teletouch. "The approval to issue the new Class C Preferred Stock will reduce dramatically the potential share dilution while eliminating significant complexities in the overall corporate structure." In May 2002, Teletouch announced a major restructuring of debt facilities culminating in a significant reduction in debt. The transactions eliminated approximately $57.3 million in principal and $2.7 million in accrued interest related to the Company's senior debt facility. In addition, junior subordinated debt was forgiven in the amount of $25.3 million. Subsequent to the completion of the transactions, Teletouch's debt was reduced to approximately $7.2 million and was approximately $4.0 million at August 31, 2002. As a result of these transactions, Teletouch's stockholders' equity was increased by approximately $70 million. "The net result for Teletouch stockholders is a stronger balance sheet and improved cash flow," continued Mr. McMurrey. "We have positive cash flow from operations and believe our strengthened financial condition will be an important part in funding additional growth opportunities in wireless communication services." Teletouch shareholders approved the following proposals at the Company's Annual Meeting Friday: 1) Elected two Class II Directors for a three-year term J. Kernan Crotty - President of Teletouch Marshall G. Webb - President of Polaris Group, a privately held company 2) Ratified the selection of Ernst & Young LLP as the Company's independent auditors; 3) Approved the amendment of the Company's Certificate of Incorporation providing for an increase in the authorized shares of common stock to 70 million shares; 4) Approved the issuance of 1 million shares of Series C Preferred Stock and warrants to purchase 6 million shares of the Company's common stock to certain affiliates of the Company; 5) Approved the restatement of the Company's Certificate of Incorporation; and 6) Adopted and ratified the Company's 2002 Stock Option and Appreciation Rights Plan. Teletouch Communications provides wireless messaging, cellular and two-way radio communications services in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Oklahoma, Texas and Tennessee. The Company focuses on smaller metropolitan markets where it believes there is less competition and more opportunity for internal growth than in larger metropolitan areas. Teletouch's common stock is traded on the American Stock Exchange under the stock symbol TLL. Additional financial information on Teletouch is available at the Internet Web address: http://www.irinfo.com/tll Teletouch Paging services are available at: http://www.teletouch.com TELSCAPE INT'L: Trustee Has Until January 15 to Decide on Leases ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Chapter 11 Trustee of Telscape International and its debtor- affiliates' bankruptcy estates, more time to decide what to do with the company's unexpired nonresidential real property leases. The Trustee has until January 15, 2003, to determine whether to assume, assume and assign, or reject the unexpired leases. Telscape International is a leading integrated communications provider serving the Hispanic markets in the United States, Mexico and Central America, offering local and long distance telephone, internet and pre-paid calling card services. The Company filed for Chapter 11 petition on April 27, 2001 in the District of Delaware. Brendan Linehan Shannon, Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts and Victoria W. Counihan, Esq., and Scott D. Cousins, Esq., at Greenberg Traurug, LLP represent the Chapter 11 Trustee. TENDER LOVING CARE: Files for Chapter 11 Protection in E.D.N.Y. --------------------------------------------------------------- Med Diversified, Inc., (PINK SHEETS: MDDV), a provider of home and alternate site health care services, announced its subsidiary Tender Loving Care Health Care Services, Inc., has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court of the Eastern District of New York. Chapter 11 allows a company to continue operations while it develops a reorganization plan to maximize recovery for the company's stakeholders. Med Diversified believes this filing was caused by the collapse of National Century Financial Enterprises, TLCS' primary lender, and the inaction of the trustees (J.P. Morgan Chase & Co. and Bank One Corporation) of NCFE's special purpose organizations, as recently reported in The Wall Street Journal, The Washington Post and Forbes. Med Diversified's other operations, including Chartwell Diversified Services, Inc., are not included in the filing and will continue to operate normally. Med Diversified operates companies in various segments within the health care industry, including pharmacy, home infusion, multi-media, management, clinical respiratory services, home medical equipment, home health services and other functions. For more information, see http://www.meddiversified.com TREND TECHNOLOGIES: Files for Chapter 11 Protection in Delaware --------------------------------------------------------------- Trend Technologies Inc., sought chapter 11 bankruptcy protection from creditors on Thursday, Nov. 7, 2002, with the U.S. Bankruptcy Court in Wilmington, Delaware, Dow Jones reported. The San Jose, California-based company listed assets and liabilities of more than $100 million in its chapter 11 petition. Listed in the petition as its largest unsecured creditor was Deutsche Bank Trust Co., as agent for the company's secured lenders, with a $206 million claim. Also filing for chapter 11 petitions are company affiliates Trend Holdings Inc., Trend Plasco Inc., Trend L.P. New Ventures Inc., Cam Fran Tool Inc., Trend Technologies Texas L.P., Cowden Metal Finishing Inc. and Hitek Product Finishing Inc. According to court papers, Trend Technologies has hired Crossroads LLC as its chief restructuring officer. Trend Technologies largely processes plastics, stamps metal and performs electromechanical assembly of electronic enclosures in facilities around the world. The companies are represented by Laura Davis Jones, Esq., at the Wilmington office of Pachulski Stang Ziehl Young & Jones P.C. (ABI World, Nov. 8) TREND HOLDINGS: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Trend Holdings, Inc. 4626 Eucalyptus Avenue Chino, California 91707 Bankruptcy Case No.: 02-13283 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Trend Technologies, Inc. 02-13285 Trend L.P. New Ventures, Inc. 02-13286 Trend Plasco, Inc. 02-13287 Trend Technologies Texas, L.P. 02-13288 Cam Fran Tool Co., Inc. 02-13291 Hitek Product Finishing, Inc. 02-13293 Cowden Metal Finishing, Inc. 02-13294 Type of Business: Processes plastics, stamps metal and performs electromechanical assembly of electronic enclosures in facilities around the world. Chapter 11 Petition Date: November 7, 2002 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtors' Counsel: Laura Davis Jones, Esq. Christopher James Lhulier, Esq. Pachulski Stang Ziehl Young & Jones PC 919 N. Market Street 16th Floor Wilmington, DE 19899 Tel: 302-778-6405 Fax : 302-652-4400 Estimated Assets: Estimated Debts: ----------------- ---------------- Holdings, Inc. More than $100MM $50 to $100 Mil. Trend Technologies, Inc. More than $100MM More than $100MM L.P. New Ventures $1 to $50 Mill. $0 to $50K Trend Technologies Texas $1 to $50 Mill. More than $100MM Cam Fran Tool $1 to $50 Mill. $1 to $50 Mill. Hitek Product $100 to $500K $500K to $1 Mil. Cowden Metal $1 to $50 Mill. $1 to $50 Mill. Debtors' 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Agent for Secured Lenders: Term and Revolving $206,000,000 Deutsche Bank Trust Co. Loans dated March 6, Americas 2000 130 Liberty Street New York, NY 10006 Attn: M. Sutton Tel: (212) 260-3505 Attn: Stephen H. Warren O'Melveny & Myers LLP G.E. Polymerland, S.A. Trade Claim $3,510,200 De C.V. Calz Juan Gil Perciado Zapopan, JA 45132 Mexico -and- G.E. Polymerland Corporate Headquarters 9930 Kincy Avenue Huntersville, NC 28078 Attn: Narenda Mansharami, Corp. Credit Manager Tel: 704-992-4943 Delta Electronics Trade Claim $3,447,231 Yao Chow, CFO 4405 Cushing Parkway Freemont, CA 94538 Tel: 510-668-5101 Fax: 510-668-0681 Hipro Electronics, Inc. Trade Claim $2,874,357 2024 Centimeter Circle Austin, TX 78758 Tel: 512-833-6600 Fax: 512-833-6886 Sanmina Corp./SCI Corp. Trade Claim $1,476,983 Rick Ackel, CFO 2700 N. First Street San Jose, CA 78758 Tel: 408-964-3500 Fax: 408-964- DET Logistics Corp. Trade Claim $1,376,542 Attn: Yao Chow, CFO 4405 Cushing Parkway Freemont, CA 94538 Tel: 510-668-5101 Fax: 510-668-0681 SCI Systems (Kunshan) Trade Claim $1,347,223 Co., Ltd. Angeles rey 312 Qing Yang Road Kunshan, JIA Ngshu 215300 China Tel: 011-86-512-5771-4449 Fax: 011-86-512-5771-4404 Serviacero Planos Trade Claim $1,325,371 Benjamin Zemeno Blvd. Hermanos Aldama 4002 Ciudad Industrial, c.p. 37490 Leon, Gto., Mexico Tel: 011-52-477-763-5312 Fax: 011-52-477-763-5317 NMB Technologies Corp. Trade Claim $1,273,624 9700 Independence Avenue Chatsworth, CA 91311 Tel: 818-341-3355 Fax: 818-341-8207 Northrop Grumman/Litton Trade Claim $1,225,180 Interconnect 4811 Westkearney Street Springfield, MO 65803 Tel: 417-829-5300 Fax: 417-829-5675 Delta Products Corp. Trade Claim $1,111,806 Yao Chow, CFO 4405 Cushing Parkway Freemont, CA 94538 Tel: 510-668-5101 Fax: 510-668-0681 GE Polymerland Trade Claim $935,382 Narenda Mansharamani 9930 Kincy Avenue Huntersville, NC 28078 Tel: 800-752-7849 Fax: 704-992-4923 SCI Systems De Mexico Trade Claim $917,140 Sa. De. Cv. Thajomulco de Zuniga Plant Carretera Guadalajara Chapala Km 15.8, No. 45 Thajomulco de Zuniga Guadalajara 45640 Mexico LNP Engineering Trade Claim $779,320 Plastics, Inc. 475 Kreamery Way Exton, PA 19341 Tel: 800-854-8774 Fax: 610-363-4798 Flectronics Int'l., Trade Claim $664,399 Ltd. 1431 FM 1101 New Braunfels, TX 78130 Tel: 830-608-1200 Fax: 830-608-0611 Amphenol Assembletech Trade Claim $662,700 Kevin Vigneaux, Controller 12620 West Airport Blvd. Suite 100 Sugar Land, TX 77478 Tel: 281-340-6500 Fax: 281-340-6501 Bayer Corporation Trade Claim $580,291 100 Bayer Road, Bldg. 16 Pittsburgh, PA 15205-9741 -and- Bayer De Mexico, S.A. De C.V. Credit Dept. M. Cerrantes Saadvedra 259 D.F.D.I. 11520 Mexico Tel: 011-523-555-788-3146 Fax: 011-523-555-728-3007 Steel Technologies Sa. Trade Claim $513,192 De. Cv. Federalismo 204 Frace. Industrial La Silla Guadalupe, N.L. Mexico 66070 Premier Resource Group, Trade Claim $510,082 LLC Mike Noble 930 West 175th Street Homewood, IL 60430 Tel: 708-647-8033 Fax: 708-647-8131 Hon Hai USA (Foxconn) Trade Claim $485,638 500 Center Ridge Drive Austin, Texas 78753 -and- Foxconn 6122 Katella Avenue Cypress, CA 90630 Lite-On, Inc. Trade Claim $347,416 Ron Tokiwa 720 S. Hillview Drive Milpitas, CA 95035 -and- Lite-On, Inc. 2120-F West Braker Lane Austin, TX 78758 Laird Technologies Trade Claim $425,255 Shielding Way Delaware Water Gap, PA 18327 -and- Laird Technologies Tom Reese, Corp. Controller Tel: 314-344-9348 Fax: 314-344-9333 Diversified Diemakers Trade Claim $424,369 Dba Internet 801 Second Street Monroe City, MO 63456 Tel: 573-735-4578 Fax: 573-406-6090 Corestaff Services Trade Claim $347,129 Corporate Headquarters 1775 St. James Place Suite 300 Houston, TX 77056 Tel: 713-438-1400 Fax: 713-438-1763 Tyco (Amp Division) Trade Claim $346,009 2800 Fulling Mill Road Middletown, PA 17057 Tel: 800-468-2023 Fax: 717-986-3611 Flextronics Metal Trade Claim $304,982 Specialties Lightning Manufacturing Solutions Texas LLC 4146 Collections Center Drive Chicago, IL 60693 -and- Flextronics Metal Specialties Lightning Manufacturing Solutions Texas LLC 1431 FM 1101 New Braunfels, TX 78130 Viking Materials Trade Claim $300,566 3225 Como Avenue Minneapolis, MN 55414 Tel: 612-617-5800 Fax: 612-623-9070 GE Capital Corporation Trade Claim $300,461 Ann Cumberton Commercial Equipment Finance 44 Old Ridgebury Road Danbury, CT 06810 Tel: 203-796-2387 203-796-1000 Fax: 720-293-7829 Motorola, Inc. Trade Claim $289,459 Computer Group 1900 S. Diablo Way Tempe, AZ 85282 Tel: 602-438-3717 Fax: 602-437-6273 Power One, Inc. Trade Claim $273,000 740 Kalle Palmo Camarillo, CA 93012 Tel: 805-987-8741 Fax: 805-388-0904 UNITED AIRLINES: Sees Need to Furlough Flight Attendants by Jan. ---------------------------------------------------------------- United Airlines (NYSE:UAL) announced that because of its decreased flight schedule for next year, the airline will need to reduce its flight attendant employment levels by an additional 2,700 beginning Jan. 31, 2003. This will bring the total number of flight attendants on furlough to approximately 4,800. "United sincerely regrets the necessity of making this decision because of the impact it will have on our employees, their families and their communities," said Larry De Shon, United's senior vice president-Onboard Service. "As part of our recovery plan, United has previously announced it will reduce capacity and that unfortunately means we will need fewer flight attendants." "Our goal is to be as helpful as we can be during this extremely difficult process for everyone," he said, "and under terms of its contract with the Association of Flight Attendants, United will first offer voluntary furlough options to offset imposing involuntary furloughs." In addition, United's Human Resource Division will support all flight attendants to assist them with career transitions. United currently has about 23,800 flight attendants around the world. At this time it is not known which domiciles will be affected by this announcement. United late last month announced cost savings measures that will result in the furlough of roughly 1,500 maintenance, customer service and reservations employees. Other information about United Airlines can be found at the company's Web site at http://www.united.com UNITED AIRLINES: Reaches Tentative Agreement with AFL-CIO --------------------------------------------------------- Representatives of the United Airlines Master Executive Council of the Association of Flight Attendants, AFL-CIO, and United Airlines management have reached a tentative agreement on changes to the Flight Attendant Contract that will provide United with $412 million in savings over the next 5-1/2 years. This tentative agreement achieves the airline's goal of getting the cost savings it needs from the Flight Attendants to obtain approval of the Air Transportation Stabilization Board for a loan guarantee, gain access to capital markets, and keep the airline out of bankruptcy. The Recovery Plan tentative agreement, reached early Saturday morning, Nov. 9, was presented to the members of the AFA United MEC on Saturday and Sunday. The MEC voted unanimously Sunday to endorse the Recovery Plan tentative agreement. It is being sent to the Flight Attendants for ratification by November 30, 2002. "These Flight Attendant sacrifices will enable our airline to obtain the ATSB loan guarantee, avoid bankruptcy, and return our airline to premier status in airline industry," said AFA United MEC President Greg Davidowitch. "The Recovery Plan tentative also provides the Flight Attendants with a return on our investment in United in the form of profit-sharing and stock options." Details will not be released until the Flight Attendants get a chance to review the tentative agreement. More than 50,000 Flight Attendants, including the 26,000 Flight Attendants at United, join together to form AFA, the world's largest Flight Attendant union. Visit its Web site at http://www.unitedafa.org US AIRWAYS: Institutional Creditors File Claim Intention Notices ---------------------------------------------------------------- Eight parties have filed documents with the Court outlining their claimholder status or their claims intentions against the Estate of US Airways Group Inc., and its debtor-affiliates: 1) Property Management Inc., as agents for Colonital Building Associates, is a Substantial Claimholder of the Debtors. James P. Stephens, Jr., CPM President, tells the Court that his firm has claims in the aggregate principal amount of $1,396.58 against the Debtors. 2) Phoenix Life Insurance Company notifies the Court that it is a Substantial Claimholder. Michael E. Haylon, Phoenix Executive Vice President, relates that his firm beneficially owns claims in the aggregate amount of $62,903,915.58, plus undetermined amounts for arrears and other fees. 3) Several disparate parties filed an anti-trust lawsuit against several major airlines of the U.S. The District Court, Eastern District of Michigan, on May 16, 2002, certified the Plaintiffs' motion to allow the case to proceed as a class action. The Anti-trust Classes may have become a Substantial Claimholder against US Airways Group. From May 18, 1995 to the present, the Anti-trust Classes became the beneficial owner of claims against the Debtors exceeding $950,000,000. This amount reflects claims for damages that are continuing to accrue and may be trebled by law. Geoffrey L. Silverman, Esq., at Shefferly, Silverman & Morris, relates that the identity of all the class members and the dates and amounts of damages incurred are not yet ascertained, but are within the Debtors' knowledge and control. The amount of the claim has been ascertained and testified to by experts in the consolidated proceedings of the Anti-trust Litigation. 4) Kreditanstalt f�r Wiederaufbau informs Judge Mitchell that it beneficially owns claims in the aggregate principal amount of at least $368,030,940.14 against the Debtors. KfW is represented by Wilbur F. Foster, Esq., at Milbank, Tweed, Hadley & McCloy. 5) Wachovia Bank, formerly known as First Union, solely as Trustee and not in its individual capacity, is a Substantial Claimholder. As Trustee, Wachovia holds claims in the principal amount of $135,532,472 against Debtors. Richard M. Kremen, Esq., at Piper Rudnick, is providing legal advice to Wachovia. 6) Wachovia Bank, as Owner Trustee and not in its individual capacity, owns claims against the Debtors in the principal amount of $298,759,477. The claims are the result of 29 lease agreements. 7) Wachovia Bank, as Equipment Trust Trustee or Indenture Trustee and not in its individual capacity, beneficially owns claims against the Debtors for $598,028,826. The claims result from 41 Lease Agreements entered into between 1987 and 1991. 8) AT&T Comcast Corporation, which will be the result of the merger between AT&T Broadband and Comcast, notifies the Court that it currently owns no claims against US Airways Group. AT&T Comcast proposes to purchase, acquire of otherwise accumulate claims against the Debtors for $174,772,859. (US Airways Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AIRWAYS: Gets OK to Continue Mesa Regional Jet Codeshare Pact ---------------------------------------------------------------- Mesa Air Group, Inc. (Nasdaq: MESA), announced that the United States Bankruptcy Court has approved a motion filed by US Airways to continue the existing regional jet codeshare agreement with Mesa. The approval will also allow Mesa to add 20 50-seat regional jets to its existing US Airways Express fleet. All 20 additional regional jets are expected to be integrated into the US Airways Express network in 2003. "We are pleased that the court recognized the importance of regional jets to US Airways' future," said Jonathan Ornstein, Mesa's Chairman and Chief Executive Officer. "We appreciate the opportunity to further strengthen our partnership with US Airways." Mesa currently operates 126 aircraft with 919 daily system departures to 147 cities, 36 states, Canada and Mexico. It operates in the West and Midwest as America West Express, the Midwest and East as US Airways Express, in Denver as Frontier JetExpress, in Kansas City with Midwest Express Airlines and in New Mexico as Mesa Airlines. The Company, which was founded in New Mexico in 1982, has approximately 3,300 employees. Mesa is a member of Regional Aviation Partners. US Airways Inc.'s 10.375% bonds due 2013 (U13USR2) are trading at 10 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for real-time bond pricing. USG CORP: Court Approves Leydig Voit as Debtor's Patent Counsel --------------------------------------------------------------- USG Corporation and its debtor-affiliates obtained permission from the Court to retain and employ Leydig, Voit & Mayer, Ltd., as Special Patent Counsel in these Chapter 11 cases, specifically to: 1) defend USG Interiors in patent infringement litigation initiated by Worthington Armstrong Venture in the United States District Court for the Eastern District of Pennsylvania; and 2) provide other intellectual property counseling, and prosecution services. 3) provide analysis, advice, and litigation regarding patent and other intellectual property matters, including, but not limited to, infringement issues. LVM intends to charge for its legal services on an hourly basis in accordance with its ordinary and customary rates and seek reimbursement for actual and necessary out-of-pocket expenses, while maintaining detailed and contemporaneous time and actual expense records. (USG Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) US WIRELESS: Maintains Exclusive Right to File Plan until Dec. 2 ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, U.S. Wireless Corporation and its debtor-affiliates obtained an extension of their exclusive periods. The Court gave the Debtors, until December 2, 2002, the exclusive right to file their plan of reorganization, and until February 3, 2003, to solicit acceptances of that Plan from their creditors. U.S. Wireless Corporation is a research and development of wireless location technologies, designs and implements wireless location networks using proprietary "location pattern matching" technology. The Company filed for chapter 11 protection on August 29, 2001 in the U.S. Bankruptcy Court for the District of Delaware. David M. Fournier, Esq., at Pepper Hamilton LLP represents the Debtor in their restructuring effort. When the Company filed for protection from its creditors, it listed $17,688,708 in assets and $22,239,832 in liabilities. WARNACO: Silver Sands Asks Court to Modify Store Closing Order -------------------------------------------------------------- Silver Sands Joint Venture Partners asks the Court overseeing the chapter 11 cases involving The Warnaco Group, Inc., and its debtor-affiliates to reconsider its Store Closing Sale Order with respect to the Sale Guidelines. Patrick E. Mears, Esq., at Dickinson Wright PLLC, in Grand Rapids, Michigan, relates that Silver Sands is the owner of a shopping center in Destin, Florida known as the Silver Sands Factory Stores Outlet. The Debtors leased a space in the Shopping Center dated as of August 1, 1994. The Lease has expired. In the Store Closing Sale Order, one of the Sale Guidelines permits the use of exterior banners to advertise these sales. In addition, the Order prohibits the Debtor from distributing "handbills, leaflets or other written materials consistent with the other provisions herein to customers within three-yard area outside the front of the Store." However, Mr. Mears reports, the Debtors placed a large exterior banner announcing the store closing sale on the exterior of the Destin store. This banner projects out over the sidewalk at the Shopping Center and constitutes a potential safety risk to pedestrians. Mr. Mears points out that Section 13.02.05.02 of the Walton County, Florida Land Development Code prohibits the use of exterior banners like the one being used by the Debtors in the Shopping Center. The Debtors and its agent, Hilco Merchant Services LLC, have employed individuals who have carried signs and handbills beyond the three-yard limit. Thus, Silver Sand asks the Court to modify the Store Closing Sale Order to require the Debtors to comply with the Walton County, Florida Land Development Code and remove the exterior banner on the Destin store and direct the Debtors and its agents to comply with the terms of the Store Closings Sale Order. (Warnaco Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTAR ENERGY: Applauds Kansas Regulator's Order re Workout ----------------------------------------------------------- Westar Energy, Inc. (NYSE:WR) -- whose BB+ corporate credit rating has been placed by Standard & Poor's on CreditWatch Negative -- is reviewing the Kansas Corporation Commission order regarding restructuring of the company released late last week. Upon initial review, the order appears consistent with the commission's discussion during an administrative meeting Sept. 26, where commissioners expressed the desire to split the regulated and unregulated assets of the company. At this critical juncture, the commission appears to concur with Westar Energy, Inc., that it is in the best interests of customers, employees and shareholders for all parties to work together to reduce the company's debt. The commission's intent is clear. However, Westar Energy, Inc., will need the KCC's support and flexibility in achieving the commission's goals. It is encouraging to us that in the order, the commission recognizes that the company has a variety of options to pay down debt and that each requires careful consideration. Westar Energy management and employees remain dedicated to and focused on providing outstanding customer service and reliable electric service to Kansas homes and businesses. The Westar Energy, Inc., Board of Directors continues to give its full and prompt attention to naming an acting chief executive officer and president. David C. Wittig is on administrative leave without pay from his posts as chairman, president and CEO of the company and all director and officer positions of affiliates of the company. Westar Energy, Inc., (NYSE:WR) is a consumer services company with interests in monitored services and energy. The company has total assets of approximately $7 billion, including security company holdings through ownership of Protection One, Inc. (NYSE:POI) and Protection One Europe, which have approximately 1.2 million security customers. Westar Energy is the largest electric utility in Kansas, providing service to about 647,000 customers in the state. Westar Energy has nearly 6,000 megawatts of electric generation capacity and operates and coordinates more than 34,700 miles of electric distribution and transmission lines. Through its ownership in ONEOK, Inc. (NYSE:OKE), a Tulsa, Okla.-based natural gas company, Westar Energy has a 44.7 percent interest in one of the largest natural gas distribution companies in the nation, serving more than 1.4 million customers. For more information about Westar Energy, visit http://www.wr.com WHEELING-PITTSBURGH: Court Okays FTI Consulting as Fin'l Advisor ---------------------------------------------------------------- Wheeling-Pittsburgh Steel Corp., and its debtor-affiliates sought and obtained the Court's authority to employ FTI Consulting, Inc., the successor-in-interest to the Business Recovery Services practice of PricewaterhouseCoopers LLP, to continue to provide financial advisory and reorganization consulting services to the Debtors in lieu of PwC, nunc pro tunc to September 1, 2002. As authorized by Judge Bodoh, PwC has been providing financial advisory and reorganization consulting services to the Debtors through professionals of its Business Recovery Services practice, a product line that specializes in providing services to parties in distressed corporate situations. On July 24, 2002, FTI publicly announced that it had entered into a definitive agreement to purchase the BRS Practice from PwC and related assets and receivables. This transaction closed formally on August 30, 2002. Upon the Closing, Scott H. King, the primary PwC partner providing the Advisory Services, as well as substantially all of the other members of the BRS Practice team, became FTI employees. With the Court's approval of this Application, PwC will no longer be providing the Advisory Services to the Debtors. The Debtors will employ FTI under the same terms and conditions set out in the first two previously approved PwC Application. The current fee structure is a flat rate for all hours charged by PwC professionals. This hourly rate was set at $350 per hour in the Second PwC Application, with adjustments to that rate to be made annually. The current hourly rate is $370 per hour. The accounting and tax services authorized in the Original Application to be provided by PwC are unaffected by this Application and will continue to be performed by PwC. Scott H. King, a partner in FTI, assures Judge Bodoh that FTI is a "disinterested person" as that term is defined in the Bankruptcy Code. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) WISER OIL COMPANY: Will Hold Q3 2002 Conference Call Tomorrow ------------------------------------------------------------- The Wiser Oil Company (NYSE:WZR) -- whose June 30, 2002 balance sheets show a working capital deficit of about $14 million -- will hold a conference call to discuss the Company's third quarter 2002 results tomorrow, Nov. 13, 2002, at 10:00 a.m. Central Standard Time (11:00 a.m. Eastern Standard Time). The third quarter 2002 results will be announced today, Nov. 12, 2002. To participate in the conference call, dial 800/446-1671, passcode: 6457391 or host: Mr. Hickox, call title: Third Quarter 2002 Results, 5 to 10 minutes prior to scheduled start time. If you are unable to participate, a replay of the call will be available one hour after the conference has concluded on Wednesday, Nov. 13, 2002 through Friday, Nov. 22, 2002 by dialing 888/843-8996, passcode: 6457391. The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.vcall.com A replay of the webcast will be available on vcall through Friday, Nov. 29, 2002. WORLDCOM INC: Verestar Gets Stay Relief to Setoff Obligations ------------------------------------------------------------- Verestar, Inc., sought and obtained relief from the automatic stay to effect a setoff with respect to mutual prepetition debts with Worldcom Inc., and its debtor-affiliates. The Debtors are indebted to Verestar prepetition for $816,921.75 while Verestar is indebted to the Debtors prepetition for $595,858.87. Thus, after giving effect to the setoff, the Debtors will have a $221,062.88 prepetition liability to Verestar. The Court also authorizes Verestar to effect a setoff of mutual postpetition liabilities pursuant to Section 553 of the Bankruptcy Code. As of September 20, 2002, Debtors owed Verestar $1,928,524.94, for postpetition services, while Verestar also owed Debtors $651,113.23 for postpetition services. After giving effect to the setoff of postpetition liabilities, the Debtors are indebted to Verestar for $1,277,411.71, which the Court orders will be considered as an allowed administrative expense against the Debtors' estate. Steven A. Soulios, Esq., at Ruta & Soulios LLP, in New York, informs the Court that Verestar is in the business of providing and selling digital, satellite telecommunications services, including satellite uplinking, downlinking, terrestrial fibre and loops, long distance telephone and Internet connectivity or bandwidth. In connection with its business operations, Verestar similarly purchases circuits and bandwidth and other telecommunications services from other telecommunications providers and resellers that facilitate voice and data communications services. Prior to the Petition Date, Verestar and the Debtors provided to each other, on a reciprocal and mutually beneficial basis, certain services. The course of dealings established by the parties with respect to the reciprocal relationships was conducted on negotiated terms as memorialized in various contracts by and between Verestar and its affiliates and subsidiaries. On February 28, 2002, Verestar and MCI WorldCom Communications, Inc. executed a Digital Master Service Agreement, which only addressed that aspect of the relationship in which Verestar purchases services from Debtors. Pursuant to the Master Agreement, Verestar agreed to purchase from Debtors circuits, which enabled long distance voice and data communications, including Internet connectivity services. The Master Agreement has a three-year term. The Master Agreement was intended to be a forward-looking agreement that recognized the prior arrangement under which the various subsidiaries and affiliates of Verestar did business with Debtors, and henceforth centralized the relationship in light of Verestar's consolidating ownership. The Court recognizes that the postpetition services provided by Verestar are necessary and beneficial to the administration and rehabilitation of Debtors' estate. Judge Gonzalez directs the Debtors to pay to Verestar without further delay $1,277,411.71 in satisfaction of the administrative expense. The Court also orders the Debtors to assume or reject the Verestar Agreements no later than October 31, 2002. (Worldcom Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports, Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USR4) are trading at 19 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4 for real-time bond pricing. XCEL ENERGY: Receives Temporary Equity Ratio Waiver from SEC ------------------------------------------------------------ Xcel Energy (NYSE:XEL) received a temporary waiver from the Securities and Exchange Commission requirement that the company's common equity be at least 30 percent of its total consolidated capitalization, including short-term debt. The SEC waiver reduces the requirement to 24 percent through March 2003. "This waiver gives us the financial flexibility we wanted as we approach the expiration of our $400 million credit line," said Dick Kelly, Xcel Energy's chief financial officer. "We now have the option to complete renegotiation of our existing credit line or execute alternative plans." Under the Public Utility Holding Company Act of 1935, compliance with the 30 percent common equity test is a condition to engage in financing transactions by Xcel Energy at the parent company level. On June 30, 2002, the ratio stood at 31 percent. NRG Energy, Xcel Energy's wholly owned subsidiary, will take write-downs on various projects that will reduce Xcel Energy's equity ratio to below 30 percent during the third quarter. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com NRG Energy, a wholly owned and unregulated subsidiary of Xcel Energy, develops and operates power generating facilities. NRG's operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. XCEL ENERGY: Pays Down $400-Million Bank Line Due Nov. 8, 2002 -------------------------------------------------------------- Xcel Energy has paid down a $400 million, 364-day bank line that came due Friday last week. Funds to pay down the line came from cash at the Xcel Energy holding company plus funds from a new financing. "We would have preferred to renegotiate our existing bank line, but we're in a difficult market for bank financing because a number of banks are facing losses on loans to the independent power sector," said Dick Kelly, Xcel Energy chief financial officer. "Consequently, several weeks ago we began to develop contingency plans." Kelly said one of the bank lenders has a relatively large exposure to subsidiary NRG Energy but was a small participant in Xcel Energy's $400 million bank line. "This bank tried to leverage its position in the Xcel Energy facility, demanding among other things that Xcel Energy make various financial commitments to NRG in exchange for approval of a renegotiated bank line," Kelly said. He added that the other banks were willing to accept reasonable terms. When Xcel Energy reached an impasse in negotiations it elected to switch to one of its contingency plans. "The new financing gives us a lot of flexibility at an attractive interest rate," said Kelly. "We will describe specific terms of the new financing in an 8K we intend to file on November 12." Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com XCEL ENERGY: Fitch Places Ratings on Watch Negative --------------------------------------------------- Fitch Ratings has placed the ratings of Xcel Energy Inc., and its subsidiaries Northern States Power MN, Northern States Power WI, Southwestern Public Service Co., and Public Service Co., of Colorado on Rating Watch Negative. The Rating Outlook for Xcel had previously been Negative as of July 30, 2002. At that time Fitch had lowered the ratings of Xcel to reflect concerns over the impact of severe credit challenges at subsidiary NRG Energy Inc., (not rated by Fitch) and liquidity concerns at the parent level. The Rating Watch Negative assigned relates to further concerns over Xcel's short- term liquidity, following the maturity of its $400 million bank revolving credit line on November 8, 2002. Fitch notes that Xcel continues to have several avenues available to increase liquidity, and benefits from its ownership of subsidiaries with a strong regulated utility base, but will monitor the parent's ability to attract funding to replace the depletion of available liquidity. The $400 million committed facility at the parent level, due to expire Friday [last week], was paid down and has not been renewed. As Xcel maintained c. $340 million in cash balances prior to the expiry of this facility, Xcel has been obliged to seek alternative sources of funding to repay the balance beyond cash held on drawings under the facility. The ability of Xcel to fund this portion and generate additional liquidity at the parent level was thus dependent upon receipt of additional funding. Xcel's ability to access additional funding has been hampered by the need for a waiver from the Securities and Exchange Commission for the requirement to maintain an equity ratio of 30%. Xcel received this waiver on November 7, 2002, and, in addition, is taking steps with regard to its interest in NRG Energy Inc. which are likely to restore Xcel's equity ratio in the near-term. Fitch does not regard the equity ratio as a significant credit indicator in itself, but acknowledges the significance of the waiver requirement for Xcel's ability to raise capital. Following receipt of this waiver, Xcel has negotiated a financing with a private investor group. Xcel intends to describe the financing in an 8K, which it intends to issue on November 11. The proceeds of the offering, , have been disbursed this afternoon, allowing Xcel to meet the repayment of the syndicated bank facility. Liquidity at the parent level now amounts to c. $40 million. Alternative sources of funding for the holding company include (1) receipt of additional funding from the facility, which is agreed but subject to satisfaction of certain further conditions; (2) funds from a pipeline disposal, amounting to $112 million (plus $50 million in assumed debt); (3) a new bank facility, which in current market conditions, Fitch considers is unlikely to have a maturity beyond one-year and/or (4) receipt of quarterly dividends upstreamed from utility subsidiaries. The Viking pipeline disposal has already been agreed with acquirer Northern Border Partners, L.P. (senior unsecured debt rated 'BBB+' by Fitch), and receipt of funds is anticipated by year-end 2002. The upstreaming of a reasonable level of dividends from the utility subsidiaries, while facing no significant legal or regulatory obstacles, does face practical obstacles in addressing regulatory and investor concern over the stand-alone health of the regulated utilities. The utility subsidiaries currently have combined cash balances of c. $1.5 billion, and are projected to generate material free cash flow of over $400 million during 2003, although c. $1.1 billion of committed facilities at the subsidiary level will expire through February, June and August 2003. Extension of additional bank facilities to the holding company, most likely shorter-term, from the bank community may require further negotiation, during which time Xcel's liquidity will remain under pressure. Xcel have indicated that liquidity needs over the next month are modest, primarily a $25 million interest payment due in early December 2002. Xcel has stated that it does not see significant additional near-term liquidity needs in collateral for its own trading business or as a result of the guarantee extended to coal and gas purchase arrangements at troubled subsidiary NRG Energy. The settlement of a restructuring of NRG Energy Inc. may, however, involve an injection of up to $300 million by Xcel as part of the settlement with creditors. While any such payment, were it to be made, would likely fall in 2003, the overhang of this potential obligation will continue to pressure liquidity at the holding company, not least as Xcel seeks to access new sources of capital. Should Xcel successfully negotiate additional committed facilities at the parent level or manage alternative additional liquidity , the ratings are likely to be removed from Rating Watch and return to a Negative Outlook. Ratings affected by the rating action are: Xcel Energy Inc. -- Senior unsecured debt 'BB+'; Northern States Power Company-MN -- First mortgage bonds and secured pollution control revenue bonds 'BBB+'; -- Senior unsecured debt and unsecured pollution control revenue bonds 'BBB'; -- Trust preferred stock 'BBB-'; -- Commercial paper 'F2'; Northern States Power Company-WI -- First mortgage bonds 'BBB+'; -- Senior unsecured debt and unsecured shelf ratings 'BBB'; Southwestern Public Service Company -- First mortgage bonds 'BBB+'; -- Senior unsecured debt 'BBB'; -- Commercial paper 'F2'; Southwestern Public Service Capital I -- Trust preferred stock 'BBB-'; Public Service Company of Colorado -- First mortgage bonds 'BBB+'; -- Senior unsecured notes 'BBB'; -- Preferred stock 'BBB-'; -- Commercial paper rating 'F2'; All entities have been placed on Rating Watch Negative. Xcel Energy Inc., is the holding company for six electric utility companies that serve electric and natural gas customers in 12 states, together with two transmission companies and two natural gas pipelines. Xcel also owns a number of non-regulated businesses, the largest of which is NRG Energy, Inc. XCEL ENERGY: Selling Viking Gas Assets to Focus on Core Ops. ------------------------------------------------------------ An agreement reached by Xcel Energy (NYSE:XEL) to sell subsidiary Viking Gas Transmission Company and Viking's one- third interest in Guardian Pipeline to Northern Border Partners, L.P., (NYSE:NBP) reflects Xcel Energy's continuing focus on its core utility business, according to Dick Kelly, the company's chief financial officer. "We've been pleased with Viking's financial performance and the contributions of its employees to make it a successful company," Kelly said. "However, we do not have enough scale in the gas transmission business to realize the full potential of Viking. This sale is consistent with our intent to focus on our core electric and gas distribution businesses." Northern Border Partners would purchase all of the common stock of Viking from Xcel Energy for approximately $152 million, including the assumption of outstanding debt. The purchase is expected to close by year-end 2002, subject to receipt of all necessary approvals. Xcel Energy was advised by Credit Suisse First Boston. The Viking system is a 671-mile interstate natural gas pipeline extending from Emerson, Manitoba, to Marshfield, Wis. Guardian Pipeline is a 141-mile interstate natural gas pipeline system with a scheduled in-service date of December 2002. It will transport gas from Joliet, Ill., to a point west of Milwaukee, Wis. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com DebtTraders says that Xcel Energy Inc.'s 7.0% bonds due 2010 (XEL10USR1) are trading at 76 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL10USR1for real-time bond pricing. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***