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/raid1/www/Hosts/bankrupt/TCR_Public/021205.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, December 5, 2002, Vol. 6, No. 241 Headlines AMERICA WEST: November Revenue Passenger Miles Slide-Up 22.5% AMERIKING INC: Files for Chapter 11 Reorganization in Delaware AMERIKING INC: Case Summary & 39 Largest Unsecured Creditors AMES DEPARTMENT: Proposes Uniform Lease Rejection Procedures ANC RENTAL: Wants to Continue Use of Lender's Cash Collateral ANC RENTAL CORP: Commences Review of Airline Loyalty Programs AOL TIME WARNER: Reaffirms 2002 Outlook for America Online Div. ARBEK OAK: Buxbaum Completes GOB Sale & Other Asset Auctions ASIA GLOBAL CROSSING: Seeks Approval of Asia Netcom Sale Pact ASSOCIATED MATERIALS: All 9.75% Notes Tendered in Exchange Offer ATLAS AIR: S&P Keeps B- Corp. Credit Rating on Watch Negative BETHLEHEM STEEL: Court Approves Stipulation with JPMorgan Chase CALL-NET ENTERPRISES: Randy Benson Resigns as Senior VP and CFO CALYPTE BIOMEDICAL: Dian J. Harrison Joins Board of Directors CD WAREHOUSE: Court Fixes December 13, 2002 as Claims Bar Date CLASSIC COMMS: Delaware Court to Consider Plan on Dec. 10, 2002 CLUETT AMERICAN: S&P Junks Credit & Sr. Secured Ratings at CCC+ CONSECO FINANCE: Fitch Drops Senior Debt Rating to Default Level CORDOVA FUNDING: S&P Hatchets Senior Secured Bond Rating to BB COVANTA: Selling Aviation Fueling Business to Allied Aviation COVISTA COMMS: Fails to Comply with Nasdaq Listing Requirements CREDIT SUISSE: Fitch Affirms Low-B Ratings on Six Note Classes DEUTSCHE MORTGAGE: Fitch Affirms Low-B's on 4 Classes of Notes EL PASO ENERGY: S&P Places BB+ Rating on CreditWatch Negative ENCOMPASS SERVICES: Debtors Ask Court for Vendor Comfort Order ENRON: Secures Nod to Sell Oneida Aircraft to First Tennessee EOTT ENERGY: Court Approves Patton Boggs as Special Counsel FAIRCHILD CORP: Completes Sale of Fastener Unit for $657 Million FAIRCHILD CORP: Accepts for Purchase All 10.75% Notes Tendered FEDERAL-MOGUL: Equity Committee Wants to Commence Rule 2004 Exam FIBERMARK INC: Moody's Ratchets 9.375% Notes Down a Notch to B2 FRONTLINE COMMS: Will Not Make Dividend Payment on Preferreds GE CAPITAL: Fitch Rates 6 Classes of 2002-3 Notes at Low-B Level GENTEK INC: Wins Nod to Hire Skadden Arps as Chapter 11 Counsel GENUITY INC: Obtains Court Approval of 'First Day Motions' GLOBAL CROSSING: US Trustee Names Martin Cooperman as Examiner HAYES LEMMERZ: Court Approves General Motors Supply Contract IMPERIAL SUGAR: Selling Diamond Crystal Unit to Hormel Foods INFU-TECH: Ch. 7 Trustee Hires Hermes Group as Tax Accountants KMART CORP: Seeks Go-Signal to Transfer $2 Million to S.F.P.R. L-3 COMMS: Larry Schwartz Rejoins Company to Head 2 Divisions LAIDLAW INC: Court Approves Kevin Benson's Engagement as CEO MILLERS AMERICAN: Completes Sale of Certain Assets to Hallmark MORGAN STANLEY: Fitch Affirms Ratings on Series 1998-HF2 Notes NAPSTER: Ch. 11 Trustee Gets $250,000 DIP Financing from Napco NATIONAL CENTURY: Proposes Professional Compensation Procedures NATIONAL STEEL: October 2002 Net Loss Tops $4.6 Million NAVISTAR INT'L: Full-Year 2002 Net Loss Balloons $132 Million NETIA: Polish SEC Admits Restructuring Shares to Trading NEW POWER COMPANY: Disclosure Statement Hearing Set for Dec. 17 NORTEL: Will Link Wi-Fi Networks with CDMA, GPRS, UMTS Networks OAKWOOD HOMES: US Trustee Appoints Unsecured Creditors Committee OCEAN POWER: Seeks Nod to Obtain DIP Financing from Algonquin OWENS CORNING: Court Approves Sale of Mission Plant to B.C. Ltd. OWENS-ILLINOIS: EVP and CFO R. Scott Trumbull Opts to Retire PRIME GROUP: K Capital Urges Company to Seek Strategic Options PROVANT INC: Maxco Inc. Discloses 10.4% Equity Stake PROVELL: Disclosure Statement Hearing is Tomorrow in Manhattan PSC INC: Brings-In U.S. Bancorp Piper as Investment Banker RAILAMERICA INC: Initiates Cost-Reduction Efforts & Promotions SAFETY-KLEEN CORP: Plan's Classification & Treatment of Claims SAMSONITE CORP: Third Quarter 2002 Results Show Improvement SATCON TECHNOLOGY: Fails to Satisfy Covenant Under Credit Pact SEITEL INC: Noteholders Extend Standstill Agreement Until June 2 SKYLINE MULTIMEDIA: Sept. 30 Working Capital Deficit Tops $11MM SPECTRASITE: Turns to Lazard Freres for Financial Advice STANDARD COMM'L: S&P Ups Corp. Credit & Sr. Sec. Ratings to BB+ TITANIUM METALS: Sets Special Shareholders' Meeting for Feb. 4 TOKHEIM CORP: Wants to Pay Prepetition Critical Vendor Claims TRENWICK GROUP: Fitch Further Junks long-Term & Sr. Debt Ratings TYCO: Names Gardner Courson Deputy General Counsel, Litigation UNITED AIRLINES: ATSB Nixes Proposal for Federal Loan Guarantee UNITED AIRLINES: 10-Day Grace Period Expires Dec. 12 UNITED AIRLINES: S&P Keeps Watch on Ratings on Deferred Payments UNITED AIRLINES: Cuts Number of Company Officers & Their Wages UNITED AIRLINES: Will Furlough Additional 220 Pilots by Jan. 6 UNITED PAN-EUROPE: Case Summary & 20 Largest Unsec. Creditors UNIVIEW TECHNOLOGIES: Fails to Raise New Funds & Cuts Operations UNOCAL CORP: Board Elects Ferrell McClean as Independent Member U.S. TIMBERLANDS: Commences Trading on Nasdaq SmallCap Market VENTAS INC: Appoints Richard Schweinhart as New SVP and CFO VENTAS INC: Expects Merrill Lynch to Underwrite Share Offering VENTAS INC: Executes Supplemental Senior Note Indenture WASATCH PHARMACEUTICAL: Implements 1-for-25,000 Reverse Split WORLDCOM INC: Keeps Plan Filing Exclusivity Until April 17, 2003 WORLDCOM: TRAC Warns Consumers of New Round of MCI Rate Hikes WORKGROUP TECHNOLOGY: Appeals Nasdaq Delisting Determination * DebtTraders' Real-Time Bond Pricing ********* AMERICA WEST: November Revenue Passenger Miles Slide-Up 22.5% ------------------------------------------------------------- America West Airlines (NYSE: AWA) reported traffic statistics for the month of November and year-to-date 2002. Revenue passenger miles for November 2002 were a record 1.6 billion, an increase of 22.5 percent from November 2001. Capacity for November 2002 was 2.2 billion available seat miles, up 20.6 percent from November 2001. The passenger load factor for the month of November was a record 71.2 percent versus 70.1 in November 2001. Year-to-date load factor was a record 73.5 percent, up 1.2 points from 2001. Year-to-date RPMs were a record 18.2 billion, a 2.5 percent increase from 2001. Available seat miles increased 0.7 percent for the current year to 24.7 billion. The November 2001 results were significantly impacted by the events of Sept. 11, 2001, and a subsequent reduction in America West capacity due to reduced demand. Compared to November 2000, RPMs increased 0.8 percent, ASMs decreased 1.6 percent and load factor increased 1.7 points from 69.5 percent to 71.2 percent. "Consumers' response to our business-friendly fare structure continues to be outstanding and is driving business market share to America West," said Scott Kirby, executive vice president, marketing and sales. "Our November load factor led all major airlines and our traffic increased 23 percent while U.S. domestic industry traffic was essentially flat year-over-year." America West Airlines is the nation's largest low-fare, hub-and- spoke airline. Founded in 1983, it is the only carrier formed since deregulation to achieve major airline status. Today, America West is the nation's eighth-largest carrier and serves 93 destinations in the U.S., Canada and Mexico. America West is a wholly owned subsidiary of America West Holdings Corporation, an aviation and travel services company with 2001 sales of $2.1 billion. * * * As reported in Troubled Company Reporter's June 6, 2002 edition, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. AMERIKING INC: Files for Chapter 11 Reorganization in Delaware -------------------------------------------------------------- AmeriKing, Inc., one of the largest independent BURGER KING(R) franchisees, has commenced voluntary bankruptcy proceedings under Chapter 11 of the United States Bankruptcy Code. The petition was filed in the United States Bankruptcy Court in Wilmington, Delaware. This filing is a necessary step in AmeriKing's planned reorganization and its ongoing negotiations with its bank group and others to restructure its balance sheet and extend the maturity of its credit facility. A detailed restructuring plan is being finalized that would allow a significant portion of the debt to be exchanged for equity ownership in the company, thereby significantly deleveraging the balance sheet and substantially reducing annual interest payments. Additionally, AmeriKing is working with potential investors to secure an investment to fund capital improvements. All of these dollars would be invested into the restaurants to fund key capital projects such as new drive- thru systems, new signage and restaurant remodels. As part of its restructuring plan, AmeriKing has closed 23 underperforming restaurants, leaving the company with 329 restaurants. The Company has placed the majority of the impacted employees into positions in existing restaurants. Joe Langteau, President and Chief Executive Officer, said, "This is a critical moment in our company's history. This restructuring, when successfully completed, will enable us to significantly reduce our long-term debt and position us to accelerate our turnaround. We are committed to the BURGER KINGr Brand and are excited about the programs underway to improve systemwide performance. We are looking forward to working closely with our bank group and Burger King Corporation to finalize the details of this restructuring agreement." Ben Hirst, Executive Vice President of Burger King Corporation, said, "We intend to work with AmeriKing and its lenders and suppliers to achieve a fair and equitable restructuring in Chapter 11. We are confident that AmeriKing will be able to accomplish the financial restructuring and infusion of capital that are necessary to stabilize its business, strengthen its balance sheet, and improve its operations. As one of our largest franchisees, AmeriKing will continue to be an important and valued business partner of Burger King Corporation." Headquartered in Westchester, Illinois, AmeriKing is one of the largest independent BURGER KING(R) franchisees in the United States with 329 restaurants, located primarily in twelve Midwestern and Mid-Atlantic states. AMERIKING INC: Case Summary & 39 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: AmeriKing, Inc. 2215 Enterprise Drive Suite 1502 Westchester, Illinois 60154 Bankruptcy Case No.: 02-13515 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- AmeriKing Service Co., Inc. 02-13516 National Restaurant Enterprises Holdings, Inc. 02-13517 National Restaurant Enterprises, Inc. d/b/a AmeriKing Corp. 02-13518 AmeriKing Indiana Holdings, Inc. 02-13519 AmeriKing Indiana, L.P. 02-13520 AmeriKing Tennessee Corp. I 02-13521 AmeriKing Colorado Corporation I 02-13522 Type of Business: The Company operates approximately 329 franchised restaurants through its subsidiaries. Chapter 11 Petition Date: December 4, 2002 Court: District of Delaware Judge: Jerry W. Venters Debtors' Counsel: Christopher A. Ward, Esq. Neil B. Glassman, Esq. Steven M. Yoder, Esq. The Bayard Firm 222 Delaware Avenue Suite 900 Wilmington, DE 19899 Tel: 302-655-5000 Fax : 302-658-6395 Total Assets: $223,399,000 Total Debts: $291,795,000 Debtor's 39 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ State Street Bank and Indenture Trustee of $63,372,835 Trust Senior Notes, 13%, Lena Altomare Due 2007 - NRE Holdings 2 Avenue De Lafayette Boston, MA 02111 State Street Bank and Indenture Trustee of $53,486,000 Trust Senior Notes, 10.75%, Lena Altomare Due 2007 - NRE Holdings 2 Avenue De Lafayette Boston, MA 02111 Burger King Corporation Estimated Amounts $5,548,258 Nikka Copeland Due Under Various 5505 Blue Lagoon Drive Franchise Agreements Miami, FL 33126 as of Oct. 28, 2002 State Street Bank and Indenture Trustee of $491,000 Trust Senior Notes, 10.75%, Lena Altomare Due 2006 - Ameriking, 2 Avenue De Lafayette Inc. Boston, MA 02111 Illinois Dept. of Revenue Estimated Sale and $237,000 Use Taxes as of Dec. 2, 2002 Comed Trade debt as of Nov. 21 $197,533 Stainless, Inc. Trade Debt as of $169,324 Nov. 29, 2002 Coca-Cola Financial Corp. Trade Debt as of $167,167 Dec. 2, 2002 Irwin Franchise Capital Trade Debt as of $162,659 Corp. Dec. 2, 2002 Colt Hothorn Employment/Separation $162,500 Agreement North Carolina dept. of Estimated sale and use $158,000 Revenue taxes as of Dec. 2, 2002 State of Wisconsin Estimated Sale and Use $146,000 Dept. of Revenue Taxes as of Dec. 2, 2002 Tenessee Dept. of Revenue Estimated Sale and use $131,000 Taxes as of Dec. 2, 2002 Prosi Design Trade Debt as of $102,787 Nov. 29, 2002 Coca-Cola USA Trade Debt as of $97,203 Nov. 21, 2002 VA Dept. of Taxation Estimated Sale and Use $87,000 Taxes as of Dec. 2, 2002 State of Indiana Estimated Sale and Use $75,000 Dept. of Revenue Taxes as of Dec, 2, 2002 Landscape Concepts Mgt. Trade debt as of $75,000 Inc. Nov. 29, 2002 Fleet Capital Leasing Trade debt as of $62,160 Dec. 2, 2002 Muzak Limited Partnership Trade debt as of $52,659 Nov. 29, 2002 Hickory Associates Trade debt as of $51,781 Nov. 29, 2002 The Executive Building Co. Trade debt as of $50,794 Nov. 29, 2002 Lighting Maintenance Trade debt as of $48,397 Nov. 29, 2002 Mayer Brown, Rowe, Maw Trade debt as of $44,345 Nov. 29, 2002 Curtis James Investments Trade debt as of $43,689 Nov. 29, 2002 Texas Comptroller of Estimated Sale and $41,000 Public Accounts Use Taxes as of Dec. 2, 2002 Waste Management 930580 Trade debt as of $38,427 Nov. 29, 2002 Peoples Energy Trade debt as of $60,687 Nov. 29, 2002 BRE Enterprise Drive LLC Trade debt as of $36,441 Nov. 29, 2002 Colorado Dept. of Revenue Estimated Sale and use $36,000 Taxes as of Dec. 2, 2002 Wesley Rooks Trade debt as of $35,416 Nov. 29, 2002 Sarfatty Assoc., Ltd. Trade debt as of $35,609 Nov. 29, 2002 Ikerd Enterprises Trade debt as of $33,750 Nov. 29, 2002 Techteam Cyntergy, LLC Trade debt as of $33,750 Nov. 29, 2002 Ohio Dept. of Taxation Trade debt as of $33,000 Nov. 21, 2002 Northern Indiana Public Trade debt as of $32,621 Ser. Nov. 29, 2002 W.W. Grainger, Inc. Trade debt as of $33,397 Nov. 29, 2002 Swisher Trade debt as of $57,746 Nov. 29, 2002 Madrus Realty Co., Inc. Trade debt as of $28,396 Nov. 29, 2002 AMES DEPARTMENT: Proposes Uniform Lease Rejection Procedures ------------------------------------------------------------ To streamline the process of rejecting their remaining unexpired leases, Ames Department Stores, Inc., and its debtor-affiliates ask the Court to approve certain Rejection Procedures. Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, tells Judge Gerber that the Debtors are in the process of reviewing and analyzing the unexpired leases to determine their economic values. From the results of this analysis and review, the Debtors will determine which leases have no value and should be rejected. According to Mr. Bienenstock, the leases to be rejected include those which the Debtors have had difficulty in securing subtenants or assignees that are willing and able to satisfy the full value of the unexpired lease obligations. Mr. Bienenstock asserts that the proposed Rejection Procedures balance the need for an expeditious reduction of burdensome costs to the Debtors' estates while providing due notice of the proposed rejection to the counterparties to the unexpired leases. The Debtors also seek the Court's authority to remove any property from the premises subject to the rejected unexpired lease that they either own or lease from third parties, or that is subject to any equipment financing agreements with third parties. The Debtors intend to abandon any property remaining in the premises in the event that property has little or no more value to them. The Lease Rejection Procedures to be implemented are: -- Any Unexpired Lease that the Debtors determined to be unmarketable will be rejected after 10 business days written notice, via facsimile or overnight mail to: (1) the non-Debtor party and its counsel, if known, under the Unexpired Lease; (2) the statutory creditors' committee's counsel; (3) Kimco's counsel; (4) the postpetition lenders' counsel; and (5) the U.S. Trustee. -- If an objection to a Rejection Notice is filed by a Rejection Notice Party, the Debtors may schedule a hearing to consider the objection. -- If no objection to a Rejection Notice is timely filed and received, the applicable Unexpired Lease will be deemed rejected on the later of: (a) the date of the Rejection Notice unless otherwise agreed, in writing, by the Debtors and the counterparty to the Unexpired Lease; (b) the date the leased property is surrendered to the affected lessor; and (c) the effective date otherwise set forth in the Rejection Notice. -- If a timely objection to a Rejection Notice is received, and the Court ultimately upholds the Debtors' determination to reject the Unexpired Lease, the Unexpired Lease will be deemed rejected: (a) as of the later of: (i) the date of the Rejection Notice unless otherwise agreed, in writing, by the Debtors and the counterparty to the Unexpired Lease; (ii) the date the leased property is surrendered to the affected lessor; and (iii) the effective date otherwise set forth in the Rejection Notice; or (b) as otherwise determined by the Court in its order overruling the objection. -- Any claims arising out of the rejection of the Unexpired Leases must be filed with Donlin, Recano & Company, the Court-approved claims processing agent, on or before 30 days after the effective rejection date. (AMES Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL: Wants to Continue Use of Lender's Cash Collateral ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates seek the Court's authority to continue using the Cash Collateral for the payment of expenses critical to their business operations until February 16, 2003. Elio Battista, Jr., Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, tells the Court that the Debtors will be using the Cash Collateral on the same terms as the current Cash Collateral Order. The Debtors are currently seeking the Creditors Committee's consent on the motion. If the Debtors are denied authority to continue using the Cash Collateral, Mr. Battista is concerned that the Debtors' reorganization efforts would be seriously undermined -- to the detriment of their creditors, equity holders and employees. The Debtors fund their working capital needs through cash generated from their business operations. Except for certain contingent letters of credit, the Debtors do not rely on any credit facility to meet their regular working capital needs. The Debtors' operating expenses include the maintenance of the various vehicles and the payment of rent, taxes, utilities, salaries and wages, employee benefits and necessary capital expenditures. The Debtors will be using the Cash Collateral for financing and purchasing new vehicles for their fleet as well as payment of other administrative expenses including, without limitation: -- professional fees and expenses allowed by the Court pursuant to Sections 330 and 331 of the Bankruptcy Code; -- reimbursement of allowed expenses incurred by the members of any official committee appointed by the Office of the United States Trustee in the Debtors' cases; -- fees payable under bankruptcy and related costs; and -- other charges incurred in administering the Debtors' Chapter 11 cases. "Authorization to use the cash collateral for the preservation of the Debtors' businesses will benefit creditors and the Debtors alike," Mr. Battista asserts. "Moreover, the Debtors' use of cash collateral in their cases has been instrumental to the implementation of their business plan that will result in the streamlining of their businesses and successfully emerging from Chapter 11 as a viable company." (ANC Rental Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL CORP: Commences Review of Airline Loyalty Programs ------------------------------------------------------------- Acknowledging that not all Frequent Flyer programs offer the competitive advantages they once did, ANC Rental Corporation, parent of National Car Rental and Alamo Rent A Car, will begin reviewing the value of its participation in Airline Loyalty Programs. Committed to reviewing all options, the company will begin meeting with travel partners and commercial accounts over the next 30 days. A decision is expected during the first quarter of 2003. "Not all frequent flyer programs offer the marketing advantage they once did," said Michael Going, Sr. VP of Sales for ANC. "It is also apparent that the cost of the programs benefits the airlines, not the customer or the car rental industry due to the breakage component in unredeemed miles." ANC's move follows closely on the heels of a similar decision by Hertz. There will be one key difference, however. "While we support the direction of the recent Hertz decision to improve margins," said Going, "we do not believe that a change forced on customers with no advance notice or informed discussion is an appropriate path. We will move to become competitive in programs that benefit our customers, while yielding an acceptable rate of return. We differ, though, in that our customers and business partners will be involved in our decision." To that end, ANC will convene an advisory group to weigh the effects of various plan modifications on its corporate travel partners. The advisory group will consist of representatives from various commercial travel accounts and airline partners. ANC Rental Corporation, headquartered in Fort Lauderdale, is one of the world's largest car rental companies with annual revenue of approximately $3.2 billion in 2001. ANC Rental Corporation, the parent company of Alamo and National, has more than 3,000 locations in 69 countries. Its more than 17,000 global associates serve customers worldwide with an average daily fleet of more than 275,000 automobiles. AOL TIME WARNER: Reaffirms 2002 Outlook for America Online Div. --------------------------------------------------------------- AOL Time Warner Inc., (NYSE:AOL) reaffirmed its previously provided 2002 outlook for its America Online division and announced a preliminary 2003 outlook for the division in advance of Tuesday's meeting where management will provide an update on its America Online business. The Company said it expects America Online's full-year 2002 total revenues to range between $8.8 billion and $9.0 billion and advertising and commerce revenues to be between $1.5 billion and $1.6 billion. The Company also said it expects America Online's EBITDA to total between $1.7 billion and $1.8 billion, trending toward the high end of that range. In providing a preliminary 2003 outlook for America Online, the Company said that it expects solid growth in worldwide subscription revenue will be offset by declines in advertising and commerce revenues of 40% to 50% in 2003, largely due to lower revenue recognition from prior-period commitments. As a result, overall revenues for the division will be essentially flat in 2003 compared with 2002. With the decline in high-margin advertising and commerce revenues, the Company said that it expects EBITDA to decrease 15% to 25% year over year. AOL Time Warner Chief Financial Officer Wayne Pace said: "Our 2002 results continue to track as we expected. Even though it's early to give a precise 2003 outlook for America Online, management has just concluded a comprehensive review of its operations and has developed an achievable business plan to build a strong foundation for the future. It is clear that 2003 will be a transition year, but with this plan we expect America Online once again to deliver solid EBITDA growth beginning in 2004." Separately, AOL Time Warner said it also expects to achieve its previously announced overall Company outlook for full-year 2002 EBITDA growth at the low end of the 5% to 9% range and full-year revenue growth within the 5% to 8% range. AOL Time Warner Inc., is the world's leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks, music and publishing. At September 30, 2002, AOL Time Warner's balance sheets show that its total current liabilities exceeded its total current assets by about $2.1 billion. ARBEK OAK: Buxbaum Completes GOB Sale & Other Asset Auctions ------------------------------------------------------------ The recent going-out-of-business sale and auctions directed by Buxbaum/Century of Arbek Oak Furniture's merchandise inventory, machinery and equipment resulted in the sale of all items on hand, yielding a return to the manufacturer's secured lender that was nearly 50% above original projections. Buxbaum/Century of Calabasas, Calif., was retained by the bank to dispose of Arbek's inventory, machinery and equipment following a foreclosure. Founded in 1982, Chino, Calif.-based Arbek had sold its oak furniture through more than 1,000 retailers nationally, ranging from the Haverty, Wickes and Levitz chains, to independent merchants. Arbek's merchandise inventory consisted of 3,500 pieces of beds, mirrors and replacement parts valued at $2.5 million (at retail). All merchandise went on public sale at the Chino plant starting September 13, and all but 450 pieces were sold. This was followed by an on-site auction on October 18 of 1,500 lots of Arbek's machinery and equipment, which ranged from woodworking machines to warehouse equipment and office furnishings. More than 500 bidders from as far away as Pennsylvania, Canada and Mexico snapped up everything in sight. Finally, the remaining 450 pieces of furniture were sold at auction on October 19. Buxbaum/Century is a joint venture between Buxbaum Group of Calabasas and Century Services, a leading specialist in industrial equipment appraisals and liquidations, headquartered in Calgary, Alberta. Buxbaum/Century Services was formed in 2000 to provide machinery and equipment appraisal and auction services for financial institutions and corporations throughout North America. "This project showcased the unique combination of strengths this joint venture brings together: The consumer goods expertise of Buxbaum Group and the machinery and equipment expertise of Century Services," explained Buxbaum/Century regional manager Joseph Seigo, who directed the Arbek sale and auctions. "As opposed to a scenario under which one company would handle the merchandise sale and another the M&E auction, the efficiencies inherent to this single-source approach allow for significantly higher return to the secured lender, both from an initial offer perspective as well as on a net recovery basis. "Among other things," Seigo continued, "we were able to leverage the retail sale advertising to promote the M&E auction. When it came time to close the liquidation and go to auction with the M&E, we had a forum to market the remaining merchandise and generate a higher return than 'bulking out' the balance of the inventory. At the end of the day, we were able to increase the net returns to the lender by almost 50%." Buxbaum Group provides inventory appraisals, auctions on both fixed and liquid assets, turnaround and crisis management, as well as other consulting services for banks and other financial institutions with retail, industrial, wholesale/distribution and consumer-product manufacturing clients. The firm also provides liquidation services on an equity or consultative basis for consumer-product inventories, machinery and equipment. Additionally, Buxbaum buys and sells consumer-product inventories on a closeout basis. ASIA GLOBAL CROSSING: Seeks Approval of Asia Netcom Sale Pact ------------------------------------------------------------- Richard F. Casher, Esq., at Kasowtiz Benson Torres & Friedman LLP, in New York, informs the Court that immediately prior to the commencement of its Chapter 11 Case, the Asia Global Crossing Ltd. Debtors and Asia Netcom entered into a Sale Agreement. Pursuant to the Sale Agreement, the AGX Debtors propose to transfer, assign and sell to Asia Netcom substantially all of its assets free and clear of Encumbrances and assume and assign to Asia Netcom of certain executory contracts and unexpired leases. The Asia Netcom Transaction is subject to approval by this Court and higher or better offers to be solicited pursuant to certain notice and bidding procedures. The Asia Netcom Transaction will provide the economic underpinnings of the Debtors' plan of reorganization to be filed in the Chapter 11 Case. By this Sale Motion, at a hearing requested to be held on January 20, 2003, the AGX Debtors request entry of an order approving the terms and conditions of the Sale Agreement, or any other definitive agreement between the Debtor and the Successful Bidder that may emerge from an auction process. The Debtors also ask the Court to authorize the consummation of the Sale of the Acquired Assets, free and clear of all Encumbrances, in accordance with the provisions of the Sale Agreement. Finally, the Debtors ask the Court to determine that the Asia Netcom Transaction is exempt from any stamp, transfer, recording or similar tax as a sale in anticipation of a Chapter 11 plan of reorganization. Immediately after the GX Debtors notified the AGX Debtors of their refusal to honor its funding commitment under the GX Credit Facility that the GX Debtors had made available to the AGX Debtors in connection with AGX's placement of $408,000,000 Senior Notes in October 2000, AGX began to consider the best way to preserve the value in its estate. AGX determined that, in order to retain the greatest amount of value in its business, it is in the best interest of its estate to sell the Assets on a going concern basis. Consequently, in February 2002, prompted by the GX Debtors' refusal to honor its funding commitment under the GX Credit Facility, Mr. Casher relates that AGX engaged Lazard Freres & Co. LLC to assist it in connection with the restructuring of the Senior Notes and the potential sale of all or substantially of its assets, the sale of a controlling interest in the equity of AGX, the merger or consolidation of AGX with another entity and other similar transactions. In the course of its engagement, Lazard: -- conducted detailed due diligence in respect of AGX's operations and financial condition; -- prepared financial models, projections and restructuring alternatives; -- prepared and distributed an offering memorandum to nearly 30 potential financial and strategic investors; -- contacted potential investors worldwide and assisted AGX during the due diligence phase of the Restructuring Process; -- negotiated with representatives of the Ad Hoc Committee; -- analyzed the investment proposals submitted by various potential investors; -- assisted AGX's senior management, board of directors and outside counsel in addressing various issues implicated by the proposals; and -- assisted AGX's senior management and board of directors in selecting the proposal that offered the highest value for AGX's stakeholders. The Asia Netcom Transaction is the culmination of the exhaustive, comprehensive, worldwide marketing process that the AGX Debtors and Lazard have pursued continuously since February 2002. In consideration of the transfer of the Assets to Asia Netcom: -- up to $81,200,000 in cash will be retained by or transferred to AGX, subject to certain potential adjustments under the Sale Agreement, for distribution to its priority and non-priority creditors; and -- Asia Netcom will assume certain liabilities of AGX and the Acquired Subsidiaries. Mr. Casher believes that the value of the Assumed Liabilities, net of cash and receivables to be retained by Asia Netcom, lies in a range of $277,000,000 to $1,125,000,000. The low end of that range assumes that the liability for customer capacity contracts to be assumed by Asia Netcom is measured by the out- of-pocket cost of providing the contractually committed capacity to the customers; the high end of the range assumes that the liability for the customer capacity contracts is measured by the face amount of the capacity purchased by the customers. As a result of the structure of the Asia Netcom Transaction, AGX's estate will be freed of substantial claims that otherwise would be asserted against it, including: -- NEC Corp. and KDDI Submarine Cable Systems Inc. holds a substantial claim against East Asia Crossing Ltd. and AGX arising in connection with the construction of East Asia Crossing, a 17,900-kilometer undersea cable in East Asia. In conjunction with the Asia Netcom Transaction, those claims, which total $280,000,000, are being reduced, restructured and assumed by Asia Netcom and released as to AGX; -- Intercompany claims exceeding $600,000,000 that certain Subsidiaries hold against AGX will be released in connection with the Asia Netcom Transaction; and -- $145,000,000 in claims for unactivated capacity arising under IRUs purchased by customers are being assumed by Asia Netcom and, therefore, will not be asserted against AGX's estate. In short, as a result of the Asia Netcom Transaction, $81,200,000 in cash will be retained by the Debtors for distribution to a class of residual general unsecured claims that will be substantially reduced in size. According to Mr. Casher, Asia Netcom is an investment vehicle incorporated in Bermuda that was formed and is wholly-owned by China Netcom International Limited, which, in turn, is 100% owned by China Netcom Corporation (Hong Kong) Limited. Asia Netcom has been established for the specific purpose of entering into the Sale Agreement and consummating the Asia Netcom Transaction. After execution of the Sale Agreement, CNC will: -- provide evidence of its commitment to make an equity investment in Asia Netcom of $120,000,000; -- provide a commitment letter from The Industrial and Commercial Bank of China (Asia) Limited to provide a $150,000,000 in debt financing to Asia Netcom; and -- execute and deliver to the Debtors a guaranty of payment and performance of Asia Netcom's obligations pursuant to the Sale Agreement and each Ancillary Agreement executed by Asia Netcom, up to a maximum amount of $16,000,000. CNC has reserved the right to assign part of its equity commitment to third parties and currently is engaged in confidential discussions with these parties. The principal terms of the Asia Netcom Transaction are: -- Acquired Assets: The assets to be acquired by Asia Netcom include: * the Debtors' equity interests in certain direct subsidiaries, and the resulting indirect equity interests in certain indirect subsidiaries; * the Business as a going concern; * certain insurance policies held by the Debtors; * books and records used by the Debtors in connection with the Business; * goodwill of the Debtors relating to the Business; * the Debtors' intellectual property; * claims and causes of action related to the Business and pertaining to and inuring to the benefit of the Debtors, except those relating to the Excluded Assets, the Excluded Liabilities or the rights of the Debtors and any Excluded Subsidiary in any claims against any of their respective directors or officers; * all of the Debtors' rights under all contracts, licenses, sales or purchase orders and under all bids and offers related to the Business to the extent transferable; * all of the Debtors' right, title and interest in and to all amounts receivable from third parties and all other assets, rights and claims used, or intended to be used, in the operation of the Business; * rights in certain contracts between the AGX Debtors and the GX Debtors, to the extent that they are entered into prior to the Closing; * all right, title and interest of the Debtors in and to the Assigned Contracts, and all right, title and interest of the Excluded Subsidiaries in and to the Assigned Non-Debtor Contracts; * all of the AGX Debtors' right, title and interest in and to certain proofs of claim filed by AGX against the GX Entities; and * all of the Debtors' right, title and interest in certain specified loan agreements. The Acquired Assets will be sold free and clear of any and all Encumbrances, except for Permitted Encumbrances; -- Excluded Assets: The Sale Agreement specifically sets forth in Schedule 2.01(b) the assets of AGX that will not be acquired by Asia Netcom. The Excluded Assets include direct and indirect equity ownership interests in certain subsidiaries of AGX, including Asia Global Crossing Development Co.; -- Assumed Liabilities: Asia Netcom will assume and agree to pay, perform and discharge the liabilities of the Acquired Subsidiaries and the liabilities of the Debtors, including: * AGX's obligations under certain contracts with the GX Debtors to the extent that they are entered prior to the Closing and are reasonably acceptable to Asia Netcom; * the Debtors' liabilities under the Assigned Contracts and the Excluded Subsidiaries' liabilities under the Assigned Non-Debtor Contracts; and * the Debtors' obligations under certain specified guarantee agreements; -- Excluded Liabilities: The Debtors and the Excluded Subsidiaries will retain, and be responsible for paying, performing and discharging when due, and Asia Netcom will not assume, the liabilities of the Debtors and the Excluded Subsidiaries other then the Assumed Liabilities. The Excluded Liabilities include the Payables of the Debtors and the Excluded Subsidiaries, certain agreements and Reorganization Expenses; -- Purchase Price: The consideration given by Asia Netcom for the Acquired Assets will be $81,200,000 in cash to be retained by or transferred to Asia Netcom plus the amount of the Assumed Liabilities; -- Cash Transfers: If the cash held by the Debtors and the Excluded Subsidiaries as of the Closing Date is: * less than the Distribution Amount, then cash will be transferred to the Debtors: a. from the Acquired Subsidiaries; and b. from Asia Netcom, to the point that the Seller and the Excluded Subsidiaries hold an amount equal to the Distribution Amount as of the Closing Date; or * greater than the Distribution Amount, the Debtors and the Excluded Subsidiaries must transfer to Asia Netcom or the Acquired Subsidiaries the amount in excess of the Distribution Amount; -- Guaranty and Financing: After execution of the Sale Agreement, CNC, Asia Netcom's corporate parent, will: * execute and deliver to the Debtors a guaranty of payment and performance of all obligations of Asia Netcom pursuant to the Sale Agreement and each Ancillary Agreement executed by Asia Netcom, up to $16,000,000; * provide a commitment to make a $120,000,000 equity investment in Asia Netcom; and * provide a commitment letter from the Industrial and Commercial Bank of China (Asia) Limited to provide $150,000,000 in debt financing to Asia Netcom; -- Closing: The closing of the Asia Netcom Transaction will take place at 10:00 a.m., Hong Kong time, at the offices of Shearman & Sterling, on the fifth Business Day following the satisfaction or waiver of the conditions set forth in Sections 7.01 and 7.02 of the Sale Agreement; -- Releases: As a condition to Closing, the Debtors' primary vendors must have agreed to fully release the Debtors and the Excluded Subsidiaries from their obligations under the Vendor Contracts; and Asia Netcom will deliver releases in favor of the Debtors and the Excluded Subsidiaries with respect to all Assumed Liabilities. Asia Netcom will also deliver an agreement releasing and discharging on behalf of Asia Netcom and the Acquired Subsidiaries each director and officer of the Acquired Subsidiaries from all past, present and future against these individuals, except for fraud and willful misconduct; -- Global Crossing: The AGX Debtors will use commercially reasonable efforts to: * negotiate certain services agreements with the GX Debtors; * negotiate a reduction of the GX Payables; and * prevent any GX Entity from using or licensing the name "Asia Global Crossing" for three years after the Closing Date. If the GC Payables that are acquired are not reduced to $0, AGX and Asia Netcom will negotiate in good faith an alternative arrangement to achieve a reduction to $0. -- Finance Subsidiary: To effectuate the transfer of certain intercompany payables and receivables amounts between the Debtors and the Excluded Subsidiaries, on one hand, and the Acquired Subsidiaries, on the other, the Debtors will establish a new subsidiary to which it will transfer the receivables from the Acquired Subsidiaries in exchange for a note. After the receipt of the Approval Order and prior to the Closing Date, the Debtors will waive the repayment of the note by the new subsidiary, and the Acquired Subsidiaries will waive the repayment of amounts owed to them by the Debtors. At the Closing, Asia Netcom will acquire the new subsidiary and the Acquired Subsidiaries; -- Taiwan Subsidiary: Prior to Closing, Asia Netcom will irrevocably and unconditionally assign its rights to acquire the Taiwan Shares to a third party to be identified by Asia Netcom prior to Closing; -- Termination: The Sale Agreement may be terminated at any time prior to the Closing: * by mutual written consent of the Debtors and Asia Netcom; * by Asia Netcom or the Debtors, if the Closing has not occurred by January 31, 2003, provided, that if the only unsatisfied condition to Closing is non-receipt of any Regulatory Approval, the date is extended to March 31, 2003; * by either party, if the contemplated transactions are prohibited by law or regulation or the contemplated transactions would violate any non-appealable Final Order of the U.S. Bankruptcy Court, the Bermuda Court or a Governmental Authority having competent jurisdiction; * by Asia Netcom, if certain filing deadlines set forth in the Sale Agreement relating to the Debtors' filing, and this Court's consideration and approval of, the Bidding Procedures Motion and the Sale Motion have not been met, and the approval of certain orders by this Court and the Bermuda Court by specific dates have not occurred; * by Asia Netcom: a. if the Debtors accept an Acquisition Proposal prior to the approval of the Bidding Procedures Order, seeks this Court's approval of any Acquisition Proposal prior to the approval of the Bidding Procedures Order, or after the approval of the Bidding Procedures Order, takes action to pursue an Acquisition Proposal, other than as permitted by the Bidding Procedures Order; b. the Debtors enter into an agreement with another Person or group with respect to a Acquisition Proposal; c. the Debtors' board has resolved to do any of the foregoing; or d. this Court enters an order approving an Acquisition Proposal, any sale of the Acquired Assets other than to Asia Netcom; * by Asia Netcom after: a. the dismissal of the Debtors' Chapter 11 case or a conversion of the Chapter 11 case to a Chapter 7 case under the Bankruptcy Code; b. the appointment of a trustee or an examiner with expanded powers in the Chapter 11 Case, or the appointment by the Bermuda Court of a liquidator; or c. the Debtors file a plan of reorganization that is materially inconsistent with, or would reasonably be expected to materially delay, materially adversely effect or materially conflict, directly or indirectly, with the transactions contemplated or the benefits reasonably expected to be gained by Asia Netcom under the Sale Agreement; * by Asia Netcom or the Debtors, for uncured material breaches or defaults of representations and warranties or violations of, or inability to satisfy, covenants; or * by Asia Netcom if a Subsidiary Bankruptcy Case is commenced: a. under Chapter 7 of the Bankruptcy Code, b. with the appointment of a trustee or an examiner with expanded powers, or c. without specified amendments to the Sale Agreement having been made and any Filing Subsidiary having become a party to the Sale Agreement; -- Fees and Expenses: Except as otherwise specified in the Sale Agreement, all costs and expenses, including those of counsel, financial advisors and accountants, will be paid by the party incurring the costs and expenses, whether or not the Closing have occurred. Mr. Casher contends that the Debtors have ample and sound business justifications for consummating the Asia Netcom Transaction or the Alternative Sale Transaction. Following the GX Debtors' refusal in December 2001 to honor its funding commitment under the GX Credit Facility, and in light of the effective closing of the capital markets to the telecommunications industry generally, the AGX Debtors lacked sufficient liquidity, and was unable to obtain third-party financing, to fund operations beyond the third quarter of 2002. Although assets sales conducted in the first half of 2002 increased the AGX Debtors' "liquidity runway" through the first quarter of 2003, it is apparent that, absent a substantial capital transaction, the Debtors' ability to sustain its operations on a stand-alone basis dwindles, and soon evaporates, with time. Mr. Casher notes that the Debtors have devoted significant effort to maintain its workforce and the inherent going concern value associated with its business operations. However, the Debtors deems it unlikely that its current cash resources and projected expenditure "run rate" will permit it to maintain its business operations and its workforce beyond the first quarter of 2003 without a substantial infusion of fresh capital. It is the Debtors' business judgment that, in light of the liquidity constraints that severely restrict its current operations, and given the unavailability in the marketplace of fresh capital to sustain its operations, a going concern sale of the Assets to a third party is the optimal vehicle for preserving and maximizing value for the benefit of its creditors. Additionally, Mr. Casher points out that in the current depression besetting the telecommunications industry, delay in consummating the Asia Netcom Transaction could have extremely prejudicial and adverse consequences to asset values. Given these circumstances, Asia Netcom is only willing to proceed to acquire the Assets if the Sale can be considered and approved by the Bankruptcy Court expeditiously. The timing of this Court's consideration and approval of the Sale is of utmost importance that Asia Netcom may elect to terminate the Sale Agreement if the Bidding Procedures Order is not entered by December 17, 2002, and Asia Netcom may elect to terminate the Sale Agreement if the Approval Order is not entered by January 31, 2003. Accordingly, consummating, as expeditiously as possible, the Asia Netcom Transaction or the Alternative Sale Transaction, as the case may be, constitutes a proper exercise of the Debtors' sound business judgment. The Debtors submit that the Sale of the Acquired Assets will provide fair and reasonable consideration to its estate. Mr. Casher notes that the Debtors negotiated the Sale Agreement with Asia Netcom only after the conclusion of the extensive, worldwide Restructuring Process conducted by Lazard, at which time the Debtors, in consultation with Lazard, determined that, among the proposals submitted, the Asia Netcom Transaction constituted the highest and best offer for the Debtors' estate. Thus, the Assets already have been thoroughly shopped and marketed by a premier investment banking firm. The Sale Agreement represents the culmination of extensive, arm's length negotiations as to the value of the Asia Netcom Transaction and reflect a fair and reasonable "floor price." (Global Crossing Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1) are trading at about 10 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1 for real-time bond pricing. ASSOCIATED MATERIALS: All 9.75% Notes Tendered in Exchange Offer ---------------------------------------------------------------- Associated Materials Incorporated said that 100% of the aggregate principal amount of its unregistered 9-3/4% Senior Subordinated Notes due 2012 had been tendered and accepted pursuant to the Company's offer to exchange such notes. The Company offered to exchange $165,000,000 of the original notes, issued in April 2002, for new notes registered under the Securities Act of 1933, as amended, pursuant to the registration rights agreement related to the sale of the original notes. The terms of the new notes are identical to the terms of the original notes, but the new notes will not be subject to the transfer restrictions under the federal securities laws that were applicable to the original notes. The exchange offer expired at 5:00 p.m., New York City time on Tuesday, November 26, 2002. AMI is a leading manufacturer of exterior residential building products, which are distributed through 89 company-owned Supply Centers across the United States. The Company produces a broad range of vinyl siding and vinyl window product lines as well as vinyl fencing, decking and railing and vinyl garage doors. * * * As previously reported, Standard & Poor's revised the CreditWatch implications on building products manufacturer Associated Materials Inc.'s 'BB' corporate credit rating to negative from developing. Ratings on Associated Materials were placed on CreditWatch on December 20, 2001, following the company's announcement that it was pursuing strategic alternatives, including a possible sale of the company. The revision of the CreditWatch implications stems from the completion of Standard & Poor's review of the company's proposed capital structure pending its sale to Harvest Partners Inc. The transaction, valued at $468 million, will be financed with $296 million of cash and debt and $172 million of equity. If the acquisition is completed as currently structured, Standard & Poor's expects to lower its corporate credit rating on Associated Materials Inc., to double-'B'-minus, reflecting a more leveraged capital structure. The outlook will be stable. In addition, Standard & Poor's expected to assign a single-'B' rating to the company's proposed $165 million subordinated notes due 2012 to be issued under Rule 144A with registration rights. ATLAS AIR: S&P Keeps B- Corp. Credit Rating on Watch Negative ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Atlas Air Worldwide Holdings Inc., and subsidiary Atlas Air Inc. Standard & Poor's ratings on both entities remain on CreditWatch with negative implications, where they were placed on October 17, 2002. Standard & Poor's lowered the corporate credit rating to 'B-' from 'B' and senior unsecured debt to 'CCC' from 'CCC+'. Ratings of most enhanced equipment trust certificates were lowered by one notch, as well. One class of enhanced equipment trust certificates, the 1999-1B certificates, was lowered two notches (to 'BB+' from 'BBB'), reflecting deterioration in asset coverage, as well as the effect of the downgrade of Atlas Air Inc. The rating actions follow the company's announcement that its failure to provide timely audited financial statements has become an "event of default" under its credit facilities and related intercompany aircraft leases, and that lenders may now accelerate repayment of approximately $246 million in outstanding indebtedness, should lenders representing at least 50.1% of the outstanding loans choose to do so. "The rating actions reflect Atlas' default under its credit agreement, and continuing concerns about near-term liquidity and the company's ability to meet debt service requirements as they come due over the near term," said Standard & Poor's credit analyst Lisa Jenkins. "The company is in discussions with its banks and is attempting to negotiate a waiver of the default," Ms. Jenkins continued. Purchase, New York-based Atlas announced on October 16 that it was initiating a re-audit of its financial results for 2000 and 2001, following a determination that certain adjustments must be made to prior-year results. Completion of the re-audit is not expected before early 2003. As a result of the re-audit, the company delayed the filing of its third-quarter 2002 Form 10-Q, which created the event of default. Atlas Worldwide Holdings, which provides heavyweight air cargo services through its Atlas Air Inc. subsidiary and scheduled, high-frequency airport-to- airport cargo services through its Polar subsidiary, has about $2.5 billion of debt (including off-balance-sheet leases). Atlas is seeking additional waivers if and to the extent necessary to avoid defaults under other indebtedness, as well as its the default under the bank facilities. DebtTraders says that Atlas Air Inc.'s 10.75% bonds due 2005 (CGO05USR1) are trading at about 35 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CGO05USR1for real-time bond pricing. BETHLEHEM STEEL: Court Approves Stipulation with JPMorgan Chase --------------------------------------------------------------- In accordance with the Final DIP Financing Order, Bethlehem Steel Corporation and its debtor-affiliates caused Bethlehem Steel Funding, LLC to sell its accounts receivable for a purchase price comprised of: (a) the total cash required to satisfy the obligations owed by Funding to the Funding Purchasers, including all amounts needed to cash collateralize reimbursement obligations in respect of undrawn letters of credit; and (b) the cancellation of the Funding Note. Funding used the proceeds to repay in full all outstanding purchased interests in: (1) the accounts receivable held by the Funding Purchasers under the Receivables Agreement; and (2) the cash collateralize reimbursement obligations with respect to the undrawn letters of credit issued under the Receivables Agreement. Before October 7, 2002, all but one of the Receivables Agreement LOCs were terminated without being drawn upon, and the applicable amount of cash collateral was returned to the Debtors. There remained outstanding one undrawn Receivables Agreement LOC -- Travelers LOC -- in the face amount of $2,500,000. JPMorgan Chase Bank, in its capacity as administrative, structuring, and collateral agent under the Receivables Agreement, presently holds cash collateral equal to 105% of the Travelers LOC for the benefit of the Funding Purchasers. On October 7, 2002, JPMorgan received a draw request for the full amount of the Travelers LOC, which was honored on October 11, 2002. In consideration for the release of the accounts receivable the Debtors acquired from Funding, the Debtors are required to indemnify and hold harmless the Funding Purchasers and the Funding Agent for and against any and all claims, losses, costs or expenses they suffered or incurred arising out of or relating to the Receivables Agreement. Accordingly, Judge Lifland approves a Stipulation between the Debtors and JPMorgan to apply the Cash Collateral as reimbursement for the drawn Travelers LOC. It is in the Debtors' best interest to reimburse the Funding Purchasers as soon as possible to minimize the accrual of interest and other costs, expenses and fees related to the Travelers LOC. Pursuant to the Stipulation, the parties agree that: -- JPMorgan, on behalf of the Funding Purchasers, is directed irrevocably to apply the Cash Collateral as reimbursement or payment of: (a) the full amount of the drawing made under the Travelers LOC -- Principal Sum; (b) the Yield accrued on the Principal Sum for the period from October 11, 2002 to the date of the application; (c) any accrued and unpaid Letter of Credit Participation Fees and L/C Issuing Bank Letter of Credit Fees whether for the Travelers LOC or any other Receivables Agreement LOC; and (d) any other non-contingent costs, expenses or fees payable under the Receivables Agreement and relating to the Travelers LOC. Before JPMorgan applies the Cash Collateral, it will deliver to the Debtors a statement setting forth in reasonable detail the calculation of all amounts; -- Upon full reimbursement or payment, JPMorgan will turn over to the Debtors any remaining Cash Collateral. JPMorgan will then acknowledge receipt of full payment of the amounts reimbursed or paid; and -- To the extent necessary, the automatic will be deemed lifted for the purpose of consummating the transactions. (Bethlehem Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALL-NET ENTERPRISES: Randy Benson Resigns as Senior VP and CFO --------------------------------------------------------------- Bill Linton, president and chief executive officer of Call-Net Enterprises Inc., (TSX: FON, FON.B) said that the corporation has accepted the resignation of Randy Benson, senior vice president and chief financial officer, effective December 31, 2002. Mr. Benson joined the company in 1999. His experience in operational and financial restructuring was invaluable to Call- Net and he played an integral role in the company's successful $2.6 billion recapitalization completed in April of 2002. "We are sorry to lose someone of Randy's calibre, however we understand his desire to move forward and pursue different ventures," said Linton. "He has made a significant contribution to Call-Net during his three year tenure and will be missed by the entire management team." "Randy made a valuable contribution to Call-Net Enterprises during a difficult phase in our company's history," said Larry Tapp, chairman of the board of directors, Call-Net. "We will miss him and wish Randy well in his future endeavours." "I am privileged to have had the opportunity to work with such a motivated and talented group of people on the board, on the management team and within the company," said Benson. "We've overcome significant obstacles as an organization and I depart confident of the company's ability to manage through the next phase of industry change." Call-Net Enterprises Inc., is a leading Canadian integrated communications solutions provider of local and long distance voice services as well as data, networking solutions and online services to over 4,500 businesses and 110,000 households primarily through its wholly-owned subsidiary Sprint Canada Inc. Call-Net, headquartered in Toronto, owns and operates an extensive national fibre network and has over 100 co-locations in ten Canadian metropolitan markets. For more information, visit the Company's Web sites at http://www.callnet.caand http://www.sprint.ca * * * As previously reported, Standard & Poor's assigned a 'B+' rating to Call-Net Enterprises Inc.'s US$377.0 million 10.625% senior notes on April 16, 2002. At the same time, the long-term corporate credit rating on the company was raised. Outlook is positive. The ratings reflect Call-Net's national franchise in Canada, and improvement in its subscriber mix and financial risk profile, following the company's successful C$2.6 billion recapitalization in April 2002. The ratings also took into consideration Sprint Corp.'s 10.0% equity ownership and strategic alliance, which provides Call-Net with access to Sprint's technology, network, purchasing power, and related trademarks. Still, increasing competition from incumbent providers in the small and midsize business telecommunications market, Call-Net's exposure to declining long-distance prices, and the execution risks associated with a revised business plan remain concerns. CALYPTE BIOMEDICAL: Dian J. Harrison Joins Board of Directors ------------------------------------------------------------- Calypte Biomedical Corporation (OTCBB:CALY), the developer and marketer of the only two FDA-approved HIV-1 antibody tests that can be used on urine samples, as well as an FDA-approved serum HIV-1 antibody Western Blot supplemental test, announced that Dian J. Harrison, age 54, has agreed to join Calypte's board of directors. She has received unanimous approval from Calypte's current board and becomes a nominee, subject to shareholder approval, for Calypte's 2003 board of directors as part of the preliminary proxy filing of November 2002. Ms. Harrison brings nearly 30 years of progressive experience in the healthcare and nonprofit sector to Calypte's board of directors. She currently serves as the president and chief executive officer of Planned Parenthood Golden Gate, which serves the entire San Francisco Bay Area. PPGG is one of the largest Planned Parenthood affiliates in the United States. Harrison brought PPGG to fruition by merging Planned Parenthood Association of San Mateo County with Planned Parenthood affiliates in Alameda, San Francisco, Marin, Sonoma and Mendocino counties. She now leads and oversees the operations for nine health centers, a 300 staff organization and manages a $18 million annual operating budget. She is also the primary spokesperson for the organization in a variety of areas, including Medical Services, Education Programs, Advocacy, and Patient Rights. "Dian brings to Calypte's board an extensive track record educating and administering care in reproductive and general health issues," stated Nancy Katz, president and CEO of Calypte. "While her credentials speak for themselves, it is Dian's passion for and involvement in community health that has propelled her career. Dian's community-based experience can help Calypte to increase the awareness of urine screening for HIV. We believe she will be a tremendous asset to our board." Ms. Harrison currently serves on the board of the California Family Health Council. She has served on the boards of several organizations, including the American Civil Liberties Union, the National Association for the Advancement of Colored People and the Red Rock Foundation. She received the Woman of the Year Award and the Women of Color Inspiration Award in 1996 from the National Women's Political Caucus, and was presented the 1997 Outstanding Leadership and Service Award from the Black Women for Political Action. Prior to her work with Planned Parenthood, Harrison served in leadership positions with high-profile organizations such as the United Way, the Urban League, and Fisk University. She received an undergraduate degree in Sociology from California State University, Los Angeles, and a Masters Degree in Social Work Planning and Administration from Western Michigan University. Calypte Biomedical Corporation, headquartered in Alameda, California, is a public healthcare company dedicated to the development and commercialization of urine-based diagnostic products and services for Human Immunodeficiency Virus Type 1 (HIV-1), sexually transmitted diseases and other infectious diseases. Calypte's tests include the screening EIA and supplemental Western Blot tests, the only two FDA-approved HIV-1 antibody tests that can be used on urine samples, as well as an FDA-approved serum HIV-1 antibody Western Blot test. The company believes that accurate, non-invasive urine-based testing methods for HIV and other infectious diseases may make important contributions to public health by helping to foster an environment in which testing may be done safely, economically, and painlessly. Calypte markets its products in countries worldwide through international distributors and strategic partners. Refer to current product package inserts for complete information on product performance characteristics. As previously reported in the Troubled Company Reporter, Calypte's June 30, 2002 balance sheet shows a total shareholders' equity deficit of about $7.5 million. CD WAREHOUSE: Court Fixes December 13, 2002 as Claims Bar Date -------------------------------------------------------------- December 13, 2002, is fixed by the U.S. Bankruptcy Court for the Western District of Oklahoma as the final day for creditors of CD Warehouse, Inc., and its debtor-affiliates to file their Proofs of Claims against the Debtors estates, or be forever barred from asserting those claims. Proofs of claims must be received by the Clerk of the Bankruptcy Court before 4:30 p.m. on the Claims Bar Date. CD Warehouse, Inc., together with its affiliates, filed for Chapter 11 protection on July 26, 2002. The Kirschner Law Firm, PC represents the Debtors in their restructuring efforts. CLASSIC COMMS: Delaware Court to Consider Plan on Dec. 10, 2002 --------------------------------------------------------------- On November 12, 2002, the U.S. Bankruptcy Court for the District of Delaware, approved the Disclosure Statement presented by Classic Communications, Inc., and it debtor-affiliates to explain the Company's First Amended Plan of Reorganization. Judge Walsh finds that the disclosure document contains adequate information and allows creditors to make informed decisions when voting to accept or reject the Plan. A hearing to consider confirmation of the Plan is scheduled for December 10, 2002, at 5 p.m., before the Honorable Peter J. Walsh in Wilmington. Classic Communications, Inc., a cable operator focused on non- metropolitan markets in the United States, filed for Chapter 11 petition on November 13, 2001 along with its subsidiaries. Brendan Linehan Shannon, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $711,346,000 in total assets and $641,869,000 in total debts. CLUETT AMERICAN: S&P Junks Credit & Sr. Secured Ratings at CCC+ --------------------------------------------------------------- Standard & Poor's lowered its corporate credit and senior secured ratings on Burlington, North Carolina-based hosiery manufacturer Cluett American Corp., to 'CCC+' from 'B'. At the same time, Cluett's subordinated debt rating was lowered to 'CCC-' from 'CCC+'. All ratings were placed on CreditWatch with negative implications. Approximately $235 million in debt was outstanding at September 29, 2002. The downgrade and CreditWatch placement reflect Standard & Poor's concern with the company's liquidity and ability to reduce the outstanding debt on its senior secured facility by approximately $45 million by March 31, 2002, as required by the loan agreement. (Currently Cluett does not generate any free cash flow.) This requirement was a result of the Nov. 13, 2002, amendment to the company's senior credit facility. The facility was amended because the company was not in compliance with its financial covenants at September 29, 2002, a result of the difficult retail environment, which has pressured margins and profitability. In addition to the required debt reduction, the financial covenants for the September and December 2002 quarters were also amended. "To resolve the CreditWatch, Standard & Poor's will discuss liquidity and future operating and financial strategies with management," said Standard & Poor's credit analyst Susan Ding. Cluett American is a leading designer, manufacturer, and marketer of men's socks in the U.S., selling primarily to department stores and national chain retailers. The company's well-known owned and licensed brands include Gold Toe, Kenneth Cole, IZOD, and Nautica. CONSECO FINANCE: Fitch Drops Senior Debt Rating to Default Level ---------------------------------------------------------------- Fitch Ratings has downgraded the senior debt rating of Conseco Finance to 'D' (Default) from 'CC'. The Default rating for Conseco Finance follows Wednesday's announcement that Conseco Finance elected not to make $4.7 million in guarantee payments on Dec. 2, 2002 related to manufactured housing securitization trusts. Conseco Finance indicated that it intends to suspend all such future guarantee payments relating to manufactured housing trusts until there is resolution to the restructuring of its manufactured housing business. Conseco Finance has indicated that such restructuring may lead to a Chapter 11 bankruptcy filing. CORDOVA FUNDING: S&P Hatchets Senior Secured Bond Rating to BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Cordova Funding Corp.'s $225 million series A senior-secured bonds, due 2019, to 'BB' from 'BBB-', and placed the rating on CreditWatch with negative implications. CFC is the funding vehicle that issued debt and subsequently loaned the proceeds to its affiliate, Cordova Energy Co. LLC, which guarantees CFC's payment obligations. Cordova, which is wholly owned by MidAmerican Energy Holdings Co. (MEC; BBB- /positive/--), completed the 537-megawatt natural gas-fired, combined-cycle power plant located in Rock Island County, Ill. in June 2001. The downgrade reflects the project's reliance on a tolling agreement with El Paso Merchant Energy Co., that expires in 2019. El Paso Corp., (BB/Watch Neg/--) guarantees the obligations of El Paso Merchant Energy. Standard & Poor's recently lowered the rating on El Paso to 'BB' from 'BBB'. MidAmerican Energy Co. (A/Stable/A-1), an affiliate of Cordova, has the option to purchase 50% of the capacity of Cordova, and has exercised this option through May 2004. However, there can be no assurances that MidAmerican will continue to exercise this option, in which case 100% of the capacity would be under contract with El Paso. The project is on track to generate cash flow that will service debt on the order of 1.3 times to 1.4x in 2002 and 2003, assuming that the plant realizes its revenues under the tolling agreements, and that it continues to meet availability targets. However, due to the current depressed spark spreads in the Midwest, it is not likely that the project would be able to sustain a rating in the 'BB' category if forced to operate in the merchant environment. The project benefits from liquidity support in the form of a debt service reserve account that covers six months' of debt service. Tolling counterparties are not required to post any collateral. COVANTA: Selling Aviation Fueling Business to Allied Aviation ------------------------------------------------------------- James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that prior to 1999, Covanta Energy Corporation and its debtor-affiliates provided numerous aviation-related services, including ground services, passenger services, cargo handling, fueling services and facility management and airport infrastructure development and management services, at over 100 airports throughout the world. After intensive evaluation of their business operations, the Debtors decided in September 1999 to pursue the sale or other dispositions of its Aviation Businesses. Accordingly, the Debtors engaged the services of Goldman Sachs & Company to initiate marketing efforts and solicit offers for the sale of the Aviation Businesses. The Debtors and Goldman Sachs contacted over 100 potential buyers that resulted in several sales of parts of the Aviation Businesses. The remaining Aviation Assets up for grabs consist of fuel storage management and into-plane fueling services at the John F. Kennedy, Newark and LaGuardia airports. Five wholly owned Debtors operate these businesses: Ogden New York Services, Inc., Ogden Aviation Service Company of New Jersey, Inc., Newark Automotive Fuel Facilities Corporation, Ogden Aviation Service Company of New York, Inc., and LaGuardia Fuel Facilities Corporation -- the Aviation Subsidiaries. All of the Aviation Subsidiaries shares are held by PA Aviation Fuel Holdings, Inc. Postpetition, Mr. Bromley informs Judge Blackshear, the Debtors and their financial advisor, Chilmark Partners, continued the sale process for the remaining aviation fueling business and continue to provide solicitation packages and Acquisition Agreements to potential bidders, including Allied Aviation Holdings Corporation. By this motion, the Debtors ask the Court to approve the sale of the Aviation Assets pursuant to the terms of the Acquisition Agreement with Allied Aviation, free and clear of liens, claims and encumbrances. In addition, the Debtors ask the Court to: (a) dismiss some of their bankruptcy cases, subject to approval of the Acquisition Agreement or other agreement requiring the dismissal; and (b) authorize the assumption and assignment of executory contracts and unexpired leases as provided by the Acquisition Agreement or any higher or better offer. The salient terms of the Debtors' Acquisition Agreement with Allied Aviation are: A. Purchase Price. If the Court dismisses the Acquired Companies' bankruptcy cases -- Ogden Aviation Service Company of New Jersey, Inc., Ogden Aviation Service Company of New York, Inc., LaGuardia Fuel Facilities Corporation and Newark Automotive Fuel Facilities Corporation -- on or prior to December 31, 2002, the purchase price would be $8,000,000, consisting of $5,800,000 in cash and $2,200,000 in the form of a promissory note. If the closing order is entered by the Court after December 31, 2002, the purchase price would be $6,000,000, consisting of $3,800,000 in cash and $2,200,000 in the form of a promissory note. The Purchase Price is subject to adjustment based on changes in the working capital of the Acquired Companies and Ogden New York from June 30, 2002 to the Closing of the Sale. In addition, Allied Aviation will waive any claims it or its affiliates may have with respect to the rejection of any agreements with the Debtors; B. Purchased Businesses. The Acquisition Agreement provides for the sale of all of the shares and assets owned by PA Aviation and Ogden New York, specifically, the shares of capital stock of Ogden Aviation Service Company of New Jersey, Inc., Ogden Aviation Service Company of New York, Inc., LaGuardia Fuel Facilities Corporation and Newark Automotive Fuel Facilities Corporation -- Acquired Companies; and the shares of capital stock of the Acquired Companies that are currently owned by PA Aviation. Other assets to be sold include all of Ogden New York's rights, title and interest under its agreements and permits with the Port Authority and its collective bargaining agreements, and any additional contracts with airlines and suppliers, which may be identified by Allied Aviation; C. Conditions to Closing. Prior to Closing, the Debtors will receive Court approval of the Proposed Sale and, if necessary, a Break-up Fee and will secure receipt of the Port Authority consent and arrange with Allied Aviation the assumption or replacement of the Acquired Companies' and Ogden New York's contractors' pollution liability insurance; D. Port Authority Consent. To obtain the Port Authority's consent of the Proposed Sale, Allied Aviation will replace the existing $3,000,000 letter of credit related to the operations at LaGuardia Airport; provide an additional $2,000,000 letter of credit related to operations at JFK airport; pledge to the Port Authority all accounts receivable arising from operations at Newark; and provide a guaranty from Tampa Pipeline Corporation and Allied Aviation to cover its subsidiaries' obligations at JFK and Newark; E. Assumed Liabilities. Allied Aviation will assume all liabilities and obligations: -- of the Acquired Companies; -- arising out of the ownership or operation of the Ogden New York assets; -- all liabilities and obligations under the executory contracts and unexpired leases assigned to Allied Aviation pursuant to the Acquisition Agreement; and -- all obligations with respect to any customer deposits and credits under the executory contracts and unexpired leases assigned to Allied Aviation pursuant to the Acquisition Agreement; F. Excluded Liabilities. Allied Aviation will not assume or pay, discharge or perform, and will not be liable for any liability, claim, commitment, or obligation of the Debtors or any other person, disclosed or undisclosed, related or arising out of: -- any contract or lease of Ogden New York that is not selected by Allied Aviation as a contract or lease to be assigned to Allied Aviation; -- any Ogden New York Environmental Damages; -- any of the Debtors' reorganization expenses; or -- any employee benefit plan, program or policy that is maintained by, contributed to or to which there is or was an obligation to contribute by Covanta or any of its affiliates, other than certain company plans as provided in the Acquisition Agreement; G. Contract or Lease. Allied Aviation will be liable for all cure costs under the contracts or leases assigned to it; H. Termination. Termination of the Acquisition Agreement will occur: -- if either Allied Aviation or Sellers fails to fulfill its respective performance obligations under the Acquisition Agreement; or -- upon the selection by Sellers of an alternative Successful Bidder; or -- by mutual consent; -- if the Proposed Sale has not closed on or prior to the 45th business day after the date of Court order approving the sale or upon the consummation of an Alternative Transaction; I. Break-Up Fee. If the Debtors accept a bid other than that of Allied Aviation and consummate a sale of all or substantially all of the Aviation Assets to this bidder within six months of the date of the Acquisition Agreement or November 14, 2002, the Debtors will pay Allied Aviation a $500,000 break-up fee as reimbursement of its expenses in respect of the transaction and for the value Allied Aviation added for serving as the stalking horse bidder; J. Deposit. Allied Aviation will pay to the Debtors a $2,000,000 cash deposit to be held in escrow and be applied against the Purchase Price at the completion of the sale, provided that if the Debtors consummate a sale to an alternative bidder, or if the Acquisition Agreement terminated other than as a result of a breach on the part of Allied Aviation, the deposit will be refunded to Allied Aviation; K. Representations and Warranties. Representations and warranties have been made as provided in Prepetition Agreement, with appropriate modifications to reflect the new structure of the transaction and the bankruptcy cases against the Debtors and Acquired Companies. Sellers will be deemed to have breached a representation if Allied Acquisition knew of the breach before the Acquisition Agreement was executed; and L. Indemnification. The Acquisition Agreement provides that Allied Aviation will be indemnified for certain breaches of representation or warranties as described in the Acquisition Agreement. The maximum potential indemnification liability of the Debtors is $2,200,000 and can be satisfied only by way of offset against the promissory note Allied Aviation will provide as part of the Purchase Agreement. If there will be other potential bidders aside from Allied Aviation, the proposals must be submitted on or before December 16, 2002 at 12:00 noon Prevailing Eastern Time. Any higher bid must be submitted in writing to: (a) the Debtors' financial advisors, Chilmark Partners; and (b) the Debtors' counsel, Cleary, Gottlieb, Steen & Hamilton. All those bids submitted that demonstrate sufficient financial wherewithal to consummate the proposed transaction will be considered by the Debtors. All parties who submit the bids should attend the December 18 Hearing. If a higher bid than that of Allied Aviation is received, the Debtors will request on the Hearing the: (a) approval of the Bidding Procedures and the Break-up Fee; (b) approval of the notice procedures pertaining to the form and notice of the proposed sale, the Bidding Procedures and the assumption and assignment of the related executory contracts and unexpired leases; and (c) setting the Auction Date and hearing on the merits of the proposed sale. Mr. Bromley contends that the closing of the bankruptcy cases subject to Court approval of the Proposed Sale is warranted under Section 1112(b) of the Bankruptcy Code because the case dismissal is in the "best interest of the creditors" since Allied Aviation would assume all liabilities and obligations of the Acquired Companies and continue operating the Acquired Companies' businesses upon consummation of the sale. Moreover, Section 363 supports the sale on these grounds: (i) the Acquisition Agreement represents the best offer received to date by the Debtors for the Aviation Assets, which are not related to the Debtors' core energy assets; (ii) the Acquisition Agreement was entered into after an extensive and thorough marketing process that began prior to the Petition Date and will continue until the Court approves the Sale; (iii) the Purchase Price is fair and reasonable; (iv) any lien, claims or encumbrances to the Aviation assets will attach to the net sale proceeds with the same validity, priority, force and effect that the liens, claims and encumbrances had on the Aviation Assets prior to the Closing; and (v) the terms of the Acquisition Agreement was negotiated at arm's length, without collusion, and in good faith. Furthermore, Mr. Bromley asserts that the assumption, assignment and sale of certain contracts and leases is reasonable under Section 365 as: (i) Allied Aviation has the financial capability, willingness and ability to perform under the Assigned Contracts; and (ii) counterparties will be informed of the transaction, the proposed cure amounts and will have enough opportunity to evaluate Allied Aviation's ability to provide adequate assurance of future payments. Since the transaction is contemplated to, and as furtherance of, a plan of reorganization, the Debtors ask the Court to exempt the sale from taxation provided under Section 1146(c). (Covanta Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVISTA COMMS: Fails to Comply with Nasdaq Listing Requirements --------------------------------------------------------------- Covista Communications, Inc., (NASDAQ symbol: CVST) received notification from NASDAQ on November 26, 2002, to the effect that the Company no longer is in compliance with NASDAQ's audit committee and market maker requirements as set forth in NASDAQ Marketplace Rules 4350(d)(2) and 4450(b)(6), respectively. This communication supplements the notification previously received on October 28, 2002, that the Company was not in compliance with other NASDAQ requirements pertaining to shareholders' equity/market value of listed securities/total assets and total revenue and market value of publicly held shares, pursuant to Rule 4450(b)(1)(A). Covista has scheduled a hearing before the NASDAQ Listing Qualifications Panel on December 5, 2002. Until a final determination of the matter has been made, the Company's Common Stock will continue to be listed on the NASDAQ National Market. There can be no assurance that the Panel will grant the Company's request for continued listing. However, Covista's management believes that the information and plan which management will present to the Panel should satisfy the requirements for continued listing on the NASDAQ National Market. Covista is a facilities-based long distance telecommunications, Internet and data services provider with a substantial customer base in the residential, commercial and wholesale market segments. Its products and services include a broad range of voice, data and Internet solutions, including long distance and toll-free services, calling cards, frame relay, Internet access, VPN, directory assistance and teleconferencing services. The wholesale division provides domestic and international termination services to carriers worldwide. Covista currently owns and operates switches in New York City, Newark, New Jersey, Philadelphia, Dallas and Chattanooga, and has announced plans to expand to an additional switch site in Minneapolis. Covista operates Network Operations, call center and information technology facilities in Chattanooga to monitor its switched network and to coordinate its various services. For information on the Company visit its Web site at http://www.covista.com Covista Communications' July 31, 2002 balance sheet shows that total current liabilities exceeded total current assets by about $13 million. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Six Note Classes -------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CP4 $89.5 million class A-1, $86.9 million class A-2, $110 million class A-3, $611.4 million class A-4 and interest-only classes A- X and A-CP are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms $61.9 million class B at 'AA', $45.7 million class C at 'A', $22.1 million class D at 'A-', $16.2 million class E at 'BBB+', $16.2 million class F at 'BBB', $11.8 million class G at 'BBB-', $22.1 million class H at 'BB+', $19.1 million class J at 'BB', $10.3 million class K at 'BB-', $8.8 million class L at 'B+', $7.4 million class M at 'B' and $5.9 million class N at 'B-'. Fitch does not rate the $20.6 million class O certificates. The rating affirmations follow Fitch's annual review of the transaction, which closed in August 2001. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. As of the November distribution date, the pool's collateral balance has decreased 1% to $1.17 billion from $1.18 billion at issuance. The certificates are collateralized by 130 fixed-rate loans on 139 properties, consisting mainly of the following: office (45% of the pool), multifamily (31%), and retail (19%) with significant concentrations in California (25%), Texas (12%), and Florida (11%). Midland Loan Services, the master servicer, collected year-end 2001 financials for 88% of the pool balance. The YE 2001 weighted average debt service coverage ratio is 1.53 times compared to 1.58x at issuance for the same loans. Currently, one loan (0.08%) is in special servicing. The loan is secured by a multifamily property in Cincinnati, OH and is currently 30 days delinquent. The borrower is working to bring the loan current. Two loans(2.3%) reported YE 2001 DSCRs below 1.00x. One of the loans(2.2%), Golf Terrace Apartments, is located in Winter Springs, FL and suffered in 2001 from construction at the property which has been completed. Fitch reviewed credit assessment of the Landmark loan (7.8%) and the Parfinco East and West Annex loan (4.7%). The DSCR for each loan is calculated using borrower financials less required reserves and debt service payments based on the current balance and Fitch stressed refinance constant. The Landmark loan is secured by a 423,677 square foot office building located on Market Street in the Financial District of Downtown San Francisco. The stressed DSCR for the trailing twelve months ending September 2002 was 1.70x compared to 1.73x at issuance. Tenants include Epicentric (26% of the net rentable area), Del Monte(15%), and Salesforce.com(15%). The tenants have security deposits in place in the form of letters of credit aggregating to approximately $18 million. The Parfinco East and West Annex loan is secured by two eight story office buildings totaling 510,550 sf located in Pasadena, CA. The stressed DSCR for the trailing twelve months ending September 2002 was 1.48x compared to 1.40x at issuance. The largest tenants are Kaiser Health Plan (54%), FEMA (12%), and Arco (12%). Based on their stable to improved performance, both loans maintain investment grade credit assessments. Fitch will continue to monitor this transaction, as surveillance is ongoing. DEUTSCHE MORTGAGE: Fitch Affirms Low-B's on 4 Classes of Notes -------------------------------------------------------------- Deutsche Mortgage & Asset Receiving Corp.'s commercial mortgage pass-through certificates, COMM 1999-1, are affirmed by Fitch Ratings as follows: $120.5 million class A-1, $723.2 million class A-2, and interest-only class X at 'AAA'; $62.3 million class B and $22.9 million class C at 'AA'; $62.3 million class D at 'A'; $81.9 class E at 'BBB'; $19.7 million class F at 'BBB-'; $68.8 million class G at 'BB'; $13.1 million class H at 'BB-'; $26.2 million class J at 'B'; and $19.7 million class K at 'B-'. Fitch does not rate the $29.5 million class L certificates. The affirmations follow Fitch's annual review of the transaction, which closed in March 1999. The certificates are collateralized by 221 fixed-rate loans, consisting mainly of office (25%), multifamily (24%), and retail (22%) properties. The three largest geographic concentrations are California (18%), Texas (11%), and Florida (11%). As of the November 2002 distribution date, the pool's aggregate certificate balance has been reduced by approximately 5%, to $1.25 billion from $1.31 billion at closing. ORIX Real Estate Capital Markets, LLC, the master servicer, collected year-end 2001 financials for 78% of the pool. Based on this information, the weighted-average YE 2001 debt service coverage ratio was 1.52 times, compared to 1.51x for YE 2000 and 1.39x at issuance. There were 26 loans (12% by principal balance) with a YE 2001 DSCR below 1.0x. Seven loans (2% by principal balance), two of which had a YE 2001 DSCR below 1.0x, were in special servicing. In addition to the loans with a YE 2001 DSCR below 1.0x and the loans in special servicing, approximately 8% of the transaction was on the master servicer watchlist mostly due to weak major tenants. Four of these loans (3% by principal balance) are secured by properties where a major tenant is in bankruptcy. As of November 2002, none of these leases had been rejected. Fitch's analysis accounted for the higher default probability associated with those loans with a weak DSCR and weak tenants. Criimi Mae, the special servicer, is currently working on the following real estate-owned loans. Winstone Park Apartments, located in Memphis, Tennessee. This loan has an outstanding balance of $8.8 million. Recently, Criimi has focused on carrying out necessary capital improvements and improving the tenant roster. Criimi expects to market the property shortly. Hyde Park Office Court, located in Austin, Texas. This loan has a current outstanding balance of $1.6 million. The property became REO when the borrower failed to cover debt service following a lease rate dispute with Mariner Post Acute, which at the time was in bankruptcy. Criimi expects a sale of the property in the near term. Fitch affirmed the ratings due to the amount of credit enhancement available to the rated classes and the year-to-year stability in the transaction's weighted average DSCR. Currently the 'B-' rated class K benefits from 2.4% in credit enhancement while specially serviced assets account for 2%. EL PASO ENERGY: S&P Places BB+ Rating on CreditWatch Negative ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating on oil and natural gas services company El Paso Energy Partners L.P., on CreditWatch with negative implications based on the recent downgrade of its general partner, El Paso Corp. (BB/Watch Neg/--). Houston, Texas-based EPN has about $1.8 billion in outstanding debt. "The CreditWatch listing for EPN reflects the greater uncertainties surrounding the credit profile of its general partner. El Paso's involvement as the general partner with a 42% stake in EPN influences the partnership's credit profile in several ways and effectively tethers the ratings of the two entities," said Standard & Poor's credit analyst Todd Shipman. EPN has played an important role in El Paso's plan to deleverage its balance sheet plan by enabling it to transfer qualifying midstream assets to EPN. El Paso continues to operate EPN's assets and provide administrative support. The deterioration of El Paso's credit quality pressures EPN's rating irrespective of the partnership's stand-alone credit quality. In resolving the CreditWatch designation, Standard & Poor's will assess the El Paso situation's effect on EPN and the degree to which operational, legal, and strategic matters will affect any ratings separation between the two entities. ENCOMPASS SERVICES: Debtors Ask Court for Vendor Comfort Order -------------------------------------------------------------- As of the Petition Date, Encompass Services Corporation and debtor-affiliates had numerous pending outstanding orders for materials, supplies, goods, products and related items from their vendors. But as a result of their Chapter 11 filing, the Debtors believe that many of the vendors may be concerned that the postpetition delivery or shipment of goods with respect to prepetition purchase orders will render the vendors general unsecured creditors of the Debtors' estates. The Debtors are concerned that the vendors might initiate certain steps to protect their interest over the goods. According to Lydia T. Protopapas, Esq., at Weil Gotshal & Manges LLP, the vendors may decline to ship or may instruct their shippers not to deliver goods destined for the Debtors, unless the Debtors: -- issue substitute purchase orders postpetition; or -- obtain a Court order confirming that all undisputed obligations arising from the postpetition delivery of goods and materials subject to prepetition Outstanding Orders are afforded administrative expense priority. Ms. Protopapas, however, points out that the Debtors may be required to expend substantial time and effort to reissue the Outstanding Orders to provide the vendors with the administrative priority assurance. "The attendant disruption to the continuous flow of materials to the Debtors could result in insufficient supplies and inventory with which to provide services bargained for by their customers," Ms. Protopapas tells Judge Greendyke. "Such a disruption could lead to dissatisfied customers, potentially harming the vendors' confidence in the Debtors' ability to conduct their business at a critical juncture and jeopardizing the prospects for a successful reorganization." To obtain delivery of the materials subject to the Outstanding Orders, the Debtors ask Judge Greendyke to: (a) grant the vendors administrative expense priority status for the undisputed obligations arising from the Outstanding Orders that are delivered subsequent to the Petition Date; and (b) authorize them, in their sole discretion in the exercise of their business judgment and in accordance with their customary business practices, to satisfy those undisputed obligations to the vendors in the ordinary course of business. The Debtors believe that they have $24,000,000 in undisputed obligations to the vendors arising from the Outstanding Orders. Ms. Protopapas clarifies that the granting of administrative expense priority status will not extend to any orders for those goods or services that were fully completed as of the Petition Date. (Encompass Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON: Secures Nod to Sell Oneida Aircraft to First Tennessee ------------------------------------------------------------- Enron Corp., obtained permission from the Court to sell its Raytheon Hawker 800XP aircraft, in accordance with the terms and conditions of a Purchase Agreement between Oneida Leasing, Inc., and First Tennessee Equipment Finance Corporation. The salient terms of the Purchase Agreement are: 1. Purchase Price. $9,400,000; 2. Deposit Escrow. (a) First Tennessee will deliver to and deposit in trust with Federal Aviation Title and Guaranty Company $500,000, pursuant to an escrow agreement; (b) The Escrow Agent will promptly return the Deposit to First Tennessee on the earlier of: -- First Tennessee's termination of the Purchase Agreement for cause; -- entry of an order by the Bankruptcy Court approving the sale of the Aircraft to a third party; or -- First Tennessee's termination due to Oneida's incurable default; (c) First Tennessee will cause the Escrow Agent to, and the Escrow Agent will, deliver the Deposit to Oneida upon the earlier of: -- Oneida's termination of the Purchase Agreement due to First Tennessee's non-performance of its obligations under the Purchase Agreement; -- at the Closing of the sale to First Tennessee; or -- First Tennessee's termination of the Purchase Agreement without cause; (d) The Escrow Agent's escrow fees and charges will be shared equally by both parties; 3. Closing Date Payment. At Closing, First Tennessee will: (a) pay and deliver to Oneida by wire transfer, the Purchase Price less the Deposit; and (b) instruct the Escrow Agent in writing to deliver the Deposit to Oneida. Any accrued interest on the Deposit will be returned to First Tennessee; 4. Closing. The Closing will take place on the earlier of: (a) five business days after satisfaction or waiver of the conditions to Closing; (b) December 17, 2002; or (c) other date mutually agreed by the parties. All documents to be filed with the FAA on the Closing Date will be held in trust by Crowe & Dunlevy and filed on the parties' mutual agreement; 5. Oneida's Deliveries. At Closing, Oneida will deliver to First Tennessee: (a) an FAA Aircraft Bill of Sale and Warranty Bill of Sale for the Aircraft; (b) an Assumption and Assignment Purchase Agreement, wherein Oneida assigns to First Tennessee, at no cost, all of its rights, title and interest in all non-expired manufacturer warranties and the maintenance service plan related to the Aircraft; (c) an Oneida certificate certifying: -- the matters set in the Purchase Agreement; -- resolutions duly adopted by Oneida's board of directors and stockholder approving the sale transaction; and -- as to the incumbency of Oneida's officers executing the Purchase Agreement and related documents; (d) a written opinion of Oneida's legal counsel, regarding the authorization and due execution of the Purchase Agreement and related documents; (e) other documents, instruments and writings required to be executed and delivered in order to effectuate the sale of the Aircraft; and (f) a Court approval of the sale of the Aircraft; 6. First Tennessee's Deliveries. At Closing, First Tennessee will deliver, or cause to deliver to Oneida: (a) payment of the Purchase Price less the Deposit; (b) transfer of the Deposit to Oneida's account; (c) the duly executed Assignment Agreement; (d) other documents authorizing the purchase from First Tennessee's board of directors; (e) First Tennessee's legal counsel certifying the purchase authority; (f) a Tennessee Sales Tax Exemption Certificate, if applicable, with respect to the Aircraft; (g) other documents, instruments an writings required to effectuate the sale; and (h) payment of $4,500 for reimbursement of the cost to transport the Aircraft from the Inspection Location to the Delivery Location; 7. Closing Conditions. (a) Oneida's Closing Conditions: -- all of First Tennessee's representations and warranties made in the Purchase Agreement are true and correct in all material respects; -- First Tennessee has performed in all material respects all of its covenants and obligations under the Purchase Agreement; and -- the Bankruptcy Court Order approving the Sale; (b) First Tennessee's Closing Conditions: -- all of Oneida's representations and warranties made in the Purchase Agreement is true and correct in all material respects; -- Oneida has performed in all material respects all of its covenants and obligations under the Purchase Agreement; -- Bankruptcy Court approval of the Sale; -- First Tennessee has completed the Inspection and delivered the Acceptance Certificate; -- Oneida has delivered the Aircraft to First Tennessee; and -- Oneida has paid all 2002 personal property taxes ($100,000) owed to Harris County, Texas; and 8. Brokers. Each party will be responsible for its own broker fees and related costs. In connection with the sale, Oneida will pay $70,500 to its broker, JB&A Aviation. (Enron Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 14 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. EOTT ENERGY: Court Approves Patton Boggs as Special Counsel ----------------------------------------------------------- EOTT Energy Partners, L.P., and its debtor-affiliates obtained permission from the Court to employ and retain Patton Boggs LLP as its special counsel in all matters necessary to fulfill its fiduciary duties. As previously reported, at least six Patton Boggs professionals will render their services to the Restructuring Committee. Accordingly, Patton Boggs will charge the Debtors these hourly rates: Clifton R. Jessup, Jr. Partner $450 Bruce H. White Partner 375 William L. Medford Associate 265 Vickie L. Judd Associate 195 Bryan L. Elwood Associate 195 Jeanie George Paraprofessional 90 Moreover, Patton Boggs will seek reimbursement of out-of-pocket expenses including secretarial overtime, travel, copying, outgoing facsimiles, document processing, court fees, transcript fees, long distance telephone calls, postage, messengers, transportation and other similar expenses. (EOTT Energy Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) FAIRCHILD CORP: Completes Sale of Fastener Unit for $657 Million ---------------------------------------------------------------- The Fairchild Corporation (NYSE:FA) -- whose single-'B' corporate credit rating has been placed by Standard & Poor's on CreditWatch with developing implications -- has completed the sale of its fastener business for approximately $657 million to Alcoa Inc. (NYSE:AA). The cash received from Alcoa is subject to a post-closing adjustment based upon the net working capital of Fairchild Fasteners on December 3, 2002, compared with its net working capital as of March 31, 2002. Fairchild may also receive additional cash proceeds up to $50 million, in an earnout formula based on the number of Boeing and Airbus commercial aircraft deliveries during 2003-2006. Jeffrey Steiner, Chairman and Chief Executive Officer of The Fairchild Corporation, stated: "This sale is very timely. It allows Fairchild to lessen dependency on a single industry, provides funds for new acquisitions and reduces debt to $31 million of non-recourse real estate financing and $5 million of other debt." The Fairchild Corporation used a portion of the proceeds from the sale to repay its bank debt and to complete a tender offer acquiring all of its outstanding $225 million 10.75% senior subordinated notes due in April 2009. The tender offer and the repayment of bank debt closed concurrently with the closing of the sale to Alcoa. Eric Steiner, President and Chief Operating Officer of The Fairchild Corporation, stated: "Conditions in today's financial markets, and the economy in general, have made available many growth opportunities. We fully intend to redeploy our cash in those opportunities which will enable us to build a strong industrial company for the long term." The Fairchild Corporation is engaged in the aerospace distribution business which stocks and distributes a wide variety of aircraft parts to commercial airlines and aerospace companies providing aircraft parts and services to customers worldwide. The Fairchild Corporation also owns and operates a shopping center located in Farmingdale, New York. Additional information is available on The Fairchild Corporation Web site at http://www.fairchild.com FAIRCHILD CORP: Accepts for Purchase All 10.75% Notes Tendered -------------------------------------------------------------- The Fairchild Corporation (NYSE:FA) has accepted for purchase all 10-3/4% Senior Subordinated Notes due 2009 tendered pursuant to and prior to the expiration of its tender offer to purchase any and all of the outstanding notes. The tender offer, which was announced on October 22, 2002, expired at 9:00 A.M., New York City time, on December 3, 2002. As of the expiration of the tender offer, $225,000,000 (100%) in principal amount of the outstanding notes had been tendered. The purchase price for each $1,000 principal amount of tendered notes tendered prior to 5:00 P.M., New York City time, on November 4, 2002 is $1,000 plus accrued and unpaid interest on such principal amount to the payment date. The purchase price for each $1,000 principal amount of tendered notes tendered after 5:00 P.M., New York City time, on November 4, 2002 is $990 plus accrued and unpaid interest on such principal amount to the payment date. Payment for tendered notes will be made today by Fairchild by depositing the purchase price for all tendered notes in cash with The Bank of New York, as Depositary, which will act as agent for the tendering holders for the purpose of receiving the purchase price and transmitting payment to the tendering holders. Banc of America Securities LLC is the Dealer Manager and Solicitation Agent for the tender offer and the consent solicitation. Persons with questions regarding the tender offer and consent solicitation should contact Banc of America Securities LLC at 888/292-0070. The Information Agent is D.F. King & Co., Inc. Requests for tender offer and consent solicitation materials should be directed to the Information Agent at 800/207-3158. The Fairchild Corporation is engaged in the aerospace distribution business which stocks and distributes a wide variety of aircraft parts to commercial airlines and aerospace companies providing aircraft parts and services to customers worldwide. The Fairchild Corporation also owns and operates a shopping center located in Farmingdale, New York. Additional information is available on The Fairchild Corporation Web site at http://www.fairchild.com Faichild Corp.'s 10.75% bonds due 2009 (FA09USR1) are trading at about 53 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FA09USR1for real-time bond pricing. FEDERAL-MOGUL: Equity Committee Wants to Commence Rule 2004 Exam ---------------------------------------------------------------- The Official Committee of Equity Security Holders wants Federal- Mogul Corporation, its debtor-affiliates, and the Unsecured Creditors Committee to produce the analyses made by their financial and asbestos advisors. Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedures, the Equity Committee wants to obtain all written reports, analyses, opinions, drafts, summaries or other writings relating to the Debtors, which were created by the financial and asbestos advisors: (a) to the Creditors' Committee, including but not limited to KPMG, LLP, Jefferies & Co., Inc., and Bates, White & Ballantine; and (b) to the Debtors, including but not limited to Rothschild, Inc., PricewaterhouseCoopers LLC, Ernst & Young Corporate Finance LLC, and Ernst & Young LLP. Ian Connor Bifferato, Esq., at Bifferato, Bifferato & Gentilotti, in Wilmington, Delaware, reminds both the Creditors' Committee and the Debtors that the Court has suggested that the Equity Committee's advisors could rely on the internal analyses created by their financial advisors, in lieu of funding the Equity Committee's financial advisors at a level enabling them to create independent analyses of the Debtors' financial condition. Mr. Bifferato tells the Court that the Equity Committee has asked both the Creditors' Committee and the Debtors to produce their advisors' analyses, but no documents have been given. Mr. Bifferato contends that without the Equity Committee's own assessment, it will be unable to rebut unsubstantiated contentions as to the Debtors' solvency made by the Creditors' Committee and other parties. The Equity Committee's ability to assert its rights in these proceedings, including its right to participate meaningfully in negotiation or litigation involving any plan of reorganization, will be materially prejudiced. (Federal-Mogul Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) Federal-Mogul Corp.'s 8.80% bonds due 2007 (FMO07USR1) are trading at about 15 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FMO07USR1 for real-time bond pricing. FIBERMARK INC: Moody's Ratchets 9.375% Notes Down a Notch to B2 --------------------------------------------------------------- FiberMark, Inc., (NYSE:FMK) announced that Moody's Investors Service has revised its long-term debt ratings downward, while maintaining a stable outlook. Specifically, the ratings on FiberMark's $100 million, 9.375% guaranteed senior notes due October 15, 2006 were lowered to B2 from B1. The company's $230 million, 10.75% guaranteed global notes due April 15, 2011, were also lowered to B2 from B1. Moody's announcement indicated that the downgrade was prompted by FiberMark's recent lower-than-expected financial performance and the impact of a "protracted period of economic weakness, particularly in North America." Current ratings and the stable outlook were influenced by mitigating factors such as the expected cost reductions related to facility consolidation, continued strength in European operations and the company's geographic and product line breadth. FiberMark, headquartered in Brattleboro, Vermont, is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide. Products include filter media for transportation, vacuum bag and fast food applications; base materials for specialty tapes, printed circuit boards, photographic and graphic arts applications, wallpaper, flooring materials and sandpaper and cover/decorative materials for school and office supplies, publishing, printing and premium packaging. The company operates 12 facilities in the eastern United States and Europe. FRONTLINE COMMS: Will Not Make Dividend Payment on Preferreds ------------------------------------------------------------- Frontline Communications Corp. (AMEX: FNT) -- http://www.fcc.net -- announced that its Board of Directors voted not to declare a dividend on its Series B Convertible Redeemable Preferred Stock for the payment period ending December 30, 2002. "The Board has determined that given current economic and market conditions, it is in the best interests of the Company to forgo any dividend payments at this time. The Board's action does not constitute a default under the terms of the stock", said Company CEO and Chairman Stephen J. Cole-Hatchard. "The dividend will accumulate and will be paid at such time in the future as the Board elects to declare a dividend", added Cole-Hatchard. Founded in 1995, Frontline Communications Corporation provides high-quality Internet access and Web hosting services to homes and businesses nationwide. Frontline offers Ecommerce, programming, and Web development services through its PlanetMedia group, http://www.pnetmedia.com Frontline is headquartered in Pearl River, New York, and is traded on the American Stock Exchange. At September 30, 2002, Frontline Communications' balance sheets show a total shareholders' equity deficit of about $1,798,296. GE CAPITAL: Fitch Rates 6 Classes of 2002-3 Notes at Low-B Level ---------------------------------------------------------------- GE Capital Commercial Mortgage Corp., series 2002-3, commercial mortgage pass-through certificates are rated by Fitch Ratings as follows: -- $383,943,000 class A-1 'AAA'; -- $553,782,000 class A-2 'AAA'; -- $1,170,328,275 class X-1 * 'AAA'; -- $1,061,431,000 class X-2 * 'AAA'; -- $46,813,000 class B 'AA'; -- $16,092,000 class C 'AA-'; -- $26,333,000 class D 'A'; -- $14,629,000 class E 'A-'; -- $10,240,000 class F 'BBB+'; -- $17,555,000 class G 'BBB'; -- $11,703,000 class H 'BBB-'; -- $27,796,000 class J 'BB+'; -- $10,240,000 class K 'BB'; -- $8,777,000 class L 'BB-'; -- $10,241,000 class M 'B+'; -- $8,777,000 class N 'B'; -- $5,852,000 class O 'B-'; -- $17,555,275 class P 'NR'. *Interest-only Class P is not rated by Fitch Ratings. Classes A-1, A-2, B, and C are offered publicly, while classes X-1, X-2, D, E, F, G, H, J, K, L, M, N, O, and P, are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 131 fixed-rate loans having an aggregate principal balance of approximately $1,170,328,276 as of the cutoff date. GENTEK INC: Wins Nod to Hire Skadden Arps as Chapter 11 Counsel --------------------------------------------------------------- GenTek Inc., and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Skadden, Arps, Slate, Meagher & Flom LLP, to prosecute their Chapter 11 cases. Skadden, Arps is expected to: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest and advising and consulting on the conduct of the cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning all litigation in which the Debtors may be involved and objections to claims filed against the estates; (d) prepare, on the Debtors' behalf, all motions, applications, answers, orders, reports and papers necessary to the administration of the estates; (e) negotiate and prepare, on the Debtors' behalf, plan or plans of reorganization, disclosure statements and all related agreements and documents and taking any necessary action on behalf of the Debtors to obtain confirmation of those plans; (f) advise the Debtors in connection with any sale of assets; (g) appear before this Court, any appellate courts, and the United States Trustee, and protecting the interests of the Debtors' estates before these courts and the United States Trustee; and (h) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these Chapter 11 cases. In consideration for the firm's professional services, the Debtors propose to pay Skadden, Arps in accordance with the firm's standard hourly rates. Presently, the hourly rates under the bundled rate structure range from: Bundled Rate Professionals ------------ ------------- $495 - 725 partners 240 - 485 counsel & associates 80 - 195 legal assistants & support staff The Debtors will also reimburse Skadden, Arps for actual necessary expenses incurred in connection with their services in these cases. The Debtors and Skadden, Arps also agreed to implement a retainer program pursuant to which the Debtors paid $1,500,000 as initial retainer for the services rendered or to be rendered by the firm. As of the Petition Date, based on prepetition fees and costs that have been identified and accounted for, Skadden, Arps had $1,370,341 remaining in the Retainer. Those remaining funds will be applied by Skadden, Arps to pay prepetition fees and costs that are subsequently identified and accounted for. (GenTek Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Obtains Court Approval of 'First Day Motions' ---------------------------------------------------------- Genuity Inc., (NASDAQ:GENUQ) announced that the U.S. Bankruptcy Court for the Southern District of New York has approved orders with respect to Genuity's "first day motions" on December 2, 2002. The first day orders, in essence, allow Genuity to conduct business as usual relative to all of its customers, employees and suppliers and to maintain its existing cash management systems. These orders authorize payment of pre-petition employee wages, salaries, business expenses and other employee benefits. The court's approval of Genuity's initial motions, along with the $800 million Genuity has in cash, will provide the company with operational stability and the necessary financial resources as Genuity and Level 3 move through the transition period. The court will reconvene on Monday, December 9, 2002, to continue hearings on Genuity's initial motions. These court hearings follow Genuity's announcement on Wednesday, November 27, 2002, that it had reached a definitive agreement with Level 3, an international communications and information services company, in which Level 3 will acquire substantially all of Genuity's assets and operations for up to $242 million. To facilitate the acquisition process, Genuity and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. The transaction has the full support of Genuity's two largest creditors -- the global consortium of banks that provided Genuity with a line of credit and Verizon Communications that provided a separate line of credit. In addition, Genuity announced that The NASDAQ Stock Market notified the company that, as a result of its Chapter 11 filing, the fifth character "Q" was added to the company's trading symbol, changing the symbol from GENU to GENUQ at the opening of business on December 3, 2002. In addition, Genuity has received notice that in accordance with Marketplace Rules 4330 (a)(1) and 4450(f), and its inability to satisfy the listing requirements of Marketplace Rules 4450(b)(3)and 4450(b)(4), The NASDAQ Stock Market will delist the company's securities at the opening of business on December 5, 2002. On that date, Genuity's securities will be eligible to begin trading on the Over the Counter Bulletin Board (OTCBB). Genuity is a leading provider of enterprise IP networking services. The company combines its Tier 1 network with a full portfolio of managed Internet services, including dedicated and broadband access, Internet security, Voice over IP (VoIP), and Web hosting to provide converged voice and data solutions. With annual revenues of more than $1 billion, Genuity (NASDAQ: GENUQ and NM: Genuity A-RegS 144) is a global company with offices and operations throughout the U.S., Europe, Asia and Latin America. Additional information about Genuity can be found at http://www.genuity.com GLOBAL CROSSING: US Trustee Names Martin Cooperman as Examiner -------------------------------------------------------------- Carolyn S. Schwartz, the United States Trustee for Region 2, consulted these parties-in-interest regarding the appointment of the Examiner: -- Michael Walsh, Esq. of Weil, Gotshal & Manges Counsel to Global Crossing Ltd., and its debtor- affiliates; -- John Biedermann, Esq. of Brown Rudnick Berlack Israels LLP Counsel to the Official Committee Of Unsecured Creditors; -- Robert T. Honeywell, Esq. of Greenberg Traurig, LLP Counsel to the Subcommittee of the Official Committee of Unsecured Creditors; -- John Hovel Shareholder; -- Michael Pascazi Shareholder; and -- Alistaire Bambach, Esq. Representative of the Securities and Exchange Commission. After consultation, the U.S. Trustee selected Martin E. Cooperman, as the Examiner for Global Crossings Ltd., et al. Accordingly, the U.S. Trustee asks the Court to approve Martin E. Cooperman's appointment. Martin E. Cooperman is a managing partner of the New York area offices of Grant Thornton LLP. Mr. Cooperman assures the Court that, with respect to these Chapter 11 cases, he does not have any connection with Global Crossing Ltd. or its subsidiaries or affiliates, the Debtors' attorneys, the Debtors' creditors, and any other parties-in-interest. Mr. Cooperman asserts that he is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Cooperman discloses that Grant Thornton LLP currently renders services in unrelated matters to: -- Abercrombie & Kent Safaris (Pty) Ltd., -- Andersen Legal BV, -- Bank of America, -- Bank One, -- Cendant, -- CIBC Oppenheimer, -- Fleet Bank, -- General Electric, -- JP Morgan Chase, -- JP Morgan Private Bank, -- KPMG LLP, -- Lucent, -- Nortel Networks, -- PricewaterhouseCoopers LLP, -- Prudential, -- Qwest Communications, -- Southwestern Bell, -- Starwood Hotels and Resorts Worldwide, -- Telefonica S.A., -- Textron Inc., -- Tyco Submarine Systems Ltd., -- First Union (Wachovia), -- Van Kampen, and -- Verizon. Mr. Cooperman will charge the Debtors $450 per hour, subject to periodic adjustments. (Global Crossing Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) HAYES LEMMERZ: Court Approves General Motors Supply Contract ------------------------------------------------------------ Hayes Lemmerz International, Inc., and its debtor-affiliates sought and obtained the Court's authority to enter into a purchase order supply contract with General Motors Corporation whereby the Debtors would produce four types of steel wheels for GMC's GMT 800 program for the 2005 model season. Grenville R. Day, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, informs the Court that GMC is one the Debtors' principal customers, purchasing from the Debtors aluminum and steel wheels for many of the vehicles it manufactures. GMC and the Debtors are parties to numerous purchase order supply agreements whereby the Debtors agree to produce GMC's wheel requirements for particular vehicles manufactured by GMC. The purchase orders between the Debtors and GMC typically contain industry standard terms and last for four to five years each depending on the length of time GMC utilizes a given design for a particular model of vehicle. The Debtors and GMC typically enter into a purchase order several years before a particular model design is scheduled to begin production so that the Debtors and GMC may work together to develop and finalize the wheel design for the vehicle. According to Mr. Day, the Debtors are currently soliciting business from original equipment manufacturers including GMC with respect to wheels that the Debtors will not begin producing and delivering for several years. Before GMC awards a supply contract to the Debtors, it reviews and evaluates proposals or bids from the Debtors and their competitors who are all soliciting the same business from GMC. The Debtors were successful in obtaining the contract for GMC's GMT 800 program for the 2005 model year. The GMT 800 program is GMC's premiere truck line, including its Silverado and Sierra models. Mr. Day relates that the Supply Agreement for the GMT 800 program contains industry standard provisions and is a standard and typical purchase order. Thus, it is an ordinary course transaction between the Debtors and GMC. However, GMC requested an addendum to the Supply Agreement that would be applicable only during the Debtors' Chapter 11 cases, which has not been included in prior agreements between the parties and which the Debtors believe is not within the ordinary course of its business. Specifically, the addendum provides that, GMC would have the right, after 30 days written notice and the Debtors' failure to cure, to terminate the Supply Agreement without any obligation or liability to the Debtors for termination or cancellation, in the event either: -- the Debtors seek to materially modify or amend any material supply agreement with GMC, other than for certain allowable changes or modifications or ordinary course of business commercial issues, or -- the Debtors materially default on their obligations to GMC under any material supply agreement. Moreover, if GMC terminates the Supply Agreement pursuant to this authority, GMC would be entitled to produce or designate a new supplier to produce the parts required to be produced under the Supply Agreement, and GMC or the new supplier would have a fully paid, royalty free, irrevocable, world-wide license to use any intellectual property owned or licensed by the Debtors that are reasonably necessary to manufacture these Parts. Mr. Day informs the Court that the license would: -- be used only to manufacture the Parts; -- be limited only to the intellectual property necessary to manufacture the Parts; -- expire immediately after the amount of parts to be produced under the Supply Agreement has been produced by GMC or the new supplier; and -- be subject to any prohibitions on assignment in any licenses held by the Debtors. GMC or its new supplier would be prohibited from using the license, or any intellectual property or confidential information obtained thereby, for any commercial purpose other than the production of the Parts. After expiration of the license, GMC or its new supplier would be required to cease using the license, intellectual property or confidential information for any purpose. Under the Supply Agreement, Mr. Day relates that the Debtors produce 2,300,000 wheels annually for seven years beginning in late 2003. The Debtors conservatively estimate the Supply Agreement will result in $45,000,000 to $50,000,000 of sales to GMC annually. In addition to direct economic benefits to be received under the Supply Agreement, the Debtors believe that it is absolutely essential to maintain ongoing business relationships with GMC to reassure GMC that the Debtors continue to be the premiere manufacturer and supplier of automotive parts and to prevent their competitors from gaining a greater share of important GMC business. Mr. Day assures the Court that the Debtors have no intention of seeking material modifications of their agreements with GMC that are not otherwise allowable or in the ordinary course of business. Furthermore, the Debtors can envision no scenario where this activity would be necessary or beneficial to the Debtors in the context of these cases and their business relationship with GMC. Moreover, the Debtors do not expect to materially default on any material agreements with GMC, and certainly not to the extent that any potential default, even if material, would not be cured within thirty days of receiving written notice of alleged default from GMC. Thus, the Debtors believe that the provision requested by GMC guards against an eventuality that likely will not occur during this case and, as a result, provides a relatively simple mechanism for the Debtors to provide comfort and assurances to an extremely important customer. (Hayes Lemmerz Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) Hayes Lemmerz Int'l Inc.'s 11.875% bonds due 2006 (HLMM06USS1) are trading at 45 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1 for real-time bond pricing. IMPERIAL SUGAR: Selling Diamond Crystal Unit to Hormel Foods ------------------------------------------------------------ Imperial Sugar Company (OTCBB:IPSU) has signed a non-binding letter of intent with Hormel Foods Corporation to sell its subsidiary, Diamond Crystal Brands, and that it will consolidate its cane sugar refining operations to its Gramercy, La., and Savannah, Ga., facilities, discontinuing sugar refining operations at its Sugar Land, Texas plant by the end of the year. The company will continue to run distribution and packaging operations at the Sugar Land facility and will continue to operate its headquarters activities in Sugar Land. According to company officials, these actions are necessary to create a strong balance sheet and to adapt to the current industry environment by helping to reduce costs and increase the company's efficiency overall. The expected purchase price for the DCB subsidiary is $115 million and the proposed transaction is expected to close by Dec. 31, 2002, subject to negotiation and execution of definitive documentation, government clearance and other conditions. Proceeds from the sale are to be used to pay down debt. Imperial President and CEO Robert Peiser stated that Imperial Sugar will focus its business activities on marketing sugar products nationwide to industrial customers and retail chains. In addition to Sugar Land and the sugar refineries in Louisiana and Georgia, the company will continue to operate its two beet factories in Mendota and Brawley, Calif., and its packaging facility in Tracy, Calif. Diamond Crystal Brands, based in Savannah, Ga., packages and sells various sugar, sugar substitute and salt and pepper products, savory products, drink mixes and dessert mixes to the foodservice and retail marketplace. It operates four packaging facilities and employs approximately 600 people. Under the terms being negotiated, Imperial will continue to sell certain items to the retail trade that had previously been marketed by DCB as well as bagged sugar to foodservice distributors and large foodservice accounts. The retail items will be packed under a multi-year co-pack agreement with DCB; in turn, DCB will buy the major portion of its sugar requirement from Imperial under a multi-year supply agreement. "DCB is a very fine company with a very good management team and good people throughout," said Peiser. "We would have been pleased to continue our association, but its sale allows us to achieve our primary financial objectives." After the consolidation of its refinery operations is complete, the workforce at the Sugar Land facility will be reduced from 426 to about 100. The final number will be dependent on pending negotiations between the company and representatives of the Machinist Union that will begin this week. "These have been extremely difficult decisions to make because of the people involved and the strong heritage that Imperial has in Sugar Land," added Peiser. "Nevertheless, the industry dynamics dictate that we rationalize our capacity and strengthen our balance sheet. I am deeply appreciative of the significant contributions our employees have made to the company over the years and I am committed to ensuring that those affected are treated fairly and compassionately." Imperial will provide Sugar Land area employees with outplacement counseling and assistance. Details of the separation package will be announced when negotiations between Imperial Sugar and union representatives are completed, and union members have ratified the agreement. "Our long-term plans for Imperial Sugar are to build upon its strong relationships with industrial and supermarket accounts," said Peiser. "Our two primary retail brands, Imperial and Dixie Crystals, are by far the most recognized brands in the Southwest and Southeast, respectively, and we will continue to build on their customer loyalty. As importantly, we have made tremendous strides in the past few months restructuring the company's financial position. I am excited and encouraged about the prospects for this company going forward." With 2,210 full-time employees across the country before these actions, Imperial Sugar is one of the largest processors and marketers of refined sugar in the United States. The company emerged from bankruptcy in August 2001 and since then has realized proceeds over $235 million from the sale of assets, including the expected proceeds from the DCB divestiture. In fiscal 2002, Imperial marketed 28 percent of the refined sugar consumed in the United States. The Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States and a major distributor to the foodservice market. Imperial Sugar is a name recognized and trusted in the food industry for more than 150 years, as the company's history dates back to the mid-1800s. With packaging and refining facilities across the nation, the company markets products nationally under the Imperial(R), Dixie Crystals(R), Spreckels(R), Pioneer(R), Holly(R), Diamond Crystal(R) and Wholesome Sweeteners(TM) brands. Additional information about Imperial Sugar may be found on its Web site at http://www.imperialsugar.com INFU-TECH: Ch. 7 Trustee Hires Hermes Group as Tax Accountants -------------------------------------------------------------- Michael B. Kaplan, Esq., the Trustee overseeing the liquidation of Infu-Tech Inc., sought and obtained permission to hire The Hermes Group, LLP, Certified Public Accountants to prepare any necessary tax filings. The Trustee tells the Court that Hermes Group is known to be experienced and thoroughly competent to perform the duties sought by the Chapter 7 Trustee. Anthony D. Nini, a Partner in Hermes Group assures the Court that the Firm has no adverse interest in this case and is well qualified to provide services to the Trustee. The Hermes Group will bill the Debtors at its current hourly rates which are: Partners -------- Mark I. Massad $400 per hour Ronald J. Sacco $375 per hour Harold B. Peterson, Jr. $350 per hour Anthony D. Nini $350 per hour Directors --------- Joseph A. Falsetti $400 per hour Thomas C. Mackay $400 per hour Tom Teper $300 per hour Principals/Senior Managers -------------------------- Peter G. Croghan $250 per hour Stephen E. Cohodes $400 per hour Stephen B. Peters $200 per hour Senior Accountants ------------------ Melissa M. Chau $175 per hour Thomas J. O'Connor $175 per hour Lawrence C. Gallo, Jr. $160 per hour Staff Accountants ----------------- Lori A. Farina $125 per hour Arleiga L. Crate $115 per hour Dawn M. Peters $110 per hour Administrative -------------- Annemarie Sacco $ 75 per hour Joseph Sacco $ 75 per hour Elaine M. Welsh $ 70 per hour Infu-Tech provided infusion therapy to patients at home, in nursing homes or subacute care facilities. Its specialty pharmaceutical unit provides such services as chemotherapy, enteral and parenteral nutrition, chronic pain management, and hydration therapy. In March 2001, the Company's balance sheet showed $6.6 million in assets and $9.9 million in liabilities. Infu-Tech filed for protection from its creditors in August 2001 in the U.S. Bankruptcy Court for the District of New Jersey. KMART CORP: Seeks Go-Signal to Transfer $2 Million to S.F.P.R. -------------------------------------------------------------- During the course of the disputes between Kmart Corporation, its debtor-affiliates, and their insurers, Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom, informs Judge Sonderby that the U.S. Attorney opened an investigation with regard to the Debtors' casualty loss, the actions of the employees in determining damages as a result of the loss, and the ensuing insurance claims arising from Hurricane Georges. The Debtors have fully cooperated with investigations, and responded by, among other things, taking all actions to insure that the claims submitted to the insurance carriers did not contain any inappropriate losses. Nevertheless, as a result of this investigation and the Debtors' own internal investigation, the Debtors entered into a Plea Agreement with the U.S. Government. Pursuant to the Plea Agreement, on October 28, 2002, Debtor S.F.P.R. Inc. pled guilty in the U.S. District Court of Puerto Rico to mail fraud in violation of 18 U.S.C. Sections 1341 and 1342. On the same date, the Puerto Rico District Court sentenced S.F.P.R. to the agreed upon and recommended fine of $2,000,000, plus a 3-year probation period. As part of the Plea Agreement, S.F.P.R. agreed to pay the $2,000,000 fine. Kmart Corporation also agreed to transfer the funds necessary for S.F.P.R. to pay the fine. By this motion, the Debtors seek the Court's authority: -- to transfer $2,000,000 to S.F.P.R.; and -- for S.F.P.R. to ultimately pay the fine. Mr. McDermott contends that the Plea Agreement as well as the fine engendered a resolution of many complicated issues related to the Debtors' casualty losses and the ensuing insurance claims, without further litigation and the attendant time and expenses. It has been estimated that continuing to trial in Puerto Rico may have cost as much as $2,500,000 in fees and expenses. (Kmart Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kmart Corp.'s 9% bonds due 2003 (KM03USR6) are trading at about 17 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. L-3 COMMS: Larry Schwartz Rejoins Company to Head 2 Divisions ------------------------------------------------------------- L-3 Communications (NYSE: LLL), announced that Larry Schwartz has rejoined the company as vice president of Homeland Security and president of the Navigation Products group, which encompasses L-3's Interstate Electronics Corporation and Space & Navigation divisions. Mr. Schwartz had previously served with the company for over 30 years, most recently as vice president of Business Development. In his role as vice president of Homeland Security, Mr. Schwartz will coordinate efforts across L-3 to capitalize on existing synergies between products and divisions to help address the growing homeland security market with law enforcement and government agencies. He will also seek new opportunities and partnerships with other companies to develop new homeland security products. As an addressable market, homeland security includes a number of product segments; intrusion detection, port and border security, secure communications, border security, feasibility studies and requirements training. L-3 believes that future homeland security market will provide $4-5 billion a year for product acquisition. "We are extremely pleased to welcome Larry back to the L-3 family," said Frank C. Lanza, chairman and chief executive officer of L-3 Communications. "As homeland security becomes an increasingly important market, we needed an industry veteran with the technological expertise to focus our efforts on addressing this growing opportunity. Larry's 30 plus years of defense industry experience, technological knowledge and strength in developing new business and product opportunities will be vital in these efforts as we look to maximize our existing products, and pursue new product development as well." As president of the Navigation Products group, Mr. Schwartz will be responsible for managing the combined divisions of IEC and Space & Navigation. He will focus on developing technology strategies for the group, while managing the research and development process and new product development. IEC is an industry leader in global positioning system receiver and translator-based products, which are currently in use on multiple aircraft, cruise missiles and precision-guided weapons. The division also produces ruggedized displays for both military and industrial applications, and provides secure communications on a quick reaction basis for deployed forces in Eastern Europe. Space & Navigation is one of the world's premier providers of inertial instruments and integrated fire control systems to the global market. The division is a major supplier of high quality Pointing, Guidance, Control and Positioning equipment for satellites, artillery, and launch vehicles, serving the military, commercial and government markets. Mr. Schwartz holds Bachelor of Arts and Masters degrees in electrical engineering from Dartmouth College. Prior to L-3, he served as senior vice president of Technology for Loral, where he cultivated new product strategies and synergies with existing product lines, as well as overseeing technology partnerships and research and development. Headquartered in New York City, L-3 Communications is a leading merchant supplier of Intelligence, Surveillance and Reconnaissance products, secure communications systems and products, avionics and ocean products, training products, microwave components and telemetry, instrumentation, space and wireless products. Its customers include the Department of Defense, selected US government intelligence agencies, aerospace prime contractors and commercial telecommunications and wireless customers. To learn more about L-3 Communications, please visit the company's Web site at http://www.L-3Com.com * * * As previously reported in the June 24, 2002 edition of the Troubled Company Reporter, Standard & Poor's expected to raise its corporate credit rating on New York, New York-based L-3 Communications to double-'B'-plus from double-'B' after the defense company completes its offering of approximately $900 million in common stock and $750 million in senior subordinated debt and assuming that any pending acquisition activity is on a scale that can be accommodated by the company's enhanced financial resources. At the same time, the rating on the company's subordinated debt would be raised to double-'B'-minus from single-'B'-plus. The outlook would be stable. The company's ratings remain on CreditWatch with positive implications, where they were placed on June 6, 2002. LAIDLAW INC: Court Approves Kevin Benson's Engagement as CEO ------------------------------------------------------------ Laidlaw Inc., and its debtor-affiliates obtained 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 replaces John R. Grainger, who served as LINC CEO on an interim basis. 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. 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. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) MILLERS AMERICAN: Completes Sale of Certain Assets to Hallmark -------------------------------------------------------------- Hallmark Financial Services, Inc., (Amex: HAF.EC) announced the closing of its acquisition of certain subsidiaries and other assets from Millers American Group, Inc. Hallmark acquired the outstanding stock of Millers General Agency, Inc., a Texas managing general agency, as well as certain contracts and fixed assets, from Millers Insurance Company, an indirect subsidiary of Millers. Hallmark simultaneously acquired directly from Millers all of the outstanding stock of two inactive subsidiaries, Financial and Actuarial Resources, Inc., and Effective Litigation Management, Inc. The acquisition of Millers General Agency expands Hallmark's product offerings to include commercial lines insurance in addition to non-standard automobile insurance. As a result of the transaction, Hallmark will expand its presence beyond Texas to the states of Idaho, New Mexico, Oregon and Washington. Additionally, the newly acquired Hallmark subsidiaries have employed all Millers Insurance Company personnel and entered into agreements to provide fee-based claims and financial administrative services to Millers Insurance Company. These acquisitions follow Hallmark's recent purchase of a note in default by Millers which is secured by the capital stock of Millers Insurance Company, a Texas-based commercial lines insurance carrier, and Phoenix Indemnity Insurance Company, an Arizona-based non-standard automobile insurance carrier. Hallmark previously announced that, in lieu of immediate foreclosure, it has negotiated with Millers to accept the stock of Phoenix in partial satisfaction of the outstanding balance of the Millers note. This proposed exchange is contingent on execution of a mutually acceptable definitive agreement and regulatory approval. If consummated, the proposed transaction would result in Phoenix becoming a wholly-owned subsidiary of Hallmark. The stock of Millers Insurance Company would continue to be held by Hallmark as collateral for the remaining balance of the Millers note while the parties evaluate the recapitalization or reorganization of Millers Insurance Company. Hallmark Financial Services, Inc., now engages primarily in underwriting, marketing and financing non-standard automobile insurance in the State of Texas and in marketing commercial lines insurance in Texas, New Mexico, Idaho, Oregon and Washington. Other activities include fee-based claims handling as well as administrative and financial services for unrelated parties. The Company is headquartered in Dallas, Texas and its common stock is listed on the American Stock Exchange under the symbol "HAF.EC". MORGAN STANLEY: Fitch Affirms Ratings on Series 1998-HF2 Notes -------------------------------------------------------------- Morgan Stanley Capital I, Inc.'s commercial mortgage pass- through certificates, series 1998-HF2, $136.6 million class A-1, $547.8 million class A-2, and interest only class X are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms $52.9 million class B at 'AA', $52.9 million class C at 'A', $58.2 million class D at 'BBB', $21.2 million class E at 'BBB-', $23.8 million class F at 'BB+', $18.5 million class G at 'BB', $10.6 million class H at 'BB-', $21.2 million class J at 'B+', $10.6 million class K at 'B', $15.9 million class L at 'B-' and $10.6 million class M at 'CCC'. The $10.6 million class N is not rated by Fitch. The rating affirmations follow Fitch's annual review of the transaction, which closed in November 1998. The certificates are currently collateralized by 258 loans, consisting primarily of multifamily (32.9%), retail (22.8%), and industrial (8.8%) properties. The properties are located in 39 different states, with large concentrations in California (20%), Georgia (9%), and Texas (8%). As of the November 2002 distribution date, the pools aggregate certificate balance was $990.6 million, a reduction of 6% since issuance. Fitch received year-end 2001 information for 92% of the pool. Based on this information, the pool's YE 2001 weighted average debt service coverage ratio was 1.55 times, compared to 1.57x for YE 2000 and up from 1.37x at issuance. Eleven loans (6%), reported year-end 2001 DSCRs below 1.0x. There were 31 loans (14%) on the master servicer's watchlist, of which, 5 loans (3%) were deemed of concern by Fitch. There were 3 loans (2%) are in special servicing, however no losses are expected on these loans. The following loans are currently in special servicing. The Holiday Inn Select loan, secured by a property located in Denver, CO, has an outstanding principal balance of $11 million, representing 1% of the pool, and is 90-days delinquent. The loan was transferred to special servicing due to a missed debt service payment. The special servicer is in the process of negotiating a short-term modification agreement with the borrower. Year-to-date September 2002 occupancy was 52.8%, ADR was $86.88 and REVPar was $45.87. The Royal Gulf Apartments loan, secured by a property located in Biloxi, MS, has a current outstanding principal balance of $5.8 million, and represents 0.6% of the pool. The loan is currently real estate-owned. The special servicer is currently attempting to stabilize performance in preparation for sale. The Chateau DeVille Apartments loan, secured by a property located in Slidell, LA, has an outstanding principal balance of $3.2 million, representing 0.3% of the pool. The loan is in foreclosure. Fitch modeled the transaction taking into account the specially serviced loans and other loans of concern. Based on this analysis, subordination levels remained sufficient to affirm the ratings. Fitch will continue to monitor this transaction, as surveillance is ongoing. NAPSTER: Ch. 11 Trustee Gets $250,000 DIP Financing from Napco -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to Hobart G. Truesdell, the Chapter 11 Trustee of Napster, Inc., to obtain postpetition financing and perform other obligations under a Letter of Intent. On behalf of the Debtors, the Trustee is authorized to obtain credit under a Loan Agreement from Napco Acquisition, LLC up to the principal amount of $250,000. The Debtors have an immediate need to obtain financing in order to permit, among other things, the orderly and efficient liquidation of substantially all of the Debtors' assets and to satisfy other working capital needs. The ability of the Debtors to obtain sufficient working capital and liquidity through the occurrence of new indebtedness is vital to the preservation and maintenance of the value of the Assets. The Debtors have entered into the Letter of Intent with the Lender for the sale of certain of the Assets to the lender. The Letter of Intent provides that the Lender shall have the exclusive right to conduct diligence and negotiate a purchase of the Assets. The Court concludes that the terms of the Financing are fair and reasonable, reflect the Trustee's exercise of prudent business judgment consistent with his fiduciary duties and are supported by reasonably equivalent value and fair consideration. The Trustee on behalf of the Debtors is authorized to borrow pursuant to the Loan Agreement, up to an aggregate principal amount of $250,000 in accordance with the terms of the Loan Agreement, which shall be used, among other things, for the purpose of providing working capital for the Debtors, and to agree to the terms of the Exclusivity Provisions. The Exclusivity Provisions of the Letter of Intent shall not affect any liens of Comerica and Bank of America, NA against certain of the Debtors' certificate of deposit. Napster, Inc., and its debtor-affiliates own and operate the peer-to-peer music service known as Napster. The Napster service has provided music enthusiasts with an easy-to-use, high quality service for finding and discovering music and communicating their interests with other members of the Napster community. The Company filed for chapter 11 protection on June 6, 2002. Daniel J. DeFranceschi, Esq., Russell C. Silberglied, Esq., at Richards, Layton & Finger and Richard M. Cieri, Esq., Michelle Morgan Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts of more than $100 million. NATIONAL CENTURY: Proposes Professional Compensation Procedures --------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates anticipate that they may need to retain other professionals to assist in the administration of these cases. Matthew A. Kairis, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, notes that one or more statutory committees may be appointed. The Committees would naturally seek to retain counsel, and possibly other professionals, to assist them in fulfilling their duties. Thus, the Debtors seek a Court order that will streamline the professional compensation process to enable the Court and other parties to monitor the professional fees incurred more effectively. Specifically, the Debtors propose that the professionals retained be permitted to seek interim payment of compensation and reimbursement of expenses according to these procedures: (a) Every 25th day of each calendar month after the month for which compensation is sought, each Professional seeking interim compensation may submit a monthly fee and expense statement; (b) Each Notice Party will have until 15 days after service of the Monthly Statement to review it and raise any objections; (c) If no timely Objection is filed to a Professional's Monthly Statement, the Debtors will be authorized to immediately pay 80% of the fees and 100% of the expenses requested in the Monthly Statement. If a timely Objection is filed, the objecting party and the affected Professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution, the affected professional may: -- file a request for payment of the disputed amount with the Court and serve the request on the Notice Parties, which will be heard at the first scheduled omnibus hearing, at least 20 days after filing; or -- forego payment of the disputed amount until the next interim of final fee application hearing, at which time the Court will consider and dispose of the Objection. Pending resolution of a timely Objection, the Debtors will be authorized to immediately pay the lesser of: -- 80% of the fees and 100% of the expenses requested; and -- the aggregate amount of fees and expenses not subject of the Objection; (d) Each of the Professionals may file, at four-month intervals, for interim Court approval and allowance of compensation and reimbursement of expenses incurred four months prior within 45 days after the end of the Interim Fee Period; (e) The Debtors will ask the Court to schedule a hearing on the Interim Fee Applications after its filing; (f) Any Professional that fails to submit a Monthly Statement or file an Interim Fee Application when due will be ineligible to receive further interim payments of fees or expenses under the Compensation Procedures until both are filed; and (g) The pendency of an Objection to payment of compensation or reimbursement of expenses will not disqualify a Professional from the future payment of compensation or reimbursement. Mr. Kairis explains that with respect to the Committee members' expenses, the Debtors ask the Court to permit each Committee member to submit statements of expenses supporting vouchers to the applicable Committee's counsel who will collect and submit the members' requests for reimbursement. Mr. Kairis asserts that the Debtors' proposed Compensation Procedures should be allowed since they are appropriate and are consistent with those established in other large Chapter 11 cases. (National Century Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONAL STEEL: October 2002 Net Loss Tops $4.6 Million ------------------------------------------------------- National Steel Corporation (OTC Bulletin Board: NSTLB) filed a Form 8-K on November 26, 2002 for the entities that filed Chapter 11 and reported a net loss for October of $4.0 million. Including all of the entities that did not file Chapter 11, National Steel had a net loss of $4.6 million. The October loss was attributed to higher planned maintenance outages and lower shipments due to seasonal reductions in construction and container market shipments. Average selling prices continued to increase primarily as a result of a better mix of shipments. As indicated in the 10-Q and associated press release, the fourth quarter 2002 is projected at a net loss due to significant maintenance outages and an anticipated deterioration in average selling price. For the sixth consecutive month, National Steel generated a positive EBITDA. The EBITDA for October was $12.4 million, which brings the year to date EBITDA to $33.6 million. Additionally, borrowings decreased during the month by $19 million, to $77 million at October 31, 2002. Total liquidity from cash and availability under the Company's DIP credit facility remained strong at $252 million at month-end, as compared to $237 million at September 30, 2002. "I am pleased with our cash flow generation and continued strong liquidity, which will fund the planned maintenance outages occurring in the fourth quarter. We made a decision to complete most of our major maintenance outages in the fourth quarter in order to coincide with the automotive market shutdowns and seasonally low market demands," stated Mineo Shimura, chairman and chief executive officer. 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), DebtTraders says, are trading at 38 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NSTL09USR1 for real-time bond pricing. NAVISTAR INT'L: Full-Year 2002 Net Loss Balloons $132 Million ------------------------------------------------------------- As previously forecast, Navistar International Corporation (NYSE: NAV), the nation's largest commercial truck and mid-range diesel engine producer, reported a net loss for both the fourth quarter and year ended October 31, 2002. Restructuring, non- recurring charges and loss from discontinued operations, net of taxes, totaled $404 million for the year, compared to a prior forecast of a maximum $456 million. The net loss from continuing operations for the fourth quarter, excluding the after-tax restructuring and non-recurring charges and loss from discontinued operations, amounted to $60 million, or $0.98 per diluted common share. The consensus estimate of financial analysts had been for a loss from continuing operations of $1.07 per diluted common share. Including the charges and discontinued operations, the fourth quarter loss amounted to $460 million, or $7.58 per diluted common share. In the fourth quarter a year ago, the company reported earnings of $7 million, or $0.11 per diluted common share. Consolidated revenues for the fourth quarter of 2002 were up 12 percent to $2.1 billion from $1.8 billion in 2001. Consolidated sales and revenues for the year ended October 31, 2002, totaled $6.8 billion, compared with $6.7 billion a year earlier. The net loss from continuing operations, excluding restructuring and non-recurring charges and discontinued operations, amounted to $132 million in 2002, equal to ($2.18) per diluted common share, compared with a net loss of $9 million, or $0.15 per diluted common share in 2001. Including the charges and discontinued operations, the net loss for 2002 totaled $536 million, equal to $8.88 per diluted common share, compared with a net loss of $23 million or $0.39 per diluted common share in 2001. The decline in income from continuing operations, excluding restructuring and non-recurring charges and discontinued operations $123 million, is the result of significant increases in the cost of post-retirement benefits and interest expense combined with the impact of several unusual items that have not been classified as restructuring or other non-recurring charges. These unusual items total (approximately $115 million pre tax) and include the impact of the United Auto Workers negotiations, the Canadian Auto Workers strike, brake recalls, Class 8 engine shortages and the impact of exchange losses in Brazil and Argentina. These unfavorable impacts were partially offset by material cost improvement and manufacturing performance. "As we move forward into 2003 we will drive further cost improvements as we gain experience with our new products," said John R. Horne, Navistar chairman and chief executive officer. He noted that 2002 was one of the most difficult periods in the company's 100-year history yet the company took a number of giant steps forward that will enhance future earnings opportunities. Major initiatives included: -- Realigned the company's truck manufacturing facilities. -- Introduced a new lineup of High Performance Trucks (Class 6-8). -- Launched a new 6-liter V8 engine. -- Negotiated a new United Auto Workers (UAW) union contract that allows for a more flexible workforce at a more competitive wage and benefit structure. -- Continued progress on the Blue Diamond truck and parts joint venture with Ford Motor Company. "Steps were taken during 2002 to discontinue a number of processes and to close a number of facilities that were utilized for our old products," Horne said. "We reduced our fixed costs and maintained a healthy distribution system throughout the downturn. Our goal for 2003 is to be profitable. We have positioned the business well, and now is the time to reap the benefits." According to Horne, the fixed cost reductions resulting from the restructuring and discontinued operations, coupled with the company's ongoing program of continuous cost improvements and the benefits from the Ford joint venture are expected to result in incremental gains in earnings before interest and taxes (EBIT) of $100 million in 2003 and $400 million at the peak of the next cycle. Horne said that given the weakness in the Class 8 market, the company expects a loss in the first quarter of 2003 to be in the area of $1.45 to $1.55 per diluted common share. The company expects demand for Class 8 trucks to remain weak during the first half of the year due to the pull forward of demand in the second half of 2002 as a result of the change in emission regulations. Demand for Class 8 trucks is expected to improve in the second half of the year because of improving trends in used truck inventories, the industry tonnage hauled and already extended replacement cycles. Horne emphasized that the company still forecasts a small profit for 2003, although there are some significant costs, such as the change in earnings assumption on pension assets that were not included in the original forecast, which must be avoided or offset for this forecast to materialize. "The building blocks are now in place as we have realigned our manufacturing facilities to deliver scale for focused products and invested to make those plants the most efficient in the industry," Horne said. "We expect to continue to reduce our material costs through improved product design and the reduction in the number of suppliers. In addition, our joint venture with Ford allows us to participate in the benefits of purchasing scale." As part of the Ford joint venture, production of Ford's medium truck will begin at Navistar's truck assembly plant in Escobedo, Mexico next week and as a result, approximately two-thirds of the facility will be transferred into the joint venture. The company's trucks and buses are sold under the Internationalr and ICr brands. Worldwide shipments in 2002 totaled 84,100 trucks and buses, of which 33,100 were medium trucks, primarily Class 6-7; 19,500 were school buses; and 31,500 were heavy trucks (Class 8). Shipments in 2001 consisted of 89,600 trucks and buses of which 43,700 were medium trucks, 20,800 were school buses, and 25,100 were heavy trucks. Engine shipments totaled 375,500 units in 2002 compared with 394,300 units in 2001. Navistar is forecasting United States and Canadian total truck industry retail sales volume for Class 6-8 and school bus in fiscal 2003 at 265,500 units, up 1 percent from the 263,400 units sold in the 12 months ended October 31, 2002. Demand for heavy trucks is expected to decline 5 percent to 156,000 units, while demand for Class 6-7 medium trucks is estimated at 82,000, up 13 percent from the 73,000 sold in 2002. School bus demand is forecast to be flat at 27,500 units. Horne said that due to the decline in the stock market this year, coupled with the decline in interest rates, the underfunded liability of the company pension plans has increased. The reduction of equity due to the increase in unfunded liability as of October 31, 2002, was $369 million after tax. In addition, the company has reduced the 2003 rate of return assumptions on plan assets for the pension and other postretirement benefits plans to 9.0 percent. Headquartered in Warrenville, Ill., Navistar International Corporation (NYSE: NAV) is the parent company of International Truck and Engine Corporation, a leading producer of mid-range diesel engines, medium trucks, heavy trucks, severe service vehicles and a provider of parts and service sold under the International(R) brand. IC Corporation, a wholly owned subsidiary, produces school buses. The company also is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Additionally, through a joint venture with Ford Motor Company, the company will build medium commercial trucks and currently sells truck and diesel engine service parts. International Truck and Engine has the broadest distribution network in the industry. Financing for customers and dealers is provided through a wholly owned subsidiary. Additional information can be found on the company's Web site at http://www.nav-international.com * * * As reported in Troubled Company Reporter's November 4, 2002 edition, Standard & Poor's Ratings Services placed its double-'B' corporate credit ratings on Navistar International Corp., and its subsidiary Navistar Financial Corp., a leading North American producer of heavy- and medium-duty trucks, on CreditWatch with negative implications. The CreditWatch listing is the result of Standard & Poor's concerns that the loss or postponement of the Ford Motor Co. V6 diesel engine business, combined with heavy cash outlays associated with the recently announced $456 million restructuring charge and continued challenging end market conditions, could pressure the credit profile and cash flow. Additionally, the company has approximately $200 million in manufacturing debt maturities it needs to refinance in the next 12 months, which heightens financial risk. Navistar International's 9.375% bonds due 2006 (NAV06USN1) are trading at about 92 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NAV06USN1for real-time bond pricing. NETIA: Polish SEC Admits Restructuring Shares to Trading -------------------------------------------------------- Netia Holdings S.A. (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services (in terms of value of generated revenues), announced that on November 29, 2002, the Polish Securities and Exchange Commission decided to admit to public trading 317,682,740 ordinary series H shares, 64,848,652 ordinary series J shares and 18,373,785 ordinary series K shares of Netia, to be issued connection with Netia's ongoing restructuring. Furthermore, the Commission gave its consent for the introduction to public trading of 31,419,172 ordinary series I notes and 1,005,154 ordinary series II notes, which authorize their holders to subscribe for the series J shares on a pre- emptive basis, with priority to Netia shareholders (subscription warrants), and 18,373,785 ordinary series III notes, which authorize their holders to subscribe for the series K shares on a pre-emptive basis. This approval represents the achievement of another milestone in the implementation of the Restructuring Agreement signed by Netia with its creditors on 5 March, 2002. NEW POWER COMPANY: Disclosure Statement Hearing Set for Dec. 17 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia will convene a hearing on December 17, 2002, to consider the adequacy of the Disclosure Statement prepared by New Power Company, and its debtor-affiliates, to explain the Company's Plan of Reorganization. The hearing will start at 10 a.m. before the Honorable W. Homer Drake, Jr. Objections to the approval of the Disclosure Statement must be received by the Bankruptcy Court before 4:00 p.m. on December 9, 2002, with copies served upon: i. Counsel to the Debtors King & Spalding 191 Peachtree Street Atlanta, Georgia 30326 Attn: Paul K. Ferdinands, Esq. ii. Counsel to the Debtors Sidley Austin Brown & Wood LLP 787 Seventh Avenue, New York, New York 10019 Attn: William M. Goldman, Esq. iii. Counsel to the Creditors Committee Morris, Manning and Martin LLP 1600 Atlanta Financial Center 3343 Peachtree Road NE Atlanta, GA 30326 Attn: Frank W. DeBorde, Esq. iv. Office of the United States Trustee 362 Richard B. Russell Building 75 Spring Street SW Atlanta, Georgia 30303 Attn: R. Jeneane Treace New Power Company filed for Chapter 11 protection on June 11, 2002. Gregory Bianchi, Esq., and Paul K. Ferdinands, Esq., at King & Spalding and William M. Goldman, Esq., Geoffrey T. Raicht, Esq., and Richard W. Havel, Esq., at Sidley Austin Brown & Wood LLP represent the Debtors in their restructuring efforts. NORTEL: Will Link Wi-Fi Networks with CDMA, GPRS, UMTS Networks --------------------------------------------------------------- Nortel Networks (NYSE:NT)(TSX:NT.) announced the ability to provide integrated solutions for wireless operators that will seamlessly link existing and future Wireless Wide Area Networks with fast-emerging wireless 'hot spots,' also known as Wireless Local Area Networks. Nortel Networks integrated WWAN/WLAN technology will give GSM, GPRS, UMTS and CDMA wireless operators the opportunity to provide enterprises and consumers with a single 'sign on' and seamless service between 2G/3G networks and wireless hot spots. This solution will also give operators the capability to provide consolidated billing, authentication and security without the need to restructure existing network architectures. This technology will help enable mobile workers to establish 'virtual offices,' connect securely to corporate intranets, send and respond to e-mails, access the Web, download files, and conduct business from virtually any location. In addition, it will allow users to roam seamlessly between wireless 2G/3G and WLAN networks with uninterrupted access to the same Internet Protocol (IP) data services. The technology will also manage billing information across networks so that end users can receive one consolidated bill from their wireless operator. "As part of our Wireless Data Networks strategy, Nortel Networks has developed this comprehensive suite of solutions to allow wireless operators to offer secure WLAN hotspot connectivity as an extension to their existing wireless services," said Dave Murashige, vice president, strategic marketing, Wireless Networks, Nortel Networks. "The WLAN strategy we are announcing today demonstrates our commitment to helping operators create a mobile environment that delivers users compelling content and data services from any location. Our WLAN technology, coupled with our extensive experience in IP data networking, will position operators to increase revenue potential and reduce subscriber churn." "Public access WLAN provides a good test bed for mobile data applications, particularly those targeted at enterprise markets," said Jason Chapman, senior analyst, Gartner. "With 3G mobile heavily relying on the take-up of data services, it is not only in the interests of mobile operators but also of the mobile infrastructure vendors to make sure that early data services are successful, paving the way for 3G. Once mobile enterprise customers feel security and pricing are not prohibitive, they will get used to, for example, being able to pull out their laptops in a coffee shop and get access to corporate data." As part of its integrated WWAN/WLAN offering, Nortel Networks is working with Mobility Network Systems, a leading supplier of carrier-class WLAN solutions, to provide comprehensive solutions that will enable GSM, GPRS and UMTS operators to integrate WLANs into their existing networks and service platforms using SIM and RADIUS technology. In interoperability testing conducted earlier this year, Mobility Networks ipRAN technology was successfully integrated with Nortel Networks GSM, GPRS and UMTS core network infrastructure and products, including Home Location Register and Nortel Networks Univity GPRS Gateway Serving Node. Nortel Networks CDMA technology will enable CDMA operators to provide WLAN services to their customers using existing CDMA2000 core network equipment. Nortel Networks is working in collaboration with Bridgewater Systems and MetaSolv to support common authentication and billing between CDMA2000 and Wi-Fi networks, enabling a single 'sign-on' for the customer and consolidated billing information. CDMA operators can choose to deploy their own WLAN access networks or act as a virtual network operator through WLAN access wholesalers or aggregators. Nortel Networks Univity GGSN/PDSN, based on Nortel Networks Shasta platform, can provide a number of value-added benefits for wireless operators wanting to integrate WLANs with WWANs. Univity GGSN/PDSN will allow operators to identify and manage subscribers, control traffic flows, and deliver a richer set of IP data services. It will also provide enhanced protection of subscriber data with security features such as 'state-aware' firewalls and strong encryption algorithms. In addition, Nortel Networks integrated WWAN/WLAN technology will use industry standard IPSec encryption technology to help reduce enterprise security concerns. Nortel Networks Contivity solution can also be used to provide encryption, authentication, firewalls and routing in a single, secure switch, and stops unauthorized users from hacking into the network to gain free access and/or steal confidential information. 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 * * * As reported in Troubled Company Reporter's November 6, 2002 edition, Moody's Investors Service lowered the senior secured and senior implied ratings on the securities of Nortel Networks Corp., and its subsidiaries to B3 and Caa3 from Ba3 and B3 respectively. Outlook is negative. The rating action reflects the lack of Nortel's financial flexibility and the decline of its revenue base. The downgrade also takes into account the company's planned lapse of its $1.5 billion in credit facilities due on December. However the rating action is offset by its substantial cash, modest near-term debt maturities, and the progress the company has made in streamlining its expenses. 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. OAKWOOD HOMES: US Trustee Appoints Unsecured Creditors Committee ---------------------------------------------------------------- The U.S. Trustee for the District of Delaware Monday appointed the following members of the Committee of Unsecured Creditors of Oakwood Homes Corp: * J.P. Morgan Chase Bank, as Trustee, * U.S. Bank N.A. as Trustee, * Absolute Recovery Hedge Funds, * Aegon USA Investment Management, LLC, * Patrick Industries, Inc., * Carriage Industries, Inc., and * La Salle Bristol LP. The Committee has elected Wilbur L. Ross, Chairman of Absolute Recovery Hedge Fund, as its Chairman and has selected Akin, Gump, Strauss Hauer & Feld LLP and McCarter & English LLP as its counsel. On November 15, 2002, Oakwood Homes filed for protection under Chapter 11 of the federal bankruptcy code, listing $705 million of debts, including almost $300 million in senior notes, and $842 million of total assets. The bankruptcy filing came amid a slump in mobile home sales and a cutback in lending by Oakwood Homes lenders including Conseco Inc., Greenpoint Financial Corp., and others. Oakwood Homes Corporation and its subsidiaries are engaged in the production, sale, financing and insuring of manufactured housing throughout the United States. The Company's products are sold through Company-owned stores and an extensive network of independent retailers. Oakwood Homes Corp.'s 7.875% bonds due 2004 (OH04USR1) are trading at about 22 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=OH04USR1for real-time bond pricing. OCEAN POWER: Seeks Nod to Obtain DIP Financing from Algonquin ------------------------------------------------------------- Ocean Power Corporation asks for permission from the U.S. Bankruptcy Court for the Southern District of New York to obtain Postpetition Financing from Algonquin Capital Management, LLC and to incur Postpetition Indebtedness with superpriority status. Pursuant to the DIP Loan Agreement, the Lender shall make loans and advances to the Debtor in an amount not to exceed $216,819. The Debtor discloses that the Prepetition Lender was owed $3,701,005.66 under as of the Petition Date. The Debtor relates that it has no unencumbered funds or credit available to fund its business operations or to conduct the orderly sale of its assets. The Debtor has also been unsuccessful in its attempts to secure third party financing from other potential debtor-in- possession lenders. Thus, without the funding from the Algonquin Capital, the Debtor's operations will cease and the value of its assets will be lost. The Debtor asserts that it is imperative that it be authorized to obtain advances under the DIP Loan Agreement in order to preserve and maximize the value of its assets. The Debtor has determined a sale of its assets will maximize value. The Debtor has simultaneously filed motion for approval of an Asset Purchase Agreement, which provides for the sale of the Debtor's assets to Algonquin Capital Management L.L.C. and Hibernia Capital Management LLC. Since the DIP Lender is also the Pre-Petition Lender, whose senior liens and security interests are being primed, the DIP Loan Agreement grants the Lender adequate protection of the prepetition liens on and security interests in the Prepetition Collateral in the form of the Replacement Liens, subject and subordinate only to the Post-Petition Liens on and the Lender's security interests in the Collateral. DIP Loan Agreement will terminate at the earliest of: (a) the Closing under the Sale Agreement, (b) February 28, 2003, (c) termination of the Sale Agreement for any reason; (d) withdrawal of the motion for approval of the Sale Agreement; or (e) occurrence of Events of Default. Additionally, the DIP Loan Agreement provides for the inclusion of $70,000 of advances made by the Debtor immediately prior to the Petition Date. The Debtor relates that prior to the Petition Date, it had no cash to fund certain necessary expenses that would have otherwise forced the Debtor to immediately terminate operations, liquidate its assets and wind-up its business. Because these advances were necessary to the prospect of any bankruptcy proceeding, the Debtor seeks authority to include the advances under the DIP Loan Agreement. Moreover, the Debtor has certain operating needs that will require funding prior to the interim hearing. Accordingly, the Debtor requests authority to obtain funding on an emergency basis in an amount not to exceed $15,000. Ocean Power Corporation, aka PTC Group, aka PTC Holdings, Inc., was formed to develop and manufacture modular seawater desalination and power plants. The Company filed for chapter 11 petition on December 1, 2002. Alan David Halperin, Esq., at Halperin & Associates represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $1,465,024 in total assets and $24,012,243 in total debts. OWENS CORNING: Court Approves Sale of Mission Plant to B.C. Ltd. ---------------------------------------------------------------- Owens Corning and its debtor-affiliates obtained Court approval of the Purchase and Sale Agreement between Vytec Corporation and 493989 B.C. Ltd., for the sale of the Debtors' plant in Mission BC, Canada. Vytec Corporation is a wholly owned non-Debtor subsidiary of Fibreboard. Owens Corning (China) Investments Company Ltd., is an indirect wholly owned non-debtor subsidiary of Owens Corning Cayman (China) Holdings. Owens Corning (Anshan) Fiberglass Co., Ltd., is an indirect wholly-owned non-debtor subsidiary of Owens Corning and was organized under the laws of China and was formed in 1996 for the purpose of manufacturing, marketing, distributing and selling fiberglass insulation products used for both residential and commercial purposes. 493989 B.C. Ltd., is an unaffiliated third party. The key terms of the Purchase and Sale Agreement, among others, are: A. BC Ltd. will pay Vytec CDN $2,650,000, which includes a CDN $60,000 deposit, for the real property and the equipment and personal property. The balance of the Purchase Price will be paid at Closing; B. The Closing is scheduled to take place on November 27, 2002; C. BC Ltd. is to indemnify and hold Vytec harmless from all claims and expenses that relate to the release or discharge of hazardous substances onto or into the Property after Closing; D. Vytec is to indemnify and hold BC Ltd. harmless from all claims and expenses that relate to the presence on any hazardous substances on the Property prior to Closing and not previously disclosed to B.C. Ltd. or known by BC Ltd. prior to the Closing; Eo BC Ltd. may enter the real property prior to Closing to prepare the premises for its occupation after Closing; F. If the Vytec-owned equipment not subject to the sale to BC Ltd. is not removed from the Property prior to Closing, the Equipment can be stored on the Property until November 1, 2002; and G. Vytec's obligation to close the transactions contemplated in the Purchase and Sale Agreement is conditioned on Bankruptcy Court approval. (Owens Corning Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS-ILLINOIS: EVP and CFO R. Scott Trumbull Opts to Retire ------------------------------------------------------------ Owens-Illinois, Inc., (NYSE: OI) announced that R. Scott Trumbull, executive vice president and chief financial officer, has elected to retire from the company as of the end of 2002, and has accepted the position of Chairman and Chief Executive Officer of Franklin Electric Company, Inc., (Nasdaq: FELE). Mr. Trumbull has served as a member of the board of directors of Franklin Electric since 1998. Joseph H. Lemieux, Owens-Illinois chairman and chief executive officer, said, "We thank Scott for his many contributions during his 31 years of service with the Company, and we wish him well in his new position." Mr. Lemieux further said, "The reassignment of Mr. Trumbull's responsibilities within the Company will be announced at a later date." Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. Plastics packaging products manufactured by O-I include consumer products (blow molded containers, injection molded closures and dispensing systems) and prescription containers. Copies of Owens-Illinois news releases are available at the Owens-Illinois Web site at http://www.o-i.comor at http://www.prnewswire.com * * * As reported in Troubled Company Reporter's November 5, 2002 edition, Fitch Ratings assigned a 'BB' rating to Owens-Illinois' (NYSE: OI) proposed $300 million privately placed, Rule 144A senior secured notes. The Rating Outlook remains Negative. Credit risks incorporated in the rating and the Outlook concern OI's asbestos exposure, high leverage position and refinancing requirements. The bankruptcy of several companies with asbestos exposure has heightened interest in the company's asbestos exposure, and some uncertainty will likely remain over the near term. However, OI showed reduced payments through the first nine months of 2002, and despite a $475 million addition to reserves in the first quarter, trend lines are positive. OI's exposure is differentiated from other asbestos exposed firms by a number of factors including OI's exit in 1958 from asbestos-related manufacturing (earlier than most other exposed companies), the aging of potential claimants, and agreements in place with numerous plaintiff law firms as to the handling of claims. OI has retained high leverage as a result of a number of meaningful acquisitions as well as high levels of asbestos payments. OI has demonstrated continued access to the capital markets, although heavy refinancing requirements, unsteady capital markets and exposure to asbestos uncertainties indicate that refinancing risk, although reduced, could remain. OI has been able to maintain relatively stable margins and breakeven, or modestly positive, free cash flow (after asbestos payments) in spite of the weak economic environment. Recent results in the glass business have been positive due to steady unit growth, lower energy costs and a degree of pricing strength. The plastics operations continue to experience pricing pressure. Historically, OI has been able to maintain relatively steady margins in their glass business through a consistent focus on cost reductions and productivity improvements. PRIME GROUP: K Capital Urges Company to Seek Strategic Options -------------------------------------------------------------- K Capital sent the following letter to Prime Group Realty Trust. December 3, 2002 Stephen J. Nardi - Acting Chairman Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Dear Mr. Nardi: "K Capital Partners manages an investment partnership that focuses on undervalued equities. We beneficially control over 18% of Prime Group shares and have been a shareholder for over a year. We believe that the stock market valuation of Prime Group represents a significant discount to its real estate net asset value. Prime Group suffers this discount because its high leverage, lack of dividend and small market capitalization constrain investor interest in the stock. "We applaud the Board and Management's efforts to turn around the company and manage debt levels. However, despite these positive moves, the stock is still trading at a substantial discount to its NAV due to the aforementioned reasons. Therefore, we strongly encourage Management and the Board to pursue a liquidation of a substantial portion of its real estate portfolio or a sale of the entire company. We look forward to working with Management and the Board to implement a more effective plan to maximize shareholder value." Regards, Abner Kurtin Managing Director K Capital Partners, LLC 75 Park Plaza, Box 11 Boston, MA 02116 * * * As reported on April 10, 2002 in Troubled Company Reporter, Daniel Kaufman, Chairman of the Committee to Restore Shareholder Value, said, "[F]or the past three months, PGE has faced the risk of involuntary bankruptcy due to the potential redemption of $40 million of PGE's Preferred A shares. Inexplicably, the Board has left Mssrs. Reschke and Curto to negotiate with creditors who are fully aware of how the parties chose to deal with another creditor. Mr. Reschke recently stated that he hopes to solve PGE's liquidity crisis with asset sales. Given PGE's outstanding tax indemnification agreements, asset sales may be inferior to completing an entity-level transaction or issuing additional debt or equity." PROVANT INC: Maxco Inc. Discloses 10.4% Equity Stake ---------------------------------------------------- Maxco, Inc., beneficially owns 2,837,089 shares of the common stock of Provant, Inc., representing 10.4 per cent of the outstanding common stock shares of the Company. Maxco holds sole powers of voting and disposing of the stock. Maxco, Inc., currently operates in two business segments through wholly owned subsidiaries: heat treating and packaging products. Maxco also has investments in real estate and investments representing less than majority interests in a number of other businesses. The consideration which was used to acquired the Provant, Inc., common stock was stock in Strategic Interactive, Inc., which was acquired by Provant, Inc., in October 1998, and of which Maxco, Inc., was a former shareholder. Maxco, Inc., acquired the Provant, Inc., common stock in connection with the acquisition by merger of Strategic Interactive, Inc., by Provant. The merger agreement provided for the former Strategic Interactive shareholders to receive additional shares of Provant, Inc., common stock upon the reaching of specified contingencies. Those contingencies were met and the additional shares of Provant, Inc., were registered by Provant, Inc., with the Commission by registration statement declared effective November 13, 2002 and distributed to Maxco, Inc., on November 14, 2002. Maxco, Inc., has no plans which relate to or would result in the acquisition or disposition of any securities of Provant, Inc., any extraordinary corporate transaction involving Provant, Inc., or any change in control or operations of Provant, Inc. As a leading provider of performance improvement training services and products, Provant helps its clients maximize their effectiveness and profitability by improving the performance of their people. With over 1,500 corporate and government clients, the Company offers blended solutions combining web-based and instructor-led offerings that produce measurable results by strengthening the performance and productivity of both individual employees and organizations as a whole. For more information visit http://www.provant.com * * * As reported in Troubled Company Reporter's November 7, 2002 edition, Provant continues to be in default under its credit facility agreement, and "believe[s] [the Company is] close to finalizing the terms of an extension to it that would end the current default." The terms of this extension will, among other things, extend the due date of the facility to April 15, 2003, subject to the Company's continued obligation to take actions that would result in the early repayment of our indebtedness to the banks. The Company continues to pursue various strategic alternatives, which include the sale of Provant or various of its assets. PROVELL: Disclosure Statement Hearing is Tomorrow in Manhattan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing to consider approval of Provell, Inc.'s Proposed Disclosure Statement explaining the Company's Joint Plan of Reorganization. The Debtors will ask the Court to find that the disclosure document contains adequate information that will allow creditors to make informed decisions when asked to vote to accept or reject the plan. The Disclosure Statement Hearing will be held on December 6, 2002, at 10:00 a.m. before the Honorable Allan L. Gropper, United States Judge for the Southern District of New York, Alexander Hamilton Custom House, One Bowling Green, New York, NY 10004. Provell, Inc., develops, markets and manages an extensive portfolio of membership and customer relationship management programs that provide discounts and other benefits to members in the areas of shopping, travel, hospitality, entertainment, health/fitness, finance, cooking and home improvement. The company filed for chapter 11 protection on May 9, 2002. Alan Barry Hyman, Esq., Jeffrey W. Levitan, Esq., David A. Levin, Esq., at Proskauer Rose LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $40,574,000 in total assets and in $82,964,000 total debts. PSC INC: Brings-In U.S. Bancorp Piper as Investment Banker ---------------------------------------------------------- PSC Inc., and its debtor-subsidiary PSC Scanning, Inc., ask for permission from the U.S. Bankruptcy Court for the Southern District of New York to continue their employment of U.S. Bancorp Piper Jaffray Inc., as Investment Banker while in chapter 11. The Debtors tell the Court that Piper has a wealth of experience in providing investment banking and financial advisory services to its clients, including services pertaining to: (i) general financial advice, (ii) mergers, acquisitions, and divestitures, (iii) special committee assignments and (iv) corporate restructuring. The Debtors believe that Piper is well qualified and able to represent the Debtors in a cost-effective, efficient, and timely manner. Piper will continue to assist the Debtors as their investment banker and agent in connection with the implementation of its financial restructuring and confirmation of the Plan. Specifically, Piper will: (a) review financial and other data provided by the Debtors; (b) develop valuation, debt capacity and recovery analyses in connection with developing and negotiating a potential restructuring; (c) evaluate alternative capital structures and restructuring plans for the Debtors, as appropriate; (d) develop a negotiating strategy and assist in negotiations with the Debtors' creditors and other interested parties with respect to a potential restructuring; (e) make presentations to the Debtors' Board of Directors, creditor groups or other interested parties, as appropriate; (f) assist the Debtors and their post-emergence shareholders with their tax reporting requirements by providing a determination of the fair market value of the securities of the Company as of the Effective Date of the chapter 11 bankruptcy (g) any such other financial advisory services which may be customarily rendered in connection with the restructuring; and (h) provide expert witness testimony, if required. In exchange of its services, Piper shall receive a success fee, upon completion of a Restructuring, equal to $1,325,000. PSC, manufacturer of bar code scanning equipment and portable data terminals for retail market and supply chain market, filed for chapter 11 protection on November 22, 2002. James M. Peck, Esq., at Schulte Roth & Zabel LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $130,051,000 in total assets and $159,722,000 in total debts. The Debtors' Chapter 11 Plan and the accompanying Disclosure Statement are due on March 22, 2003. RAILAMERICA INC: Initiates Cost-Reduction Efforts & Promotions -------------------------------------------------------------- RailAmerica, Inc., (NYSE: RRA) the world's largest short line and regional railroad operator, has implemented a reduction of its workforce, certain cost savings initiatives and staff promotions. These actions are part of an ongoing comprehensive plan to reduce costs and increase future profitability in light of the prevailing soft domestic economy and reduced operating results in Australia due to the previously announced severe drought and weak grain harvest. When completed by year-end 2002, the workforce reduction, which includes a number of personnel at both the corporate and operating levels in the United States and Australia, will total approximately 145 positions. RailAmerica had a total of approximately 2,800 employees worldwide prior to this reduction. As a result of the workforce reduction, the Company will take an after-tax charge of approximately $2 million in the fourth quarter of 2002. In addition, the Company has identified further operating and administrative expense savings and is in the process of implementing those by year-end. In 2003, the workforce and expense reductions are expected to result in pre- tax savings of over $10 million. Gary O. Marino, Chairman, President & CEO of RailAmerica, said, "As previously disclosed, our Australian railroad, Freight Australia, has done a tremendous job bolstering revenues with new transportation contracts which will partially offset reduced grain revenues caused by the current 100-year drought. Despite the weaker economy, our North American rail operations have continued to provide strong carload and revenue growth this year. With our May 2002 financing we have lowered our interest expense by approximately $8 million per year. These measures have helped produce solid earnings for RailAmerica this year. However, we felt that in order to ensure that we were as streamlined and efficient as possible, we had to do a top-to- bottom operational and headcount review, which included some difficult decisions with respect to personnel." At the corporate level, the Company announced the promotion of Michael J. Howe, formerly Vice President & Treasurer, to Senior Vice President & Chief Financial Officer, replacing Bennett Marks, who has left the Company. Larry Bush, formerly Vice President - Financial Planning, was promoted to Vice President & Treasurer. Wayne A. August, formerly Assistant Vice President - Administration, was promoted to Vice President - Administration & Investor Relations. Peter F. Turrell, formerly Vice President International Operations, was promoted to Senior Vice President - International Rail Group, and Scott G. Williams, formerly Vice President & General Counsel - Real Estate, was promoted to Senior Vice President & General Counsel. Mr. Howe, 55, joined RailAmerica in 2000 with over 30 years of experience in finance, operations and systems management, including eighteen years in the transportation industry. He has served in senior executive positions of public and private companies and is particularly experienced in strategic planning and international finance. Immediately prior to joining RailAmerica, Mr. Howe was Vice President & Chief Financial Officer at SurfAir, Inc., an international transportation services company. He also spent seven years with CSX Corporation in various senior management positions, including Chief Financial Officer at CSX Logistics Information Services and Senior Director at CSX Commercial Services. Mr. Howe, a CPA, received both his B.B.A. and M.B.A. in Accounting from the University of North Florida. Mr. Bush, 39, has been with the Company over 8 years and has served in various financial capacities, including Vice President & Controller. Prior to RailAmerica, he was with the accounting firm of Coopers & Lybrand. Mr. Bush, a C.P.A., earned his B.B.A. from Siena College. Mr. August, 39, joined RailAmerica in 1997 from CSX Corporation. He has over 10 years of experience in investor relations, corporate communications and financial planning. Mr. August holds a B.S. in Engineering from the University of Florida and an M.B.A. from Duke University's Fuqua School of Business. Mr. Turrell, 59, joined RailAmerica in 1999 and has been responsible for overseeing operations of the Company's international operations in Chile and Australia. His railroad career began in 1969 with the Illinois Central Railroad, and he has worked in the operating departments of MidSouth Corporation (now Kansas City Southern Railway), Amtrak and Nuevo Central Argentino railroads. Mr. Turrell received his B.A. from Lafayette College. Mr. Williams, 48, joined RailAmerica in early 2002 after 21 years with the Florida-based law firm of Shutts & Bowen, where as a partner he specialized in real estate, corporate and finance areas, including railroad acquisitions and financings. He is a member of the Florida Bar and received his B.A. from Yale University and J.D. from Vanderbilt University School of Law. "It is always difficult to make personnel reductions, but we have a deep management team and we believe it was time to promote those who have demonstrated great ability," said Donald D. Redfearn, Executive Vice President & Chief Administrative Officer. "Mike has been with our organization for 3 years and has been instrumental in designing and implementing our financial and strategic plan. He is well known in the financial community and his appointment as CFO is well deserved. Larry has been a key member of our financial team for several years and will do a great job in carrying out the responsibilities formerly performed by Mike. Wayne has been with us for nearly 6 years and moves back to investor relations, where he has developed an excellent relationship with the financial and Wall Street community. Peter has more than 33 years of railroad operating experience and spent extensive time at both our Chilean and Australian railroads. Scott has key railroad- related legal experience and was instrumental in RailAmerica's first acquisition in 1986." Marino added, "Over the past 16 years we have shown our ability to deliver on our growth strategy by building a strong, diversified short line and regional railroad company that is now the largest in the world. Our first duty is to our shareholders. Therefore, a successful organization needs to be able to adapt to changes in circumstance, and these measures allow us to better implement our growth initiatives. As a result of these actions, we believe RailAmerica becomes an even stronger, tougher, leaner and more profitable Company." RailAmerica, Inc. -- http://www.railamerica.com-- the world's largest short line and regional railroad operator, owns 49 railroads operating approximately 12,800 route miles in the United States, Canada, Australia and Chile. In North America, the Company's railroads operate in 27 states and six Canadian provinces. Internationally, the Company operates an additional 4,300 route miles under track access arrangements in Australia and Argentina. In July 2001, the Company was named to the Russell 2000(R) Index. * * * As reported in Troubled Company Reporter's April 25, 2002 edition, Standard & Poor's raised its long-term corporate credit rating on RailAmerica Inc., citing the rail operator's improved financial flexibility. The senior secured debt rating was raised to 'BB' from 'BB-', and the subordinated debt rating was raised to 'B' from 'B-'. Standard & Poor's also assigned its 'BB' rating to $475 million in senior secured credit facilities issued by RailAmerica Transportation Corp. and guaranteed by RailAmerica Inc. Local and Foreign Currency Ratings are assigned at 'BB-' and 'BB+' respectively. Ratings outlook is stable. The rating actions reflected the company's successful expansion of operations and improved financial profile. Nevertheless, debt leverage remains elevated, in the 70% debt to capital area, and management's active acquisition strategy carries potential for additional debt financing. SAFETY-KLEEN CORP: Plan's Classification & Treatment of Claims -------------------------------------------------------------- Safety-Kleen Corp., and its debtor-affiliates outline the classification and treatment of claims under their proposed Chapter 11 Reorganization Plan. Class Description Plan Treatment ----- ----------- -------------- Administrative On, or as soon as reasonably Claims practicable after the latest of: Estimated Allowed -- the date the Administrative Claim Amount: becomes Allowed; $68,500,000 -- the Initial Distribution Date; or -- the date the Claim becomes payable under any separate agreement between the Debtor and the Claimant, the holder will receive, in full satisfaction on the Claim: (a) cash equal to any unpaid portion of the Claim; or (b) other treatment as may be agreed between the Debtor and the Claimant. Administrative Claims of the BSSD Debtors will be paid in the ordinary course of those Debtors' businesses. Canadian Lender Canadian Lender Administrative Administrative Claims are debts owed to banks Claim that are parties to the Prepetition Credit Agreement (Toronto-Dominion). Estimated Allowed This debt was assumed by Safety- Amount: Kleen Services, Inc. under the $79,400,000 Order approving the sale of the Chemical Services Division to Clean Harbors. The Canadian Lender Claims are, by order, Allowed Administrative Claims against SK Services for $79,400,000 plus interest, less any amounts for outstanding letters of credit that are replaced or backstopped under the Exit Facility. On the Initial Distribution Date, the Creditor will receive, in full satisfaction, the Creditor's pro rata share of: (a) New Common Stock having a value equal to 72% of the full face amount of the Allowed Claim; and (b) New Subordinated Notes in an amount equal to 28% of the full face amount of the Allowed Claim. DIP Facility Each holder will receive, on the Claims later of the Effective Date or the date on which the DIP Facility Estimated Allowed becomes payable by agreement, in Amount: full satisfaction: $50,000,000 (a) Cash equal to the full amount of the Allowed DIP Claim, or (b) other payment as may be agreed between the parties. Priority Tax At the sole option of the applicable Claims Reorganized Debtor, the Creditor will receive in full payment: Estimated Allowed Amount: (a) equal cash payments made on $10,500,000 the last business day of every 3-month period following the Initial Distribution Date over a period not exceeding 6 years after the Assessment of the tax, totaling the principal amount plus simple interest calculated at the interest rate available on 90-day US Treasuries; (b) full payment in cash; or (c) other treatment as agreed by the parties. The Debtors reserve the right to pay any Allowed Priority Tax Claim in full at any time after the Initial Distribution Date without premium or penalty. No payments will be made on any pre- Effective Date interest or penalty arising after the Petition Date on any Priority Tax Claim. DHEC This claim relates to the Pinewood Administrative Facility in Sumter County, South Claim Carolina. Estimated Allowed Paid under the terms of the DHEC Amount: Settlement as described in the Plan. $50,000,000 Payment in full of the Allowed DHEC Administrative Claim. 1 Non-Tax Claims As soon as reasonably practical Entitled To after the latest of: Priority -- the date the Other Priority Claim Estimated Allowed becomes Allowed; Amount: $3,400,000 -- the Initial Distribution Date; or -- the date the Claim becomes payable under any separate agreement between the Debtor and the Claimant, the holder will receive, in full satisfaction on the Claim: (a) cash equal to any unpaid portion of the Claim; or (b) other treatment as may be agreed between the Debtor and the Claimant. This class of Other Priority Claims is unimpaired and will recover 100% of the Claims in it. As such, the holders of these claims are not entitled to vote on the Plan. 2 Miscellaneous Each Miscellaneous Secured Claim is Secured Claims place in its own sub-Class. Each sub-Class is deemed to be a Estimated Allowed separate class for all purposes, Amount: including voting. $10,200,000 Each holder of an Allowed Class 2 Miscellaneous Secured Claim will, at the option of the Debtors or the Applicable Reorganized Debtor, receive payment under option A, B, C or D: Option A: As soon as reasonably practical after the latest of: -- the date the Miscellaneous Secured Claim becomes Allowed; -- the Initial Distribution Date; or -- the date the Claim becomes payable under any separate agreement between the Debtor and the Claimant, the holder will receive full satisfaction on the Claim from the Reorganized Debtors. Option B: These Claims will be reinstated and paid according to their original terms; however, the Debtors warn that any failure to object to any of these Claims under this Option will be without prejudice to the Debtors' or the Reorganized Debtors' right to oppose or otherwise defend against the Claim in the appropriate forum when the holder attempts to enforce the Claim. Option C: When the Debtors elect this Option, they will surrender the Collateral securing the Claim to the Claimant in full satisfaction of the related obligation. Option D: Claims subject to the Debtors' election under this option will be paid according to whatever terms and conditions are agreed upon by the parties to the Claim and the Debtors or Reorganized Debtors. All Miscellaneous Secured Claims are unimpaired by the Plan. 3 Secured US Lender Claims in this Class consist of: Claims Estimated Allowed (a) the portion of US Lender Claims Amount: arising under the Prepetition $480,000,000 to Credit Agreement, including $660,000,000 claims for reimbursement under letters of credit that remain outstanding as of the Effective Date; and (b) the Secured Claims of the Swap Parties arising as a result of: -- the ISDA Master Agreement of 1999 between Services and Citibank NA, and -- the ISDA Master Agreement between Services and Toronto Dominion (Texas), Inc. Class 3 contains three sub-Classes of Secured US Lender Claims against each Debtor. Each sub-Class is a separate class for voting purposes. On the Effective Date, each holder will be entitled to receive, on or reasonably after the Initial Distribution Date, the holder's Pro Rata share of: (a) the New Common Stock after deduction for the New Common Stock distributed to the holders of the Canadian Lender Administrative Claim; and (b) the New Subordinated Notes after deduction for the New Subordinated Notes distributed to the Canadian Lender Administrative Claim. These Claimants are impaired and may vote on the Plan. 4 SKC General This Class includes: Unsecured Claims (a) the Aragonite IRB Claims; Estimated Allowed Amount: (b) the California Pollution $1,200,000,000 to Control Financing Authority IRB $1,400,000,000 Claims; and (c) the deficiency claims of the US Lenders against SKC; but excludes: (x) the Class 5.9-1/4% Senior Notes Claims against SKC; and (y) the guaranty claims of the holders of the Class 6.9-1/4% Senior Subordinated Note Claims. As soon as reasonably practical, after the latest of: -- the date the Other Priority Claim becomes allowed; -- the Initial Distribution Date; or -- the date the Claim becomes payable under any separate agreement between the Debtor and the Claimant, the holder will receive, in full payment of the Claim, the holders' pro rata share of: (x) the beneficial interests in the Safety-Kleen Creditor Trust -- together with all holders of Allowed Claims in Classes 5 through 7, and (y) the net proceeds of any recoveries on the PwC Litigation Claim -- together with all holders of Allowed Claims in Classes 5 and 6. Claims in this Class are impaired and can vote. 5 9-1/4% Senior Note The same as Class 4. Claims Estimated Allowed Amount: $236,800,000 6 9-1/4% Senior The same as Class 4. Subordinated Notes Estimated Allowed Amount: $340,800,000 7 General Unsecured This Class has separate sub-Classes Claims for all General Unsecured Claims against each Debtor other than SKC. Estimated Allowed Amount: The same as Class 4 -- but no $223,000,000 sharing in recovery on PwC Litigation recovery. 8 Subordinated These are subordinated claims that Claims arise from rescission of, or for Damages, indemnification, Estimated Allowed reimbursement or contribution with Amount: respect to a purchase or sale of Undetermined Old Common Stock or other debt or equity securities of SKC or its affiliates. No distribution. Class deemed to have rejected the Plan. 9 Equity Interests Holders of Old Common Stock, including options, warrants, or other rights to acquire stock Old Common Stock cancelled and extinguished. No distribution. Class deemed to reject the Plan. All inter-company claims will, on the sole discretion of the applicable Debtor or Reorganized Debtor: (a) be preserved and reinstated, (b) be released or waived, or (c) be contributed to the capital of the obligor corporation. The Plan Disbursing Agent will establish a Lender Claims Reserve by withholding the New Subordinated Notes and the New Common Stock to be distributed to the holders of Secured Claims for reimbursement obligations related to the letters of credit under the Prepetition Credit Agreement not otherwise replaced or backstopped through letters of credit issued under the Exit Facility. (Safety-Kleen Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) SAMSONITE CORP: Third Quarter 2002 Results Show Improvement ----------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) reported revenues of $201.9 million, operating income of $21.8 million and net loss to common stockholders of $3.3 million for the quarter ended October 31, 2002. These results compare to revenues of $190.9 million, operating income of $11.0 million and net loss to common stockholders of $15.3 million for the third quarter of the prior year. Operating earnings for the current quarter include $0.2 million of expenses associated with the Company's restructuring activities compared to $1.7 million of restructuring related expenses in the same quarter for the prior year. Preferred stock dividends of $10.9 million for the current quarter and $9.5 million for the prior year are reflected in the net loss to common stockholders. Adjusted EBITDA (earnings before interest expense, taxes, depreciation, amortization, and minority interest, adjusted to exclude restructuring provisions and expenses and to include realized hedge gains and losses) was $25.6 million for the quarter, which compares to $19.4 million in the third quarter of the prior year. Revenues for the nine months ended October 31, 2002, were $549.5 million, a decrease of $33.3 million from revenues of $582.8 million during the same nine-month period in the prior year. Operating earnings for the first nine months of the year increased 27% to $44.6 million from $35.2 million during the prior year. Operating earnings for the current year include $5.8 million restructuring related expenses compared to $8.4 million restructuring related provisions and expenses in the prior year. Net loss to common stockholders for the first nine months of the year was $37.2 million versus a net loss of $36.3 million during the prior year. Adjusted EBITDA for the first nine months of the current year was $62.1 million versus $63.7 million for the same period in the prior year. Chief Executive Officer, Luc Van Nevel, stated: "The year-over- year improvement in sales and operating earnings during the quarter is attributed to the successful introduction of several new products in the Company's casual bag and business case lines, the addition of new sales in the Company's OEM distribution channel and the success of recent operational restructuring initiatives in lowering the Company's operating costs. However, year-to-date sales continue to lag prior year levels as a result of the continuing negative effects of weak economic conditions in Europe and the United States. The frequency and volume of leisure and business travel is improving, although worldwide travel has not yet fully recovered to levels prior to September 2001." Chief Financial Officer, Richard Wiley, commented: "The Company's business in the United States has improved substantially since the fourth quarter of fiscal 2002. Third quarter combined wholesale and retail division sales in the United States were $86.2 million and increased 54% and 14% versus the fourth quarter and third quarter, respectively, of fiscal 2002. Operating earnings for these two divisions in the United States improved to $7.7 million or 8.9% of sales, which compares to a loss of $1.5 million in the third quarter of the prior year, reflecting the benefits of lower fixed operating expenses as the result of the Company's restructuring initiatives. "Recovery in our European sales has lagged the Company's expectations. Sales of 81.9 million euros during the quarter represent a decline of 8.4% from the prior year third quarter but an increase of 11.8% from the fourth quarter of fiscal 2002. Despite softer than expected sales, European operating income as a percentage of sales remains a strong 10.7% because of lower fixed operating costs as a result of the Company's restructuring initiatives and cost containment efforts. "Our Asian operations continue to exceed our growth and profitability expectations. Net sales for the quarter in Asia grew 6.5% to $18.0 million in aggregate compared to $16.9 million in sales in the prior year. Similarly, operating earnings grew 13% to $3.4 million for the quarter compared to $3.0 million in the prior year." Samsonite Corporation will hold a conference call with securities analysts to discuss its third quarter fiscal year 2003 earnings results for the quarter ended October 31, 2002, at 11:00 a.m. Eastern Standard Time today, December 5, 2002. Investors and interested members of the public are invited to listen to the discussion. The dial-in phone number is (800) 779-9076 in the U.S. and (712) 271-3441 for international calls and the pass code is Samsonite. The leader of the call is Luc Van Nevel. If you cannot attend this call, it will be played back immediately following completion through December 20, 2002. The playback number is (800) 294-6360 and (402) 220-9790 for international calls. Samsonite is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, backpacks, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R) and SAMSONITE(R) black label. For more information about Samsonite, please visit its Web site at http://www.samsonite.com * * * As reported in Troubled Company Reporter's October 10, 2002 edition, Standard & Poor's lowered its corporate credit and senior secured debt ratings on luggage manufacturer Samsonite Corp., to single-'B'-minus from single-'B'; its subordinated debt rating to triple-'C' from triple-'C'-plus; and its preferred stock rating to triple-'C'-minus from triple-'C.' The ratings were also placed on CreditWatch with negative implications. Samsonite had about $430 million of debt and almost $300 million of preferred stock outstanding at July 31, 2002. SATCON TECHNOLOGY: Fails to Satisfy Covenant Under Credit Pact -------------------------------------------------------------- SatCon Technology Corporation(R) (Nasdaq NM: SATC), a leader in critical power systems, has not satisfied a covenant in its loan agreement with Silicon Valley Bank, requiring that SatCon raise a minimum of $4.0 million of new equity or subordinated debt by December 1, 2002. SatCon is in discussions with Silicon Valley Bank to seek to amend the agreement to extend the time period in which to raise the additional investment. Currently, SatCon is in discussions with potential investors regarding raising additional capital. SatCon Technology Corporation manufactures and sells critical power products. SatCon has three business units: SatCon Power Systems manufactures and sells power systems for distributed power generation, power quality and factory automation, including inverter electronics from 5 kilowatts to 5 megawatts. SatCon Electronics manufactures and sells power chip components; power switches; RF devices; amplifiers; telecommunications electronics; and hybrid microcircuits for industrial, medical, military and aerospace applications. SatCon Applied Technology develops advanced technology in digital power electronics, high- efficiency machines and control systems for a variety of defense applications with the strategy of transitioning those technologies into multiyear production programs. For further information, please visit the SatCon Web site at http://www.satcon.com SEITEL INC: Noteholders Extend Standstill Agreement Until June 2 ---------------------------------------------------------------- Seitel, Inc., (NYSE: SEI; Toronto: OSL) has reached an agreement with its Noteholders to extend the previously announced standstill agreement. Under the terms of the extension, the Senior Noteholders have agreed to forebear from exercising any rights and remedies they have against the Company related to the previously reported events of default under the Senior Note Agreements until June 2, 2003. In addition, the extended standstill agreement provides for the deferral, until June 2, 2003, of the $10 million principal payment previously scheduled to be due to certain of the Noteholders on December 30, 2002. Interest on the Notes continues to be payable on a monthly basis. As with the previous agreement, the amended standstill agreement will terminate prior to June 2, 2003, in the event of, among other things, a default by the Company under the standstill agreement or any subsequent default under the existing Senior Note Agreements; a default in the payment of any non- excluded debt of $5,000,000 or more; the termination or expiration of the Company's existing term or revolving credit lines with the Royal Bank of Canada (the Company is currently in discussions with the Royal Bank of Canada and the Noteholders regarding the terms for the proposed extension of these facilities); or after five business days written notice from Noteholders owning a majority in interest of the outstanding principal amount of the Notes. The standstill agreement will also terminate in the event the Company does not present to the Noteholders a proposal for restructuring the Notes by December 11, 2002; an agreement in principle for the restructuring is not reached by January 24, 2003; or the documents necessary for the restructuring are not substantially completed by February 28, 2003. Fred Zeidman, Chairman of Seitel, stated, "We are encouraged by the ongoing discussions with the Noteholders with respect to a long-term modification of the Senior Note Agreements. The negotiations continue to be amicable and constructive. We appreciate the additional time provided by this extension of the standstill agreement as we seek to reach agreement with the Noteholders on outstanding matters." Seitel markets its proprietary seismic information/technology to more than 400 petroleum companies, licensing data from its library and creating new seismic surveys under multi-client projects. SKYLINE MULTIMEDIA: Sept. 30 Working Capital Deficit Tops $11MM --------------------------------------------------------------- Skyline Multimedia Entertainment, Inc., is a holding company incorporated under the laws of the State of New York on November 2, 1993, which owns all of the outstanding stock of its operating subsidiaries, New York Skyline, Inc., and Skyline Virtual Reality, Inc. SVR ceased operations in January 2001. The Company has been engaged in the development and operation of state-of-the-art simulator attractions and high technology and family entertainment at established tourist sites in New York City. Revenues generated during the three months ended September 30, 2002, aggregated $2,369,000, as compared to $2,583,000 for the three months ended September 30, 2001. The decrease in revenues resulted from less sales of combination tickets (combination tickets provide access to both the Empire State Building Observatory as well as New York Skyride) during the three months ended September 30, 2002 versus the three months ended September 30, 2001, which are sold at a higher price than the New York Skyride attraction alone. Operating Expenses incurred for the three months ended September 30, 2002, aggregated $1,630,000, as compared to $1,809,000 for the three months ended September 30, 2001. The decrease for the three months ended September 30, 2002, was primarily due to reduced sales of combination tickets by New York Skyride, which resulted in a decrease in the number of tickets purchased by the Company from the Empire State Building Observatory. The basic and diluted net income and earnings per share available to common shareholders was $172,000 and $.08 for the three months ended September 30, 2002 as compared to $504,000 and $.22 for the three months ended September 30, 2001. The decrease from the previous period was primarily a result of an increase in the interest rates from 14% to 21% in connection with the Senior Credit Agreement. For the three months ended September 30, 2002, income from operations (before interest, taxes, depreciation and amortization - EBITDA) was approximately $873,000, as compared to an income from operations (before interest, taxes, depreciation and amortization - EBITDA) of approximately $957,000 for the three months ended September 30, 2001. The Company's working capital deficiency at September 30, 2002, was approximately $10,762,000 compared to a working capital deficiency of approximately $9,421,000 at September 30, 2001. While the Company has generated cash from operations, such amount has been offset by an increase in accrued interest on debt. Skyline Multimedia has historically sustained its operations from the sale of debt and equity securities, through institutional debt financing and through agreements or arrangements for financing with certain key suppliers. The Company is in default on the Senior Notes, which became due on December 20, 2001. As a result, effective December 20, 2001, the interest rate on the principal and unpaid interest was increased to 21%. In the event that the Company is unable to sustain positive cash flow, the Company will need additional capital. However, the Company has no assurance that additional capital will be available on acceptable terms, if at all. In such an event, this would have a materially adverse effect on the Company's business, operating results and financial condition. SPECTRASITE: Turns to Lazard Freres for Financial Advice -------------------------------------------------------- SpectraSite Holdings, Inc., wants to employ Lazard Freres & Co., LLC, as its Financial Advisor in its chapter 11 case. The Debtor tells the U.S. Bankruptcy Court for the Eastern District of North Carolina that the size of its operation and the complexity of its attendant financial difficulties require it to employ experienced advisors to render financial advisory and other related services in connection with its chapter 11 case. The Debtor retained Lazard Freres as financial advisor before the Petition Date. The Debtor wants Lazard Freres to continue to: a) review and analyze the Debtor's business, operations and financial projections; b) evaluate the Debtor's potential debt capacity in light of its projected cash flows; c) assist in the determination of a capital structure for the Debtor; d) assist in the determination of a range of values for the Debtor in a going concern and liquidation basis; e) advise the Debtor on tactics and strategies for negotiating with its various groups of Creditors; f) render financial advice to the Debtor and participate in meetings or negotiations with the Creditors in connection with any Restructuring Transaction; g) advise the Debtor on the timing, nature, and terms of any new securities, other consideration or other inducements to be offered to its Creditors in connection with any Restructuring Transaction; h) assist the Debtor in preparing documentation within Lazard Freres' area of expertise required in connection with the implementation of any Restructuring Transaction; i) provide financial advice and assistance to the Debtor in developing and obtaining confirmation of a plan of reorganization, and as modified; j) assess the possibilities of bringing in new lenders or investors to replace, repay or settle with any of the Creditors; k) advise the Debtor with respect to the structure of and negotiations relating to any Business Combination incorporating all or substantially all of the assets of the Debtor or the majority of the equity involving the Debtor's network services business; l) advise and attend meetings of the Debtor's Board of Directors and its committees; m) provide testimony, as necessary, in any proceeding in any judicial forum; and n) provide other restructuring advisory services, as necessary. Lazard Freres will charge the Debtor a $350,000 monthly advisory fee and expect reimbursement of out-of-pocket expenses. Spectrasite Holdings, Inc., is a holding company incorporated in Delaware whose principal asset is 100% of the common stock of SpectraSite Communications, Inc., a telecommunication company. The Company filed for chapter 11 protection on November 15, 2002. Andrew N. Rosenberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $742,176,818 in total assets and $1,739,522,826 in total debts. STANDARD COMM'L: S&P Ups Corp. Credit & Sr. Sec. Ratings to BB+ --------------------------------------------------------------- Standard & Poor's raised its corporate credit and senior secured ratings on Standard Commercial Corp. and its wholly owned subsidiary, Standard Commercial Tobacco Co., Inc (guaranteed by Standard Commercial Corp.), to 'BB+' from 'BB'. At the same time, the subordinated debt rating on Standard Commercial Corp., was raised to 'BB-' from 'B+'. Total rated debt is about $110 million at Dec. 3, 2002. The outlook is stable. "The upgrade reflects improved operating performance and the related improvement in profitability and cash flow measures. In addition, Standard Commercial continues to reduce debt," said Standard & Poor's credit analyst Jayne M. Ross. However, further upgrade potential could be somewhat difficult given the current market conditions for cigarette manufacturers, both in the U.S. and abroad, and the related impact on the leaf tobacco dealers' operations. The ratings on Standard Commercial reflect the company's position as one of the leading independent leaf tobacco dealers and one of the larger players in the fragmented wool commodity segment, offset by its leveraged financial profile. Following several years of disappointing results stemming from operating difficulties and a very weak pricing environment for both leaf tobacco and wool, Standard Commercial took steps to improve its operations. These actions included implementing better inventory management, as well as plant rationalization and cost-reduction programs. Overall, this has strengthened the company's financial position and increased financial flexibility. Standard Commercial's operational and financial strategies have resulted in improved performance despite conservative buying patterns of cigarette manufacturers as the industry consolidates and faces ongoing litigation, fierce global competition, and political unrest in leaf tobacco producing countries. Worldwide leaf tobacco supply and demand is in better balance, which should result in somewhat improved leaf tobacco pricing in the near term. There is some customer concentration risk with the top five customers accounting for 49% of total sales and 59% of tobacco sales. TITANIUM METALS: Sets Special Shareholders' Meeting for Feb. 4 -------------------------------------------------------------- Titanium Metals Corporation (NYSE:TIE) announced the Company's Board of Directors has set the close of business on December 6, 2002 as the record date for a special meeting of stockholders of the Company to consider the previously announced reverse stock split proposal approved by the Company's Board. Only the holders of TIMET's common stock, at the close of business on the record date, will be entitled to notice of, and to vote at, the special meeting. The stockholders' meeting is currently scheduled for 9:45 a.m. (Central Time) on Tuesday, February 4, 2003 at the offices of Valhi, Inc., located at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas. TIMET, headquartered in Denver, Colorado, is a leading worldwide producer of titanium metal products. Information on TIMET is available on the World Wide Web at http://www.timet.com/ * * * As reported in Troubled Company Reporter's October 31, 2002 edition, Standard & Poor's lowered its preferred stock rating on Titanium Metals Corp., to single-'C' from triple-'C'- minus following the company's announcement that it plans to defer future dividend payments on its preferred stock. Standard & Poor's said that it has affirmed its single-'B'-minus corporate credit rating on the company. The outlook remains negative. TOKHEIM CORP: Wants to Pay Prepetition Critical Vendor Claims ------------------------------------------------------------- Tokheim Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to pay the prepetition claims of critical vendors in the ordinary course of their businesses in an aggregate amount of up to $2,000,000. In return for payment of the Critical Vendors' claims in the ordinary course of their business during these cases, the Debtors will require that the Critical Vendors provide a concomitant economic benefit by agreeing to continue to extend normalized trade credit. The Debtors identified 6 categories of Critical Vendors: (1) The Sole Source Vendors are the Debtors only qualified provider of a critical product. At times, the Debtors have special arrangements with the Vendors which is extremely favorable to the Debtors. Additionally, the Sole Source Vendors manufacture parts to the Debtors' specifications based on proprietary designs. If the Debtors Sole Source Vendors refuse to continue doing business with them, the Debtors' manufacturing operations could be crippled while the Debtors consume time to locate substitute vendors. (2) The Critical Carriers provide transportation services to the Debtors. The Debtors relate that their operation is conducted internationally, requiring shippers to provide sophisticated domestic and global logistics to coordinate the unique packaging and shipping requirements of transporting dispensers and electronics. It is imperative that the Debtors do not damage their relationship with their Critical Carriers. The Debtors anticipate that the threat to their supply chain will severely compromise the Debtors' sales process. (3) Customer Directed Vendors manufacture, assemble and deliver a product based on the customer's stated specification and requirements. In the Debtors' pump and dispenser businesses, several customers have designated the Vendors from whom the Debtors must purchase Critical Products because of such Vendor's ability to meet specifications, proprietary design, custom tooling and quality standards. (4) Critical Suppliers manufacture goods that require specific tooling for the Debtors' manufacturing operations. Changing suppliers, the Debtors assert, would create a palpable burden to the Debtors and would require them to incur considerable re-tooling expenses to qualified alternative vendors. (5) Unique Parts Vendors provide items which are limited in distribution. The Debtors relate that they have worked with these Vendors over many years to secure production of the unique parts and cannot subject their operations to quality control and supply risks by changing vendors at this critical juncture. (6) Operational Services Vendors provide critical operational services to the Debtors which facilitate Debtors' management of their operations. Without the Operational Services Vendors, the Debtors would not be able to manage their day-to-day operations. The Debtors assert that payment of the Critical Vendor claims is essential because without the necessary products and services being supplied consistent with the current credit terms, the Debtors' operations will be put in jeopardy. Tokheim Corporation, manufacturer of electronic and mechanical petroleum dispensing systems, field for chapter 11 protection on November 21, 2002. Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $249.5 million in total assets and $457.8 million in total debts. TRENWICK GROUP: Fitch Further Junks long-Term & Sr. Debt Ratings ---------------------------------------------------------------- Fitch Ratings has lowered its long-term and senior debt ratings on Trenwick Group, Ltd., and its subsidiaries, to 'CC' from 'CCC'. In addition, Fitch has lowered its ratings on Trenwick's preferred capital securities to 'C' from 'CC' and its preferred stock to 'C' from 'CC'. The ratings remain on Rating Watch Evolving. Fitch's rating action follows Trenwick's November 29, 2002 announcement that it was suspending dividends or distributions on its preferred stock and trust preferred capital securities. This included a preferred dividend payable on December 2, 2002 to holders of record on October 31, 2002. Trenwick had agreed to refrain from making such payments or distributions under a forbearance agreement it entered into with its letter of credit providers on November 13, 2002. Rating Action Trenwick Group, Ltd. -- Long-term Downgrade 'CC'/Evolving. Trenwick America Corp. -- Long-term Downgrade 'CC'/Evolving; -- Senior debt Downgrade 'CC'/Evolving. LaSalle Re Holdings, Ltd. -- Long-term Downgrade 'CC'/Evolving; -- Preferred stock Downgrade 'C'/Evolving. Trenwick Capital Trust I -- Preferred capital sec Downgrade 'C'/Evolving. TYCO: Names Gardner Courson Deputy General Counsel, Litigation -------------------------------------------------------------- Tyco International Ltd., (NYSE: TYC, BSX: TYC, LSE: TYI) announced that Gardner G. Courson has been appointed VP, Deputy General Counsel, Litigation. Mr. Courson will be responsible for corporate legal issues regarding litigation. He will report to Tyco General Counsel William B. Lytton. Mr. Courson has practiced as a trial lawyer for 28 years, and is admitted to six of the United States Courts of Appeals and the U.S. Supreme Court. He is the former managing partner of the Atlanta office of McGuireWoods and was a member of the Firm's Board of Partners before leaving the firm to join Tyco. Mr. Courson has successfully handled hundreds of lawsuits across the U.S., focusing on complex employment, labor relations and related business tort issues. He has acted as employers' legal advisor in numerous individual and class actions and is widely viewed as an authority on litigation management, alternative fees and the use of legal technology. Mr. Lytton said, "We're building a strong, professional legal team at Tyco. Gardner Courson has extensive experience in the courtroom dealing with and managing difficult and multifaceted corporate litigation. He will make a valuable contribution to Tyco and we are very excited that he is joining the Company at this important transition period." Mr. Courson said, "Tyco is working hard to demonstrate clear leadership for American business in all facets of the legal area and I am enthusiastic about being a part of that effort. This is a Company with enormous potential and I look forward to working with Ed Breen, Bill Lytton and the talented group of people they are assembling to lead Tyco into its promising future." Mr. Courson graduated from the University of Virginia and earned his law degree from Emory University School of Law in Atlanta, Georgia. He is a Fellow of The College of Labor and Employment Lawyers; recipient of the General Counsel's Award for Achievement in Diversity from the DuPont Legal Department and a member of the Advisory Board of the University of Virginia's McIntire School of Commerce. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. Tyco International, at June 30, 2002, reported a working capital deficit of about $2.7 million. Tyco International Group's 6.75% bonds due 2011 (TYC11USR1) are trading at 88 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TYC11USR1for real-time bond pricing. UNITED AIRLINES: ATSB Nixes Proposal for Federal Loan Guarantee --------------------------------------------------------------- The Air Transportation Stabilization Board said it cannot approve the proposal submitted by United Air Lines, Inc., for a $1.8 billion federal guarantee of a $2.0 billion loan. The Board believes that the business plan submitted by the company is not financially sound. This plan does not support the conclusion that there is a reasonable assurance of repayment and would pose an unacceptably high risk to U.S. taxpayers. The Board believes that United's business plan does not position the company to meet the challenges of the current airline industry environment and to achieve long-term financial stability. Specifically, the plan is based on unreasonably optimistic revenue projections. The Board believes that with a more reasonable revenue forecast, United's revenues and costs still would not be aligned, even with the benefit of all proposed cost reduction initiatives. Thus, even with the proceeds of the proposed guaranteed loan, United would face a high probability of another liquidity crisis within the next few years. Two members of the Board also believe that the suggested revisions that United proposed by e-mail and fax the evening of December 3 are highly unlikely to change their assessment of United's proposal. Considering all of the foregoing factors, Governor Gramlich and Under Secretary Fisher voted not to approve this proposal. Mr. Van Tine, General Counsel of the Department of Transportation, voted to defer a decision on the Application until December 9, 2002, to allow United to submit additional financial information. The Board conducted its review pursuant to the standards set out by the Air Transportation Safety and System Stabilization Act and by the implementing regulations promulgated by the Office of Management and Budget. The Board considered all relevant information, including information obtained during numerous meetings between United, Board staff, and agency representatives beginning in April 2002, throughout the summer and fall. UNITED AIRLINES: 10-Day Grace Period Expires Dec. 12 ---------------------------------------------------- United Airlines (NYSE: UAL) announced that it will be relying on the grace periods included in certain debt obligations due to be repaid on December 2, including $375 million in enhanced equipment trust certificates and the approximately $500 million owed to Kreditanstalt f�r Wiederaufbau, which was due on Dec. 2, as a result of the failure to meet all of the conditions to a further extension of the repayment obligation. The EETC debt carries a ten-calendar-day grace period, and the KfW debt carries in part a seven-calendar-day grace period and in part a ten-calendar-day grace period. The company is also in the grace period on $45 million in various debt obligations in addition to the EETC and KfW obligations due today. United believes that taking advantage of these grace periods is a fiscally prudent step in light of its current financial situation. The company intends to rely on grace periods included in future debt obligations until its financial situation is clarified. The company is seeking $2 billion in financing, of which $1.8 billion would be guaranteed by the Air Transportation Stabilization Board. If the ATSB-backed loans are approved, the company plans to make the requisite payments on these obligations. Other information about United Airlines can be found at the company's Web site at http://www.united.com UNITED AIRLINES: S&P Keeps Watch on Ratings on Deferred Payments ---------------------------------------------------------------- UAL Corp. (CCC-/Watch Dev./--) unit United Air Lines Inc. (CCC- /Watch Dev./--), as expected, did not pay aircraft-backed debt that came due on December 2, taking advantage of grace periods to defer the payments pending conclusion of its efforts to secure a federal loan guarantee and avoid bankruptcy. Standard & Poor's Ratings Services said its ratings for both entities, which were lowered to current levels November 29, remain on CreditWatch with developing implications. "United is using the grace periods on several debt instruments to buy time while its mechanics vote on a concessionary contract and it attempts to secure a federal loan guarantee and avoid bankruptcy," said Standard & Poor's credit analyst Philip Baggaley. United disclosed that it had not paid $375 million of 1997-1, class A enhanced equipment trust certificates (rated BB+) and, further, that about $500 million owed to German bank Kreditanstalt f�r Wiederaufbau, including two junior classes of the 1997-1 certificates, also came due on Dec. 2 as a result of the failure to meet all of the conditions previously agreed for a further extension of United's obligations to the bank. The 1997-1 certificates have a 10-calendar-day grace period (December 12), and the debt owed to KfW debt has in part a seven-calendar-day grace period (December 9) and in part a 10- calendar-day grace period, giving United little time to try to complete its financial rescue plan. UNITED AIRLINES: Cuts Number of Company Officers & Their Wages -------------------------------------------------------------- United Airlines (NYSE:UAL) will reduce the number of company officers by 18 percent and provided details about the officers' participation in the airline's financial recovery program. The terms of the officers' financial contribution are subject to review and approval by the compensation committee of the board of directors. "Our objective is to optimize the performance of the organization while reducing the airline's cost structure," said Glenn Tilton, United's chairman, president and chief executive officer. "We also have determined the financial contribution that our officers will make to the company's labor-cost savings," Tilton added. "The 36 officers will contribute an average of 11 percent of their annual compensation over the five-and-one-half year recovery period. The total officer contribution, including the reduction in the number of officers, is more than $60 million." In addition to their wage reductions, and consistent with other salaried and management employees, the officers have forgone their planned 2002 merit salary increase and a 2002 incentive payment. As with other employee groups participating in the company's financial recovery, the officers will receive stock option grants and participate in a profit sharing program from 2004 through 2008. The officers' wage reduction arrangement will become effective upon the closing of a loan facility for the company, guaranteed in part by the Air Transportation Stabilization Board (ATSB), and satisfactory participation by all employee groups in the recovery plan. Other information about United Airlines can be found at the company's Web site at http://www.united.com UNITED AIRLINES: Will Furlough Additional 220 Pilots by Jan. 6 -------------------------------------------------------------- United Airlines (NYSE: UAL) announced that in accordance with its previously announced plan to decrease the airline's flying schedule in 2003, United will reduce its pilot employment levels by 220 on January 6, 2003 and 132 on February 7, 2003. This will bring the total number of furloughed pilots to 1,196. "This is a very difficult announcement to make because of the impact it will have on our employees and their families," said Captain Steve Forte, United's senior vice president-Flight Operations. "Our goal is to be as helpful as we can during the transition." United's Human Resources Division will support all pilots to assist them with career transitions. United currently has about 8,600 pilots around the world. United late last month announced cost savings measures that will result in the furlough of roughly 9,000 employees from its worldwide workforce. Other information about United Airlines can be found at the company's Web site at http://www.united.com UNITED PAN-EUROPE: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: United Pan-Europe Communications N.V. Bowing Avenue 53 P.O. Box 74763 Amsterdam, The Netherlands 1070 BT aka United and Philips Communications BV Bankruptcy Case No.: 02-16020 Type of Business: United Pan-Europe Communications N.V. is a holding company which owns various direct and indirect subsidiaries that operate broadband communications networks providing telephone, cable and internet services to both residential and business customers in Europe. Chapter 11 Petition Date: December 3, 2002 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtors' Counsel: Howard S. Beltzer, Esq. White & Case, LLP 1155 Avenue of the Americas New York, NY 10036 Tel: (212) 819-8306 Fax : (212) 354-8113 Total Assets: E7,021,760,000 Total Debts: E10,130,880,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Citibank NA Indenture Trustee $4,690,526,335 5 Carmelite Street for all Series of London EC 4Y0PA Bonds United Kingdom Attn: Marne Lidster Tel: 44 207-500-5748 MacKay-Shields Bonds $387,370,000 Financial Corp. Mr. D. Morgan 9 West 57th Street 33rd Floor New York, NY 10019 Tel: 212-230-3911 Salomon Brothers Asset Bonds $260,488,000 Management Mr. P. Wilby 745 Route 3 Rutherford, NJ 07070 Tel: 201-231-0728 Capital Research & Mgt. Bonds $229,565,000 Mr. P. Haaga One Market, Stewart Towers Suite 1800 San Francisco, CA 94105 Tel: 415-421-9360 Merill Lynch Investment Bonds $127,000,000 Managers Mr. V. Lathburg 800 Scudders Mill Road Plainsboro, NJ 08536 Tel: 609-282-2084 Putnam Investments Bonds $115,020,000 Mr. E. D'Alelio 1 Post Office Square 7th Floor Boston, MA 02109 Tel: 617-760-1339 Bear Stearns Trading Desk Bonds $92,839,000 Mr. B. Cowley 575 Lexington Avenue 10th Floor New York, NY 10022 Tel: 212-272-2000 Fidelity Investments Bonds $83,020,000 Mr. R. Pozen 82 Devonshire Street Boston, MA 02109 Tel: 617-563-7703 Merill Lynch Debt Bonds $72,325,844 Securities Apollo Advisors Bonds $68,000,000 Mr. T. Doria Two Manhattanville Road Purchase, NY 10577 Tel: 914-694-8000 York Capital Management Bonds $65,978,000 Federated Investors Bonds $61,545,000 1001 Liberty Avenue Pittsburgh, PA 15222 Prudential Investments Bonds $56,885,000 Mr. P. Appleby 100 Mulberry Street 2nd Gateway Center Newark, NJ 07102 Tel: 973-367-3073 Oppenheimer Funds Bonds $50,585,000 Mr. D. Negri 498 Seventh Avenue New York, NY 10018 Tel: 800-525-7048 Everest Capital Ltd. Bonds $50,567,000 Mr. E. Graham 65 Front Street PO Box HM 2458 HM 5X Hamilton, Bermuda Philips Digital Trade Collector $45,000,000 Networks BV Professor Holstlann 4 5656AA Eindhoven The Netherlands JP Morgan Investment Bonds $40,205,000 Management 60 Wall Street, 23rd Fl. New York, NY 10260 Tel: 212-483-2323 Teachers Advisors, Inc. Bonds $40,000,000 Mr. D. Schleffer 730 Third Avenue New York, NY 10260 Tel: 212-483-4021 Morgan Stanley Dean Bonds $34,835,000 Witter & Co. 5, Rue Plaetis L-2338 Luxembourg Tel: 352-346-46-000 Northwestern Mutual Life Bonds $31,500,000 Insurance Co. Ms. J. Clark-Gunia 720 E. Wisconsin Ave, Milwaukee, WI 53202 Tel: 414-271-1444 UNIVIEW TECHNOLOGIES: Fails to Raise New Funds & Cuts Operations ---------------------------------------------------------------- uniView Technologies Corporation (OTCBB:UVEW) has been unsuccessful in its efforts to obtain additional financing and plans a significant reduction in operations. The company previously reported that if it was unable to generate sufficient cash or obtain the necessary financing to support its operations it would be necessary to close one or more of its divisions. It has begun to wind down its Network America operations and has substantially reduced the number of its employees in anticipation of winding down additional operations. The company may also seek buyers for its intellectual property assets, including its set top box technology, its CTI technology and other assets. "The decreasing business prospects for our current operating entities, a lack of alternate sources of revenue in the near term and an inability to raise additional capital have lead us to this decision," stated Patrick A. Custer, CEO of uniView Technologies. "Although we believe that our technologies are state of the art, the economy has had a devastating effect on our business model and it has become necessary to take remedial action. We plan to continue working diligently to ensure the greatest possible value for our creditors, preferred stockholders and common stockholders." About uniView: Dallas-based uniView Technologies Corporation -- http://www.uniView.com-- offers enhanced digital media solutions to customers worldwide. Its products deliver the highest quality video, audio and gaming features through broadband networks. In addition, uniView provides companies with enterprise customer service solutions through CIMphony(TM), a suite of computer telephony integration software products and services. CIMphony allows contact centers to customize and incorporate voice, data and Internet communications into their customer interactions. The company markets its products and services to hospitality, utility, banking and telecommunication companies. UNOCAL CORP: Board Elects Ferrell McClean as Independent Member --------------------------------------------------------------- Unocal Corporation (NYSE: UCL) said that its board of directors has elected Ferrell P. McClean to serve as an independent member of the board. The board also elected John W. Creighton, Jr., as vice chairman. Ms. McClean is a retired managing director of JP Morgan where she was senior advisor to the head of the Global Oil & Gas Group in Investment Banking. Prior to JP Morgan's merger with Chase, she co-headed Global Energy in Investment Banking, a leading merger and acquisition team that played a leading role in the consolidation of the global oil and gas industry. She founded both the Leveraged Buyout Group and Restructuring Group at JP Morgan. "Ms. McClean is an excellent addition to our board," said Charles R. Williamson, Unocal chairman and chief executive officer. "With her long background in investment banking and energy, Ferrell's unique background brings substantial depth and expertise in key areas that are critical to the future success and growth of Unocal." Ms. McClean holds a Bachelor of Arts degree from Radcliffe College. She is on the board of directors of GrafTech International Ltd. Creighton, who served as non-executive chairman in 2001, has been on the Unocal board since 1995. He had resigned as Unocal's chairman when he was appointed interim chairman of UAL Corporation. He is retired president and chief executive officer of Weyerhaeuser Company. Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal operations are located in North America and Asia. At September 30, 2002, Unocal Corp.'s balance sheet shows that total current liabilities exceeded total current assets by about $273 million. U.S. TIMBERLANDS: Commences Trading on Nasdaq SmallCap Market ------------------------------------------------------------- U.S. Timberlands Company, L.P., (Nasdaq: TIMBZ) announced that, as a result of the hearing held on October 31, 2002, with respect to the continued listing of its Common Units on the Nasdaq National Market, the Nasdaq Listing Qualifications Panel has determined to transfer the listing of the Common Units to the Nasdaq SmallCap Market, effective with the open of business December 4, 2002. The continued listing of the Common Units on the Nasdaq SmallCap Market is contingent upon the company's successful completion of an application and review process, and the payment of applicable listing fees. The company is currently in the process of determining whether to proceed with the application and review process. If it does not proceed with the process, the Common Units will be de-listed from the Nasdaq SmallCap Market. U.S. Timberlands Company, L.P., and its affiliate own 670,000 fee acres of timberland and cutting rights on 18,000 acres of timberland containing total merchantable timber volume estimated to be approximately 1.8 billion board feet in Oregon and Washington, east of the Cascade Range. U.S. Timberlands specializes in the growing of trees and the sale of logs and standing timber. Logs harvested from the timberlands are sold to unaffiliated domestic conversion facilities. These logs are processed for sale as lumber, molding products, doors, millwork, commodity, specialty and overlaid plywood products, laminated veneer lumber, engineered wood I-beams, particleboard, hardboard, paper and other wood products. These products are used in residential, commercial and industrial construction, home remodeling and repair and general industrial applications as well as a variety of paper products. U.S. Timberlands also owns and operates its own seed orchard and produces approximately five million conifer seedlings annually from its nursery, approximately 75% of which are used for its own internal reforestation programs, with the balance sold to other forest products companies. * * * As previously reported, Standard & Poor's raised its corporate credit and senior unsecured debt ratings on timber company U.S. Timberlands Klamath Falls LLC and its affiliate, U.S. Timberlands Finance Corp., to triple-'C'-plus from triple-'C'- minus after company management confirmed that the May 15, 2002, interest payment on the $225 million of senior unsecured notes issued jointly by the two companies was made within the 30-day grace period. Standard & Poor's also removed the ratings from CreditWatch. The current outlook is negative. The senior unsecured notes represent the total amount of debt outstanding. VENTAS INC: Appoints Richard Schweinhart as New SVP and CFO ----------------------------------------------------------- Ventas, Inc., (NYSE:VTR) announced that Richard A. Schweinhart, 53, joined the Company as Senior Vice President and Chief Financial Officer effective December 2, 2002. "Rick is a proven professional who brings 30 years of healthcare experience and integrity as a chief financial officer to our Company," Ventas President and CEO Debra A. Cafaro said. "Rick's accounting, acquisition and finance skills were honed as a senior executive in complex public healthcare companies. He will further enhance our diversification efforts, infrastructure building and financial statement credibility -- high priorities for our Company." Schweinhart, who is a CPA, has served as a full time consultant to Ventas since May 2002, focusing on financial reporting and acquisition activities. Until February of this year, he was SVP and CFO for Kindred Healthcare, Inc., Ventas's largest tenant. Schweinhart joined Kindred in 1998 and played an instrumental role in that company's successful reorganization. Prior to that, he was a SVP of Finance for Columbia/HCA Healthcare Corporation and was CFO at Galen Health Care, Inc. prior to its acquisition by Columbia/HCA. Previously, Schweinhart was a SVP of Finance at Humana Inc. He started his professional career with the Louisville office of the international accounting firm of Coopers & Lybrand. Ventas, Inc., is a healthcare real estate investment trust that owns 44 hospitals, 220 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 healthcare and senior housing assets located in Ohio and Maryland. More information about Ventas can be found at the Company's Web site at http://www.ventasreit.com At September 30, 2002, Ventas' total shareholders' equity deficit widened to about $126 million. VENTAS INC: Expects Merrill Lynch to Underwrite Share Offering -------------------------------------------------------------- Ventas, Inc., (NYSE:VTR) expects Merrill Lynch & Co., to be sole book-running manager, Banc of America Securities LLC to be joint lead manager and UBS Warburg LLC, Legg Mason Wood Walker, Incorporated and SunTrust Robinson Humphrey to be co-managers for the previously announced offering of approximately 16 million shares of its common stock jointly with Tenet Healthcare Corporation, upon effectiveness of a shelf registration filed yesterday with the Securities and Exchange Commission. That registration statement covers approximately 8 million shares of Ventas common stock owned by two subsidiaries of Tenet Healthcare Corporation (NYSE:THC), one of Ventas's largest shareholders. The underwritten offering would be comprised of approximately 8 million newly issued shares of common stock to be sold by Ventas and the Ventas shares currently held by Tenet. In addition, the underwriters will be granted an over-allotment option. Ventas intends to use the proceeds from the offering of its new common shares to repay certain of its outstanding indebtedness. Ventas would not receive any proceeds from the sale of its common stock sold by Tenet. A registration statement relating to the securities offered by Tenet has been filed with the SEC but has not yet become effective. These securities may not be sold nor any offers to buy be accepted prior to the time the registration statement becomes effective. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Ventas, Inc., is a healthcare real estate investment trust that owns 44 hospitals, 220 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 healthcare and senior housing assets located in Ohio and Maryland. More information about Ventas can be found at the Company's website at www.ventasreit.com. When available, investors will be able to obtain a copy of the prospectus relating to the offering from Merrill Lynch & Co., 4 World Financial Center, 250 Vesey Street, Ground Floor, New York, NY 10080, Attention: Max Tabuzo. VENTAS INC: Executes Supplemental Senior Note Indenture ------------------------------------------------------- On November 25, 2002, Ventas, Inc., together with Ventas TRS, LLC, a newly formed, wholly owned indirect subsidiary of the Company, and certain of the Company's other subsidiaries executed (i) a Supplemental Indenture relating to the 8-3/4% Senior Notes due 2009 of Ventas Realty, Limited Partnership and Ventas Capital Corporation, which supplements the Indenture, dated April 17, 2002, between Ventas Realty and Ventas Capital, as Issuers, the Company and Ventas LP Realty, L.L.C., as Guarantors, and U.S. Bank National Association, as Trustee, as previously supplemented; and (ii) a Supplemental Indenture relating to the 9% Senior Notes due 2012, of Ventas Realty and Ventas Capital, which supplements the Indenture, dated April 17, 2002, between Ventas Realty and Ventas Capital, as Issuers, the Company and Ventas LLC, as Guarantors, and U.S. Bank National Association, as Trustee, as previously supplemented. Under each of the Indentures, the Company is required to cause newly acquired or created subsidiaries to become Guarantors of the Notes and to cause such newly acquired or created subsidiaries to execute a supplemental indenture, subject to certain exceptions. Ventas TRS was formed on November 8, 2002 and the Supplemental Indentures were executed in order to fulfill the Company's obligations under the Indentures with respect to Ventas TRS. WASATCH PHARMACEUTICAL: Implements 1-for-25,000 Reverse Split ------------------------------------------------------------- Wasatch Pharmaceutical Inc., (OTCBB:WSHP) CEO Gary Heesch announced that major changes within Wasatch are taking place in regards to restructuring and the refocusing of our marketing and distribution of products. Mr. Heesch stated, "We announced in a previous press release on October 7, 2002 that a restructuring was going to take place. We have implemented a reverse split and have been assigned a new symbol WSHP. We are also prepared to disclose at this time the introduction of a major new line of products that will allow Wasatch to diversify into an industry with significant growth potential for years to come. "September 11, 2001 had a traumatic impact on many companies both big and small, and Wasatch Pharmaceutical was no exception. The difference is that Wasatch has survived while many others were not so fortunate. Choices were required that stretched our resources to the limit and required us to secure expensive interim financing that ultimately affected the distribution and dilution of shareholder stock. In order to restructure our stock, we are announcing a 1:25,000 reverse split. The lack of long-term funding has limited our ability to launch our marketing programs and we feel that this reverse split will provide a much healthier environment in which we can obtain this necessary funding. We hope to announce a stock dividend program with preferred shares some time in April 2003 that would reward shareholders who have been loyal to the Company during our development stage. The reason for the delay is to insure that the structure of these stock dividends are provided in accordance with existing SEC rules and regulations and that proper funding has been received to launch our marketing programs. "With the new year coming upon us, we are prepared to implement the changes we feel will allow Wasatch to grow into a successful company in the coming years. In conjunction with the restructuring of our stock, we are at this time, preparing a private placement of Wasatch stock which will allow us to secure the funding necessary to reach our goals in the coming year and reduce our debt significantly. "As mentioned earlier, Wasatch will be diversifying with a product that will allow our entry into a $9 billion U.S. industry with a superior product. In 2002, a major patent was awarded with thirty-one claims on a new generation of fasteners and ancillary tools. This patent was awarded to Gary Heesch, CEO of Wasatch Pharmaceutical Inc. This new fastener technology has broad applications in wood screws, safety screws, orthopedics and in those industries where the torque factor is important and in the huge domestic market for home construction, commercial building, aerospace, automotive and the computer industry. The transfer of this technology into Wasatch Pharmaceutical will take place upon the completion of the private placement funding sometime in early 2003. Once this is accomplished, a new corporation will be established under the Wasatch umbrella as a wholly owned subsidiary. Following this, we will recruit a qualified team to establish offshore manufacturing and will target those applications of the fastener in the U.S. market which will be the easiest to penetrate in the next two years. "To see and review this patent and the market research report, please log onto the Web site at http://www.landsem.com/Heesch In order to review all the pages of graphics, you must hit the "next" button which is in the right hand bottom corner of each page. The link to the market research report is located under "the Heesch fastener" on top of the first page of the Web site. "For information on Wasatch Pharmaceutical dermatology products, you may log onto http://www.restoremyskin.com For additional information on Wasatch Pharmaceutical, you may look at our Web site at http://www.wasatchpharm.com" At September 30, 2002, Wasatch's balance sheet shows a total shareholders' equity deficit of about $5 million. WORLDCOM INC: Keeps Plan Filing Exclusivity Until April 17, 2003 ---------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates obtained permission from the Court to extend their Exclusive Periods. The Court gives the Debtors, until April 17, 2003, the exclusive right to propose and file a plan of reorganization, and until June 16, 2003, to solicit acceptance of that plan from their creditors. WORLDCOM: TRAC Warns Consumers of New Round of MCI Rate Hikes ------------------------------------------------------------- Following up on mid-November rate hikes, MCI has announced a second and even more significant set of rate increases that are likely to hit all of their customers. MCI, the nation's second largest long distance company, announced rate increases on many plans two weeks ago, increasing those by 25 to 80 percent. Today, the Telecommunications Research & Action Center (TRAC), the nation's leading telecommunications-focused consumer group, warns all MCI customers that the latest round of hikes are across the board and will be escaped by very few individuals who use this phone service division of scandal-plagued WorldCom. All MCI long distance customers will see higher bills in 2003 resulting from greater universal service charges, higher monthly minimums, increases in calling card and casual calling rates, and new fees. The new charges for the New Year include: * $2.50 per month if MCI Consumers receive their long distance bill with their local phone bill. * A $5.00 monthly minimum will be imposed on ALL calling plans. * Customers will be paying 10.5 percent of their bill, up from 9.9 percent, in Universal Service charges. * Casual callers, those without an MCI account that place occasional long distance calls, will be paying $3.95 per call surcharge and $0.75 per minute. * State-to-state calling card calls will cost $1.25 per minute with a $1.75 direct dial per call surcharge. * NEW FEE! February 1, MCI will begin levying a new "tax" of 0.5 percent -- a "Carrier Cost Recovery Charge." This fee is imposed by MCI, not the government, and will account for an additional 0.5 percent of your monthly bill. "The most recent rate increases will affect 100 percent of MCI customers, not just those enrolled in specific calling plans," said Kate Dean of TRAC. "Our worst fears seem to be realized -- TRAC believes that these rate increases are a direct result WorldCom's accounting and legal woes." In June 2002, TRAC wrote the Federal Communications Commission on behalf of local and long distance telephone consumers in light of WorldCom's bankruptcy filing. TRAC asked that residential consumers not bear the burden of increased long distance rates and other charges as a response to the company's financial trouble. TRAC, once again, reminds consumers to be aware of their calling habits, and to evaluate their long distance bills. "Be sure that you are not spending too much, or getting too little from your long distance service," added Kate Dean. "TRAC urges consumers to investigate competitive calling options, as well, including wireless phones, prepaid calling cards and dial around services, many of which do not include monthly fees, surcharges and universal service fees." Need help evaluating? Order TRAC's Tele-Tips Residential Long Distance Comparison Chart, or one of TRAC's consumer guides. TRAC charts can be sent in PDF or hard copy. TRAC, founded in 1984, is a non-profit membership organization based in Washington, DC that promotes the interests of residential telecommunications customers. TRAC staff researches telecommunications issues and publishes rate comparisons to help consumers make informed decisions regarding their long distance and local phone service options. TRAC can be found on the Web at http://www.trac.org WORKGROUP TECHNOLOGY: Appeals Nasdaq Delisting Determination ------------------------------------------------------------ Workgroup Technology Corporation (WTC) (NASDAQ: WKGP), a leading provider of Web-enabled, extended enterprise collaborative product data management software solutions, announced its financial results for the second quarter of fiscal 2003 ended September 30, 2002. For the second quarter of fiscal 2003, WTC reported revenue of $1,556,000 compared with $1,870,000 in the second quarter of fiscal 2002. The net loss for the second quarter of fiscal 2003 was $421,000 based on 1,841,121 weighted average shares outstanding, compared with a net loss of $988,000 based on 1,841,121 weighted average shares outstanding, for the second quarter of fiscal 2002. The Company's total revenue for the second quarter of fiscal 2003 decreased $144,000 from the first quarter of fiscal 2003. Of this amount, software license revenue decreased $159,000, offset by an increase in maintenance and services revenue of $15,000. The Company had a decrease in net loss of $136,000 for the second quarter of fiscal 2003 when compared to the first quarter of fiscal 2003. Patrick H. Kareiva, President and Chief Executive Officer, stated, "The decrease in software license revenue during the past quarter was substantially due to the continued delay of purchasing decisions by several of our current customers and major prospects. The decrease in the net loss for the second quarter of fiscal 2003 when compared to the first quarter of fiscal 2003 was largely due to the continuing actions that the Company has been taking to bring its operating expenses more in- line with its anticipated level of revenue." Kareiva further stated that, "The Company currently believes that many of the industry segments into which it sells are continuing to experience economic difficulties. The Company anticipates that several of its current customers and prospects may continue to delay major purchasing decisions, including decisions to renew maintenance agreements on a timely basis. The Company intends to continue to take appropriate action to manage its expenses commensurate with the level of sales expected. As of September 30, 2002, the Company had approximately $2,301,000 of cash on hand, a reduction of approximately $817,000 from the June 30, 2002 cash on hand balance of approximately $3,118,000." As previously announced, the Company has been advised by the Nasdaq Listing Qualifications Staff that the Company is in violation of certain of the minimum maintenance standards for continued listing of its common stock on The Nasdaq SmallCap Market. The Company has appealed the Staff's determination and is currently awaiting a final decision by the Nasdaq Qualifications Hearing Panel. There can be no assurance that the Panel will grant the Company's request for continued listing. If the Panel does not grant the Company's request, then the Company's securities will be delisted from the NASDAQ Small Cap Market, but will be eligible to be traded on the Over-the- Counter Bulletin Board (OTCBB). Also as previously announced, the Company is in discussions with several parties regarding the possible acquisition of the Company. There can be no assurance that such a transaction will be concluded. WTC develops, markets and supports WTC ProductCenter(TM), a web- enabled, extended enterprise collaborative Product Data Management (PDM) solution that provides document management, design integration, configuration control, change management, and enterprise integration for optimizing product development. Based in Burlington, Massachusetts, the Company differentiates itself on the basis of its controlled and secure accessibility, enterprise integration, and quick adaptability of its software. Thousands of users at mid-sized and global companies are in production and benefit from WTC products, including ABB Flexible Automation; Baker Oil Tools; Eaton Corporation; General Electric Company; Goodrich Turbine Fuel Technologies; Honeywell; Millipore Corporation; Siemens Energy & Automation, Inc.; U.S. Army; and Whirlpool Corporation. The Company's Web site is located at http://www.workgroup.com * * * The Company has generated continued losses from operations which has reduced its cash balances. At September 30, 2002, the Company had cash and cash equivalent balances totaling $2,301,000 and working capital of $552,000, each of which represent significantly lower liquidity than in the prior year. The Company intends to continue to take appropriate action to manage its expenses commensurate with the level of sales expected. Among other things, these actions may include a restructuring of its operations. Management believes that cash and cash equivalent balances at September 30, 2002 are sufficient, combined with management's intent and ability to reduce expenditures, to meet its operating and capital expenditure requirements and maintain positive liquidity at least through March 31, 2003. At September 30, 2002, Workgroup's balance sheets show that the Company's total shareholders' equity has dwindled to about $715,000 from about $1.7 million recorded at March 31, 2002. * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 14 - 16 -1 Finova Group 7.5% due 2009 32.5 - 34.5 -1< /TT> Freeport-McMoran 7.5% due 2006 90 - 92 +1 Global Crossing Hldgs9 .5% due 2009 2.25 - 3.25 -0.25 Globalstar 11.375% due 2004 7 - 8 +0.5 Lucent Technologies 6.45% due 2029 47 - 49 -1 Polaroid Corporation 6.75% due 2002 3 - 5 -0.5 Terra Industries 10.5% due 2005 90 - 92 0 Westpoint Stevens 7.875% due 2005 22.5 - 24.5 +1.5 Xerox Corporation 8.0% due 2027 54 - 56 0 Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. 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 ***