/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/021217.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 17, 2002, Vol. 6, No. 249 Headlines ADELPHIA COMMS: US Trustee Amends Unsecured Creditors' Committee AES: Reaches Pact to Sell Two Australian Businesses for A$295MM AMERICAN SYNPOL: Case Summary & 20 Largest Unsecured Creditors ANC RENTAL: Court OKs Lincoln Property as Debtor's Texas Broker ARIES INSURANCE: Progressive Corp. Discloses $7.8-Mill. Exposure ARMSTRONG: PD Committee's Request re Product ID Ruling Nixed ASIA GLOBAL CROSSING: Seeks Court Injunction Against Utilities AVEBURY PROPERTIES: Fitch Cuts 8.36% Secured Note Rating to BB BCF LLC: Fitch Drops Rating on Class B3 Note to D from C BEAR ISLAND PAPER: Lenders Relax Covenants Under Credit Pact BOYD GAMING: Fitch Assigns B+ Rating to $300MM Senior Sub. Issue BROOKFIELD PROPERTIES: Sets Jan. 6 as Unit Distribution Date BUDGET: Wins Nod to Make $1MM Equity Contribution to German Unit CALYPTE BIOMEDICAL: Issues 12% Conv. Notes to Mercator Momentum CAMBRIAN COMMS: Signs-Up PricewaterhouseCoopers as Tax Advisors COMMUNICATION DYNAMICS: Wants Until March 22 to Decide on Leases COMMUNICATION INTELLIGENCE: Falls Below Nasdaq Listing Standards CORNING INC: Concludes Sale of Precision Lens to 3M for $850MM COSERV ELECTRIC: Successfully Emerges from Chapter 11 Bankruptcy COSERV ELECTRIC: Successfully Emerges from Chapter 11 COVANTA ENERGY: Wants to Pay Aramark $2MM Under Settlement Pact CROWN NORTHCORP: Fitch Assigns CPS3 Primary Servicer Rating C*STAR: Fitch Withdraws BB-/CCC- Note Ratings as Deal is Called DEL MONTE FOODS: Caps Senior Subordinated Note Offering Price DIGEX INC: Fails to Regain Compliance with Nasdaq Requirements DONLAR BIOSYNTREX: Ability to Continue Operations Uncertain DOW CORNING: Names Joseph D. Sheets as New Chief Fin'l Officer DYNCORP: Fitch Places B-Rated 9-1/2% Notes on Watch Positive DYNEGY INC: Will Publish 2003 Company Guidance on January 7 ENCOMPASS SERVICES: Wants OK to Hire Innisfree as Noticing Agent EXIDE: Court Extends Lease Decision Period Until June 9, 2003 GECCMC: Fitch Affirms Low-B Ratings on 3 Classes of P-T Certs. GENUITY INC: Will be Paying Up to $2 Million of Shipping Charges HALLIBURTON: Court Hearing on Stay Continues Tomorrow HAYES LEMMERZ: Seeking Fourth Lease Decision Period Extension HEALTH INSURANCE: S&P Keeps Watch on B+ Fin'l Strength Rating INSILCO HOLDING: Files for Chapter 11 Protection in Delaware INSILCO TECH: Case Summary & 25 Largest Unsecured Creditors IT GROUP: Court Approves Stipulation Resolving Dispute with Shaw IVG CORPORATION: Knight Securities Discloses 11% Equity Stake KAISER ALUMINUM: Wants to Grant QAL Claims Administrative Status KMART CORP: Court Allows Sale of RK-227 Beechjet to Dominion LERNOUT & HAUSPIE: L&H NV Sues Cevennes SA to Recoup Conveyances LEVEL 3 COMMS: Unit Sells 4.7MM Shares of Commonwealth Telephone LTV CORP: Noteholders Want Nod to Hire CIBC as Fin'l Advisors MARK NUTRITIONALS: Wants Lease Decision Time Extended to Jan. 15 MCCLAIN INDUSTRIES: Will Delist Shares from Nasdaq SmallCap MJ DESIGNS: Files for Chapter 11 Reorganization in Texas NATIONSRENT: Amends and Extends GECC DIP Replacement Agreement NAVISTAR INT'L: Fitch Rates Sr. Unsec. Convertible Notes at BB NEORX CORP: Fails to Regain Compliance with Nasdaq Requirements NORTEL NETWORKS: Makes Amendments to Existing Security Pacts NOVADEL PHARMA: Company's Ability to Continue Ops. Uncertain OWENS CORNING: Lease Decision Period Extended Until June 4, 2003 PERKINELMER INC: Extends Tender Offer for 6.80% Notes to Dec. 26 PERKINELMER: Selling 8.875% Sr. Sub. Notes in Private Placement PETCO ANIMAL: Settles California Employee Overtime Litigation PITTSTON: Completes Sale of Virginia Coal Mining Business POKER.COM: Mark Glusing Replaces Michael Jackson as President POLAROID: Retirees Seek Approval of Proposed Trust Agreement PURCHASEPRO.COM: Committee Taps Santoro Friggs as Attorneys R.H. DONNELLEY: David C. Swanson Assumes Board Chairman Post RRUN VENTURES: Initiates Restructuring with AXXUS Divestiture RUSSELL CORP: Names Kevin Clayton VP to Lead Diversity Efforts SALIENT 3: Plans to Make Liquidating Distribution on Dec. 30 SBC COMMUNICATIONS: Board Declares Regular Dividend on Shares SECURITY ASSOCIATES: External Auditors Air Going Concern Doubt SUPERIOR TELECOM: Completes Sale of All Assets to Alpine Group TXU CORP: Airs Disappointment with Moody's Rating Downgrades UNION ACCEPTANCE: First Investors to Buy Unit's Loan Portfolio UNIROYAL TECHNOLOGY: Taps Grubbs & Ellis as Real Estate Broker UNITED AIRLINES: Wants to Honor Prepetition Maintenance Claims UNITED AIRLINES: SkyWest Discloses $13.5MM Prepetition Exposure UNIVIEW TECHNOLOGIES: Will Wind Down All Remaining Operations US AIRWAYS: Continental Airlines Demand Timely Lease Performance WILSON N. JONES: Fitch Ratchets Hospital Bond Rating Down to BB+ WORLDCOM INC: Wants to Pull Plug on North Pacific Cable Pacts * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: US Trustee Amends Unsecured Creditors' Committee ---------------------------------------------------------------- Carolyn Schwartz, the United States Trustee for Region 2, amends her list of appointments of the Official Committee of Unsecured Creditors of Adelphia Communications by replacing Scientific Atlanta, Inc., with C-Cor.net. The Committee is now composed of: 1. Appaloosa Management, LP 26 Main Street, Chatham, NJ 07928 Attn: James Bolin Phone: (973) 701-7000 Fax: (973) 701-7309 Counsel: Akin Gump Strauss Hauer & Feld, L.L.P. 590 Madison Avenue, New York, New York 10022 Attn: Daniel Golden, Esq. Phone: (212) 872-8010 2. W. R. Huff Asset Management Co., L.L.C. 67 Park Place, Morristown, NJ 07960 Attn: Edwin M. Banks, Senior Portfolio Manager Phone: (973) 984-1233 Fax: (973) 984-5818 Counsel: Kasowitz, Benson, Torres & Friedman LLP 1633 Broadway, New York, New York 10019-6799 Phone: (212) 506-1700 Fax: (212) 506-1800 Klee Tuchin & Bogdanoff & Stern LLP 1880 Century Park East, Los Angeles, CA 90067-1698 Phone: (310) 407-4000 Fax: (310) 407-9090 3. MacKay Shields LLC 9 West 57TH Street, New York, New York 10019 Attn: Ben Renshaw, Associate Director Phone: (212) 230-3836 Fax: (212) 754-9187 4. Law Debenture Trust Company of New York 767 Third Avenue, 31st Floor, New York, New York 10017 Attn: Daniel R. Fisher, Senior Vice President Phone: (212) 750-6474 Fax: (212) 750-1361 Counsel: Seward & Kissel LLP One Battery Park Plaza New York, New York 10004 Attn: Ronald L. Cohen, Esq. Phone: (212) 575-1515 5. U.S. Bank National Association, as Indenture Trustee 1420 Fifth Avenue, 7th Floor, Seattle, WA 98101 Attn: Diana Jacobs, Vice President Phone: (206) 344-4680 Fax: (206) 344-4632 Counsel: Sheppard, Mullin, Richter & Hampton LLP 333 South Hope Street, Los Angeles, CA 90071-1448 Attn: David J. McCarty, Esq. T. William Opdyke, Esq. Phone: (213) 617-1780 Fax: (213) 620-1398 6. Home Box Office 1100 Avenue of the Americas, New York, New York 10036 Attn: Stephen L. Sapienza Phone: (212) 512-1680 Fax: (212) 512-1986 Counsel: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas, New York 10019 Attn: Steve Shimshak, Esq. Phone: (212) 373-3133 Fax: (212) 373-2136 7. Viacom 1515 Broadway, New York, New York 10036 Attn: J. Kenneth Hill, Vice President, Ass't. Treasurer Phone: (212) 258-6000 Counsel: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas, New York 10019 Attn: Brendan D. O'Neill, Esq. Phone: (212) 373-3125 8. Franklin Advisers, Inc. One Franklin Parkway, San Mateo, CA 94403 Attn: Richard L. Kuersteiner, Associate General Counsel Phone: (650) 312-4525 Fax: (650) 312-7141 9. C-COR.net 60 Decibel Road, State College, PA Attn: Bill Hanelly Phone: (814) 231-4421 Fax: (814) 231-6501 10. Fidelity Management & Research Company 82 Devonshire Street, Mail Zone E20E, Boston, MA 02109 Attn: Nate Van Duzer Phone: (617) 392-8129 Fax: (617) 476-5174 11. Capital Research and Management Company 11100 Santa Monica Boulevard, Los Angeles, CA 90025-3384 Attn: Marc Linden Phone: (310) 996-6000 Fax: (310) 996-6200 Counsel: Capital Research and Management Company 333 South Hope Street, Los Angeles, CA 90071 Attn: James P. Ryan, Esq. Phone: (213) 486-9318 Fax: (213) 486-9455 (Adelphia Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are trading at about 38 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1 for real-time bond pricing. AES: Reaches Pact to Sell Two Australian Businesses for A$295MM --------------------------------------------------------------- The AES Corporation (NYSE:AES) has entered into agreements to sell its two Australian generation businesses in transactions valued at A$295 million. Origin Energy Limited, an Australian company, has committed to buy AES Mt Stuart, AES's 288MW gas fired peaking generation business in Queensland, in a transaction valued at A$93 million, or approximately US$52 million. A consortium of Babcock & Brown and Prime Infrastructure Group, has committed to buy AES Ecogen, which comprises AES's 510MW Newport and 450MW Jeeralang gas-fired generation plants in Victoria, in a transaction valued at A$202 million, or approximately US$113 million. The combined value of both transactions equates to an equity purchase price of A$104.25 million, or approximately US$58 million, which currently represents a premium to AES's book investment of 140%. Completion of these transactions is subject to the receipt of certain project lender and customer approvals and AES expects the transactions to close by the end of the first quarter of 2003. Paul Hanrahan, President and Chief Executive Officer, stated, "The sale of these two AES businesses in Australia is a terrific first step in our expanded asset sales program, and we are pleased with the value we have received for them. We think the premium reflects the high quality of these businesses. We are also making good progress on our plan to raise $1 billion from asset sales, in addition to the $800 million of sales from the completed sale of AES NewEnergy and pending sale of Cilcorp. We continue to focus on improving the financial performance of our company and returning value to our shareholders. The execution of this plan is the primary focus of our company." AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 176 facilities totaling over 60 gigawatts of capacity, in 33 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. For more general information visit Web site at http://www.aes.com * * * As reported in Troubled Company Reporter's November 13, 2002 edition, Standard & Poor's will not change the corporate credit rating of AES Corp., (B+/Watch Neg/--) following AES' announcement of the extension until December 3, 2002, of the tender offer for its December 2002 notes and June 2003 ROARS, with changes in the terms of the offer. Standard & Poor's believes that the extension reflects the difficulty in reaching an agreement given the multitude of parties involved, the circumstances of the exchange offer, and the time until the Dec. 15 maturity date is reached. AES Corporation's 10.25% bonds due 2006 (AES06USR1), DebtTraders says, are trading at about 41 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. AMERICAN SYNPOL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: American Synpol Corporation 1215 Main Street P.O. Box 667 Port Neches, Texas 77651 Bankruptcy Case No.: 02-13682 Chapter 11 Petition Date: December 16, 2002 Court: District of Delaware Judge: Kevin J. Carey Debtors' Counsel: Joseph A. Malfitano, Esq. Robert S. Brady, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Bldg 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: 302-571-6600 Fax : 302-571-1253 -and- Mitchel H. Perkiel, Esq. Lee Stremba, Esq. Jenkens & Gilchrist Parker Chapin LLP 1211 Avenue of the Americas New York, NY 10036 Tel: 212-704-6000 Estimated Assets: More than $100 Million Estimated Debts: $50 to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Huntsman Petrochemicals Note $7,913,946 Fin. Dept. 16th Floor Box 27707 Houston, TX 77227-7707 Equistar Note $6,858,093 One Houston Center Suite 1600 Houston, TX 77252-2583 Merrill Lynch $1,405,581 4 World Financial Center Attn: Jeff Hawkins New York, NY 10080 GE Plastics Note $1,261,670 One Plastics Ave. Pittsfield, MA 01202 BP Amoco Note $1,185,975 150 Warrenville Road Mail Code SY 2217 Naperville, IL 60563 Huntsman Corp. $1,114,219 PO Box 27707 Houston, TX 77227-7707 Deguss Engineered Carbons, LP $1,101,681 379 Interspace Parkway PO Box 677 Parsippany, NJ 07054-0677 Zurich U.S. $819,961 2500 City West Blvd. #2500 Houston, TX 77042 Nova Chemical Ines. $537,561 1550 Corapolis Heights Rd. Moon Township, PA 15108 Carrier Corporation $470,107 100 Southbelt Industria; Drive Attn: Cindy Odom Houston, TX 7707 E.Vironment $415,528 14011 Park Drive Attn: John Latin Tomball, TX 77375 TXU Electric $341,125 PO Box 660354 Dallas, TX 75266-0354 Baker Botts, LLP $307,126 PO Box 201626 Attn: Kirk Richards Houston, TX 77216-1626 Cognis Corporation $254,179 5051 Estecreek Drive Attn: Diane Cincinnati, Ohio 45232-1446 Unit Gas Transmission Company $227,939 Citgo Petroleum Corp. $221,956 Entergy $194,326 Wells Fargo Equipment Finance $151,955 Huber Lawrence & Abell $150,110 Arizona Chemical Company $146,742 ANC RENTAL: Court OKs Lincoln Property as Debtor's Texas Broker --------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates obtained permission from the Court to employ Lincoln Property Company Commercial as their real estate brokers -- nunc pro tunc to May 20, 2002 -- for marketing and selling of the Debtors' property located at Panair and Monroe Streets in Houston, Texas. Lincoln will receive a 5% commission based on the sale price if it is the only broker. In case of dual brokers, the commission will be increased to 6%, which Lincoln will split on a 50/50 basis with the cooperating broker. (ANC Rental Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARIES INSURANCE: Progressive Corp. Discloses $7.8-Mill. Exposure ---------------------------------------------------------------- The Progressive Corporation reported that the Company reserved $7.8 million for its estimated exposure to guaranty fund assessments related to the Aries Insurance Company insolvency in Florida. Progressive's Personal Lines business units write insurance for private passenger automobiles and recreation vehicles. Progressive's Commercial Auto business unit writes insurance for automobiles and trucks owned by small businesses for primary liability, physical damage and other auto-related insurance coverages. The Company's other businesses primarily include writing lenders' collateral protection and directors' and officers' liability insurance and providing insurance-related services, primarily processing business for Commercial Auto Insurance Procedures, which are state supervised plans serving the involuntary market. The Progressive group of insurance companies ranks fourth in the nation for auto insurance, offering its products by phone at 1- 800-PROGRESSIVE, online at progressive.com and through more than 30,000 independent agencies. The Progressive Corporation, the holding company, is publicly traded at (NYSE: PGR). ARMSTRONG: PD Committee's Request re Product ID Ruling Nixed ------------------------------------------------------------ The Official Committee of Asbestos-Related Property Damage Claimants of Armstrong Holdings, Inc., and its debtor-affiliates asks Judge Newsome to reconsider his bench ruling regarding required product identification for asbestos property damage claims. On October 25, 2002, Armstrong's counsel advised that the Court instructed them to notify the PD Committee that at the November 1 Omnibus Hearing, the Court wanted to conduct a status conference as to PD claims. According to Joanne B. Wills, Esq., at Klehr Harrison Harvey Branzburg & Ellers LLP, no further information regarding the matters to be considered at the status conference was provided. At the omnibus hearing held on November 1, 2002, the Court, in connection with the status conference as to PD Claims, sua sponte issued a directive as to product identification issues and requested that an Order be submitted to the Court memorializing the Court's directive from the bench. On November 13, 2002, the Court entered its Order requiring product identification for Asbestos Property Damage Claims. The Order requires property damage claimants to submit certain information described in the Order within 45 days of entry of the Order -- i.e. by December 28, 2002. The Order further provides that failure of a PD Claimant to comply with the Order will result in a disallowance of its PD claim. Following November 1, 2002, various PD Claimants advised the PD Committee that there were numerous serious problems with the Court's directive and, accordingly, asked the PD Committee to file this Motion For Reconsideration. Specifically, the PD Committee seeks relief from the Order as to the 45-day time frame, as to claimants who have already provided extensive product identification to the Debtors, as to the photograph requirement where the product has already been removed or where there is a less burdensome and more efficient manner in which to identify their products Ms. Wills explains that the purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence. Rule 59(e) of the Federal Rules of Civil Procedure states in relevant part: "[a]ny motion to alter or amend a judgment shall be filed no later than ten days after entry of the judgment." Motions for reconsideration which seek to alter, amend, or offer relief from a judgment should be granted when: (1) there has been an intervening change in the controlling law; (2) there is newly discovered evidence which was not available to the moving party at the time of the judgment; or (3) there is a need to correct a legal or factual error which has resulted in the manifest injustice. The PD Committee relies on the second and third bases for reconsideration, namely, that there are numerous facts that were not presented to the Court and that both procedural and substantive errors made in connection with this Court's ruling will work substantial injustice to the PD Claimants unless rectified. Under these standards, the facts and circumstances surrounding the Order present a highly compelling case for this Court to reconsider or amend its ruling. At the November 1, 2002 Omnibus Hearing, Ms. Wills suggested that it would be appropriate to stay prosecution of objections to PD claims pending the District Court' s decision on either the PD Committee's Motion for Leave to File an Interlocutory Appeal or the Appeal relating to the Daubert ruling. The Court rejected the suggestion of the PD Committee. Instead, the Court established criteria for product identification, without any notice or opportunity to be heard being afforded to individual PD Claimants. Counsel for the PD Committee had no prior notice of the product identification criteria or the 45-day deadline that the Court directed at the November 1 hearing, and had no opportunity to discuss with the PD Claimants prior to the imposition by the Court of the product identification requirements. Since entry of the Order, which memorializes the November 1, 2002 directive of the Court, numerous PD Claimants have contacted counsel for the PD Committee and advised that much of the required information is either impossible to obtain or impossible to obtain within the 45-day time period specified in the Order. The 45-day time period is too short a time in which to require product identification for these reasons: * Many, if not a majority, of PD Claimants have multiple buildings. For instance, the State of Connecticut has more than 3,000 buildings which may contain Armstrong asbestos containing floor products. Similarly, the State of Illinois has more than 239 buildings or facilities with identified Armstrong floor coverings as detailed in its proof of claim; * Forty-five days is not enough time to amass the required information for all of these buildings. Specifically, as to proof that the products contain asbestos, 45 days is not adequate time to obtain bulk analysis results as required by the Order; * Often, polarized light microscopy provides a false Negative and the Modified Chatfield Method using transmission electron microscopy may be necessary to prove that the products contain asbestos. Moreover, this 45-day period includes the busiest holiday season of the year -- Thanksgiving, Chanukah and Christmas -- making these time constraints even more burdensome. Many of the buildings will be closed for observance of these holidays for some portion of the 45 days. In addition, many people whose assistance is necessary for product identification may be on vacation during some portion of the 45 day period; and * In other asbestos cases like Celotex, the typical time required for product identification has not been shorter than three months and is typically six months or more. It is not clear from the Order whether a PD Claim will be barred if certain information cannot be provided. There are numerous ways by which a PD Claimant can identify a product as an asbestos-containing product manufactured by Armstrong. The product identification Order is unclear as to what proof will be accepted for either identification of the product as a product manufactured by Armstrong or evidence that the product contains asbestos. Product identification can be made in a variety of ways. Sales records, invoices, shipping records, specifications, color schedules, approval records, distribution records, installer records and recollections, affidavits from purchasers, customer complaints and warranty records are among the many ways to prove product identification. Also, Armstrong controls much of this information. For example, Armstrong's contracting unit, AC&S installed many Armstrong and non-Armstrong products in industrial settings and the only way to identify the products is through a maze of documents, most of which are in the possession of Armstrong or its attorneys. Discovery from Armstrong and its affiliates would be needed to ferret out the product identification information from sales and other documents. The PD Claimants should have a minimum of six months to review Armstrong documents, including sales records to locate product identification materials, and longer if Armstrong drags its feet in the discovery process. The product identification Order provides that if a PD Claimant does not submit color photographs of each Asbestos-containing product in each building for which a property damage claim is made, the claim will be disallowed. PD Claimants have advised the PD Committee that providing color photographs would be: * duplicative of other forms of product identification, * otherwise unduly burdensome, and * impossible to perform within 45 days by PD Claimants with hundreds or thousands of buildings, or may be impossible where the asbestos-containing floor products have already been removed or been enclosed or covered with carpeting or otherwise. Moreover, the standards applicable to photographs have not been adequately articulated. For instance, photographs are only as good as the camera and the photographer, as well as the light conditions. What is required for: (1) distance from the product; (2) how bright the lighting; (3) regular film or digital; (4) 35 mm or would a video do; (5) if digital, printed on what sort of paper and at how many DPI; (6) photo size -- 3x5, 5x7 or 8x10. In addition, who will decide whether a photo is sufficiently clear or detailed to be used? These factors were not appreciated by PD Committee counsel at the time of the Court's ruling at the November 1, 2002 hearing. In addition, automatic disallowance without an opportunity to defend the adequacy of proof of product identification is a violation of due process. Those PD Claimants who were in litigation with Armstrong prepetition or who have previously provided proof of product identification either in litigation or as part of their proof of claim should not be required to submit again the same or additional proof of product identification. The Order has no relationship to any claims objection or claims resolution process contemplated either in the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure or the Delaware Local Rules governing the claims objection process in Delaware. PD claims should not be disallowed simply because information like a photograph is not provided even though other reasonable proof of product identification has been provided. So long as PD Claimants provide some information to establish product identification, each PD Claimant should be afforded an opportunity to defend the sufficiency of the proof submitted. The Order does not provide any sort of fair claims resolution process. Rather, it affirmatively supports wholesale disallowance of claims unless unreasonable criteria are met. For these reasons, the PD Committee asks Judge Newsome to reconsider its Order Regarding Required Product Identification for Asbestos Property Damage Claims. * * * However, Judge Newsome denies the PD Committee's request. (Armstrong Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) ASIA GLOBAL CROSSING: Seeks Court Injunction Against Utilities -------------------------------------------------------------- In connection with the global operation of their businesses and management of their properties, Asia Global Crossing Ltd., and its debtor-affiliates obtain telephone and similar services from at least six different utility companies. Pursuant to Section 366 of the Bankruptcy Code, within 20 days after the commencement of a bankruptcy case, a utility may not discontinue service to a debtor solely on the basis of the commencement of the case or the failure of the debtor to pay a prepetition debt. Following the 20-day period, however, utilities may discontinue service to the debtor if the debtor does not provide adequate assurance of future performance of its postpetition obligations. If the Utility Companies are permitted to terminate Utility Services on the 21st day after the Petition Date, Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman LLP, in New York, says, the AGX Debtors will be forced to cease operations of their affected facilities, potentially resulting in a loss of sales and profits. The impact on the AGX Debtors' business operations, revenues and restructuring efforts would be extremely harmful. It is therefore critical that Utility Services continue uninterrupted. Accordingly, the Debtors ask the Court to: -- prohibit the Utility Companies from altering, refusing or discontinuing any Utility Services; and -- determine that the Utility Companies have "adequate assurance of payment" within the meaning of Section 366, without the need for payment of additional deposits or security. The Debtors propose to provide adequate assurance in the form of payment as an administrative expense of their Chapter 11 estates pursuant to Sections 503(b) and 507(a)(1) of all valid charges for Utility Services rendered to the Debtors by the Utility Companies on or after the Petition Date. Mr. Casher points out that the Debtors are current with respect to all invoices rendered by the Utility Companies prior to the Petition Date. The United States Court of Appeals for the Second Circuit has held that where debtors have timely paid their utility bills prior to the commencement of their Chapter 11 cases, the administrative expense priority provided in Sections 503(b) and 507(a)(1) constitutes adequate assurance of payment, and no deposit or other security is required. Mr. Casher tells the Court that the Debtors have an excellent prepetition payment history with the Utility Companies. In addition, the Debtors represent that they will continue to pay all postpetition obligations, including utility bills, as billed and when due. The Debtors have $198,000,000 in unrestricted cash as of the Petition Date, which should adequately assure the Utility Companies of timely future payment. "The adequate assurance proposed, which includes explicitly granting administrative expense priority to any postpetition utility obligations, will provide more than sufficient protection to the Utility Companies," Mr. Casher insists. "Further, the relief requested ensures that the Debtors' business operations will not be disrupted but also provides the Utility Companies with a fair and orderly procedure for determining requests for additional adequate assurance." "The Debtors' proposed method of furnishing adequate assurance of payment for postpetition Utility Services is in keeping with the spirit and intention of Section 366 of the Bankruptcy Code, is not prejudicial to the rights of any Utility Company, and is in the best interest of the Debtors' estates," Mr. Casher asserts. (Global Crossing Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1) are trading at about 11 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1 for real-time bond pricing. AVEBURY PROPERTIES: Fitch Cuts 8.36% Secured Note Rating to BB -------------------------------------------------------------- Fitch Ratings, the international rating agency, has downgraded Avebury Properties Limited's Class B 8.36% secured notes due 2030 to 'BB' from 'BBB'. The ratings of the Class A1 secured floating rate notes due 2011 and the Class A2 7.51% secured notes due 2024 are affirmed at 'A'. At the same time, Fitch has affirmed the ratings on all notes issued by Alehouse Finance Plc, Pubmaster Finance Limited, Punch Taverns Finance Plc, Punch Funding II Limited, Spirit Funding Limited, Unique Pub Finance Company Plc and Wellington Pub Company Plc. The actions follow a formal committee review of all pub securitisations. Fitch expects to issue a full report summarising the information presented to committee on all transactions in the week beginning 16 December 2002. The affirmed ratings are as follows: -Alehouse Finance Plc: Class A1 notes due 2021 at 'A'; Class A2 notes due 2026 at 'A'; and Class B notes due 2026 at 'BBB'. -Pubmaster Finance Limited: Class A1 notes due 2009 at 'A'; Class A2 notes due 2011 at 'A'; Class A3 notes due 2022 at 'A'; Class A4 notes due 2009 at 'AAA'; Class A5 notes due 2016 'AAA'; Class A6 notes due 2024 at 'A'; Class B1 notes due 2025 at 'BBB'; and Class B2 notes due 2028 at 'BBB'. -Punch Taverns Finance Plc: Class A1 notes due 2008 at 'A'; Class A2 notes due 2011 at 'A'; Class A3 notes due 2015 at 'A'; Class A4 notes due 2022 at 'A'; Class B notes due 2026 at 'BBB'; and Class C notes due 2027 at 'BB+'. -Punch Funding II Limited: Class A2 notes due 2020 at 'AAA'; Class M notes due 2029 at 'A'; Class N1 notes due 2030 at 'BBB'; Class N2 notes due 2029 at 'BBB'; and Class O Secured notes due 2030 at 'BB'. -Spirit Funding Limited: Class A notes due 2020 at 'AAA'; Class M notes due 2024 at 'A'; Class N notes due 2031 at 'BBB'; and Class O notes due 2030 at 'BB'. -Unique Pub Finance Company Plc: Class A1 notes due 2010 at 'A'; Class A2R notes due 2013 at 'AAA'; Class A3 notes due 2021 at 'A'; Class A4 notes due 2027 at 'A'; Class M notes due 2024 at 'BBB+' and Class N notes due 2032 at 'BBB'. -Wellington Pub Company Plc: Class A notes at 'AA'; Class B notes at 'A'; and Class C notes at 'BB'. The downgrade to Avebury Properties Limited's Class B notes results from Fitch's concern that a breach of a financial covenant is possible when the full impact of amortization of the Class A1 notes is seen on the debt service coverage ratio in 2003/2004. Due to a structural feature of this transaction, it is possible that a breach could cause an acceleration of the notes, and therefore payments of interest to the Class B notes may become subordinate to Class A note payments until the senior notes are repaid in full. This would mean a default on the timely payment of interest on the junior notes. The financial covenant level is set at 1.25x based on EBITDAR divided by debt service, tested historically on both a two-quarter and a four- quarter basis. EBITDAR was GBP15.9 million for the year to September 2002. To prevent a breach of the financial covenant, calculated on a two-quarter basis, annualized EBITDAR needs to reach GBP16.4m by December 2003 and GBP17.4m by March 2004. In the event of a breach of a financial covenant, the company has 60 days in which to remedy the breach through the injection of cash or other means. If a breach is not remedied, holders of 25% of the Class A notes can request that the trustee issues a note enforcement notice, and that he issues an acceleration notice. Should an acceleration notice be issued, payments of interest on the Class B notes would cease until the Class A notes have been redeemed in full. The low debt service coverage ratio results primarily from a front-loaded amortisation profile. The company does not expect to breach its financial covenant as organic growth, additional pubs expected to be acquired early in 2003 and a recently renegotiated beer discount should ensure the company meets the required levels. However, even if the required levels are met, Fitch believes that the limited margin for deterioration in performance before a breach occurs is not compatible with an investment grade rating for the Class B notes. To the extent that EBITDAR does not increase as management anticipates, further downgrades to the Class B notes are possible. In its performance analytics report dated 21 November 2001, Fitch outlined that growth in EBITDAR would be required in 2002/2003 in order to avoid breaching covenants going forward. This growth has not materialised in 2002 and the company is now under some pressure to ensure that the 1.25x coverage is achieved by 2004. The company does however have cash reserves of GBP5.3m available for acquisitions, which should improve coverage levels. However, given the structure of this transaction, a substantial excess over the 1.25x cover will be needed before an upgrade would be considered. Fitch will be issuing a performance analytics report summarising the performance and structural features of Avebury that have combined to result in the downgrade. BCF LLC: Fitch Drops Rating on Class B3 Note to D from C -------------------------------------------------------- Fitch Ratings takes the following rating actions on BCF L.L.C.'s mortgage pass-through certificates, series 1997-R3: Series 1997-R3 --Class B3 downgraded to 'D' from 'C'; --Class B2 downgraded to 'BBB' from 'A-' and removed from Rating Watch Negative; --Class A1-A2, A-WAC affirmed at 'AAA'; --Class B1 affirmed at 'AA'. These actions are taken due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the November 2002 distribution. BEAR ISLAND PAPER: Lenders Relax Covenants Under Credit Pact ------------------------------------------------------------ Bear Island Paper Company, L.L.C., a wholly owned subsidiary of Brant-Allen Industries, Inc., has amended its Senior Credit Agreement to allow the Company to more easily meet future financial covenant testing. In addition, the lenders waived past financial covenant violations allowing for a resumption of borrowing under the Company's existing Revolving Credit Facility. In connection with the Amendment, Brant-Allen Industries has agreed to make an additional $10 million of funding available to Bear Island. This brings Brant-Allen's total commitments of funding to Bear Island to $ 15 million during calendar year 2002. Bear Island Paper Company L.L.C., is a producer of high quality newsprint suitable for four-color printing whose customers include leading newspaper publishers in the United States. BOYD GAMING: Fitch Assigns B+ Rating to $300MM Senior Sub. Issue ---------------------------------------------------------------- Fitch Ratings has assigned a rating of 'B+' to the $300 million senior subordinated notes due 2012 being issued by Boyd Gaming Corporation. Proceeds are to be used to tender for the company's existing $250 million in senior subordinated notes due 2007 and to repay outstandings under the its revolving credit agreement. Ratings for Boyd reflect the company's diversified property portfolio, strong operating performance and successful history of absorbing acquisitions. The company's leverage remains consistent with the rating category, although further debt reduction is anticipated in the short term. Over the intermediate term risk factors include the potential for debt- financed acquisitions and projected moderate levels of share repurchases. The Rating Outlook is Stable. Aided by the May 2001 Delta Downs acquisition and strong core property performance, Boyd has posted meaningful margin expansion over the past several years. For the nine months ended September 30, 2002, Boyd produced EBITDA growth in seven of its eight operating segments. The commencement of slot operations at Delta Downs in February 2002 has been a meaningful contributor to consolidated growth. Strong cash flows and reduced capital investments have resulted in healthy free cash flow and improved financial statistics. LTM debt/EBITDA has improved to 4.1 times at September 30, 2002, while LTM interest coverage has improved to 2.9x from 2.4x for the full year 2001. Boyd reduced debt by more than $50 million through the first nine months of 2002, in line with its stated intentions, despite capital contributions of approximately $37 million toward its Borgata joint-venture. Financial risk has also moderated as the Borgata nears its scheduled opening in the summer of 2003. The project remains on- schedule and on-budget. Fitch Ratings recognizes the declining risk associated with potential claims that could be made under completion guarantees, and views Boyd's equity position as further asset support to the company's risk profile. In June 2002, Boyd completed an amended and restated credit agreement, establishing a $400 million secured revolving credit due 2007 and a $100 million secured term loan due 2008. In April 2002, the company also issued $250 million in senior subordinated debt. These steps addressed refinancing issues, and the company has no meaningful debt maturities until October 2003 at which point approximately $122 million in senior notes will become due. The company's credit agreement, with more than $212 million available as of September 30, 2002, was structured to incorporate the capacity to refinance the remaining October 2003 senior note maturities. The company has no other significant maturities until the 2007-2008 time period. BROOKFIELD PROPERTIES: Sets Jan. 6 as Unit Distribution Date ------------------------------------------------------------ Brookfield Properties Corporation (BPO: NYSE/TSX) announced that January 6, 2003, will be the distribution date of Brookfield Homes Corporation to shareholders. On that date, Brookfield Properties Corporation common shareholders of record on January 2, 2003 will receive a special distribution equivalent to one-fifth of a Brookfield Homes Corporation share for each Brookfield Properties Corporation common share that they own. The change in distribution date from December 31, 2002 to January 6, 2003 was made to coordinate regulatory approvals and minimize shareholder administration in the current year. Upon completion of the distribution, Brookfield Homes will be a Delaware corporation listed on the NYSE under the symbol "BHS." For further information on the Brookfield Homes spin-off, please refer to the Form 10/A of Brookfield Homes and the Management Proxy Circular of Brookfield Properties Corporation in the Investor Relations/Financial Reporting section on the Brookfield Properties Web site: http://www.brookfieldproperties.com Brookfield Properties Corporation, with a stock market value of $9 billion, owns, develops and manages premier North American office properties. The Brookfield portfolio comprises 50 commercial properties and development sites totaling 45 million square feet, including landmark properties such as the World Financial Center in New York and BCE Place in Toronto. Brookfield is inter-listed on the New York and Toronto Stock Exchanges under the symbol BPO. For more information, visit the Brookfield Properties Web site at http://www.brookfieldproperties.com Brookfield Homes Corporation is a residential home builder which also develops land in master-planned communities and infill locations. The company designs, develops and markets single-family and multi-family homes primarily to move-up and luxury buyers and develops land which is sold to other home builders. The company's operations are currently in four markets: the San Francisco Bay Area; Southland/Los Angeles; San Diego/Riverside; and Northern Virginia. For more information, visit the Brookfield Homes Web site at http://www.brookfieldhomes.com As reported in the Troubled Company Reporter's September 11, 2002 edition, Standard & Poor's Ratings Services assigned its 'P-3(High)' Canadian national scale and double-'B'-plus global scale ratings to Brookfield Properties Corp.'s C$150 million- C$200 million 6.0% cumulative class AAA redeemable preferred shares, series F. At the same time, the ratings outstanding on the company, including the triple-'B' long-term issuer credit rating, were affirmed. The outlook's stable. BUDGET: Wins Nod to Make $1MM Equity Contribution to German Unit ---------------------------------------------------------------- Bankruptcy Court Judge Mary F. Walrath authorizes Budget Group Inc., and its debtor-affiliates to make a $1,000,000 equity contribution to its German subsidiary, Budget Deutschland GmbH, provided that the Debtors are to make an immediate contribution of $500,000, with the remaining $500,000 conditioned on the Official Committee of Unsecured Creditors' consent. The amount of cash transferred to make an equity contribution will constitute a dollar-for-dollar reduction to the cash purchase price to the extent that any transfer is made before the closing of the sale to Cherokee. (Budget Group Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALYPTE BIOMEDICAL: Issues 12% Conv. Notes to Mercator Momentum --------------------------------------------------------------- Calypte Biomedical Corporation issued a 12% Convertible Debenture due on October 22, 2004, in the sum of $300,000 to Mercator Momentum Fund LP. The Debenture was executed on November 21, 2002. The Debenture is convertible at the option of Mercator at 80% of the market price of the Company's common stock at the average of the lowest three inter-day trading prices during the 20 trading days immediately preceding the applicable conversion date. The conversion price will not be less than $.05 per share. In connection with the Convertible Debenture, the Company granted cost-free registration rights to Mercator. The Company also issued 3,000,000 warrants to purchase 3,000,000 shares of its common stock at $.10 per share and further agreed to register the underlying shares with respect to said warrants, and also paid a fee of 10% of the proceeds received in the financing. The Company agreed to register the shares underlying the debenture and warrants on or before January 21, 2003, and Mercator has agreed not to convert the debenture or exercise the warrants prior to that date. The Company has filed a Preliminary Proxy Statement with the Securities and Exchange Commission wherein it has requested stockholders approve an increase of the 200,000,000 common shares that are currently authorized to 550,000,000 common shares of $.01 par value common stock. Subject to the approval of the stockholders, the Company intends to use the newly authorized shares of its common stock to reserve and register the underlying shares pursuant to the convertible debenture and warrants. 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. CAMBRIAN COMMS: Signs-Up PricewaterhouseCoopers as Tax Advisors --------------------------------------------------------------- Cambrian Communications LLC and Cambrian Holdings LLC asks the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to hire PricewaterhouseCoopers LLP, to perform tax advisory and accounting services that will be necessary during the companies' chapter 11 cases. The Debtors anticipate that PwC will: a) Advise the Debtors regarding tax issues; b) Prepare the Debtor's corporate tax returns; c) Provide testimony in court on behalf of the Debtor, if necessary; and d) Assist with such other related matters as necessary in connection with this case. PwC's normal hourly rates are: partners $549.75 per hour senior managers $461.25 per hour managers $387.75 per hour senior associates $260.25 per hour associates $164.25 per hour Cambrian Communications LLC, together with its affiliate Cambrian Holdings LLC, filed for chapter 11 protection on September 20, 2002. Bradford F. Englander, Esq., at Linowes and Blocher LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of over $10 million and estimated debts of over $50 million. COMMUNICATION DYNAMICS: Wants Until March 22 to Decide on Leases ---------------------------------------------------------------- Communication Dynamics, Inc., and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Delaware to extend the time period within which they need to decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors tell the Court that they need until March 22, 2003, to make lease related decisions. The Debtors relate that although they have worked diligently to evaluate their remaining Unexpired Leases, there simply has not been sufficient time to make a final determination. Since the inception of these cases, the Debtors have engaged in extensive negotiations with the Prepeptition Lenders for the consensual use of cash collateral. Additionally, the Debtors point out that they have spent considerable amount of time preparing and presenting to the Prepetition Lenders and the Committee a business plan, which will serve a platform for the plan of reorganization negotiations. Communication Dynamics, Inc., together with its Debtor and non- Debtor affiliates, is one of the largest multinational suppliers of infrastructure equipment to the broadband communications industry. The Debtors filed for chapter 11 protection on September 23, 2002. Jeffrey M. Schlerf, Esq., at The Bayard Firm represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million both in estimated assets and debts. COMMUNICATION INTELLIGENCE: Falls Below Nasdaq Listing Standards ---------------------------------------------------------------- Communication Intelligence Corporation (Nasdaq: CICI) announced that on December 9, 2002, CIC received a Nasdaq Staff Determination Letter indicating that CIC fails to comply with the minimum closing bid price requirement of $1.00 for continued listing set forth in Marketplace Rule 4310(C)(4) and that its securities are therefore subject to delisting from the Nasdaq SmallCap Market. CIC has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination, which will give CIC the opportunity to present its position to Nasdaq as to why it believes continued listing of its shares on Nasdaq SmallCap Market is warranted. The hearing request will stay the delisting pending the outcome of the hearing, which is expected to be held within the next 45 days. There can be no assurance that the Panel will grant CIC's request for continued listing. Communication Intelligence Corporation is the leading supplier of electronic signature, biometric security and natural input solutions focused on emerging, fast growth applications including paperless workflow, smart wireless devices and e- Commerce enabling the world with "The Power to Sign Online(TM)". The Company's core software technologies include multilingual handwriting recognition systems, biometric signature verification, natural messaging, and operating system extensions that enable pen input. CIC's products are designed to increase the ease of use, functionality, and security of wireless electronic devices and e-business processes. CIC sells direct to OEMs and Enterprises. Products are also available through major retail outlets such as Circuit City, CompUSA, Staples, OfficeMax, key integration partners and direct via www.cic.com. Industry leaders such as Ericsson, Fujitsu, Hitachi, Siebel Systems, IBM, Charles Schwab and Prudential have licensed the company's technology. CIC is headquartered in Redwood Shores, California and has a joint venture, CICC, in Nanjing, China. For more information, please visit the Company's Web site at http://www.cic.com * * * Liquidity and Capital Resources In its SEC Form 10-Q for the quarter ended September 30, 2002, the Company stated: "At September 30, 2002, cash and cash equivalents totaled $1,246 compared to cash and cash equivalents of $2,588 at December 31, 2001. The decrease was due primarily to cash used in operating activities of $1,569, cash used in investing activities of $54. Cash provided by financing activities was $281, net. The $281 provided by financing activities consists of $426 in proceeds from the exercise of stock options by the Company's employees and former chairman, the acquisition of capital equipment under capital lease of $40, reduced by the repayment of the note by the Joint Venture of $181, and by payments of capital lease obligations of $4. Total current assets were $2,372 at September 30, 2002, compared to $3,899 at December 31, 2001. "As of September 30, 2002, the Company's principal source of funds was its cash and cash equivalents aggregating $1,246. "The Company was incorporated in Delaware in 1986 and the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations that raise a doubt about its ability to continue as a going concern. The Company is in the process of filing a registration statement with the Securities and Exchange Commission in order to obtain funding from equity financing. However, there can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company's business, results of operations and ability to operate as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. "Current liabilities, which include deferred revenue, were $953 at September 30, 2002. Deferred revenue, totaling $123 at September 30, 2002, primarily reflects advance payments for products and maintenance fees from the Company's licensees which are generally recognized as revenue by the Company when all obligations are met or over the term of the maintenance agreement." CORNING INC: Concludes Sale of Precision Lens to 3M for $850MM -------------------------------------------------------------- Corning Incorporated (NYSE:GLW) completed the sale of Corning Precision Lens, Incorporated., a wholly owned subsidiary of Corning Incorporated, to 3M for $850 million in cash. Concluding a transaction that was originally announced on November 12, 2002, Corning divested its precision lens business to raise cash to strengthen its balance sheet and to support of one of the company's strategic initiatives for 2002 -- protecting its financial health. Established in 1851, Corning Incorporated -- http://www.corning.com-- creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable and photonic products for the telecommunications industry; and high- performance display glass and components for television, information technology and other communications-related industries. The company also uses advanced materials to manufacture products for scientific, semiconductor and environmental markets. * * * As previously reported in Troubled Company Reporter, Standard & Poor's lowered its ratings on two synthetic transactions related to Corning Inc., to double-'B'-plus from triple-'B'-minus. The lowered ratings follow the lowering of Corning Inc.'s long- term corporate credit and senior unsecured debt ratings on July 29, 2002. The two deals are both swap independent synthetic transactions that are weak-linked to the underlying collateral, Corning Inc.'s debt. The lowered ratings reflect the credit quality of the underlying securities issued by Corning Inc. RATINGS LOWERED Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-28 Trust $12.843 million corning debenture-backed series 2001-28 Rating Class To From A-1 BB+ BBB- Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-35 Trust $25.2 million corning debenture-backed series 2001-35 Rating Class To From A-1 BB+ BBB- COSERV ELECTRIC: Successfully Emerges from Chapter 11 Bankruptcy ---------------------------------------------------------------- CoServ Electric and CoServ Telecom announced that their two Chapter 11 plans previously confirmed by the U.S. Bankruptcy Court have become effective, completing the Chapter 11 reorganization process for all CoServ entities that was first initiated voluntarily by certain CoServ entities November 30, 2001. CoServ Electric and related entities include CoServ Electric, CoServ Investments, L.P., and CoServ Utility Holdings, L.P. The approved plan for CoServ Electric and its related entities reflects an agreement reached in May and confirmed in September, and includes total refinancing of CoServ's debt, payment in full of all of CoServ's unsecured creditors, and a 10-year $200 million capital expenditure credit facility. Additionally, CoServ Electric has diversified its lenders to include CoBank, an institution that provides lending to electric cooperatives, as well as its previous lender, the National Rural Utilities Cooperative Finance Corporation. "This is a great outcome for our members and our family of electric companies," said Bill McGinnis, chief executive officer. "And the $200 million credit facility puts us in a good position to continue to grow. In fact, throughout the reorganization process, we've remained strong and have continued to grow. Over the last 12 months, we've grown at a rate of more than 12% to 84,985 meters in 2002 from 75,517 in 2001, and we remain committed to delivering the high quality of electric service that we believe will help us continue to increase our customer base in the future." The six CoServ Telecom entities whose plans also become effective include CoServ, L.L.C. d/b/a CoServ Communications, CoServ Telecom GP, L.L.C., CoServ Telecom Holdings, L.P., DWB GP, Inc, MultiTechnology Services, L.P. d/b/a CoServ Broadband Services and Dallas Wireless Broadband, L.P. d/b/a CoServ Broadband. The assets of these entities, which include telephone and cable, have been transferred to Denton Telecom Partners I, L.P. and will conduct business under the name AdvanTex Communications, operating as an affiliate of CFC. "While CoServ will no longer be involved with the communications services, we expect these customers to continue to receive high levels of service," said McGinnis. CoServ Realty Holdings, L.P., announced October 11, 2002, that its Chapter 11 plan previously confirmed by the U.S. Bankruptcy Court became effective, making it the first of three CoServ Chapter 11 plans to emerge from bankruptcy protection. On November 30, 2001, CoServ sought Chapter 11 protection for its telephone and cable companies. On February 1, 2002, CoServ sought Chapter 11 protection for its electric and related companies. For nearly 65 years, CoServ Electric has provided dependable, affordable, electric power to thousands of homes. Further information on CoServ Electric is accessible at http://www.coserv.com COSERV ELECTRIC: Successfully Emerges from Chapter 11 ----------------------------------------------------- Friday, Denton County Electric Cooperative, d/b/a CoServ Electric, emerged from bankruptcy. CoServ is an electric distribution cooperative located and serving approximately 75,000 customers in the Dallas metro area. CoServ is also National Rural Utilities Cooperative Finance Corporation's largest borrower. In June, CoServ and CFC filed a joint plan of reorganization with the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. The general terms of the bankruptcy settlement include the following: -- CoServ has agreed to refocus on its core electric business and to make quarterly debt service payments to CFC for the term of the note. -- CoServ's telecom assets were transferred today to an entity controlled by CFC. -- CoServ's real estate development notes, certain assets and its interests in certain real estate development projects were transferred to entities controlled by CFC on October 11, 2002. -- All prior legal claims of CFC and CoServ have been released by the bankruptcy court. CoServ has agreed to begin servicing its obligations to CFC. Under the plan, CFC should recover the entire $1 billion of loan principal from CoServ through the transfer of assets and the quarterly debt service payments. Based on its analysis, CFC believes that it is adequately reserved for any potential loss on its loans to CoServ. CFC is a not-for-profit finance cooperative that serves the nation's more than 1,000 electric cooperatives and their subsidiaries. With nearly $20 billion in assets, CFC provides its member-owners with an assured source of low-cost capital and state-of-the-art financial products and services. COVANTA ENERGY: Wants to Pay Aramark $2MM Under Settlement Pact --------------------------------------------------------------- Pursuant to Section 363(b) and 105(a) of the Bankruptcy Code, Covanta Energy Corporation and its debtor-affiliates ask the Court to approve a Settlement Agreement among Ogden Services Corporation (n/k/a Covanta Energy Corporation), Aramark Services, Inc., and Aramark Entertainment, Inc. The Debtors further seek the Court's authority for Covanta to pay Aramark $2,000,000 pursuant to the Settlement Agreement. James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that on November 17, 1995, DC Arena LP, as landlord, and Aramark Entertainment, as Operator, entered into a Concession Lease Agreement relating to a multi-purposes arena in Washington, D.C. known as the MCI Center. At the same time, Senior Lenders advanced funds to DC Arena under a Senior Credit Facility to cover, in part, the cost of developing, constructing and equipping the MCI Center. Under the Lease Agreement, the Operator agreed to provide to the Senior Lenders and maintain a Letter of Credit. Also on November 17, 1995, Covanta executed a guaranty of, among other things, the Operator's performance of its obligations under the Lease Agreement. On March 29, 2000, pursuant to the Ogden Food and Beverage Concession & Venue Management Acquisition Agreement, Aramark Corporation purchased from Covanta, among other things, all of the issued and outstanding shares of capital stock of what was then called Ogden Entertainment, Inc. n/k/a Aramark Entertainment. Mr. Bromley says that in order to fulfill the obligation imposed by the Lease Agreement, Covanta has maintained the $5,300,000 Covanta Letter of Credit scheduled to expire on January 5, 2003. However, Covanta will not renew the Covanta Letter of Credit as its renewal is not provided for in the Debtors' postpetition financing. Pursuant to the terms of the Covanta Letter of Credit, it can be drawn for the full amount if, among other things, the Covanta Letter of Credit is not renewed within 15 days of expiring. Once drawn, the reimbursement obligation related to the Covanta Letter of Credit, in an amount up to $5,300,000, would be secured. To prevent this, the Parties negotiated to enter into a Settlement Agreement providing that: (a) On December 13, 2002, DC Arena will have agreed to a release of Covanta from any and all of its obligations under the Lease Agreement, the Guaranty and the Letter of Credit, which release will be effective on Closing. Aramark will deliver to Covanta a Due Diligence Completion Notice and Covanta will have delivered to Aramark the DIP Lender Consent; (b) By December 17, 2002, the Collateral Agent or Senior Lender, will provide Covanta with its agreement to the form a replacement letter of credit amounting $5,300,000 and its agreement that provided the replacement letter of credit becomes effective, the Senior Lender will: -- not draw on the Covanta Letter of Credit; -- accept the replacement letter of credit in substitution of the Covanta Letter of Credit; and -- return the Covanta Letter of Credit to Covanta for cancellation and take action as is required to cancel the Covanta Letter of Credit in accordance with the terms thereof; (c) Covanta will pay Aramark the amount of $2,000,000 as consideration for the Release and the other transactions contemplated by the Agreement; and (d) Effective on the Closing Date, Aramark and Aramark Entertainment will release Covanta and its affiliates, subsidiaries and parents from claims arising under the Guaranty, the Letter of Credit and the Lease Agreement. Mr. Bromley contends that the Settlement Agreement is the Debtors' exercise of sound business judgment because the Debtors will be able to successfully avoid a secured claim of $5,300,000 on the Covanta estate, which can be drawn as early as December 23, 2002. (Covanta Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) CROWN NORTHCORP: Fitch Assigns CPS3 Primary Servicer Rating ----------------------------------------------------------- Fitch Ratings affirms Crown NorthCorp., Inc.'s primary servicer rating of 'CPS3' and its special servicing rating of 'CSS3'. The primary servicer rating is based on Crown's ability to service commercial mortgage loans in CMBS transactions. The special servicing rating reflects Crown's ability to workout, manage and liquidate CMBS loans. Due to pending initiatives at the company, Fitch plans to review the ratings again at the end of the first quarter of 2003. As of September 30, 2002, Crown's primary servicing portfolio was approximately $81.2 million, of which $20.4 million is CMBS. As of the same date, Crown was responsible for asset management and special servicing for 21 properties valued at approximately $50 million. Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 4, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. C*STAR: Fitch Withdraws BB-/CCC- Note Ratings as Deal is Called ---------------------------------------------------------------- Fitch Ratings has withdrawn the ratings on four classes of notes issued by C*Strategic Asset Redeployment Program (C*STAR) 1999-2 Limited. The deal has been called and all monies owed have been repaid to the noteholders. The ratings prior to the withdrawal are shown below: --Class A notes 'AA+'; --Class B notes 'AA-'; --Class C notes 'BB-'; --Class D notes 'CCC-'. DEL MONTE FOODS: Caps Senior Subordinated Note Offering Price ------------------------------------------------------------- Del Monte Foods Company (NYSE: DLM), through its wholly-owned subsidiary Del Monte Corporation, announced the pricing terms for the offer of its Senior Subordinated Notes due 2012. The Notes will bear interest at a rate of 8-5/8% and will be redeemable, in whole or in part, on or after December 15, 2007. In addition, Del Monte may redeem up to 35% of the aggregate principal amount of the Notes prior to December 15, 2005 from the proceeds of an equity offering. The Corporation also announced that the offering will be increased to $450 million of Notes, up from the $300 million announced on December 5, 2002. The offering of the Notes relates to the previously announced proposed transaction in which Del Monte will acquire the U.S. and Canadian pet food and pet snacks, U.S. tuna and retail private label soup and U.S. infant feeding businesses of H. J. Heinz Company (NYSE: HNZ) through a merger of the Corporation and a spun-off subsidiary of Heinz. The offering of the Notes is expected to close on December 20, 2002, concurrently with the closing of the Merger and a new $1.245 billion senior secured credit facility, which Del Monte has successfully syndicated in connection with the Merger. The credit facility and the Note offering together will finance the Merger and related transactions. The closing of the Note offering and the Merger are subject to various closing conditions, including the approval of the Merger by Del Monte stockholders at Del Monte's annual meeting to be held on December 19, 2002. Three hundred million dollars ($300 million) in principal amount of the Notes will be distributed to Heinz as part of the financing relating to the spin-off. Heinz will then transfer such Notes to one of its affiliates. The $300 million in principal amount of the Notes are being sold by the Heinz affiliate in the offering. Del Monte will not receive any of the proceeds from the sale of Notes by the Heinz affiliate. The Notes have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States, absent registration or an applicable exemption from the Securities Act registration requirements. Del Monte Foods Company, with net sales of approximately $1.3 billion in fiscal 2002, is one of the largest producers and distributors of premium quality, branded processed fruit, vegetable and tomato products in the United States. The Del Monte brand was introduced in 1892 and is one of the best known brands in the United States. Del Monte products are sold through national grocery chains, independent grocery stores, warehouse club stores, mass merchandisers, drug stores and convenience stores under the Del Monte, Contadina, S&W and SunFresh brands. The Company also sells its products to the U.S. military, certain export markets, the foodservice industry and food processors. The Company operates twelve production facilities and seven distribution centers in the U.S., has operations in Venezuela and owns Del Monte brand marketing rights in South America. * * * As previously reported in Troubled Company Reporter, Fitch Ratings affirms its 'BB-' rating on Del Monte Corporation's (the operating subsidiary of Del Monte Foods Company) senior secured credit and its 'B' rating on its senior subordinated notes. The affirmation follows the company's announcement that it will be merging with certain non-core U.S. assets of Heinz. Rated securities totaled $642.5 million at March 31, 2002. The Rating Outlook is Stable. The ratings reflect heritage Del Monte's leading position in the processed fruit, vegetable and solid tomato categories, stable cash flows and the strength of the management team. Improved financial and operating performance has stemmed from rationalization of operating facilities, product innovation, and a stronger relationship with large retailers. The ratings also consider the company's relatively high leverage for a food processor, and the short-term integration risk associated with this transaction. DIGEX INC: Fails to Regain Compliance with Nasdaq Requirements -------------------------------------------------------------- Digex, Incorporated (Nasdaq: DIGX), announced that on December 6, 2002 it received a letter from the Nasdaq Listing Qualifications Department indicating that the Company is subject to delisting from the Nasdaq SmallCap Market because of its failure to regain compliance with the minimum USD$1.00 bid price per share requirement, set forth in Marketplace Rule 4310(C)(8)(D). "We have requested a hearing to appeal the Staff's determination," said George Kerns, Digex president and CEO. "Regardless of the outcome, we will continue with initiatives to further grow the company and ultimately meet the criteria. It is also important to note that this process and the outcome will not affect our day-to-day operations and does not change our previously announced exploration of strategic alternatives." Digex is not eligible for an additional 180 day calendar day grace period given that it does not meet the initial listing criteria for the SmallCap Market under Marketplace Rule 4310(C)(2)(A), which states that "[f]or initial inclusion, the issuer shall have (i) stockholders' equity of $5 million; (ii) market value of listed securities of $50 million ... ; or (iii) net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years." The market value calculation is based on the number of Digex Class A shares alone and does not include Class B shares. Digex currently does not meet the initial listing criteria. The continued listing criteria for the SmallCap Market under Marketplace Rule 4310(C)(2)(B) states that "the issuer shall have (i) stockholders' equity of $2.5 million; (ii) market value of listed securities of $35 million . . . ; or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years." Digex currently does not meet the continued listing criteria. The Company has requested a hearing before the Nasdaq Listing Qualifications Panel to review the determination reached by the Nasdaq Listing Qualifications Department. The hearing is expected to be scheduled within 45 days of the filing of the hearing request. Digex's stock will continue to be listed on The Nasdaq SmallCap Market pending the panel's decision. There can be no assurance the Nasdaq Panel will grant the Company's request for continued listing. If delisted, the Company would seek to have its Class A common stock traded in the over-the- counter market via the Electronic Bulletin Board. Digex is a leading provider of managed Web and application hosting services. Digex customers, from mainstream enterprise corporations to Internet-based businesses, leverage Digex's services to deploy secure, scaleable, high performance e- Enablement, Commerce and Enterprise IT business solutions. Additional information on Digex is available at http://www.digex.com As previously reported, Digex's balance sheet shows a total shareholders' equity deficit of about $2.5 million. DONLAR BIOSYNTREX: Ability to Continue Operations Uncertain ----------------------------------------------------------- In transactions closing in November 2000 and January 2001, Donlar Biosyntrex Corporation, then know as Biomune Systems, Inc., acquired from Donlar Corporation in exchange for 41,279,520 shares of Biosyntrex's common stock, representing approximately 96% of Biosyntrex's shares then outstanding on a fully diluted basis, substantially all of Donlar's businesses and assets plus cash consideration. The businesses acquired from Donlar were the manufacturing and marketing of agricultural, industrial and consumer products. Donlar also transferred to Biosyntrex all technology, know how and patents for the crop nutrient management and oil field services businesses created after November 3, 2000, as well as all technology resulting from Donlar pharmaceutical research and development activities after November 3, 2000. Donlar's ownership interest in Biosyntrex has decreased since January 2001 as a result of transfers of common stock by Donlar and issuances of additional common stock by Biosyntrex. As of December 31, 2001, the Company had an accumulated deficit of $90,822,933, a shareholders' deficit of $32,194,299 and has had substantial recurring losses. The consolidated operations of the Company have not achieved profitability and the Company has relied upon financing from the sale of its equity securities and liquidation of other assets to satisfy its obligations. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The Company's ability to continue as a going concern is subject to the attainment of profitable operations or obtaining necessary funding from outside sources. Management's plan with respect to this uncertainty includes obtaining additional financing from the Company's principal lender, reorganizing the Company and converting debt to equity, evaluating new products and markets, and minimizing overhead and other costs. However, there can be no assurance that management will be successful. Biosyntrex's operating results in future quarters may be below the expectations of securities analysts and investors. In such event, the price of the common stock would likely decline, perhaps substantially. In addition, the stock market has historically experienced extreme price and volume fluctuations. Moreover, Biosyntrex's common stock may be even more prone to volatility than the securities of other businesses in light of the relatively small number of shares held by non-affiliates of Biosyntrex. Given such a relatively small public float, there can be no assurance that the prevailing market price of common stock will not be artificially inflated or deflated by trading even of relatively small amounts of common stock. DOW CORNING: Names Joseph D. Sheets as New Chief Fin'l Officer -------------------------------------------------------------- Joseph D. (Don) Sheets, 42, currently general manager of Dow Corning's Xiameter(TM) business, will become chief financial officer on March 31, 2003. He will succeed Gifford E. Brown, 56, who, after 34 years, is retiring at that time. The Dow Corning Board of Directors is expected to elect Sheets to his new position at its February meeting. "Having just provided great leadership and guidance to the development and successful launch of Xiameter(TM) this year, we look forward to Don providing the same skills to the Finance function, building on the benefits of his past experiences in financial and business roles," Dow Corning president and CEO Gary E. Anderson said. K. Michael Lanham, 42, currently global commercial director for Xiameter(TM), will be named executive director of Xiameter(TM). Lanham's current position will not be replaced. He will continue to report to Sheets. Dow Corning -- http://www.dowcorning.com-- provides performance-enhancing solutions to serve the diverse needs of more than 25,000 customers worldwide. A global leader in silicon-based technology and innovation, offering more than 7,000 products and services, Dow Corning is equally owned by The Dow Chemical Company and Corning, Incorporated. More than half of Dow Corning's annual sales are outside the United States. DYNCORP: Fitch Places B-Rated 9-1/2% Notes on Watch Positive ------------------------------------------------------------ Fitch Ratings has placed DynCorp's 'B' rated $100 million 144A private placement 9-1/2% senior subordinated notes due 2007 on Rating Watch Positive. This action follows Friday's announcement that DynCorp will be acquired by Computer Sciences Corp., for $950 million, including the assumption of DynCorp's estimated $270 million in total debt. Both Boards of Directors have already unanimously approved the transaction, which is expected to close in the first calendar quarter of 2003. The transaction is subject to majority shareholder approval by outstanding DynCorp stock holders as of Sept. 26, 2002, and is subject to regulatory approvals, including expiration of the waiting period under the Hart-Scott- Rodino Antitrust Improvements Act. As of the third quarter of 2002 ending September 26, 2002, DynCorp continues to report improving financial results. For the first nine months of 2002, DynCorp's revenues were $1,744.3 million, up 23% from the prior-year comparable period. The revenue increase was due to new contracts and increased revenues from existing contracts. EBITDA for the first nine months of 2002 increased to $90.3 million from $69.9 million from the prior-year comparable period, while the EBITDA margin increased slightly to 5.2% from 4.9%. For the latest 12 months (LTM) ending September 26, 2002, net free cash flow improved to $44.5 million versus $43.2 million for the prior-year comparable period. DynCorp's backlog has increased to $8.5 billion at September 26, 2002, from $6.8 billion at Dec. 27, 2001. The current ratings reflect the company's operating history and long-standing relationship with the federal government. The federal government's trend toward outsourcing non-strategic functions affords DynCorp a strong position in potentially good growth markets. DynCorp's rating also reflects its low capital spending requirements and the increasing component of information technology in the company's business mix. DynCorp has made significant progress in deleveraging from a previous acquisition, as well as achieving solid operational results in a strong government outsourcing environment. DYNEGY INC: Will Publish 2003 Company Guidance on January 7 ----------------------------------------------------------- Dynegy Inc., (NYSE:DYN) will host an analyst conference call on Jan. 7 to discuss 2003 company guidance and provide an update on its liquidity position as of the end of 2002. The company will simulcast the conference call live via the Internet and it will be available on the "News and Financials" section of http://www.dynegy.com Dynegy Inc., owns operating divisions engaged in power generation, natural gas liquids, regulated energy delivery and communications. Through these business units, the company serves customers by delivering value-added solutions to meet their energy and communications needs. * * * As previously reported, Dynegy Holdings Inc.'s senior unsecured debt rating was downgraded to 'BB+' from 'BBB' by Fitch Ratings. In addition, Fitch downgraded Dynegy Inc.'s indicative senior unsecured debt to 'BB+' from 'BBB-'. The short-term ratings for DYNH and DYN' have been lowered to 'B' from 'F3'. The ratings for DYN and DYNH remain on Rating Watch Negative where they were originally placed on Nov. 9, 2001. In addition, ratings for affiliated companies, Illinois Power Co., and Illinova Corp., have been lowered and remain on Rating Watch Negative. ENCOMPASS SERVICES: Wants OK to Hire Innisfree as Noticing Agent ---------------------------------------------------------------- Encompass Services Corporation and its debtor-affiliates seek authorization to employ Innisfree M&A Inc., as noticing, ballot solicitation and tabulation agent in connection with their Chapter 11 cases. Lydia T. Protopapas, Esq., at Weil Gotshal & Manges LLP, in Houston, Texas, explains that Encompass has issued publicly held securities, namely the 10-1/2% Senior Subordinated Notes and the company's common stock. While Encompass can readily identify the registered holders of the securities, Ms. Protopapas says Encompass has no knowledge of the number and identity of the beneficial holders of the securities because many of the beneficial holders hold their securities in "street name" through a bank, brokerage firm, agent, proxy or other nominee. Ms. Protopapas contends that the successful dissemination of information and notices to the beneficial owners requires coordination with the nominees, primarily to ensure that these entities properly and promptly forward notices and other materials to their customers. This is the reason why the Debtors selected Innisfree, Mr. Muzzy explains. Innisfree is a sophisticated international proxy solicitation and investor relations firm whose management and employees have significant experience in providing proxy and ballot solicitation services to large publicly traded companies in matters relating to communications with public security holders and creditors. In addition to the mailing of voting and non-voting documents as ballot solicitation and tabulation agent, Innisfree will also provide these services at the Debtors' request: (i) Advice regarding all respects of the voting and tabulation process; (ii) Assist in requesting information from the indenture trustee and the Depository Trust Company; (iii) Coordinate with the nominees and responds to inquiries of noteholders regarding the disclosure statement and the plan voting procedures; (iv) Receive and examine all ballots and master ballots cast by the noteholders and other creditors; (v) tabulate all ballots and master ballots in accordance with established procedures; and (vi) prepare an appropriate ballot certification. As special noticing agent and consultant, Innisfree will: (a) assist in sending notices and documents to the holders of the Debtors' public securities in connection with the plan and disclosure statement processes in these Chapter 11 cases; (b) coordinate with other parties in interest to ensure that the mailings of the notices and related documents are done properly and in a timely fashion; (c) prepares affidavits of service for filing with the Court; and (d) provide the Debtors with consulting services regarding the development and review of plan solicitation materials, including the disclosure statement, ballots, master ballots, voting instructions and issues arising in connection with the vote solicitation and tabulation process. Accordingly, the Debtors will pay Innisfree for its balloting and tabulation services: (1) a $10,000 project fee; (2) a $2,000 fee for each issue of public securities entitled to vote on the Plan; and (3) a $1,500 fee for each issue of public securities not entitled to vote on the Plan but entitled to receive notice. Innisfree will also receive: (1) a fee for mailings to any registered record holders of securities or any creditors at $1.75 to $2.25 per package, depending on the complexity of the mailing; (2) a minimum charge of $2,000 to respond to up to 250 phone calls from security holders within a 30-day solicitation period, with additional calls charged at $8.00 per call; and (3) a fee of $100 per hour for tabulating ballots and master ballots, plus a set up charge of $1,000 for each tabulation element. The Debtors will also pay the firm for its consulting services in ccordance with Innisfree's hourly rates: Staff Rate ----- ---- Co-chairman $375/hr Managing Director 350/hr Practice Director 275/hr Director 250/hr Account Executive 225/hr Staff assistant 150/hr Innisfree will also receive fees for mass mailing services: -- $3,500 for handling notice mailings to the holders of the securities; and -- $0.50 to $0.65, plus postage, for handling notice mailings to registered record holders and other creditors. The Debtors will also reimburse Innisfree for its out-of-pocket expenses, for travel costs, messenger and courier costs and expenses incurred in obtaining or converting depository participant, creditor, shareholder and "non-objecting beneficial owners" lists. Additionally, the Debtors intend to employ Bankruptcy Services LLC as their official claims and noticing agent in these Chapter 11 cases. Nonetheless, the services provided by Innisfree will not duplicate the services to be provided by Bankruptcy Services. (Encompass Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE: Court Extends Lease Decision Period Until June 9, 2003 ------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained permission from the Court to extend the Section 365(d)(4) Deadline, by which they must determine whether to assume, assume and assign, or reject over 100 unexpired leases. The lease decision time has been stretched for an additional period of 180 days, through and including June 9, 2003. GECCMC: Fitch Affirms Low-B Ratings on 3 Classes of P-T Certs. -------------------------------------------------------------- GECCMC commercial mortgage pass-through certificates, series 2001-1 are affirmed by Fitch Ratings as follows: $156.9 million class A-1, $703 million class A-2, $1.1 billion class X-1 and $662.6 million class X-2 at 'AAA'; $45.2 million class B at 'AA'; $49.4 million class C at 'A'; $15.5 million class D at 'A- '; $15.5 million class E at 'BBB+'; $15.5 million class F at 'BBB'; $14.1 million class G at 'BBB-'; $25.4 million class H at 'BB+'; $18.3 million class I at 'BB'; and $9.9 million class J at 'BB-'. Fitch does not rate classes K, L, M, and N. The rating affirmations follow Fitch's annual review of the transaction, which closed in May 2001. The affirmations reflect consistent loan performance and minimal paydown of the collateral balance since issuance. There have been no delinquencies or specially serviced loans since origination. The comparable weighted average debt service coverage ratio for the pool was 1.44 times at YE 2001, a slight increase over the 1.41x at issuance. The WADSCR was calculated using the financial statements collected by the master servicer, GEMSA, for approximately 95% of the loans in the pool by balance. As of the November 2002 distribution date, the pool's certificate balance has decreased by 1.3% to $1.11 billion from $1.13 billion at issuance. The pool is geographically diverse with the highest concentration in California (20%). No other state concentrations exceed 10%. Nine loans, approximately 16% of the pool, are secured by multiple assets that are cross- collateralized and cross-defaulted. Fitch maintains an investment grade credit assessment on 59 Maiden Lane (4.4% of the pool), which is secured by a 1,037,002 square foot office building located in the financial district of New York City. The DSCR after tenant improvements and leasing commissions are taken out of the net cash flows is 2.75x, this is unchanged from issuance. Fitch lowered the internal credit assessment of the Equity Inns Portfolio from investment grade to below investment grade in response to its declining performance; the loan represents 2.9% of the pool. The DSCR has declined to 1.86x as of YE 2001 from 2.11x at issuance. In addition, the revenue per available room for the portfolio has declined to $51.88 as of year-to-date Sept. 30, 2002 from $52.41 as of YE 2001 and $54.18 at issuance. The portfolio consists of seven Hampton Inns located in seven different states. The loan is current. Fitch will continue to monitor this transaction, as surveillance is ongoing. GENUITY INC: Will be Paying Up to $2 Million of Shipping Charges ---------------------------------------------------------------- Judge Beatty authorizes Genuity Inc., and its debtor-affiliates to pay the Shipper Claims, Regulator Claims and Contractor Claims in the ordinary course of the Debtors' business; provided, however: -- the Debtors will not pay a Contractor Claim unless the Contractor has perfected or is capable of perfecting, one or more liens or interests to secure payment of the Contractor Claim; and -- the payment of any Contractor Claim will be made with a full reservation of rights regarding the extent, validity, perfection or possible avoidance of any liens or interests. Shipper Claims J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, informed the Court that in the normal course of the Debtors' provision of services and products to their customers across the United States and abroad, the Debtors ship and store hi-tech equipment designed to transfer and route critical communications data as well as other equipment needed to support the Debtors' network. Shipping and storage typically are handled by independent third party commercial common carriers, including trucking companies, public warehousemen, and independent operators of distribution centers. The Debtors believe that, unless paid, Shippers, Warehousemen and Distributors may withhold delivery of, or access to, the Debtors' goods, and that the value of these goods exceeds the amounts of the claims of these parties. In addition, under the laws of many states, Shippers, Distributors and Warehousemen may have possessory liens on goods in their possession. In the ordinary course of business, Mr. Milmoe said that the Debtors utilize G&T Co., a third party paying agent, to pay certain of the Shippers. G&T collects invoices from these Shippers for services rendered to the Debtors, reconciles these invoices against the Debtors' records and then periodically bills the Debtors for amounts owed to the Shippers. Once payment from the Debtors is received, G&T cuts checks on the Debtors' behalf to the individual Shippers. Due to the absence of an alternate system that will facilitate the transfer of payments from the Debtors to the Shippers, the Debtors also seek the Court's authority to pay prepetition charges due to G&T, as well as G&T's standard fees for processing and paying the Shippers, including payment of any prepetition amounts outstanding, in the ordinary course of business. Mr. Milmoe believed that the payment of these charges will ensure steady supply of shipping services indispensable to the normal operations of the Debtors' businesses. Regulator Claims In the ordinary course of their business, the Debtors pay to various federal, state and municipal agencies regulatory and business license assessments, as well as franchise and right-of- way fees. The Debtors pay various federal and state regulatory fees and assessments required by Regulators in order to provide inter- exchange, interstate services, including but not limited to Universal Service Fees. The Debtors are also required to pay business license fees and assessments for the right to operate in various jurisdictions throughout the United States. In addition, the Debtors have entered into franchise and rights- of-way agreements with various municipalities throughout the United States. Pursuant to the majority of these agreements, the Debtors are required to pay for access to the public rights of way. To protect and preserve the value of the Debtors' businesses and continue the Debtors' operations, the Debtors seek the Court's authority to pay the Regulator Claims in the ordinary course of business. If Regulator Claims are not paid, various federal, state and municipal Regulators likely will take adverse action against the Debtors based upon purported regulatory and police powers that may not be subject to the automatic stay. In addition, preserving ongoing good standing with such authorities is vital to the Debtors' ability to continue to operate in the future. Contractor Claims Mr. Milmoe reported that the Debtors employ numerous mechanics, tradespersons and contractors to perform services that give rise to a right to payment that is or could become secured by a mechanic's, materialmen's or other similar lien. The Debtors call on many of these Contractors daily to provide specialized services for administrative, repair and industrial functions related to maintaining the Debtors' extensive communications network, including ensuring that various locations comply with applicable local regulatory requirements like fire codes. Ongoing maintenance and provision of services by certain Contractors is critical to maintaining the value of the Debtors' assets. (Genuity Bankruptcy News, Issue No. 2 & 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) HALLIBURTON: Court Hearing on Stay Continues Tomorrow ----------------------------------------------------- Halliburton (NYSE: HAL) announced that a status conference scheduled Friday in the Harbison-Walker bankruptcy regarding the stay contained in the bankruptcy court's temporary restraining order has been continued until tomorrow, December 18, 2002. The bankruptcy court, upon request of the Official Committee of Asbestos Creditors in the Harbison-Walker bankruptcy and Halliburton, agreed to extend the stay until this week. The court's temporary restraining order, which was originally entered on February 14, 2002, stays more than 200,000 pending asbestos claims against Halliburton's subsidiary DII Industries, LLC. The company said it is close to an agreement in principle with plaintiffs' attorneys representing more than 300,000 claimants that will resolve all of the asbestos-related personal injury claims against the company, but needs more time to agree to details of the terms. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services Group and Engineering and Construction Group business segments. The company's World Wide Web site can be accessed at http://www.halliburton.com HAYES LEMMERZ: Seeking Fourth Lease Decision Period Extension ------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates sought and obtained a fourth extension of the deadline by which they must decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Court gives the Debtors until April 30, 2003, to make those decisions. Anthony W. Clark, Esq. at Skadden Arps Slate Meagher & Flom, in Wilmington, Delaware, reports that the unexpired leases cover Hayes Lemmerz's corporate and manufacturing facilities and are valuable assets of the Debtors' estates. The unexpired leases are integral to the Debtors' continued operations as they seek to reorganize. Mr. Clark believes that most of these unexpired Leases will prove to be either desirable or necessary to the continued operation of the Debtors' go-forward business. The Debtors may assume and assign the unexpired Leases to third parties if they are not necessary to the Debtors' ongoing business operations but have a "below market" rate. The Debtors have made progress in evaluating their real estate assets throughout these cases and are currently assessing the value and marketability of all of the Unexpired Leases and whether there is sufficient value to merit assumption and assignment rather than rejection. Currently, however, the Debtors cannot confidently determine which of locations covered by the unexpired leases will remain a part of the Debtors' business until the Debtors go-forward business plan is more fully implemented. Mr. Clark contends that the full implementation of this business plan is necessary before decisions be made because, ultimately, the Debtors' decision whether to assume, assign, or reject particular unexpired leases, as well as the timing depends in large part on the Debtors' business plans for the future. Indeed, without an additional extension of time within which to make these decisions, the Debtors' business judgment may be compromised as they would be forced to make premature decisions on specific properties before related implementation of their business plan. Mr. Clark relates that the Debtors have developed and are implementing their five-year business plan and currently expect to present a plan of reorganization to the Court by December 16, 2002, which will likely contain decisions with respect to these unexpired leases. Mr. Clark assures the Court that the objecting landlords will not be prejudiced if the relief requested is granted. Throughout the course of these cases, the Debtors have remained current on their administrative obligations, including leasehold obligations. Going forward, there is no reason to believe that the Debtors will not continue to remain current on their leasehold obligations. The Debtors have the financial resources and the unfettered intention to perform all of their obligations under the unexpired leases. (Hayes Lemmerz Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) Hayes Lemmerz's 11.875% bonds due 2006 (HLMM06USS1), DebtTraders says, are trading at about 52 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1 for real-time bond pricing. HEALTH INSURANCE: S&P Keeps Watch on B+ Fin'l Strength Rating ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' counterparty credit and financial strength ratings on Health Insurance Plan of Greater New York on CreditWatch with positive implications. "HIP's consolidated pretax income was $148 million through Sept. 30, 2002, and is expected to range from $165 million-$175 million by year-end 2002," explained Standard & Poor's credit analyst Joseph Marinucci. "Pursuant to Standard & Poor's quarterly surveillance, year-end 2002 profitability is now expected to significantly exceed initial expectations and serves to dramatically improve HIP's level of capitalization," Marinucci added. HIP's statutory surplus improved by more than 70% to $333 million as of Sept. 30, 2002, from $193 million at year-end 2001. Standard & Poor's will be conducting a more in depth review of HIP's operational performance to determine the full extent and sustainability of its improved financial condition and expects to resolve the CreditWatch in the first quarter of 2003. INSILCO HOLDING: Files for Chapter 11 Protection in Delaware ------------------------------------------------------------ Insilco Holding Co., (OTC Bulletin Board: INSL) having completed its review of strategic alternatives for addressing its capital structure issues, its primary operating subsidiary, Insilco Technologies, Inc., has entered into definitive agreements to sell substantially all of the assets of its three business segments. To facilitate the sales, Insilco Holding Co., and certain of its domestic subsidiaries, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Insilco Technologies, Inc., and certain of its subsidiaries, have agreed to sell the passive components business to Bel Fuse Ltd., for approximately $35 million; a substantial majority of the custom assembly business to Amphenol Corporation for approximately $10 million; the North Myrtle Beach custom assembly business to LL&R Partnership, a private investor group, for $1.7 million; and the stamping business to SRDF Acquisition Company LLC, a private investor group, for approximately $13 million. Insilco Technologies, Inc., has also signed a contract to sell the Ireland-based custom assembly business to that facility's general manager, thus resolving approximately $1.8 million of liabilities that would otherwise have been triggered by a plant shutdown. Insilco anticipates that a competitive bidding process in the bankruptcy proceedings will be conducted for each business in an effort to obtain higher or otherwise better offers prior to the close of these transactions. None of Insilco's operations located outside of the United States were included in the Chapter 11 filings, though the shares of certain foreign subsidiaries and certain foreign assets will be included in the sale transactions, and it is anticipated that the completion of the sale of the assets of Insilco's Canadian subsidiary will require insolvency proceedings in Canada. The Chapter 11 filings allow the sale of the assets of the domestic entities to be free and clear from certain liabilities that the prospective purchasers do not wish to assume. Insilco emphasized that all of its operations, including its domestic and international manufacturing facilities, are conducting business as usual, including making new order commitments. Until completion of the sales transactions, present employees will continue to receive their regular weekly or semi- monthly compensation from Insilco, and their health and other benefits will continue. To enable Insilco to conduct its businesses while the sales are completed, the Agent for Insilco's senior secured lending group has agreed to the terms and conditions on which it will allow Insilco to use its existing cash reserves, which presently total approximately $22 million, and its revenues from operations, in accordance with an agreed budget, to meet all of its current operating requirements. Insilco's request to use the funds covered by its agreement with the Agent for its senior secured lending group has been submitted to the Bankruptcy Court as part of Insilco's first-day motions. Upon Bankruptcy Court approval of Insilco's request, Insilco will be able to use these funds to pay suppliers in full, under normal terms, for all goods and services provided in the ordinary course of business after the bankruptcy filings, until the asset sales are complete. David A. Kauer, President and Chief Executive Officer of Insilco Holding Co., said, "We are pleased that our business segments will be acquired by financially stronger companies and capable private investor and management groups, and that we have the resources to continue operating our businesses as usual while the sales of our businesses as going concerns are completed. "Though our businesses have consistently met their customer commitments and our cash position has remained steady and strong for several months, our holding company's capital structure was not designed for the kind of prolonged, cyclical slowdown that we have been experiencing in our primary markets. After reviewing our alternatives for addressing our capital structure issues, we determined that selling our businesses to new owners, whose capital structures will be better aligned with the current revenues from these businesses, would be in the best interests of our customers, suppliers, employees and lenders. A Chapter 11 filing is the most effective way for Insilco to complete the sales of our business segments and help ensure that they have the resources to continue operating as usual while the sales are being finalized. "We appreciate the continued support of our customers and suppliers during this period. Our ability to use our $22 million in cash and our revenues from operations to meet all current operating requirements should give our customers confidence and assure our suppliers that they will be paid in full, under normal terms, for all deliveries and new orders made after our Chapter 11 filing. We remain committed to maintaining the levels of service and performance that our customers and suppliers have come to expect from us, and we believe that the companies that have agreed to buy our businesses share our high standards. "Insilco has been able to attract buyers to provide continuity to our businesses because our employees never stopped focusing on our customers and on fulfilling their needs reliably and efficiently. As a result, we believe our employees will have better opportunities to work with financially stronger organizations. I am proud of their continuing hard work and dedication," Mr. Kauer concluded. The consummation of the proposed asset sale transactions are subject to, among other things, the completion of a competitive bid process under Chapter 11 (including the opportunity for competing bidders to submit higher or otherwise better offers), Bankruptcy Court approval, and customary closing conditions. Gleacher Partners LLC is financial advisor and Shearman & Sterling is legal counsel to Insilco. Separately, Insilco reported that James Ashton and George Peinado, members of the board of directors of Insilco Holding Co., have joined the board of Insilco Technologies, Inc., and that Thompson Dean has resigned as a member of the boards of directors of Insilco Holding Co., and Insilco Technologies, Inc. Insilco Holding Co., through its wholly-owned subsidiary Insilco Technologies, Inc., is a leading global manufacturer and developer of a broad range of magnetic interface products, cable assemblies, wire harnesses, high- speed data transmission connectors, power transformers and planar magnetic products, and highly engineered, precision stamped metal components. Insilco maintains more than 1.5 million square feet of manufacturing space and has 21 locations throughout the United States, Canada, Mexico, China, Ireland and the Dominican Republic serving the telecommunications, networking, computer, electronics, automotive and medical markets. For more information visit these sites: http://www.insilco.comor http://www.insilcotechnologies.com INSILCO TECH: Case Summary & 25 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Insilco Technologies, Inc. 425 Metroplace N. Suite 555 Dublin, Ohio 43017 Bankruptcy Case No.: 02-13672 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Insilco Holding Co. 02-13671 InNet Technologies, Inc. 02-13673 Insilco International Holdings Inc. 02-13674 Precision Cable Manufacturing Corporation 02-13675 Eyelets For Industry, Inc. 02-13676 EFI Metal Forming, Inc. 02-13677 Stewart Stamping Corporation 02-13678 Stewart Connector Systems, Inc. 02-13679 Signal Caribe, Inc. 02-13680 Signal Transformer Co., Inc. 02-13681 Type of Business: The Debtors and their non-debtor affiliates are a leading global manufacturer and developer of highly specialized electronic interconnection components and systems, serving the telecommunications, computer networking, electronics, automotive and medical markets. Chapter 11 Petition Date: December 16, 2002 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: Pauline K. Morgan, Esq. Sharon M. Zieg, Esq. Maureen D. Luke, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: 302 571-6600 Fax : 302-571-1253 -and- Constance A. Fratianni, Esq. Scott C. Shelley, Esq. Shearman & Sterling 599 Lexington Avenue New York, New York 10022-6069 Telephone: 212-848-4000 Fax: 212-848-7179 Total Assets: $144,263,000 Total Debts: $611,329,000 Debtor's 25 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wachovia Bank 12% Bonds $138,424,162 Corporate Trust Group Robert L. Vice 401 S. Tyron Street, 12th Floor Charlotte, NC 28288 Tel: 704-715-3021 Fax: 704-374-6682 US Bank, NA 14% Bonds $12,550,000 Corp. Trust Dept. 1420 Fifth Avenue 7th Floor Seattle, WA 98101 Tel: 206-344-4680 Fax: 206-344-4632 Tyco Electronics Trade $541,477 PO Box 3608 Harrisburg, PA 17105-3608 Tel: 717-564-0100 Fax: 717-986-5073 2800 Fulling Mill Road Middleton, PA 17057 Tel: 717-986-7459 Fax: 717-986-7299 International Wire Group Trade $292,197 Jim Johnson 12 Masonic Avenue Canden, NY 13316 Tel: 315-245-2000 Fax: 315-245-4014 TW Metals Trade $127,996 Molex Incorporated Trade $120,705 Klein Plating Trade $110,297 National Material of Trade $97,149 Mexico Lucent Technologies Trade $96,826 DSM Engineering Trade $95,016 Guardian Metal Trade $93,689 Forgo Fasteners, Inc. Trade $83,668 Tempel de Mexico Trade $80,396 Rafferty Brown Steel Co. Trade $78,121 Johnny C. Allen Trade $73,451 Wieland Metals, Inc. Trade $63,544 Sun Belt Trade $58,468 Arrow Electronics Trade $57,945 Precious Plate Trade $55,987 Penn United Technology Trade $53,997 ASEP, Inc. Trade $53,112 Calstrip Industries, Inc. Trade $51,601 Force Electronics Trade $48,974 Federal Mogul Corp. Trade $48,586 Raychem/Tyco Elec. Trade $48,250 IT GROUP: Court Approves Stipulation Resolving Dispute with Shaw ---------------------------------------------------------------- Judge Walrath approves a Stipulation between The IT Group, Inc., its debtor-affiliates and Shaw Group Inc., to settle the dispute and avoid further judicial proceeding. Pursuant to the Stipulation: (a) Shaw will deliver to the Debtors' counsel a release on behalf of their former employees who were terminated before May 3, 2002 -- the closing of the Shaw transaction. The former employees possess claims against the Debtors for accrued "paid time off benefits"; (b) Within 5 business days of Shaw's delivery of the release, the Debtors will pay to the former employees the amount of their claim using the PTO Fund, in complete satisfaction of the Debtors' and Shaw's obligations. The parties agree that the release will not be effective until the Debtors pay the former employees; (c) If a former employee does not execute a release, no payment will be given to him. That claimant may still assert a claim, subject to whatever objections any party may assert, in the ordinary claims approval process. To the extent the claim is approved in connection with any claims approval process, the Debtors will then pay that former employee's claim from the PTO Fund; (d) Once all claims are finally resolved as to validity and amount, whether by payment or by resolution through the ordinary claims approval process, the Debtors will reconcile any balance form the PTO Fund. The Debtors will return any PTO Fund balance to Shaw within 30 days after all claims are resolved finally, including appeals. To the extent the amount of the claims and other employee payments exceed the amount of the PTO Fund, Shaw will pay to the Debtors the excess amount within 30 days after reconciliation. Shaw's obligations for employee payments, including the claims, will not exceed $29,500,000; and (e) Shaw agrees to indemnify and hold harmless the Debtors from any and all claims that may be asserted against the them by any person at any time. (IT Group Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) IVG CORPORATION: Knight Securities Discloses 11% Equity Stake ------------------------------------------------------------- Knight Securities, LP, beneficially owns 799,363 shares of the common stock of IVG Corporation, now known as Group Management Group, representing 11.0% of the outstanding common stock of the Company. Knight Securities holds sole voting and dispositive powers over the shares. IVG Corp., is a human resources and technology holding company that acquires promising revenue-generating companies and assists them by providing financial guidance, business model creation and implementation, access to equity resources and technology. To date, Its portfolio companies consist of SES-Corp., Inc., a Professional Employer Organization that provides employee payroll, human resource and benefit services; Swan Magnetics, Inc., a developer of a proprietary ultra-high-capacity flexible disk drive technology and the owner of 46% of the common stock of iTVr, Inc., which is developing next generation digital video recording technology; and CyberCoupons.com, Inc., a source for consumers to obtain coupons for grocery, household and beauty products via the Internet. The Company also has a division, GeeWhizUSA.com, which is building a vertically integrated supply chain of patented or proprietary novelty, gift and branded products. At September 30, 2002, the Company's balance sheet shows a working capital deficit of close to $6 million, and a total shareholders' equity deficit of about $5 million. KAISER ALUMINUM: Wants to Grant QAL Claims Administrative Status ---------------------------------------------------------------- On July 31, 1964, Kaiser Aluminum & Chemical Corporation and its wholly owned subsidiary, Kaiser Alumina Australia Corporation, and several non-affiliated foreign corporations entered into a participants agreement for the sole purpose of constructing an alumina refinery at Gladstone in Queensland, Australia. The Gladstone Plant refines bauxite into alumina on a toll basis for the participants. To own and operate the Gladstone Plant, the parties formed Queensland Alumina Limited. Kaiser Australia owned a 28.3% interest in QAL. However, in September 2001, Kaiser Australia sold 8.3% of its interest to Comalco Aluminium Limited for $189,000,000. The purchase price consisted of a $159,000,000 cash payment plus Comalco's assumption of $30,000,000 of off-balance sheet QAL indebtedness. Kaiser Australia now owns a 20% interest in QAL. To fund its operations, QAL collects its tolling charges and other cash requirements through periodic cash calls on the QAL Participants. According to Paul N. Heath, Esq., at Richards, Layton & Finger, Kaiser Australia receives cash calls from QAL five or six times a month in amounts that typically range from $6,000,000 to $8,000,000 per month. Through product sales and delivery, the Kaiser Companies realize $120,000,000 a year from their share of the alumina QAL produced. Kaiser Australia's share of alumina production is then sold to Kaiser Aluminum for its own smelter facilities. Kaiser Aluminum may also resell the alumina to Kaiser Aluminium International, Inc. for their other facilities or to Kaiser International's customers in the Northwest United States, Asia and Australia. In the past, Mr. Heath relates that QAL's capital expenditure requirements have been largely financed by QAL debentures issued to international financial institutions. Most recently, pursuant to a financing agreement dated March 30, 2001, the QAL Participants agreed that, to refinance the existing Series V and Series W debentures scheduled to mature in 2002 and 2003 and to cover a portion of QAL's projected capital expenditures in 2002 and 2003, QAL would raise up to $300,000,0000 in additional debt financing through the issuance of debentures on terms similar to those of prior issuances. The Financing Agreement also provides that Kaiser Australia will reimburse certain of the non-debtor QAL Participants the difference between: (a) the prevailing interest rates, using various rating sources, for comparable loans that each non-debtor QAL Participant's parent could have obtained before QAL enters into the additional financing; and (b) the actual interest rate to be paid by QAL -- and ultimately passed on to its participants -- for the issuance of additional debentures. QAL ultimately raised $155,000,000 -- $70,000,000 of which remains undrawn -- of the $300,000,000 as agreed under the Financing Agreement through the issuance of a new series of debentures referred to as Series X. Currently, there are two series of outstanding debentures: Series W amounting to $160,000,000; and Series X amounting to $85,000,000, for a total of $245,000,000. To preserve the value of their interests in QAL, as well as interests in other foreign joint ventures, Mr. Heath recounts that the Debtors filed a motion to continue ordinary course transactions with, and pay prepetition claims of, their non- debtor foreign joint venture affiliates, including QAL. The Debtors also initiated discussions with the non-debtor QAL Participants regarding: (1) further borrowing by QAL under the existing Series X loan commitments, under which $70,000,000 -- $14,000,000 of which would be Kaiser Australia's share -- remains undrawn; and (2) the issuance of another $145,000,000 in debentures by QAL pursuant to a Series Z Financing, which bears terms similar to those under the Series X Financing. Unfortunately, the non-debtor QAL Participants were unwilling to proceed with the financings because of the uncertainty as to: (i) whether Kaiser Australia and Kaiser Aluminum would be legally obligated to satisfy payment obligations under the Participants Agreement, the Financing Agreements and certain tolling contracts and supply agreement as they come due; (ii) whether the non-debtor QAL Participants would have an adequate remedy if the Debtors default on a payment obligation owing under the QAL Agreements; and (iii) the status of the QAL Agreements and the Debtors' ability to perform thereunder in view of their Chapter 11 filings. Pursuant to a Final Joint Venture Order, the Debtors obtained permission from the Court to pay their obligations related to any further borrowing by QAL under the Series X Financing or the proposed Series Z Financing. The Debtors were also allowed to enter into joint venture transactions related to QAL. But despite the Final Joint Venture Order, Mr. Heath tells the Court that the non-debtor QAL Participants remain unwilling to support QAL's drawing down the Series X Financing and entering into the Series Z Financing without greater assurances that: (i) they would have an adequate remedy if the Debtors defaulted on any of their payment obligations under the QAL Agreements, including, in particular, their payment obligations in respect of the additional Series X and proposed Series Z financing; and (ii) the Debtors are and will remain obligated under the QAL Agreements. Accordingly, the Debtors ask the Court to grant the non-debtor QAL Participants superpriority administrative expense status for any claims that they might have against Kaiser Australia and Kaiser Aluminum as a result of: -- a breach by Kaiser Australia or KACC of any payment obligation under any of the QAL Agreements, provided that the extent of the superpriority administrative expense status will be limited to the amount of the payment obligation both Debtors have failed to pay; or -- without duplication, a decision by QAL or any of the non- debtor QAL Participants to pay all or a portion of any tolling charges or other payment that Kaiser Australia or KACC fails to make under the QAL Agreements, but limited to the amount of the payment made by QAL or any of the non-debtor QAL Participants on Kaiser Australia's or KACC's behalf, in each case without prejudice to: (a) any rights or remedies that QAL or the non-debtor QAL Participants may have under the QAL Agreements; and (b) any rights or defenses that Kaiser Australia or KACC may have under the QAL Agreements. Mr. Heath explains that the only way the Debtors will obtain further financing is to grant QAL and the non-debtor QAL Participants superpriority administrative expense status to their claims. On these conditions, the Debtors and the non- debtor QAL Participants have agreed that the remaining $70,000,000 of the Series X Financing and $75,000,000 of the Series Z Financing will be drawn down by December 31, 2002. "Securing the additional financing for the Debtors' share of QAL's scheduled debt maturities and future QAL capital expenditures will assist the Debtors in preserving the value of QAL for [the Debtors'] estates," Mr. Heath says. Mr. Heath also asserts that the Series X Financing and Series Z Financing are more cost effective methods for Kaiser Australia to finance its share of QAL's debt maturities and capital expenditures. Mr. Heath notes that paying Kaiser Australia's share in cash could necessitate borrowing under the Debtors' postpetition financing facility, which has a higher interest rate under both the Series X Financing and Series Z Financing. Any borrowings under the DIP Facility would also reduce the Debtors' overall liquidity. The superpriority administrative claims will be junior to the superpriority administrative expense claims granted: * to the postpetition lenders under the Final DIP Order; and * under the Final Cash Management System with respect to the postpetition intercompany claims. Debtors Will Assume QAL Contracts Concurrent with the granting of superpriority administrative expense status to QAL and the non-debtor QAL Participants, the Debtors also seek the Court's authority to assume -- with the ability to later assign -- the agreements associated with QAL. Mr. Heath informs Judge Fitzgerald that this is another condition set by QAL and the non-debtor QAL Participants as part of their consent to a further borrowing under the Series X Financing and the proposed Series Z Financing. Mr. Heath maintains that there are no default under the QAL Agreements and accordingly, no cure payments are required. The Debtors further ask the Court to allow QAL and the QAL Participants to exercise their remedies and enforce their rights under the QAL Agreements in the event of default by Kaiser Australia and Kaiser Aluminum without first seeking relief from the Court, including relief from the automatic stay. The Debtors propose to assume these agreements: 1. The QAL Participants Agreement The Participants Agreement was purposely created for the construction of an alumina refinery at Gladstone in Queensland, Australia. 2. Tolling Contracts The Participants Agreement requires each QAL Participant to enter into the Tolling Contracts. Pursuant to the Tolling Contracts, Kaiser Australia is required to: (a) take 20% of the Gladstone Plant's output and pay tolling charges equal to 20% of QAL's overall costs including interest and depreciation; and (b) pay standby charges. The tolling charges and bauxite freight charges are collected by QAL only to the extent of its cash requirements. The Participants Agreement and the Tolling Contracts also provide that Kaiser Australia is unconditionally obligated to advance funds as necessary to fund QAL's bauxite freight charges, working capital, capital spending and debt service requirements. Kaiser Aluminum guarantees Kaiser Australia's performance of these and all other obligations under the Participants Agreement and the Tolling Contracts. 3. Bauxite Supply Agreement Under the Participants Agreement, each QAL Participant -- except Comalco -- is required to purchase its supply of bauxite to be tolled into alumina at the Gladstone Plant from Comalco's reserves in Northern Queensland, Australia. To fulfill this requirement, the Debtors from time to time entered into bauxite supply contracts with Comalco, including the most recent one, dated November 17, 1993. 4. Trihydrate Bauxite Agreement The Debtors and Comalco entered into the Trihydrate Bauxite Supply Agreement, dated May 17, 1990. Here, Comalco supplies Kaiser Australia all of its trihydrate bauxite for use at the Gladstone Plant. 5. The Financing Agreements Parties Agree to Series Z Financing Addendum The Debtors further seek the Court's authority to enter into an interest reimbursement agreement with Pechiney Resources Pty. Limited and Pechiney in connection with the Series Z Financing. Pursuant to the reimbursement agreement, Kaiser Australia will reimburse Pechiney's interest expense under the Series Z Financing if the weighted average interest rate of funds borrowed under the Series Z Financing exceeds 80 basis points over LIBOR. Mr. Heath explains that this addendum to the Series Z Financing is similar to other interest reimbursement agreements that the Debtors have entered into in the past. DIP Lenders Object Bank of America, on behalf of itself and certain lenders, tells the Court that the proposition to grant superpriority administrative expense status to QAL claims would create an event of default under the DIP Credit Agreement. Steven M. Yoder, Esq., at The Bayard Firm, in Wilmington, Delaware, points out that, pursuant to the Credit Agreement, an Event of Default occurs when "an order will be entered by the Bankruptcy Court... granting relief from automatic stay to any creditor of any Debtor (other than the Agent and the Lenders) with respect to any claim with a value equal to or in excess of $5,000,000 . . ." "The Debtors acknowledge in the Motion that, in addition to other financial payments, concessions and accommodations, they are obligated to pay $6,000,000 to $8,000,000 to QAL at least five to six months per month," Mr. Yoder notes. Mr. Yoder also reminds the Court that the Debtors have promised under the Credit Agreement that they will "acquire and maintain [their assets] in a manner that will allow . . . [their assets] to be subject to [Bank of America's liens] . . ." Mr. Yoder argues that the Debtors' proposition violates this covenant by diminishing the effectiveness of Bank of America's liens because it potentially subjects the Debtors' assets to the unchecked claims of QAL and the QAL Participants. Mr. Yoder further complains that the Motion reestablishes the proverbial "race to the courthouse" by granting QAL and the QAL Participants relief from the automatic stay to exercise their rights against the Debtors without consideration of the Final DIP Order requirement that the lenders first be indefeasibly paid in full. "The most troubling aspect about the race, however, is that, without receiving notice, the favored participants [the lenders] will be unable to hear the starting gun," Mr. Yoder says. Creditors' Committee Responds The Official Committee of Unsecured Creditors tells Judge Fitzgerald that it does not object to the Debtors' request. However, the Committee does have several concerns related to the motion. Rafael X. Zahralddin-Aravena, Esq., at Ashby & Geddes, in Wilmington, Delaware, relates that the Creditors' Committee has asked the Debtors to include in their proposed Order that the U.S. Trustee or any administrative claimant retains the right to object to the superpriority treatment of any particular QAL claims. Mr. Zahralddin-Aravena explains that the Committee has asked for this provision since the superpriority administrative claim against Kaiser Australia and Kaiser Aluminum & Chemical Corporation are supposed to be junior to the superpriority administrative expense claims granted to the postpetition lenders under the DIP Facility and to the postpetition intercompany claims. It, therefore, makes sense to provide other administrative claimants with the opportunity to object to the superpriority treatment of any particular claims of the QAL participants. "The Debtors have stated that they will relay our concern to the QAL Participants. However, the Debtors have not yet notified the [Creditors' Committee] whether [the Debtors] and the QAL Participants will agree to revise the Order to address this concern," Mr. Zahralddin-Aravena says. (Kaiser Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1) are trading at 10 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for real-time bond pricing. KMART CORP: Court Allows Sale of RK-227 Beechjet to Dominion ------------------------------------------------------------ Kmart Corporation and its debtor-affiliates obtained Court's approval to sell another corporate jet, a Model Year 1999 Beechjet 400A, identified by serial number RK-227 and registration number N632KM, to Dominion Aircraft, Inc., subject to higher and better offers. To recall, the RK-227 Beechjet was also used by Kmart's divisional presidents to visit stores in their regions. Because of their restructuring and the reduction of their stores, the Debtors no longer needed to maintain the aircraft. Aerodynamics Inc., a broker specializing in aircraft sale, assisted the Debtors in marketing and selling the RK-227 Beechjet. Pursuant to the parties' Exclusive Aircraft Brokerage Agreement approved by the Court, the Debtors will compensate Aerodynamics 1-1/2% of the aircraft's purchase price. The salient terms of the Purchase Agreement between the Debtors and Dominion are: Purchase Price: $3,500,000 Escrow Deposit: $50,000 Assets Included: All the Debtors' right, title and interest in the aircraft Closing: Immediately after the last to occur of: (1) approval of the Proposed Sale by this Court; (2) completion of the Pre-Purchase Inspection; (3) closing of the Escrow Deposit; and (4) payment of the Purchase Price. Conditions to Closing: The Agreement is subject to higher and better offers, as well as Bankruptcy Court approval. Representations And Warranties: The Property will be conveyed "as is, where is." (Kmart Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392- 0900) Kmart Corp.'s 8.190% bonds due 2003 (KM03USR4), DebtTraders reports, are trading at about 16 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR4for real-time bond pricing. LERNOUT & HAUSPIE: L&H NV Sues Cevennes SA to Recoup Conveyances ---------------------------------------------------------------- Brussels Translation Group N.V. was established on March 13, 1997. On that same day, BTG signed a $3,500,000 licensing agreement with L&H. The Licensing Agreement was amended in May 1997 to increase the amount of the license fee payable by BTG to L&H to $5,000,000. At the same time, BTG contracted to pay L&H $30,000,000 for research and development services. In June 1999, L&H acquired BTG from Cevennes, S.A., of Luxembourg for $42,000,000, plus the assumption of $17,000,000 in debt owed to L&H related to development costs. As of the Acquisition Date, BTG was worth substantially less than the consideration paid by L&H, which included both cash transfer and debt forgiveness. As a result, L&H's estate and creditors suffered yet another "substantial loss". Accordingly, L&H asks Judge Wizmur to undo the transaction and award the estate judgment for the amount paid, plus interest. (L&H/Dictaphone Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEVEL 3 COMMS: Unit Sells 4.7MM Shares of Commonwealth Telephone ---------------------------------------------------------------- Level 3 Communications, Inc., (Nasdaq: LVLT) announced that Eldorado Equity Holdings, Inc., an indirect, wholly-owned subsidiary of Level 3 Communications, Inc., has sold 4.74 million shares of Common Stock of Commonwealth Telephone Enterprises (Nasdaq: CTCO). Gross proceeds for this sale are approximately $166 million, and net proceeds are approximately $159 million. Net proceeds are expected to be received on December 18, 2002. Level 3 (Nasdaq: LVLT) is an international communications and information services company. The company offers a wide range of communications services over its 20,000 mile broadband fiber optic network including Internet Protocol services, broadband transport, colocation services, and patented Softswitch-based managed modem and voice services. Its Web address is http://www.Level3.com The company offers information services through its wholly-owned subsidiaries, (i)Structure and Software Spectrum. (i)Structure provides managed IT infrastructure services and enables businesses to outsource costly IT operations. Its Web address is http://www.i-structure.com Software Spectrum is a global business-to-business software services provider specializing in enterprise software management, licensing and support. Its web address is http://www.softwarespectrum.com Level 3 Communications' September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $254 million, as compared to a deficit of about $65 million, recorded at December 31, 2001. LTV CORP: Noteholders Want Nod to Hire CIBC as Fin'l Advisors ------------------------------------------------------------- After approval of LTV Steel's Asset Protection Plan, the United States Trustee met with the official committees in these cases to discuss the ongoing costs of the Committees, and whether one or two Committees should exist going forward. The U.S. Trustee opposed the continued retention of financial advisors on a monthly flat fee basis, but indicated hourly billing would be okay. By this application, the Official Committee of Noteholders of LTV Steel ask Judge Bodoh to approve its employment of CIBC World Markets Corporation as its financial advisors. Reasons for Hiring CIBC In August 2002, it became apparent that the Debtors would either sell the Copperweld Companies or formulate a stand-alone plan of reorganization for Copperweld. In fact, a three-year business plan for the Copperweld Companies is expected to be delivered in the next week or so. As a result, the Noteholders' Committee needs the assistance of a financial advisor to evaluate the Copperweld Companies' business plan, conduct valuation analysis of the potential reorganized entities, and evaluate any potential sale of the Copperweld Companies' assets. CIBC's retention, the Noteholders say, is essential for effective representation of all the Debtors' unsecured creditors, other than unsecured creditors of LTV Steel. Other than the Pension Benefit Guaranty Corporation and the United Steelworkers of America, all members of the Creditors' Committee are unsecured creditors of LTV Steel only. In contrast, the Noteholders possess claims against each Debtor. Thus, the interests of the Debtors' unsecured creditors other than LTV Steel are, in essence, represented by the Noteholders' Committee. Since significant inter-company disputes between LTV Steel and the other Debtor entities are already developing, the Noteholders' Committee must assume the role of asserting the rights of both the Noteholders and the unsecured creditors of non-LTV Steel Debtors. Unless Judge Bodoh approves CIBC's retention, the Noteholders' Committee cannot effectively represent the Noteholders and the non-LTV Steel unsecured creditors in the course of negotiating the Copperweld Companies' plan of reorganization and complex inter-company claims negotiations. The Noteholders' Committee has negotiated a "project fee" structure with CIBC. CIBC will assist the Noteholders' Committee in analyzing, negotiating and effecting a plan of reorganization for the Copperweld Companies, or assist the Committee in connection with the sale of all or substantially all of the Copperweld Companies' assets, including, to the extent necessary, performing valuation analyses on the Copperweld Companies and their assets and performing analyses of inter-company claims relating to the Debtors. Joseph F. McDonough, Esq., and James McLean, Esq., at Manion McDonough & Lucas PC, in Pittsburgh, Pennsylvania, point out that these are the very issues that will determine the recovery, if any, of the Noteholders. For these services, CIBC will charge a $450,000 cash fee, payable by the Copperweld Companies. CIBC will be entitled to an $225,000 fee, payable by Copperweld Companies, in the event that CIBC is requested by the Noteholders' Committee to participate in depositions, hearings, or any other proceeding before Judge Bodoh in connection with services rendered to the Committee. Since CIBC will receive a flat, project-based fee for its services, the Noteholders' Committee asks Judge Bodoh to waive the requirement for submission of monthly fee and expense statements by CIBC. However, CIBC will file interim and final fee applications. (LTV Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-00900) MARK NUTRITIONALS: Wants Lease Decision Time Extended to Jan. 15 ---------------------------------------------------------------- Mark Nutritionals, Inc., wants the Court to extend the time period in which the Company is required to decide to assume, assume and assign, or reject unexpired leases and executory contracts. Mark asks for an extension through January 15, 2003, to make these decisions. The Debtor tells the U.S. Bankruptcy Court for the Western District of Texas that it has already hired a financial consultant, but has not reached any conclusions regarding the best possible course of action. The Debtor points out that the precarious financial condition of the Debtor, and the fact that the creditors lack the information to make an informed decision on whether to support or oppose the assumption of executory contracts and unexpired leases, make it is necessary to extend the time for assumption or rejection of contracts and unexpired leases. Mark Nutritionals, Inc., filed for chapter 11 protection on September 17, 2002. William H. Oliver, Esq., at Pipkin, Oliver & Bradley, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors it listed estimated debts of over $10 million. MCCLAIN INDUSTRIES: Will Delist Shares from Nasdaq SmallCap ----------------------------------------------------------- McClain Industries, Inc., (Nasdaq: MCCL) filed with the Securities and Exchange Commission a Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934 on Form 15 pursuant to the Securities Exchange Act of 1934, as amended. The filing of a certification on Form 15 immediately suspends the Company's obligation to file periodic reports pursuant to the Exchange Act. The Company's termination of registration under the Exchange Act of its common stock will become effective 90 days after filing the certification of Form 15. As a result of the Company's termination of registration, the Company will delist its shares from the Nasdaq SmallCap market. The Company also announced that Ronald Briggs, Raymond Elliott and Walter Kirchberger each resigned as a director of the Company. McClain Industries, Inc., is one of the nation's leading manufacturers of solid waste handling and transportation equipment for the waste disposal industry. McClain Industries' June 30, 2002 balance sheet shows that total current liabilities exceeded total current assets by about $9 million. MJ DESIGNS: Files for Chapter 11 Reorganization in Texas -------------------------------------------------------- MJ Designs has filed a Chapter 11 Bankruptcy petition with the United States Bankruptcy Court in the Northern District of Texas, Fort Worth Division. David H. Eisenberg, Chief Executive Officer, stated, "We are very disappointed that this step became necessary. Soft sales, combined with the lack of available additional equity, left the company with no choice but to file Chapter 11. We will continue to operate during the bankruptcy process, and all stores will be open throughout the holiday season." MJ Designs is a specialty retailer of arts and crafts and home decor products. The company has twelve locations in the Dallas/Fort Worth metroplex. NATIONSRENT: Amends and Extends GECC DIP Replacement Agreement -------------------------------------------------------------- On October 25, 2002, NationsRent Inc., and its debtor-affiliates filed a motion seeking approval of a DIP Replacement Letter Agreement with GE Capital Corporation since their current $50,000,000 DIP Credit Agreement will expire on December 31, 2002. The Debtors have determined that they need either to amend and restate the current facility or enter into a new credit facility. GE Capital's put a proposal on the table for new debtor-in-possession financing beginning the next year. Michael J. Merchant, Esq., at Richards, Layton & Finger, relates that the Debtors have conditioned their entry into the Replacement DIP Facility on the approval of their prepetition lenders. The Debtors believe that under the Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated August 2, 2000, their authority to pursue the Replacement DIP Facility was subject to the approval of the majority lenders under the prepetition facility. Mr. Merchant explains that, by entering into the Replacement DIP Facility, the Debtors would have to ask the prepetition lenders to subordinate the liens securing their obligations under the prepetition credit agreement to the liens securing their obligations under the Replacement facility. In view of the many responses and objections to the motion by several interested parties and the possibility that the lenders will not approve the Replacement DIP Facility, Mr. Merchant says the Debtors and GE Capital also collaborated an Amended Agreement for a possible month extension of the Original DIP Facility. After hearing the merits of the motion, the Court directed the lenders to notify the Debtors of their approval by November 22, 2002. Consequently, the Debtors have been informed that the prepetition lenders will not concede to the subordination of their liens. In view of the lenders' negative response, the Debtors decide to pursue the Amended Agreement. To this end, the Debtors seek to enter into a commitment letter with GE Capital for the extension of the current DIP Agreement. The Debtors also propose to pay GE Capital $500,000 as commitment fee and another closing fee in connection with the implementation of the Amended Agreement. Since the Debtors already paid a $500,000 as good faith deposit fee with respect to the Replacement DIP Facility, Mr. Merchant reports that GE Capital has proceeded with due diligence efforts for the pursuit and negotiation of the Amended Agreement. Pursuant to the Amended Agreement, the Debtors and GE Capital will amended and restate the present DIP loan documents to, among other things, provide for a six-month extension of the Credit Agreement with up to $75,000,000 in new financing inclusive of loans and letter of credit reimbursement outstanding under the current DIP Agreement. Mr. Merchant contends that Debtors' entry into the Amended Agreement is necessary to ensure that the Debtors have: -- have continued access to debtor-in-financing and, accordingly, have sufficient liquidity to continue their business operations; and -- accomplish their long-term operational restructuring goals and effectuate their reorganization. "Absent this key source of liquidity, the Debtors could suffer the loss of customer patronage and vendor support, which would, in turn, impair their ability to maximize the value of their estates and reorganize successfully," Mr. Merchant tells Judge Walsh. The salient terms of the Amended Agreement include: Maximum Commitment: $75,000,000 Letter of Credit Sub-Limit: Not less than $30,000,000 in the aggregate Term: The Amended Agreement will terminate on the earlier of: (i) the date of the sale of all of the Debtors' assets; (ii) the effective date of a plan or plans of reorganization in the Debtors' cases; and (iii) June 30, 2003. All amounts outstanding will be due and payable in full at the end of the term of the Amended Agreement. Availability: The maximum permitted outstanding under the present Credit Agreement is amended to be the lesser of: * 35% on the Borrowers' net Orderly Liquidation Value of the equipment rental fleet plus 75% of the eligible accounts receivable; and * 3.0 times trailing 12 months adjusted EBITDA. Interest: All amounts outstanding under the Amended Agreement will bear interest at GE Capital's Index Rate in effect from time to time plus 2.0% per annum. In addition, the default interest rate is 2.0% above the rate otherwise applicable. Fees: The Borrowers pay a variety of fees: (A) Good Faith Deposit Fee $500,000 which the Debtors already paid; (B) Commitment Fee $500,000 due and payable to GE Capital on the issuance and acceptance of a commitment letter; (C) Expense Reimbursement The Debtors will reimburse GE Capital for its ongoing out-of-pocket fees and expenses incurred in connection with the execution, delivery, performance and enforcement of the letter agreements and the Amended Agreement; (D) Closing Fee $1,125,000 payable at closing minus a credit for the Good Faith Deposit, less expenses and the Commitment Fee. (E) Unused Commitment Fee 0.5% per annum on the average unused daily balance of the Amended Agreement; (F) Letter of Credit Fee 3.25% per annum of average daily face amount of any Letter of Credit outstanding during each calendar month; and (G) Agent Fee $20,000 in advance on the closing date and on the first day of each calendar month thereafter per calendar month. Covenants: Certain financial covenants included in the current Credit Agreement with respect to permitted indebtedness, permitted capital expenditures, required EBITDA levels and permitted liens will be reset in accordance with the Debtors' projections and business plan, and certain new financial covenants will be developed. Collateral: Lenders will have fully perfected priority priming security interest in all existing and after-acquired assets of the Borrowers. However: -- the first priority priming security interest is subject to the approval of the Bankruptcy Court and the consent of the Borrowers' prepetition secured lenders and other creditor constituencies; -- all Collateral will be free and clear of other liens, claims and encumbrances; and -- each Collateral will include a pledge of all the issued and outstanding capital stock of the Debtors' subsidiaries. Lessors' Objection & Responses 1. KeyCorp Leasing, a division of Key Corporate Capital, Inc. KeyCorp complains that, when viewed together the Motion and Commitment Letter are ambiguous as to whether GE Capital requires a priming lien on all assets of the Debtors, including the equipment KeyCorp leased. KeyCorp wants clarification or carveout from any language or provision that could arguably be viewed as priming its interest in the equipment and leases. KeyCorp points out that the Motion has provided that the terms of the Final DIP Order providing collateral security and superpriority claims with respect to the Credit Agreement will continue to apply with respect to the Amended Agreement. The liens securing the Debtors' Obligations under the Amended Agreement will be first priority liens. However, the Commitment Letter and the accompanying Term Sheet provides that GE Capital will require under any proposed DIP facility fully perfected first priority priming security interests in all existing and after acquired real and personal, tangible and intangible assets of the Debtors -- including a first priority priming lien on all assets they currently own. KeyCorp suggests this language be included in the order: "... the Final DIP Order will continue in effect and apply to GE Capital and any new lenders. In addition, none of the liens or security interests granted to the Prepetition Lenders or agents as adequate protection, will be prior to or prime any liens of equipment lessors and other lienholders to the extent the lienholders held valid perfected liens on such assets with priority over the Prepetition Lenders or agents as of the filing date." 2. Fleet Capital Corporation & Fleet Capital Leasing Vendor Finance Fleet objects to the Motion to the extent it would create any interest in favor of GE Capital or any other interested party that could prime, or be construed to have priority over, its interests in its leases or equipment. James E. Hugget, Esq., at Klehr Harrison Harvey Branzburg & Ellers LLP, in Wilmington, Delaware, points out that the Motion impairs Fleet's right under the leases. Fleet is the lessor under certain prepetition leases and associated equipment schedules. As of December 17, 2001, Fleet is owed by the Debtors at least $609,939 for its leases. 3. Banc One Leasing Corporation "Banc One does not believe that the Debtors and GE Capital intend to grant priming liens to GE Capital in Banc One's equipment. Nevertheless, the language in the Term Sheet providing for priming liens renders... the Motion vague, at best," William P. Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, tells Judge Walsh. "To the extent that that is not what GE Capital and the Debtors intend, this should be made clear." Banc One objects to the Motion to the extent it would enable the Debtors and GE Capital to eviscerate a settlement agreement Banc One had with the Debtors. If they intend to prime Banc One's liens, Mr. Bowden contends that the Debtors would be in breach of the settlement agreement. The Debtors and Banc One have entered into a settlement agreement to resolve the dispute over the parties' leases. The Debtors have initiated an adversary proceeding against seeking to recharacterize the Banc One lease as financing agreements. Banc One answered the complaint and asserted that the Debtors owed them rent payments due on January 1, 2002 plus other unpaid obligations under the lease. Pursuant to the settlement agreement, Banc One agreed to finance the Debtors' purchase of its equipment. Mr. Bowden alleges that Fleet National Bank, the agent for the lenders, have agreed that as part of the settlement, the security interest that it will obtain in the equipment as a result of the DIP Financing Order will be subordinated to Banc One's purchase money security interest in the equipment the Debtors are purchasing. 4. FINOVA Capital Corporation FINOVA also finds the motion ambiguous. FINOVA wants the Term Sheet clarified or addressed to that its senior claims, liens and interests in the Debtors' cases are protected. FINOVA holds a lien and security interest in certain of its inventory and other personal property in connection the $4,968,083 promissory note the Debtors issued. Fleet National Bank, the administrative agent for the Debtors' lenders, have agreed to subordinate any security interest and lien the lenders had to the FINOVA collateral. 5. Heller Financial Leasing, Inc. Heller objects to the Motion and the proposed Amended Agreement to the extent the liens to be granted to the Agents, Lenders, Prepetition Agents, and Prepetition Lenders in order to secure the Debtors' obligations under the Amended Agreement may be senior in priority to its liens and interests in and to its equipment. Heller also seeks clarification in the Motion that the liens to be granted to the Agents, Lenders, Prepetition Agents, and Prepetition Lenders will not impair or prime its liens in and to the equipment. Heller succeeded the interests of Genie Financial Services, Inc. in a September 1, 1998 Master Equipment Lease Agreement with the Debtors. (NationsRent Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) NAVISTAR INT'L: Fitch Rates Sr. Unsec. Convertible Notes at BB -------------------------------------------------------------- Fitch Ratings has assigned a 'BB' to Navistar International Corporation's newly issued $190 million senior unsecured convertible notes. Fitch expects that the proceeds of the new debt issuance will be used to retire $100 million of senior notes coming due in February 2003 and for other debt repayment purposes. The Rating Outlook is Negative. Fitch Ratings recently downgraded Navistar's existing securities to reflect the continuing weak industry environment in Navistar's core medium and heavy-duty truck markets in North America, recent occurrences in Navistar's joint efforts with Ford, continued headwinds in certain cost areas such as employee and retiree healthcare costs, and concerns over the impacts of substantial cash calls associated with scheduled pension contributions and restructuring charges. Mitigating these negatives were some positive factors such as the completion of Navistar's major capital expenditure program, overall product competitiveness, restructuring efforts that have positioned them for the future, and the recent conclusion of contract negotiations with the UAW. After hitting a peak in CY 1999 at 431.8 thousand units in Class 5-8 trucks, industry U.S. shipments fell a precipitous 43% over the next two years to 246.2 thousand units in CY 2001. Going into FY2002, Navistar was positioned for continued short-term weakness with a manufacturing cash balance of $806 million at FYE 2001. Continued industry weakness, reflected in the year-to- date 10% decline in industry volumes, has resulted in a larger cash drain and a more extended timetable for recovery. The cash balance has been depleted from $806 million to $549 million at fiscal year-end (not factoring in a $50 million increase in the receivable due from Navistar Financial to the parent). This decrease in cash is after a sale leaseback transaction that generated $164 million in cash. The overall effect is a substantial decrease in cash coinciding with a substantial increase in manufacturing adjusted debt levels. Although Fitch feels Navistar has the liquidity to manage through some continued industry weakness, the overall level of financial flexibility has decreased. This decrease in financial flexibility happens at a time when Navistar faces additional costs from its employee medical and post retirement programs. Although Navistar has taken actions with its recent UAW contract and through other means, it will be several years before much of the positive impact will be felt. In the meantime, Navistar must contend with the indefinite delay of the Ford V-6 diesel engine program and with significant cash claims from the pension plan ($150-175 million in 2003 and $440-$490 million over the next three years) and from previous restructuring announcements ($149 million in 2003 and $298 million over the next three years). When combined with the normal working capital trends, it is probable that these factors will result in a significant cash outflow in 1H FY2003. Only a substantial recovery in the second half the FY2003 would reverse this trend for the entire fiscal year. Intermediate to longer term, Fitch expects that Navistar is well positioned to recover smartly from the eventual cyclical recovery in the industry. Even in the midst of the recent weak environment, Navistar was able to complete the revamping of its product line. Based upon initial feedback it appears that the new product introductions have been going well, with good reception by customers. Indicators, such as increases in backlog, bode well for prospects of an eventual turnaround. Through its restructuring efforts and contract negotiations, Navistar has lowered its long-term cost structure to be far more competitive. Possible increased diesel engine utilization, driven both by industry trends and potentially by stronger fuel- economy and emissions mandates, could substantially benefit Navistar and continue to be a longer-term positive. Overall, Navistar's competitive position remains well intact through this extended downturn and Navistar stands poised to recover strongly longer term with the eventual return to more normalized industry volumes. Navistar International's 9.375% bonds due 2006 (NAV06USN1) are trading at about 95 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NAV06USN1 for real-time bond pricing. NEORX CORP: Fails to Regain Compliance with Nasdaq Requirements --------------------------------------------------------------- NeoRx Corporation (Nasdaq:NERX) has requested a hearing before a Nasdaq Listing Qualifications Panel to review a NASDAQ staff determination that the Company's stock be delisted from The Nasdaq National Market. Under Nasdaq rules, NeoRx's common stock will continue to trade on The Nasdaq National Market pending the outcome of the hearing. At the hearing the Company intends to request additional time to bring NeoRx common stock into compliance with the $1.00 minimum bid price requirement and during this time may take certain actions designed to achieve compliance. NeoRx expects the hearing to occur within approximately 45 days of the date of this press release. There can be no assurance that the Panel will grant the Company's request for additional time to achieve compliance, and accordingly the Company's common stock may be delisted from The Nasdaq National Market. The Company may apply for transfer to The Nasdaq SmallCap Market. If these strategies are not successful, the Company's common stock would be listed on the OTC bulletin board or another quotation system or exchange on which the Company would qualify. NeoRx received a Nasdaq Staff Determination dated December 9, 2002, indicating that NeoRx has failed to regain compliance with the minimum $1.00 per share requirement for continued listing set forth in Marketplace Rule 4450(a)(5) and that the Company's common stock is therefore subject to delisting from The Nasdaq National Market, effective at the opening of business on December 17, 2002. The Company has now requested a hearing and will continue to trade on The Nasdaq National Market pending the outcome of the hearing. NeoRx Corporation is a cancer therapeutics company developing products for targeted delivery of therapeutic agents, including radiopharmaceuticals, to tumor sites. The company's lead product candidate is Skeletal Targeted Radiotherapy (STR), in clinical development for treatment of multiple myeloma, a cancer of the bone marrow. Visit NeoRx at http://www.neorx.comfor more information on the Company. * * * Liquidity and Capital Resources In its SEC Form 10-Q filed on November 14, 2002, the Company reported: "The Company has financed its operations primarily through the sale of equity securities, collaborative agreements and debt instruments. The Company invests excess cash in investment securities that will be used to fund future operating costs. Cash, cash equivalents and investment securities totaled $12,378,000 at September 30, 2002 versus $33,581,000 at December 31, 2001. The Company primarily funds current operations with its existing cash and investments. On occasion, the Company derives revenue from licensing its patent technologies and from government grants. "The Company currently maintains a line of credit with Pharmaceutical Product Development, Inc., of up to $5.0 million to assist in funding the pivotal phase III trial of its STR product in development. This line of credit is available to the Company only upon the successful resumption of phase III trials and the proceeds can only be applied to the expenses related to the phase III trials. The Company has not drawn funds on this line of credit to date, which carries an annual interest rate of 16%. "In January 2002, the Company sold the remainder of its investment in Angiotech Pharmaceuticals, Inc. for $1.4 million and recognized a gain on the sale of approximately $109,000. "On November 12, 2002, the Company entered into an agreement with IDEC Pharmaceuticals Corporation relating to the sale to IDEC of certain NeoRx intellectual property and the grant to IDEC of certain license and option rights. NeoRx received $7.9 million in cash and may receive in the future royalty payments with respect to certain products. The intellectual property addressed by this agreement includes a portfolio of NeoRx US and international patents and certain associated technology and know-how relating to antibody-based therapeutics and ligand- linker technology. The intellectual property rights being transferred to IDEC do not include rights to NeoRx's STR or Pretarget(R) programs. With respect to the patents involved in the sale, NeoRx retains a license for the development of certain NeoRx products. "The Company will need to raise additional capital to fund its planned STR pivotal clinical trial program, and its current operating cash needs. The Company expects that its cash, including the consideration received in the transaction with IDEC, cash equivalents, investment securities and interest income will be sufficient to fund its anticipated working capital and capital requirements into the fourth quarter of 2003. In July 2002, the Company decided to discontinue all of its Pretarget(R) technology activities. The discontinued Pretarget(R) activities include its Pretarget(R) Lymphoma and Pretarget(R) Carcinoma phase I trials, for which patient enrollment has concluded, and manufacturing development activities associated with the Pretarget(R) project. Also in July 2002, the Company reduced its staff size by 31 persons, or 30%. The cost associated with the reduction in force is approximately $529,000 and will be incurred primarily over a four-month time period beginning in August 2002. In October 2002, the Company further reduced its staff, primarily in its Denton manufacturing facility, by an additional 13 persons, or approximately 15% of the Company's total work force. The cost associated with this reduction in force was approximately $122,000 and will be incurred primarily over a four-month time period beginning in October 2002. In an effort to further reduce cash expenditures and unused office space, in October 2002 the Company terminated its lease at the 410 West Harrison Street location in Seattle, Washington effective April 2003. The lease originally was effective through May 2006. The cost of terminating the lease was three months base rent, or approximately $110,000, which was paid in October 2002. "The Company's decision to curtail Pretarget(R) activities and reduce staff was in response to the anticipated clinical development timeline of the Pretarget(R) candidates and the current economic environment. The Company will seek to sell or outlicense the Pretarget(R) patent portfolio and other assets in an effort to raise additional funds. The Company also is addressing its need for additional capital by pursuing opportunities for the licensing or divestiture of certain intellectual property and other assets, by seeking partnering or outlicensing opportunities for its STR technology, and through the sale of securities. In the event that sufficient additional funds are not obtained through asset sales, strategic partnering opportunities and/or sales of securities on a timely basis, the Company plans to reduce expenses through the delay, reduction or curtailment of STR development activities and/or further reduction of costs for facilities and administration. The Company's actual capital requirements will depend on numerous factors, including conditions in the capital markets in general and in the life sciences capital markets specifically, which may affect potential financing sources for the development of the Company's business; the progress and results of research and development activities and clinical trials; actions by the FDA and other regulatory authorities; the levels of resources that the Company devotes to establishing and maintaining marketing and manufacturing capabilities; the emergence of competitive technologies and other adverse market developments and the timing and amount of revenues and expense reimbursements resulting from relationships with third parties or collaborative agreements. There can be no assurance that the Company will be able to obtain such additional capital or enter into relationships with corporate partners on a timely basis, on favorable terms, or at all. These financial statements are prepared on a going concern basis, however if the Company were forced to liquidate its assets, it may not recover the carrying amount of such assets." NORTEL NETWORKS: Makes Amendments to Existing Security Pacts ------------------------------------------------------------ Nortel Networks (NYSE:NT)(TSX:NT) announced amendments to its existing security agreements to facilitate future financial flexibility for the Company. These security agreements pledge substantially all of the assets of Nortel Networks in favor of certain banks (under the Company's syndicated credit facilities and which otherwise provide credit support to the Company) and the holders of Nortel Networks public debt securities. The amendments, among other things, permit Nortel Networks and its subsidiaries to secure additional obligations (related to indemnity, guarantee and reimbursement obligations with respect to letters of credit, letters of guarantee, performance bonds, surety bonds, indemnification arrangements and other instruments) with the assets pledged under the security agreements. As part of the amendments to the security agreements, Nortel Networks has agreed to terminate US$1.175 billion in undrawn credit facilities that would otherwise expire in April 2003. "Given current telecom industry and financial market conditions, I am pleased that we were able to secure additional financial flexibility within our security agreements," said Doug Beatty, chief financial officer, Nortel Networks. "As we stated in our October 17, 2002 press release, we continue to focus on cash management and expect to have a cash balance in excess of US$3 billion at the end of 2002. In 2003, in conjunction with our plan to drive the business to profitability by the second quarter of 2003, we continue to expect to fund restructuring costs of approximately US$900 million and make the scheduled repayment on our public debt coming due September 1, 2003." Nortel Networks is currently in negotiations with certain banks and Export Development Canada regarding arrangements that would provide for support, on a secured basis, of certain Nortel Networks obligations arising out of normal course business activities including letters of credit, letters of guarantee, indemnity arrangements, performance bonds, surety bonds, receivables purchases and similar instruments and arrangements. These arrangements would provide the Company with support for its operations as well as facilitate improved liquidity for the Company. Although there can be no assurance that these negotiations will be successfully concluded, the parties expect to finalize the arrangements in the first quarter of 2003. Nortel Networks has no current intention to draw on its US$750 million in credit facilities that mature in April 2005 and the facilities remain undrawn and available. As previously announced in October 2002, US$1.5 billion in credit facilities entered into in December 2001 by Nortel Networks will not be amended or extended and which expired Friday. 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 EDC is a financially self-sustaining Canadian federal Crown corporation that provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets. It operates on commercial principles, charging rates and fees according to the risks it undertakes. EDC also funds its activities by borrowing from capital markets as well as from its accumulated earnings. Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2) are trading at about 63 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2 for real-time bond pricing. NOVADEL PHARMA: Company's Ability to Continue Ops. Uncertain ------------------------------------------------------------ Novadel Pharma Inc., believes that its current cash levels together with revenues from operations, will be sufficient to satisfy its cash requirements for the next 5 months. However, beyond this point there is substantial doubt about the Company's ability to continue operations without obtaining additional financing and/or consummating a strategic alliance with a well- funded business partner. There are a number of risks and uncertainties related to the Company's attempt to complete a financing or strategic partnering arrangement that are outside the control of the Company. Novadel has indicated that it may not be able to successfully obtain additional financing on terms acceptable to the Company, or at all. These uncertainties raise substantial doubt as to the Company's ability to continue as a going concern. Novadel Pharma Inc., a Delaware corporation, is engaged in development of novel application drug delivery systems for presently marketed prescription and over-the-counter drugs and has been a consultant to the pharmaceutical industry. Since 1992, the Company has used its consulting revenues to fund its own product development activities. Since its inception, substantially all of the Company's revenues have been derived from its consulting activities. The Company has had a history of recurring losses from operation, giving rise to an accumulated deficit at October 31, 2002, of approximately $11,527,000. Revenues from consulting may be expected to continue to decline in the future as the Company shifts its emphasis away from product development consulting for its clients and towards development of its own products. For the reasons stated above, the Company anticipates that it will incur substantial operating expenses in connection with the testing and approval of its proposed delivery systems, and expects these expenses will result in continuing and significant operating losses until such time, if ever, that the Company is able to achieve adequate sales levels. Operating revenues for the 2002 Period decreased approximately $72,000 to $0 from $72,000 for the 2001 Period. Total costs and expenses for the 2002 Period increased approximately $1,405,000 to $1,729,000 from $324,000 for the 2001 Period. This increase includes approximately: $783,000 in outside consultant fees primarily due to a non-cash charge of approximately $580,000 for options and warrants issued to consultants; $208,000 in legal & professional fees; $148,000 in payroll expense primarily due to additional employees and the establishment of a vacation pay accrual; $140,000 in laboratory testing and clinical studies costs; $25,000 in depreciation and amortization expense due to the earlier purchase of internal laboratory equipment; $22,000 in insurance expenses; $16,000 in laboratory expenses due to additional lab employees requiring additional supplies and services; $10,000 in office expenses due to increased activities and a Company name change; $9,000 increase in travel expenses; and a $7,000 increase in rent. Interest income increased approximately $10,000 to $15,000 for the 2002 Period from $5,000 for the 2001 Period due to an increased average cash balance. The resulting net loss for the 2002 Period was $1,714,000 compared to a net loss of $247,000 for the 2001 Period. Net cash used in operating activities approximated $967,000 for the 2002 Period compared to net cash used in operating activities of approximately $207,000 for the 2001 Period. Net cash used in operating activities for both the 2002 and 2001 periods was primarily attributable to the net loss of $1,714,000 and $247,000, respectively. For the 2002 Period, approximately $110,000 was used for investing activities compared to approximately $15,000 for the 2001 Period. For the 2002 period, approximately $26,000 was used for financing activities. Total cash flow for the 2002 period decreased approximately $1,103,000 as compared to a $222,000 decrease for the 2001 period. OWENS CORNING: Lease Decision Period Extended Until June 4, 2003 ---------------------------------------------------------------- Without prejudice to their seeking further extension, Owens Corning, and its debtor-affiliates obtained Court approval of its application to extend its lease decision period. The Court gave the Debtors until June 4, 2003, to determine whether to assume, assume and assign, or reject unexpired leases of non- residential real property to June 4, 2003. (Owens Corning Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) PERKINELMER INC: Extends Tender Offer for 6.80% Notes to Dec. 26 ---------------------------------------------------------------- PerkinElmer, Inc., (NYSE: PKI) extended its cash tender offer for its outstanding 6.80% Notes due October 15, 2005. The offer will now expire at 10:00 a.m., New York City time, on Thursday, December 26, 2002, unless further extended, rather than on Monday, December 23, 2002 at 10:00 a.m. The new expiration date is expected to coincide with the closing date for PerkinElmer's recently announced private placement of $300 million in senior subordinated notes. PerkinElmer also expects to close its proposed new senior secured credit facilities on that date. Holders who have not yet tendered their 6.80% notes may do so until the expiration of the offer. If the offer is completed, holders who validly tendered their 6.80% notes and the related consents at or before 5:00 p.m., New York City time, on Friday, December 6, 2002 (the consent date) will be entitled to receive the tender offer consideration of $985 per $1,000 principal amount of 6.80% notes tendered, plus a consent payment of $15 per $1,000 principal amount. Notes and consents tendered as of the consent date may not be revoked. Holders who did not tender their notes and related consents as of the consent date will receive the tender offer consideration of $985 per $1,000 principal amount of notes tendered but will not be entitled to the consent payment. On December 6, 2002, PerkinElmer announced that approximately $108 million, or 94%, in aggregate principal amount of the outstanding 6.80% notes, and the consents related thereto, had been tendered as of the consent date. As of December 12, 2002, the same amount of notes and related consents, approximately $108 million, had been tendered. PerkinElmer's obligation to complete the tender offer and consent solicitation is subject to a number of conditions, including the closing of the previously announced secured credit facilities and offering of senior subordinated notes. PerkinElmer has retained Merrill Lynch to act as Dealer Manager in connection with the offer and Solicitation Agent in connection with the consent solicitation. The information agent for the offer and the consent solicitation is D.F. King & Co., Inc. Questions about the offer or requests for additional sets of the offer materials may be directed to Merrill Lynch (telephone: 888/ML4-TNDR (toll-free), or 212/449-4914) or to D.F. King & Co., Inc. (collect telephone at: 212/269-5550 for banks and brokers; or 800/290-6426 for all others). PerkinElmer, Inc., is a global technology leader focused in the following businesses - Life and Analytical Sciences, Optoelectronics, and Fluid Sciences. Combining operational excellence and technology expertise with an intimate understanding of its customers' needs, PerkinElmer creates innovative solutions - backed by unparalleled service and support - for customers in health sciences, semiconductor, aerospace, and other markets whose applications demand absolute precision and speed. The company markets in more than 125 countries, and is a component of the S&P 500 Index. Additional information is available through http://www.perkinelmer.com * * * As reported in Troubled Company Reporter's December 13, 2002 edition, Standard & Poor's lowered its corporate credit and senior unsecured note ratings on PerkinElmer Inc., to 'BB+' from 'BBB-', based on weak credit measures for the rating and subpar operating performance in 2002. At the same time, Standard & Poor's assigned a 'BB+' bank loan rating to the proposed $445 million senior secured credit facilities due 2008 and a 'BB-' rating to the proposed $225 million of senior subordinated notes due 2012. Ratings were removed from CreditWatch where they were placed on October 30, 2002. The prior bank loan rating and the short-term rating were withdrawn. The outlook on the Wellesley, Mass.-based diversified technology provider is stable. Total debt outstanding is $661 million (including synthetic leases and accounts receivable securitization). PERKINELMER: Selling 8.875% Sr. Sub. Notes in Private Placement --------------------------------------------------------------- PerkinElmer, Inc., (NYSE:PKI) has entered into an agreement to sell $300 million aggregate principal amount of its 8.875% Senior Subordinated Notes due 2013 in a previously announced institutional private placement. The company will sell the notes at a price of 99.173% of the principal amount. The amount of the transaction was increased from the previously announced $225 million aggregate principal amount. Interest on the notes will be payable on January 15 and July 15 of each year, beginning on July 15, 2003. The notes will be guaranteed on a senior subordinated basis by certain of PerkinElmer's domestic subsidiaries. The notes and the guarantees will be unsecured. The transaction is expected to close on December 26, 2002. The closing is subject to customary closing conditions, as well as the funding of PerkinElmer's new senior credit facility and the completion of other elements of the company's previously announced debt refinancing. Neither the notes nor the guarantees have been registered under the Securities Act of 1933, as amended, or any state securities laws. The notes and the guarantees will be offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside of the United States in accordance with Regulation S under the Securities Act. Unless so registered, neither the notes nor the guarantees may be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. PETCO ANIMAL: Settles California Employee Overtime Litigation ------------------------------------------------------------- PETCO Animal Supplies, Inc., (Nasdaq: PETC) has reached a tentative agreement to settle all claims related to a previously disclosed California lawsuit which alleged the Company improperly classified store managers and assistant store managers as exempt from California overtime laws. This lawsuit is similar to numerous lawsuits filed against retailers and others with operations in California. While the Company denies the allegations underlying the lawsuit, it has tentatively agreed to the settlement to avoid possible disruption to its business from protracted litigation. The settlement, which is subject to final documentation and court approval, is expected to cost a maximum of $2.5 million after tax. The Company indicated that it will take a charge for this item which will reduce fiscal 2002 fourth quarter earnings per share by $0.04. Absent this charge, the Company's current expectations for fourth quarter earnings would have been unchanged from the guidance of $0.35 - $0.36 per diluted common share previously set out in the Company's third quarter earnings release on November 21, 2002. As a direct result of incurring this charge, the Company now expects its fourth quarter earnings to be in the range of $0.31 - $0.32 per diluted common share, compared to pro forma diluted earnings per common share of $0.27 in the prior year quarter. Consistent with its previous guidance, the Company continues to expect to achieve a comparable store net sales increase in the range of 6.0% - 7.0% for the fourth quarter of fiscal 2002 and approximately 8.0% for the full year. PETCO is a leading specialty retailer of premium pet food, supplies and services. PETCO's strategy is to offer its customers a complete assortment of pet-related products at competitive prices, with superior levels of customer service at convenient locations. PETCO generated net sales of $1.3 billion in the fiscal year ended February 2, 2002. It operates 600 stores in 43 states and the District of Columbia, as well as a leading destination for on-line pet food and supplies at http://www.petco.com The PETCO Foundation, PETCO's non-profit organization, has raised more than $10.0 million since inception in 1999. More than 1,300 non-profit grassroots animal welfare organizations from around the nation have received support from the Foundation. As reported in Troubled Company Reporter's November 26, 2002 edition, PETCO's November 2, 2002 balance sheet shows a total shareholders' equity deficit of about $31 million. PITTSTON: Completes Sale of Virginia Coal Mining Business --------------------------------------------------------- The Pittston Company (NYSE: PZB) announced that, in accordance with its strategy to exit the coal business, subsidiaries of Pittston have consummated the previously announced sale of substantially all of their remaining coal assets in Virginia to subsidiaries of Alpha Natural Resources, LLC, an affiliate of First Reserve Corporation. Michael T. Dan, Chairman, President and Chief Executive Officer of The Pittston Company, said: "We are pleased to have completed the sale of all of our active Virginia coal operations and substantially all of our Virginia coal assets. This sale, which includes the significant majority of our remaining active operations, represents the largest and most important step towards the completion of the process of exiting the coal business this year. The value realized and assets involved are consistent with our previously announced goals." The Pittston Company is a diversified company with interests in security services through Brink's, Incorporated and Brink's Home Security, Inc., global freight transportation and supply chain management services through BAX Global, Inc. and mining and minerals exploration through Pittston Coal Company and Pittston Mineral Ventures. Based in Greenwich, Connecticut, First Reserve is an independently owned private equity firm that invests exclusively in the energy and energy related sectors of the world economy. First Reserve is a leading private equity firm specializing in the energy industry with $2.6 billion under management. It is currently the largest shareholder of Dresser, Inc., Chicago Bridge & Iron, Pride International, and Superior Energy Services. At September 30, 2002, Pittston's balance sheet shows that total current liabilities exceed total current assets by about $23 million. POKER.COM: Mark Glusing Replaces Michael Jackson as President ------------------------------------------------------------- Poker.com, Inc., (OTCBB: PKER) announced that Mr. Michael Jackson has stepped down as the Interim Acting President of the Company and the Board has appointed Mr. Mark Glusing as the new President of Poker.com, Inc., effective immediately. The Board of Directors wishes to thank Mr. Jackson for serving in the role of interim president. Mr. Glusing has a strong background in international business, public company management and finance. Until recently, Mr. Glusing was a director and Chief Operating Officer of Immune Network Ltd., a publicly traded biotech incubator, where he led a restructuring effort which included the disposition of a major asset to ensure the conclusion of a critical clinical trial. Mr. Glusing is a former director of BC Research Inc. and currently represents a number of public and private companies at the board level. Poker.com, Inc., was recently affected by the illegal re- direction of its Internet domain at http://www.poker.comand is in the process of taking the necessary legal action to protect the interests of the company. Despite the Company's efforts to reclaim the domain, the process may be lengthy and may have adverse affects to current operations. Poker.com, Inc., will be required to consider other sources of revenue, sources of financing and other possible business ventures to ensure shareholder value is maintained. Poker.com, Inc., is a public company listed on the OTCBB and engages in the licensing and marketing of internet poker and casino packaged online gaming systems. The company's sources of revenue include licensing fees, ongoing royalties and online advertising. POLAROID: Retirees Seek Approval of Proposed Trust Agreement ------------------------------------------------------------ Pursuant to the Settlement Agreement between Polaroid Corporation and its debtor-affiliates, the Official Committee of Unsecured Creditors, Agents for the Postpetition Lenders, Agents for Prepetition Lenders and Official Committee of Retirees, the Retirees' Committee presents to the Court the proposed Polaroid Retirees Trust Agreement for approval. Scott D. Cousins, Esq., at Greenberg Traurig LLP, in Wilmington, Delaware, relates that the salient terms of the Trust Agreement are: A. Nature and Purpose of Trust The Trust exist solely for the purposes as set forth in the Stipulation and Order, including, but not limited to conducting litigation with respect to the Fiduciary Claims, holding, liquidating and disposing of by sale or otherwise any assets received by it and paying or settling the ascertained, unascertained and contingent liabilities and obligations of the Trust thereafter distributing the remaining Trust Corpus to the Beneficiaries. It is intended that the Trust will serve as a vehicle for the preservation and maintenance of the Trust Corpus, with a view to its liquidation. Until the eventual final liquidation, the Trustees will have the power and authority to hold, operate and administer the business and the assets of the Trust for such time during the term of this Trust as they deem necessary or advisable. This Trust Agreement is intended to create a trust, and to be governed and construed in all respects as a trust. This Trust is not intended to be, will not be deemed to be, and will not be treated as a general partnership, limited partnership, joint venture, corporation, joint stock trust or association, nor will the Trustees or Beneficiaries, or any of them, for any purpose be, or be deemed to be or treated in any way whatsoever to be, liable or responsible as partners or joint ventures. B. Unknown Property and Liability The Trustees will be responsible for only the property delivered to them or registered in their name and will have no duty to make, nor incur any liability for failing to make, any search for unknown property. C. Limitation of Liability No personal liability will attach to the Trustees or the Beneficiaries with respect to any liabilities or obligations arising under this Trust Agreement, and all persons dealing with the Trust must look solely to the Trust Corpus for the enforcement of any claims against the Trust. D. Beneficial Interest The Beneficial Interest of each Beneficiary will be recorded by the Trustees or their agent on the books of the Trust. Neither the Trustees nor their agent will issue any certificates representing Units of Beneficial Interest. If any conflicting claims or demands are made or asserted to be Beneficial Interests herein, or if there should be any disagreement between the transferees, assignees, heirs, representatives or legatees succeeding to all or a part of the interest of any Beneficiary resulting in adverse claims or demand being made in connection with the interest, then the Trustee will be entitled to refuse to comply with any conflicting claims or demands. In so refusing, the Trustees may elect to make no payment or distribution in respect of the Beneficial Interests involved, or any part thereof. Hence, the Trustees will not be liable to any of the parties for their failure to comply with any of the conflicting claims, nor will the Trustees be liable for interest on any funds, which they may so withhold. The Trustees will be entitled to refrain and refuse to act until: (1) the rights of the adverse claimants have been adjudicated by a final judgment of the court from where there is no appeal pending and the applicable appeal period have expired; (2) all differences have been adjusted by valid written agreement between all of the parties, and the Trustees have been furnished with an executed counterpart of the agreement; or (3) the Trustee is furnished with a surety bond or other security satisfactory to the Trustee, as they will deem appropriate, to fully indemnify them as between all conflicting claims or demands. E. Rights of Beneficiaries Each Beneficiary will be entitled to participate in the rights and benefits due to a Beneficiary according to his Beneficial Interest. Each Beneficiary will take and hold his Beneficial Interest subject to all the terms and provisions of this Trust Agreement. F. No Transfer of Interests of Beneficiaries The interest of a Beneficiary in the Trust may not be transferred in whole or in part and any attempted transfer will be of no force and effect as between the Trustees and the Beneficiary attempting the transfer. G. Trustees as Beneficiaries Each Trustee, either individually or in a representative or fiduciary capacity, may be a Beneficiary to the same extent as if he or she were not a Trustee hereunder. H. Duration of Trust The Trust will terminate five years from the date of its creation, unless earlier terminated by the distribution of all of the Trust Corpus; provided however, that the term of the Trust may be extended by the Trustees for additional periods as they may deem necessary solely to complete the litigation concerning Fiduciary Claims, settlement or payment of any outstanding claims and the winding-up of the affairs of the Trust. I. Continuance of Trust for Winding-Up After the termination of the Trust and for the purpose of liquidating and winding up the affairs of the Trust, the Trustees will continue to act as one until their duties have been fully performed. Upon distribution of all the Trust Corpus, the Trustees will retain the books, records, Beneficiary list and certificates and other documents and files which will have been delivered to or created by the Trustees. At the Trustee's discretion, all records and documents may, but need not, be destroyed at any time after three years from the completion and winding up of the affairs of the Trust. J. Payments of Claims, Expenses and Liabilities The Trustee will pay from the Trust Corpus all claims, expenses, charges, liabilities, and obligations of the Trust and those the Trustees assumed and agreed to pay pursuant to this Trust Agreement. At times as may be determined by them, the Trustees will distribute, or cause to be distributed, to the Beneficiaries of record on the close of business on record date as the Trustees may determine, in proportion to the respective interests of the Beneficiaries in the Trust Corpus, the cash or non-cash property comprising a portion of the Trust Corpus as the Trustees determine may be distributed without detriment to the ability of the Trust to pay the liabilities and obligations that the Trustees have assumed under this Trust Agreement. If the Trustees determine that all claims, debts, liabilities and obligations of the Trust have been paid or discharged, or if the existence of the Trust will terminate by its term, the Trustees will, as expeditiously as is consistent with the terms of the Stipulation and Order and the conservation and protection of the Trust Corpus, distribute the Trust Corpus to the Beneficiaries of record on the close of business on record date as the Trustee may determine. K. Specific Powers of Trustees In addition to any powers conferred to them in the Trust Agreement, the Trustees will have these powers: (a) to retain and set aside funds out of the Trust Corpus as the Trustees will deem necessary to expedient to pay, or provide for the payment of unpaid claims, liabilities, debts or obligations of the Trust, contingencies and the expenses of administering the Trust Corpus; (b) To do and perform any acts or things necessary or appropriate for the conservation and protection of the Trust Corpus, and in connection therewith to employ any agents or representatives as the Trustees deem expedient and to pay reasonable compensation therefore; (c) to deal with any other manner with any of the Trust Corpus in a manner as the Trustees may deem advisable for any Trust purpose, providing that any action is in accordance with the terms and conditions of the Stipulation and Order; (d) to engage in, intervene in, prosecute, join, defend, compound, settle, compromise, abandon or adjust, by arbitration or otherwise, any action, suits, proceedings, disputes, claims, controversies, demands or other litigation to enforce any instruments, contracts, agreements, claims or causes of action relating to the Trust, the Trust Corpus, the Fiduciary Claims or the Trust affairs, to enter into agreements relating to the foregoing, whether or not any suit is commenced or claim accrued or asserted and, in advance of any controversy, to enter into agreements regarding arbitration, adjudication or settlement thereof, all in the name of the Trust; (e) to file and all documents and take any and all other action as the Trustees, in their sole judgment, may deem necessary in order that the Trust may lawfully carry out its purposes in any jurisdiction; (f) to change the name of the Trust; and (g) to prepare and file, or assist in the preparation and filing of, Federal and state tax returns and reports required to be filed on behalf of the Trust or the Trustees. L. Liability of Trustees and Beneficiaries No Trustee will be liable to the Trust or to any Trustee or Beneficiary for any act or omission of any other Trustee, Beneficiary or agent of the Trust, or be held to any personal liability whatsoever in tort, contract, or otherwise in connection with the affairs of the Trust, except only that arising from the Trustee's or Beneficiary's own bad faith, willful misfeasance, gross negligence or reckless disregard of duty. No Trustee will be liable except for the performance of the duties and obligations as are specifically set forth in the Trust Agreements, and no implied covenants or obligations will be read into this Trust Agreement against the Trustees. No Trustee will be liable with respect to any action taken or omitted to be taken by the Trustee in good faith. In addition, no successor Trustee will be in any way liable for the acts or omissions of any Trustee or agent of the Trust occurring prior to the date on which he or she became a Trustee. The Trustees may consult with and retain counsel, auditors or other experts and the advice or opinion of these experts will be full and complete protection to all of the Trustees in respect of any action taken or suffered by them in good faith and in reliance upon or in accordance with the advise or opinion. The Trustees, in incurring any liability or in taking or omitting any other action in connection with the Trust, are, and will be deemed to be acting as Trustees of the Trust and not in their own individual capacities. M. Compensation of Trustees The Trustees will not be compensated for their services as Trustees. Each Trustee will be responsible for any expenses incurred in accordance with this Trust Agreement and will not be reimbursed by the Trust or Trust Corpus for the same. N. Number and Qualification of Trustees There will be at least two and no more than five Trustees of this Trust, each of whom will be a citizen and resident of the United States as well as a Retiree. Any time before a Trustee is named as a plaintiff in a Fiduciary Claim Litigation, the Trustee may resign from the Trust by giving written notice to the remaining Trustees. After a Trustee is named as a plaintiff in a Fiduciary Claim Litigation, the Trustee may resign from the Trust upon motion and order by the Court, which retains jurisdiction of the Fiduciary Claims litigation. Any Trustee may be removed at any time, for cause, by majority vote of the other Trustees. When a Trustee position vacancy exist, the successor will be appointed by the vote of the incumbent Trustees of the Trust. If there is no remaining Trustee, any Beneficiary may apply to a court to fill in the vacancies. O. Concerns on the Beneficiaries No Beneficiary will have any right to institute any action or proceeding against any party with respect to the Trust Corpus. A meeting of the Beneficiaries may be called at any time and from time to time advising the Beneficiaries of certain events or decisions of this Trust. Polaroid Retiree Association Objects G. Michael Gignac, Jr., a Director of Polaroid Retirees Association, relates that certain terms, wordings and the obvious absence of words can be found in the Proposed Polaroid Retirees Trust Agreement. Mr. Gignac notes that the most important missing word would be that "Retirees" has not been defined and is subject to many interpretations. Thus, Mr. Gignac suggests, either the word "retiree" should be defined or be replaced by the word "Beneficiaries". Moreover, "Beneficial Interest" is improperly defined. Mr. Gignac asserts that "beneficial interest" should be worded as: "Beneficial Interest shall mean the proportionate interest of each Beneficiary on record determined by the ratio of one divided by the number of Beneficiaries on record who were also Beneficiaries as of October 9, 2001." Accordingly, the Polaroid Retirees Association asks the Court to compel the Retirees' Committee to address their concerns and direct it to revise the proposed Trust Agreement to eliminate the ambiguities and correct the missing words. (Polaroid Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) PURCHASERPO.COM: Committee Taps Santoro Friggs as Attorneys ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada gave the Official Committee of Unsecured Creditors of PurchasePro.Com, Inc., the go-signal to employ Santoro, Friggs, Walch Kearney, Johnson & Thompson as its bankruptcy counsel. Santoro Friggs will be responsible for: a) developing through discussion with the Committee and other parties in interest, the Committee's legal positions and strategies with respect to all facets of the case, including analyzing the Committee's position on administrative and operation issues; b) negotiating and assisting in the implementation of the Debtor's sale of assets; and c) all other matters concerning maximizing the funds available for the unsecured creditors. Richard F. Holley, a shareholder with the law firm of Santoro Friggs discloses that the firm's hourly rates range from: Principals $270 - $300 per hour Associates $175 - $250 per hour Law Clerks $110 per hour Paralegals $110 - $125 per hour Professionals who are most likely to be active in this engagement are: Richard F. Holley $280 per hour Michael E. Kearney $270 per hour Victoria L. Nelson $250 per hour Kirby C. Gruchow $175 per hour Pat Alstatt $125 per hour PurchasePro.com which offers strategic sourcing and procurement software solutions, filed for chapter 11 protection on September 12, 2002. Gregory E. Garman, Esq., at Gordon & Silver, Ltd., represents the Debtors in their restructuring efforts. The Debtor's Chapter 11 Plan and Disclosure Statement is due on January 9, 2003. When the Company filed for protection from its creditors, it listed $41,943,000 in total assets and $20,058,000 in total debts. R.H. DONNELLEY: David C. Swanson Assumes Board Chairman Post ------------------------------------------------------------ R.H. Donnelley Corporation (NYSE:RHD) -- whose senior secured $1.5 billion facility has been rated by Standard & Poor's at BB -- announced that Chief Executive Officer David C. Swanson has assumed the additional position of Chairman of R.H. Donnelley. As part of RHD's previously announced succession plan, Mr. Swanson succeeds Frank R. Noonan as Chairman. Mr. Noonan also retired from the Board of Directors. "Frank has done an outstanding job leading R.H. Donnelley," said David C. Swanson. "On behalf of everyone at R.H. Donnelley, I want to thank Frank for his leadership, inspiration and countless contributions to Donnelley's success." R.H. Donnelley is a leading marketer of yellow pages advertising. The company's businesses include relationships with SBC and Sprint, as well as its pre-press publishing facility in Raleigh, N.C. For more information, please visit Donnelley at http://www.rhd.com RRUN VENTURES: Initiates Restructuring with AXXUS Divestiture ------------------------------------------------------------- RRUN Ventures Network Inc., (OTC Bulletin Board: RRUN) has divested its AXXUS Corporation subsidiary and its uncompleted technology projects, in exchange for the reduction of approximately $412,000 of debt from the RRUN balance sheet. This action is the first major step in a plan to restructure and focus business operations, through which the Company aims to improve the chances of long term success. In an agreement reached with Emanuel Koseos, the lead developer of AXXUS and RAHX 1.0 technologies, the Company eliminated payables due to Emanuel Koseos and his development company, Kaph Data Engineering Inc., in exchange for AXXUS Corporation, which owned the rights to the unfinished software code. Concurrently, Mr. Koseos has also tendered his resignation as RRUN's CTO. As previously stated in the Company's Form 10QSB for the period ending September 30, 2002: "Since inception the Company's original business strategy was to operate as a venture development organization initially focused on content distribution utilizing the Internet. Originally RRUN's core business venture was RAHX 1.0, a software platform that uses Peer to Peer technologies to enable and enhance the distribution of digital media files over the Internet. Beginning earlier this year the Company's RAHX venture has shifted its strategy from being focused solely on P2P music file exchange to one of developing an Entertainment Experience Network, now focused on live entertainment. The software was initially being designed to enable file exchange in a legal manner; however, the software code to enable file exchange in a legal manner is not complete. We have chosen not to proceed with further development of the software, due to lack of funding and the determination that the release of software that allows illegal file exchanging of content may present risk of litigation upon the Company by companies in the content and music industries." Due to major changes in market conditions, the fact that the software had not reached commercial feasibility, lack of available capital for file exchange development and other forms of cutting edge P2P technology, liability concerns for companies that produce music file exchange software, and the lack of resources to retain Mr. Koseos as a lead developer, management determined it is in the Company's best interest to take advantage of the opportunity to strengthen its balance sheet while divesting of a subsidiary and a project that management realized had little chance to benefit shareholders. Edwin Kwong, the Company's CFO, stated: "We see this as a positive step forward as the Company refocuses around offline revenue streams such as live entertainment. The opportunity for the Company to reduce its debt by such a significant amount is significant progress towards building a healthy organization for its shareholders." Ray A. Hawkins, President and CEO of RRUN Ventures Network Inc., added: "The Company plans to continue to explore options of moving the Company forward through actions such as reducing debt via stock-based settlements with creditors; building its management team; procuring of capital; and through seeking acquisitions and mergers whether synergistic or not that may add value to the Company." RRUN vni is a holding company. Its core business is the development of Liquor Licensed Entertainment Establishments, namely nightclubs. Its key operating subsidiary is RAHX, Inc. The Company is currently seeking our first establishment through acquisition and is also scouting other potential establishment projects for development. For more information please visit the Company's Web sites at http://www.rrun.comand http://www.rahx.com RUSSELL CORP: Names Kevin Clayton VP to Lead Diversity Efforts -------------------------------------------------------------- Kevin L. Clayton will join Russell Corporation (NYSE: RML) as vice president of diversity, and he was elected a corporate officer by the Board of Directors at their December meeting. Clayton will be responsible for the company's diversity initiative in all locations and will report to Jack Ward, chairman and CEO. "We are pleased that Kevin has agreed to join us and lead our efforts to take diversity to the next level," said Ward. "He has a broad business background and has worked with the best known experts in the field of diversity management. Additionally, Kevin has been involved in all aspects of Russell's diversity initiative as a consultant for us over the past three years." Clayton has more than 20 years' experience with corporations and as an entrepreneur. He has worked in several major industries and held various positions in sales, marketing and training, as well as diversity management. He founded K. L. Clayton & Associates in 1991 and has built a reputation as a leading consultant in diversity and change management. In addition to Russell, his clients have included Procter & Gamble, Federal Home Loan Bank of Atlanta, MTV Networks, Time Warner Cable, Sony Pictures, Auburn University, SunTrust Banks, Frito Lay and Quaker Oats. A native of Cleveland, Clayton earned his B.A. degree in business administration and psychology from Wilmington College in Ohio. Clayton's position is effective January 1, 2003, but he will continue to work with his current clients until he has completed his personal commitments to their projects. Russell Corporation is a leading branded athletic, activewear, and outdoors company with over a century of success in marketing athletic uniforms, apparel and accessories for a wide variety of sports, outdoor and fitness activities. The Company's brands include: Russell Athletic(R), JERZEES(R), Mossy Oak(R), Cross Creek(R), Discus(R) and Moving Comfort(R). The Company's common stock is listed on the New York Stock Exchange under the symbol RML and its Web site address is http://www.russellcorp.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's assigned a corporate credit rating of 'BB+' to apparel manufacturer Russell Corp. It also assigned ratings to the company's proposed $375 million senior secured credit facility and proposed $200 million senior unsecured note issue at 'BB+' and 'BB' respectively. The ratings reflect Russell's participation in the highly competitive and volatile apparel industry, which is subject to changing consumer preferences and a consolidating retailer base. Somewhat mitigating these factors are the company's well known brand name, its strong market position, and its moderate financial profile. SALIENT 3: Plans to Make Liquidating Distribution on Dec. 30 ------------------------------------------------------------ Salient 3 Communications, Inc., (OTC Bulletin Board: STCIA) announced that its Board of Directors has declared a liquidating distribution of $0.50 per share for both the Class "A" and Class "B" common stock of the Company. The dividend is payable on or about December 30, 2002, to shareholders of record at the close of business on December 23, 2002. Salient 3 shareholders approved the dissolution and liquidation of the Corporation on July 21, 2000. The Company has paid previous liquidating distributions of $12.00 per share on September 8, 2000 and $2.00 per share on December 14, 2001. SBC COMMUNICATIONS: Board Declares Regular Dividend on Shares ------------------------------------------------------------- The board of directors of SBC Communications Inc., (NYSE:SBC) declared a regular dividend of 27 cents a share. The dividend is payable Feb. 3, 2003 to shareowners of record as of the close of business on Jan. 10, 2003. SBC Communications Inc. -- http://www.sbc.com-- is one of the world's leading data, voice and Internet services providers. Through its world-class networks, SBC companies provide a full range of voice, data, networking and e-business services, as well as directory advertising and publishing. A Fortune 30 company, America's leading provider of high- speed DSL Internet Access services, and one of the nation's leading Internet Service Providers, SBC companies currently serve 58 million access lines nationwide. In addition, SBC companies own 60 percent of America's second-largest wireless company, Cingular Wireless, which serves more than 22 million wireless customers. Internationally, SBC companies have telecommunications investments in 25 countries. At September 30, 2002, SBC Communications' balance sheet shows a working capital deficit of about $7 billion. SECURITY ASSOCIATES: External Auditors Air Going Concern Doubt -------------------------------------------------------------- Security Associates International has continued to incur losses from its operations. SAI's loss from operations for the nine months ended September 30, 2002 was $4,846,596 as compared to $6,131,151 for the nine months ended September 30, 2001. The loss from operations for the nine months ended September 30, 2002 includes a charge of $533,059 relating to the restructuring plan announced in 2001 as well as a charge of $1,801,508 relating to an incentive compensation program for certain executives and consultants. As a result of this loss from operations, net cash used in operating activities for the nine months ended September 30, 2002 totaled $5,061,392. SAI currently anticipates that it will continue to use cash in its operating activities, however at a reduced rate. SAI recurring losses from operations has created a net working capital deficiency that raises substantial doubt about its ability to continue as a going concern. During the first three quarters of 2002, SAI experienced a $4,938,862 decrease in its cash balance. The decrease was the result of cash used in operating activities in the amount of $5,061,392, cash used in investing activities of $1,081,030 and cash provided by financing activities of $1,203,560. Cash used in operating activities for the nine months ended September 30, 2002 included a net loss of $7,137,313, offset by non-cash items totaling $1,814,257. Included in these items were depreciation and amortization expenses of $1,413,079 and a charge of $510,713 for the impairment of fixed assets identified for disposal. Accounts receivable balances decreased by $773,440 during the period, and accounts payable increased by $501,389. The Company has been notified by AMEX that it is not currently in compliance with their continuing listing requirements, including the Company's current stock price and total stockholders' equity. SAI says it is working with AMEX to maintain its listing. Although management does not believe that delisting is imminent, such an event could adversely affect the Company's stock price and the liquidity of its stock. SUPERIOR TELECOM: Completes Sale of All Assets to Alpine Group -------------------------------------------------------------- Superior TeleCom Inc., (OTC: SRTO.OB) has completed the sale to The Alpine Group, Inc., of substantially all of the assets and business of Superior's Electrical wire operations as well as the sale of 100 percent of the common stock of its electronics subsidiary, DNE Systems, Inc., and a substantial portion of its indirect common equity ownership in Superior Cables Ltd., an Israeli-based wire and cable manufacturing company. As has been previously disclosed, the total purchase price for the assets and businesses sold included approximately $85 million in cash (plus assumed payables, accruals and other liabilities), and a warrant issued to Superior to purchase a 19.9 percent common equity position in the entity to be formed by Alpine to own and operate the Electrical wire business. The Company also expects to realize $20-$30 million in 2003 from tax benefits from the sale in the form of cash tax refunds. Approximately $10 million of proceeds from the asset sale has been retained by Superior for liquidity and general corporate purposes with the balance applied to permanent debt reduction. Superior TeleCom Inc., is the largest North American wire and cable manufacturer and among the largest wire and cable manufacturers in the world. Superior manufactures a broad portfolio of wire and cable products with primary applications in the communications and original equipment manufacturer markets. The company is a leading manufacturer and supplier of communications wire and cable products to telephone companies, distributors and system integrators and magnet wire for motors, transformers, generators and electrical controls. The Company's Web site is at http://www.superioressex.com Superior Telecom's September 30, 2002 balance sheet shows a working capital deficit of close to $1 billion, and a total shareholders' equity deficit of about $490 million. * * * In another news report, The Alpine Group, Inc. (OTC Bulletin Board: ALPG.OB) announced that it has completed the purchase from Superior TeleCom Inc., (OTC Bulletin Board: SRTO.OB) of substantially all of the assets and business comprising Superior's electrical wire business, 100% of the common stock of DNE Systems, Inc., and a 47% equity interest in Superior Cables, Ltd., for an aggregate purchase price of approximately $85 million in cash and a warrant to Superior to purchase 19.9% of the common stock of the entity formed by Alpine to own and operate the electrical wire business. Mr. Steven S. Elbaum, Chairman and Chief Executive Officer of The Alpine Group, Inc., stated that "Alpine is pleased to have completed the purchase and we are enthusiastic about the prospects for rebuilding Alpine's business base, earnings and cash flow. The acquired businesses, whose revenues exceeded $500 million in the last 12 months, offer Alpine a substantial opportunity to create long term shareholder value. The electrical wire business, which will be operated under the name Essex Electric, is one of the major U.S. producers of low voltage electrical wire for residential, commercial and industrial markets. We will immediately launch an investment plan to restructure, modernize and strengthen this business to achieve substantial improvements in profitability and customer service. DNE Systems, Inc., is an outstanding, respected and profitable manufacturer of multiplexers sold to the Department of Defense and other communications and electronic products. Superior Cables, Ltd., is the largest Israeli-based producer of a broad range of wire and cable products including medium and high voltage power cables and communications cables for sale in Israel, Europe and North America." The Alpine Group, Inc., headquartered in New Jersey, is a holding company which owns approximately 48% of Superior TeleCom Inc. (OTC Bulletin Board: SRTO), a North American wire and cable manufacturer of a broad portfolio of products with primary applications in the communications, and original equipment manufacturer wire and cable markets, as well as 100% of Essex Electric Inc., and DNE Systems, Inc., and 47% of Superior Cables, Ltd. (Israel). TXU CORP: Airs Disappointment with Moody's Rating Downgrades ------------------------------------------------------------ TXU (NYSE: TXU) noted the decision by Moody's Investors Service to downgrade credit ratings at TXU Corp., and certain subsidiaries. While TXU is disappointed with the action, the company's subsidiaries maintain solid investment grade ratings. The company has ample liquidity and continues to focus on solid core operations and further strengthening of its credit. TXU Corp.'s and its subsidiaries' credit ratings at Standard and Poor's and Fitch Ratings are investment grade. The credit rating changes do not significantly affect TXU's operations, and TXU's customers will not be affected. TXU has taken decisive steps to maintain strong liquidity and maximize cash flow to further strengthen credit. In recent months, TXU has: -- demonstrated a clear and complete path out of Europe, -- reduced the dividend and developmental capital expenditures significantly, retaining an incremental $850 million to $950 million of cash per year for debt reduction, -- negotiated an amendment to TXU Corp.'s $500 million bank loan excluding foreign subsidiaries from its cross- default provision, -- secured commitments for a $1 billion credit facility at Oncor, -- issued $750 million of TXU Energy exchangeable subordinated notes, and -- completed a public offering of 35 million shares of TXU common stock for $516 million. These steps have positioned TXU well to maintain projected liquidity of approximately $2 billion through 2004 and to continue to use strong free cash flows to reduce debt and strengthen credit. These actions also complement TXU's other priorities of focusing on operational excellence and low risk growth from solid core operations in North America and Australia. TXU is a major energy company with operations in North America and Australia. TXU's energy business in North America is the largest power generator and electricity retailer in Texas with 19,000 megawatts of competitive generation and 2.7 million electric customers. TXU also has the largest electricity and natural gas utilities in Texas, delivering over 100 million megawatt hours of electricity and over 140 billion cubic feet of natural gas annually. TXU's business in Australia includes both electricity and natural gas delivery and energy operations with 1,280 megawatts of generation and almost 1 million electricity and natural gas customers. TXU serves over five million electricity and natural gas customers in North America and Australia. Visit http://www.txu.comfor more information about TXU. UNION ACCEPTANCE: First Investors to Buy Unit's Loan Portfolio -------------------------------------------------------------- First Investors Financial Services (Nasdaq: FIFS) announced that a partnership which includes First Investors and First National Bank of Omaha had reached an agreement to acquire a $200 million portfolio of installment loan receivables from UAFC-2 Corporation, a subsidiary of Union Acceptance Corporation. UAC is currently operating as a debtor-in-possession under Chapter 11 of the Bankruptcy Code. The sale was approved by the United States Bankruptcy Court, Indianapolis Division, on December 11, 2002, and is expected to close on December 18, 2002, subject to the execution of definitive agreements. First Investors will own a partnership interest in the acquiring entity and will also perform loan servicing and collection activities on the portfolio on behalf of the partnership. First Investors indicated that it anticipates the transaction will be accretive to net income and earnings per share as a result of both servicing revenue and limited partnership earnings. Earnings on its partnership interest will be dependent upon residual cash flows generated by the portfolio after servicing costs, principal and interest payments on the acquisition debt, and credit losses. While First Investors believes that the transaction will be accretive to previously disclosed fiscal year 2003 earnings guidance, most of the anticipated benefits to earnings will occur in fiscal year 2004 and beyond due to certain acquisition costs which will be incurred during the third quarter of fiscal year 2003. First Investors is a specialized consumer finance company engaged in the purchase and retention of automobile finance receivables originated from franchised automobile dealers and directly through consumers from the sale of new and late-model used vehicles. The Company is headquartered in Houston, Texas and operates in 28 states. UNIROYAL TECHNOLOGY: Taps Grubbs & Ellis as Real Estate Broker -------------------------------------------------------------- Uniroyal Technology Corporation and its debtor-affiliates wants the U.S. Bankruptcy Court for the District of Delaware's authority to retain Grubbs & Ellis as Real Estate Broker, nunc pro tunc to the Petition Date. The Debtors seek to retain Grubbs & Ellis as their exclusive real estate broker for the closing of a sale of the Property located in Port Clinton Ohio known as the Uniroyal Building 146, Erie Industrial Park. Grubbs & Ellis was responsible for finding the purchaser of the Property. Because of Grubbs & Ellis' experience and knowledge in the field of commercial real estate, and particularly with respect to the Property, the Debtors believe that Grubbs & Ellis is well qualified to perform the brokerage services of it. Grubbs & Ellis will be paid a 6% commission on the gross sales price of the Property. Uniroyal Technology Corporation and its subsidiaries are engaged in the development, manufacture and sale of a broad range of materials employing compound semiconductor technologies, plastic vinyl coated fabrics and specialty chemicals used in the production of consumer, commercial and industrial products. The Company filed for chapter 11 protection on August 25, 2002 Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $85,842,000 in assets and $68,676,000 in debts. UNITED AIRLINES: Wants to Honor Prepetition Maintenance Claims -------------------------------------------------------------- As of the Petition Date, UAL Corporation/United Airlines Inc., and affiliates debtors estimate they owe Outside Maintenance Providers, Shippers, and Contractors approximately $36,000,000 for outstanding prepetition services provided. Accordingly, the Debtors seek the Court's authority to pay these prepetition claims in full satisfaction of any Liens or Interests Outside Maintenance Providers, Shippers, and Contractors might have against them. The Debtors also ask Judge Wedoff to authorize and direct all applicable banks and other financial institutions to receive, process, honor and pay all checks presented for payment of, and to honor all fund transfer requests made by the Debtors related to, the claims subject to this motion, regardless of whether the checks were presented or fund transfer requests were submitted prior to or after the Petition Date. It is provided, however, that the funds are available to cover the checks and fund transfers and all financial institutions are authorized to rely on the Debtors' designation of any particular check as approved by the Court. Outside Maintenance Providers James H.M. Sprayregen, Esq., at Kirkland & Ellis, informs the Court that the Debtors are required to perform significant maintenance and overhaul work to maintain their aircraft fleet in accordance with the Federal Aviation Administration regulations. Although they utilize their own employees to perform much of the aircraft maintenance and repair work, the Debtors also rely on Outside Maintenance Providers to perform a significant portion of the aircraft, engine, and other equipment maintenance and repair work. The Debtors' Outside Maintenance Providers perform maintenance and repair work pursuant to ongoing maintenance and service contracts, primarily, engine repair contracts or pursuant to purchase orders. In addition, Outside Maintenance Providers provide "on-call" maintenance and repair services at various destinations enabling the Debtors to avoid maintaining complete repair facilities and employee mechanics at every destination city. As part of their maintenance and repair work, the Outside Maintenance Providers supply or sell certain aircraft component parts, most of which are replacement parts. The Debtors have well-developed, long-standing relationships with their Outside Maintenance Providers, which enable them to negotiate favorable pricing and trade credit terms. The Debtors fear that their failure to honor their prepetition obligations to their Outside Maintenance Providers would jeopardize these relationships resulting in higher costs for replacement services. Because the market for Outside Maintenance Providers with the size and expertise to service the Debtors is very limited, it would be extremely difficult to replace the majority of these providers with new providers on economically viable terms. Additionally, many of the Outside Maintenance Providers are currently in the possession of aircraft, engines and other equipment that are vital to the Debtors' operations. The Outside Maintenance Providers may be able to assert possessory liens on this equipment. They may also refuse to redeliver the equipment to the Debtors unless they are paid the prepetition amounts owed. The Debtors estimate that their outstanding prepetition obligations owed to the Outside Maintenance Providers is approximately $20,000,000. The repair and maintenance services furnished by the Outside Maintenance Providers could also give rise to a right to payment secured by mechanics' liens, materialmen's, other similar liens, or any other non-possessory lien on equipment, supplies and goods of the Debtors. Liens and Interests may be perfected notwithstanding the automatic stay established by Section 362 of the Bankruptcy Code. Pursuant to Section 362(b)(3), the act of perfecting Liens and Interests, to the extent consistent with Section 546(b), is expressly excluded from the automatic stay otherwise established by Section 362(a). Under Section 546(b), a debtor's lien avoidance powers "are subject to any generally applicable law that . . . permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection . . ." 11 U.S.C. Section 546(b)(1)(A). Shippers An integral part of the Debtors' maintenance and repair operations is the use of domestic and foreign commercial common carriers, movers, shippers, freight forwarders/consolidators, delivery services, customs brokers, shipping auditing services, and other third-party services providers to ship, transport, store, move through customs, and deliver goods and packages through established national and international distribution networks. The Debtors rely extensively on the Shippers to transport parts, goods, and packages to and from third parties. The services provided by the Shippers are critical to the Debtors' day-to-day operations. At any given time, there are numerous shipments en route to or from Outside Maintenance Providers and, therefore, Shippers are currently in possession of engines and other equipment that are vital to the Debtors' operations. Absent payment, the Shippers might be capable of asserting possessory liens against property that they hold in their possession. They might refuse to deliver or release the property to the Debtors until they are paid the prepetition amounts owed. In addition, the Debtors depend on the Shippers to transport goods and packages -- Revenue Cargo -- that the Debtors ship on behalf of third parties. If the Debtors were not allowed to pay Shippers for prepetition claims, the Shippers may assert and perfect Liens and Interests against Revenue Cargo, and refuse to deliver Revenue Cargo that is in transit. Even if the Revenue Cargo were merely delayed in reaching its destination, the Debtors would fail to meet the needs of the Third Parties that contract the Debtors to ship the Revenue Cargo. As a result, the Debtors could be subjected to claims by the third parties, who would stop using the Debtors' shipping services, causing a substantial loss of revenue. Moreover, because the value of the Revenue Cargo in transit would greatly exceed the prepetition shipping claims on which a Shipper's Lien and Interest might arise, if the Debtors were not given the authority to satisfy Shippers' Liens and Interests, the Debtors' losses caused by withheld Revenue Cargo would far outweigh the amount of the claim secured by Shippers' Liens and Interests. The Debtors estimate that their outstanding prepetition obligations owed to the Shippers reach $3,000,000. Contractors The Debtors also rely on contactors, subcontractors and professional service firms to perform construction, maintenance and repairs at their various facilities including hangars, terminals, and gates. If not paid for their prepetition services, the Contractors may refuse to perform ongoing construction, maintenance, or repair obligations. Some of the projects for which the Contractors are currently providing their services may be near completion. Replacing these Contractors and bringing the replacements up to speed would likely cost more than an existing Contractor's prepetition claim. In addition, without the Contractors' services, the physical condition of certain facilities might deteriorate. The Debtors' failure to pay the Contractors for prepetition goods and services may result in the Contractors having a right to assert a valid statutory, mechanic's, or possessory lien on certain of the Debtors' facilities. The Debtors estimate that their outstanding prepetition obligations owed to the Contractors is approximately $13,000,000. Proposed Conditions to Receive Payment To avoid undue delay and to facilitate the continued operation of their businesses, the maintenance and repair of their aircraft and other equipment, gates, terminals, and hangars, and the completion of ongoing construction projects, the Debtors seek the Court's immediate authority to pay and discharge, on a case-by-case basis, the claims of all Outside Maintenance Providers, Shippers, and Contractors that have given or could give rise to Liens and Interests against their property, regardless of whether the Outside Maintenance Providers, Shippers, or Contractors already have perfected their Liens and Interests. However, the Debtors will not pay a Claim unless the Outside Maintenance Provider, Shipper, or Contractor has perfected or is presently capable of perfecting or will be capable of perfecting in the future Liens and Interests -- that are not subject to avoidance -- giving rise to the Claim. Also, the payment of the Claim will be made with a full reservation of rights for the extent, validity, perfection or possible avoidance of any Liens and Interests. The Outside Maintenance Provider, Shipper, or Contractor must agree to promptly release any Liens and Interests on payment of the Claim. Mr. Sprayregen notes that although it is difficult for them to estimate the amount of prepetition Liens and Interests that may arise from their prepetition repair, maintenance, construction, and shipping needs, the Debtors believe, based on prepetition activities and needs, that payment of a majority of the Lien Claim Amount may be necessary to resolve the Liens and Interests. In exchange for their payment of a Claim, the Debtors propose that an Outside Maintenance Provider, Shipper, or Contractor must agree to continue to provide goods and services to the Debtors postpetition on ordinary and customary terms, and to promptly release any Liens and Interests on payment of their Claim. Additionally, if any Outside Maintenance Provider, Shipper, or Contractor that accepts payment but does not continue to provide goods and services on Customary Terms during the pendency of these Chapter 11 cases, then: (a) any payment on a prepetition claim received by this Outside Maintenance Provider, Shipper, or Contractor will be deemed to be an improper postpetition transfer and, recoverable by the Debtors in cash on written request; and (b) upon recovery by the Debtors, any prepetition claim of the Outside Maintenance Provider, Shipper, or Contractor will be reinstated as if the payment had not been made. To ensure that any Outside Maintenance Provider, Shipper, or Contractor holding a Liens or Interests will transact business with the Debtors on Customary Terms, in exchange for the Debtors' satisfaction of any of the party's Liens or Interests, the party whose Lien or Interest is satisfied will be required, in the Debtors' discretion, to sign a letter agreeing to these terms. Pursuant to the Customary Terms Agreement, Outside Maintenance Providers, Shippers, and Contractors agree to continue to provide goods and services to the Debtors based on Customary Terms. (United Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) United Airlines' 10.67% bonds due 2004 (UAL04USR1) are trading at about 13 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. UNITED AIRLINES: SkyWest Discloses $13.5MM Prepetition Exposure --------------------------------------------------------------- SkyWest, Inc., (Nasdaq: SKYWE) addressed the following issues associated with the bankruptcy filing by United Airlines and other industry developments. SkyWest estimates that as of December 9, 2002, the date of United's bankruptcy filing, it was owed approximately $13.5 million for United Express services rendered prior to the filing. It is SkyWest's understanding that United has received approval from the U.S. Bankruptcy Court authorizing, but not requiring, United to honor pre-petition obligations to its United Express carriers. SkyWest believes that, if these pre- petition amounts are not paid by United, SkyWest may offset amounts owed to United for pre-petition services totaling approximately $4.1 million. Therefore, SkyWest estimates its net exposure to United for pre-petition amounts is approximately $9.4 million. With respect to United Express services rendered subsequent to United's filing, it is SkyWest's understanding that its agreements with United will be honored during the pendency of the bankruptcy proceeding, and payments will be due at the times set forth in SkyWest's existing United Express agreement. Consistent with that understanding, SkyWest reported that it received payment from United on December 13, 2002, for United Express service rendered subsequent to the United bankruptcy filing. "United's filing illustrates the tremendous challenges our industry faces," said Jerry C. Atkin, SkyWest's President and Chief Executive Officer. "Our major airline partners, and the airline industry in general, are dealing with lower revenues from fewer passengers traveling, and those who are traveling are paying lower ticket prices," Atkin continued. In light of United's filing and other industry developments, SkyWest also cautioned investors that its financial performance will be less predictable and will be negatively impacted as the industry experiences significant restructuring. "We are targeting aggressive cost-reduction alternatives with the help of our employees and intend to pass a substantial amount of the anticipated cost reductions on to our major partners in rate reductions for 2003 and beyond," said Bradford R. Rich, SkyWest's Executive Vice President and Chief Financial Officer. "Although all aspects of our rate agreements with Delta and United have not been finalized, and may not be finalized for some time, it is likely that our margins will be lower and less predictable going forward," said Rich. At the same time, Rich noted that industry pressures may produce additional opportunities for SkyWest. "Both Delta and United have stated the importance of smaller aircraft serving smaller markets into their larger networks as being very important in these challenging times. We continue to believe that we will take delivery of 36 net new aircraft, subject to our ability to obtain financing, during 2003. We presently anticipate that 28 of these aircraft will be placed in United Express service and eight will be flown on Delta Connection routes. If delivered, these aircraft will increase our available seat miles by approximately 40%." Atkin concluded, "notwithstanding the current challenges of our industry, SkyWest is committed to delivering the highest level of service to our customers at competitive prices, pursuing additional market opportunities and providing a competitive return to our shareholders. Over the past 30 years, we have built a reputation for outstanding performance and exceptional service. We remain dedicated to the pursuit of these objectives." SkyWest Airlines is the nation's largest independently operated regional carrier and recently celebrated its 30-Year anniversary. In January 2002, SkyWest was named Regional Airline of the Year by Air Transport World. SkyWest Airlines operates as United Express and Delta Connection under marketing agreements with United Airlines and Delta Air Lines, respectively. SkyWest serves 90 cities with more that 1,000 daily flights in the United States and Canada. More information on SkyWest can be accessed at http://www.skywest.com UNIVIEW TECHNOLOGIES: Will Wind Down All Remaining Operations ------------------------------------------------------------- uniView Technologies Corporation (OTCBB:UVEW) plans to wind down its remaining operations, consisting of its uniView Softgen and its Products Group divisions. The company previously reported that it would wind down its Network America operations. The company has received resignations from its outside directors and general counsel. The company has also laid off all employees and officers. Some former employees may act in a consulting role to facilitate an orderly process, as well as the CEO who will be the sole director. "The financial position of the company, as well as the general business outlook for the upcoming year prompted immediate action to protect the company's assets," stated Patrick A. Custer, CEO of uniView Technologies. "An evaluation process is currently underway and a plan of action will be formulated within the next couple of weeks. It is our desire to maximize the value of the remaining assets for the benefit of creditors and shareholders. It is regrettable that this action has become necessary and we wish to express our appreciation for the support of our former employees, directors, and shareholders through the years, some of whom have been with us from the beginning." Dallas-based uniView Technologies Corporation offered enhanced digital media solutions to customers worldwide. Its products are capable of delivering the highest quality video, audio and gaming features through broadband networks. In addition, uniView provided 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. More information on this company can be found on eWorldWire's Online Newsroom at http://www.eworldwire.com/headlines/majornewswire/uniview.htm US AIRWAYS: Continental Airlines Demand Timely Lease Performance ---------------------------------------------------------------- Steven M. Abramowitz, Esq., at Vinson & Elkins, tells Judge Stephen S. Mitchell that US Airways Group Inc., and its debtor- affiliates have defaulted on their postpetition obligations to pay rent under the LaGuardia Airport facility lease Continental Airlines. Mr. Abramowitz relates that the Debtors were required to make a $15,849,284 Facility Rental payment on December 1, 2002 -- $8,594,284 in Bond Interest and $7,255,000 of Principal. On November 27, the Debtors' lawyers informed Continental Airlines' counsel that the Debtors would make a Partial Payment to the Bond Trustee for $7,672,565 on December 2, 2002. According to Mr. Abramowitz, this Partial Payment was calculated (i) by prorating the interest component of $8,594,284 for 113 days (the number of days in chapter 11 through and including December 1, 2002) out of 180 days and (ii) by prorating the December Required Bond Principal Payment of $7,255,000 for 113 days out of 360 days. Mr. Abramowitz stresses that until the Debtors decide whether to assume or reject the Facility Lease, they are receiving all the benefits from the Terminal at LaGuardia Airport without paying the full costs of that occupancy, including the full amount of rent that is due during the postpetition period. That the rental amount is calculated by reference to interest and principal on bonds issued by a nondebtor should not change the treatment of the rental as a lease obligation arising from and after the Petition Date. In addition, the Debtors' decision to unilaterally prorate portions of the rent that are equal to interest and principal on the Bonds over differing time periods -- notwithstanding the clear requirement that the full amount be paid on November 26, 2002 -- provides uncertainty to the rights of other parties that are obligated under the Facility Lease, including Continental. According to Mr. Abramowitz, those are circumstances that Congress intended to avoid by enacting Section 365(d)(3) in 1984. Section 365(d)(3) requires that the Debtors make their full Facility Rental payment that was due on November 26, 2002. Even if this Court were to adopt the "accrual method" of ascertaining the nature of the Section 365(d)(3) obligation, accrual is only appropriate for payments that are clearly susceptible to proration over time, like real estate taxes. The arbitrary nature of the proration implemented by the Debtors here is improper, and the Debtors should be required to make the full payment of Facility Rental that was required on November 26, 2002. Mr. Abramowitz admits that the law is somewhat unsettled on whether Section 365(d)(3) of the Bankruptcy Code requires that the debtor perform in full all obligations that come due under the terms of the lease after the petition date, called the billing method, or whether debtors are permitted to prorate between prepetition and postpetition periods, called the accrual method. Even if the Court were to hold that the accrual method was applicable, Mr. Abramowitz argues, the payments should not be subject to proration. Under the Facility Lease, US Airways was required to make the $15,849,284 Facility Rental payment in full when due in order to enable the Bond Trustee to make the required debt service payable on the Bonds. These lease payments were fixed in amount and timing at the inception of the Lease Supplement, which was entered into concurrently with the issuance of the Bonds in June 1990. Payment of the Facility Rental does not provide the debtors with a prorata or any other ownership interest in the Terminal (title of which always remains with the landlord Port Authority) and the Debtors are required to make all payments called for under the Facility Lease as long as they are a tenant. Unlike items such as real estate taxes and common area charges which can perhaps be characterized as accruing over time on a daily basis, the November 26, 2002 Facility Rental payment represents an obligation that can only be characterized as arising from and after the Petition Date. Notwithstanding that the rent payable by the Debtors under the Facility Lease was determined by reference to the required debt service payable by the Port Authority on the Bonds, the obligations are clearly rent within the meaning of Section 365(d)(3). While the Debtors appear to have prorated the interest component of the rent based on the theory that interest accrues evenly over time, there is no principled basis for prorating a fixed principal amortization payment over 360 days -- or any other period. By its very nature, principal is payable on the promised date, and any attempt to accrue a fixed rental payment equivalent to principal between pre and post petition periods is arbitrary and provides the debtor with unfair leverage that is contrary to the language and spirit of Section 365(d)(3). The Bank of New York, as Bond Trustee, offers up its own request to the Court. Bradley R. Duncan, Esq., at Hunton & Williams in McLean, Virginia, tells Judge Mitchell that pursuant to Section 3.1(F) of the Trust Administration Agreement and Section 87(e) of the Supplement, the Debtor is obligated to pay Bank of New York, serving as the Bond Trustee, for Debt Service no later than five days prior to the date on which the Bond Trustee is obligated to pay Debt Service to the Bondholders. Also, the Debtor is obligated, pursuant to the Trust Administration Agreement, to pay the Bond Trustee reasonable compensation for extraordinary services and to reimburse the Bond Trustee for reasonable expenses, including attorneys' fees, including the Bond Trustee's attorneys' fees and expenses for this Motion. The Bond Trustee was obligated to pay $15,849,284 in Debt Service to the Bondholders on December 2, 2002. Repeating Continental Airlines' account of the facts, Mr. Duncan says that the Debtors were obligated to pay $15,849,284 to the Bond Trustee by November 26, 2002. The Debtors paid nothing to the Bond Trustee prior to or on November 26, 2002. By letter dated November 14, 2002, the Bond Trustee notified the Debtors that $15,849,284 was due on or before December 2, 2002. On December 2, 2002, the Debtors delivered to the Bond Trustee by wire transfer $7,672,565. This figure represents the Debtor's calculation of that portion of the Debt Service payment amount accrued during the period since the Petition Date. After the Bond Trustee's receipt of the payment, the amount on deposit in the Bond Fund was equal to $7,693,840. This amount was insufficient to pay the Debt Service to the Bondholders on December 2, 2002. Shortly before this Motion was filed, Continental Airlines delivered to the Bond Trustee by wire transfer $8,155,444, representing the difference between the amount on deposit in the Bond Fund as of December 2, 2002, and the amount of Debt Service required to be paid by the Bond Trustee to the Bondholders on December 2, 2002. Notwithstanding the payment by Continental, the Bond Trustee seeks relief from the automatic stay to debit the Debt Service Fund in order to ensure that it is able to protect the interests of the Bondholders, given the complexity of the underlying financing and the differing rights and duties of the Debtor and Continental. Mr. Duncan argues that despite the Debtor's and Continental's payments on December 2, it is conceivable that issues relating to these payments may arise in the future, and the Bond Trustee requires a present confirmation from the Court that it will be able to debit the Debt Service Fund should the resolution of any issues require that it protect the interests of the Bondholders. Permitting the Bond Trustee this relief will prevent an acceleration of the Bonds or a need to seek expedited relief in the future. The only interest of the Debtor in the Debt Service Fund is the right to receive any balance remaining in the Debt Service Fund after the Bonds are redeemed, retired or refunded. Although the Bond Trustee does not concede that the funds in the Debt Service Fund are property of the Debtor's bankruptcy estate, the Bond Trust has determined, out of an abundance of caution, to pursue relief from the automatic stay before it debits the Debt Service Reserve Fund. If the Bond Trustee is unable to debit the Debt Service Fund in a timely fashion, including, possibly, at a time prior to a future date upon which it would be unable to obtain expedited relief, the Bond Trustee may be compelled to accelerate the Bonds under Section 10 of the Trust Indenture. Mr. Duncan argues that cause exists in this case to lift the automatic stay under Section 365(d)(2). If the Bond Trustee is unable to make a timely Debt Service payment to the Bondholders out of funds immediately available to it, including through a debit of the Debt Service Fund, then it may have no choice but to accelerate the entire $202,000,000 indebtedness outstanding under the Bonds. USAir would not be entitled to any of the funds until the respective maturity dates of the Bonds of 2006, 2010 and 2015 absent a default and an acceleration of the Bonds prior to their maturity dates. It is unlikely that the amount of the funds in the Debt Service Fund would exceed the amount necessary to redeem, retire or refund the Bonds. BNY asks for an Order modifying the stay to allow it to exercise its rights under the Trust Administration Agreement. BNY also asks for reimbursement of its attorneys' fees and expenses. (US Airways Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHEELING-PITTSBURGH: Obtains Eighth Exclusive Period Extensions --------------------------------------------------------------- On December 3, 2002, Judge Bodoh approved another Agreed Order signed by: -- Scott N. Opincar, Esq., at Calfee Halter & Griswold, on Wheeling-Pittsburgh Steel Corp.'s behalf, -- Lee D. Powar, Esq. and Julie K. Zurn, Esq., on the Official Noteholders' Committee's behalf, and -- Marc E. Richards, Esq., and Edward J. LoBello, Esq., on the Official Committee of Unsecured Trade Creditors' behalf. The parties agree to extend the Debtors' exclusive period to file a plan of reorganization until December 23, 2002, and the Debtors' exclusive period to solicit acceptances of that plan until February 21, 2003. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILSON N. JONES: Fitch Ratchets Hospital Bond Rating Down to BB+ ---------------------------------------------------------------- Fitch Ratings has downgraded to 'BB+' from 'BBB-' the rating on the outstanding $46,300,000 Metro Health Facilities Development Corp., (Sherman, TX) hospital revenue bonds, series 2001. Fitch does not rate the series 1993 ($41 million outstanding), which are insured by Ambac (rated 'AAA' by Fitch). The Rating Outlook has been revised to Negative. The rating downgrade to 'BB+' and Negative Outlook reflects Wilson N. Jones Regional Health System's weak balance sheet, negative operating performance through the nine months-ended Sept. 30, 2002, and high debt burden. WNJ's unrestricted cash and investments totaled $7.2 million (21 days cash on hand) at Sept. 30, 2002, which was much lower than the $20.5 million (95 days cash on hand) reported at fiscal year-end 1999. This sharp decline is directly related to inefficient receivables management (134 days in accounts receivables) and the unexpected use of cash reserves for property, plant, and equipment, particularly, the completion of a $19.5 million medical office building. However, management has informed Fitch that short-term collections have improved, with the assistance of various consultants, and liquid reserves have increased by more than $4 million. WNJ's operating and excess margins were negative 1.1% and negative 0.4%, respectively, through the nine month interim period. The negative performance can be attributed to increased usage of contract labor, specifically agency nurses, and rising bad debts, which represents 14% of total revenues. Given the high aging of receivables, Fitch expects additional bad debt write-offs over the near-term. WNJ's negative operating performance has depressed cash flow and caused leverage indicators to weaken. Through Sept. 30, 2002, maximum annual debt service coverage was 1.5 times, cash to debt was very low at 8%, and debt to EBIDA was high at 8.0x. Although WNJ's performance has recently declined, Fitch believes management has taken necessary actions that should stabilize operations and eventually improve financial indicators. Since Nov. 1, 2002, WNJ has cut nearly all contract labor and expects to save approximately $0.5 million per month. Additionally, Fitch believes WNJ's actions to improve revenue cycle and receivables management should lead to increased cash flow. Furthermore, management expects to monetize the recently constructed MOB, which would add approximately $10-$15 million in unrestricted cash to WNJ's balance sheet. Positive volume trends are viewed as a credit strength and WNJ boasts approximately 60% market share compared to Texoma Medical Center's 29%. The Negative Outlook reflects Fitch belief that additional bad debt write-offs could occur in the near-term and that the restoration of the balance sheet to the level of previous years will take considerable time. Management still faces numerous obstacles to fully turnaround operations, and if the projected improvements are not realized or financial indicators continue to fall then further negative rating pressure may be placed on the credit. Located in Sherman, TX (65 miles north of Dallas), WNJ is a small hospital system that operates 285 beds at two medical centers. WNJ had $151 million in total operating revenue in FY 2001. WNJ covenants to provide quarterly disclosure to bondholders, which Fitch views favorably. WORLDCOM INC: Wants to Pull Plug on North Pacific Cable Pacts ------------------------------------------------------------- Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, informs the Court that many large telecommunications companies in the world are parties to the North Pacific Cable Construction and Maintenance Agreement dated February 2, 1989, as supplemented. Pursuant to the C&M Agreement, the parties built the North Pacific Cable, a fiber-optic cable originating in Japan connecting to the U.S. in Alaska and Oregon to provide a direct telecommunications link between the United States and Japan. Due to legal restrictions in the U.S. and Japan, the Consortium Members jointly own the submarine cable -- i.e. the undersea section, but do not jointly own the "terrestrial" sections of NPC -- i.e. the section which connects the submarine cable's beachfront landing point to the Consortium's telecommunications networks located at the Interface Points. The Consortium includes, among others, AT&T, British Telecom, Deutsche Telekom, Sprint, and various telecommunications authorities and entities from Japan, Korea, Singapore, the Philippines, Canada, Switzerland, Brazil, Italy, Hong Kong, Norway, and Belgium. Ms. Goldstein relates that the C&M Agreement provides for the allocation among the Members of the initial construction costs and ongoing maintenance obligations in respect of the submarine section of NPC. To coordinate service, operation and maintenance issues in connection with NPC, the terms of the C&M Agreement provide for a management committee. Each Member has voting rights on the MC based on the Member's ownership interest in NPC. Maintenance costs for NPC are divided among the Members based on these ownership interests. Generally, ownership interests are commensurate with a Member's anticipated fiber capacity needs. In the event a Member determines that it requires additional capacity to handle its customers' telecommunications traffic across NPC, Ms. Goldstein explains that the capacity may be purchased from another Member of the Consortium through agreements known as indefeasible rights of use. A Submarine IRU represents a transfer of interest in the "selling" Member's "capacity" interest in the submarine section of NPC, but not the ownership interest in NPC. Accordingly, the selling Member's maintenance costs associated with its ownership interest are not reduced, but these costs are reimbursed by the counter-party to the Submarine IRU. As Members do not own the terrestrial sections of NPC, Ms. Goldstein explains that access to NPC's terrestrial sections connecting the Landing Points to the Interface Points is purchased through agreements commonly known as "Backhaul Agreements." Backhaul refers to the fiber-optic transmission cables and related equipment linking the undersea cable from the beachfront Landing Points to the Interface Points' transmission centers. There are two forms of NPC Backhaul Agreements, via ownership of fiber capacity or IRUs and short-term leases of fiber capacity. Since the Petition Date, Worldcom Inc., and its debtor- affiliates have reviewed their network strategy and operating capacity, which is an ongoing, integral component of the Debtors' long-range business plan. In connection therewith, the Debtors determined that they do not require access to NPC. Although NPC represented an important network route immediately following its construction, Ms. Goldstein contends that its utility has significantly diminished with the advent of other more advanced and cost-effective technology. In determining to terminate its access to NPC, the Debtors considered, network needs, overcapacity, costs and other inefficiencies, as well as the Debtors' ability to move traffic to alternative network sources in a more cost-effective manner. In view of these factors, pursuant to Sections 365(a) and 554(a) of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, the Debtors seek the Court's authority to reject the NPC Agreements and abandon their ownership interests in NPC. Ms. Goldstein reports that the Debtors currently only have one customer on NPC, and that customer will no longer utilize NPC by the end of December 2002. The maintenance costs associated with the NPC under the C&M Agreement and the IRUs reach $300,000 per month while the lease costs in respect of Backhaul Leases equal to $45,800 per month. By rejecting the NPC Agreements, the Debtors will save the estates $3,682,000 in administrative expenses per annum. In addition, the Debtors will terminate their NPC costs for future years, including any costs in connection with dismantling NPC. The Debtors have reviewed the NPC Agreements and determined that there is likely no market for the assignment of the NPC Agreements. For these reasons, the NPC Agreements should be rejected effective January 1, 2003. Due to the collapse of the telecommunications industry, as evidenced by the numerous Chapter 11 filings in recent years, Ms. Goldstein believes that the market for network capacity is currently oversaturated. Moreover, in light of technologically superior and more cost-effective means of network transmission, NPC is of no value to the Debtors or any other party. Most likely, there is no market for the sale of the Debtors' interests in NPC. Telecommunications service and capacity of the type acquired pursuant to the NPC Agreements may be leased for 20% of the maintenance costs currently being paid by the Debtors under the NPC Agreements. (Worldcom Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Advisory Board ABCO (16) 48 (20) Air Canada AC (938) 8,901 (634) Alliance Imaging AIQ (79) 658 25 Alaris Medical AMI (47) 573 129 Amylin Pharm Inc. AMLN (3) 63 47 Amazon.com AMZN (1,440) 1,637 286 Anteon Int'l. Corp. ANT (3) 307 27 Arbitron Inc. ARB (169) 127 17 Alliance Resource ARLP (47) 291 (2) American Standard ASD (90) 4,831 208 Actuant Corp ATU (44) 294 18 Avon Products AVP (46) 3,193 428 Saul Centers Inc. BFS (24) 346 N.A. Choice Hotels CHH (64) 321 (28) Chippac Inc. CHPC (23) 431 (18) Caremark Rx, Inc. CMX (772) 874 (31) Campbell Soup Co. CPB (114) 5,721 (1,479) Echostar Comm DISH (778) 6,520 2,024 Dun & Brad DNB (20) 1,431 (82) Gamestop Corp. GME (4) 607 31 Hollywood Entertainment HLYW (113) 718 (271) Hollywood Casino HWD (92) 553 89 Imclone Systems IMCL (5) 474 295 Inveresk Research Group IRGI (7) 302 (115) Gartner Inc IT (34) 839 (79) Journal Register JRC (36) 711 (26) Kos Pharmaceuticals KOSP (58) 83 27 Ligand Pharm LGND (58) 117 22 Level 3 Comm Inc. LVLT (65) 9,316 642 Mega Blocks Inc. MB (37) 106 56 Moody's Corp. MCO (304) 505 12 Medical Staffing MRN (33) 162 55 Petco Animal PETC (86) 473 68 Proquest Co. PQE (45) 628 (140) Playtex Products PYX (44) 1,105 108 RH Donnelley RHD (111) 296 0 Sepracor Inc. SEPR (314) 1,093 727 United Globalcom UCOMA (3,284) 9,039 (8,279) United Defense I UDI (166) 912 (55) Valassis Comm. VCI (66) 363 10 Ventas Inc. VTR (91) 942 N.A. Weight Watchers WTW (87) 483 (24) Western Wireless WWCA (274) 2,370 (105) Expressjet Holdings XJT (214) 430 52 ********* 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. 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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. 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