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/raid1/www/Hosts/bankrupt/TCR_Public/030303.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, March 3, 2003, Vol. 7, No. 43 Headlines AMERICAN LAWYER: Eases Fin'l Flexibility with Amended Debt Pacts AMERIPATH: S&P Assigns Low-B Corp. Credit & Sub. Notes Ratings APPLICA INC: Hits Sales and Earning Expectations in 4th Quarter ASIA GLOBAL CROSSING: Seeks to Assume & Assign KDDI & NEC Pacts BASIS100 INC: Court Clears EFA Group Asset Sale to Computershare BCE INC: Lawsuit Launched against 5 Former Teleglobe Directors BIOTRANSPLANT INC: Files Chapter 11 Petition in Boston, Mass. BIOTRANSPLANT INC: Case Summary & 20 Largest Unsec. Creditors BURLINGTON INDUSTRIES: Berkshire Terminates $579-Mil. Cash Offer CALYPTE BIOMEDICAL: Dec. 31 Net Capital Deficit Widens to $7MM CANMINE RESOURCES: PricewaterhouseCoopers Appointed as Receiver CEDRIC KUSHNER: Needs Additional Financing to Sustain Operations COMDISCO INC: Seeks Approval of Subrogation Rights Transfer CWMBS (INDYMAC): Fitch Downgrades Several Issues Due to Losses DEVINE: Intends to Meet TSX's Continued Listing Requirements DICE INC: Garden City Appointed as Claims and Balloting Agent DIGEX INC: Commences Trading on OTCBB Effective February 28 DONINI INC: Samuel Klein & Co. Expresses Going Concern Doubt ENCOMPASS SERVICES: Implementing Key Employee Retention Plan FLEMING COS: S&P Lowers Credit Rating to B- and Says Watch Neg. FREESTAR TECH.: Court Dismisses Involuntary Chapter 7 Petition GAP INC: Brings-In Eva Sage-Gavin as EVP of Human Resources GAP INC: Fourth Quarter Performance Shows Marked Improvement GEN. CHEMICAL: S&P Cuts Rating over Increased Liquidity Concerns GISA HOLDINGS: Sues MAII Hldgs. & Car Rental for Breach of Pacts GLOBAL CROSSING: IMPSAT Demands Prompt $1.9M Admin Claim Payment GMACM MORTGAGE: Fitch Rates 2 P-T Note Classes at Lower-B Level GRAHAM PACKAGING: Narrows Partners' Capital Deficit to $460 Mil. HOLLINGER INT'L: Expects Up to $120-Million in EBITDA in 2002 HOLLINGER INT'L: Board of Directors Declare Quarterly Dividend HOLLYWOOD CASINO: S&P Junks Ratings over Notes Repurchase Issues HORSEHEAD INDUSTRIES: Court Fixes March 28, 2003 Claims Bar Date IMPAC FUNDING: Fitch Hatchets Ratings on Various Note Issues INTEGRATED DEFENSE: S&P Puts Low-B Ratings on Watch Developing INTERPLAY ENTERTAINMENT: Shoos-Away Ernst & Young as Accountants IPCS INC: Gets Court OK to Engage Mayer Brown as Special Counsel JP MORGAN: S&P Assigns Low-B Prelim. Ratings to 3 Note Classes KEMPER INSURANCE: Enters Renewal Rights Pact with Arch Insurance KEY3MEDIA GROUP: Hires AlixPartners for Court Noticing Services KNITWORK PRODUCTIONS: Wants to Pay $810,000 to Critical Vendors KULICKE & SOFFA: Gets Purchase Orders from Samsung Electronics LAIDLAW INC: W.D.N.Y. Court Confirms Third Amended Reorg. Plan LEATHERLAND: Brings-In George Lang & Associates as Accountants MERRILL LYNCH: S&P Keeps Watch on Four Low-B Note Class Ratings METRIS COS.: Fitch Junks Senior & Credit Facility Ratings at CCC METRIS COS.: Won't Pay Dividend Due to Credit Pact Restrictions MITEC TELECOM: Further Downsizes Global Manufacturing Operations MSU DEVICES: Files for Chapter 11 Reorganization in N.D. Texas NAT'L CENTURY: HHA & HBHS Intends to Participate in Proceedings NEW HORIZONS WORLDWIDE: Completes $14MM Term Loan Refinancing NOMURA CBO: Fitch Ratchets Several 1997-1 & 1997-2 Note Ratings NORTEL NETWORKS: Will Pay Preferred Share Dividends on April 14 NORTHWEST PIPELINE: Caps Senior Notes Offering Price NUTRITIONAL SOURCING: Unsec. Committee Hires Stroock as Counsel OGLEBAY NORTON: Annual Shareholders' Meeting Slated for April 30 OTTAWA SENATORS: PwC Now Accepting Purchase Offers PACIFIC GAS: Confirmation Hearing to Continue Early Next Month PAXSON COMMS: Selling KAPX-TV Station to Telefutura for $20 Mil. PEGASUS COMMS: Reports Improved Fin'l Results for Q4 & YE 2002 PETROLEUM GEO: NYSE Suspends Trading for Violating Requirements PG&E CORP: Red Ink Flows in 2002 with Net Loss Topping $874 Mil. PHOTOCHANNEL NETWORKS: Dec. 31 Balance Sheet Upside-Down by $2MM PRIME GROUP: Barnes & Thornburg Executes Sublease Amendment REALTY INCOME: Moody's Raises Preferred & Unsecured Ratings RESIDENTIAL ACCREDIT: Fitch Rates 2 Note Classes at Low-B Levels RITE AID: Cerberus Advised to Pass on any Investment Last Year SAIRGROUP FINANCE: Confirmation Hearing Scheduled for April 8 SHERRITT POWER: Distributes Mail Circular for March 25 Meeting SIERRA HEALTH: Fitch Rates $100MM Convertible Senior Notes at BB SOTHEBY HLDGS: S&P Affirms B+ Credit Rating after Nixed Merger SPIEGEL GROUP: Retailer In or Very Near the Zone of Insolvency SPIEGEL GROUP: Appoints James M. Brewster as Chief Fin'l Officer STEEL DYNAMICS: Buys Remaining Interest in New Millennium Bldg. TRICO MARINE: S&P Revises B+ Rating Outlook to Neg. after Review UBIQUITEL INC: Closes Exchange Offer for 14% Senior Notes UNIROYAL TECH: Judge Walsh Appoints Second Retirees' Committee UNITED AIRLINES: Inks Codeshare Agreement with Mesa Air Group US AIRWAYS: Meets Financial Tests for Pension Plan Termination USG CORP: Court Moves Lease Decision Deadline to August 29, 2003 VENUS EXPLORATION: Consents to Chapter 11 Reorganization WELLS FARGO MORTGAGE: Fitch Rates Classes B-4 & B-5 at BB/B WICKES INC: S&P Drops Rating to SD After Completed Debt Exchange WILLIAMS COS.: Completes Sale of Travel Centers for $189 Million WORLDCOM INC: Seeking SBC's Compliance under MVP Agreements YUM! BRANDS: Posts Improved International System Sales for Jan. * Cadwalader Names Two Special Counsel in London Office * Lawrence M. Nagin Joins O'Melveny & Myers LLP as "Of Counsel" * BOND PRICING: For the week of March 3 - 7, 2003 ********* AMERICAN LAWYER: Eases Fin'l Flexibility with Amended Debt Pacts ---------------------------------------------------------------- American Lawyer Media, Inc. (ALM), the nation's leading legal journalism and information company, announced changes to two debt agreements that will provide the company with increased financial flexibility. ALM will defer the payment of cash interest on the senior discount notes issued by its parent corporation, American Lawyer Media Holdings, Inc., until June 2005. In addition, the terms of ALM's current $40 MM revolving credit facility, issued by GE Corporate Finance to ALM's operating subsidiary, The New York Law Publishing Company, have been revised to provide compliance alternatives for three key financial ratios. The holders of the senior discount notes have agreed to waive cash payment of semi-annual interest that was to begin in June 2003. The senior discount notes will now become "cash-pay" in December 2004, with the first payment due on June 15, 2005. The deferral of the cash payments will result in a reduction in ALM's projected FY 2003 and FY 2004 cash interest payments of $7.8 MM per year. The senior discount notes will continue to accrete until December 2004, at which time the aggregate principal amount of the notes will be $80,260,705. Beginning on December 15, 2004, cash interest on the senior discount notes will accrue at the rate of 12.25% per annum. Bruce Wasserstein, chairman of the board of directors of ALM and ALM Holdings, and certain affiliates own all of the senior discount notes. In addition, as of February 27, 2003, Bruce Wasserstein and certain affiliates own approximately 4% of the $175 million 9-3/4% senior notes issued by American Lawyer Media, Inc. The terms of three specific covenants contained in the GE Corporate Finance revolving credit agreement have also been amended. These covenants, specifying required compliance levels for ALM's maximum total leverage, minimum interest coverage and minimum fixed charge coverage, now provide alternative compliance levels. Specifically -- according to information obtained from http://www.LoanDataSource.com-- ALM agrees: * ALM's Total Leverage Ratio must be cut by more than half over the next five years and must not exceed: For Any Fiscal Quarter Maximum Total Ending During the Period of Leverage Ratio --------------------------- -------------- Closing Date through Sept. 29, 2002 16.00 to 1.00 Sept. 30, 2002 through Dec. 30, 2003 14.00 to 1.00 Dec. 31, 2003 through Dec. 30, 2004 13.00 to 1.00 Dec. 31, 2004 through June 29, 2005 8.50 to 1.00 June 30, 2005 through June 29, 2006 8.00 to 1.00 June 30, 2006 through Dec. 30, 2006 7.50 to 1.00 Dec. 31, 2006 and thereafter 7.00 to 1.00 * ALM must maintain an Interest Coverage Ratio of no less than: For Any Fiscal Quarter Minimum Interest Ending During the Period of Coverage Ratio --------------------------- ---------------- Closing Date through Sept. 29, 2002 0.60 to 1.00 Sept. 30, 2002 through Dec. 30, 2003 0.70 to 1.00 Dec. 31, 2003 through Dec. 30, 2004 0.75 to 1.00 Dec. 31, 2004 through March 30, 2005 1.00 to 1.00 March 31, 2005 through Dec. 30, 2005 1.15 to 1.00 Dec. 31, 2005 and thereafter 1.30 to 1.00 * ALM covenants that it will maintain a Fixed Charge Coverage Ratio of no less than: Minimum For Any Fiscal Quarter Fixed Charge Ending During the Period of Coverage Ratio --------------------------- -------------- Closing Date through March 30, 2003 0.50 to 1.00 March 31, 2003 through Dec. 30, 2003 0.55 to 1.00 Dec. 31, 2003 through Dec. 30, 2004 0.60 to 1.00 Dec. 31, 2004 through March 30, 2005 0.80 to 1.00 March 31, 2005 through Dec. 30, 2005 1.05 to 1.00 Dec. 31, 2005 and thereafter 1.15 to 1.00 Additionally, the credit agreements provide for incremental interest rates based on actual financial performance -- the higher the credit risk, the higher the interest rate. The revolving credit agreement was also amended to allow for the senior discount note transaction described above. Based on the increased financial flexibility provided by these amendments, ALM may purchase senior notes in the marketplace, make acquisitions and pursue new business initiatives, as permitted under its indentures and credit agreement. Further details on both of these agreements are available in Form 8K reports filed by ALM and ALM Holdings with the Securities and Exchange Commission. Headquartered in New York City, ALM is a leading integrated media company, focused on the legal industry. ALM currently owns and publishes 23 national and regional legal magazines and newspapers, including The American Lawyer(R) and The National Law Journal(R). ALM's other businesses include Web, book, custom and newsletter publishing, court verdict and settlement reporting, production of legal trade shows and conferences, educational seminars and distribution of content related to the legal industry. ALM was formed by U.S. Equity Partners, L.P., a private equity fund sponsored by Wasserstein & Co., LP. More information on ALM, its business and services is available on the Web at http://www.americanlawyermedia.com * * * Standard & Poor's lowered its corporate credit rating on American Lawyer Media Holdings Inc. and its subsidiary American Lawyer Media Inc., to triple-'C' from triple-'C'-plus and also removed all ratings from CreditWatch, where they were placed on Sept. 6, 2001. The downgrade reflects the company's continued weak operating performance, primarily as a result of declining advertising revenues for its publications. The current outlook for the New York, New York-headquartered company is negative. "The downgrade reflects continued weak operating performance, thin interest coverage, and increasing cash interest requirements in 2003," said Standard & Poor's credit analyst Hal Diamond. "Standard & Poor's is concerned that the lackluster legal advertising market may continue to hamper profitability despite cost reductions. Further deterioration in profitability would prompt another downgrade." AMERIPATH: S&P Assigns Low-B Corp. Credit & Sub. Notes Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' corporate credit rating to anatomic pathology services company AmeriPath Inc. At the same time, Standard & Poor's assigned a 'B+' rating to AmeriPath's proposed $365 million senior secured credit facility and a 'B-' to its proposed $210 million senior subordinated notes maturing in 2013. Both the credit facility and the notes will be issued as part of a leveraged buyout by the company's equity sponsor, Welsh, Carson, Anderson, and Stowe. The outlook on the Riviera Beach, Fla.-based AmeriPath is positive. At the close of the transaction, roughly $500 million of debt will be outstanding. "The speculative grade ratings reflect AmeriPath's leading U.S. position in the field of anatomic pathology services, a niche segment that is subject to reimbursement risks and competitive uncertainties," said Standard & Poor's credit analyst Jordan C. Grant. The company has grown through its acquisitions of more than 50 anatomic pathology businesses since its formation in 1996. AmeriPath serves both the outpatient and hospital markets, specializing in dermatopathology, urology, women's health, and gastroenterology. About 50% of the company's revenues are derived from outpatient services, in which the company provides analysis of samples for physicians using a network of regional and satellite laboratories. Almost all of the company's remaining business is derived from its hospital laboratories, in which AmeriPath serves as an exclusive provider of professional pathology services for contracted hospitals. AmeriPath's business is concentrated in a relatively narrow field that is subject to reimbursement risks. The rapid expansion of the business has been assisted by a positive trend upward in both Medicare and Medicaid reimbursement rates for anatomic pathology procedures. However, rates for 2003 and beyond may be less favorable than they have been in recent years. Standard & Poor's expects the pace of the company's acquisitions to abate somewhat in the intermediate term following the LBO. AmeriPath competes with large national clinical laboratories Quest Diagnostics Inc. and Laboratory Corp. of America Holdings Inc., as well as many local players. (Eighty percent of U.S. pathologists work in small practices of 10 physicians or less.) APPLICA INC: Hits Sales and Earning Expectations in 4th Quarter --------------------------------------------------------------- Applica Incorporated (NYSE: APN) announced that fourth-quarter sales for 2002 were $221.4 million, an increase of 5.2% from the fourth quarter of 2001. For the year ended December 31, 2002, net sales were flat at $727.4 million. Sales for the quarter and the year increased in North America, but were offset by continued weakness in Latin America. In the fourth quarter, increased sales of Black & Decker branded products, pest control products, contract manufacturing and professional personal care products were offset by decreases in sales of Windmere and other branded products, primarily in Latin America. For the year, increases in contract manufacturing and sales of pest control products were offset by decreases in sales of Windmere branded and other products. Harry D. Schulman, Applica's President and Chief Executive Officer, commented, "I am pleased that we were able to hit the high end of our sales and earnings expectations despite the sluggish world economy, the congestion resulting from the West Coast port lock-out and lower sales to certain of our customers with increased credit risk. Additionally, our continued focus on the balance sheet was evident as we decreased our debt level to $194 million as of December 31, 2002." Applica reported net earnings for the 2002 fourth quarter of $5.1 million, compared with a loss of $28.1 million for the 2001 fourth quarter. Excluding aggregate charges and certain tax expenses of $31.3 million, the pro forma earnings for the 2001 fourth quarter were $3.2 million. As previously announced, in the first quarter of 2002, the Company recognized a non-cash adjustment to goodwill of $121.3 million (or $78.8 million after tax) as the result of its assessment of its existing goodwill for impairment in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." The adjustment was reported as a cumulative change in accounting principle and reduced reported earnings by $3.31 per share for the year. The change in accounting principle did not impact the Company's operations or cash position. Additionally, as previously announced, during 2002, Applica took charges relating to costs and expenses of the consolidation of its Shelton, Connecticut, office, as well as certain back-office and supply chain functions in Latin America and Canada, in an aggregate amount of $10.6 million. These charges were partially offset by a one-time gain of $557,000 in the third quarter of 2002 in connection with its settlement of all outstanding litigation matters with Salton, Inc. For the year ended December 31, 2002, Applica reported a net loss of $73.8 million, compared with a loss of $28.4 million for 2001. Excluding (1) the effect of the cumulative change in accounting principle in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, (2) the costs and expenses related to the consolidation of its Shelton, Connecticut, office, as well as certain back-office and supply chain functions in Latin America and Canada, and (3) the one-time gain on the settlement of outstanding litigation matters with Salton, the pro forma earnings for the year ended December 31, 2002, were $11.1 million. Excluding aggregate charges and certain tax expenses of $31.3 million, the pro forma earnings for the year ended December 31, 2001, were $2.9 million. Applica's gross profit margin was 32.9% in the fourth quarter as compared to 28.9% in 2001, excluding the $13.4 million in recall charges recorded in cost of sales in 2001. Gross profit margin was 31.9% for the year ended December 31, 2002, as compared to 29.0%, excluding the applicable charges recorded as cost of sales in 2001. The gross profit margins increased as Applica experienced an improved product mix during 2002 and higher production levels at its manufacturing facilities. Mr. Schulman continued, "We are encouraged by the expansion in gross margins. We have a product development team dedicated to innovation in and outside of our core categories that will drive margins for us and our retail partners." EBITDA increased 21.9% to $23.4 million for the 2002 fourth quarter. For the year, EBITDA increased 6.3% to $67.7 million, as compared to $63.7 million for 2001, excluding applicable charges for 2002 and 2001. At December 31, 2002, total debt as a percentage of total capitalization was 47.0%, with total debt of $194.0 million and stockholders' equity of $219.1 million. The Company's book value per share was $9.33 at December 31, 2002. Capital expenditures for the years ended December 31, 2002 and 2001, were $19.3 million and $23.3 million, respectively. Applica Incorporated and its subsidiaries are manufacturers, marketers and distributors of a broad range of branded and private-label small electric consumer goods. The Company manufactures and distributes small household appliances, pest control products, home environment products, pet care products and professional personal care products. Applica markets products under licensed brand names, such as Black & Decker(R), its own brand names, such as Windmere(R), LitterMaid(R) and Applica(TM), and other private-label brand names. Applica's customers include mass merchandisers, specialty retailers and appliance distributors primarily in North America, Latin America and the Caribbean. The Company operates manufacturing facilities in China and Mexico. Applica also manufactures products for other consumer products companies. Additional information regarding the Company is available at http://www.applicainc.com As previously reported in Troubled Company Reporter, Standard & Poor's raised its senior secured bank loan rating on Miami Lakes, Florida-based Applica Inc.'s $205 million revolving credit facility due December 2005 to double-'B'-minus from single-'B'-plus. At the same time, Standard & Poor's affirmed its single-'B'-plus corporate credit rating on the small appliance manufacturer and marketer. The outlook is stable. ASIA GLOBAL CROSSING: Seeks to Assume & Assign KDDI & NEC Pacts --------------------------------------------------------------- Prior to the Petition Date, NEC Corporation and KDDI Submarine Cable Systems Inc., were the primary vendors that constructed "East Asia Crossing," a 17,900-kilometer subsea, fiber-optic cable system in East Asia that is the primary physical asset of East Asia Crossing Ltd., an indirect, wholly owned subsidiary of Asia Global Crossing Ltd. The AGX Debtors and EACL incurred substantial indebtedness to NEC and KDDI totaling about $280,000,000 in connection with the construction of East Asia Crossing. NEC and KDDI have agreed with AGX, EACL and Asia Netcom to reduce, restructure, and release their claims. According to Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman LLP, in New York, the reduction, restructuring and release of NEC and KDDI's claims are a central component of the Asia Netcom Transaction. Concurrently with the negotiation of the Sale Agreement with Asia Netcom, the AGX Debtors negotiated with both KDDI and NEC to reduce and restructure the amounts due each Vendor. As a result of those negotiations and on the date of execution of the Sale Agreement, each of NEC and KDDI executed an agreement with AGX, EACL and Asia Netcom that generally provides for or contemplates: -- a reduction by 30% of the debt owed to each of the Vendors by EACL and AGX; -- the exchange of mutual releases between the Vendors, on the one hand, and AGX and certain of its subsidiaries, on the other hand; -- the substitution of Asia Netcom in lieu of AGX as a party to the operative agreements between AGX and the Vendors, including each of the Second Amendments; and -- AGX to seek the Court's authority to assume certain agreements with NEC or KDDI, specified in these Vendors' Second Amendments, and assign these agreements to Asia Netcom. By its terms, each of the Second Amendments is effective only after the consummation of the Asia Netcom Transaction. In order that AGX may fulfill its contractual obligations under the Second Amendments, by this motion, the Debtors ask Judge Bernstein to: A. authorize AGX to assume and assign to Asia Netcom the agreements with KDDI and NEC, to the extent these agreements may be assumed and assigned under Section 365 of the Bankruptcy Code; and B. authorize and approve the releases required to be executed and delivered by AGX and certain of its affiliates in favor of NEC and KDDI. To facilitate the Asia Netcom Transaction, Mr. Casher states that the effectiveness of each of the Second Amendments is conditioned on the assumption by AGX of certain agreements between AGX and the relevant Vendor and the assignment by AGX of these agreements to Asia Netcom. Specifically, the KDDI Amendment No. 2 Conditions Precedent include that the Asia Netcom Transaction will have been consummated following entry by the Court of an order: -- approving the Asia Netcom Transaction; and -- authorizing and approving AGX's assumption of the KDDI Assumed Agreements and assignment of the KDDI Assumed Agreements to Asia Netcom, in each case effective after consummation of the Asia Netcom Transaction. The NEC Amendment No. 2 Conditions Precedent include that the NEC Assumed Agreements will have been: -- assumed by AGX under Section 365 of the Bankruptcy Code by a Court order in form and substance reasonably satisfactory to NEC, which order will be in full force and effect and will not have been stayed, modified, reversed or amended as of the Closing Date; and -- assigned to, and assumed by, Asia Netcom pursuant to one or more assignment and assumption agreements in form and substance satisfactory to NEC. Pursuant to the Sale Motion, Mr. Casher relates that AGX already has requested authority to assume and assign to Asia Netcom certain agreements that it has entered into with the Vendors. By this motion, AGX seeks to assume and assign to Asia Netcom those same agreements, together with certain additional agreements. Although there is some redundancy between the relief requested in the Sale Motion and the relief requested in this motion, the Debtors concluded that it would be more edifying to request, in a single motion, authority to assume and assign to Asia Netcom all executory contracts to which AGX and KDDI or NEC are parties, rather than potentially create confusion by requesting authority to assume and assign some executory contracts to Asia Netcom in the Sale Motion and others in a subsequent motion. As of the Petition Date, Mr. Casher notes that AGX was in default under certain of the KDDI Assumed Agreements and certain of the NEC Assumed Agreements. However, for purposes of facilitating AGX's assumption of these agreements and its assignment to Asia Netcom, and, in recognition of the execution by the parties of the Second Amendments, the Vendors are not requiring AGX to cure these defaults as a condition to assumption and assignment. With respect to Vendor Assumed Agreements to which a non-AGX-affiliated third party is a party, notice of this request has been given to DB Trustees (Hong Kong) Limited. AGX does not believe that it is in default -- monetary or otherwise - under the Third Party Vendor Assumed Agreements. Accordingly, Section 365(b) of the Bankruptcy Code does not govern AGX's request to assume and assign to Asia Netcom the Third Party Vendor Assumed Agreements. Nevertheless, the single non-AGX-affiliated party to the Third Party Vendor Assumed Agreements will have an opportunity to contest AGX's assertion that it is not in default under the agreements. AGX proposes that, after consummation of the Asia Netcom Transaction, each non-debtor party to a Third Party Vendor Assumed Agreement will be forever barred from asserting cure or other amounts with respect to the Third Party Vendor Assumed Agreements. Pursuant to the Second Amendments, KDDI and NEC are consenting to the assumption by AGX, and the assignment by AGX to Asia Netcom, of the Vendor Assumed Agreements. The effectiveness of each of the KDDI Amendment No. 2 and the NEC Amendment No. 2 is conditioned on the assumption by AGX, and the assignment by AGX to Asia Netcom, of the KDDI Assumed Agreements and the NEC Assumed Agreements. Therefore, the issue of "adequate assurance of future performance" is not implicated with respect to KDDI and NEC. With respect to the sole non-AGX-affiliated third party to the three Third Party Vendor Assumed Agreements, AGX contends that the assumption and assignment to Asia Netcom of the Third Party Vendor Assumed Agreements will provide each non-debtor counterparty with adequate assurance of the future performance. To the extent any defaults exist under the two Third Party Vendor Assumed Agreements, Mr. Casher assures the Court that AGX will cure the default. In respect of Asia Netcom's financial credibility and its ability to perform in the future, Asia Netcom's corporate parent, CNC, will be capitalizing Asia Netcom with $120,000,000 of equity capital and has arranged for bank debt financing totaling $150,000,000 to be available to Asia Netcom. In addition, CNC has executed and delivered to AGX a guaranty -- up to $16,000,000 -- of the payment and performance by Asia Netcom of its obligations under the Sale Agreement. At the Sale Hearing and at the hearing on this request, Mr. Casher tells the Court that AGX will produce additional evidence of Asia Netcom's financial credibility, experience, and ability to perform under the Third Party Vendor Assumed Agreements. The Sale Hearing and the hearing on this request, therefore, will provide the Court and other interested parties the opportunity to evaluate and challenge the ability of Asia Netcom provide adequate assurance of future performance under the two Third Party Vendor Assumed Agreements, as required under Sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code. Accordingly, the Court should authorize AGX to assume and assign the Vendor Assumed Agreements. Assumption and assignment of the Vendor Assumed Agreements will be effective only after consummation of the Asia Netcom Transaction, and will not burden AGX's estate with any administrative expense liability. By facilitating the consummation of the Asia Netcom Transaction, assumption and assignment of the Vendor Assumed Agreements will contribute to the enrichment of AGX's estate by a minimum of $68,500,000 and a maximum of $89,800,000 in cash proceeds from the consummation of the Asia Netcom Transaction. Moreover, each of the Second Amendments generally provides for the release by AGX of KDDI or NEC of: -- the particular Vendor's obligations to perform under certain agreements specified in the relevant Second Amendment; and -- AGX's related claims, rights and defenses, each release generally being effective after the consummation of the Asia Netcom Transaction. Specifically, with respect to AGX's obligation to release NEC, the NEC Amendment No. 2 provides that AGX and the Excluded Subsidiaries: -- fully and finally release NEC, together with its Subsidiaries and Affiliates from their obligations under NEC Payment Deferral Loan Agreement, the NEC Supply Contract and the Transaction Agreements; and -- agree to waive and release any claims, rights or defenses that may limit or restrict the effectiveness or scope of the AGX/NEC Release. With respect to AGX's obligation to release KDDI, the KDDI Amendment No. 2 generally provides that AGX will: -- fully and finally release KDDI from claims under the KDDI Assumed Agreements; and -- waive and release any claims, rights or defenses against KDDI that may limit or restrict the effectiveness of the AGX/KDDI Release. (Global Crossing Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392- 0900) DebtTraders reports that Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USR1), DebtTraders reports, are trading at 12 cents on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USR1 for real-time bond pricing. BASIS100 INC: Court Clears EFA Group Asset Sale to Computershare ---------------------------------------------------------------- Basis100 Inc. (TSX:BAS), a business services provider to the financial services industry, announced that a definitive agreement on the sale of the EFA Group was executed on February 7, 2003. In addition, on February 27, orders were issued by the Court of Queen's Bench of Alberta authorizing the sale of the EFA Group's assets to Computershare Investor Services Inc., and providing for the vesting of assets necessary to complete this transaction. The EFA Group also applied for and received an extension of the deadline to file a formal proposal under the Bankruptcy and Insolvency Act of Canada to April 11, 2003 in order to facilitate the sale transactions. Now that the court has approved the agreement of purchase and sale and made all orders required to allow the transaction to close, the parties expect to close in March 2003. In December, 2002, Basis100 announced that it had agreed to sell certain assets of EFA Software Services Ltd., and EFA Cyprus Ltd., (part of the EFA Group) to Computershare, a global technology solutions provider to the securities industry. Basis100 Inc., is a business services provider to the financial services industry, which enables companies to build, distribute, buy and sell products and services in more efficient and innovative ways. Basis100's lines of business include: Lending Solutions for consumer credit, mortgage origination and processing; Data Warehousing and Analytics Solutions for automated property valuations, property data-warehousing, data products and analytics support; and Capital Markets Solutions for fixed income trading. For more information about Basis100, visit http://www.Basis100.com At December 31, 2002, the Company's balance sheet shows a working capital deficit of about $2.4 million. The Company's total shareholders' equity has further diminished to about $11 million, from about $40 million recorded a year earlier. BCE INC: Lawsuit Launched against 5 Former Teleglobe Directors -------------------------------------------------------------- BCE Inc., was informed that a lawsuit was filed in the Ontario Superior Court of Justice by Kroll Restructuring Ltd., in its capacity as interim receiver of Teleglobe Inc., against five former directors of Teleglobe Inc. This lawsuit was filed in connection with Teleglobe Inc.'s redemption of its third series preferred shares in April 2001 and the retraction of its fifth series preferred shares in March 2001. The plaintiff, without establishing any basis on which its allegations are made, is seeking a declaration that such redemption and retraction were prohibited under the Canada Business Corporations Act and that the five former directors should be held jointly and severally liable to restore to Teleglobe Inc., all amounts paid or distributed on such redemption and retraction, being an aggregate of approximately C$661 million, plus interest. While BCE is not a defendant in this lawsuit, Teleglobe was at the relevant time a subsidiary of BCE. Pursuant to standard policies and subject to applicable law, the five former Teleglobe Inc. directors are entitled to be indemnified by BCE in connection with this lawsuit. Based on its knowledge of the facts, BCE strongly believes that the claims contained in the plaintiff's lawsuit are without merit and that these claims will be vigorously defended against to the fullest extent possible. BCE is Canada's largest communications company. It has 25 million customer connections through the wireline, wireless, data/Internet and satellite services it provides, largely under the Bell brand. BCE's media interests are held by Bell Globemedia, including CTV and The Globe and Mail. As well, BCE has e-commerce capabilities provided under the BCE Emergis brand. BCE shares are listed in Canada, the United States and Europe. BIOTRANSPLANT INC: Files Chapter 11 Petition in Boston, Mass. ------------------------------------------------------------- BioTransplant Incorporated (Nasdaq: BTRN) announced that the Company and its wholly-owned subsidiary, Eligix, Inc., have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the U.S. Bankruptcy Court in Boston, Massachusetts. "While this was a difficult decision for this Company to make, the filings were necessary to preserve and maximize the value of our intellectual property and, in particular, to avoid the potentially devastating effects of the attempted termination by the Catholic University of Louvain of our exclusive license to develop and commercialize BTI-322 and its human analogue, MEDI- 507. This decision will allow BioTransplant to continue its efforts to maximize the value of its key assets," commented Donald B. Hawthorne, Chief Executive Officer of BioTransplant. "We intend to continue to seek to resolve the disputes with the Catholic University of Louvain, and under the protection of the Bankruptcy Court, we firmly believe that we will be in an even stronger position to negotiate reasonable terms," stated Mr. Hawthorne. BioTransplant's key objective remains to enter into attractive partnering and licensing agreements with respect to its key assets while preserving its rights to any potential future royalty income from MEDI-507. The compound is currently in Phase II clinical trials for psoriasis being conducted by BioTransplant's partner MedImmune, Inc., and in the xenotransplantation program being conducted by Immerge Biotherapeutics AG, its joint venture with Novartis. The Company will continue partnering and licensing discussions for the Eligix(TM) HDM Cell Separation System and the AlloMune(TM) System. BioTransplant Incorporated, a Delaware corporation located in Medford, Massachusetts, is a life science company whose primary assets are intellectual property rights that it has exclusively licensed to third parties. The Company's strategy is to maximize the potential future value of these licensed intellectual property rights. The Company has exclusively licensed siplizumab (MEDI-507), a monoclonal antibody product, to MedImmune, Inc. Siplizumab is in Phase II clinical trials for the treatment of psoriasis. The Company's assets also include the AlloMune System technologies, which are intended to treat a variety of hematologic malignancies and improve outcomes for solid organ transplants, and the Eligix HDM Cell Separation Systems, which use monoclonal antibodies to remove unwanted cells from bone marrow, peripheral blood stem cell and donor leukocyte grafts used in transplant procedures. BioTransplant also has an interest in Immerge BioTherapeutics AG, a joint venture with Novartis, to further develop both companies' individual technology bases in xenotransplantation. BIOTRANSPLANT INC: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: Biotransplant Incorporated 200 Boston Avenue Medford, Massachusetts 02155 Bankruptcy Case No.: 03-11585 Type of Business: BioTransplant discovers, develops and commercializes therapeutics, therapeutic devices and therapeutic regimens designed to suppress undesired immune responses and enhance the body's ability to accept donor cells, tissues and organs. Chapter 11 Petition Date: February 27, 2003 Court: District of Massachusetts (Boston) Judge: Carol J. Kenner Debtor's Counsel: Daniel C. Cohn, Esq. Cohn Khoury Madoff & Whitesell LLP 101 Arch Street Boston, MA 02110 Tel: 617-951-2505 Total Assets: $16,338,300 Total Debts: $6,960,338 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Massachusetts General Contract $746,086 Hospital 50 Staniford Street Suite 1001 Boston, MA 02114 Tel: 617-726-3503 BioLease Inc. Landlord $34,957 The Nasdaq Stock Market Trade Creditor $29,820 TUV America, Inc. Trade Creditor $21,391 AllCells, LLC Trade Creditor $21,391 Onyx Environmental Services Trade Creditor $20,256 Merrill Comms LLC Trade Creditor $16,951 Beckham Coulter, Inc. Trade Creditor $12,858 NSTAR Electric Trade Creditor $11,602 Charles River Laboratories Trade Creditor $10,920 Commonwealth of Mass. Trade Creditor $9,704 Dept. of Revenue Expanets Financial Services Trade Creditor $9,678 Eagle Building Services Trade Creditor $8,840 AllEnergy Trade Creditor $7,013 Keyspan Energy Delivery Trade Creditor $5,687 Lab Support Trade Creditor $5,640 Susan Dearborn Trade Creditor $5,500 IKON Office Solutions Trade Creditor $5,201 Tuscarora Inc. Trade Creditor $5,097 The St. Paul Trade Creditor $5,058 BURLINGTON INDUSTRIES: Berkshire Terminates $579-Mil. Cash Offer ---------------------------------------------------------------- Burlington Industries, Inc., (OTC Bulletin Board: BRLG) said that Berkshire Hathaway, Inc., had terminated its February 11, 2003 agreement to acquire Burlington. Under the agreement, Burlington creditors would have received distributions estimated at $579 million in cash. Berkshire's action follows a ruling Thursday before Judge Randall Newsome in Wilmington in a hearing in Burlington's reorganization case to consider procedures to solicit alternatives to the Berkshire transaction. The Bankruptcy Court indicated it approved the procedures generally, but disapproved the break-up fee and certain other conditions required by Berkshire to proceed as a "stalking horse" in the alternative bid process. While the secured bank lenders were in support, the Official Committee of Unsecured Creditors opposed the granting of a break-up fee. WL Ross & Co. wants to finance a plan that calls for a stand- alone plan of reorganization that swaps new equity for old claims. WL Ross says its plan idea delivers up to 45 cents-on- the-dollar to Burlington's unsecured creditors. George W. Henderson III, Burlington's Chairman and CEO, said, "It is unfortunate that the Berkshire Hathaway break-up fee was not accepted by the Court and the offer has been subsequently withdrawn by Berkshire. It was a firm cash offer that would have been a good outcome for the company, our employees and our creditors. "The fact that there is so much interest in the company is a credit to our employees that have worked so hard to get us to this point. The bankruptcy process is complex and consists of many steps." Henderson continued, "We are pleased that the Court extended our period of exclusivity as part of this hearing. We are reviewing our alternatives in light of these developments, including a process to solicit new proposals. We expect to advise the Bankruptcy Court of our thinking next week and intend to move the process forward in a positive and expeditious manner." Warren E. Buffett, Chairman of Berkshire Hathaway commented, "We're sorry to have to terminate our offer. We trust and admire the Burlington team and hope the company can emerge bankruptcy debt free. Emergence from bankruptcy under a debt-free structure will provide the best chance for the long-term survival of Burlington and allow the company to best fulfill its pension obligations to employees." With operations in the United States, Mexico and India and a global manufacturing and product development network based in Hong Kong, Burlington Industries is one of the world's most diversified marketers and manufacturers of softgoods for apparel and interior furnishings. CALYPTE BIOMEDICAL: Dec. 31 Net Capital Deficit Widens to $7MM -------------------------------------------------------------- Calypte Biomedical Corporation (OTCBB:CALY), the developer and marketer of the only two FDA-approved HIV-1 antibody tests that can be used on urine samples, as well as an FDA-approved serum HIV-1 antibody Western Blot supplemental test, announces financial results for the fourth quarter and year ended December 31, 2002. Recent Highlights During the second half of 2002 and in first part of 2003, Calypte's management team has moved forward with its objective to advance sales growth by increasing product distribution and gaining further acceptance in the marketplace. Recent highlights include: -- Achieved sequential-quarterly revenue growth of 64% from $493,000 to $809,000 in the fourth quarter. -- As announced Thursday, added Planned Parenthood Golden Gate to the growing list of customers utilizing Calypte's urine HIV-1 tests. As one of the larger Planned Parenthood affiliates, this relationship represents an excellent opportunity to demonstrate the benefits of urine testing to other Planned Parenthood chapters and similar organizations. -- Qualified for distribution in the state of California by PathNet Esoteric Laboratory Institute, which specializes in pathology, cytopathology and amplified esoteric sexually transmitted disease testing for numerous women's healthcare providers. Calypte and PathNet intend to work together to develop and implement outreach programs to notify PathNet's clients and other healthcare providers about the test availability. -- Received its first and second commercial orders from its Chinese distributor for a total of over 260,000 tests. The first order for 100,000 tests was received in October and shipped in December and the second order for 160,000 tests was received in January 2003, sooner than anticipated, and will be shipped in the next several weeks. -- Executed a Memorandum of Understanding with the Safe Blood for Africa Foundation to market and distribute Calypte's urine-based HIV-1 antibody tests and Serum Western Blot tests in sub-Saharan Africa. The tests are to be used as blood donor pre- screening tools in Safe Blood for Africa Foundation's mission to help prevent the spread of HIV/AIDS throughout 34 countries in sub-Saharan Africa. -- Joined the Community Healthcare Network's (CHN) menu of testing services. CHN, a not-for-profit organization, oversees a network of nine health care centers and three mobile vans, which reach over 60,000 individuals and their families in New York City annually. -- The U.S. Food and Drug Administration (FDA) eliminated the requirement for lot release testing for the Calypte HIV-1 Urine EIA, as the result of a demonstrated multi-year history of successful product manufacture. Elimination of the FDA lot release testing is expected to reduce the production-to-market time by two to eight weeks and decrease associated production costs without sacrificing any product quality. A similar elimination of FDA lot release testing for the Cambridge Biotech HIV-1 Urine Western Blot is also being sought by the company. -- Gained recognition for Calypte's test in a study led by Johns Hopkins University that concluded urine-based HIV screening can be an effective tool for identifying and treating infected persons in high-prevalence inner city communities, and leads to increased voluntary HIV testing versus testing for HIV with blood samples. The test was published in the December 2002 JAIDS Journal of Acquired Immune Deficiency Syndromes. -- Increased government relations expertise by hiring Dr. Richard George, a CDC and HIV veteran, to spearhead global programs to increase awareness of the importance of HIV testing, highlight the benefits of urine-based testing, develop HIV testing programs and secure capital to fund programs with public sector and government-sponsored agencies. -- Appointed Ms. Dian Harrison, CEO of Planned Parenthood Golden Gate Chapter, to the company's Board of Directors effective February 24, 2003. The company intends to utilize Ms. Harrison's experience educating and administering care in reproductive and general health issues. "During the last quarter of 2002, we believe that our continued progress was evidenced by the increase in sequential revenue and our expanded distribution channels," stated Anthony Cataldo, executive chairman of Calypte. "We believe that in the first half of 2003, Calypte will continue to build its distribution channels and sign on new customers, to provide future growth. As these customers generally need approximately six months to ramp up and provide a normalized revenue, we hope to benefit during the second half of the year." Nancy Katz, Calypte's president and chief executive officer, stated, "Calypte has also made important strides operationally. As Calypte already has FDA-approved manufacturing facilities, during a review of production goals for our Rapid HIV-1 Test, which is under development, we determined that we will manufacture the test internally. Thus, we plan to utilize our expertise and strict quality controls, and we expect to increase efficiencies and rate of production. As our decision to manufacture our proposed Rapid HIV-1 Test internally will require us to obtain the necessary funding to purchase equipment and materials as well as time to finalize product design, we have delayed our IDE submission. However, we believe this strategy and these initial capital investments will provide significantly greater long-term return and margins on the Rapid product once developed." Cataldo continued, "Our long-term goal is to maximize the potential of our core urine-based testing solutions. We have built a foundation with our urine HIV-1 screening and confirmatory tests. Now, one of our highest priorities is to secure the necessary funding to complete our Rapid HIV-1 Urine Test IDE submission and to be able to meet our current manufacturing requirements for our FDA approved products. Upon filing the IDE, we intend to launch the Rapid Test internationally, which is our largest target market. At the same time, we intend to pursue FDA clearance to distribute the Rapid Test product domestically. We can begin clinical trials 30 days after our IDE submission, and from there we would anticipate receiving FDA clearance in 12-18 months, allowing 6-12 months for our trials and a maximum of 6 months for the FDA's review process. We will also simultaneously continue our research and development of tests in the areas of infectious and other diseases." For the fourth quarter ended December 31, 2002, Calypte recorded revenues of $809,000, compared with $2.3 million in the fourth quarter of 2001. The net loss attributable to common stockholders for the quarter was approximately $6.3 million, compared with a net loss attributable to common stockholders of $1.2 million for the three months ended December 31, 2001. The net loss for the fourth quarter ended December 31, 2002 included $3.6 million in non-cash charges related the grants of common stock and fully vested options and warrants as compensation for services that are included in selling, general and administrative expenses and non-cash interest expense. During the quarter ended December 31, 2001, there was less than $0.1 million in non-cash charges. For the year-ended December 31, 2002, Calypte reported revenues of $3.7 million, compared with $6.8 million in 2001. The net loss attributable to common stockholders for 2002 was $13.4 million, compared with a net loss attributable to common stockholders of $9.2 million for the year ended December 31, 2001. Calypte's 2002 operations and results were significantly impacted by the second quarter decision that resulted in an almost-complete wind down of its operations due to insufficient cash to fund continuing operations. This decrease also reflects lower revenues, increased non-cash-operating expenses, and an increase in non-cash interest expense related to the financings, offset by extraordinary income related to the extinguishment of debt. The net loss for the year-ended December 31, 2002 included $5.1 million in non-cash charges related to the grants of common stock and fully vested options and warrants as compensation for services that are included in selling, general and administrative expenses and non-cash interest expense. During the year ended December 31, 2001 these non-cash charges were approximately $1.6 million. Calypte Biomedical's December 31, 2002 balance sheet shows a working capital deficit of about $4 million, and a total shareholders' equity deficit of about $7 million. 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, 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. CANMINE RESOURCES: PricewaterhouseCoopers Appointed as Receiver --------------------------------------------------------------- Edward L. Ellwood reports on behalf of Canmine Resources Corporation (TSX Symbol: CMR) the following: 1) Following a meeting of the Corporation's board of directors held on Tuesday evening, February 25, 2003 with counsel present, all of the Corporation's directors and officers resigned. 2) During a hearing held on Feb. 26 before the Ontario Superior Court of Justice a protection Order previously issued under the Companies' Creditor Arrangement Act with regard to the Corporation was lifted effective immediately. 3) Also during the Court hearing, an Order was issued appointing PricewaterhouseCoopers Inc. as interim receiver to liquidate the Corporation's assets for the benefit of all stakeholders. CEDRIC KUSHNER: Needs Additional Financing to Sustain Operations ---------------------------------------------------------------- The revenues of Cedric Kushner Promotions Inc. decreased by approximately $4,438,000, to $1,869,000 for the three months ended September 30, 2002, from $6,307,000 for the three months ended September 30, 2001. While the number of televised events promoted were equal at eight events during each period, the average size of the events decreased significantly from approximately $555,000 per event during the three months ended September 30, 2001 to $171,000 for the same period in 2002. This decrease was due to relatively fewer premium cable licensing fees due to the expiration of contracts with premium level boxers. In addition, the Company had a decrease in activity from its talent command premium cable licensing fee. The revenue for the three months ended September 30, 2002 includes $500,000 from the assignment of a boxer's contract to another promoter. Costs of revenue decreased by approximately $3,710,000, to $2,183,000 for the three months ended September 30, 2002, from $5,893,000 for the three months ended September 30, 2001. Costs declined corresponding with the number and dollar volume of events promoted by the Company. Revenues decreased by approximately $840,000, to $13,604,000 for the nine months ended September 30, 2002, from $14,444,000 for the nine months ended September 30, 2001. The number of televised events promoted increased slightly during the period ended September 30, 2002 to 23 events from 19 during the same period the previous year. However the average size of the events decreased from approximately $760,000 per event during the nine months ended September 30, 2001 to $570,000 for the same period in 2002. This decrease was due to relatively fewer premium cable licensing fees due to the expiration of contracts with premium level boxers. In addition, the Company had a decrease in activity from its talent command premium cable licensing fee. The revenue for the nine months ended September 30, 2002 includes $500,000 from the assignment of a boxer's contract to another promoter. Costs of revenue decreased by approximately $72,000, to $13,329,000 for the nine months ended September 30, 2002, from $13,401,000 for the nine months ended September 30, 2001. Costs declined corresponding with the number and dollar volume of events promoted by the Company. At September 30, 2002, the Company had deficiencies in working capital of approximately $7,402,000 and an accumulated deficit of $11,380,000 and there is substantial doubt about the Company's ability to continue as a going concern unless it is able to obtain additional financing. There can be no assurance that sufficient funds required during the next twelve months or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing shareholders. There is substantial doubt about the Company's ability to continue as a going concern. COMDISCO INC: Seeks Approval of Subrogation Rights Transfer ----------------------------------------------------------- William J. Raleigh, Esq., at Raleigh & Cahill, in Chicago, Illinois, relates that pursuant to the Acquisition Agreement, Comdisco, Inc., and its debtor-affiliates transferred their disaster recovery services business to SunGard Data Systems Inc. and SunGard Recovery Services L.P. Because the employment positions of a number of Comdisco's employment were transferred as part of the acquisition, a number of former Comdisco employees became SunGard employees. Certain of these employees had previously participated in the SIP. At the time the Acquisition Agreement was negotiated, the Debtors and SunGard also agreed that the Debtors should transfer the SIP Rights related to the employees' SIP participation to SunGard and that SunGard should assume the Potential SIP Liabilities related to the employees' SIP Participation. After having discussions with SunGard, the Debtors have determined to re-assume the SIP Rights and to release SunGard from its agreement to assume the Potential SIP Liabilities or its assumption of the Potential SIP Liabilities, as applicable, in exchange for a cash payment from SunGard pursuant to the terms of a letter agreement. Consequently, the Reorganized Debtors ask the Court to approve the Letter Agreement they entered into with SunGard, and authorize them to assume the Potential SIP Liabilities and subrogation rights from SunGard. The Letter Agreement sets forth the terms under which SunGard will transfer to the Reorganized Debtors the SIP Rights previously transferred to SunGard and the Reorganized Debtors will release SunGard from its obligation to assume the Potential SIP Liabilities or its assumption of those Potential SIP Liabilities, as applicable. The SIP Rights and Liabilities relate to that certain Facility and Guaranty Agreement dated February 2, 1998 by and among Comdisco, Inc. and the First National Bank of Chicago, SunGard having agreed to assume the SIP Rights and Liabilities pursuant to that certain Acquisition Agreement, effective as of July 15, 2001 and executed as of October 12, 2001. Mr. Raleigh explains that under the SIP, certain Comdisco employees were offered the opportunity to purchase stock interests in the Company with the proceeds of third-party loans. Specifically, 106 Comdisco managers borrowed approximately $109,000,000 from certain third-party lenders through full recourse, personal loans to purchase over 6,000,000 shares of Old Common Stock. The SIP Loans closed on January 30, 1998 and were guaranteed by Comdisco, Inc. pursuant to a guaranty agreement. In conjunction with the sale of certain of the Debtors' assets to SunGard as approved by Court orders, the Debtors agreed to transfer their subrogation rights under the Guaranty Agreement, and SunGard agreed to assume certain potential liabilities related thereto, with respect to certain employees whose positions were being transferred to SunGard. At present, Mr. Raleigh tells the Court, SunGard wants to transfer and the Reorganized Debtors wants to re-assume those Subrogation Rights and Liabilities in exchange for a $4,400,000 cash payment by SunGard to the Debtors, subject to certain adjustments based on the results of litigation or any settlement by the Reorganized Debtors with Bank One. "The Plan gives the Debtors broad authority to operate their business in furtherance of the Plan," Mr. Raleigh explains. Section 14.2 of the Plan authorizes the Debtors to "settle any Claims against them and claims they may have against Other Persons without approval from the Bankruptcy Court." Thus, the Debtors believe that they have the authority to enter into the Letter Agreement without Court approval. However, because of the pending litigation surrounding the SIP claims generally, the Debtors and SunGard have determined to voluntarily seek the Court's approval of the Letter Agreement. After reviewing the SIP claims and their defenses to the claims, the Debtors believe that it is likely that any settlement or damages award on account of the SunGard employees' SIP claims will be less than the amount that SunGard has agreed to pay. In addition, the complicated litigation related to the SIP is complicated further by SunGard's participation as a party. By assuming the Potential SIP Liabilities, the Debtors are able to eliminate one party, SunGard, and streamline that process. (Comdisco Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) CWMBS (INDYMAC): Fitch Downgrades Several Issues Due to Losses -------------------------------------------------------------- Fitch Ratings downgrades the following CWMBS (IndyMac) Inc.'s mortgage pass-through certificates: CWMBS (IndyMac) 1995-I: -- Class B4 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 1996-G Group 1: -- Class B-1E rated 'B' is placed on Rating Watch Negative. CWMBS (IndyMac) 1996-G Group 2: -- Class B-2D rated 'BB' is placed on Rating Watch Negative. -- Class B-2E rated 'B' is downgraded to 'D'. CWMBS (IndyMac) 1999-F (RAST 1999-A6): -- Class B5 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 1999-G (RAST 2000-A7): -- Class B4 rated 'BB' is placed on Rating Watch Negative. --Class B5 rated 'CCC' is downgraded to 'CC'. CWMBS (IndyMac) 2000-A (RAST 2000-A1): -- Class B4 rated 'B' is placed on Rating Watch Negative. -- Class B5 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 2000-C (RAST 2000-A3): -- Class B4 rated 'B' is placed on Rating Watch Negative. -- Class B5 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 2000-D (RAST 2000-A4): -- Class B4 rated 'BB' is downgraded to 'B' and placed on Rating Watch Negative. -- Class B5 rated 'B-' is downgraded to 'C'. CWMBS (IndyMac) 2000-E (RAST 2000-A5): -- Class B4 rated 'BB' Rating Watch Negative is downgraded to 'B' and remains on Rating Watch Negative. -- Class B5 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 2000-G (RAST 2000-A7): -- Class B4 rated 'BB' Rating Watch Negative is downgraded to 'B' and remains on Rating Watch Negative. -- Class B5 rated 'CCC' is downgraded to 'C'. CWMBS (IndyMac) 2000-H (RAST 2000-A8): -- Class B4 rated 'BB' is downgraded to 'B' and placed on Rating Watch Negative. --Class B5 rated 'B-' is downgraded to 'C'. 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 February 25, 2003 distribution. DEVINE: Intends to Meet TSX's Continued Listing Requirements ------------------------------------------------------------ Responding to the recently announced TSX listing review, Devine Entertainment Corporation (TSX:DVN) stated that the Company intends to meet the TSX's continued listing requirements within the 120 days granted by the review process. President and CEO David Devine commented, "Given the stock market's continued downturn and the Company's recent share price, the listing review had been expected. With the completion of production financing of Devine Entertainment's new projects and a contractually committed favorable debt-restructuring expected in the near future, the Company is looking for a positive resolution within the specified time period." Five-time Emmy Award-winning Devine Entertainment Corporation is a developer and producer of high-quality children's and family films designed for worldwide television and cable markets and international home video markets. The Company's interactive history website, http://www.devinetime.com, was a YAHOO! Canada "Pick of the Week" and won first prize in the Entertainment category at the Atlantic Digital Media Festival. * * * As previously reported in the Jan. 23, 2003, edition of the Troubled Company Reporter, Devine Entertainment Corporation reached an agreement with the majority of its outstanding debenture holders to postpone certain principal payments. In aggregate, CDN $1,385,800 principal amount of the Series 1 and 2 Subordinate Convertible Debentures are currently issued and outstanding. As of December 31, 2002 the Company was in default on the Series 2 Debentures. The Company previously reported that because of conditions in the capital markets that made it difficult for the Company to raise equity investment, its working capital continues to be limited. With the support of its debt holders, the Company had previously postponed certain interest payments. DICE INC: Garden City Appointed as Claims and Balloting Agent ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave its nod of approval to Dice Inc., to appoint The Garden City Group, Inc., as Notice, Claims and Balloting Agent. The Debtor expects Garden City to: a) prepare and serve required notices in this Chapter 11 Case which may include: 1) notice of the commencement of this Chapter 11 Case and the initial meeting of creditors under Section 341(c) of the Bankruptcy Code; 2) notice of the claims bar date; 3) notice of objections to claims; 4) notice of any hearings pertaining to the adequacy of disclosure statement and/or confirmation of a plan(s) of reorganization; and 5) other miscellaneous notices to any entities, as the Debtor, or the Court, may deem necessary and appropriate for orderly administration of this Chapter 11 Case; b) file with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; c) conduct the reconciliation and resolution of claims; d) maintain copies of all proofs of claim and proofs of interest filed; e) maintain official claims registers, including information for each proof of claim or proof of interest: 1) the name and address of the claimant and any agent thereof, if the proof of claim or proof of interest was filed by an agent; 2) the date received; 3) the claim number assigned; and 4) the asserted amount and classification of the claims; f) implement necessary security measures to ensure the completeness and integrity of the claims register; g) transmit to the Clerk's Office a copy of the claims register on a monthly basis, unless requested by the Clerk's Office on a more frequent basis; h) act as the balloting agent in connection with a plan of reorganization, which will include: 1) printing of ballots including the printing of credit and shareholder specific ballots; 2) preparing the voting report for the plan by class, credits or shareholder for review and approval by the Debtor; 3) coordination of mailing of ballots, disclosure statement and plan to all voting and non-voting parties and provide affidavit of service; and 4) receiving ballots at a post office box, inspecting ballots for conformity to voting procedures, date stamping and numbering ballots consecutively and tabulating and certifying the results; i) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest; j) provide access to the public for examination of copies of proofs of claim or interest without charge during regular business hours; k) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e); l) comply with all applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and other requirements; and m) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe. Garden City's consulting and general project management hourly fees are: Clerical $40 to $60 per hour Supervisor $75 to $95 per hour Senior Supervisor/ Bankruptcy Paralegal $95 to $125 per hour Project Manager $150 per hour Senior Project Manager $175 per hour Quality Assurance $175 per hour Senior VP Systems and Managing Director $250 per hour Dice Inc., provides career management solutions to tech professionals via online job board, dice.com, through non-debtor subsidiary Dice Career Solutions, Inc., and certification preparation and assessment products through non-debtor subsidiary MeasureUp, Inc. The Company filed for chapter 11 protection on February 14, 2003 (Bankr. S.D.N.Y. Case No. 03- 10877). Robert Joel Feinstein, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $38,795,000 in total assets and $82,080,000 in total debts. DIGEX INC: Commences Trading on OTCBB Effective February 28 ----------------------------------------------------------- Nasdaq Listing Qualifications Panel delisted Digex, Incorporated's (OTC Bulletin Board: DIGX) common stock from The Nasdaq SmallCap Market effective at the opening of business Friday, February 28, 2003. Digex's common stock was eligible for trading on the Over-the- Counter (OTC) Bulletin Board effective with the opening of business Friday, February 28, 2003. The OTC Bulletin Board(R) (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the- counter equity securities. Information regarding the OTC Bulletin Board, including stock quotations, can be found at http://www.otcbb.com Digex's ticker symbol will remain "DIGX" on the OTC Bulletin Board. However, some Internet quotation services add an "OB" to the end of the symbol and will use "DIGX.OB" for the purpose of providing stock quotes. "This decision by Nasdaq does not affect our day-to-day operations and does not change our previously announced exploration of strategic alternatives," said George Kerns, Digex president and CEO. Digex, whose September 30, 2002 balance sheet shows a working capital deficit of about $30 million, and a total shareholders' equity deficit of about $2.5 million, 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 DONINI INC: Samuel Klein & Co. Expresses Going Concern Doubt ------------------------------------------------------------ Donini, Inc. was incorporated under the name PRS Sub VI, Inc., in the State of New Jersey in 1991 as a subsidiary of People Ridesharing Systems, Inc., a public corporation which filed for the protection of the Bankruptcy Court in 1989, to provide a candidate for merger with an operating company. The Company retained its status as a public company with no assets and no liabilities. In January 2001 certain shareholders of Pizza Donini Inc. a company organized under the laws of Canada, acquired eighty-two percent (82%) of the outstanding shares of the Company and the Company agreed to assume all liabilities of Pizza Donini. The Company owns 100% of the common stock Pizza Donini Inc. On February 6, 2001, Donini amended its Certificate of Incorporation changing its name from PRS Sub VI, Inc. to Donini, Inc. and increasing its authorized shares of common stock from 10,000,000 to 100,000,000, par value $.001. Pizza Donini Inc. was organized in 1987 and at present operates a franchise management company supporting over thirty pizza outlets in the Greater Montreal area. Pizza Donini Inc. supports twenty-eight (28) pizza outlets. At May 31, 2002 twenty-seven (27) were franchised and one (1) location was held with intention of selling it as a Pizza Donini franchise. In addition, Pizza Donini Inc. entered into an agreement with Zellers Inc., a Canadian national merchandise chain, to offer for sale Pizza Donini Inc. products in twenty seven (27) of its in store restaurants within its department stores, all in the Province of Quebec. Intrawest Corp, a developer and operator of village centered destinations resorts, has signed a three year contract for the supply of pizzas. During fiscal 2002, Donini's consolidated revenues increased $19,067, or 1.2%, to $1,593,462 from 2001 revenues of $1,574,395. This increase is primarily a result of increased revenues to outside distributors. Cost of goods sold for the year ended May 31, 2002 was $713,896, or 75.6%, as compared to $515,372, or 62.9%, for fiscal 2001. Working capital deficit during this period increased from $1,070,896 at May 31, 2001 to $1,234,186 at May 31, 2002. Total assets increased from $1,001,343 as of May 31, 2001 to $1,010,290 as of May 31, 2002. Net losses increased $493,820 from $1,029,453 during fiscal 2001 to $1,523,273 at May 31, 2002. The net increase in net losses is primarily due to increases in stock based compensation of $650,643 ($267,745 for advertising and promotion, and 382,898 for professional fees) and a decrease in product development, and recapitalization cost of $53,884 and $179,405 respectively. The Company maintains that its liquidity will improve marginally with improved earnings, but will not be sufficient to allow it to expand its operations to any significant degree. The Company has adopted a plan to raise additional capital through an outside offering of debentures. During fiscal year ended May 2002, Donini's principal independent account, KPMG LLP, resigned. That decision was based on the fact that fees were owed to the accounting firm, which fees the Company discharged through the issuance of 269,752 shares of common stock to KPMG LLP. The Board of Directors approved the change, which was deemed to be in the best interest of the corporation to change auditors. The financial statements for the Company's fiscal year ended May 31, 2002, were audited by Samuel Klein and Company. The audit report contains an explanatory paragraph related to substantial doubt about the Company's ability to continue as a going concern. ENCOMPASS SERVICES: Implementing Key Employee Retention Plan ------------------------------------------------------------ Encompass Services Corporation, and its debtor-affiliates sought and obtained the Court's permission to implement a key employee retention program designed to retain and motivate key employees during the pendency of their Chapter 11 cases. The Debtors developed the terms of the Retention Program after significant due diligence concerning the objectives of the Chapter 11 cases, and the job functions critical to the achievement of those objectives. The Retention Program is intended to halt declining employee morale, encourage key employees to remain with the Debtors during the course of these Chapter 11 cases, and increase the probability of successful Chapter 11 cases. The Key Employee Retention Program The Retention Program, as ratified by the Debtors' Board of Directors, will provide compensation to 69 of the Debtors' key employees. Essentially, all of the Key Employees are corporate employees who are located at the Debtors' corporate headquarters in Houston, Texas. These 69 employees include the remaining corporate staff that exists after a Reduction in Force in early January 2003. Under the Retention Program, each eligible employee will be entitled to receive a target retention amount calculated at 5% to 100% of base compensation based on the eligible employee's level and the expected required length of service. The actual amount designated for each individual will be determined by the Debtors' executive officers and approved by the Board. The designated Target Retention Amount will be paid in lieu of any other incentive bonus payments for the 2003 fiscal year and any severance benefits the eligible employees would otherwise receive under the Debtors' severance policy. The Debtors anticipate that the total of all Target Retention Amounts for eligible employees will be $3,200,000. The Debtors will save $900,000 from severance benefits that would otherwise be payable if the 69 employees are terminated. Given this, the aggregate cost of the Retention Program is $2,300,000. Payment Of Retention Amount Except in those circumstances where a Key Employee's designated assignment are completed before the confirmation of a reorganization plan, 100% of the Retention Amount will be earned, accrued and paid on the earlier of the completion of that Key Employee's assignment or the Confirmation Date. The payment of the Retention Amount will be done in this manner: -- All eligible employees are expected to remain with the Debtors through the Confirmation Date and will receive the full Retention Amount on that date or promptly after that, provided the employee is still an active employee on that date; -- If the eligible employee's assignments are completed before Confirmation Date, as determined by the Debtors' executive officers and approved by the Chairman of the Board, the eligible employee will be released before the Confirmation Date. The Debtors will terminate his employment without cause. Accordingly, the eligible employee will receive the full Retention Amount as if they remained an active employee through the Confirmation Date. The eligible employee's base compensation will end on the Employment Termination Date; and -- If an eligible employee resigns or is terminated for cause before the Assignment Completion Date or the Confirmation Date: (i) the Retention Amount will be forfeited; and (ii) the eligible employee's base compensation will end on the Employment Termination Date. Grounds For Termination Grounds for an eligible employee's termination for cause include the employee's: (a) material breach of his or her employment agreement, if applicable, or any policies the Debtors adopted; (b) gross negligence in the performance or intentional nonperformance of any of his duties and responsibilities; (c) dishonesty, fraud or misconduct with respect to the Debtors' business affairs; and (d) conviction of a felony. (Encompass Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING COS: S&P Lowers Credit Rating to B- and Says Watch Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Fleming Cos. Inc., to 'B-' from 'B'. The rating remains on CreditWatch with negative implications, where it was placed on Sept. 25, 2002. The Dallas, Texas-based company had $2 billion of total debt outstanding as of December 28, 2002. "The downgrade is based on our belief that the challenges Fleming faces in restructuring its wholesale business may weaken cash flow protection measures. Although liquidity for the near term appears sufficient and Fleming intends to reduce debt with proceeds from the sale of its retail assets, debt service costs in relation to cash flow remain high," said Standard & Poor's credit analyst Mary Lou Burde. Fleming has announced a cost reduction plan, including overhead reduction and the closure of four distribution centers (two of which were dedicated to the Kmart contract, due to terminate March 8, 2003). Cash costs associated with the plan are expected to be $115 million. Noncash charges associated with the plan and other impairment charges may adversely impact the company's previously announced 2002 financial results. Fleming still needs to fully integrate the CoreMark International Inc. acquisition, complete the sale of its retail assets, and manage the consolidation of two distribution centers. Moreover, the company has hired PricewaterhouseCoopers to assist with shareholder lawsuits and a formal SEC investigation into accounting matters. Standard & Poor's believes management will be challenged to manage these processes smoothly while maintaining focus on its core distribution business. Standard & Poor's will meet with management to assess Fleming's revised business strategy, including its plans to replace lost volume of the Kmart and retail business, prospects for debt reduction, and the SEC inquiry. DebtTraders reports that Fleming Companies Inc.'s 10.625% bonds due 2007 (FLM07USR1) are trading between 28 and 31. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FLM07USR1for real-time bond pricing. FREESTAR TECH.: Court Dismisses Involuntary Chapter 7 Petition -------------------------------------------------------------- FreeStar Technology Corporation (OTCBB:FSTI) announced that a memorandum of decision dismissing the Chapter 7 Involuntary Bankruptcy Petition, brought against the Company on January 9, 2003, was signed Thursday afternoon. Pursuant to the ruling by Honorable Judge Allan L. Gropper, the Chapter 7 Petition brought in January by vFinance, Inc., David Stefansky, Richard Rosenblum, Marc Siegel, Papell Holdings LLC and Boat Basin Investors Ltd., in the United States Bankruptcy Court for the Southern District of New York, will be dismissed promptly. As contended in FreeStar's Motion to Dismiss of February 4, 2003, the Petitioners held no claims against FreeStar that were not the subject of a bona fide dispute. FreeStar is of the opinion that the Chapter 7 Petition was filed in bad faith in order to depress FreeStar's share price and thus allow the Petitioners to cover a substantial naked short position in FSTI stock. FreeStar will seek substantial punitive and consequential damages, pursuant to provisions of the Bankruptcy Code, relating to the Petitioners' actions causing the Company's market capitalization to decrease significantly on and about January 10, 2003. The first of such motions, seeking statutory recovery of FreeStar's fees and costs, is likely to be filed within the next two weeks. Paul Egan, President and Chief Executive Officer of FreeStar, stated, "While the facts of this case were clear, we commend the diligent endeavors of our defense team. Justice has been served by today's ruling and we look forward to focusing our efforts on FreeStar's core business without further distraction." With Corporate headquarters in Santo Domingo, Dominican Republic, and offices in Dublin, Ireland, and Helsinki, Finland, FreeStar Technology is focused on exploiting a first-to-market advantage for enabling ATM and debit card transactions on the Internet and high-margin credit card processing through a leading Northern European processor, Rahaxi Processing Oy. FreeStar Technology's Enhanced Transactional Secure Software is a proprietary software package that empowers consumers to consummate e-commerce transactions on the Internet with a high level of security using credit, debit, ATM (with PIN) or smart cards. It sends an authorization number to the e-commerce merchant, rather than the consumer's credit card information, to provide a high level of security. For more information, please visit the Company's Web sites at http://www.freestartech.com http://www.rahaxi.comand http://www.epaylatina.com GAP INC: Brings-In Eva Sage-Gavin as EVP of Human Resources ----------------------------------------------------------- Gap Inc., (NYSE:GPS) announced that Eva Sage-Gavin is joining the company in the newly created role of Executive Vice President of Human Resources. Ms. Sage-Gavin will oversee Gap Inc.'s human resources strategies worldwide, including staffing, organization development and training, compensation and benefits, employee relations and diversity. Ms. Sage-Gavin, 44, will report to Paul Pressler, Gap Inc., President and CEO, and will be a member of the company's Executive Leadership Team. "This new position underscores our ongoing commitment to developing talent throughout the company," said Mr. Pressler. "Eva is a great addition to our team. She's a proven leader with strong experience in driving human resources strategies across a diverse and global employee base." Ms. Sage-Gavin joins Gap Inc., from Sun Microsystems, where she was Senior Vice President of Human Resources. Prior to joining Sun, Ms. Sage-Gavin served as Senior Vice President, Human Resources, for Disney Consumer Products, a division of the Walt Disney Company. In addition, she served in various senior human resources leadership positions for The PepsiCo Corporation, including its Taco Bell division, and for Xerox Corporation. Ms. Sage-Gavin holds a bachelor's degree in Industrial and Labor Relations from Cornell University. Gap Inc., is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic and Old Navy brand names. Fiscal 2002 sales were $14.5 billion. As of February 1, 2003, Gap Inc. operated 4,252 store concepts (3,117 store locations) in the United States, the United Kingdom, Canada, France, Japan and Germany. In the United States, customers also may shop the company's online stores at gap.com, BananaRepublic.com and oldnavy.com. As previously reported, the outlook on Gap Inc., was revised to negative from stable. The 'BB+' long-term and 'B' short-term corporate credit ratings on the company were also affirmed. The outlook revision was based on continuing negative sales trends in the company's Old Navy and Gap divisions. The ratings on the San Francisco, California-based company reflect management's challenge to improve business fundamentals in its three brands in an industry that will continue to experience intense competition, and to improve its weakened credit protection measures. These factors are partially offset by the company's strong business position in casual apparel, its geographic diversity, and strong cash flow before capital expenditures. GAP INC: Fourth Quarter Performance Shows Marked Improvement ------------------------------------------------------------ Gap Inc., (NYSE:GPS) reported sales and earnings for the fourth quarter and fiscal year 2002, ending February 1, 2003. Fourth Quarter Results Net sales for the fourth quarter increased 14 percent to $4.7 billion, compared with $4.1 billion for the fourth quarter last year. Comparable store sales increased 8 percent, compared with a decrease of 16 percent during the fourth quarter of the prior year. The company reported net income of $249 million for the fourth quarter, compared with a net loss of $34 million in the prior year. In addition to improved business performance, these results reflect a reduction in the company's effective tax rate and included a $40 million after-tax charge for estimated sublease reserves, which were taken for excess office space that the company intends to sublease. Fiscal 2002 Results Net sales of $14.5 billion for the 52 weeks ended February 1, 2003, increased 4 percent, compared with net sales of $13.8 billion for same period ended February 2, 2002. The company's comparable store sales for the year decreased 3 percent, compared with a decrease of 13 percent in the prior year. For the year, the company reported net income of $477 million, compared with a net loss of $8 million last year. In addition to improved business performance, these results reflect a reduction in the company's effective tax rate and included an after-tax charge for estimated sublease reserves, which were taken for excess office space that the company intends to sublease. "We're pleased with our fourth quarter and year-end results, which reflect the hard work and progress made in our turnaround efforts across all three brands," said President and CEO Paul Pressler. "Strong margin performance indicates our customers are responding to product improvements. Looking to 2003, we will continue to focus on improving our balance sheet, managing costs and creating sustainable growth strategies for our brands." Sales Results By Division The company's fourth quarter comparable store sales by division were as follows: -- Gap U.S.: positive 4 percent, compared with a negative 16 percent last year. -- Gap International: positive 6 percent, compared with a negative 14 percent last year. -- Banana Republic: positive 5 percent, compared with a negative 7 percent last year. - Old Navy: positive 14 percent, compared with a negative 20 percent last year. Net sales for the fourth quarter in each division were: -- Gap U.S.: $1.6 billion, compared with $1.5 billion last year. -- Gap International: $549 million, compared with $472 million last year. -- Banana Republic: $610 million, compared with $566 million last year. -- Old Navy: $1.9 billion, compared with $1.5 billion last year. For fiscal year 2002, the company's comparable store sales by division were as follows: -- Gap U.S.: negative 7 percent, compared with a negative 12 percent last year. -- Gap International: negative 5 percent, compared with a negative 11 percent last year. -- Banana Republic: negative 1 percent, compared with a negative 8 percent last year. -- Old Navy: positive 1 percent, compared with a negative 16 percent last year. Net sales for 2002 in each division were: -- Gap U.S.: $5.1 billion, compared with $5.2 billion last year. -- Gap International: $1.7 billion, compared with $1.6 billion last year. -- Banana Republic: $1.9 billion, compared with $1.9 billion last year. -- Old Navy: $5.8 billion, compared with $5.1 billion last year. February 2003 Outlook Commenting on February month-to-date sales results, Chief Financial Officer Byron Pollitt said: "Given the sharp drop in consumer confidence and extreme weather conditions on the East Coast, February has been challenging. Month-to-date, however, we are pleased with a high single-digit positive comp performance. "These results are somewhat short of our beginning of month projections, and while weather was clearly a factor, other reasons for this shortfall are difficult to read. We are still evaluating performance for the month." The company will report February sales on March 6, 2003. Real Estate Growth Gap Inc., increased net square footage by 2.5 percent in 2002 and ended the quarter with 4,252 concepts, which equates to 3,117 locations. Gap brand stores are reported based on concept and locations. Any Gap Adult, GapKids, babyGap or GapBody concept that meets a certain square footage threshold has been counted as a store, even when residing within a single physical location that may have other concepts. 2003 Real Estate Outlook The company announced it anticipates new store openings of about 30-40 locations, or 40-60 concepts, accompanied by store closures, which will likely be somewhat higher than 2002. Overall, the company expects net square footage to decline approximately two percent for the year. With a store base of more than 3,000 locations and a typical minimum lease term of about five years, Gap Inc. has 400 to 500 lease actions which come up for review each year. The company will use these opportunities over the next few years to optimize the number of stores in its fleet. Corporate Governance As part of the company's commitment to ensuring strong corporate governance practices, Gap Inc. also announced it has launched a new Corporate Governance section on gapinc.com. The section includes comprehensive information on Gap Inc.'s corporate governance guidelines, Board of Directors, board committees, executive leadership team and Code of Business Conduct. "We are committed to operating under the highest ethical business standards -- and that includes communicating openly and consistently with our shareholders," said Mr. Pressler. "In 2002, we further enhanced our board composition and practices, with emphasis on independence and corporate governance leadership. We will continue to evolve and adopt appropriate corporate governance best practices." As previously reported, the outlook on Gap Inc., was revised to negative from stable. The 'BB+' long-term and 'B' short-term corporate credit ratings on the company were also affirmed. The outlook revision was based on continuing negative sales trends in the company's Old Navy and Gap divisions. The ratings on the San Francisco, California-based company reflect management's challenge to improve business fundamentals in its three brands in an industry that will continue to experience intense competition, and to improve its weakened credit protection measures. These factors are partially offset by the company's strong business position in casual apparel, its geographic diversity, and strong cash flow before capital expenditures. GEN. CHEMICAL: S&P Cuts Rating over Increased Liquidity Concerns ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on commodity chemical producer General Chemical Industrial Products Inc., to 'B-' from 'B+', citing continued deterioration in market conditions that have increased near-term liquidity concerns. The current outlook is negative. General Chemical Industrial Products, based in Hampton, N.H., is a leading North American producer of soda ash, and has about $147 million of reported debt outstanding. "The downgrade reflects continued profitability weakness in the company's key markets, resulting in further deterioration to the financial profile and tightening liquidity," said Standard & Poor's credit analyst Franco DiMartino. The domestic soda ash market continues to suffer from overcapacity and downward pressure on pricing, while natural gas costs are trending higher. The resulting decline in profitability suggests that General Chemical may soon breach the financial covenants in its bank credit facility. Access to the credit facility is a key rating consideration in light of the company's low cash balance, persistent operating challenges, and significant debt service requirements. Standard & Poor's said that its ratings on General Chemical reflect a below-average business risk profile, characterized by a narrow focus on the highly cyclical and commodity-like soda ash and calcium chloride markets, and a very aggressive financial profile. GISA HOLDINGS: Sues MAII Hldgs. & Car Rental for Breach of Pacts ---------------------------------------------------------------- Gisa Holdings Inc., JMG Holdings, LLC and Jack and Marty Gunion, former owners of the Discount Car and Truck Rentals franchise in Maricopa County, Ariz., filed a lawsuit in the Superior Court of the State of Arizona (Case No. CV2003-002976), against MAII Holdings Inc. a Texas corporation; CRD Holdings Inc., a Delaware corporation; and CAR RENTAL DIRECT of Central Arizona Inc., an Arizona corporation. The complaint alleges: Breach of Agency; Constructive Fraud/Breach of Fiduciary Duty; Breach of Implied Covenant of Good Faith and Fair Dealing; Fraudulent Transfer; Unjust Enrichment; Promissory Estoppel; Negligence; Gross Negligence; Breach of Contract; Declaratory Judgment on Indemnity Liability; Constructive Trust; Specific Performance; and Punitive Damages, all related to the purchase of substantially all of Gisa's assets. MAII and CAR RENTAL DIRECT, through its chairman and CEO, Christie S. Tyler, announced in a press release on Aug. 29 they were canceling the terms of an Asset Purchase Agreement entered into with Gisa on May 1, 2002. In addition to the Asset Purchase Agreement between the parties, an Operating Agreement, entered into on the same date, obligated CAR RENTAL DIRECT to act as agent to Gisa in the operation of the business. The lawsuit alleges that MAII Holdings or CAR RENTAL DIRECT has never paid Gisa Holdings Inc., JMG Holdings or the Gunions for their business. Rental income or profits generated by CAR RENTAL DIRECT from the more than 600-vehicle fleet was never credited to Gisa. In addition to withholding all rental income and profits, CAR RENTAL DIRECT has yet to pay much of the Gisa debt incurred during the operation of the business, for which they were responsible as Gisa's agent. Numerous other allegations and Claims for Relief against MAII and CAR RENTAL DIRECT are spelled out in the formal complaint, filed in Maricopa County Superior Court on Feb. 13, 2002. In August 2002, Gisa filed a Chapter 11 petition in the Federal Bankruptcy Court in an effort to force CAR RENTAL DIRECT to immediately return all vehicles titled in Gisa's name. In October 2002, Gisa withdrew the Chapter 11 petition. Many attempts were then made to collect the vehicles through the beginning of 2003 by Gisa's creditors, but CAR RENTAL DIRECT continued to rent them and retained all rental proceeds and profits. Discount Car and Truck Rentals was the second largest company in Maricopa County, servicing the replacement vehicle market segment of the automobile rental industry. Ford Motor Credit, knowing that CAR RENTAL DIRECT specifically wanted to grow in the Phoenix market and in Gisa's segment of the industry, introduced CAR RENTAL DIRECT to Gisa. Following execution of the Operating Agreement by both parties on May 1, 2002, CAR RENTAL DIRECT substantially altered the business to the point where Gisa could no longer take it back. Signs were changed to the CAR RENTAL DIRECT name; computer systems were replaced; vehicles were sold from Gisa's fleet; customer relationships and certain leases were cancelled; and CAR RENTAL DIRECT subsequently discharged most of Gisa's former employees. Gisa, JMG Holdings and the Gunions are asking that MAII and CAR RENTAL DIRECT honor the terms of the Asset Purchase Agreement and Operating Agreement, entered into on May 1, 2002. GLOBAL CROSSING: IMPSAT Demands Prompt $1.9M Admin Claim Payment ---------------------------------------------------------------- Michael J. Canning, Esq., at Arnold & Porter, in New York, informs the Court that IMPSAT Fiber Networks Inc. is a party to 14 contracts with Global Crossing Ltd., and its debtor- affiliates. The IMPSAT Contracts generally consist of three types of agreements: -- Turnkey Backhaul Construction and IRU Agreements; -- Telehouse Agreements; and -- Capacity Agreements. Since the Petition Date, the IMPSAT Entities have continued to perform all of their obligations under the IMPSAT Contracts to the applicable GX Debtors. Given the crucial importance of the IMPSAT Contracts to the GX Debtors' continued business operations, the IMPSAT Entities' continued performance has, without question, conferred an ongoing, significant benefit to the Debtors' bankruptcy estates. Section 503(b)(1)(A) of the Bankruptcy Code grants administrative priority to "the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case." Pursuant to Bankruptcy Code Section 507(a)(1), administrative claims are afforded first priority. Specifically, claims that arise out of the continued operation of a debtor's business after the petition date are entitled to administrative priority. See, e.g., In re Enron Corp., 279 B.R. 695, 704 (Bankr. S.D.N.Y. 2002) ("expenses the debtor- inpossession incurs during the reorganization effort are afforded a first priority"). Moreover, even if a debtor-in- possession has not expressly assumed a contract under Section 365(a), the party requesting payment of administrative expenses will be entitled to such claim so long as there is a benefit to such debtor's bankruptcy estate from that party's continued performance. See Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 955 (2d Cir. 1993); In re Keren Ltd. P'ship, 225 B.R. 303, 308 (S.D.N.Y. 1998). Despite the IMPSAT Entities' continued performance during the Postpetition Period under the IMPSAT Contracts, however, Mr. Canning contends that the Debtors have failed to compensate the IMPSAT Entities in accordance with the payment terms of the IMPSAT Contracts. According to Mr. Canning, the payment terms of each of the IMPSAT Contracts require that payment be made in U.S. Dollars and U.S. Dollar equivalents, at the amounts set forth in the IMPSAT Contracts. In the case of certain of the Telehouse Agreements entered into by SAC Argentina, SAC Brasil and SAC, however, rather than pay the requisite amounts contractually provided for in U.S. Dollars and its equivalents, the Debtors have -- since the commencement of the Global Crossing Chapter 11 proceedings, and continuing throughout the Postpetition Periods -- made payments denominated in local currencies. These defective payments have resulted in the receipt by IMPSAT Argentina and IMPSAT Brazil of U.S. Dollar equivalents significantly less than that required by the applicable IMPSAT Contracts. This improper payment in local currencies, rather than in the contractually provided for U.S. Dollars, has resulted in significant shortfalls between amounts due and owing under the terms of the IMPSAT Contracts and amounts actually paid by the Debtors. The total amount owed by the Debtors on account of these shortfalls arising under the IMPSAT Contracts in respect of the Postpetition Period, through December 31, 2002, is $1,069,051.57, plus interest at the prime rate plus 1% from the date the amounts were contractually due. As these payment shortfalls occurred during the Postpetition Period, the IMPSAT Entities' claims for these shortfalls are entitled to administrative priority. Mr. Canning relates that each of the Backhaul Agreements contains provisions adjusting payment amounts for maintenance services to compensate for inflation. In this regard, the Debtors have incredibly asserted that the Inflation Adjustments permit them to reduce the amount of contractually provided for Recurring Service Charges arising under the Backhaul Agreements based on unverified changes in market prices for short-term maintenance services, and, predicated on this incorrect assertion, in October 2002, SAC failed to make proper payment in respect of amounts owing under the TAC Agreement. Moreover, Mr. Canning argues that the Debtors' Inflation Assertion is wholly unsupportable, as the Inflation Adjustments do not allow for a reduction in Recurring Service Charges due under the IMPSAT Contracts, but rather only provide for upward adjustments in payment amounts caused by inflation. Under the clear meaning of the TAC Agreement, Mr. Canning explains that after the request of either party, the parties should meet and mutually agree on an appropriate adjustment to the Recurring Service Charges at the time and in the event that the specific circumstances, namely an increase in inflation or additional services, occur. Global Crossing, however, has ignored its contractual obligation to meet and seek mutual agreement, but instead has imposed a self-help remedy for its willful failure to make payment when due. In this respect, Global Crossing never requested that the parties meet to discuss whether an adjustment to the TAC Agreement Recurring Service Charges should be considered in accordance with the procedures set forth in Section 9.02 of the TAC Agreement, and IMPSAT can only infer from Global Crossing's failure to follow the terms of the TAC Agreement that it well knows that any adjustment of the TAC Agreement Recurring Services Charges can only result in an increased payment to the IMPSAT Entities because of inflation, not a reduction. Even if the parties were to have attempted but failed to reach agreement on an adjustment, Mr. Canning notes that the TAC Agreement does not provide for a self-help remedy. Rather, Global Crossing would have had the right, while continuing to make full payment in accordance with the TAC Agreement, to seek dispute resolution on the parties' good faith obligations under New York law to negotiate a contractual adjustment. Instead, Global Crossing somehow suggested that the words of the adjustment provisions, which are expressly and specifically limited to "inflationary effects" and "system augments," allow Global Crossing relief because of short-term changes in local competitive pricing for similar services. Competitive pricing is not, and cannot be, a proxy for inflation. Competitive prices are dependent on a variety of factors, including those that are juxtaposed to inflation. Thus, Mr. Canning asserts that the clear meaning of the adjustment provisions is to contemplate additional payments to IMPSAT in the stated circumstances. There is no plausible reading of the relevant provisions that provide for reduced payments from Global Crossing, and most assuredly not in the context where the market for competitive services may have changed in the short-term. The parties knowingly entered into long-term fixed price contracts that intentionally did not provide adjustments based on market prices. Today, when Global Crossing seeks to lower its expenses and avoid its contractual obligations, it asserts a frivolous argument that it may have wished it had been able to negotiate several years ago. Accordingly, the balance of the total amount due during the Postpetition Period through December 31, 2002 with respect to the TAC Agreement equals $614,470.50, plus interest at the Prime rate plus 1% from the date the amounts were due. Once again, as the payment shortfalls caused by the Debtors' position with respect to the Inflation Adjustments have occurred during the Postpetition Period, the IMPSAT Entities' claims for these shortfalls are entitled to administrative priority. Finally, with respect to the Lima Telehouse Agreement dated March 16, 2000 among IMPSAT Peru, SAC Peru and SAC, and the Peru Backhaul Agreement, the Debtors have failed to pay amounts due under those agreements for the period between the Petition Date for SAC Peru's Chapter 11 proceeding through September 30, 2002. The amounts due in respect of the Lima Telehouse Agreement and Peru Backhaul Agreement total $246,262.26, plus interest at the Prime rate plus 1% from the date the amounts were due. As a result, the applicable IMPSAT Entities' claim for the shortfalls is entitled to administrative priority. Accordingly, IMPSAT asks the Court to allow its claims against the Debtors for the payment shortfalls under the applicable IMPSAT Contracts during the Postpetition Period, and grant the claims administrative priority pursuant to Sections 503(b)(1)(A) and 507(a)(1). (Global Crossing Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Global Crossing Ltd.'s 9.125% bonds due 2006 (GBLX06USR1) are trading at 2 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1 for real-time bond pricing. GMACM MORTGAGE: Fitch Rates 2 P-T Note Classes at Lower-B Level --------------------------------------------------------------- Fitch rates $444.5 million GMACM Mortgage Pass-Through Certificates 2003-J1 classes A-1 through A-10, PO, IO, R-I and R-II certificates (senior certificates) 'AAA'. In addition, class M-1 ($2.7 million) is rated 'AA', class M-2 ($0.9 million) is rated 'A', class M-3 ($0.7 million) is rated 'BBB', the privately offered class B-1 ($0.5 million) is rated 'BB' and the privately offered class B-2 ($0.5 million) is rated 'B'. The 'AAA' rating on the senior certificates reflects the 1.25% subordination provided by the 0.60% class M-1, the 0.20% class M-2, the 0.15% class M-3, the 0.10% privately offered class B-1, the 0.10% privately offered class B-2, and the 0.10% privately offered class B-3 (which are not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral and the strength of the legal and financial structures and GMAC Mortgage Corporation's servicing capabilities as servicer. Fitch currently rates GMAC Mortgage Corporation a 'RPS1' for Servicing. As of the cut-off date, February 1, 2003, the trust consists of one group of mortgage loans with an aggregate principal balance of $450,149,512. The mortgage pool consists of 1,012 conventional, fully amortizing 15-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties. The average unpaid principal balance as of the cut- off date is $444,812. The weighted average original loan-to- value ratio (OLTV) is 60.38%. Approximately 71.94% and 4.39% of the mortgage loans possess FICO scores greater than 720 and 660 or less, respectively. Cash-out refinance loans represent 23.57% of the loan pool. The three states that represent the largest portion of the mortgage loans are California (20.09%), Massachusetts (10.68%), and New Jersey (9.24%). Approximately 1.1% of the mortgage loans are secured by properties located in the State of Georgia, none of which are covered under the Georgia Fair Lending Act, effective as of October 2002. The loans were sold by GMAC to Residential Asset Mortgage Products, the depositor. The depositor, a special purpose corporation, deposited the loans in the trust, which then issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits. GRAHAM PACKAGING: Narrows Partners' Capital Deficit to $460 Mil. ---------------------------------------------------------------- Graham Packaging Holdings Company, parent company of Graham Packaging Company, L.P., reported a 16 percent gain over last year in adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA). The Company said its Adjusted EBITDA for 2002 was $198.2 million, compared to $171.5 million for 2001. A its year-end 2002 balance sheet, the Company recorded a working capital deficit of about $12 millions, and a partners' capital deficit of about $460 million. "We are very pleased with our earnings growth this year and our Company's continuing signs of strength, especially given the uncertainty in the economy and the volatility of the financial markets in general," Chief Financial Officer John Hamilton said. The increase in Adjusted EBITDA was achieved on net sales of $906.7 million and net income was $7.6 million in 2002, compared to net sales of $923.1 million and a net loss of $44.0 million in 2001. "Our net sales were lower primarily because of lower resin prices utilized in our products," Chief Executive Officer Phillip R. Yates said. "In reality, we actually grew our 2002 business by more than 7 percent in the number of units sold compared to the previous year. This is the continued result of adding new products and plants to support our customers," Yates explained. Graham Packaging opened new plants in the United States, France, and Mexico in 2002, but Yates said that the full impact of these plant openings won't show up until 2003 results are reported. The other reason for the decrease in net sales, Yates added, was the Company's ongoing strategic restructuring of its European operations in the past year. The Company closed or sold unprofitable plants in France, Italy, and the United Kingdom. "Excluding business impacted by the restructuring, sales would have increased by approximately 3 percent in 2002 compared to 2001," Yates said. Total outstanding debt at the end of 2002 was $1,070.6 million, up only slightly from $1,052.4 million at the end of 2001. Graham recently completed a bank refinancing on its existing senior credit facility consisting of two seven-year term loans, for $570 million and $100 million, respectively, and a $150 million, five-year revolving loan. According to Hamilton, the refinancing "significantly extended the maturities of our existing senior credit facility. This new facility also improves the company's liquidity, increases our flexibility, and provides long-term financing for continued capital spending in support of our growth with key customers. We believe this transaction also confirms the confidence the debt markets have in Graham." Graham Packaging, based in York, Pennsylvania, USA, is a worldwide leader in the design, manufacture and sale of customized blow-molded plastic containers for the branded food and beverage, household and personal care, and automotive lubricants markets. The Company employs approximately 3,900 people at 57 plants throughout North America, Europe, and South America. It produced more than nine billion units in 2002. Blackstone Capital Partners of New York is the majority owner of Graham Packaging. HOLLINGER INT'L: Expects Up to $120-Million in EBITDA in 2002 ------------------------------------------------------------- Hollinger International Inc., (NYSE: HLR) confirmed its guidance for the full-year 2002. As previously indicated, the Company forecast EBITDA to be in the range of $110 million to $120 million. Hollinger International believes it will report an EBITDA in the lower end of that range when it issues its final results. In October, 2002, the Emerging Issues Task Force issued EITF Issue No. 02-17 "Recognition of Customer Relationship Intangible Assets Acquired in a Business Combination," which provides guidance as to customer-related intangible assets which must be recognized apart from goodwill. As a result of the new guidance and review comments received from the Securities and Exchange Commission on the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2002, the Company is reevaluating whether certain of its identifiable intangible assets which existed as at January 1, 2002, totaling $494 million were appropriately reclassified to goodwill at that date. Should the Company determine that certain intangible assets need to be recognized apart from goodwill, additional amortization expense would need to be recorded for 2002. The Company intends to resolve, as quickly as possible, whether any adjustment is required to its intangible assets and related amortization expense for 2002 and expects to be in a position to issue its overall results for 2002 during the first half of March. Had the January 1, 2002 reclassification to goodwill not been made and such intangible assets amortized on the same basis as 2001, the additional amortization expense for the nine months ended September 30, 2002 would be $13.4 million. Such adjustment, net of the related tax recovery and minority interest, would increase 2002 net loss by approximately $11 million. Adjustments, if any, would not affect previously reported EBITDA and the 2002 EBITDA guidance referred to above. In addition, in connection with the sale of operations to CanWest in 2000, the Company recorded a valuation allowance against the remaining pension plan asset in respect of the operations sold. Generally accepted accounting principles do not specifically address pension valuation allowances. The Company believed that a valuation allowance was appropriate to reflect the impairment in the pension asset as a result of uncertainties regarding the Company's legal right to use or access the full amount of the plan surplus. Recent regulatory guidance has made it clear that such a valuation allowance is not permitted under GAAP. In light of this guidance, the Company has retroactively reversed the valuation allowance established in fiscal 2000, which has resulted in an increase in reported net earnings for fiscal 2000 of $40,312,000 and a decrease in the reported net loss for fiscal 2001 of $2,395,000, each net of related income tax and minority interest. Hollinger International Inc., owns and operates English-language newspapers in the United States, the United Kingdom, Canada and Israel. The Company's principal assets are the Chicago Sun- Times, which has the second highest circulation and the highest readership of any newspaper in the Chicago metropolitan area, more than 100 titles in the greater Chicago metropolitan area, and The Daily Telegraph, the highest circulation broadsheet daily newspaper in the United Kingdom and in Europe, and its related publications in the United Kingdom. The Company also owns The Jerusalem Post in Israel. In addition, Hollinger has a number of minority investments in various Internet and media- related public and private companies. For more information on Hollinger International Inc., visit its Web site at http://www.hollinger.com * * * At September 30, 2002, the Company's balance sheets show a working capital deficit of about $112 million. Update on Financing Initiative As previously announced, the Company is continuing to pursue a comprehensive financing initiative in order to extend debt maturities and provide more advantageous borrowing terms. This initiative may include a new amended syndicated credit facility for which Wachovia Securities Inc., would act as lead-arranger and bookrunner. Additionally this initiative may include the sale, in a private placement, of long-term debt securities. Completion of these transactions will be subject to market conditions, conclusion of definitive agreements and satisfaction of conditions in such agreements. The long term debt securities have not and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration under that Act or an applicable exemption from the registration requirements. HOLLINGER INT'L: Board of Directors Declare Quarterly Dividend -------------------------------------------------------------- The Board of Directors of Hollinger International Inc., (NYSE: HLR) has declared a quarterly dividend of $0.05 per share on the issued and outstanding common stock of the Company to be payable April 15, 2003, to stockholders of record on April 1, 2003. Hollinger International Inc. owns English-language newspapers in the United States, United Kingdom, and Israel. Its assets include The Telegraph Group Limited in Britain, the Chicago Sun- Times, the Jerusalem Post, a large number of community newspapers in the Chicago area, a portfolio of new media investments and a variety of other assets. For more information on Hollinger International Inc., visit its Web site at http://www.hollinger.com * * * At September 30, 2002, the Company's balance sheets show a working capital deficit of about $112 million. Update on Financing Initiative As previously announced, the Company is continuing to pursue a comprehensive financing initiative in order to extend debt maturities and provide more advantageous borrowing terms. This initiative may include a new amended syndicated credit facility for which Wachovia Securities Inc., would act as lead-arranger and bookrunner. Additionally this initiative may include the sale, in a private placement, of long-term debt securities. Completion of these transactions will be subject to market conditions, conclusion of definitive agreements and satisfaction of conditions in such agreements. The long term debt securities have not and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration under that Act or an applicable exemption from the registration requirements. HOLLYWOOD CASINO: S&P Junks Ratings over Notes Repurchase Issues ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings for Shreveport, Louisiana-based Hollywood Casino Shreveport to 'CCC+' from 'B-'. At the same time, Standard & Poor's removed these ratings from CreditWatch where they were placed on August 8, 2002. The outlook is negative. Total debt outstanding at September 30, 2002, was approximately $190 million. The downgrade follows the announcement by Penn National Gaming Inc. (B+/Stable/--), which is acquiring HCS and its parent, Hollywood Casino Corp., that it does not intend to provide financing or credit support to assist HCS in making the obligated offer to repurchase its outstanding notes upon a change of control. In addition, Penn is seeking a waiver to the change of control provision under HCS's existing bond indentures. The ratings reflect HCS's continued weak operating performance, high debt leverage, competitive market conditions, and limited liquidity. "The property has struggled since its opening in late 2000 due to intensely competitive market conditions, weaker-than-expected market growth, and the difficult economic environment in the Dallas area, the major feeder market to Shreveport," said Standard & Poor's credit analyst Michael Scerbo. He added, "As a result, the property's cash flow during 2002 will likely be below the level needed to meet the company's cash interest expense." HORSEHEAD INDUSTRIES: Court Fixes March 28, 2003 Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York fixed the deadline by which creditors of Horsehead Industries, Inc., d/b/a Zinc Corporation of America, and its debtor- affiliates who wish to assert a claim against the Debtors' estates must file their proofs of claim or be forever barred from asserting that claim. All proofs of claim must be received on or before 4:00 p.m. prevailing New York time on March 28, 2003: If delivered by mail: Horsehead Industries Claims Processing P.O. Box 5046, Bowling Green Station New York, NY 10274-5046 If delivered by hand or courier: United States Bankruptcy Court Southern District of New York One Bowling Green, Room 534 New York, NY 10004-1408. Creditors are not required to file a proofs of claim if they are for: (A) claims already filed against the Debtors; (B) claims not listed as "disputed", "contingent", "unliquidated", "undetermined", "unknown", or "zero" in the Debtors' schedules of liabilities; (C) claims for equity securities of the Debtors; and (D) claims for administrative fees and expenses including those of professionals retained in these Cases, and claims for fees of the Office of the U.S. Trustee. Horsehead Industries, Inc. d/b/a Zinc Corporation of America, with its subsidiaries, is the largest zinc producer in the United States. The Company filed for chapter 11 protection on August 19, 2002 (Bankr. S.D.N.Y. Case No. 02-14024). Laurence May, Esq., at Angel & Frankel, P.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $215,579,000 in total assets and $231,152,000 in total debts. IMPAC FUNDING: Fitch Hatchets Ratings on Various Note Issues ------------------------------------------------------------ Fitch Ratings downgrades the following Impac Funding Corp.'s mortgage pass-through certificates: ICIFC Secured Assets Corp. Mtge. Pass-Through Certificates, Series 1997-1 -- Class B4 rated 'BB' is placed on Rating Watch Negative. -- Class B5 rated 'CCC' is downgraded to 'C'. ICIFC Secured Assets Corp. Mtge. Pass-Through Certificates, Series 1997-2 -- Class B5 rated 'B' is downgraded to 'CCC'. ICIFC Secured Assets Corp. Mtge. Pass-Through Certificates, Series 1997-3 -- Class B2 rated 'CCC' Rating Watch Negative is downgraded to 'C'. Impac Secured Assets Corp., Mtge. Pass-Through Certificates, Series 2000-1 -- Class B1 rated 'BB' is placed on Rating Watch Negative. -- Class B2 rated 'B' Rating Watch Negative is downgraded to 'CCC'. Impac Secured Assets Corp., Mtge. Pass-Through Certificates, Series 2000-3 -- Class M3 rated 'BBB' is placed on Rating Watch Negative. -- Class B1 rated 'B' is downgraded to 'C'. --Class B2 rated 'C' is downgraded to 'D'. 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 February 25, 2003 distribution. INTEGRATED DEFENSE: S&P Puts Low-B Ratings on Watch Developing -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB-' corporate credit rating, on defense electronics supplier Integrated Defense Technologies Inc. on CreditWatch with developing implications. "The CreditWatch placement reflects IDT's announcement that it has retained an investment bank to explore strategic alternatives to enhance shareholder value," said Standard & Poor's credit analyst Christopher DeNicolo. A range of alternatives is being considered, including selling or merging IDT with a larger competitor. The resolution of the CreditWatch and any change in ratings on IDT will be determined by what the company decides to do and the impact on its credit profile. The current ratings on IDT reflect a modest revenue base, high leverage, and an acquisition program, offset somewhat by leading positions in defensible niches for military electronics and an improved financial profile after an initial public offering. The Huntsville, Alabama-based company focuses on defense electronics, addressing niche markets for electronic test equipment, warfare simulators, communications monitoring, and specialty radars. Some well-supported programs, with a high percentage of sole-source contracts, mitigate participation in the highly competitive domestic defense industry. Nevertheless, the business risk profile remains well below average, with the firm facing much larger defense competitors and normal industry risks of program cancellations and cost overruns. Debt to total capital increased to over 55% at the end of 2002 from around 40% after the February 2002 initial public offering due to the debt-financed acquisition of a unit of BAE Systems. However, the solid profitability of the acquired operations will likely offset somewhat the increased debt. INTERPLAY ENTERTAINMENT: Shoos-Away Ernst & Young as Accountants ---------------------------------------------------------------- On February 18, 2003, Interplay Entertainment Corp., informed Ernst and Young LLP that their firm would no longer be engaged as the Company's independent public accountants. Ernst and Young LLP's report on the Company's financial statements for the year ended December 31, 2001 contained a qualification as to the Company's ability to continue as a going concern. The decision to change the Company's independent public accountants was approved by the Company's Audit Committee of the Board of Directors. On February 18, 2003, the Company's Audit Committee of the Board of Directors approved and authorized the engagement of Squar, Milner, Reehl & Williamson, LLP as the Company's independent public accountants. IPCS INC: Gets Court OK to Engage Mayer Brown as Special Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia gave its nod of approval to iPCS, Inc., and its debtor- affiliates to engage the services of Mayer, Brown, Rowe & Maw as special counsel. As Special Counsel, Mayer Brown will: a. represent the Debtors in their litigation against, and any other disputes, contested matters, adversary proceedings and negotiations that may arise with respect to, Sprint Corporation and its affiliates; b. advise the Debtors with respect to corporate, finance and related issues in connection with the development and implementation of a transactional strategy; c. assist the Debtors in evaluating, participating in the development of, and documenting such mergers, acquisitions, stock sales, major asset sales and other significant corporate transactions as may be proposed during the course of these Chapter 11 Cases; d. assist the Debtors' management with presentations made to the Debtors' Board of Directors regarding these Chapter 11 Cases; e. advise the Debtors with respect to matters of general corporate and corporate finance as such advice relates to these Chapter 11 Cases; and f. perform any and all other legal services that may be required from time to time, including court appearances, as are in the interests of the Debtors' estates and that do not overlap with the services being performed by general bankruptcy counsel or any other counsel. The Firm will bill the Debtors at current hourly rates: Paul W. Theiss $510 per hour Stuart M. Rozen $575 per hour John M. Touhy $450 per hour David R. Melton $425 per hour John J. Voorhees, Jr. $485 per hour iPCS, Inc., provider of wireless personal communication services, filed for chapter 11 protection together with two of its affiliates on February 23, 2003 (Bankr. N.D. Ga. Case No. 03-62695). Gregory D. Ellis, Esq., at Lamberth, Cifelli, Stokes & Stout, PA represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $253,458,000 in total assets and $378,433,000 in total debts. IPCS Inc.'s 14.000% bonds due 2010 (IPCS10USR1), DebtTRaders says, are trading between 5 and 6. See http://www.debttraders.com/price.cfm?dt_sec_ticker=IPCS10USR1 for real-time bond pricing. JP MORGAN: S&P Assigns Low-B Prelim. Ratings to 3 Note Classes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Corp.'s $464.4 million commercial mortgage pass-through certificates series 2003-FL1. The preliminary ratings are based on information as of Feb. 27, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, and the economics of the underlying mortgage loans. Standard & Poor's analysis determined that, on a weighted-average basis, the pool has a debt service coverage ratio (DSCR) of 1.01x based on an assumed weighted-average refinance constant of 9.75% and as is net cash flow (NCF), and a beginning and ending loan-to-value ratio of 96.5%. The Westhollow Apartments mortgage loan has junior and senior participations. The senior participation is included in this transaction, while the junior participation is excluded from the trust fund's assets. Unless otherwise indicated, pool statistics include only the senior portion of the Westhollow Apartments mortgage loan, as these statistics are based on the initial mortgage pool balance. PRELIMINARY RATINGS ASSIGNED J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-thru certificates series 2003-FL1 Class Rating Amount ($) ----- ------ ---------- A-1 AAA 162,927,000 A-2 AAA 125,000,000 B AA 27,284,000 C A 27,864,000 D A- 6,966,000 E BBB+ 12,190,000 F BBB 11,610,000 G BBB- 8,708,000 H BB 29,605,000 J B 18,576,000 K B- 5,805,000 NR N.R. 27,864,000 X-A* AAA 464,399,000 X-B* N.R. 464,399,000 X-FL* AAA 209,845,000 * Interest-only class. Notional amount. N.R. -- Not rated. KEMPER INSURANCE: Enters Renewal Rights Pact with Arch Insurance ---------------------------------------------------------------- The Kemper Insurance Companies has reached an agreement in principle to sell the renewal rights to its surety business to Arch Insurance Group, a division of Arch Capital Group Ltd. Kemper's agreement with Arch includes contract and specialty surety products written through Kemper's Surety division, including Lou Jones & Associates. "This transaction continues Kemper's efforts to become primarily a standard commercial lines insurance provider," said David B. Mathis, Kemper chairman and CEO. "Kemper Surety accounts were not included in the previously announced cut-through arrangement with Berkshire Hathaway subsidiary National Indemnity Company." To provide continuity, the transaction also includes some Kemper Surety staff and certain assets used in the business. Kemper Insurance Companies is a leading provider of property- casualty insurance. Kemper is headquartered in Long Grove, Ill. For more information about Kemper visit http://www.kemperinsurance.com Arch Capital Group Ltd., a Bermuda-based company with over $1.4 billion in equity capital, provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. Arch Insurance Group's principal insurance subsidiaries - Arch Insurance Company, Arch Specialty Insurance Company, and Arch Excess & Surplus Insurance Company - are rated A- (Excellent) by A.M. Best. * * * As reported in Troubled Company Reporter's January 9, 2003 edition, Fitch Ratings downgraded the insurer financial strength ratings of three primary insurance underwriters of the Kemper Insurance Companies to 'B+' from 'BBB'. Additionally, Fitch has downgraded the surplus notes issued by group member Lumbermens Mutual Casualty Company to 'CCC' from 'BB-'. All ratings remain on Rating Watch Negative. The rating actions reflect Fitch's concerns regarding the prospective financial condition of KIC. Included in these concerns is the increasing likelihood that future interest payments on Lumbermen's surplus notes may not be made as scheduled. Given the regulatory oversight of surplus notes payments, and the organization's strained capital position, Fitch is concerned that Lumbermens will have difficulty maintaining minimum capital requirements and therefore could experience difficulties in maintaining approvals from regulators to pay interest on its surplus notes. KEY3MEDIA GROUP: Hires AlixPartners for Court Noticing Services --------------------------------------------------------------- Key3Media Group, Inc., and its debtor-affiliates, ask for permission from the U.S. Bankruptcy Court for the District of Delaware to hire AlixPartners, LLC as the Official Claims and Balloting Agent in its chapter 11 cases. AlixPartners will: a) assist the Company with the preparation of its bankruptcy schedules and statements of financial affairs as needed; b) assist the Company with calculating reclamation claims as necessary; c) assist with developing the complete notice database system to inform all potential creditors as to the filing of the case and the bar date notice; c) process and mail all notices including the initial bankruptcy notices and bar date notice; d) receive and process all proofs of claim and maintain the claims register; e) systematically match the proof's of claim to scheduled liabilities; f) track all claims transfers and update ownership of claims in the claims register accordingly; g) provide both the Company and its counsel access to the claims database system; h) assist the Company with reconciling claims; i) assist the Company with the handling of all executory contracts and reject or assume leases accordingly; j) provide all voting ballots to necessary parties, quantify the ballot results and provide a final report to the Bankruptcy Court; h) be available for testimony such as results of balloting; and i) assist with such other matters as may be requested that fall within our- expertise and that are mutually agreeable. The Debtors will pay the AlixPartners for its services at current hourly rates: Principals $365 Senior Associates $285 Associates $245 Consultants $200 Analysts $145 Paraprofessionals $ 95 Key3Media Group, Inc.'s business consists of the production, management and promotion of a portfolio of trade shows, conferences and other events for the information technology industry. The Company filed for chapter 11 protection on February 3, 2003 (Bankr. Del. Case No. 03-10323). John Henry Knight, Esq., and Rebecca Lee Scalio, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $241,202,000 in total assets and $441,033,000 in total debts. DebtTraders reports that Key3Media Group Inc.'s 11.250% bonds due 2011 (KME11USR1) are trading between 4 and 8. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KME11USR1for real-time bond pricing. KNITWORK PRODUCTIONS: Wants to Pay $810,000 to Critical Vendors --------------------------------------------------------------- Knitwork Productions Corp., a/k/a American Attitude, a/k/a Say What, asks for authority from the U.S. Bankruptcy Court for the Southern District of New York to pay the prepetition claims of its critical vendors. The Debtor tells the Court that it obtains certain specialty goods, materials, and services from select vendors. These vendors include: (a) suppliers of yarn, piece goods and other raw materials; (b) contractors, i.e. finishers and knitters holding raw materials and work in process which the Debtor needs to have turned into finished product and delivered; (c) foreign suppliers who have, or are in the process of, manufacturing imported goods for the Debtor; and (d) certain additional suppliers of miscellaneous goods or services. The Debtor contends that its ability to continue its operations will largely depend upon the continued business of these Critical Vendors. The Debtor reports that as of the Petition Date, it owes about $810,000 to these Critical Vendors. The Debtor submits that paying these Critical Vendor Claims will not create an imbalance of its cash flow because the majority of these obligations will promptly generate significant receivables which will provide immediate cash availability from the Debtor's factor. The Debtor believes that it must continue to receive goods and services provided by the Critical Vendors in order to achieve a successful reorganization, otherwise, the Critical Vendors may: i) refuse to deliver goods and services; ii) refuse to deliver goods and services on reasonable credit terms absent payment of prepetition claims; or iii) suffer significant financial hardship if their prepetition claims are not paid in whole or in part. Knitwork Productions Corp., a private label, sweater manufacturer, filed for chapter 11 protection on February 24, 2003 (Bankr. S.D.N.Y. case No. 03-11040). Burton S. Weston, Esq., at Garfunkel, Wild & Travis, P.C., represents the Debtors in its restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of over $10 million each. KULICKE & SOFFA: Gets Purchase Orders from Samsung Electronics -------------------------------------------------------------- Kulicke & Soffa Industries, Inc., (Nasdaq:KLIC) announced a significant purchase order from Samsung Electronics, the world's second largest semiconductor manufacturer. This order for Maxum wire bonders is the first of a multi-staged purchase agreement with Samsung. The first group of machines is set for immediate delivery to their factory in South Korea. The Company has also received strategic orders for the Maxum machines from several large Japanese semiconductor factories that have previously only purchased equipment from Japanese equipment makers that compete with K&S in the wire bonder market. The Japanese orders all represent market share growth in factories not normally served by K&S. Christian Rheault, Vice President of the Wire Bonder Product Group, commented on this recent group of orders, "Our Maxum platform is receiving continued customer validation of its technical leadership. We are pleased to be expanding into new customers, as well as maintaining a strong majority position in our existing customers. These orders are enabling our market share growth in the leading edge packaging arena. We believe that our product portfolio is uniquely positioned to serve both capability and capacity needs." Kulicke & Soffa (Nasdaq:KLIC) is the world's leading supplier of semiconductor assembly and test interconnect equipment, materials and technology. We offer unique wire bonding solutions, combining wafer dicing and wire bonding equipment with bonding wire and capillaries. Flip chip solutions include wafer bumping services and technology. Chip scale and wafer level packaging solutions include Ultra CSP(R) technology. Test interconnect solutions include standard and vertical probe cards, ATE interface assemblies and ATE boards for wafer testing, as well as test sockets and contactors for all types of packages. Kulicke & Soffa's Web site address is http://www.kns.com Kulicke & Soffa's 4.750% bonds due 2006 are trading at about 61 cents-on-the-dollar. LAIDLAW INC: W.D.N.Y. Court Confirms Third Amended Reorg. Plan -------------------------------------------------------------- Laidlaw Inc., announced that the United States Bankruptcy Court for the Western District of New York has confirmed its Third Amended Plan of Reorganization and that the Ontario Superior Court of Justice has issued an order recognizing and implementing the Third Amended Plan of Reorganization in Canada. These orders clear the way for the Company to emerge from bankruptcy in April as Laidlaw International, Inc., subject to the satisfaction of certain other conditions. "This is an important step in a long process," said Kevin Benson, President and CEO of Laidlaw. "In particular it signals to the 100,000 employees around the Company that we are nearly at the end of a challenging few years. We haven't landed yet, but we've now got the airport in sight". Paul Harner, Esq., at Jones, Day, Reavis & Pogue stepped Judge Kaplan through the 13 statutory requirements under Section 1129(a) of the Bankruptcy Code necessary to confirm Laidlaw's Third Amended Plan of Reorganization that eliminates some $2,900,000,000 of bank and bond debt: (A) Section 1129(a)(1) of the Bankruptcy Code provides that a plan of reorganization must comply with the applicable provisions of Chapter 11 of the Bankruptcy Code. The legislative history of Section 1129(a)(1) of the Bankruptcy Code indicates that a principal objective of this provision is to assure compliance with the sections of the Bankruptcy Code governing classification of claims and interests and the contents of a plan of reorganization. Laidlaw's Plan complies with all provisions of the Bankruptcy Code. (B) Section 1129(a)(2) of the Bankruptcy Code requires that the proponent of a plan of reorganization comply with the applicable provisions of the Bankruptcy Code. The legislative history and cases discussing Section 1129(a)(2) of the Bankruptcy Code indicate that the purpose of the provision is to ensure that the plan proponent complies with the disclosure and solicitation requirements of Sections 1125 and 1126 of the Bankruptcy Code. Laidlaw has performed all of its obligations under the Bankruptcy Code. (C) The Plan has been "proposed in good faith and not by any means forbidden by law," as required by Section 1129(a)(3) of the Bankruptcy Code. (D) Section 1129(a)(4) of the Bankruptcy Code requires that payments made by the debtor on account of services or costs and expenses incurred in connection with the Plan or the Reorganization Cases either be approved or be subject to approval by the bankruptcy court as reasonable. Laidlaw's Plan discloses all payments to be made and the Court has approved or will approve all plan-related expenses. (E) Section 1129(a)(5)(A)(i) of the Bankruptcy Code requires the proponent of a plan to disclose the identity of certain individuals who will hold positions with the debtor or its successor after confirmation of the plan. Section 1129(a)(5)(A)(ii) of the Bankruptcy Code requires that the service of these individuals be "consistent with the interests of creditors and equity security holders and with public policy." Laidlaw issued a press release last week naming the individuals the creditor's committee wants installed as new directors for the Reorganized Company. (F) Section 1129(a)(6) of the Bankruptcy Code permits confirmation only if any regulatory commission that will have jurisdiction over the debtor after confirmation has approved any rate change provided for in the plan. This requirement is inapplicable in Laidlaw's chapter 11 cases. (G) Section 1129(a)(7) of the Bankruptcy Code, the "best interests of creditors test," requires that, with respect to each impaired class of claims or interests, each holder of a claim or interests of the class under the Plan on account of the claim or interests (a) has accepted the plan; or (b) will receive or retain under the plan on account of the claim or interests property of a value, as of the effective date of the plan, that is not less than the amount that the holder would so receive or retain if the debtor were liquidated under Chapter 7. Laidlaw has provided a detailed liquidation analysis showing that creditors recover less in a chapter 7 liquidation scenario than they receive under the Plan. Accordingly, the Plan complies with the "best interests of creditors test." (H) Section 1129(a)(8) of the Bankruptcy Code requires that each class of claims or interests must either accept a plan or be unimpaired under a plan. Pursuant to Section 1126(c) of the Bankruptcy Code, a class of impaired claims accepts a plan if holders of at least two-thirds in dollar amount and more than one-half in number of the claims in that class actually vote to accept the plan. Pursuant to Section 1126(d) of the Bankruptcy Code, a class of interests accepts a plan if holders of at least two-thirds in amount of the allowed interests in that class that actually vote to accept the plan. A class that is not impaired under a plan, and each holder of a claim or interests of the class, is conclusively presumed to have accepted the plan. Laidlaw's creditors voted overwhelmingly to accept the Plan. (I) The treatment of Administrative Expense Claims and Priority Non-Tax Claims pursuant to Sections 2.1 and 4.2 of the Plan satisfies the requirements of Sections 1129(a)(9)(A) and (B) of the Bankruptcy Code, and the treatment of Priority Tax Claims pursuant to Section 2.3 of the Plan satisfies the requirements of Section 1129(a)(9)(C) of the Bankruptcy Code; (J) Section 1129(a)(10) of the Bankruptcy Code provides that at least one impaired class of claims or interests must accept the Plan, without including the acceptance of the Plan by any insider. At least one impaired class of creditors has accepted Laidlaw's Plan. (K) Section 1129(a)(11) of the Bankruptcy Code requires the Bankruptcy Court to find that the plan is feasible as a condition precedent to confirmation. The Debtors have provided detailed financial projections to creditors in their Disclosure Statement. Those projections demonstrate that, reorganized and deleveraged, Laidlaw will be on solid financial ground and there will be no need for further financial restructuring. (L) All fees payable under Section 1930 of the Judiciary Procedures Code, as determined by the Bankruptcy Court on the Confirmation Date, have been paid or will be paid pursuant to Section 13.7 of the Plan on the Effective Date, thus satisfying the requirements of Section 1129(a)(12) of the Bankruptcy Code; and (M) Section 1129(a)(13) of the Bankruptcy Code sets forth certain provisions for continuation of the payment of health, welfare and retiree benefits post-confirmation. Laidlaw's Plan continues all of those kinds of benefit programs. Judge Kaplan found that the Plan satisfies these requirements. Accordingly, the Court confirmed Laidlaw's Third Amended Plan of Reorganization on February 27, 2003. The Company anticipates that the Plan will take effect in mid-April. Laidlaw Inc., is a holding company for North America's largest providers of school and inter-city bus transport, public transit, patient transportation and emergency department management services. LEATHERLAND: Brings-In George Lang & Associates as Accountants -------------------------------------------------------------- Leatherland Corp., d/b/a Leather Limited, asks for approval from the U.S. Bankruptcy Court for the Northern District of Ohio to employ George Lang & Associates, CPAs, as its accountant. The Debtor tells the Court that in order to manage its affairs and to perform its duties as a debtor in possession, it needs the services of an accountant to: a) assist the Debtor in the review of the Debtor's financial records, and to assist in the review and analysis of any and all avoidance and recovery actions; b) assist the Debtor in the preparation and filing of any and all necessary tax returns and reports; c) provide other accounting services, including preparing financial statements and assisting the Debtor with any audit requests, as may be required by the Debtor from time to time. The Debtor believes that George Lang & Associates has the appropriate accounting skills and personnel needed to perform the accounting services this estate requires. Moreover, the Debtor has determined that George Lang & Associates is a disinterested person within the meaning of Section 101(14) and Bankruptcy Rule 2014. George Lang & Associates' normal hourly billing rates are: George Lang CPA $135 per hour Amy Kelly CPA $95 per hour Myra P. Pomili $85 per hour Susan Lang, Comm. Specialist $75 per hour Susan Beaver, Processor $45 per hour Leatherland Corp., is in the business of retail store of leather goods. The Company filed for chapter 11 protection on February 25, 2003 (Bankr. N.D. Oh. Case No. 03-31195). Patricia B Fugee, Esq., at Roetzel & Andress represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $18,525,306 in total assets and $12,606,482 in total debts. MERRILL LYNCH: S&P Keeps Watch on Four Low-B Note Class Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on five classes of Merrill Lynch Mortgage Investors Inc.'s mortgage pass-through certificates series 1998-C2 on CreditWatch with negative implications. The CreditWatch placements are due to concerns regarding the specially serviced loans, which total $53.4 million in the aggregate, or 5.7% of the loan pool. Appraisal reductions totaling $18.1 million have been taken against some of the specially serviced loans. The related appraisal reduction subordinated entitlement reduction, combined with recurring special servicing fees, has resulted in interest shortfalls on classes H and J. The accumulated shortfalls through the Feb. 18, 2003 distribution period total $4,583 and $45,904, respectively. Standard & Poor's will resolve the CreditWatch once a formal review of the transaction has been completed. RATINGS PLACED ON CREDITWATCH NEGATIVE Merrill Lynch Mortgage Investors Commercial mortgage pass-thru certs series 1998-C2 Rating Class To From Credit Support ----- -- ---- -------------- D BBB/Watch Neg BBB 14.06% E BBB-/Watch Neg BBB- 12.34% F BB/Watch Neg BB 6.00% G BB-/Watch Neg BB- 5.43% H B/Watch Neg B 3.13% J B-/Watch Neg B- 2.55% METRIS COS.: Fitch Junks Senior & Credit Facility Ratings at CCC ---------------------------------------------------------------- Fitch Ratings has lowered the senior and bank credit facility ratings of Metris Companies Inc. to 'CCC' from 'B-'. In addition, the long-term deposit rating of Direct Merchants Credit Card Bank, N.A. has been lowered to 'B' from 'B+'. The short-term deposit rating remains at 'B'. The ratings have been removed from Rating Watch Negative where they were placed on Dec. 20, 2002. The Rating Outlook is Negative for Metris and DMCCB. Approximately $350 million of holding company debt is affected by this rating action. The action reflects heightened execution risk as Metris attempts to address liquidity concerns with its various credit providers. Fitch remains concerned with Metris' ability to renew or replace conduit facilities that mature in the June and July 2003 timeframe, coupled with a $100 million term loan drawn under the company's bank credit facility due in June 2003. While Metris is in active negotiations with its credit providers, Fitch believes the pace and complexity of this process has increased overall risk to the company. The downgrade of DMCCB reflects its operational ties to the holding company, which it relies on to fund assets longer term. Furthermore, Fitch remains concerned with low excess spread levels in the Metris Master Trust, Metris' primary securitization vehicle. Excess spread levels have declined significantly over the past few months, and for many series are below 2%, eroding the cushion that once existed. Under the company's current bank credit agreement, Metris must maintain minimum excess spread in the MMT. Moreover, if trust level excess spread becomes negative, on a three month rolling average, an early amortization of the MMT would occur. If an early amortization of the trust were to take place, Fitch does not believe that Metris would have sufficient liquidity to withstand such an occurrence. In Fitch's opinion, even if near-term liquidity issues are satisfactorily resolved, Metris will remain challenged to address earnings and asset quality concerns in a difficult economic and capital markets environment. In addition, federal bank regulators have imposed more stringent requirements on credit card lending, namely higher capital and reserves for subprime loans along with greater scrutiny of fee and finance charges. While Metris has complied with these regulatory changes, Fitch believes that these actions have negatively impacted the economics of Metris' credit card business. The rating differential between Metris and DMCCB, however, reflects the relatively better liquidity position of the bank versus the holding company. The bank is strongly capitalized with a comparatively small amount of uninsured deposits, approximately $29 million at Sept. 30, 2002. Although the bank continues to be subject to a formal written agreement with the Office of the Comptroller of the Currency, Fitch believes that DMCCB has satisfactorily addressed regulatory concerns raised in the agreement. Ratings lowered and removed from Rating Watch Negative: Metris Companies Inc. -- Bank credit facility to 'CCC' from 'B-'; -- Senior debt to 'CCC' from 'B-'. Direct Merchants Credit Card Bank N.A. -- Long-term deposits to 'B' from 'B+'. Ratings affirmed: Direct Merchants Credit Card Bank N.A. -- Short-term deposits 'B'. METRIS COS.: Won't Pay Dividend Due to Credit Pact Restrictions --------------------------------------------------------------- Metris Companies Inc., (NYSE:MXT) announced that the dividend announced February 27, 2003, of $.01 per share payable March 31, 2003, will not be paid. The Company determined that the dividend could not be paid under the terms of its credit agreement which prohibits the payment of dividends following a year in which a loss was incurred. Metris Companies Inc., (NYSE:MXT) is one of the nation's leading providers of financial products and services. The Company issues credit cards through its wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A. Through its enhancement services division, Metris also offers consumers a comprehensive array of value-added products, including credit protection and insurance, extended service plans and membership clubs. For more information, visit http://www.metriscompanies.comor http://www.directmerchantsbank.com As reported in Troubled Company Reporter's January 31, 2003 edition, Standard & Poor's placed its ratings on Metris Companies Inc., including the company's 'B' long-term counterparty credit and senior unsecured debt ratings and its 'CCC+' subordinated debt rating-on CreditWatch with negative implications. The CreditWatch listing follows the Minnetonka, Minn.-based credit card company's announcement that it is reporting a loss of $48.5 million for fourth-quarter 2002. With this loss and charge-offs continuing to run at elevated levels, Standard & Poor's is concerned that funding for the company may become increasingly limited. The company's funding alternatives are already under pressure as management continues to shrink deposits in its bank subsidiary and the ratings of many of its ABS have been downgraded. MITEC TELECOM: Further Downsizes Global Manufacturing Operations ---------------------------------------------------------------- Mitec Telecom Inc. (TSX: MTM), a leading designer and provider of wireless network products for the telecommunications industry, is closing its manufacturing facility in Lostwithiel U.K. as part of its ongoing corporate strategy to re-structure and streamline its global operations. Mitec also announced that most of the products manufactured at Lostwithiel will now be supplied out of its state-of-the-art Montreal facility. Approximately 35 employees will be affected by this plant closing. "We will now concentrate our U.K. operations in Dunstable, which will become our system sales and support center for European customers, as well as the center of excellence in key technologies," said Rajiv Pancholy, Mitec's President and CEO. "We expect that the plant closing will result in an increase in profitability as we consolidate our Satcom manufacturing in one location." Mitec Telecom is a leading designer and provider of wireless network products for the telecommunications industry. The Company sells its products worldwide to network providers for incorporation into high-performing wireless networks used in voice and data/Internet communications. Additionally, the Company provides value-added services from design to final assembly and maintains test facilities covering a range from DC to 60 GHz. Headquartered in Montreal, Canada, the Company also operates facilities in the United States, Sweden, the United Kingdom, China and Thailand. Mitec Telecom Inc. is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at http://www.mitectelecom.com. The company's working capital deficit tops C$7 million at October 31, 2002. MSU DEVICES: Files for Chapter 11 Reorganization in N.D. Texas -------------------------------------------------------------- MSU Devices Inc. (OTCBB:MUCP), has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District Of Texas, Dallas Division. The Chapter 11 process will facilitate MSU Devices' restructuring which is designed to restore the company to long-term financial health while operating in the normal course of business. MSU Devices said that during its Chapter 11 case, it would seek to maintain its ability to continue its operations. Chapter 11 permits a company to continue operations in the normal course while it develops a plan of reorganization to address its existing debt, capital and cost structures. MSU Devices reported that in conjunction with its filing, it is in the process of arranging commitments for $450,000 in debtor-in-possession (DIP) financing. The DIP financing, if approved, will provide adequate liquidity to meet the anticipated needs of MSU Devices to continue normal operations throughout the Chapter 11 process. Robert L. George, president and chief executive officer of MSU Devices, said, "The Company has been working under extremely difficult conditions and this Chapter 11 filing will allow the company an opportunity to put its financial house in order. MSU Devices intends to file a plan of reorganization with the court at a later date." He went on to say, "The Chapter 11 process is the best means to facilitate necessary changes in the company's operations and will allow the company access to new capital through DIP financing not otherwise available." MSU Devices' legal counsel is Hance, Scarborough, Wright, Ginsberg & Brusilow, L.L.P., Dallas. MSU Devices designs, markets and sells affordable Windows CE- based devices that allow customers to access the Internet via narrowband or broadband networks. In addition, the Company is in the process of entering the software development business by undertaking work-for-hire contracts for software development for third-party hardware and software companies. The Company has already been developing software for Windows CE for customers purchasing the MSU V5 including applications such as a complete terminal-based SmartCard application for a customer in Italy. For more information, visit MSU Devices Inc., at http://www.msudevices.com NAT'L CENTURY: HHA & HBHS Intends to Participate in Proceedings --------------------------------------------------------------- Highland Hospital Association and Highland Behavioral Health Services, Inc., notify the Court that they intend to participate in any proceedings to determine the extent of the National Century Financial Enterprises, Inc., and its debtor-affiliates' ownership and property interest in accounts receivable generated by the operations of the various parties. Leon Friedberg, Esq., at Carlile, Patchen & Murphy, in Columbus, Ohio, relates that HHA is a West Virginia non-profit organization, which owns and operates an 80-bed freestanding psychiatric hospitals in the State of West Virginia and is one of the major providers of inpatient and adolescent services to Medicaid beneficiaries in the State of West Virginia. On the other hand, HBHS is a West Virginia non-profit medical corporation that provides psychological, psychiatric, behavioral health and related services in Boone, Clay, Kanawha, and Putnam Counties, West Virginia. HBHS provides forensic services in the State of West Virginia and is one of the only two groups that provides a full range of criminal forensic evaluations in the State of West Virginia. A substantial amount of the services provided by HHA and HBHS are to Medicare, Medicaid, state-funded, and charity cure patients who are under-served in the State of West Virginia. Among the principal operating assets of HHA and HBHS is its accounts receivables, the payments due for goods and services provided to patients. This is typically from third party payors like the insurance and other benefits. On September 12, 2002, Mr. Friedberg tells Judge Calhoun that HHA and HBHS executed a Sale and Subservicing Agreement with NPF VI, Inc. and NPFS. Among the purposes of the agreement was to provide predictable and more lump-sum financing to HHA and HBHS by the pledging or "selling" of certain of its accounts receivables to NPF VI. The difference in the value of the receivables was retained by NPF VI as payment for the funding and for various fees and other debts. In addition, NPFS, as servicer, was to provide certain services to HHA in the collection and processing of HHA and HBHS' accounts receivables and payments from third party payors, not only for the sold accounts receivable but also for HHA and HBHS accounts receivable that were not subject to the sale agreement, all for fee. Mr. Friedberg recounts that NPF VI and NPFS were components of the health care financing business of the debtor National Century Financial Enterprises, Inc. and its affiliated entities. That business involved the financing of health care providers through the "purchase" and servicing of accounts receivables by specific purpose entities created by NCFE. Of the significant aspects of the NPF VI structure was the use of a lockbox procedure, whereby the client, like HHA, would instruct its accounts receivables payors to make payments to a single payee's lockbox account. However, Mr. Friedberg notes, in the case of HHA and HBHS' financing arrangement, no lockbox arrangement was ever established due to the withdrawal of participation by the intended lockbox bank. During the brief period from the inception of the financing agreements to the Petition Date, NPF VI and NPFS were in material breach of the agreements with HHA and HBHS, Mr. Friedberg reports. This material breach caused substantial harm to HHA and HBHS' cash flow, financial condition, ability to pay its bills in a timely manner, and to sustain its ongoing operations. The issues to be litigated between the parties are: -- the nature and extent of the treatment, for bankruptcy procedures, of NPF VI and NPFS estates in the HHA and HBHS accounts receivables, like whether the transactions are to be treated as true sales or financing arrangements; -- the nature and extent of the claimed interests of third- parties in the HHA and HBHS accounts receivables, and -- the postpetition nature of the parties' claimed interests in the HHA and HBHS accounts receivables or other rights under agreement. Mr. Friedberg maintains that the agreement was a financing agreement, which was breached prepetition by the Debtors, and which is not subject to assumption. (National Century Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEW HORIZONS WORLDWIDE: Completes $14MM Term Loan Refinancing ------------------------------------------------------------- New Horizons Worldwide, Inc., (Nasdaq: NEWH) has completed a refinancing of its $14.1 million term loan that had been held by a consortium of lenders, led by Wells Fargo Bank, N.A. Of this amount, the company repaid $3.5 million from available cash, and the remaining amount was replaced with a new term loan of $10.6 million from Wells Fargo. The bank also assumed the amount outstanding under the company's revolving line of credit of $300,000 and responsibility for outstanding letters of credit. The new credit facility, which expires on February 15, 2005 and required payment of a fee of $46,000, has the following terms and conditions: (1) a $10,639,000 term loan with quarterly principal payments of $750,000 commencing March 31, 2003; (2) a revolving line of credit of $1,500,000; (3) an interest rate of either prime plus 1.5% or LIBOR plus 3.75%, at the company's option, with a potential reduction to prime plus 0% or LIBOR plus 2.25% should the company achieve a rolling four-quarter EBITDA in excess of $11.2 million; (4) a requirement to meet various financial covenants, including minimum quarterly EBITDA, maximum leverage ratio, minimum debt service coverage ratio, maximum capital expenditures, and minimum quarterly cash level; and (5) a prohibition from engaging in any acquisitions without the consent of Wells Fargo. "This financing provides us with a stable capital structure, at attractive terms," said Robert S. McMillan, the company's chief financial officer. "By resolving our previously disclosed covenant violations, this agreement provides the financial foundation to move ahead with our plans to restore profitable growth." New Horizons Computer Learning Centers, a subsidiary of New Horizons Worldwide, Inc., was named the world's largest IT training company by IDC in 2002. Through its Integrated Learning offering, New Horizons provides customer-focused computer training choices with a wide variety of tools and resources that reinforce the learning experience. With more than 265 centers in 51 countries, New Horizons sets the pace for innovative training programs that meet the changing needs of the industry. Featuring the largest sales force in the IT training industry, New Horizons has over 2,000 account executives, 2,400 instructors and over 2,000 classrooms. For more information, visit http://www.newhorizons.com NOMURA CBO: Fitch Ratchets Several 1997-1 & 1997-2 Note Ratings --------------------------------------------------------------- Fitch Ratings has downgraded the ratings on two classes of notes issued by Nomura CBO 1997-1 Ltd., three classes of notes issued by Nomura CBO 1997-2 Ltd. and affirmed the ratings on one class of notes issued by Nomura 1997-2, Ltd. These two transactions are both collateralized bond obligations backed predominantly by high yield bonds. The current ratings are as follows: Nomura CBO 1997-1 Ltd. -- $291,500,000 class A-2 notes to 'BB-' from 'BB+'; -- $45,000,000 class B notes to 'CCC-' from 'B-'. Nomura CBO 1997-2 Ltd. -- $58,000,000 class A-1 notes affirmed at 'AAA'; -- $150,000,000 class A-2 notes to 'AA-' from 'AAA'; -- $105,300,000 class A-3 notes to 'CC' from 'B'; -- $36,300,000 class B notes to 'C' from 'CC'. These rating actions are the result of increased levels of defaults and deteriorating credit quality of the underlying collateral assets, and reflect that Nomura Capital Research and Asset Management, the collateral manager, is currently restricted from trading assets from either portfolio. Fitch believes the current quality of these transactions' portfolio of assets is inconsistent with the formerly assigned ratings of Nomura CBO 1997-1 class A-2 and B notes and class A-2, A-3, and B notes of Nomura CBO 1997-2. In reaching the rating action, Fitch spoke with the collateral manager regarding their expectations and opinions of the portfolio, in addition to analyzing and evaluating the results of cash flow model runs after applying several different stress scenarios. As stated in the Nomura CBO 1997-1 Ltd. January 2003 trustee report, the notional amount of collateral is $334.7 million, and includes 28 defaulted assets having a par value of $59.29 million. The deal also contains 24.6% assets rated 'CCC+' or below, excluding defaults. Nomura CBO 1997-1 Ltd. is currently failing each of its overcollateralization (OC) tests. The current class A OC ratio is 110.61%, while having a trigger of 130%, the current class B OC ratio is 95.08%, while having a trigger of 111%. According to the Nomura CBO 1997-2 Ltd. January 2003 trustee report, the notional amount of collateral is $333.5 million, and includes 36 defaulted assets having a par value of $64.16 million. The deal also contains 33.3% assets rated 'CCC+' or below, excluding defaults. Nomura CBO 1997-2 Ltd. is currently failing each of its overcollateralization (OC) tests. The current class A OC ratio is 101.44%, while having a trigger of 126%, the current class B OC ratio is 89.30%, while having a trigger of 107%. NORTEL NETWORKS: Will Pay Preferred Share Dividends on April 14 --------------------------------------------------------------- The board of directors of Nortel Networks Limited declared a dividend on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding Non-cumulative Redeemable Class A Preferred Shares Series 7 (TSX:NTL.PR.G), the amount of which for each series will be calculated by multiplying (a) the average prime rate of Royal Bank of Canada and Toronto-Dominion Bank during March 2003 by (b) the applicable percentage for the dividend payable for such series for February 2003 as adjusted up or down by a maximum of 4 percentage points (subject to a maximum applicable percentage of 100 percent) based on the weighted average trading price of the shares of such series during March 2003, in each case as determined in accordance with the terms and conditions of such series. The dividend on each series is payable on April 14, 2003 to shareholders of record of such series at the close of business on March 31, 2003. 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. DebtTraders reports that Nortel Networks Corp.'s 7.400% bonds due 2006 (NT06CAR2) are trading 89 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for real-time bond pricing. NORTHWEST PIPELINE: Caps Senior Notes Offering Price ---------------------------------------------------- Northwest Pipeline Corporation, a subsidiary of The Williams Companies, Inc. (NYSE: WMB), has priced its previously announced offering of senior notes due 2010. The size of the offering was increased to $175 million from the previously announced $150 million. The notes, scheduled to be delivered on March 4, were priced at par to yield 8.125 percent. Northwest intends to use the proceeds for general corporate purposes, including the funding of capital expenditures. The notes being sold to certain institutional investors have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. As reported in Troubled Company Reporter's Thursday Edition, Fitch Ratings expects to assign a 'BB-' rating to Northwest Pipeline Corp.'s proposed $150 million issuance of 144A senior notes, due 2010. The rating is currently on Rating Watch Evolving, as are the outstanding $360 million 'BB-' senior unsecured notes of NWP. NWP is one of three Federal Regulatory Energy Commission regulated interstate gas pipelines wholly owned by The Williams Companies, Inc., senior unsecured rated 'B-', Rating Watch Evolving. Proceeds from the proposed senior note issuance will be used for general corporate purposes at NWP, including the funding of expansion related capital expenditures. The ratings for NWP incorporate its strong individual operating and financial profile, offset by the structural and functional ties between NWP and its financially stressed parent WMB. NWP is a participant in WMB's daily cash management program under which NWP makes periodic advances to WMB. Under a pending Notice of Proposed Rule Making at FERC, restrictions would be placed on an interstate pipeline's ability to participate in cash management or money pool arrangements based on certain credit criteria. Fitch believes NWP would be able to adequately fund its operations if it were prohibited from participating in WMB's cash management program. In addition, NWP's debt agreements, including proposed terms for the pending note issuance, provide limited restrictions on NWP's ability to make upstream cash dividends and/or inter-company advances to NWP. NUTRITIONAL SOURCING: Unsec. Committee Hires Stroock as Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Nutritional Sourcing Corporation sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain and employ Stroock & Stroock & Lavan LLP as its Counsel. The Committee expects Stroock & Stroock to: a) assist, advise and represent the Committee with respect to the administration of the Chapter 11 Case, as well as issues arising from or impacting the Debtor, the Committee or the Chapter 11 Case; b) provide all necessary legal advice with respect to the Committee's powers and duties; c) assist the Committee in maximizing the value of the Debtor's assets for the benefit of all creditors; d) pursue confirmation of a plan of reorganization with respect to the Debtor; e) investigate, as the Committee deems appropriate, among other things, the assets, liabilities, financial condition and operations of the Debtor; f) commence and prosecute necessary and appropriate actions and/or proceedings on behalf of the Committee that may be relevant to the Chapter 11 Case; g) review, analyze or prepare, on behalf of the committee, all necessary applications, motions, answers, orders, reports, schedules and other legal papers; h) communicate with the Committee's constituents and others as the Committee may consider desirable in furtherance of its responsibilities; i) appear in court to represent the interests of the Committee; j) confer with professional advisors retained by the Committee so as to properly advise the Committee; and k) perform all other legal services for the Committee that are appropriate and necessary in the Chapter 11 Case. Stroock will seek compensation from the Debtor's estate for services rendered to the Committee at its customary hourly rates: Partners $450 to $750 per hour Associates/Special Counsel $185 to $550 per hour Legal Assistants/Aides $ 65 to $210 per hour Nutritional Sourcing Corporation is a holding company with no business operations of its own. The sole assets of the Debtor are its equity interests in its non-debtor operating subsidiaries and intercompany notes. On September 4, 2002, certain members of the 9-1/2% Senior Noteholders' Ad Hoc Committee filed an involuntary petition against the Debtor for reorganization under Chapter 11 of the Bankruptcy Code (Bankr. Del. Case No. 02-12550). On September 24, 2002, the Debtor consented to the involuntary petition. William Harrington, Esq., at Kaye Scholer LLC represents the Debtor as it winds down its operations. OGLEBAY NORTON: Annual Shareholders' Meeting Slated for April 30 ---------------------------------------------------------------- The Annual Meeting of Shareholders of Oglebay Norton Company will be held at The Forum Conference and Education Center, 1375 East Ninth Street, Cleveland, Ohio, on Wednesday, April 30, 2003, at 10:00 a.m., Cleveland, Ohio time. At the Annual Meeting, Shareholders will be asked to: i. elect nine Directors for a one year term expiring in 2004; ii. consider a proposal to amend and restate Oglebay Norton's Code of Regulations; and iii. transact any other business that may properly come before the Annual Meeting. The Board of Directors fixed the close of business on March 12, 2003 as the record date for determining the shareholders entitled to notice of and to vote at the Annual Meeting, or at any postponement or adjournment of the Annual Meeting. At December 31, 2002, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $14 million. Oglebay Norton Co.'s 10.000% bonds due 2009 (OGLE09USR1), DebtTraders reports, are trading 58 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=OGLE09USR1 for real-time bond pricing. OTTAWA SENATORS: PwC Now Accepting Purchase Offers -------------------------------------------------- PricewaterhouseCoopers Inc., the court-appointed Monitor of the Ottawa Senators Hockey Club Corporation, announced today that it will proceed to solicit offers for the purchase of the Ottawa Senators in accordance with its court- mandated role. On February 10, 2003, the Monitor announced that after extensive discussions with the key stakeholders, it had consented to a conditional agreement for purchase of the Team as presented by Mr. Rod Bryden. The agreement provided the purchaser with a period of exclusivity and contained a number of specific milestone dates. As a result of various defaults and noncompliance with certain milestones, the Monitor has terminated the agreement and will now proceed with the marketing process to solicit interest in the Team from other parties. Mr. Bryden is not precluded from submitting a bid in this process. There will be no final determination as to the sale of the Team without the approval of the Court. Prior to seeking Court approval of any sale, the Monitor hopes to achieve consensus among the key stakeholders in support of the most favourable offer. PricewaterhouseCoopers Inc., was appointed monitor of OSHCC on January 9, 2003 in court proceedings commenced by OSHCC for a restructuring of its affairs and protection from its creditors. Among its duties, it is responsible for the sale of OSHCC's assets and overseeing the sale process. PACIFIC GAS: Confirmation Hearing to Continue Early Next Month -------------------------------------------------------------- The U.S. Bankruptcy Court announced an updated trial schedule for the confirmation hearings on Pacific Gas and Electric Company's plan of reorganization. The update reschedules the next confirmation hearing for early April -- the expectation is the trial will resume on Tuesday, April 8. During the interim period, parties will have an opportunity to conduct discovery as it relates to PG&E's recent plan modifications. PG&E recently made modifications to its reorganization plan to strengthen the plan and enhance its financial feasibility. Last week, Standard & Poor's completed a rating evaluation that indicated investment grade status for all the elements of PG&E's reorganization plan -- the securities and the companies. Pacific Gas and Electric Company issued the following statement after Thursday's status conference: "Achieving and maintaining investment grade status for all the securities and each of the companies that would result from PG&E's reorganization plan is a cornerstone of that plan, one that completely distinguishes the utility's plan from the competing proposal. PG&E believes that under the California Public Utilities Commission's alternative plan, the utility would emerge as a financially weakened, junk bond company. "PG&E will continue to demonstrate why its reorganization plan and the recent modifications will result in investment grade ratings for all the securities used to pay creditors and the four resulting companies. The company believes investment grade status is necessary to efficiently procure energy for customers and invest billions of dollars in new infrastructure. "The Bankruptcy Court established the new timeframe to guarantee all parties the opportunity to conduct full discovery. PG&E shared this goal, but thought it could be done in a shorter period of time. "PG&E continues to believe it has developed the only financially feasible solution that allows the utility to emerge from Chapter 11 as an investment grade company and provides for continued environmental and regulatory protections. The company's plan achieves these objectives without asking the Bankruptcy Court to raise rates or the State for a bailout." PAXSON COMMS: Selling KAPX-TV Station to Telefutura for $20 Mil. ---------------------------------------------------------------- Paxson Communications Corporation (AMEX:PAX) announced that, Telefutura Television Group, Inc., a wholly-owned subsidiary of Spanish-language giant Univision Communications Inc. (NYSE:UVN), has agreed to acquire Paxson's television station KAPX-TV, serving Albuquerque, New Mexico, the nation's 49th largest market, for a cash purchase price of $20.0 million. The station sale, subject to regulatory approvals is expected to close by summer. Paxson plans to replace the coverage in the Albuquerque market with cable and satellite. Paxson's Chairman and CEO, Lowell "Bud" Paxson, commented, "We stated in late fall 2002 that we would raise approximately $100 million through the sale of non-core/non-strategic assets and with this announced transaction of $20.0 million, we have indeed met our objective. The completion of the Albuquerque station sale concludes the $100 million liquidity program that ensures the company's solid liquidity position." Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system and PAX TV, family television. PAX TV reaches 88% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original series include, "Sue Thomas: F.B.Eye," starring Deanne Bray, "Doc," starring recording artist Billy Ray Cyrus and "Just Cause" starring Richard Thomas and Lisa Lackey. Other original PAX series include "It's A Miracle" and "Candid Camera." For more information, visit PAX TV's Web site at http://www.pax.tv * * * As previously reported in Troubled Company Reporter, Standard & Poor's placed its single-'B'-plus corporate credit and other ratings, on TV station and network owner Paxson Communications Corp., on CreditWatch with negative implications. The action follows the West Palm Beach, Florida-based company's lowered guidance for its 2002 second quarter, which includes relatively flat revenue and reduced earnings. Paxson has about $858 million in debt outstanding. PEGASUS COMMS: Reports Improved Fin'l Results for Q4 & YE 2002 -------------------------------------------------------------- Pegasus Communications Corporation (NASDAQ:PGTV) reported financial results for the three month and twelve month periods ended December 31, 2002. Results of Operations Three Months Ended December 31, 2002 Consolidated net revenues increased $125 thousand to $227.8 million. Consolidated EBITDA increased $10.6 million, or 25%, to $52.2 million. Consolidated EBITDA as a percentage of consolidated revenue increased to 22.9% from 18.3%. Consolidated free cash flow from operations increased $22.3 million to $38.1 million. Consolidated free cash flow from operations is calculated by reducing consolidated EBITDA by consolidated capital expenditures and DBS deferred subscriber acquisition costs. The Company's net loss applicable to common shares decreased $21.9 million, or 27%, to $60.6 million. DBS net revenues decreased $2.2 million, or 1%, to $217.3 million. DBS EBITDA increased $6.3 million, or 13%, to $53.9 million. DBS EBITDA as a percentage of DBS revenue increased to 24.8% from 21.7%. DBS total subscriber acquisition costs decreased $13.2 million, or 35%, to $24.4 million. DBS free cash flow increased $16.3 million, or 68%, to $40.2 million. DBS free cash flow is calculated by reducing DBS EBITDA by DBS capital expenditures and DBS deferred subscriber acquisition costs. Twelve Months Ended December 31, 2002 Consolidated net revenues increased $29.9 million, or 3%, to $901.8 million. Consolidated EBITDA increased $126.4 million, or 176%, to $198.3 million. Consolidated EBITDA as a percentage of consolidated revenue increased to 22.0% from 8.2%. Consolidated free cash flow from operations increased $121.8 million to $136.3 million. The Company's net loss applicable to common shares decreased $143.1 million, or 44%, to $185.1 million. DBS net revenues increased $26.6 million, or 3%, to $864.9 million. DBS EBITDA increased $119.9 million, or 130%, to $211.9 million. DBS EBITDA as a percentage of DBS revenue increased to 24.5% from 11.0%. DBS total subscriber acquisition costs decreased $83.9 million, or 45%, to $102.6 million. DBS free cash flow increased $109.9 million to $152.1 million. Pegasus Communications Corporation -- http://www.pgtv.com-- provides digital satellite television to rural households throughout the United States. The Company is the 10th largest pay television company in the United States. Pegasus also owns and/or operates television stations affiliated with CBS, FOX, UPN, and The WB networks. As reported in Troubled Company Reporter's January 30, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on satellite TV provider Pegasus Communications Corp., and its related entities, to 'CCC+' from 'B' based on increased concerns about the adequacy of its liquidity. In addition, Standard & Poor's removed the rating from CreditWatch where it was placed on May 16, 2002. The outlook is negative. Bala Cynwyd, Pennsylvania-based Pegasus had total debt outstanding of approximately $1.3 billion at September 30, 2002. "Pegasus continues to consume significant, albeit somewhat curtailed, capital in subscriber acquisition costs (SAC), and faces unfavorable trends in subscriber growth and uncertainty about its longer-term business position and prospects for cash flow growth," said Standard & Poor's credit analyst Alyse Michaelson. She added that, "Escalating maturities, an overburdened debt structure, and limited access to capital further intensify near-term financial risk." The ratings on Pegasus reflect its aggressive, debt-financed DirecTV rural franchise and heavy subscriber acquisition activity. These factors are responsible for the company's thin interest coverage, historical discretionary cash flow deficits, significant capital requirements, and heavy debt load. Pegasus' risk is tempered by its satellite direct-to-home subscriber base, the visibility of the DirecTV brand, steps taken to alleviate the SAC burden and churn, and weaker cable competition in rural markets. PETROLEUM GEO: NYSE Suspends Trading for Violating Requirements --------------------------------------------------------------- Petroleum Geo-Services ASA (NYSE:PGO) (OSE: PGS) has been informed by the New York Stock Exchange that the American Depositary Shares of Petroleum Geo-Services ASA and the Petroleum Geo-Svcs AsaTrust I -- tickers symbol PGO and PGOPRA - are suspended. PGS has been in continuous dialogue with the NYSE regarding the market price of its ADRs since they fell below $1.00. In the Company's Q3, 2002 Earnings Release PGS informed the market that it had fallen below the NYSE's continued listing criteria relating to the minimum share price, and indicated that under NYSE rules within six months from NYSE notice it would be required to bring the ADR price and average ADR price above $1.00 over a 30 day trading period. The NYSE decision was reached because PGO remains below the NYSE's minimum security price criterion as PGO's average ADR price has been less than $1.00 over a consecutive 30- trading - day period and has recently been trading at abnormally low levels, closing at $0.31 on February 25, 2003. Additionally, in view of today's earnings announcement, the Company has now also fallen below NYSE continued listing standards as the Company's average global market capitalization over a consecutive 30 trading-day period is less than $50,000,000 and its total stockholders' equity is less than $50,000,000. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units. PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com PG&E CORP: Red Ink Flows in 2002 with Net Loss Topping $874 Mil. ---------------------------------------------------------------- PG&E Corporation (NYSE: PCG) reported a total net loss of $874 million, for 2002, compared with total net income of $1,099 million for 2001. The 2002 results primarily reflect substantial fourth-quarter impairment charges in connection with the planned sale, transfer or abandonment of various assets in the merchant power generation segment of its PG&E National Energy Group (PG&E NEG) business unit. In addition to actual reported earnings, which are presented in accordance with generally accepted accounting principles, the Corporation also presents results on an operations basis, excluding certain gains and losses. Earnings from operations without headroom were $864 million for 2002 compared with $1,099 million for 2001. With headroom, earnings from operations were $1.9 billion for 2002. Earnings from operations primarily reflected the contribution of $797 million, from Pacific Gas and Electric Company. PG&E NEG contributed $13 million, and PG&E Corporation contributed $54 million reflecting consolidated tax benefits. The Corporation's annual report on Form 10-K, filed Thursday, also discloses the earnings impact of accounting for stock options if the company were to record them as an expense. For 2002, accounting for stock options as an expense would have reduced earnings by approximately $0.05 per share. Pacific Gas and Electric Company Not including headroom, the Corporation's California utility business, Pacific Gas and Electric Company, contributed $797 million to earnings from operations for 2002, compared with $914 million for in 2001. Earnings from operations including headroom were $1,848 million for 2002. Operational performance at the utility remained strong in 2002, as the utility continued to deliver safe, reliable electric and gas service. The utility received high marks from customers responding to its customer service survey, with more than 90 percent rating their service as good, very good or excellent. Additional accomplishments for the year included strong safety performance, with total lost-time incidents that were down 21 percent from 2001 and fewer than any in the last 10 years; a sustained five-year trend of solid reliability, with outages down by 20 percent in frequency and duration over that period; the launch of a new IT system for customer accounts; and continued excellence in energy efficiency programs, with one- third of residential customers qualifying for the 20 percent rebate program, and receipt of the American Council for an Energy-Efficient Economy's Champion of Energy Efficiency Award. Moreover, in 2002, the utility operated with the lowest system- wide average electric rates among the state's three largest investor-owned utilities. "Pacific Gas and Electric Company's financial performance and operational accomplishments in 2002 demonstrate that this business remains strong and that our team continues to provide a solid foundation for us to move forward with the utility's proposed plan of reorganization," said Robert D. Glynn, Jr., Chairman, CEO and President of PG&E Corporation. Pg&E National Energy Group The Corporation's national wholesale energy business, PG&E National Energy Group, reported earnings from operations of $13 million for 2002, compared with earnings from operations of $209 million for 2001. Performance on the PG&E NEG's Northwest natural gas pipeline remained solid for 2002, with approximately 93 percent of its available capacity committed under long-term contract at the end of the year. PG&E NEG also began operations on the North Baja pipeline in 2002. The Interstate Pipeline Operations segment of the PG&E NEG contributed $0.21 per share for 2002, compared with $0.21 per share in 2001. PG&E NEG's earnings from operations included a loss of $0.10 per share from the unit's Integrated Energy and Marketing and discontinued operations segments, compared with income of $0.37 per share for 2001. Although the PG&E NEG's operating performance was solid during 2002, its financial performance was additionally impacted by the downturn in the wholesale electric power markets resulting in a loss of $3.4 billion for the year. These losses included the impairment charges related to the planned sale, transfer, or abandonment of investments associated with the merchant power generation operation -- steps we took affirmatively to restructure that business. PG&E NEG is continuing efforts to reach agreement with lenders and debt holders on a global restructuring plan to address financial obligations the company cannot meet, including amounts due under credit facilities and equity commitments for various power plant construction projects. "Our emphasis remains on reaching a consensual restructuring agreement with the PG&E NEG's creditors," said Glynn. "We are fully engaged in that effort, and we continue to believe this is an achievable, though challenging, goal." Conclusion "PG&E marked its 150th year in 2002," said Glynn. "During this time, some things have changed; some have changed a great deal; and some haven't changed at all. Changed are the number of customers we serve and the size and scale of our operations. Changed a great deal is the structure of our industry and its marketplaces. And not changed at all are the dedication and commitment of the men and women of PG&E to provide safe, reliable and responsive delivery of energy and customer service. "As we look ahead, each of our businesses is on clear, independent course of action with the objectives of resolving uncertainty and laying the foundation for our operations to deliver the financial performance and value shareholders expect," said Glynn. PHOTOCHANNEL NETWORKS: Dec. 31 Balance Sheet Upside-Down by $2MM ---------------------------------------------------------------- PhotoChannel Networks Inc. (TSX-Ven: PNI), a global digital imaging network company, reports the following; Corporate Update "The recent signings of significant retailers like Blacks and Giant Eagle showcases how the PhotoChannel Network is becoming the online imaging product of choice for photo retailers in both Canada and the United States," stated Peter Scarth, PhotoChannel CEO. "Management and the entire PhotoChannel team are extremely committed to building the necessary solutions for the photo retailer. With the recent launch of some of our new products and services, we believe the PhotoChannel solution for photo retailers has more revenue generating features than any other in the marketplace and will become the standard for the digital photography industry. New Products and Services - Over the last few months PhotoChannel has launched many new products targeted at increasing revenue opportunities for photofinishing retailers including the PhotoChannel Print Order Wizard, PhotoChannel Mobility, PhotoChannel Prepaid card solutions, integration of the Sony PictureStation, PhotoChannel CD Viewer, PhotoChannel Calendar builder and the PhotoChannel version of the Microsoft Windows XP Order Print Wizard. More information on each of these products and services can be found on the new corporate Web site located at http://www.photochannel.com PhotoChannel Issues Warrants to TELUS The Company has issued warrants to purchase 2,100,000 common shares to TELUS Corporation pursuant to the consulting agreement with TELUS previously announced on August 19, 2001, whereby TELUS earns warrants based upon services it provides to PhotoChannel and for business it generates for PhotoChannel. The warrants are exercisable to acquire shares for a period of two years at a price of $0.10 per share. The warrants and underlying shares are subject to a 4-month hold period. PhotoChannel will issue the warrants under the Consulting Agreement on a quarterly basis, as the warrants are earned under the Consulting Agreement. The exercise price of the warrants is set at the prevailing market price at the time of issue, subject to a minimum price of $0.10. The maximum number of warrants to be issued under the Consulting Agreement is 7,600,000. First Quarter Financials The Company has filed its financial statements for the first quarter ended December 31, 2002 on SEDAR at http://www.sedar.com The following summary of the financial highlights for the quarter should be read in conjunction with the full text of the financial statements and accompanying quarterly report. The Company's December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $2 million. The Company recorded a three-month net loss of $861,694 compared to a gain of $1,278,294 in the same period last year. The gain at December 31, 2001 was the result of the expense recovery of $2,746,944, associated with the filing by the Company's US Subsidiary, PhotoChannel, Inc., under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy Court, District of Connecticut, on November 1, 2001. Excluding this one time expense recovery in 2001, the Company's net loss from operations for the three-months ended December 31, 2002 was $744,071, as compared to $1,288,399 during the comparable period in 2001. This 42% reduction was due to a significant reduction in expenses related to accounting and legal, office, salary and consulting expenses and general corporate administration. On October 29, 2002, the Company announced that it plans to offer up to an additional 750 units in the PhotoChannel Networks Limited Partnership. The Company issued 115 units for consideration of $115,000, prior to December 31, 2002, in connection with this offering. On November 14, 2002, the Company announced that it had engaged Yorkton Securities (now First Associates) to complete a financing of up to $2,000,000. PRIME GROUP: Barnes & Thornburg Executes Sublease Amendment ----------------------------------------------------------- Prime Group Realty Trust (NYSE: PGE) announced that Barnes & Thornburg, an Indianapolis-based law firm, has executed a sublease amendment for an additional 10,028 square feet at One North Wacker Drive. Barnes & Thornburg will now occupy 65,522 square feet at One North Wacker Drive. The commencement date is June 1, 2003. "As illustrated by our recent leasing activity, we continue to mitigate the Citadel Investment Group, L.L.C. lease assumption liability," stated Jeffrey A. Patterson, Co-President and Chief Investment Officer. Citadel is scheduled to take occupancy of 274,000 square feet at Bank One Corporate Center (formerly Dearborn Center) in April, 2003. Prime Group Realty Trust is a fully-integrated, self-administered, and self-managed real estate investment trust (REIT) that owns, manages, leases, develops, and redevelops office and industrial real estate, primarily in metropolitan Chicago. The Company owns 15 office properties, including the recently completed Bank One Corporate Center development in downtown Chicago, containing an aggregate of 7.8 million net rentable square feet and 30 industrial properties containing an aggregate of 3.9 million net rentable square feet. In addition, the Company owns 202.1 acres of developable land and joint venture interests in two office properties containing an aggregate of 1.3 million net rentable square feet. As reported in Troubled Company Reporter's February 10, 2003 edition, Prime Group Realty Trust's Board of Trustees, after evaluating the proposal with its financial advisors, determined that it was not interested in pursuing the previously announced recapitalization proposal presented to the Company by Northland Capital Partners, L.P., Northland Capital Investors, LLC, NCP, LLC and Northland Investment Corporation. The Board instead decided that it would continue to pursue the Company's other strategic alternatives at this time, including but not limited to, a sale, merger or other business combination involving the entire Company. The senior management of the Company then informed Northland of the Board's determination after which Northland sent a letter to the Company stating that it was terminating all discussions and negotiations relating to a possible negotiated transaction. Last year, the Company faced the risk of involuntary bankruptcy due to the potential redemption of $40 million of PGE's Preferred A shares. REALTY INCOME: Moody's Raises Preferred & Unsecured Ratings ----------------------------------------------------------- Realty Income Corp. (Realty Income), The Monthly Dividend Company(R) (NYSE:O), announced that Moody's Investors Service upgraded the company's senior unsecured debt rating to Baa2 from Baa3 and its preferred stock ratings to Baa3 from Ba1, with a stable outlook. Realty Income's Chief Executive Officer, Tom A. Lewis, stated, "We are very pleased with Moody's rating action, and believe the upgrade reflects the Company's solid financial position, the increased diversification of our portfolio of retail properties and the consistent growth of the Company in recent years." Moody's Investors Service issued the following press release on Feb. 26, 2003: "Moody's Investors Service has upgraded the ratings of Realty Income Corporation (NYSE: O) (senior debt to Baa2, preferred stock to Baa3) with a stable outlook. According to Moody's, this rating change reflects the REIT's success in increasing its asset base and revenues, sound fixed charge coverage, lack of encumbered assets, consistent performance track record, focus on free-standing single-tenant triple net lease retail property transactions, and reduction in its industry and tenant concentration. The stable rating outlook reflects Moody's belief that the REIT will maintain a conservative capital structure of low leverage with unencumbered assets, consistent operating performance, a staggered lease structure and laddered debt maturity schedule. "Realty Income maintains a conservative balance sheet (total debt and preferred stock is only 33% of gross assets) and solid fixed charge coverage (3.9x including interest and preferred dividends). Realty Income's occupancy rate has not been below 97.5% since 1969, and its current portfolio occupancy rate remains high at 97.7%, with an average remaining lease term of 10.9 years. At the same time, the REIT has significantly increased its asset base and revenues in recent years. At year- end 2002, Realty Income owned 1,197 properties that generated revenues of $141 million compared to 740 properties generating revenues of $57 million in 1996 when it was first rated. "Moody's notes that Realty Income has made significant progress in reducing its industry and tenant concentrations. Today, the REIT's top three industries account for 42.4% of annual revenues, which consists of childcare (19.5%), restaurants (12.6%), and convenience stores (10.3%). In 1996, its top three industries accounted for 76.9% of total revenues, with childcare (42.0%), restaurants (24.4%) and automotive parts (10.5%) dominating the mix. Its ten largest tenants account for 46.4% of annual rent, compared to 76.7% in 1995. Realty Income has successfully reduced its tenant exposure -- at year-end 2002 only two tenants accounted for over 5% of annualized rent -- Children's World (9.9%) and La Petite Academy (8.4%) -- compared to five tenants in 1995. "Moody's stated that the REIT has displayed good access to capital markets. Since May 2001 it has raised over $200 million from four equity issuances. Realty Income has a well-laddered debt maturity schedule, with no long term maturities until 2007, other than its recently renegotiated line of credit, which matures in October 2005. "These positive factors are offset by the REIT's exposure to non-credited tenants, modest size, the single-purpose nature of its portfolio, and tenant and industry concentration. Realty Income provides capital primarily to middle-market retail chain store operators by acquiring and leasing back their retail sites on a triple-net basis. The two largest segments consist of childcare facilities, which represent approximately 20% of Realty Income's annual rental revenue, and restaurant industries, which account for 13%. Although this concentration has consistently diminished over time, Moody's expects further decreases in this concentration, and would deem a more concentrated portfolio as a distinct negative. "Further rating upgrades will be challenging, and would reflect a maintenance of the REIT's sound balance sheet and coverages, combined with much enhanced industry leadership and diversity. "The following ratings were upgraded for Realty Income Corporation -- Senior unsecured debt to Baa2, from Baa3; -- senior unsecured debt shelf to (P)Baa2, from (P)Baa3; -- preferred stock to Baa3, from Ba1; -- preferred stock shelf to (P)Baa3, from (P)Ba1; and -- subordinate debt shelf to (P)Baa3, from (P)Ba1." Realty Income is The Monthly Dividend Company(R), a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the company has paid 391 consecutive monthly dividend payments throughout its 33-year operating history. The monthly income is supported by the cash flow from approximately 1,200 retail properties owned under long-term lease agreements with leading regional and national retail chains. The company is an active buyer of net- leased retail properties nationwide. RESIDENTIAL ACCREDIT: Fitch Rates 2 Note Classes at Low-B Levels ---------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc., $203.4 million mortgage pass-through certificates, series 2003-QS3 classes A-1 through A-8, A-P, A-V, R-I and R-II certificates 'AAA'. In addition, class M-1 ($3.1 million) is rated 'AA', class M-2 ($0.4 million) is rated 'A', class M-3 ($0.6 million) is rated 'BBB', the privately offered class B-1 ($0.3 million) is rated 'BB' and the privately offered class B-2 ($0.2 million) is rated 'B'. The 'AAA' ratings on senior certificates reflect the 2.40% subordination provided by the 1.50% class M-1, the 0.20% class M-2, the 0.30% class M-3, the 0.15% privately offered class B-1, the 0.10% privately offered class B-2, and the 0.15% privately offered class B-3 (which is not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. As of the cut-off date, Feb. 1, 2003 the mortgage pool consists of 1,273 conventional, fully amortizing, 15-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $208,409,571. The mortgage pool has a weighted average original loan-to-value ratio of 64.30%. Approximately 58.37% and 2.64% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 65.17% of the pool, equity refinance loans account for 49.08%, and second homes account for 2.04%. The average loan balance of the loans in the pool is $163,715. The three states that represent the largest portion of the loans in the pool are California (31.41%), Texas (9.32%), and Florida (6.18%). Approximately 1.9% of the mortgage loans are secured by properties located in the State of Georgia, none of which are covered under the Georgia Fair Lending Act (GFLA), effective as of October 2002. All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers except in the case of 38.1% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly owned subsidiary of the master servicer. No other unaffiliated seller sold more than approximately 13.6% of the mortgage loans to Residential Funding. Approximately 85.4% of the mortgage loans are being subserviced by HomeComings Financial Network, Inc. (rated 'RPS1' by Fitch). The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits (REMICS). RITE AID: Cerberus Advised to Pass on any Investment Last Year -------------------------------------------------------------- Cerberus Capital Management asked turnaround manager Daniel F. Crowley (currently serving as CEO for Coram Healthcare Corp.) to review Rite Aid Corp. as a potential investment from a health care perspective just over a year ago. Making a significant investment in Rite Aid's unsecured debt, Mr. Crowley told Cerberus, "would require a leap of faith." Mr. Crowley concluded that "RAD's equity has very little 'real' value," and cautioned Cerberus to "not take any comfort" in the $1.4 billion of shareholder equity shown on the Rite Aid balance sheet he was looking at. Since that time, shareholder equity on Rite Aid's balance sheet has dwindled to negative $105 million as of November 30, 2002. Copies of Mr. Crowley's correspondence with Cerberus sharing his thoughts and analysis are available at no charge at: http://bankrupt.com/misc/riteaid.pdf The documents became public when they were filed in Coram's chapter 11 proceeding (Bankr. D. Del. Case No. 00-03299) as Exhibits 11 and 16 to an Objection (Doc. 2218) interposed by Coram's Equity Committee decrying the Chapter 11 Trustee's Motion to continue Mr. Crowley's employment as Coram's CEO. In Coram's chapter 11 cases, the Sam Zell-led Equity Committee, represented by Richard F. Levy, Esq., at Jenner & Block, LLC, in Chicago, continues its widely publicized "Crowley must go!" campaign and two-year attempt to take control of Coram's destiny. The Equity Committee used the documents to demonstrate to Judge Walrath that Mr. Croyley's lied to the Court and the Trustee when he says he hasn't been working for Cerberus this past year. Cerberus is on of Coram's largest creditors. Rite Aid's Debt Load At November 30, 2002, Rite Aid's debt obligations consist of: Secured Debt: Senior secured credit facility ......... $1,380,000,000 12.5% senior secured notes due 2006 ($152,025,000 face value less unamortized discount of $6,571,000) .. 145,454,000 Senior secured (shareholder) notes due 2006 ............................. 149,500,000 Other ................................... 7,431,000 -------------- 1,682,385,000 Lease Financing Obligations ............... 178,025,000 Unsecured Debt: 6.0% dealer remarketable securities due 2003 ............................. 58,125,000 6.0% fixed-rate senior notes due 2005 .. 194,500,000 7.625% senior notes due 2005 ........... 198,000,000 4.75% convertible notes due 2006 ($250,000,000 face value less unamortized discount of 5,875,000 .... 244,125,000 7.125% notes due 2007 .................. 350,000,000 6.125% fixed-rate senior notes due 2008 ................................. 150,000,000 11.25% senior notes due 2008 ........... 150,000,000 6.875% senior debentures due 2013 ...... 200,000,000 7.7% notes due 2027 .................... 300,000,000 6.875% fixed-rate senior notes due 2028 ................................. 150,000,000 -------------- 1,994,750,000 -------------- Total debt ......................... $3,855,160,000 ============== Rite Aid completed a $300 million offering of 9.5% senior secured notes due 2011 last month. The proceeds of that offering were used to redeem all $149.5 million aggregate principal amount of its senior secured (shareholder) notes due 2006 and to retire $118.6 million of 6.0% fixed-rate senior notes due 2005. Information obtained from http://www.LoanDataSource.comshows that substantially all of Rite Aid Corporation's wholly-owned subsidiaries guarantee the obligations under a $1,900,000,000 SENIOR CREDIT AGREEMENT dated as of June 27, 2001 (as amended, supplemented or otherwise modified from time to time) among RITE AID CORPORATION, as Borrower, a consortium of unidentified lenders, CITICORP USA, INC., as a Swingline Bank, as an Issuing Bank and as administrative agent for the Lenders, Citicorp USA, as collateral agent for the Lenders and JPMORGAN CHASE BANK, CREDIT SUISSE FIRST BOSTON and FLEET RETAIL FINANCE INC., as syndication agents. The subsidiary guarantees are secured primarily by a first priority lien on the inventory, accounts receivable, prescription files, intellectual property and some real estate assets of the subsidiary guarantors. The Company's obligations under its 12.5% senior secured notes due 2006 are guaranteed by substantially all of Rite Aid Corporation's wholly owned subsidiaries. These guarantees are secured by second priority liens on the same collateral that secures the senior credit facility. Rite Aid Corporation is a holding company with no direct operations and is dependent upon dividends and other payments from its subsidiaries to service payments due under the senior secured credit facility, the 12.5% senior secured notes due 2006. The subsidiary guarantees related to the Company's debt are full and unconditional and joint and several, and there are no restrictions on the ability of the parent to obtain funds from its subsidiaries. January 2003 Sales For the four weeks ended January 25, 2003, same store sales rose 5.7 percent over the prior-year period. Pharmacy same store sales were up 7.1 percent, while front-end same store sales were up 3.1 percent. Total drugstore sales for the four-week period rose 3.6 percent to $1.196 billion compared to $1.155 billion for the same period last year. Prescription revenue accounted for 65.2 percent of drugstore sales, and third party prescription revenue represented 92.4 percent of pharmacy sales. 47-Week Period Ending January 25, 2003 Same store sales for the 47-week period ended January 25, 2003 increased 7.1 percent, consisting of a 10.3 percent pharmacy same store sales increase and a 2.0 percent increase in front- end same store sales. Total drugstore sales for the 47 weeks ended January 25, 2003 gained 4.5 percent to $14.212 billion from $13.596 billion in last year's like period. Prescription revenue accounted for 63.1 percent of total drugstore sales, and third party prescription revenue was 92.7 percent of pharmacy sales. Fourth Quarter Guidance Rite Aid provided EBITDA guidance for the fourth quarter and fiscal year 2003, which ends March 1, 2003. Based on current trends, the company said on February 4, 2003, that fourth quarter EBITDA should be $160.0 million to $170.0 million, which compares to $143.5 million in the prior year fourth quarter. EBITDA for fiscal 2003 is expected to be $605.0 million to $615.0 million. Rite Aid is expected to announce February sales data on Tuesday, March 11, 2003, and discuss fourth quarter and year-end results in a conference call on Thursday, April 10, 2003, at 10:30 a.m. Rite Aid Corporation is one of the nation's leading drugstore chains, combining its modern store base, strong brand name, modern distribution centers and superior pharmacy technology with a talented team of approximately 75,000 full and part-time associates serving customers in 28 states and the District of Columbia. Rite Aid currently operates approximately 3,400 stores, reporting total sales of $15.2 billion at the end of its 2002 fiscal year. SAIRGROUP FINANCE: Confirmation Hearing Scheduled for April 8 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the Disclosure Statement filed by SAirGroup Finance (USA), Inc., to explain its Liquidating Chapter 11 Plan. Judge Bernstein finds that the disclosure document contains adequate information for all creditors to make informed decisions about whether to vote to accept or reject the Plan. A hearing to consider confirmation of the Plan is scheduled to occur on April 8, 2003 at 10:00 a.m., before the Honorable Stuart M. Bernstein, Chief United States Bankruptcy Judge for the Southern District of New York, located at Alexander Hamilton Custom House, One Bowling Green, Courtroom 723, New York, New York. All written Confirmation Objection must be in by 4:00 p.m. of April 3, 2003 and served on: 1) counsel for the Debtor: Allen & Overy 1221 Avenue of the Americas New York, NY 10020 Attention: David C.L. Frauman, Esq. and Hugh McDonald, Esq.,; 2) joint counsel for the Ad Hoc Committee: Bingham McCutchen LLP 399 Park Avenue New York, NY 10022, Attention: Jeffrey Kirshner, Esq., and Clifford Chance US LLP 200 Park Avenue New York, NY 10166 Attention: Scott Talmadge, Esq.; and 3) the Office of the United States Trustee 33 Whitehall Street, 21st Floor New York, New York 10004 Attention: Tracy Hope Davis, Esq. The Court will only consider timely filed and served written objections. Prior to the petition date, SairGroup Finance (USA), Inc., participated in and assisted with financing transactions on behalf of its parent and sole shareholder, SAirGroup. The Company filed for chapter 11 protection on September 3, 2002 (Bankr. S.D.N.Y. Case No. 02-14302). David C.L. Frauman, Esq., at Allen & Overy, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $460,161,000 in assets and $582,888,000 in debts. SHERRITT POWER: Distributes Mail Circular for March 25 Meeting -------------------------------------------------------------- Sherritt Power Corporation has mailed its notice of special meetings and management information circular dated February 25, 2003 providing the details in support of the Corporation's proposal to amalgamate with a wholly-owned subsidiary of Sherritt International Corporation. Shareholders and noteholders of Sherritt Power will become holders of restricted voting shares and noteholders respectively of Sherritt International Corporation if the amalgamation and related transactions are approved. The Board of Directors of Sherritt Power Corporation has determined that the transactions to be put before the special meetings of its shareholders and noteholders are fair to minority shareholders and noteholders, other than Sherritt International, and are in the best interests of the Corporation. The Sherritt Power Board of Directors unanimously recommends that all shareholders and noteholders vote in favour of the special resolutions. The transactions to be put forward to Sherritt Power's security holders will provide owners of Sherritt Power notes (other than Sherritt International) with approximately 12.7% of the principal value of the Sherritt Power notes in cash ($102 in cash in respect of each $802 principal amount of notes held) and 87.3% of the principal value of the notes in the form of amended 9.5% senior unsecured debentures, due March 31, 2010 ($700 in new notes in respect of each $802 principal amount of notes held), which will be obligations of Sherritt International Corporation. Sherritt International will have an obligation to seek a rating from certain designated rating agencies in respect of these notes by December 31, 2003, failing which a one time 2% fee will be paid to noteholders. The transactions will also provide common shareholders of Sherritt Power (other than Sherritt International), 1.45 restricted voting shares of Sherritt International for each common share of Sherritt Power owned. The full details and terms of the transactions are provided in the February 25, 2003 management information circular. Sherritt Power believes the proposed transactions offer several advantages to its shareholders and noteholders: (a) Shareholders will benefit from Sherritt International's significantly larger market capitalization and its significantly higher trading volumes, providing Shareholders with greater liquidity, (b) Shareholders will have an interest in Sherritt International, which has complementary businesses to the Corporation as well as other more diversified businesses, (c) The consideration to shareholders represents a premium to the historical trading prices for the Corporation's shares, (d) Noteholders will hold notes which will be obligations of Sherritt International, thereby avoiding default on the notes, (e) Noteholders will receive a principal repayment of $102 for each $802 outstanding principal amount of notes held by them, and (f) Shareholders, who hold their shares as capital property, will not realize a capital gain (or capital loss) on the exchange of their shares for Sherritt International shares. Noteholders, who hold their notes as capital property, are not expected to realize a capital gain (or capital loss) as a result of the note amendment. The Sherritt Power Board of Directors in unanimously recommending that all shareholders and noteholders vote in favour of the special resolutions has considered many factors including, but not limited to, underlying valuations of the securities, alternatives to the transaction proposed by Sherritt International, the historical trading prices for the securities and the fact that if these transactions are not approved, the Corporation does not expect to have sufficient cash available to meet the interest and principal payments on its notes scheduled for March 31, 2003. While the final 75 MW phase of the Corporation's 226 MW of power projects is now producing power and ramping up to full capacity, the Corporation has experienced delays and increases in capital costs in the construction of this phase that have led to the expected shortfall in cash availability. Accordingly, the Corporation's viability as a going concern would be subject to significant risk if the shareholders and noteholders do not approve the proposed transaction. The Sherritt Power Board, after consideration of these and other factors, including recommendations of its special committee of independent directors and its financial and legal advisors, has determined that the proposed transaction is in the best interests of the Corporation and is fair to its minority shareholders and noteholders other than Sherritt International. Accordingly, the Board unanimously recommends that the shareholders and noteholders vote in favor of the resolutions to be put forward at the special meetings of Sherritt Power shareholders and noteholders to be held concurrently at the TSX Conference Centre, 130 King Street West, Toronto Ontario at 2:00 pm, Toronto time, March 25, 2003. Sherritt Power Corporation was formed to finance, construct and operate power-generating businesses. Sherritt Power trades on The Toronto Stock Exchange under the symbol "U". The Corporation's Sherritt Power notes trade on the over-the-counter market. * * * As reported in Troubled Company Reporter's February 24, 2003 edition, Sherritt Power Corporation and Sherritt International Corporation announced that Sherritt International has made a new proposal to restructure Sherritt Power and that the board of directors of Sherritt Power has decided to recommend to Sherritt Power security holders the enhanced terms proposed by Sherritt International in respect of Sherritt Power's common shares and 12.125% senior unsecured amortizing notes due 2007. As reported in Troubled Company Reporter's January 24, 2003 edition, the proposal from Sherritt International addresses Sherritt Power's liquidity concerns as well as provides securities via exchanges that Sherritt International has indicated represent premiums to the historical trading prices for Sherritt Power's common shares and Notes. Sherritt International has indicated that this proposal will also provide for continuing participation via an interest in Sherritt International, which has complementary businesses to Sherritt Power as well as other more diversified businesses. SIERRA HEALTH: Fitch Rates $100MM Convertible Senior Notes at BB ---------------------------------------------------------------- Fitch Ratings assigned a rating of 'BB' to $100 million of convertible senior notes issued by Sierra Health Services, Inc. The privately placed Rule 144A notes represent senior unsecured obligations of the company. At the same time, Fitch has assigned an initial long-term issuer rating of 'BB'. The Rating Outlook is Stable. In addition, Fitch has placed the 'BBB' insurer financial strength ratings on Sierra Health's health insurance units, Health Plan of Nevada and Sierra Health & Life Insurance Company, on Rating Watch Positive. The 'BBB' insurer financial strength ratings on Sierra Health's workers' compensation unit, Sierra Insurance Group, remain on Rating Watch Evolving. In January 2003, Sierra Health reclassified SIG as a discontinued operation and announced plans to seek strategic alternatives for this business. Fitch expects that proceeds from the debt issuance will be used to retire outstanding bank debt, which was $34 million as of February 25, 2003, and contribute $35 million to its TRICARE subsidiary. The balance of the proceeds will be used to repurchase up to $20 million of Sierra Health's common stock and for working capital and other general corporate purposes. The Rating Watch status on SHL and HPN reflect Fitch's expectation that a portion of the proceeds from the debt issuance will be used to improve the risk-based capital levels of these companies. The ratings on HPN and SHL continue to reflect SIE's strong market presence in the southern Nevada health care market, with strong and profitable competitive positions in the Medicare risk and commercial segments. The ratings also reflect the companies' modest statutory capital levels. Sierra Health Services, Inc. is a publicly traded diversified managed care holding company (NYSE: SIE). The SIG companies, which include California Indemnity Insurance Company, Commercial Casualty Insurance Company, Sierra Insurance Company of Texas and CII Insurance Company, operate in the workers' compensation insurance business in California, Nevada, Colorado, Texas and five other selected markets. HPN and SHL are core operating companies in SIE's managed care division, and provide health insurance & managed care products and services primarily in the southern Nevada market. Sierra Health Services, Inc. -- Long-term issuer Assigned 'BB'/Stable; -- Senior debt Assigned 'BB'/Stable. Health Plan of Nevada Sierra Health & Life Insurance Company -- Insurer financial strength 'BBB'/Positive. Ratings Unchanged California Indemnity Insurance Co. Commercial Casualty Insurance Co. CII Insurance Co. Sierra Insurance Company of Texas -- Insurer financial strength 'BBB'/Evolving. SOTHEBY HLDGS: S&P Affirms B+ Credit Rating after Nixed Merger -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Sotheby's Holdings Inc., and removed the rating from CreditWatch where it had been listed with developing implications. The outlook is stable. The rating action follows an announcement by Sotheby's that it and the Taubman family agreed to terminate proceedings involving the possible sale or merger of the company, or sale of the Taubman stake in the company. The rating had been on CreditWatch with developing implications because any buyer could have a stronger or weaker credit profile than Sotheby's. "Operating and financial ramifications associated with the company's violation of antitrust laws are essentially history, and management is no longer involved in discussions involving the sale of the company. Based on this, we expect that Sotheby's will be better able to refocus its attention on the worldwide auction business and improving its credit protection measures," said Standard & Poor's credit analyst Gerald A. Hirschberg. Standard & Poor's also said that the rating on Sotheby's continues to reflect expectations that the worldwide art auction market may experience further difficulties during 2003 given a very challenging economic environment and a volatile stock market that is impacting wealth. "Although Sotheby's made good progress in 2002 in reducing its costs, auction revenue was held back by margin pressures on high-end consignments when compared with the year before," added Mr. Hirschberg. In early February 2003, the company took an important step in fortifying its previous precarious liquidity position. Sotheby's finalized an agreement to sell its headquarters building for $175 million--and lease it back for a period of 40 years--and also announced a refinancing of its senior secured credit facility that was near expiration. SPIEGEL GROUP: Retailer In or Very Near the Zone of Insolvency -------------------------------------------------------------- The Spiegel Group, whose businesses include Eddie Bauer, Newport News, Spiegel Catalog and First Consumers National Bank, delivered its quarterly reports to the Securities & Exchange Commission last week showing that shareholder equity's dwindled to $72.4 million at September 30, 2002 -- roughly 3% of the company's $2.2 billion asset base. Dismal 2001 & 2002 Results Spiegel fell out of compliance with its 2001 loan covenants over a year ago and has been working with its bank group to amend and replace its existing credit facilities with a new credit facility. For the year ending December 29, 2001, Spiegel reported $2.9 billion in sales (down sharply from 2000) and a $587 million net loss (a $700 million downward swing from 2000 results). For the first nine months of 2002, net sales contracted to $1.5 billion and the company's net loss totaled $139 million. With another typical quarter or two of losses, Spiegel's liabilities will exceed its assets. The Bank Facilities The Company has a $600,000,000 revolving credit agreement with a group of banks that matures in July 2003 and a $150,000,000 364- Day Facility that matured in June 2002. The Company reports that $700,000,000 was outstanding at February 18, 2002. Information obtained from http://www.LoanDataSource.comshows that: * ABN Amro Bank N.V. * Banca Commerciale Italiana, New York Branch * Bank of America, N.A. * Bankgesellschaft Berlin AG * Bayerische Hypo und Vereinsbank AG * Commerzbank AG, New York and Grand Cayman Branches * Credit Lyonnais, New York Branch * Credit Suisse First Boston * Den Danske Bank * Deutsche Bank AG, New York and/or Cayman Island Branches * Deutsche Bank AG, New York Branch * DG Bank Deutsche Genossenschaftsbank AG * Dresdner Bank AG, New York and Grand Cayman Branches * HSBC Bank USA * Landesbank Hessen-Thuringen * Morgan Guaranty Trust Company of New York * Norddeutsche Landesbank Girozentrale, New York Branch and/or Cayman Island Branch * The Bank of New York * The Hongkong and Shanghai Banking Corporation Limited; and * Westdeutsche Landesbank Girozentrale, New York Branch are the financial institutions with exposure under these loan facilities. Needing continued access to working capital financing, in September 2001, the Company entered into a revolving credit agreement with Otto Versand (GmbH & Co), a related party, to obtain access to $100,000,000 of financing through June 15, 2002. As of February 2002, this credit facility was fully drawn. This loan was extinguished with the proceeds of new term loans totaling $100,000,000 from Otto-Spiegel Finance G.m.b.H. & Co. KG, a related party. The term loans matured on December 31, 2002, but as of January 2003, the $100,000,000 term loans are still outstanding. Late last year or early this year, Spiegel borrowed an additional $60,000,000 on a senior unsecured basis from Otto Versand (GmbH & Co) to keep operations going. New CFO on Board James M. Brewster was hired as the new senior vice president and chief Financial officer for The Spiegel Group on February 26, 2003. For the past 10 years, Brewster has served as senior vice president and chief financial officer for the company's Newport News subsidiary, and has a great resume. SEC Investigation Spiegel discloses that the SEC is conducting an investigation concerning the Company's delinquent filing of its Form 10-K for 2001 and its Forms 10-Q for 2002. "We are cooperating with the SEC in its investigation, but we cannot predict the duration, scope or outcome of, or potential sanctions resulting from the investigation," the Company says. KPMG Has Doubts Because (1) the Company is not in compliance with its debt agreements, and accordingly, substantially all of the Company's debt is currently due and payable and (2) the Company has violated certain provisions of agreements with MBIA Insurance Corporation, the insurer of its asset-backed securitization transactions, KPMG LLP expresses doubt about the Company's ability to continue as a going concern. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, 560 specialty retail and outlet stores, and e-commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Company's corporate headquarters and Spiegel operations are located in leased office space in Downers Grove, Illinois. The Company owns its Westmont, Illinois corporate data center. The company's Class A Non-Voting Common Stock trades on the over-the-counter market under the SPGLA ticker symbol. Otto Versand (GmbH & Co), a privately-held German partnership, acquired the Company in 1982. In April 1984, Otto Versand transfered its interest in the Company to its partners and designees. Otto Versand and the Company have "entered into certain agreements seeking to benefit both parties by providing for the sharing of expertise" and have lots of relationships in far-flung places around the globe as a result. In October 2002, the German partnership changed its name from Otto Versand (GmbH & Co) to Otto (GmbH & Co KG). Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SPIEGEL GROUP: Appoints James M. Brewster as Chief Fin'l Officer ---------------------------------------------------------------- The Spiegel Group (OTC Pink Sheets: SPGLA) appointed James M. Brewster senior vice president and chief financial officer for The Spiegel Group on February 26, 2003. For the past 10 years, Brewster has served as senior vice president and chief financial officer for the company's Newport News subsidiary. "We are delighted to have someone with Jim's capabilities to step into the position of chief financial officer and make an immediate and meaningful contribution at the corporate level," said Martin Zaepfel, vice chairman, president and chief executive officer of The Spiegel Group. As senior vice president and chief financial officer of The Spiegel Group, Brewster will report to the CEO and will have responsibility for the company's financial planning and controls as well as the company's strategic activities in the legal, tax, investor relations and loss prevention functions. Brewster joined Newport News in 1986 as manager of financial systems and moved up through the organization, serving as director of finance, director of inventory control, vice president and treasurer, and vice president and chief financial officer before being promoted to senior vice president and chief financial officer in 1992. Prior to joining The Spiegel Group, Jim worked in various financial positions in banking and public accounting in Norfolk, Va. A certified public accountant, Jim earned a bachelor's degree in business administration from Hofstra University, Long Island, New York. In addition, the company announced that on February 26, 2003, John Steele was promoted to senior vice president and treasurer of The Spiegel Group, from his current position of vice president and treasurer of The Spiegel Group. He will now report to the company's CEO. Prior to joining The Spiegel Group in 1993, Steele was vice president and corporate finance director for Deutsche Bank AG in Chicago. He also has held the position of vice president at Bank of America and at Continental Bank of Chicago, where he began his career and held a number of financial positions. Steele earned a bachelor of arts degree and a master of business administration degree at Indiana University. He also attended Hamburg University in Hamburg, Germany, and Harlaxton Manor in Grantham, England. SEC Investigation Continues Spiegel discloses that the SEC is conducting an investigation concerning the Company's delinquent filing of its Form 10-K for 2001 and its Form 10-Q's for 2002. "We are cooperating with the SEC in its investigation, but we cannot predict the duration, scope or outcome of, or potential sanctions resulting from the investigation," the Company says. KPMG Expresses Going Concern Doubts Because (1) the Company is not in compliance with its debt agreements, and accordingly, substantially all of the Company's debt is currently due and payable and (2) the Company has violated certain provisions of agreements with MBIA Insurance Corporation, the insurer of its asset-backed securitization transactions, KPMG LLP expresses doubt about the Company's ability to continue as a going concern. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, 560 specialty retail and outlet stores, and e-commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Company's corporate headquarters and Spiegel operations are located in leased office space in Downers Grove, Illinois. The Company owns its Westmont, Illinois corporate data center. The company's Class A Non-Voting Common Stock trades on the over-the-counter market under the SPGLA ticker symbol. Otto Versand (GmbH & Co), a privately-held German partnership, acquired the Company in 1982. In April 1984, Otto Versand transfered its interest in the Company to its partners and designees. Otto Versand and the Company have "entered into certain agreements seeking to benefit both parties by providing for the sharing of expertise" and have lots of relationships in far-flung places around the globe as a result. In October 2002, the German partnership changed its name from Otto Versand (GmbH & Co) to Otto (GmbH & Co KG). Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com STEEL DYNAMICS: Buys Remaining Interest in New Millennium Bldg. --------------------------------------------------------------- Steel Dynamics, Inc., (Nasdaq: STLD), whose corporate credit is rated by Standard & Poor's at 'BB-', is increasing its ownership in New Millennium Building Systems, LLC, from 46.5 percent to 100 percent. It has purchased the 46.5 percent interest in New Millennium previously held by New Process Steel Corporation, a privately held Houston, Texas, steel processor, and has entered into an agreement to acquire the remaining 7 percent stake held by other minority investors. New Millennium was formed in 1999 and produces steel building components at a 242,000 square- foot facility in Butler, Indiana. "We believe New Millennium continues to show great promise," said Keith Busse, President and CEO of Steel Dynamics. "New Millennium's management team has made great progress in the face of a difficult market environment during their first three years of operations. When the non-residential building market rebounds, we believe New Millennium will be positioned to make a strong contribution to SDI." New Millennium Building Systems produces joists, girders, trusses, and steel roof and floor decking. Having begun production in June of 2000, New Millennium has achieved success in marketing its products in the upper Midwest non-residential- building-components market. Its Butler operations utilize hot- rolled steel supplied by the nearby Steel Dynamics flat-roll mill. TRICO MARINE: S&P Revises B+ Rating Outlook to Neg. after Review ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on petroleum industry services provider Trico Marine Services Inc. At the same time, Standard & Poor's revised the company's outlook to negative, following a review of 2002 results and expected 2003 earnings. The outlook revision reflects Standard & Poor's concerns that continued weakness in the company's primary offshore support markets could lead to additional financial deterioration. Houma, Louisiana-based Trico Marine had roughly $390 million worth of debt outstanding as of December 31, 2002. "Trico Marine operates in the volatile offshore support vessel market, primarily in the Gulf of Mexico, with significant operations in the North Sea market," said Standard & Poor's credit analyst Paul B. Harvey. "The ratings on Trico Marine reflect the company's participation in the cyclical and capital- intensive offshore support vessel segment of the petroleum industry, coupled with aggressive financial leverage," he continued. Trico Marine operates 85 offshore support vessels stationed in the Gulf of Mexico, the North Sea, South America, and West Africa drilling markets. Roughly half of the company's assets currently work in the Gulf of Mexico, a market that typically operates on short-term contracts and faces highly volatile day rates. Trico's international markets, mostly deployed in the North Sea, provide diversification away from the volatile U.S. Gulf market and opportunities for longer-term contracts. North Sea, or harsh environment, capable vessels feature advanced technology and typically garner higher dayrates. In the near term, Trico Marine's financial profile will reflect both the current malaise in the Gulf market and the effects of its newbuild program. For year-ended Dec. 31, 2002, day rates, utilization, and the number of vessels working all declined when compared with 2001. Total debt to capital is expected to remain above 55%, and debt to EBITDA likely will exceed 10x during 2003. Leverage is expected to decrease with the recovery of the Gulf of Mexico market, however near-term debt levels are expected to remain very aggressive. Fixed-charge coverage measures are expected to remain weak for the rating, with EBITDA to interest coverage around 1x and EBITDA to interest plus capital expenditures below 1.0x in 2003. The negative outlook reflects the poorer-than-expected financial performance of Trico Marine, and the potential for a ratings downgrade if the company's liquidity continues to deteriorate. The effect of a continuation of the weak U.S. Gulf of Mexico market occurring simultaneously with North Sea market softness, could lead to further financial deterioration, covenant violations, and negative rating actions. UBIQUITEL INC: Closes Exchange Offer for 14% Senior Notes --------------------------------------------------------- UbiquiTel Operating Company, a wholly-owned subsidiary of UbiquiTel Inc. (Nasdaq-SCM: UPCS), announced the closing of its private placement exchange of $48.2 million aggregate principal amount of its new 14% Senior Discount Notes due May 15, 2010 and $9.6 million in cash for $192.7 million aggregate principal amount of its outstanding 14% Senior Subordinated Discount Notes due April 15, 2010. The New Notes have not been 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 registration requirements. The company anticipates filing the necessary registration statement with the Securities and Exchange Commission within ninety days. "The completion of this transaction gives us the solid financial footing we need to successfully grow the business and position us for future profitability," said Donald A. Harris, Chairman, President and CEO of UbiquiTel. "It also enables us to have the wherewithall to target the most profitable customers and use our resources in the most strategic way possible." The company also completed in a private placement a related new financing of $12.8 million aggregate principal amount of Series B Discount Notes due 2008 in which the company received cash proceeds of $9.6 million to fund the cash portion of the exchange. The company's parent UbiquiTel Inc., issued detachable warrants with the Series B Notes to purchase approximately 9.6 million shares of its common stock. The company reduced overall debt by approximately $146.7 million aggregate principal amount ($113.8 million aggregate accreted value) and cash interest requirements by approximately $9.7 million in 2005 and approximately $19.3 million annually beginning in 2006 providing cumulative savings of approximately $243 million. The company ended December 31, 2002 with $76 million of cash, cash equivalents, and restricted cash. UbiquiTel expects to announce full financial and operating results for the fourth quarter and fiscal year ended December 31, 2002 after the market closes on March 26, 2003 and to hold its conference call with investors at 8:30 a.m. ET on March 27, 2003. As reported in Troubled Company Reporter's Thursday Edition, Standard & Poor's Ratings Services lowered its corporate credit ratings on UbiquiTel Inc., and its wholly owned subsidiary, UbiquiTel Operating Co., to 'SD' from 'CC'. Simultaneously, Standard & Poor's lowered its rating on UbiquiTel Operating's 14% senior subordinated discount notes due April 15, 2010 to 'D' from 'C'. In addition, Standard & Poor's affirmed its 'CC' senior secured bank loan rating on UbiquiTel Operating and revised its CreditWatch implications on the rating to positive from negative. The CreditWatch listing reflects the potential for an upgrade upon review of the company's revised business plan. The rating actions reflect the completion of UbiquiTel Operating's debt exchange offer for approximately $189.4 million of its 14% senior subordinated discount notes due April 15, 2010. These notes are being exchanged for approximately $47.4 million of 14% senior discount notes due May 15, 2010. UNIROYAL TECH: Judge Walsh Appoints Second Retirees' Committee -------------------------------------------------------------- The Honorable Judge Peter J. Walsh approved the appointment of a second committee of retirees comprised of former salaried employees who retired from Uniroyal Technology Corporation's plastic businesses prior to the Debtors' dissolution in December 1986. The Pre-86 Plastics Retirees Committee is composed of: 1. June Garrow 619 North Wenger Avenue Mishawaka, IN 46544 2. Edward Reske 2011 East LaSalle Avenue Mishawaka, IN 46545 3. Robert Jarnes 61338 Breman Highway Mishawaka, IN 46544 4. Jesse Keith, Jr. 169 Beechwood Drive Breman, IN 46506 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 (Bankr. Del. Case No. 02-12471). Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard Firm represents 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: Inks Codeshare Agreement with Mesa Air Group ------------------------------------------------------------- Mesa Air Group, Inc., (Nasdaq: MESA) has signed a memorandum of understanding with United Airlines (NYSE: UAL) to operate as United Express under a revenue guarantee codeshare agreement. Under the agreement, Mesa will provide ten 37-passenger de Havilland Dash 8-200 aircraft to be utilized in support of United's operations in Denver. The aircraft are expected to enter service beginning July 2003 for an initial term of five years. "Mesa and United previously had a long history as partners. After Mesa's acquisitions of Aspen Airlines in 1990 and WestAir in 1992, Mesa had operated as United Express in Denver and throughout the West Coast," said Jonathan Ornstein, Mesa's Chairman and CEO. "We are delighted to have the opportunity to return to the United Express family. Mesa stands ready to do whatever we can to assist United in its successful restructuring and it is our hope that we can play a meaningful role going forward." The agreement is subject to reaching terms on a definitive contract, which is expected in the next few weeks. Mesa currently operates 122 aircraft with 889 daily system departures to 147 cities, 37 states, Canada, Mexico and the Bahamas. It operates in the West and Midwest as America West Express, the Midwest and East as US Airways Express, in Denver as Frontier JetExpress, in Kansas City as Midwest Express and in New Mexico as Mesa Airlines. The Company, which was founded in New Mexico in 1982, has approximately 3,000 employees. Mesa is a member of Regional Aviation Partners. US AIRWAYS: Meets Financial Tests for Pension Plan Termination -------------------------------------------------------------- US Airways has met the financial standards for a distress termination of the defined benefit pension plan for its pilots, as determined by a decision rendered Saturday evening by Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria following the completion of a four day hearing. The court's finding completes the requirements for the Pension Benefit Guaranty Corporation (PBGC) to begin consideration of its separate approval process to formally terminate the existing pilot pension plan by March 31, 2003, in conjunction with US Airways' planned emergence from bankruptcy protection set for that same day. At today's special session of the Bankruptcy Court, Judge Mitchell also authorized US Airways to implement a defined contribution pension plan on terms to be worked out between the company and Air Line Pilots Association (ALPA). Separately, Judge Mitchell determined that the issue of whether ALPA and the company had agreed to formal termination of the pension plan in December 2002 was a "close call" and deferred determination of that issue to arbitration under the Railway Labor Act. US Airways filed its formal notice to terminate the pension plan with the PBGC on Jan. 30, 2003. The PBGC earlier suspended processing of the formal termination as a result of a grievance filed by ALPA pending its resolution. In a filing with the Bankruptcy Court, among other matters, the PBGC advised the Court that while the ALPA grievance was being resolved, the Court could proceed to consider and render the decision made this evening, the required 60-day pension termination notice period would continue to run, and the PBGC would continue to review the distress termination information submitted by US Airways. In response to this decision, David Siegel, US Airways president and chief executive officer, said that US Airways and representatives of ALPA should begin immediate negotiations. "The company remains committed to providing $850 million over the next seven years to fund a new pension plan for our active pilots," said Siegel. "We have taken the steps to terminate the existing plan only after we had exhausted all other alternatives. But as we demonstrated to the court over four days of testimony, we cannot meet the financial obligations of the existing plan and emerge from bankruptcy protection without taking the action." Siegel reiterated comments from his testimony in court on Friday when he said that the airline's pilots had shown tremendous leadership and sacrifice throughout the company's restructuring process. "We regret the impact that the plan termination will have on our pilots but the ultimate goal must be to save this airline and the jobs of almost 35,000 dedicated employees. We respect ALPA's efforts to represent the interests of its members and believe we can find a mutually achieved solution to implement a new pension plan." US Airways filed for Chapter 11 protection on Aug. 11, 2002, to complete its financial restructuring and has kept to a fast- track timetable to emerge from bankruptcy on March 31, 2003. "Unfortunately, our airline was the first to go through a restructuring in the post-September 11 environment, but we are now seeing every other major network carrier going through its own version of this difficult process. With the threat of war looming and the industry in turmoil, we need to get out of bankruptcy protection very quickly to secure the financing capital and federal loan guarantee that we can only access after we emerge from Chapter 11," said Siegel. USG CORP: Court Moves Lease Decision Deadline to August 29, 2003 ---------------------------------------------------------------- USG Corporation and its debtor-affiliates still need additional time to review and evaluate their unexpired non-residential real property leases and to determine which leases, if any, they would assume or reject. Hence, the Debtors sought and obtained the Court's approval to extend their lease decision deadline through and including August 29, 2003. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, assures the Court that the Debtors will perform all of their postpetition obligations in a timely fashion, including payment of postpetition rent due. (USG Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) USG Corp.'s 9.250% bonds due 2001 (USG01USR1), DebtTraders says, are trading between 79 and 81. See http://www.debttraders.com/price.cfm?dt_sec_ticker=USG01USR1for real-time bond pricing. VENUS EXPLORATION: Consents to Chapter 11 Reorganization -------------------------------------------------------- In a hearing before the United States Bankruptcy Court for the Eastern District of Texas, Beaumont Division, Venus Exploration Inc., (OTCBB:VENX.OB) of San Antonio, Texas, filed a Notice of Consent to Entry of Order for Relief under Chapter 11 of the U.S. Bankruptcy Code according to Venus Chairman and Chief Executive Officer, Eugene L. Ames Jr. Ames stated that he expected that the continuing sale and drilling of the Company's extensive inventory of exploratory and development drilling projects to work the Company out of Chapter 11 and provide full repayment of all of the Company's creditors and result in the Company ultimately achieving its original goal of growth in oil and gas reserve value. Ames further commented, "Obviously we regret that it was necessary to consent to the filing of the Chapter 11 petition, however we believe that the plan of reorganization that we expect to submit to the court can allow the Company to get on sound financial footing." Ames continued further, "A few months ago, as the natural gas market fundamentals began to strengthen, we began to see a much stronger market within the oil and gas industry for the type of drilling projects we originate and sell to larger companies. We have previously reported sales of our Constitution Field interest in Jefferson County, Texas, and a natural gas drilling project, in Hansford County, Texas, where we netted approximately $2.058 million after closing adjustments. We retained a carried interest in the first three wells to be drilled on the Hansford County project and the first well in this multi-well project has been drilled and early analysis indicates that it will be as good or better than we expected." Venus is also reporting promising results from recompletions of two wells. One well located in Yoakam County, Texas, in which the Company has a 49% working interest, tested at a commercial oil rate and pumping equipment is being installed. The other well in Latimer County, Okla., in which the Company has 4% working interest, is producing at a stabilized gas rate of 2,200 MCF/day. "Our active portfolio includes 8 prospects on 20,000 acres in Texas and Louisiana. Because of the presently strong natural gas market, we are seeing increasing interest on the part of industry participants and we hope to be able to close other prospect sales in the near future under which we retain a carried or promoted interest in the initial wells." Venus is an independent oil and gas exploration and production company which is primarily engaged in the origination of oil and gas exploration prospects as well as projects to exploit and redevelop existing producing fields. Predecessors of Venus, under Ames' management, had a long and successful history of discovery and development of significant oil and gas reserves. WELLS FARGO MORTGAGE: Fitch Rates Classes B-4 & B-5 at BB/B ----------------------------------------------------------- Wells Fargo Mortgage Pass-Through Certificates, series 2003-B classes A-1 through A-3, A-R and A-LR (senior certificates, $340.1 million) are rated 'AAA' by Fitch Ratings. In addition, class B-1 ($4.7 million) is rated 'AA', class B-2 ($2.2 million) is rated 'A', class B-3 ($1.1 million) is rated 'BBB', class B-4 ($0.7 million) is rated 'BB', and class B-5 ($0.5 million) is rated 'B'. The 'AAA' rating on the senior certificates reflects the 2.85% subordination provided by the 1.35% class B-1, the 0.65% class B-2, the 0.30% class B-3, the 0.20% privately offered class B-4, the privately offered 0.15% class B-5 and the 0.20% privately offered class B-6 certificates(which is not rated by Fitch). Classes B-1, B-2, B-3, B-4, and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures and the servicing capabilities of Wells Fargo Home Mortgage, Inc., rated 'RPS1' by Fitch. The mortgage loans provide for a fixed interest rate during an initial period of approximately seven years. Thereafter, the interest rate will adjust on an annual basis based on the weekly average yield on US Treasury Securities adjusted to a constant maturity of one year and a gross margin. The mortgage pool consists of fully amortizing, one- to four- family, adjustable interest rate, first-lien mortgage loans, substantially all of which have original terms to maturity of approximately 30 years. The weighted average original loan to value ratio (OLTV) of the pool is approximately 65.58%. Approximately 1.32% of the mortgage loans have an OLTV greater than 80%. The weighted average coupon of the pool is approximately 5.649%. The weighted average FICO is 734. The properties are located primarily in these states California (37.88%), Illinois (6.01%), Virginia (6.00%), and Maryland (5.32%); other states represent less than 5% geographic concentration of the outstanding principal balance of the pool. Approximately 2.14% of the mortgage loans are secured by properties located in the State of Georgia, none of which are covered under the Georgia Fair Lending Act (GFLA), effective as of October 2002. All of the mortgage loans were originated in conformity with WFHM's standard underwriting standards. WFHM sold the loans to Wells Fargo Asset Securities Corp., a special purpose corporation, and deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. Wells Fargo Bank Minnesota, N.A., an affiliate of WFHM, will act as master servicer and custodian, and Wachovia Bank, N.A. will act as trustee. An election will be made to treat the trust as two real estate mortgage investment conduits for federal income tax purposes. WICKES INC: S&P Drops Rating to SD After Completed Debt Exchange ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on building materials distributor Wickes Inc., to 'SD' from 'CC' and removed the rating from CreditWatch with negative implications. Vernon Hills, Illinois-based Wickes has about $64 million of rated debt. The rating action is based on the company's announcement that it has completed its offer to exchange its new senior secured notes due 2005 for its outstanding senior subordinated notes due Dec. 15, 2003. Approximately 67% of the $64 million of senior subordinated notes were tendered in this transaction. The company also completed the refinancing of its senior credit facility with a new $125 million facility. "Although the note holders who tendered received security and maintained the same 11.625% cash coupon on the new notes along with a noncash interest component from and after Dec. 15, 2003, by extending the maturity to 2005 from 2003, Wickes did not meet all of its obligations as originally promised under the subordinated note issue," said Standard & Poor's credit analyst Patrick Jeffrey. In addition, the 33% of subordinated note holders that did not agree to the exchange are disadvantaged to the holders of the new senior secured notes, who are senior to them but junior to the bank facility. As a result, Standard & Poor's rating treatment is identical to a default on the specific debt issue involved. DebtTraders reports that Wickes Inc.'s 11.625% bonds due 2003 (WIKS03USR1) are trading at 60 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WIKS03USR1 for real-time bond pricing. WILLIAMS COS.: Completes Sale of Travel Centers for $189 Million ---------------------------------------------------------------- Williams (NYSE: WMB) has completed the sale of its retail travel center operations to Pilot Travel Centers LLC for approximately $189 million. The asset package is comprised of 60 travel centers, including their working inventories, in 15 states. The store network stretches from Arizona to Florida and is concentrated in the Ohio Valley and the southeastern United States. Williams' only remaining retail petroleum presence consists of 29 convenience stores in Alaska that are being offered for sale in connection with the company's planned divestiture of its North Pole, Alaska, refining operations. Steve Malcolm, chairman, president and chief executive officer, said, "We're completely focused on the tasks before us. Raising cash, reducing debt, trimming costs and concentrating on our core natural gas businesses are all part of our comprehensive plan to make Williams stronger." Approximately 1,500 people were employed by Williams TravelCenters at the time the transaction closed. The former Nashville, Tenn., corporate office for Williams TravelCenters will remain open for portions of March and April for certain employees who are providing transitional services. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com Williams Companies' 7.875% bonds due 2021 are currently trading at low-70s level. WORLDCOM INC: Seeking SBC's Compliance under MVP Agreements ----------------------------------------------------------- Prior to the Petition Date, Worldcom Inc., and its debtor- affiliates entered into a Managed Value Plan Agreement in each of SBC Communications Inc.'s Ameritech, Pacific Bell, and Southwestern Bell regions. Pursuant to the MVP Agreements, the Debtors are entitled to billing discount credits for certain of the Services in exchange for a commitment to meet or exceed a minimum annual revenue commitment with SBC in each year of the five-year term of the MVP Agreements. To the extent the Debtors meet or exceed its monthly prorated MARC under each MVP Agreement, SBC is required to apply the month's Credits against the Debtors' next monthly bill. In the event the Debtors do not meet or exceed its monthly prorated MARC, it may still receive that month's Credits through an annual true-up process. In circumstances where the Debtors meet its MARC under each MVP Agreement, Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, explains that it receives the unapplied Credits for any months for which it did not meet or exceed the monthly prorated MARC. For example, if the Debtors did not meet the monthly prorated MARC in two of the 12 months in a contract year, to the extent WorldCom meets the MARC at the end of the contract year, WorldCom would be entitled to an additional discount equal to the value of the discount for the months in which WorldCom did not meet or exceed the monthly prorated MARC. If, at the end of the contract year, WorldCom does not meet the MARC, WorldCom may pay the difference between the MARC amount and the actual annual billing amount, after which WorldCom is entitled to receive the unapplied Credits for any months in which WorldCom did not meet or exceed the monthly prorated MARC. Alternatively, WorldCom may terminate the MVP Agreement by providing written notice of termination. Ms. Goldstein relates that WorldCom's first contract year in each of the three MVP Agreements commenced on November 1, 2001 and ended on October 31, 2002. Since November 1, 2002, WorldCom has been operating in contract year two under the MVP Agreements. By letter, dated December 2, 2002, WorldCom was informed by SBC that: -- the MARC Deficiency for the Ameritech region is $7,868,819 and the unapplied Credits for this region total $23,587,130; -- the MARC deficiency for the Pacific Bell region is $12,056,136 and the unapplied Credits for this region total $18,066,421; and -- WorldCom exceeded the MARC in the Southwestern Bell region and is entitled to receive the unapplied Credits for this region equal to $19,526,343. Pursuant to the Year 1 Notification Letter, SBC indicated that the Credits owing to WorldCom in each region would be allocated to both prepetition and postpetition months covered by the MVP Agreements. By e-mail, transmitted on January 29, 2003, WorldCom indicated that it was prepared to agree to SBC's allocation of Credits for the Ameritech and Southwestern Bell regions but, similar to the Credits owing to WorldCom, payment of the MARC Deficiency for the Ameritech region should be allocated to both prepetition and postpetition periods and that WorldCom should be required to pay only the portion of the MARC Deficiency attributable to the postpetition period. By letter dated February 5, 2003, Ms. Goldstein relates that SBC indicated to WorldCom that SBC would not comply with any of its obligations under the MVP Agreements absent payment by WorldCom of the entire MARC Deficiency in the Ameritech region as well as all prepetition amounts owing in both the Ameritech and Southwestern Bell regions. The February 5, 2003 letter also states that, absent payment of all prepetition amounts, SBC will "consider" the MVP Agreements terminated. Finally, while WorldCom has exceeded the prorated MARC in the Southwestern Bell region in each month since the inception of contract year 2, SBC has refused to apply any year 2 Credits to WorldCom's monthly bills. Although WorldCom is and has been ready, willing, and able to pay its MARC Deficiency in return for the unapplied Credits in the Ameritech region and had agreed, for settlement purposes only, to the allocation of Credits in both the Ameritech and Southwestern Bell regions, WorldCom cannot reasonably commit estate funds to pay the MARC Deficiency in the Ameritech region without this Court's intervention to ensure that the Credits are applied correctly in light of SBC's: -- stated refusal to apply the unapplied Credits; -- demand that WorldCom pay all prepetition amounts owing under the MVP Agreements as a pre-condition to SBC's performance;, and -- stated intention to "consider" the MVP Agreements terminated absent payment of prepetition amounts. Thus, pursuant to Section 362 of the Bankruptcy Code, WorldCom asks the Court to: A. compel SBC to perform its obligations under the MVP Agreements, including: -- after payment by WorldCom of the Ameritech MARC Deficiency, requiring SBC to apply all of the unapplied year 1 Credits under the Ameritech MVP Agreement to WorldCom's bills for services purchased subsequent to the Petition Date, and -- requiring SBC to immediately apply all of the year 1 Credits under the Southwestern Bell MVP Agreement to WorldCom's bills for services purchased subsequent to the Petition Date; B. prohibit SBC from terminating or "considering" the MVP Agreements terminated based on the non-payment of prepetition amounts or otherwise; and C. authorize WorldCom to unilaterally apply the year 2 Credits to which it is entitled by reducing its monthly bill in the Ameritech and Southwestern Bell regions. Pending assumption or rejection, Ms. Goldstein insists that SBC must continue to comply with the contract. SBC owes the Debtors more than $35,000,000 of value in the form of Credits and, to the extent WorldCom meets or exceeds the monthly prorated MARC in the Ameritech and Southwestern Bell regions, an additional $4,000,000 per month on an ongoing basis. It is inappropriate for SBC to force the Debtors to pay prepetition obligations before the Debtors have even made the decision as to whether to assume or reject the MVP Agreements. Pending assumption or rejection of the MVP Agreements, Ms. Goldstein contends that SBC is an unsecured creditor of the Debtors. SBC's attempts to condition its performance on payment of prepetition amounts enables SBC to put itself in a privileged position relative to other unsecured creditors. This result is specifically at odds with the provisions of the Bankruptcy Code. Ms. Goldstein contends that WorldCom's rights under the MVP Agreements, including, specifically, the Credits to which WorldCom is entitled, are property of WorldCom's estates. SBC has withheld Credits to which WorldCom is entitled and has conditioned application of these Credits on WorldCom's payment of prepetition amounts in violation of Sections 362(a)(3) and (6) of the Bankruptcy Code. SBC should be required to comply with the MVP Agreements and apply all of the Credits to which the Debtors are entitled. According to Ms. Goldstein, WorldCom stands ready, willing, and able to pay the Ameritech MARC Deficiency. In the Year 1 Notification Letter, SBC stated that it would only apply a portion of the Credits under the Ameritech and Southwestern Bell MVP Agreements to WorldCom's postpetition bills. The remainder of the Credits would be used by SBC to set off prepetition amounts outstanding under these agreements. In the February 5, 2003 letter, however, SBC adopted an even more aggressive position stating that, absent payment of all prepetition amounts, SBC will not apply any Credits and will terminate the MVP Agreements. Ms. Goldstein tells the Court that WorldCom's entitlement to any unapplied Credits does not arise until the end of the contract year. At that time, if WorldCom has met the MARC, WorldCom is entitled to receive all unapplied Credits. Pursuant to the terms of the MVP Agreements, once the MARC has been met, the unapplied Credits must be applied to future bills within 60 days. Because the Debtors' entitlement to the unapplied year 1 Credits arises postpetition, SBC cannot apply any portion of these Credits to prepetition amounts outstanding. Accordingly, the Debtors are entitled to receive all of the year 1 unapplied Credits on a postpetition basis. Ms. Goldstein contends that SBC has attempted to end-run the prohibitions of the Bankruptcy Code by characterizing the non- payment of prepetition amounts as the Debtors' termination of the MVP agreements. This characterization, however, cannot be countenanced. According to the terms of the MVP Agreements, in the event the Debtors elect to terminate the MVP Agreements, WorldCom must provide SBC with written notification of termination. SBC's sole termination right requires 30 days' notice and is clearly stayed as a result of the commencement of the Debtors' Chapter 11 cases. Ms. Goldstein believes that the clear intent of SBC's February 5, 2003 letter is that either the Debtors pay outstanding prepetition amounts or SBC will terminate the MVP Agreements. Similar to the withholding of Credits, which is an existing violation of the automatic stay, SBC's unilateral declaration that, absent payment of prepetition amounts, SBC will "consider" WorldCom to have terminated the MVP Agreements, is a clear violation of the automatic stay and should not be permitted. Accordingly, pursuant to Section 362 of the Bankruptcy Code, SBC should be prohibited from terminating the MVP Agreements based on the non-payment of prepetition debts. Pending assumption or rejection of the MVP Agreements, Ms. Goldstein states that SBC is required to comply with the provisions of these agreements, including the issuance of Credits. The Debtors have exceeded its monthly prorated MARC in each of November, December, and January for the Southwestern Bell region entitling them to $1,930,000 in Credits per month. SBC, however, has failed to issue a single dollar's worth of Credits for these months. Pursuant to this Court's Amended Utility Order, dated October 2, 2002, the Debtors are obligated to pay on a timely basis, in accordance with applicable contracts and tariffs, all undisputed invoices with respect to postpetition Utility Services rendered by the Utility Companies. Ms. Goldstein contends that the amounts, which SBC is currently overbilling WorldCom are not per se "disputed" and, therefore, WorldCom anticipates that, in the event they do not pay the overbilled amounts, SBC will assert that WorldCom is not in compliance with the Utility Order. However, in light of SBC's failure to comply with the MVP Agreements and stated intention to terminate these agreements, WorldCom believes that it would be appropriate for the Court to authorize WorldCom to unilaterally apply the year 2 Credits to ensure SBC's compliance and the benefit to WorldCom's estates; provided, however, that WorldCom should only be entitled to apply Credits for months in which WorldCom meets or exceeds the prorated monthly MARC. (Worldcom Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Worldcom Inc.'s 7.375% bonds due 2003 (WCOE03USA1) are trading at 22 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE03USA1 for real-time bond pricing. YUM! BRANDS: Posts Improved International System Sales for Jan. --------------------------------------------------------------- Yum! Brands, Inc., (NYSE: YUM) reported estimated International system sales increased 10% prior to foreign currency conversion or 15% after conversion to U.S. dollars. Estimated U.S. blended same-store sales at company restaurants decreased 5% during the four-week period ended February 22, 2003 (Period 2). U.S. sales were negatively impacted approximately 2 percentage points by extreme weather conditions, which resulted in numerous restaurants closing temporarily, in the Midwest and Northeast states. Despite the unexpected impact of severe weather, the company reconfirmed its first-quarter 2003 EPS guidance of $0.38 due to effective contingency planning and favorable foreign currency impact. In addition, the company's largest division, the international business, continues to perform on target. International System Sales Growth (Estimated) Reported (U.S. $) Local Currency ------------------ ------------------ Period 2 +15% +10% Quarter to Date +13% +8% U.S. Company Same-Store Sales Growth (Estimated) Current Year Prior Year ------------------ ------------------ U.S. BLENDED (5)% +6% Taco Bell (2)% +9% Pizza Hut (6)% +6% KFC (7)% +2% Sales results for Period 3 (the four-week period ending March 22, 2003, for the U.S. businesses) will be released on March 27, 2003. (Note: U.S. same-store sales include only company restaurants that have been open one year or more. U.S. blended same-store sales include KFC, Pizza Hut, and Taco Bell company-owned restaurants only. U.S. same-store sales for Long John Silver's and A&W are not included. International system sales include sales from company, franchise, license, and joint- venture restaurants.) Yum! Brands, Inc., based in Louisville, Kentucky, is the world's largest restaurant company in terms of system units with nearly 33,000 restaurants in more than 100 countries and territories. Four of the company's restaurant brands -- KFC, Pizza Hut, Taco Bell and Long John Silver's -- are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories respectively. Since 1919, A&W All-American Food has been serving a signature frosty mug root beer float and all- American pure-beef hamburgers and hot dogs, making it the longest running quick-service franchise chain in America. Yum! Brands is the worldwide leader in multibranding, which offers consumers more choice and convenience at one restaurant location from a combination of KFC, Taco Bell, Pizza Hut, A&W All- American Food or Long John Silver's brands. The company and its franchisees today operate over 1,900 multibrand restaurants, generating nearly $2 billion in annual system sales. Outside the United States, the company opens about three new restaurants each day, 365 days a year, making it one of the fastest growing retailers in the world. In 2002, the company changed its name to Yum! Brands, Inc., from Tricon Global Restaurants to reflect its expanding portfolio of brands and its ticker symbol on the New York Stock Exchange. As previously reported, Fitch Ratings assigned a BB+ rating to Yum! Brands' $350 million Senior Notes, while Standard & Poor's gave the same debt issue its BB rating. Meanwhile, S&P rates the Company's $1.4 billion senior unsecured bank facility at BB. At Sept. 7, 2002, Yum! Brands balance sheet showed $5.1 billion in assets and $4.6 billion in total liabilities. * Cadwalader Names Two Special Counsel in London Office ------------------------------------------------------- Cadwalader, Wickersham & Taft, one of the world's leading international law firms, has named Conor Downey and Andrew Lucas as Special Counsel to the firm. Mr. Downey joins the firm's Capital Markets practice from DLA, London. Mr. Lucas is an attorney in the Corporate/Mergers & Acquisitions Department, resident in the London office. Mr. Downey advises on banking and security issues on a broad range of securitization, structuring and structured finance matters both in the UK and Europe. He has also been a member of the Securitization Departments at Orrick Herrington & Sutcliffe in London and Allen & Overy in London. Mr. Lucas has worked on a wide range of corporate and corporate finance matters throughout Europe and South-East Asia, including public and private company financings, mergers and acquisitions, reorganizations and restructurings, joint ventures, takeovers, initial public offerings and general corporate and commercial issues. "We are pleased to name these exemplary lawyers as Special Counsel to the firm," said Robert O. Link, Jr., Cadwalader's Chairman. "We look forward to Conor's contributions to our growing International Capital Markets Department. His experience complements and strengthens our European team. Andrew, already a valued member of our Corporate M&A Department, has proven he has the ability to handle a broad range of corporate matters. He will continue to be a great benefit to the firm as we build this practice area in Europe." "Special Counsel at Cadwalader enhance the level of service the firm provides and support each of the firm's departments by supervising cases and deals, maintaining client relationships and training junior attorneys," stated Link. "This select group of attorneys demonstrate expertise and skills that significantly contribute to our firm's success," Link concluded. Conor Downey holds a Bachelor of Civil Law Degree, with honors, from the University College Dublin. He is admitted to the roll of Solicitors of England, Wales and Ireland. Andrew Lucas graduated with an LLB degree from Kings College London in 1990. He qualified as a solicitor in England and Wales in 1994 and as a solicitor in Hong Kong in 1997. Cadwalader, Wickersham & Taft, established in 1792, is one of the world's leading international law firms, with offices in New York, Charlotte, Washington and London. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in securitization, structured finance, mergers and acquisitions, corporate finance, real estate, environmental, insolvency, litigation, health care, global public affairs, banking, project finance, insurance and reinsurance, tax, and private client matters. More information about Cadwalader can be found at http://www.cadwalader.com * Lawrence M. Nagin Joins O'Melveny & Myers LLP as "Of Counsel" --------------------------------------------------------------- Following his long and distinguished career with major domestic and international airlines, Lawrence M. Nagin has joined O'Melveny & Myers LLP as "of counsel." As a recognized leader in the transportation industry and with extensive financial community experience, Nagin will bring a breadth of experience, unique talents, and a valuable strategic perspective to the firm's long-established transportation, government affairs, and strategic counseling practices. "The firm welcomes Larry Nagin with much enthusiasm and looks forward to his important contributions in serving our clients' complex and challenging needs in both domestic and international areas," said Arthur B. Culvahouse, Jr., Chairman of O'Melveny & Myers LLP. "Attracting premier talent like Larry Nagin is a testament to our success and a harbinger of the strong client service we will accomplish in the future. Our clients look forward to Larry's contributions in the strategic counseling, governmental affairs, as well as the financial, labor and employment practice areas." "O'Melveny & Myers embodies professionalism and the commitment to uncompromising excellence. I am proud to be a part of and able to contribute to such a successful enterprise," said Nagin. Prior to joining the firm, Nagin served as Executive Vice President of Corporate Affairs and General Counsel for US Airways Group and US Airways, Inc. Nagin's association with aviation began in 1974 when, as senior assistant city attorney in Los Angeles, he served as principal legal advisor to the Department of Airports. Prior to joining US Airways, from 1988- 1994 Nagin was Executive Vice President of Corporate Affairs and General Counsel to UAL Corp. and United Airlines, Inc. From 1980-1988, he served as Senior Vice President of Corporate Affairs and General Counsel of The Flying Tiger Line Inc. A native of California, Nagin holds a BA in International Relations from the University of Southern California and a JD from the University of California, the Hastings College of the Law. Nagin was recently named as a member of the new board of directors of Laidlaw Corporation. In 2000, Nagin was honored with the "Diversity 2000 Award" by the Minority Corporate Counsel Association and American Lawyer Media Corp for promoting and encouraging hiring of minorities. O'Melveny & Myers is one of the world's most successful and enterprising law firms. Established in 1885, the firm maintains 14 offices around the world, with more than 900 attorneys. As one of the world's largest law firms, O'Melveny & Myers' capabilities span virtually every area of legal practice, including M&A/Private Equity; Capital Markets; Finance and Restructuring; Entertainment and Media; Intellectual Property and Technology; Trade and International Law; Labor and Employment; Litigation; White Collar and Regulatory Defense; Project Development and Real Estate; Securities; Tax; Transactions; and Bankruptcy. * BOND PRICING: For the week of March 3 - 7, 2003 ------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Abgenix Inc. 3.500% 03/15/07 64 Adelphia Communications 3.250% 05/01/21 8 Adelphia Communications 6.000% 02/15/06 8 Adelphia Communications 10.875% 10/01/10 39 Advanced Energy 5.250% 11/15/06 73 Advanced Micro Devices Inc. 4.750% 02/01/22 62 AES Corporation 4.500% 08/15/05 50 AES Corporation 8.000% 12/31/08 64 AES Corporation 9.375% 09/15/10 69 AES Corporation 9.500% 06/01/09 68 Akamai Technologies 5.500% 07/01/07 44 Alaska Communications 9.375% 05/15/09 72 Alexion Pharmaceuticals 5.750% 03/15/07 67 Allegheny Generating Company 6.875% 09/01/23 73 Alkermes Inc. 3.750% 02/15/07 63 Alpharma Inc. 3.000% 06/01/06 74 Amazon.com Inc. 4.750% 02/01/09 73 American Tower Corp. 5.000% 02/15/10 67 American Tower Corp. 6.250% 10/15/09 75 American & Foreign Power 5.000% 03/01/30 62 Amkor Technology Inc. 5.000% 03/15/07 59 AMR Corp. 9.000% 09/15/16 31 AMR Corp. 9.750% 08/15/21 23 AMR Corp. 9.800% 10/01/21 24 AMR Corp. 10.000% 04/15/21 24 AMR Corp. 10.200% 03/15/20 25 AnnTaylor Stores 0.550% 06/18/19 62 Applied Extrusion 10.750% 07/01/11 63 Aquila Inc. 6.625% 07/01/11 75 Argo-Tech Corp. 8.625% 10/01/07 70 Aspen Technology 5.250% 06/15/05 67 Bayou Steel Corp. 9.500% 05/15/08 19 BE Aerospace Inc. 8.875% 05/01/11 72 Best Buy Co. Inc. 0.684% 06?27/21 70 Beverly Enterprises 9.625% 04/15/09 75 Borden Inc. 7.875% 02/15/23 56 Borden Inc. 8.375% 04/15/16 58 Borden Inc. 9.200% 03/15/21 59 Borden Inc. 9.250% 06/15/19 65 Boston Celtics 6.000% 06/30/38 65 Brocade Communication Systems 2.000% 01/01/07 74 Brooks-PRI Automation Inc. 4.750% 06/01/08 74 Building Materials Corp. 8.000% 10/15/07 75 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 Calair LLC/Capital 8.125% 04/01/08 59 Calpine Corp. 4.000% 12/26/06 50 Calpine Corp. 8.500% 02/15/11 43 Case Corp. 7.250% 01/15/16 74 CD Radio Inc. 14.500% 05/15/09 42 Cell Therapeutic 5.750% 06/15/08 56 Centennial Cellular 10.750% 12/15/08 53 Champion Enterprises 7.625% 05/15/09 57 Charming Shoppes 4.750% 06/01/12 75 Charter Communications, Inc. 4.750% 06/01/06 18 Charter Communications, Inc. 5.750% 10/15/05 22 Charter Communications Holdings 8.625% 04/01/09 46 Ciena Corporation 3.750% 02/01/08 72 Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 68 Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 69 CNET Inc. 5.000% 03/01/06 65 Comcast Corp. 2.000% 10/15/29 23 Comforce Operating 12.000% 12/01/07 45 Commscope Inc. 4.000% 12/15/06 74 Conexant Systems 4.000% 02/01/07 52 Conexant Systems 4.250% 05/01/06 57 Conseco Inc. 8.750% 02/09/04 15 Continental Airlines 4.500% 02/01/07 41 Continental Airlines 8.000% 12/15/05 54 Corning Inc. 6.750% 09/15/13 73 Corning Inc. 6.850% 03/01/29 60 Corning Glass 8.875% 03/15/16 75 Cox Communications Inc. 0.348% 02/23/21 71 Cox Communications Inc. 2.000% 11/15/29 31 Cox Communications Inc. 3.000% 03/14/30 44 Crown Cork & Seal 7.375% 12/15/26 72 Cubist Pharmacy 5.500% 11/01/08 48 Cummins Engine 5.650% 03/01/98 64 Curagen Corporation 6.000% 02/02/07 64 CV Therapeutics 4.750% 03/07/07 74 Dana Corp. 7.000% 03/15/28 73 Dana Corp. 7.000% 03/01/29 73 DDI Corp. 6.250% 04/01/07 16 Delco Remy International 10.625% 08/01/06 55 Delta Air Lines 7.900% 12/15/09 68 Delta Air Lines 8.300% 12/15/29 50 Delta Air Lines 9.000% 05/15/16 62 Delta Air Lines 9.250% 03/15/22 59 Delta Air Lines 9.750% 05/15/21 62 Delta Air Lines 10.375% 12/15/22 65 Dynegy Holdings Inc. 6.875% 04/01/11 46 EOTT Energy Partner 11.000% 10/01/09 67 Echostar Communications 4.875% 01/01/07 74 Echostar Communications 5.750% 05/15/08 73 Edison Mission 9.875% 04/15/11 29 Edison Mission 10.000% 08/15/08 37 El Paso Corp. 7.000% 05/15/11 59 Emulex Corp. 1.750% 02/01/07 72 Energy Corporation America 9.500% 05/15/07 62 Enron Corp. 9.875% 06/15/03 16 Enzon Inc. 4.500% 07/01/08 74 Equistar Chemicals 7.550% 02/15/26 71 E*Trade Group 6.000% 02/01/07 74 Finisar Corp. 5.250% 10/15/08 45 Finova Group 7.500% 11/15/09 34 Fleming Companies Inc. 5.250% 03/15/09 32 Fleming Companies Inc. 9.250% 06/15/10 64 Fleming Companies Inc. 10.125% 04/01/08 69 Foamex LP/Capital 10.750% 04/01/09 72 Ford Motor Co. 6.625% 02/15/28 74 Fort James Corp. 7.750% 11/15/23 74 General Physics 6.000% 06/30/04 51 Geo Specialty 10.125% 08/01/08 59 Georgia-Pacific 7.375% 12/01/25 71 Giant Industries 9.000% 09/01/07 70 Goodyear Tire & Rubber 6.375% 03/15/08 69 Goodyear Tire & Rubber 7.000% 03/15/28 44 Goodyear Tire & Rubber 7.875% 08/15/11 64 Great Atlantic 9.125% 12/15/11 72 Great Atlantic & Pacific 7.750% 04/15/07 70 Gulf Mobile Ohio 5.000% 12/01/56 63 Health Management Associates Inc. 0.250% 08/16/20 66 Human Genome 3.750% 03/15/07 65 Human Genome 5.000% 02/01/07 72 I2 Technologies 5.250% 12/15/06 67 Ikon Office 6.750% 12/01/25 65 Ikon Office 7.300% 11/01/27 70 Imcera Group 7.000% 12/15/13 75 Imclone Systems 5.500% 03/01/05 72 Incyte Genomics 5.500% 02/01/07 69 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 54 Inland Steel Co. 7.900% 01/15/07 73 Internet Capital 5.500% 12/21/04 37 Isis Pharmaceutical 5.500% 05/01/09 66 Juniper Networks 4.750% 03/15/07 73 Kmart Corporation 9.375% 02/01/06 14 Kulicke & Soffa Industries Inc. 4.750% 12/15/06 61 LTX Corporation 4.250% 08/15/06 65 Lehman Brothers Holding 8.000% 11/13/03 63 Level 3 Communications 6.000% 09/15/09 45 Level 3 Communications 6.000% 03/15/10 41 Level 3 Communications 9.125% 05/01/08 65 Level 3 Communications 11.000% 03/15/08 66 Liberty Media 3.500% 01/15/31 65 Liberty Media 3.750% 02/15/30 52 Liberty Media 4.000% 11/15/29 56 LTX Corp. 4.250% 08/15/06 68 Lucent Technologies 5.500% 11/15/08 68 Lucent Technologies 6.450% 03/15/29 55 Lucent Technologies 6.500% 01/15/28 55 Magellan Health 9.000% 02/15/08 24 Mail-Well I Corp. 8.750% 12/15/08 71 Manugistics Group Inc. 5.000% 11/01/07 54 Mapco Inc. 7.700% 03/01/27 68 Medarex Inc. 4.500% 07/01/06 64 Metris Companies 10.125% 07/15/06 39 Mikohn Gaming 11.875% 08/15/08 74 Mirant Corp. 5.750% 07/15/07 48 Mirant Americas 7.200% 10/01/08 50 Mirant Americas 7.625% 05/01/06 67 Mirant Americas 8.300% 05/01/11 44 Mirant Americas 8.500% 10/01/21 36 Missouri Pacific Railroad 4.750% 01/01/30 72 Missouri Pacific Railroad 5.000% 01/01/45 62 Motorola Inc. 5.220% 10/01/21 63 MSX International Inc. 11.375% 01/15/08 67 NTL Communications Corp. 7.000% 12/15/08 19 National Steel 9.875% 03/01/09 56 National Vision 12.000% 03/30/09 50 Natural Microsystems 5.000% 10/15/05 62 Nextel Communications 5.250% 01/15/10 72 Nextel Partners 11.000% 03/15/10 67 NGC Corp. 7.625% 10/15/26 56 Noram Energy 6.000% 03/15/12 70 Northern Pacific Railway 3.000% 01/01/47 52 Northern Telephone Capital 7.875% 06/15/26 60 Northwest Airlines 8.130% 02/01/14 63 NorthWestern Corporation 6.950% 11/15/28 73 Oak Industries 4.875% 03/01/08 63 OM Group Inc. 9.250% 12/15/11 69 ON Semiconductor 12.000% 05/15/08 73 ONI Systems Corporation 5.000% 10/15/05 74 OSI Pharmaceuticals 4.000% 02/01/09 67 Owens-Illinois Inc. 7.800% 05/15/18 68 Pegasus Communications 9.750% 12/01/06 57 PG&E Gas Transmission 7.800% 06/01/25 60 Philipp Brothers 9.875% 06/01/08 47 Providian Financial 3.250% 08/15/05 74 Province Healthcare 4.250% 10/10/08 74 PSEG Energy Holdings 8.500% 06/15/11 75 Quanta Services 4.000% 07/01/07 65 Qwest Capital Funding 7.250% 02/15/11 68 RF Micro Devices 3.750% 08/15/05 74 RF Micro Devices 3.750% 08/15/05 74 Radiologix Inc. 10.500% 12/15/08 74 Redback Networks 5.000% 04/01/07 26 Revlon Consumer Products 8.625% 02/01/08 44 River Stone Networks Inc. 3.750% 12/01/06 69 Rural Cellular 9.750% 01/15/10 61 Ryder System Inc. 5.000% 02/25/21 73 SBA Communications 10.250% 02/01/09 63 SC International Services 9.250% 09/01/07 56 Schuff Steel Co. 10.500% 06/01/08 73 SCI Systems Inc. 3.000% 03/15/07 74 Sepracor Inc. 5.000% 02/15/07 69 Sepracor Inc. 5.750% 11/15/06 75 Silicon Graphics 5.250% 09/01/04 54 Solutia Inc. 7.375% 10/15/27 60 Sotheby's Holdings 6.875% 02/01/09 74 TCI Communications Inc. 7.125% 02/15/28 74 Talton Holdings 11.000% 06/30/07 40 TECO Energy Inc. 7.000% 05/01/12 73 Tenneco Inc. 11.625% 10/15/09 75 Teradyne Inc. 3.750% 10/15/06 72 Terayon Communications 5.000% 08/01/07 66 Tesoro Petroleum Corp. 9.000% 07/01/08 66 Time Warner Telecom 9.750% 07/15/08 65 Time Warner 10.125% 02/01/11 65 Transwitch Corp. 4.500% 09/12/05 59 Tribune Company 2.000% 05/15/29 74 US Airways Passenger 6.820% 01/30/14 73 Universal Health Services 0.426% 06/23/20 58 US Timberlands 9.625% 11/15/07 65 Vector Group Ltd. 6.250% 07/15/08 69 Veeco Instrument 4.125% 12/21/08 72 Vertex Pharmaceuticals 5.000% 09/19/07 75 Viropharma Inc. 6.000% 03/01/07 46 Weirton Steel 10.750% 06/01/05 45 Weirton Steel 11.375% 07/01/04 58 Western Resources Inc. 6.800% 07/15/18 75 Westpoint Stevens 7.875% 06/15/08 32 Williams Companies 7.625% 07/15/19 72 Williams Companies 7.750% 06/15/31 67 Williams Companies 7.875% 09/01/21 72 Witco Corp. 6.875% 02/01/26 71 Worldcom Inc. 7.375% 01/15/49 23 Xerox Corp. 0.570% 04/21/18 64 XM Satellite Radio 7.750% 03/01/06 60 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***