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/raid1/www/Hosts/bankrupt/TCR_Public/030312.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 12, 2003, Vol. 7, No. 50 Headlines ADELPHIA BUSINESS: Hanover Insurance Moves for a Rule 2004 Exam ADELPHIA COMMS: Renews CVC Engagement as Litigation Consultants ALLEGIANCE TELECOM: Fitch Further Drops Junk Debt Ratings to CC AMAZON.COM: Legg Mason Discloses 15.56% Equity Stake ANC RENTAL: ESL Partners Discloses 8.5% Equity Stake APPIANT TECHNOLOGIES: Unlikely to Continue as a Going Concern ARBELLA INSURANCE: Counterparty Credit Rating Downgraded to BBpi APPLICA INC: Will Redeem Common Stock Purchase Rights ARMSTRONG: Battles with California about Excusable Neglect ASBESTOS CLAIMS: Solicitation Period Extended through April 14 BEA CBO: Fitch Cuts & Affirms Ratings on 6 Series 1998-2 Classes BIOVEST INT'L: Dec. Working Capital Deficit Balloons to $2.4-Mil BOEING CO: Realigns State and Local Government Operations COMMUNICATION DYNAMICS: Paul Weiss Serves as Committee's Counsel CONSECO FINANCE: Subsidiaries Have to April 5 to File Schedules CONSOLIDATED FREIGHTWAYS: Selling Canadian Unit for $90 Million CORNING INC: CFO James Flaw Presents at Deutsche Bank Conference COVANTA ENERGY: Wants Court to Okay Settlement Pact with Masse CTC COMMS: Wants to Stretch Lease Decision Time through May 5 DALLAS LANDFILL: Case Summary & 13 Largest Unsecured Creditors DAW TECHNOLOGIES: Commences Chapter 11 Reorganization Proceeding DAW TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors DELTA AIR: Updates Guidance Due to Geopolitical Uncertainties DIVINE INC: Wants to Appoint Trumbull Services as Claims Agent DOW CORNING: Launches a New Service Solutions & Testing Unit DT INDUSTRIES: Obtains Waiver of Covenant Defaults in Q2-Q3 2003 ENCOMPASS SERVICES: Overview of Debtors' Joint Chapter 11 Plan ENRON: Seeking Court Nod on Settlement Deal with Orange County FASTENTECH: S&P Takes Back B- Senior Subordinated Note Rating FEDERAL-MOGUL: Court Okays $28 Million Camshafts Sale to Asimco FRESH AMERICA: Liquidating Assets Under Court Supervision FOUNTAIN VIEW: Files Reorganization Plan in C.D. California GENCORP INC: Plans to Appeal Court Decision in Case Against Olin GENERAL CREDIT: S.D. New York Court OKs Consolidation of Estates GENESEE CORP: Issues Statement of Net Assets in Liquidation GILAT SATELLITE: Discloses Impending Changes in Top Exec. Posts GLOBAL CROSSING: Creditors Back Hutchison/ST Purchase Pact GLOBAL CROSSING: Releases Special Committee's Fraud Report GOODYEAR TIRE: S&P Ratchets Class A-1 Trust Note Rating to BB- HOLLINGER INT'L: Amends Debt Arrangements with Hollinger Inc. HYPERFEED: Posts Net Losses for Fourth Quarter and Year-End 2002 HYPERTENSION DIAGNOSTIC: Ability to Continue Operations Doubtful INBUSINESS: Obtains $2MM Capital Infusion from Treklogic Tech INSILCO HOLDING: Judge Carey Approves Asset Sales INSILCO: Bel Acquisition of Passive Components to Close by March KAISER ALUMINUM: Summit Purchase Agreement Gets Court Nod LA QUINTA: Bank Lenders Agree to Relax Financial Covenants LEGACY HOTELS: Initiates Amendments to Management Structure LEGACY HOTELS: First Quarter Distribution Will Be On April 20 LEHMAN ABS CORP: Fitch Ratchets Ratings on Classes M-2 & B-1 LEHMAN BROS: Fitch Downgrades 2000-LLF C7 Class L & M to BB+/B+ MAGELLAN HEALTH: Files for Chapter 11 Protection in S.D.N.Y. MAGELLAN HEALTH: Case Summary & 50 Largest Unsecured Creditors MALLON RESOURCES: Black Hills Completes $53 Million Acquisition MATRIA HEALTHCARE: S&P Affirms Low-B Corp. Credit Rating at B+ MICROFINANCIAL: Engages Triax to Assist in Debt Restructuring MOBILE TOOL: Asks Court for Permission to Hire Keen Realty NAT'L CENTURY: Wants to Reject Agreements with Former Officers NAT'L STEEL: Court Grants Lift Stay to Set Off Worthington Claim NATIONSRENT: Seeks Nod on Case Credit & New Holland Agreements NEXT LEVEL: Motorola Waives Condition and Extends Tender Offer NEXTEL: Fitch Revises Rating Outlook to Positive from Stable OWENS CORNING: Gets Extension of Intercompany Tolling Agreement PEABODY ENERGY: Fitch Rates New Facility & Sr. Notes at BB+/BB PERKINELMER: Launches New Business to Reshape Laboratory Service PLANVISTA: ComVest-Led Group Acquires Bank Group's Interest PURCHASEPRO.COM: U.S. Trustee Moves for Chapter 7 Liquidation RCN CORPORATION: Senior Lenders Agree To Amend Credit Agreement QWEST COMMS: CFO Shaffer to Speak at Janco Partners Conference SCORES HOLDING: Restructuring Outstanding Debt STELCO: 175 Jobs Lost as Welland Pipe Unit Closes Permanently TANGIBLE ASSET: Substantial Losses Prompt Going Concern Doubts TCW LINC: Fitch Hatchets Ratings on 5 Note Classes to Junk Level TRANSCARE: Seeks to Extend Solicitation Period through May 12 TYCO INTL: Will Webcast Institutional Investors Meeting Tomorrow TYCO INT'L: Newly Elected Board Makes Committee Assignments UNIROYAL TECH: Retirees Committee Employs Levy Ratner as Counsel UNITED AIRLINES: AT&T Holds $205 Million Unpaid Lease Claim US AIRWAYS: MBIA Exercises Right to Purchase Trust Certificates US STEEL: Sees Loss for Q1 2003 Due To Increased Benefit Costs WALTER INDUSTRIES: Senior VP Anthony Hines To Retire on April 1 WORLDCOM INC: Enters Into Settlement Pact with Cable & Wireless * Meetings, Conferences and Seminars ********* ADELPHIA BUSINESS: Hanover Insurance Moves for a Rule 2004 Exam --------------------------------------------------------------- The Hanover Insurance Company asks the U.S. Bankruptcy Court for the Southern District of New York, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedures, to direct Adelphia Business Solutions, Inc., and its debtor-affiliates to produce documents and for an examination of the Debtors' CEO Robert Guth. Hanover is informed and believes that Adelphia Business Solutions, Inc., is receiving revenue from a non-debtor subsidiary, Adelphia Business Solutions, Inc. of Pennsylvania, Inc., which is using assets related to a contract between Allegheny Communications Connect, Inc. and a debtor subsidiary, Adelphia Business Solutions Long Haul. Through this arrangement, ABIZ is receiving the benefits of a contract between Long Haul and Allegheny without Long Haul assuming the burdens of that contract. Hanover issued a surety bond for $15,500,000 to secure the obligations of Long Haul under its contract with Allegheny. Allegheny has no motive to compel assumption of the contract by Long Haul as it has sought recourse against Hanover's bond. The Unsecured Creditors' Committee has apparently done nothing to pursue information about the transactions because the transactions affect only Long Haul's creditors and perhaps ABIZ Pennsylvania's creditors. Hanover seeks discovery to determine the relationship between the primary debtor in this case, ABIZ, the subsidiary, Long Haul, and the non-debtor company, ABIZ Pennsylvania, and to determine their rights and obligations under the Allegheny Contract. The need for the discovery is apparent from the schedules and other information disclosed in this case, including: -- Long Haul's schedule of assets includes the fiber optic lines built by Allegheny; -- Long Haul appears to be able to assume its own obligations in that its schedules of assets are $270,000,000 while its schedule of liabilities is only $23,000,000; -- The schedule of liabilities for Long Haul includes the failure to pay Allegheny the $15,500,000 secured by Hanover's bond for the Allegheny Contract; -- Long Haul's fiber optic lines appear to have been "bundled" with other subsidiaries' assets to generate revenue for ABIZ Pennsylvania without any indication that Long Haul's creditors are being compensated; and -- ABIZ Long Haul has undertaken no efforts to assume the contract, notwithstanding the apparent ability of some of the Debtors to reap the benefits of the contract with Allegheny. Steven H. Rittmaster, Esq., at Torre Lentz Gamell Gary & Rittmaster LLP, in New York, recounts that prior to the Petition Date, Hanover issued 200 surety bonds, with an aggregate penal sum over $30,500,000, on behalf of, or for the benefit of, the Debtors. One of the Hanover bonds is Bond No. 168888 issued by Hanover, as surety, on behalf of Long Haul and Adelphia Communications Corporation, as principals, in favor of Allegheny, as obligee. The Allegheny Bond is dated July 12, 2001 and is in the penal sum of $15,500,000. The Allegheny Bond recites, in part, that Long Haul and Allegheny entered into a Fiber Optic Agreement dated August 13, 1999, as amended through Addendum #7, under which Allegheny was to construct a fiber optic cable network and grant Long Haul a license to use certain fiber optic cables in the form of an Indefeasible Right of Use, conditioned on various payments being made to Allegheny by Long Haul and Adelphia Communications Corporation. Two Addenda to the contract also provided Allegheny a license from Long Haul to use certain specific fiber optic cables, similarly in the form of an IRU, including a 10- mile link from Pittsburgh to Bridgeville -- Addendum #5; and a 75-mile link from State College to Altoona -- Addendum #7. By letter to Hanover dated June 17, 2002, Allegheny formally made a claim against Hanover under the Allegheny Bond for the full $15,500,000 penal sum by reason of Long Haul's alleged failure to make payments under the Allegheny Contract. The Debtors' disclosures about the Allegheny Contract and where it fits into the assets and liabilities are confusing in that: A. Long Haul's schedules of assets and liabilities initially listed about $7,000,000 of unsecured non-priority liabilities, but failed to list Allegheny's $16,000,000 claim -- notwithstanding that it had been the subject of extensive discussion shortly prior to the filing of the schedules on October 2, 2002, including testimony by Long Haul's CEO Robert Guth to the effect that Long Haul was in default of the Allegheny Contract as of July 23, 2002. Long Haul subsequently amended its schedule of liabilities to add Allegheny and Hanover, thus increasing Long Haul's apparent liabilities to $23,000,000. B. Long Haul's Schedule of Personal Property lists numerous licenses and lengthy strands of fiber optic lines. More than 20 of these licenses are in Pennsylvania, including Pittsburgh, State College, and Altoona. Long Haul's schedules also list assets consisting of fiber optic cable IRU rights provided by Allegheny, valued at a "net book value" of $5,302,383 -- along with other IRU rights totaling more than $190,000,000, mostly outside of Pennsylvania. C. Mr. Guth has testified in this Court that the Debtors were using portions of the Allegheny system to service Pennsylvania. At a hearing on Hanover's motion to lift the automatic stay to cancel certain surety bonds, Mr. Guth testified that the Allegheny Contract was "an important contract to our company", "very crucial", "an important infrastructure", and "the best and most efficient way for us to perform under the Commonwealth of Pennsylvania contract." D. Similarly, ABIZ's consolidated Monthly Operating Statement for the period October 1 to 31, 2002 dated November 27, 2002, indicates ABIZ is receiving $24,000,000 in revenues per month. A significant portion of those revenues apparently are derived from Pennsylvania, including $4,017,669 in revenues allegedly generated by ABIZ Pennsylvania. Nevertheless, the operating statement indicates that ABIZ Pennsylvania was actually losing money, in part by incurring "Bankruptcy charges" amounting to $423,750, which were charged against ABIZ Pennsylvania even though that entity was spared from bankruptcy. E. Security deposits listed in Long Haul's schedules include three Allegheny security deposits totaling $4,122,000 which may be available to offset Allegheny's claims against Long Haul. Allegheny's counsel indicated in a letter dated October 25, 2002, that Allegheny never actually received those security deposits. Hanover obviously should be furnished, at the time of the Rule 2004 examination, all information surrounding the existence or non-existence of any security deposits, and the reasons for the apparent difference of opinion as to whether these $4,122,000 in security deposits, listed on Long Haul's official Schedule of Chapter 11 Assets, do or do not actually exist. Mr. Rittmaster insists that Hanover is clearly a creditor and a party-in-interest in this case. The $15,500,000 claim submitted by Allegheny, if paid by Hanover, will entitle Hanover to be repaid by Long Haul, as the principal under the bond, and Hanover will become subrogated to certain of Allegheny's rights in the fiber optic cable network. Hanover also issued an additional $15,000,000 of other bonds, many of which remain outstanding. In any event, Hanover has incurred expenses and legal fees for which the Debtors are obligated to reimburse Hanover under a written agreement of indemnity, thus assuring Hanover the status of a creditor even if it incurs no other losses. Mr. Rittmaster believes that Hanover is entitled to inquire into the circumstances surrounding the "bundling" of Long Haul's assets with the remaining ABIZ assets, and the distribution of revenues derived from that bundling. Hanover contends that even the mere hint that substantive consolidation might be pursued in this case, to the prejudice of Hanover as a creditor of an apparently solvent Debtor -- whose schedules show $270,000,000 in assets and only $23,000,000 in liabilities -- should entitle Hanover to extensive discovery of the entirety of the Debtors' interrelationships. Mr. Rittmaster assures the Court that Hanover's requested discovery is narrowly tailored to provide documents and information which Hanover requires to determine the extent to which Long Haul's assets are being dissipated or used by its affiliates without just compensation. The discovery should also allow Hanover to understand the extent to which Long Haul's failure to make payment under the Allegheny Contract may prevent Long Haul, ABIZ or ABIZ Pennsylvania from using the Allegheny fiber optic lines to generate revenues with which to pay creditors of any of the Debtors, as well as the extent to which the Debtors' Chapter 11 estates may be incurring additional liability relating to any failure by the Debtors to provide Allegheny with access to the portions of the fiber optics lines to which Long Haul had granted IRUs to Allegheny. Mr. Rittmaster believes that this disclosure should also help Hanover understand and discharge its obligations under the Allegheny Bond, which in part are dependent on the extent to which Allegheny itself has actually completed the construction of the fiber optic network, in a timely and acceptable manner. Nevertheless, the mere fact that there is litigation pending against a person sought to be examined under Rule 2004 is not a sufficient reason for denying the request for an examination. In re Drexel Burnham Lambert Group, Inc. (Bankr. S.D.N.Y. 1991); In re Coffee Cupboard, Inc., 128 B.R. 509 (E.D.N.Y. 1991). The fact of the matter is that the completion or non-completion of portions of the Allegheny network may be relevant to both the litigation and the reorganization plan, and the existence or non-existence of more than $4,000,000 in security deposits which Allegheny denies it is holding for Long Haul may also be relevant to both the litigation and to the reorganization plan. Hanover is entitled to know the truth about these items in both of these proceedings, that is, both the litigation and the Chapter 11 case. The Debtors should not be heard to complain that they cannot be bothered with inquiries into their accuracy of their operations and financial accountability just because Hanover might be able to get portions of one side of the story by seeking depositions in a different lawsuit. (Adelphia Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMS: Renews CVC Engagement as Litigation Consultants --------------------------------------------------------------- According to Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, ML Media Partners L.P. and Century Communications Corporation each hold a 50% interest in Century/ML Cable Venture, which was formed in 1986 and owns and operates a cable television system in Puerto Rico. Pursuant to the Amended and Restated Management Agreement and Joint Venture Agreement, dated July 1, 1994, Century, which has been indirectly owned and controlled by the Adelphia Communications Debtors since October 1999, was appointed manager of the Joint Venture's cable system. In March 2000, ML Media brought a suit in the Supreme Court of the State of New York, New York County, against Century, the ACOM Debtors and Century's immediate parent, Arahova Communications, Inc., one of the Debtors, alleging various breaches of the Joint Venture Agreement. On December 13, 2001, the parties negotiated a settlement suspending the litigation and entered into a Leveraged Recapitalization Agreement, which provided for the Joint Venture's purchase of ML Media's 50% interest in the Joint Venture for $275,000,000. Ms. Chapman explains that the Recap Agreement provided for a September 30, 2002 closing of the purchase of ML Media's 50% interest unless there occurred an event that gave rise to an acceleration of the closing date, in which case the closing was to take place 10 business days after the Acceleration Event. The Recap Agreement also purported to require the ACOM Debtors to purchase ML Media's Joint Venture interest in the event that the Joint Venture failed to consummate its purchase obligation. The current dispute now before this Court concerns ML Media's claim that two independent Acceleration Events have occurred, so that the Joint Venture and the Debtors were obligated to redeem ML Media's Joint Venture interest in advance of the agreement's September 30, 2002 closing date. By a Decision and Order dated January 17, 2003, this Court denied the parties' cross motions for summary judgment on the issue of whether there was an acceleration of the closing date under the Recap Agreement, explaining that, at least with respect to the acceleration date issue, "the interpretation of the Recap Agreement requires resort to extrinsic evidence." The Court also denied summary judgment on the basis of arguments advanced by the Debtors, Century and the Joint Venture that the Recap Agreement should be avoided as a fraudulent conveyance. Specifically, the Court found that their "contentions as to fraudulent conveyance [are] sufficient to warrant the denial of summary judgment" and that these "allegations [should be] fleshed out" and "any necessary discovery with respect to that matter" should be conducted. By this motion, the Debtors seek the Court's authority to retain Standard & Poor's Corporate Value Consulting to continue to assist the Debtors and their counsel as litigation consultants in their Chapter 11 cases to provide litigation consulting services related to the Debtors' fraudulent conveyance claims against ML Media, nunc pro tunc to January 10, 2003. Ms. Chapman informs the Court that CVC will advise the Debtors and Willkie Farr & Gallagher in connection with the Debtors' consideration, preparation, and prosecution of an action to set aside the Recap Agreement on, among other theories, fraudulent conveyance grounds. Specifically, the Debtors intend to utilize CVC in connection with these activities: -- consideration and drafting of avoidance action pleadings; -- discovery on issues pertaining to the avoidance action; -- creation of expert reports and analyses; and -- trial preparation. Ms. Chapman relates that CVC is one of the leading fraudulent conveyance litigation consulting firms and is a U.S. market leader in providing financial analyses for financial reporting, tax, business combinations, corporate restructuring, capital allocation and capital structure purposes. On September 1, 2001, CVC became a business unit of Standard and Poor's. The McGraw-Hill Companies, Inc., as the ultimate parent of CVC, is a multinational company with numerous business units employing over 15,000 employees in more than 300 locations around the world. In addition to providing financial services through S&P, McGraw-Hill is a leading worldwide provider of educational materials and professional information as well as information and media services for millions of businesses and professionals in the aviation, energy, construction and healthcare markets. Some of its well-known brands include McGraw-Hill Education, BusinessWeek, McGraw-Hill Construction and Platts. According to Ms. Chapman, CVC employs 340 employees in 12 locations in the U.S. CVC's professionals are highly respected and experienced in providing financial analytic services for a variety of industries, including the telecommunications, cable access and satellite access industries. Prior to its acquisition by McGraw-Hill, CVC operated as a division of PricewaterhouseCoopers LLP. Finally, CVC has extensive experience in advising attorneys and clients in fraudulent conveyance and preference litigations, including, for example, In re FoxMeyer Drug Co., Adv. No. A98-279 (D. Del.). CVC will seek compensation for its services at its standard hourly rates, which are based on the professionals' level of experience plus reimbursement of out-of-pocket expenses incurred in performing services for the Debtors. The firm's current standard hourly rates are: Directors $550 - 660 Managers 440 Associates 230 - 330 The professionals who are currently rendering services in these cases are: -- Allen Pfeiffer, Lead Managing Director -- Nathan Levin and Warren Hirschhorn, Managing Directors -- Michael Vitti, Manager -- Susan Del Vecchio and William Hrycay, Senior Associates According to CVC's books and records, the firm has not received any compensation for services rendered in the Debtors' Chapter 11 cases. However, for services rendered to the Debtors since January 10, 2003, Ms. Chapman informs the Court that CVC has accrued $192,000 in fees and $5,500 in expenses in connection with assistance CVC provided to the Debtors related to certain pleadings that were filed with this Court on January 27, 2003. Ms. Chapman reports that the Debtors have agreed to indemnify and hold harmless CVC and its members, employees, agents, affiliates and controlling persons during the pendency of these cases pursuant to the provisions of their Engagement Letter. To the extent that CVC provides advisory services to Willkie Farr in connection with litigation matters, CVC's work will be performed at the direction of Willkie Farr and will be for the purpose of assisting Willkie Farr in its representation of the Debtors. As a result, CVC's work may be of fundamental importance in the formation of mental impressions and legal theories by Willkie Farr, which may be used in counseling the Debtors and in the representation of the Debtors. Accordingly, for CVC to carry out its responsibilities, it may be necessary for Willkie Farr to disclose its legal analysis as well as other privileged information and attorney work product to CVC. Thus, it is critical that the Court order that the status of any writings, analysis, communications, and mental impressions formed, made, produced or created by CVC in connection with its assistance of Willkie Farr in the adversary proceeding be deemed to be Willkie Farr's work product in its capacity as counsel to the Debtors. Moreover, the Debtors ask Judge Gerber to provide that the confidential and privileged status of the CVC Adversary Proceeding Work Product will not be affected by the fact that CVC has been retained by the Debtors rather than by Willie Farr. CVC Managing Director Allen M. Pfeiffer assures the Court that the firm has not represented and has no relationship with the Debtors, their creditors or equity security holders, any other parties-in-interest in these cases, the attorneys and accountants, or the United States Trustee or any person employed in the Office of the United States Trustee, in any matter relating to these cases. In addition, CVC and its managing directors: -- do not have any connection with the Debtors, their creditors, or any party-in-interest, or their attorneys; -- do not hold or represent an interest adverse to the estate; and -- are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. However, in November 2002, Mr. Pfeiffer discloses that CVC was engaged by PricewaterhouseCoopers, the Debtors' accountants and financial advisors, to assist in PwC's review of the purchase price allocations for financial reporting purposes in connection with acquisitions made by the Debtors between 1999 and 2002. CVC's engagement by PWC was in the nature of an ordinary course of business retention through an existing master agreement between PWC and CVC. CVC's work for PWC is substantially completed and its fees for this engagement are estimated to be less than $30,000. (Adelphia Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALLEGIANCE TELECOM: Fitch Further Drops Junk Debt Ratings to CC --------------------------------------------------------------- Fitch Ratings downgraded Allegiance Telecom's 11-3/4% senior discount notes due 2008 and 12-7/8% senior notes due 2008 to 'CC' from 'CCC' and its $500 million secured credit facilities to 'CC' from 'CCC'. The 'CC' rating indicates that default of some kind appears probable. The ratings downgrade reflects Fitch's belief that Allegiance will have great difficulty meeting the debt reduction obligations of its amended credit agreement. In November 2002, the company reached an agreement with its creditors modifying some of the terms of its $500 million senior secured credit facility. Under the agreement, Allegiance received a waiver of its existing financial covenants through April 30, 2003 and replaced them with a free cash flow from operations covenant and a leverage covenant. The leverage covenant states that Allegiance must reduce its total indebtedness to $660 million from $1.2 billion by April 30, 2003. In the interim, the company was required to pay down $15 million of the outstanding balance on the credit facility. Following the paydown, the company had $470 million outstanding on the facility. At year-end 2002, Allegiance had approximately $285 million in cash on its balance sheet and was not generating any cash flow from operations. Fitch believes that the current market environment will make it extremely difficult for the company to obtain the outside funding that would be required in order for the debt reduction obligation to be met by the April 30, 2003 deadline. In addition, KPMG, the company's external auditors, has indicated that if the reduction does not occur before it issues its 2002 audit report, the report will contain a 'going concern' qualification. Fitch believes it is likely that Allegiance will be required to enter into a restructuring situation, given that the company has no other sources of liquidity and clearly has a financing shortfall. DebtTraders reports that Allegiance Telecom Inc.'s 12.875% bonds due 2008 (ALGX08USR2) are trading between 19 and 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ALGX08USR2 for real-time bond pricing. AMAZON.COM: Legg Mason Discloses 15.56% Equity Stake ---------------------------------------------------- Legg Mason, Inc., beneficially owns 59,338,420 shares of the common stock of Amazon.com, Inc., representing 15.56% of the outstanding common stock of the Company. Legg Mason shares voting and dispositive powers over the aggregate amount of stock held. Various accounts managed by the investment advisory subsidiaries of Legg Mason, Inc. have the right to receive, or the power to direct, the receipt of dividends from, or the proceeds from, the sale of shares of Amazon.com, Inc. Accounts managed by Legg Mason Funds Management, Inc., in the aggregate, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, 36,089,406 shares, or 9.46%, of the total shares outstanding of Amazon.com Inc. The interest of one account, Legg Mason Value Trust, an investment company registered under the Investment Company Act of 1940 and managed by Legg Mason Funds Management, Inc., amounted to 25,076,000 shares, or 6.57% of the total shares outstanding. Listed here are the acquiring subsidiaries and their classification: Bartlett & Co., investment adviser, Legg Mason Capital Management, Inc., investment adviser, Legg Mason Focus Capital Inc., investment adviser, Legg Mason Funds Management, Inc., investment adviser, LMM LLC, investment adviser, Legg Mason Wood Walker, Inc., investment adviser, and broker/dealer with discretion, and Perigee Investment Counsel, Inc., investment adviser. * * * As previously reported, Standard & Poor's Rating Services affirmed its 'B' corporate credit rating on Amazon.com and revised its outlook on the company to stable from negative. Amazon.com had $2.3 billion of funded debt outstanding as of December 31, 2002. "The outlook revision is based on the company's increased rate of sales growth and improved operating performance during a difficult economic period. Amazon.com's rate of sales growth increased to 26% in 2002 from 13% in 2001 due to its free shipping program, increased product offerings, and continued growth of on-line sales," said Standard & Poor's credit analyst Diane Shand. "Moreover, the company's operating margin increased to 9.9% in 2002 from 4.5% in 2001 as a result of sales leverage and the company's focus on cost improvement." ANC RENTAL: ESL Partners Discloses 8.5% Equity Stake ---------------------------------------------------- William C. Crowley, President and Chief Operating Officer of RBS Partners, L.P. and member of ESL Investment Management, LLC and RBS Investment Management, LLC discloses in a regulatory filing dated February 14, 2003 to the Securities and Exchange Commission that these entities each beneficially own 3,845,000 shares of ANC Rental Corporation Common Stock, which represents 8.5% of the total number of shares ANC issued: Shares of sole voting Entity and dispositive power ------ --------------------- ESL Partners, L.P. 2,563,889 ESL Limited 596,924 ESL Institutional Partners, L.P. 96,380 ESL Investors, L.L.C. 587,807 RBS Partners, L.P is the general partner of ESL Partners. The general partner of RBS Partners is ESL Investments, Inc. ESL Investment Management, LLC is the investment manager of Limited. RBS Investment Management, LLC is the general partner of Institutional. RBS Partners, L.P. is the manager of Investors. In these capacities, ESL, Limited, Institutional, and Investors each may be deemed to be the beneficial owner of the shares of ANC Rental Corporation common stock beneficially owned by the other members of the group. (ANC Rental Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) APPIANT TECHNOLOGIES: Unlikely to Continue as a Going Concern ------------------------------------------------------------- Appiant Technologies Inc.'s new business model and main goal is to become a leading provider of internet protocol-based (IP- based) unified communications and unified information applications designed to allow users access to communications and information in a highly-personalized format as set by the individual user from private, public and enterprise sources anytime, anywhere from any type of communications device such as a cell phone, computer, personal digital assistant, etc., in a hosted, service model. The Company has created an IP-based portal that it named inUnison-TM- in which it has incorporated or will incorporate both its proprietary UC/UI applications including, but not limited to, its own speech recognition technologies, data mining, data analysis, navigation, channel management, recommendation engines and client relationship management applications, as well as various third party applications and integrations. Appiant Technologies, Inc., has been trademarked upon receiving shareholder approval at its Fiscal 2000 shareholder meeting. The Company has filed and received U.S. Trademark applications for the name "inUnison" that it uses for its unified communications and unified information software applications. While Appiant has begun to market its new, hosted unified communications and unified information applications business model, its results for fiscal year ended September 2002 reflect generally the results of the legacy business of its Infotel Subsidiary in Singapore. Appiant acquired Infotel on June 22, 1998. Infotel is an integrator of infrastructure communications equipment products, providing radar system integration, turnkey project management services and test instrumentation, as well as a portfolio of communications equipment in Asia. Infotel is headquartered in Singapore. For the fiscal year ended September 30, 2002, the Company's net revenues were $11.8 million as compared to $21.7 million for the same period ending September 30, 2001 and $25.5 million for the same period in 2000, representing a decrease of $9.9 million, or 45.6%, compared to fiscal 2001 and $3.8 million, or a 14.9% decrease, for the same period in 2000. Net revenues for fiscal year 2002 were adversely affected by the transition to the new business model of providing unified communications and unified information applications in the Company's inUnison-TM- portal in a hosted service, recurring revenue model. The decline also represents a decline in its legacy revenues in North America and a decision by management to de-emphasis several legacy products such as call centers and proprietary voice messaging products. On a full year basis, Appiant NA's net revenues were $2.2 million for the fiscal year ended September 30, 2002 as compared to $8.7 million for the period ending September 30, 2001 and $14.0 million for the same period in 2000. The 2002 year-to-date decrease in Appiant NA net revenues came from reduced legacy products, which were discontinued and slower than expected revenues from the inUnison-TM- product offering. Net revenues for its Infotel subsidiary were $9.6 million for the fiscal year ended September 30, 2002 as compared to $13.1 million for the fiscal year ended September 30, 2001 and $11.6 million for the same period in 2000. The decrease in net revenues in fiscal year 2002 occurred within all product segments due to an overall weak Singapore economy. Appiant's legacy business backlog decreased to $2.1 million at September 30, 2002 as compared to $5.5 million as of September 30, 2001 and $9.5 million for the same period in 2000. Appiant NA's order backlog decreased to zero from $1.0 million at September 30, 2001 and from $2.9 million at September 30, 2000. Infotel's backlog decreased at September 30, 2002 to $2.1 million from $2.3 million at September 30, 2001 and from $6.6 million at September 30, 2000. Orders for its inUnison product total approximately $1.2 million as of September 30, 20002. The Company recorded a net loss of $15.8 million on net revenues of $11.8 million in its fiscal year ended September 30, 2002 and a net loss of $26.5 million on net revenues of $21.7 million during fiscal 2001. It also sustained significant losses for the fiscal years ended September 30, 1999 and 2000. Management anticipates continuing to incur significant sales and marketing, product development and general and administrative expenses and, as a result, the Company will need to generate significantly higher revenue to sustain profitability as it builds its organization for its new inUnison-TM- business model. In addition, management anticipates significant amortization of capitalized software and other assets that have been purchased or developed for its new inUnison-TM- business model in its fiscal year 2003. There is no certainty that Appiant will continue to realize sufficient revenue to return to, or sustain, profitability. Appiant Technologies Inc. received a going concern opinion on its financial statements for both fiscal 2001 and 2002. A going concern opinion means that the Company does not have sufficient cash and liquid assets to cover its operating capital requirements for the ensuing twelve-month period and if sufficient cash cannot be obtained the Company would have to substantially alter its operations or may be forced to discontinue operations. The fact that the Company was able to continue operating for more than twelve-months since receiving a going concern opinion on its fiscal 2001 financial statements is not an indication that it will be able to do so in the future. On the contrary, the Company's cash position has worsened since fiscal 2001 and its ability to continue its current operations is less likely. ARBELLA INSURANCE: Counterparty Credit Rating Downgraded to BBpi ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Arbella Mutual Insurance Co. and its affiliates to 'BBpi' from 'BBBpi'. At the same time, Standard & Poor's assigned its 'BBpi' counterparty credit and financial strength ratings to Covenant Insurance Co. Commonwealth Mutual Insurance Co. and Commonwealth Reinsurance Co., also members of the Group. Standard & Poor's also affirmed its 'BBpi' counterparty credit and financial strength ratings on Arbella Life & Health Insurance Co. Inc., an affiliate of The Group. "The ratings on the Group are based on its weak capitalization, poor operating performance, and weak liquidity," said Standard & Poor's credit analyst Allison MacCullough. Arbella Insurance Group is a large group with 2001 surplus of $229 million. The Group writes mostly private passenger auto and auto physical damage and in 2001, 92% of direct premium written were in Massachusetts. Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group. APPLICA INC: Will Redeem Common Stock Purchase Rights ----------------------------------------------------- Applica Incorporated (NYSE: APN) announced that, as part of its focus on improving corporate governance, the Board of Directors voted to terminate the Company's Common Stock Purchase Rights Plan. The plan will be terminated by redeeming the rights that were issued under the Company's Amended and Restated 1995 Common Stock Purchase Rights Agreement. The rights will be redeemed at a price of $.00001 per right, payable in cash. There is currently one right attached to each outstanding share of common stock. The rights are represented by the certificates for common stock and do not trade separately. Shareholders do not have to take any action to receive the redemption payment and do not have to surrender stock certificates. The redemption payment will be mailed on or about April 1, 2003 to shareholders of record on March 24, 2003. As a result of the redemption, the rights cannot become exercisable, and the Common Stock Purchase Right Agreement will be terminated. 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. ARMSTRONG: Battles with California about Excusable Neglect ---------------------------------------------------------- The California Franchise Tax Board, represented by Kevin J. Mangan, Esq., at Walsh Monzack & Monaco PA, in Wilmington, Delaware, asks Judge Newsome to: (1) vacate his November 2002 Order disallowing and expunging the CFB's proof of priority claim for taxes; and (2) overrule Armstrong Holdings, Inc., and its debtor- affiliates' Fourth Omnibus Objection to Claims as it relates to the CFB's proof of priority claim. From as early as 1998, and well before the filing of these bankruptcy cases, the CFB has struggled to collect unpaid sales and use taxes from Debtor Armstrong World Industries, Inc. Significantly, the Debtor does not appear to contest that these taxes are owed. Instead, by the Fourth Omnibus Objection, the Debtor latches on to a factually correct, but equitably irrelevant technicality and noted that the CFB's priority claim was not timely filed. By this motion, "and with due regard to the protections afforded the Debtor by the United States Bankruptcy Code, the Board simply seeks to have its Proof of Priority Claim for these taxes deemed allowed, and the Objection overruled," Mr. Mangan says. Beginning in October 1998, AWI cooperated and participated in a duly conducted tax audit by the CFB. On October 31, 1998, the CFB mailed Notices of Proposed Assessment to AWI for the tax years 1991 through 1993. On December 9, 1998, AWI protested these First Proposed Assessments. Two years later, on December 6, 2000, AWI commenced these Chapter 11 cases and obtained an order setting August 31, 2001, as the bar date for filing certain proofs of prepetition claims against the Debtors. While AWI served notice of the bar date on the Board's Bankruptcy Unit, it did not serve the Board's Audit Division. Well after these cases were commenced, AWI was still cooperating and participating in the Board's duly conducted audit. On January 28, 2002, the Board's Audit Division issued additional Notices of Proposed Assessment to AWI for the tax years 1994, 1995 and 1996, which AWI protested on March 12. Significantly, at the time AWI protested the Second Proposed Assessments, AWI again did not inform the Board's Audit Division that the Petition had been filed. While the Board was conducting an audit, in which AWI fully participated, the CFB's books and records did not reflect that any taxes were due and owing. Indeed, CFB's books and records did not reflect the Debtor's tax liability until AWI's protests were scheduled for hearing before the Board's Settlement Bureau in June 2002. On August 8, 2002, CFB filed its Proof of Priority Claim for prepetition taxes totaling $3,027,272.49. The Fourth Omnibus Objection On October 23, 2002, the Debtor served and filed the Omnibus Objection seeking to disallow the CFB's claim for untimely filing. The deadline for filing responses to this Objection was November 1, 2002 -- only a week after service. Despite specific CFB procedures designed to ensure that certain incoming mail is deemed priority, sorted and quickly delivered, Chuck Gower, a Bankruptcy Specialist in the CFB's Bankruptcy Unit, did not receive the Omnibus Objection until November 26, 2002, well after the November 1 deadline. The reasons for the delay are two-fold. First, during the first week of November 2002, Mr. Gower was out of the office because he was ill. Second, the CFB's procedures are not foolproof. Apparently, the Omnibus objection was not given the priority handling required by CFB procedures. Because of the absence of any opposition from the Board, on November 22, 2002, the Court sustained the Debtor's objection to the allowance of CFB's priority proof of claim. Claim Should Be Allowed For Failure to Serve Audit Division Not surprisingly, considering the fundamental importance of notice and opportunity to be heard, when a known creditor is not provided with the statutorily required formal notice of the filing of a bankruptcy petition or of a bar date, the creditor has an absolute right to prove and file its claim even if the bar date has passed. In this case, the Debtor was involved and fully cooperated in a duly conducted tax audit as early as October 1998. At the time the bar date was set, CFB's audit was pending and the CFB's records did not show any taxes due. Indeed, the CFB's records did not even show the Debtor's tax liability until the audit was complete. Moreover, the Board's Bankruptcy Unit did not become aware of the Debtor's liability until the Debtor's protests were scheduled for hearing before the Board's Settlement Bureau. Mr. Mangan argues that "under these circumstances, the Debtor should have given notice of the bar date to the Board's Audit Division, which the Debtor well knew did not have notice that the Petition had been filed." Given that the Debtor failed to serve the Notice of Bar Date on the Audit Division, and because the Board has an absolute right to file its claim for the payment of taxes, Mr. Mangan concludes that the Omnibus Objection should be overruled and the CFB's priority claim should be deemed timely filed and allowed. Excusable Neglect Whether neglect is excusable is an equitable determination that takes into account all relevant circumstances surrounding a party's omission. There are four factors to consider when a party makes an excusable neglect determination: (1) the danger of prejudice to the debtor; (2) the length of delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant; (4) whether the movant acted in good faith. Applying these factors to this case, the Court should grant CFB's request and allow its claim. A debtor is not prejudiced by an untimely proof of claim if it otherwise had notice of the claim. Granting the Board's request will not prejudice AWI because it clearly had notice of the claim from as early as October 1998. Additionally, as no plan has yet been confirmed and there is no indication that AWI relied on the expungement of CFB's claim when filing the proposed disclosure statement, the Debtor will not be prejudiced. Although considerable, the claim clearly is not "material" from a disclosure perspective. Three months have passed since the entry of the order expunging the CFB's proof of claim. Given that a plan of reorganization has not been approved, it is inconceivable to Mr. Mangan that the "delay", if any, will have an impact on this bankruptcy case. Indeed, some courts have granted this type of motion even where a plan has been approved. Debtor Responds AWI notes that CFB admits that its Bankruptcy Unit received timely and actual notice of the August 31, 2001, bar date by which proofs of claim were due to be filed against AWI's estate. The CFB also admits that it nevertheless failed to file a proof of claim in AWI's Chapter 11 case until August 8, 2002 -- nearly one year after the bar date, and over 20 months after the Petition Date. CFB also admits receipt of the Omnibus Objection and that no response was filed. In light of these admissions, the CFB's failure to explain why a delay of nearly a year should be deemed excusable, and because AWI and its creditors will suffer prejudice if the CFB is allowed to file its claim at this late date, Judge Newsome should deny the Board's request. AWI observes that the only excuse the CFB offered for its year- long failure to timely file a proof of claim is that AWI allegedly did not also serve notice of the bar date on the Board's Audit Division. This "it should have been sent somewhere else" has been rejected by many courts where notice of the bar date was sent to the specific creditor but is alleged to have been sent to the "wrong" department within the creditor's organization. Judge Newsome should reject the CFB claim that it did not receive notice where it admits that its Bankruptcy Unit received timely and proper notice of the bar date. Because the CFB presents no other explanation for its failure to file a timely proof of claim, the motion should be denied on this basis alone. In addition, AWI asserts that the CFB's actions do not constitute excusable neglect. First, the blame for failure to timely file a proof of claim lies solely with the Board. AWI's service of the bar date notice on the Board's Bankruptcy Unit constitutes actual notice, and the CFB cannot rely on a lack of notice for its "excusable neglect" claim. Moreover, the CFB had in place internal procedures to ensure that bankruptcy information is made available to the Audit Division, so that the delay in filing the disputed claim was well within CFB's control. According to CFB's internal operating procedures, the CFB's Bankruptcy Unit is "responsible for collection of amounts owing from taxpayers that have filed for bankruptcy protection." When the Bankruptcy Unit receives petition information, as CFB admits it did with regard to AWI's petition, the Bankruptcy Unit is responsible for recording information about the bankruptcy, including the bar date, and placing it in the taxpayer's file. Thus, AWI's mailing of the bar date notice to the CFB's Bankruptcy Unit is consistent with the CFB's own procedures for keeping track of deadlines in bankruptcy cases. These procedures expressly direct auditors to check for the possibility of bankruptcy while working any audit case. It is evident that the auditors working on AWI's file failed to do this, as CFB claims in its motion that the Bankruptcy Unit had no notice of AWI's petition until after the bar date. Because the CFB does not even attempt to offer an excuse for its failure to follow its own internal procedures, Judge Newsome cannot view CFB's neglect as "excusable." Having failed once to act diligently to protect its interests, the CFB should have taken action to prevent notices or pleadings in this case from falling through the cracks. Nevertheless, the CFB missed another deadline when, after AWI served the Omnibus Objection on the Board at its address set out in its late-filed claim, again the CFB failed to file a response. Once again, the CFB's failure to act was solely within its control and the CFB does not advance any reasonable explanation why no response was filed at any time before the November 1, 2002 Response Deadline or the order disallowing CFB's claim. The Board merely states that Chuck Gower was ill, not that there was no one else to perform the function, and that his illness was after the deadline. Once again, these matters were solely in CFB's control and are not grounds to set the prior order aside. (Armstrong Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) ASBESTOS CLAIMS: Solicitation Period Extended through April 14 -------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Northern District of Texas, Asbestos Claims Management Corporation obtained an extension of its exclusive solicitation period. The Court gives the Debtor until April 14, 2003, to solicit acceptances of its Chapter 11 Plan of Reorganization. As previously reported in the Troubled Company Reporter's December 20, 2002, issue, a confirmation hearing on the Debtor's Third Amended Plan of Reorganization convened on March 4 and 5, 2003. No order's been entered on the case docket as of press time. Asbestos Claims Management Corporation filed for chapter 11 protection on August 19, 2002 (Bankr. N.D. Tex. Case No. 02-37124). Michael A. Rosenthal, Esq., and Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors it listed debts and assets of over $100 million. BEA CBO: Fitch Cuts & Affirms Ratings on 6 Series 1998-2 Classes ---------------------------------------------------------------- Fitch Ratings downgraded the rating on one class of notes issued by BEA CBO 1998-2 Ltd., a collateralized bond obligation backed predominantly by high yield bonds. Fitch also affirms the ratings of five tranches of this transaction. The class A-1L, A- 1, and A-2 notes are affirmed due to an insurance wrap that is provided by Financial Securities Assurance, Inc. The current ratings are as follows: BEA CBO 1998-2 Ltd. -- $10,506,906 class A-1L affirmed at 'AAA'; -- $71,000,000 class A-1 affirmed at 'AAA'; -- $100,000,000 class A-2 affirmed at 'AAA'; -- $20,000,000 class A-3 downgraded to 'C' from 'CCC-'; -- $22,000,000 class B-1 affirmed at 'C'; -- $8,500,000 class B-2 affirmed at 'C'. According to its Feb. 2, 2003 trustee report, BEA CBO 1998-2 Ltd.'s collateral includes a par amount of $51.60 million (22.46%) defaulted assets. The class A overcollateralization test is failing at 96.57% with a trigger of 115% and the class B overcollateralization test is failing at 83.31% with a trigger of 104%. In reaching its rating actions, Fitch reviewed the results of its cash flow model runs after running several different stress scenarios. Also, Fitch had conversations with Credit Suisse Asset Management, the collateral manager, regarding the portfolio. Fitch will continue to monitor this transaction. BIOVEST INT'L: Dec. Working Capital Deficit Balloons to $2.4-Mil ---------------------------------------------------------------- Biovest International Inc. is a biotechnology company focused on production and contract manufacturing of biologic drugs and products from small through commercial scale. It has historically developed, manufactured and marketed patented cell culture systems and equipment to pharmaceutical, diagnostic and biotechnology companies, as well as leading research institutions worldwide, and has provided contract cell production services to those institutions. While continuing this business, management has chosen to re-orient the Company's focus, assets and operations to increase contract cell production and biologic drug development and ownership. The Company's first drug product, a personalized vaccine for the most common and fastest-growing form of hematologic cancer, known as B-cell Non-Hodgkin's lymphoma, is currently in a Phase III FDA-approved pivotal licensing trial. During the three months ended December 31, 2002 the Company incurred a net loss of $1,202,000. At December 31, 2002 the Company had a deficit in working capital of approximately $2,400,000. The Company has been meeting its cash requirements through the use of cash on hand and short-term borrowings, primarily from affiliates. On December 31, 2002 the Company's actual working capital deficit was $2,397,000 compared to a working capital deficit of $1,061,000 at September 30, 2002. The Company has incurred significant losses and cash flow deficits in previous years. During fiscal year 2002 and 2001 it incurred losses of $4,200,000 and $5,832,000. During the quarter ended December 31, 2002 it incurred the loss of $1,202,000 and used $285,000 of cash flow for operations. In September 2001 the Company successfully entered into a definitive Cooperative Research and Development Agreement with the National Cancer Institute for the development and ultimate commercialization of patient-specific vaccines for the treatment of non-Hodgkin's low-grade follicular lymphoma. The terms of the CRADA included, among other things, a requirement for Biovest to pay $530,000 quarterly to NCI for expenses incurred in connection with the ongoing Phase III clinical trials. The Company made the first payment in the quarter ended September 30, 2001. On May 8, 2002 the Company and the NCI executed an amendment to the CRADA, which required a single payment of $350,000, due on September 30, 2002, in lieu of the quarterly payments of the original agreement. Under the amendment, quarterly payments of $530,000 were to resume on October 1, 2002. On October 15, 2002 a new amendment to the CRADA was executed under which the Company was not required to make the $350,000 payment due to the NCI on September 30, 2002 nor the $530,000 payment due on October 1, 2002. The next payment due from the Company is $530,000 within 30 days of the April 1, 2003 due date. Failure to remit this payment will constitute the Company's unilateral termination of the CRADA and Biovest will lose the rights to commercialize the results of its research with the NCI. Successful development of the vaccine, if approved by the FDA, from Phase III clinical trials through commercialization will commit the Company to several years of significant expenditures before revenues will be realized, if ever. The Company's ability to continue its present operations and meet its obligations under the CRADA is dependent upon its ability to obtain significant additional funding. Such additional financing could be sought from a number of sources, including the sale of equity or debt securities, strategic collaborations or recognized research funding programs. Management is currently in the process of exploring various financing alternatives to meet the Company's cash needs, including additional short-term loans from shareholders and others and the sale of equity securities. Management believes they will be able to raise the necessary funds to continue operations in the near term. There is no assurance that the additional required funds can be obtained on terms acceptable or favorable to the Company, if at all. The net losses incurred and the need for additional funding raise substantial doubt about the Company's ability to continue as a going concern. BOEING CO: Realigns State and Local Government Operations --------------------------------------------------------- Boeing (NYSE: BA) announced a reorganization of its State & Local Government operations with the intent of providing a stronger and more integrated connection to Boeing business units. In explaining the new organization, Rudy deLeon, senior vice president for Washington D.C. Operations, said, "Our State & Local Government operations function is critical to Boeing and our future. The Boeing Company has employees or operations in 43 states and suppliers in all 50 states. This realignment will make sure the Washington, D.C. Operations team is energized, focused and connected to the communities in which Boeing people live and work. It is designed to fully integrate our communications activities between Boeing's State & Local team, and company leaders in the business units, Washington, D.C., World Headquarters and throughout the country. DeLeon tapped George Roman, vice president and chief of staff of the Washington, DC Operations, to lead the function for Boeing's Integrated Defense Systems (in addition to his other duties). Bob Watt, vice president, Government and Community Relations, Commercial Airplanes will lead this effort for Boeing's commercial airplane activities. Amy Day, director, State & Local Government Relations, will manage activities for Boeing's World Headquarters in Chicago. As a part of the restructuring, Robin Stone, vice president of State & Local Government Relations for Washington, D.C., Operations, has elected to leave the company to pursue other opportunities. "I want to thank Robin for his role in building the State & Local team and for his contributions and support to the Washington, D.C. office. We wish him every success in his future endeavors," said deLeon. The Company latest Form 10-Q filed with the SEC shows the company's working capital deficit amounted to $2.4 billion at September 30, 2002. COMMUNICATION DYNAMICS: Paul Weiss Serves as Committee's Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Communication Dynamics, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain Paul, Weiss, Rifkind, Wharton & Garrison as Counsel. The Committee expects Paul Weiss to: a) represent and advise the Creditors Committee in its communications with the Debtors, the Secured Lenders, the Office of the United States Trustee, any other official committees, individual creditors and other parties in interest, with respect to the administration of the chapter 11 cases; b) conduct such review as the Creditors Committee may require concerning the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses, any causes of action belonging to the Debtors' estates or creditors and any other matter of significance to the Creditors Committee which may be relevant to the chapter 11 cases; c) represent and advise the Creditors Committee in connection with the formulation, negotiation and confirmation of a chapter 11 plan for the Debtors; d) advise the Creditors Committee with respect to its rights and obligations under the Bankruptcy Code and the Bankruptcy Rules; e) advise, assist and represent the Creditors Committee in the performance of its duties and the exercise of its powers under the Bankruptcy Code and the Bankruptcy Rules; f) prepare applications, motions and other papers for filing in the chapter I 1 cases and in any related proceedings, and represent the Creditors Committee in proceedings herein or therein; g) advise the Creditor's Committee with respect to retaining a financial advisor and other professionals, as needed, and assist such advisor and other professionals as necessary; and h) perform such other legal services as may be required by the Creditors Committee in the chapter 11 cases and in any related proceedings. Paul Weiss will seek compensation from the Debtors' estates for services rendered to the Creditors Committee based on its customary hourly rates: Partners $525 to $725 Counsel $495 to $525 Associates $260 to $485 Legal Assistants $140 to $195 Legal Assistant Clerks $75 The attorneys who will have primary responsibility for representing the Creditors Committee are: Jeffrey D. Saferstein $600 per hour Andrew N. Rosenberg $575 per hour Ross B. Rosenfelt $260 per hour Communication Dynamics, Inc., together with its Debtor and non- Debtor affiliates, is one of the largest multinational suppliers of infrastructure equipment to the broadband communications industry. The Debtors filed for chapter 11 protection on September 23, 2002 (Bankr. Del. Case No. 02-12753). Jeffrey M. Schlerf, Esq., at The Bayard Firm represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million both in estimated assets and debts. CONSECO FINANCE: Subsidiaries Have to April 5 to File Schedules --------------------------------------------------------------- The Conseco Finance Corporation Subsidiary Debtors sought and obtained Judge Doyle's permission for more time to file their Schedules of Assets and Liabilities and Statements of Financial Affairs. The CFC Subsidiary Debtors have about 4,700 creditors. Because prepetition invoices have not been received or entered into the CFC Subsidiary Debtors' financial accounting systems and the significant chunk of time it takes to prepare Schedules and Statements, the documents have been started but are not yet finished. Thus, Judge Doyle extended their deadline to file their Schedules and Statements to 60 days after their Petition Date or April 5, 2003. (Conseco Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) Conseco Inc.'s 10.500% bonds due 2004 (CNC04USR2), DebtTraders reports, are trading at 37 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for real-time bond pricing. CONSOLIDATED FREIGHTWAYS: Selling Canadian Unit for $90 Million --------------------------------------------------------------- Consolidated Freightways Corporation (CF) (PINK SHEETS:CFWEQ), which filed for chapter 11 protection on September 3, 2002 (Bankr. C.D. California, Case No. 02-24289), has signed a letter of intent with CF Canada Acquisition Ltd. (CFCAL) to sell the assets of its Canadian subsidiary, Canadian Freightways Ltd. (CFL), and the assets of certain of CFL's subsidiaries. The agreement contemplates a purchase price of approximately 90 million U.S. dollars, including assumption of liabilities. CFCAL is a group comprised of current CFL senior management and a financial partner. Last week, the bankruptcy court issued a bidding procedure order. Final sale requires completing a definitive agreement incorporating the conditions of the letter of intent as well as other conditions, and securing approval of the transaction by the court. CFL is an industry leading supply chain services company, specializing in time-sensitive and expedited services. Operations in Canada and the United States include less-than- truckload (LTL), full load (TL), and parcel transportation, sufferance warehouses, customs brokerage, international freight forwarding, fleet management and logistics management. Canadian Freightways won the 2002 Consumers Choice Award for best transportation company in Calgary and Edmonton. CFL is financially and operationally independent from CF and is not part of the September 2002 bankruptcy proceedings filed by the parent company. CFL's traditional high-quality customer service and profitable operations have continued throughout this time period. Documents related to all of CF's asset sales, including those involving the sale of CFL, are posted at the company's web site http://www.cf.com. CORNING INC: CFO James Flaw Presents at Deutsche Bank Conference ---------------------------------------------------------------- Corning Incorporated's (NYSE:GLW) Vice Chairman and Chief Financial Officer, James B. Flaws gave a limited presentation on the company, its plan to provide a $400 million profit improvement in 2003, and reiterated its first quarter outlook. Flaws made his comments to investors and financial analysts attending the Deutsche Bank Information Technology Conference in Scottsdale, Arizona. Corning's vice chairman said the company continues to make significant progress on its priorities to protect the financial health of the company, restore profitability in 2003 and invest in its future. Flaws briefly discussed the four key elements of the company's plan to restore operating profitability by the third quarter of this year; stable sales volume in optical fiber and cable, significant cost reductions across the company's telecommunications segment, continued growth in the Corning Technologies segment, and further reduced corporate spending. Flaws also reiterated guidance for the first quarter, which was previously announced on Feb. 7. Corning anticipates first quarter revenues in the range of $700 to $730 million and a net loss in the range of $10 million to $50 million, or $0.01 to $0.04 per share, excluding gains on debt repurchases and restructuring charges. Flaws also told investors that Corning plans to recognize equity earnings of between $10 million and $20 million from Dow Corning Corporation in the first quarter. Flaws' presentation at the Deutsche Bank conference was webcast and replays are available on Corning Incorporated's Investor Relations website found at http://www.corning.com About Corning Incorporated Established in 1851, Corning Incorporated (www.corning.com) creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable and photonic products in its Telecommunications segment. Corning's Technologies segment manufactures high-performance display glass, and products for the environmental, life sciences, and semiconductor markets. * * * As previously reported in the Troubled Company Reporter, Standard & Poor's lowered its ratings on two synthetic transactions related to Corning Inc., to double-'B'-plus from triple-'B'-minus. The lowered ratings follow the lowering of Corning Inc.'s long- term corporate credit and senior unsecured debt ratings on July 29, 2002. The two deals are both swap independent synthetic transactions that are weak-linked to the underlying collateral, Corning Inc.'s debt. The lowered ratings reflect the credit quality of the underlying securities issued by Corning Inc. RATINGS LOWERED Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-28 Trust $12.843 million corning debenture-backed series 2001-28 Rating Class To From A-1 BB+ BBB- Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-35 Trust $25.2 million corning debenture-backed series 2001-35 Rating Class To From A-1 BB+ BBB- COVANTA ENERGY: Wants Court to Okay Settlement Pact with Masse -------------------------------------------------------------- Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, recounts that on August 21, 2002, the Court modified the automatic stay to permit Jenny Masse, as on her behalf and as co-personal representative of the Estate of Auguste Masse, to prosecute their claims asserted in the action styled, "Claudette Fenelus and Jenny Masse, as Co-Personal Representatives of the Estate of Auguste Masse, on behalf of and for the benefit of Carl Auguste Masse, a minor; Cybill Masse, a minor; Jenny Masse; Jose Martin Masse, a minor; and Louise Dina Masse, a minor vs. Covanta Lee, Inc., and Covanta Energy Services, Inc." -- the Florida Action -- to final judgment, for the sole purpose of determining all issues of liability and damages, if any, of the Defendants. Ms. Buell notes that the Order did not modify the stay with respect to any enforcement or collection or any attempted enforcement or collection actions by the Masses of any judgment or settlement obtained in the Florida Action. However, the automatic stay has been modified with respect to the Co-Plaintiff, Claudette Fenelus, to allow American International Group, Inc. to pay, and Ms. Fenelus to collect, the Co-Plaintiff Settlement Payment. Ms. Buell relates that prior to the Petition Date, Covanta Energy Corporation, and its debtor-affiliates maintained and paid for a Commercial General Liability Insurance Policy for the Period from October 20, 2000 to October 20, 2001. Under the terms of the Insurance Policy, AIG pays certain attorneys' fees, litigation costs and losses arising from certain claims, including the claim arising from those activities the Masses alleged in the Florida Action. Pursuant to certain agreements between AIG and certain of the Debtors and their affiliates and the Insurance Policy, the Debtors have, among other obligations, a $250,000 per occurrence retention obligation to AIG for losses paid pursuant to the Insurance Policy. As set forth in the AIG Agreement, the Retention Obligation with respect to the Florida Action has been satisfied and the Debtors are not subject to any further Retention Obligation in connection with the Florida Action. In addition to the Retention Obligation, the Insurance Program also imposes, among other obligations, an Allocated Loss Adjustment Expense on certain of the Debtors. The Payment Agreement provides that if the losses are within the amount of the Retention Obligation, certain of the Debtors become liable for the Loss Adjustment Obligation, which include, among other things, attorneys' fees and defense costs. However, if losses AIG paid pursuant to the Insurance Policy exceed the Retention Obligation, the Loss Adjustment Obligation would be reduced by multiplying the amount of the allocated Loss Adjustment Expenses by the fraction with a numerator equal to $250,000 and a denominator equal to the total of the losses for an occurrence. Thus, any loss AIG paid pursuant to the Insurance Policy could subject certain of the Debtors to a claim by AIG for payment of the Loss Adjustment Obligation. According to Ms. Buell, the Retention and Loss Adjustment Obligations, as well as the Debtors and their affiliates' other obligations are secured by collateral held by AIG. The collateral includes, but is not limited to: (i) letters of credit amounting to $38,400,000; and (ii) a $19,500,000 surety bond. Also, a loss stabilization fund is held and maintained by AIG or certain of its affiliates for obligations of certain of the Debtors or their non-debtor affiliates. On January 22, 2003, the Court approved a settlement with Ms. Fenelus and related AIG Agreement. It provided, among other things, that in full satisfaction of all of the Co-Plaintiff's claims in the Florida Action, including any and all claims against the Defendants and any of the Debtors, AIG would pay the Co-Plaintiff $1,200,000. The AIG Agreement provided further that upon the application of the Retention Obligation, there would be no further requirement of any further Retention Obligations by the Defendants or any of the Debtors to AIG in connection with the Fenelus Settlement Payment. Ms. Buell reports that the Debtors, AIG and Ms. Masse engaged in extensive discussions to resolve the Florida Action and all other possible related disputes between the Parties. These discussions have resulted in the execution of a Settlement Agreement, which provides that: (a) In full satisfaction of all of Florida Action claims, including any and all claims against the Defendants and any of the Debtors, AIG will pay Ms. Masse $1,200,000 -- the Settlement Payment; (b) In consideration for the Settlement Payment, Ms. Masse will release and dismiss with prejudice any and all claims against the Defendants and any of the Debtors and AIG claimed in, related to or in connection with the Florida Action, including, without limitation, any and all rights to continue to or to assert an unsecured prepetition claim in the Debtors' cases; (c) The Settlement Agreement does not intend to and does not include payment for or affect in any way the rights and obligations as set forth in the Fenelus Settlement Agreement or the AIG Agreement; and (d) This Settlement Agreement will not become effective until it has been approved by the Court. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Ms. Buell contends that Settlement serves the best interest of the Debtors' estates and creditors because: (a) Litigation of the remaining claims in the Florida Action could be prolonged; a dispute involving a wrongful death action can be lengthy, time consuming and expensive. The Florida Action has already been in litigation for 17 months; (b) The litigation of the Florida Action could be lengthy and the Settlement Agreement will capture and resolve all potential disputes between the Parties immediately; (c) The Debtors will face considerable expense and delay if forced to litigate these remaining matters or others that arise in the Florida Action. The outcome of the litigation, including any judgment amount the Defendants could be responsible for, is uncertain. The Settlement Agreement confers a significant benefit on the Debtors' estates, and allows the Debtors to avoid the cost and uncertainty that would attend protracted legal disputes between the Parties; (d) The Settlement Agreement contemplates AIG paying the Settlement Payment to Ms. Masse in consideration for her full release of AIG, the Defendants and the Debtors from any and all of her claims related to or in connection with the Florida Action. The estate is benefited because the terms of the Settlement Agreement allow the Debtors to settle the Florida Action with Ms. Masse, whereas the judgment amount the Defendants could be responsible for is uncertain. None of the Debtors' estates are prejudiced by any out-of-pocket payments by the Debtors; (e) The Debtors do not believe that they are in any underinsured position with respect to this policy year. Additionally, none of the collateral securing the Insurance Program is affected by the Settlement Agreement or any payment made thereunder, and continues to remain fully in place; and (f) The Settlement Agreement is the product of vigorous arm's length bargaining that took place over several weeks. Each of the Parties was represented by knowledgeable counsel during the course of the negotiations. The terms of the Settlement Agreement are well within the range of reasonableness. Accordingly, the Debtors ask the Court to: (a) authorize, but not require, Covanta Energy Services, Inc. and Covanta Lee, Inc. to enter into the Settlement Agreement with Ms. Masse; (b) approve the terms of the Settlement Agreement in its entirety; (c) authorize the Debtors to take actions as may be necessary and appropriate to implement the terms of the Settlement Agreement; and (d) modify the automatic stay provided by Section 362 of the Bankruptcy Code to allow the Debtors to take the necessary actions to implement the terms of the Settlement Agreement. (Covanta Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392- 0900) CTC COMMS: Wants to Stretch Lease Decision Time through May 5 ------------------------------------------------------------- CTC Communications Group, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for more time to decide to elect whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors want the decision deadline extended through May 5, 2003. The Debtors relate that the Unexpired Leases constitute valuable assets of the Debtors' estates and include leases for their corporate headquarters and their advanced technology center in Waltham, Massachusetts. In addition, the Debtors lease nonresidential real property for their central office locations which house much of the equipment necessary to provide telecommunciation services to their customers, as well as their branch sales offices located throughout the northeastern portion of the United States. The Debtors' decisions whether to assume or reject the Unexpired Leases are a fundamental component of their attempt to stabilize their businesses and to either consummate a sale of their assets or formulate a plan of reorganization. If the Debtors were compelled to decide now whether to assume or reject the Unexpired Leases, they would be faced with a choice of either rejecting a particular Unexpired Lease, thereby losing a potentially profitable lease location or assuming such Unexpired Lease and the long-term associated liabilities. CTC Communications Group, Inc., a source provider of voice, data, and Internet Communications services to medium and larger sized business customers, filed for chapter 11 protection on October 3, 2002 (Bankr. Del. Case No. 02-12873). Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $306,857,985 in total assets and $394,059,938 in total debts. DALLAS LANDFILL: Case Summary & 13 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Dallas Landfill Gas Production, LLC 2901 Bee Cave Rd., Box H Austin, Texas 78746 Bankruptcy Case No.: 03-32037 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Ecogas McCommas Bluff, Inc. 03-32039 Chapter 11 Petition Date: February 27, 2003 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtors' Counsel: John Mark Chevallier, Esq. McGuire, Craddock & Strother 3550 Lincoln Plaza 500 N. Akard St. Dallas, TX 75201 Tel: 214-954-6800 Estimated Assets: Estimated Debts: ----------------- ---------------- Dallas Landfill $1MM to $10MM $1MM to $10MM Ecogas McCommas $1MM to $10MM $10MM to $50MM Ecogas McCommas Bluff's 13 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mack Iron Works Co. Trade Debt $6,778 ACE Transportation, Inc. Trade Debt $6,678 Senior Flexonics, Inc. Trade Debt $4,170 Compression Technologies Trade Debt $3,701 Panametrics Trade Debt $3,315 JAM Distributing Co. Trade Debt $2,504 Mid South Engine Systems Trade Debt $2,300 Genesis Systems, Inc. Trade Debt $2,201 Cutler-Hammer, Inc. Trade Debt $2,085 Pan-tech Controls Co. Trade Debt $475 Total Fire & Safety, Inc. Trade Debt $198 TXU Energy Services Trade Debt $123 Praxair Distribution, Inc. Trade Debt $80 DAW TECHNOLOGIES: Commences Chapter 11 Reorganization Proceeding ---------------------------------------------------------------- Daw Technologies, Inc. (OTC: DAWK), a leader in controlled environment and cleanroom component design, engineering and installation, has filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The company also announced that European subsidiary, Daw Technologies (Europe) Ltd., will continue to operate normally outside of bankruptcy. "While our European subsidiary has completed its turnaround and is moving forward in a highly positive manner, we believe that the Chapter 11 process will help to facilitate our US restructuring plan," said Jim Collings, chief executive officer, Daw Technologies. "We have been making several strategic changes to the company over the past several months. At this stage, we feel that Chapter 11 offers the best way for us to continue to provide our US customers with industry-leading cleanroom products and construction services, while we address our existing debt, capital and cost structures." Under Chapter 11 protection, the company will be able to continue its normal business operations. Additionally, the company will be able to seek debtor-in-possession (DIP) financing not otherwise available. "Over the next several months, Daw will work closely with current customers, creditors, unions, and other stakeholders as we formulate and begin execution of our reorganization plan," Collings said. "I believe we are putting together a compelling plan that will enable Daw Technologies to emerge from bankruptcy as a stronger, more streamlined company." Daw Technologies, Inc., provides ultra-clean manufacturing environments for customers throughout the world, and specializes in the design, engineering and installation of cleanroom and mini-environment systems that meet stringent semiconductor and pharmaceutical manufacturing requirements. The company also provides contract manufacturing and specialized painting services on an OEM (original equipment manufacturer) basis for various customers. For further information, visit the company on the Internet at http://www.dawtech.com DAW TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: DAW Technologies, Inc. 2700 South 900 West Salt Lake City, Utah 84119 Bankruptcy Case No.: 03-24088 Type of Business: DAW designs and installs clean rooms for the semiconductor, pharmaceutical and medical industries. Chapter 11 Petition Date: March 10, 2003 Court: District of Utah (Salt Lake City) Judge: Judith A. Boulden Debtor's Counsel: Peter W. Billings, Jr., Esq. Fabian & Clendenin 215 South State Street 12th Floor Salt Lake City, UT 84111 Tel: (801) 531-8900 Total Assets: $6,626,240 Total Debts: $9,947,612 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Huntair $237,549 Grant Thornton $152,415 Argonaut Insurance Company $121,904 M&A Property Management $119,262 Affiliated Metals $72,230 Airguard $34,169 Arthur Andersen LLP $54,971 Camfil $90,765 Con-Way Western Express $41,235 GE Corporate Plus $76,425 Helck Die Casting Corporation $87,559 Louisville Lamp Company $34,647 Maxcess Technologies, Inc. $68,823 Northern California Carpenter Funds $49,057 Plascore, Inc. $50,163 Reliance Metal Center $88,749 Stoel Rives LLP $42,966 Tanner Co. $55,198 Temporary Resources, Inc. $64,430 Texas Carpenters Fringe Benefit Fund $86,541 DELTA AIR: Updates Guidance Due to Geopolitical Uncertainties ------------------------------------------------------------- Delta Air Lines (NYSE: DAL) updated quarterly guidance to indicate an expected 1.5 percent system capacity reduction year over year for the March 2003 quarter, and announced additional fixed-price fuel contracts, ensuring fixed costs for approximately 60 percent of its estimated 2003 jet fuel requirements at an average price of $0.77 per gallon. Additionally, the airline now expects cash flow from operations for the quarter to be negative due to soft traffic and bookings resulting from concern over potential military action. "Current geopolitical uncertainties have weakened the already depressed revenue environment more than initially expected. Bookings for the quarter are down, and we expect this to continue," said M. Michele Burns, executive vice president and chief financial officer. "Changes to capacity and additional fuel hedging agreements continue to help us manage through these difficult times. Delta remains committed to aggressively reducing costs and maintaining the flexibility to quickly adjust to changing market demand." Delta's previous capacity guidance in early January indicated that the March 2003 quarter capacity would be up 0.5 to 1.0 percent. Changes in the capacity for the quarter were primarily driven by depressed customer demand due to potential military action in the Middle East. In January, the airline stated that cash flow from operations was expected to be slightly positive for the quarter. As of March 7, 2003, Delta has hedged 77 percent of its projected aircraft fuel requirements at an average price of $0.79 per gallon for the March 2003 quarter. For the second quarter of 2003, Delta is hedged 78 percent at $0.76 per gallon. Hedged prices in heating oil are quoted as cents per gallon and include transaction costs. Delta's fuel hedging program will help mitigate additional cost pressures. In January, the airline announced that it had hedged 50 percent of its expected aircraft fuel needs for 2003 at an average price of $0.75 per gallon. Delta Air Lines, the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,619 flights each day to 438 destinations in 78 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, go to http://www.delta.com. DIVINE INC: Wants to Appoint Trumbull Services as Claims Agent -------------------------------------------------------------- divine, inc., and its debtor-affiliates ask for permission from the U.S. Bankruptcy Court for the District of Massachusetts to employ and retain Trumbull Services, LLC as Claims, Noticing and Disbursement Agent. The Debtors assure the Court that Trumbull holds no interest adverse to the Debtors and their estates. The Debtors point out that they have numerous creditors, potential creditors and parties in interest, to whom certain notices must be sent. Appointment of an agent for claims docketing would relieve the office of the Clerk of the Bankruptcy Court from the burden of having to docket and maintain the extremely large number of proofs of claim that will likely be filed in these cases. As Claims and Noticing Agent, Trumbull will: a) prepare and serve required notices in these chapter 11 cases, including: (i) notice of case commencement of the chapter 11 cases and the initial meeting of creditors under section 341(a) of the Bankruptcy Code; (ii) notices of the claims bar date; (iii) notices of objections to claims; (iv) notices of any hearings on a disclosure statement and confirmation of a plan of reorganization; and (v) such other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b) within five business days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: (i) a copy of the notice served, (ii) an alphabetical list of persons on whom the notice was served, along with their addresses, and (iii) the date and manner of service, and (iv) all other information required pursuant to MLBR 9013-3(c). c) maintain copies of all proofs of claim and proofs of interest filed in these cases; d) maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that include the following information for each such claim or interest asserted: (i) the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; (ii) the date the proof of claim or proof of interest was received by Trumbull and/or the Court; (iii) the claim number assigned to the proof of claim or proof of interest; (iv) the asserted amount and classification of the claim; (v) all assignments of claims or interests setting forth the information in (d)(i) - (iv); and (vi) the applicable Debtor against which the claim or interest is asserted; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers on a periodic basis as requested by the Clerk's Office; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and upon request make such list available to the Clerk's Office or any party in interest; h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours, including posting such claims on a website maintained by Trumbull and available to the public free of charge; i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e), if directed by the Court to do so; j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k) provide temporary employees to process claims, as necessary; l) provide expertise consultation and assistance in claim and ballot processing; m) act as disbursing agent, as necessary, to implement distributions to claimants pursuant to a chapter 11 plan; n) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and o) provide such other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors, the Clerk's Office or the Court. Trumbull Services' current hourly rates are: Clerical $50 per hour Bankruptcy Analyst $65 to $80 per hour Bankruptcy Administrator Manager $100 per hour Automation Consultant $100 to $145 per hour Sr. Automation Consultant $145 to $170 per hour Bankruptcy Consultant $175 to $195 per hour Sr. Bankruptcy Consultant $200 to $265 per hour divine, inc., an affiliate of RoweCom Inc., is an extended enterprise company, which serves to make the most of customer, employee, partner, and market interactions, and through a holistic blend of Technology, services, and hosting solutions, assist its clients in extending their enterprise. The Company filed for chapter 11 protection on February 25, 2003, (Bankr. Mass. Case No. 03-11472). Richard E. Mikels, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo represents the Debtors in their restructuring efforts. When the Debtors filed or protection from their creditors, they listed $271,372,593 in total assets and $191,957,065 in total debts. DOW CORNING: Launches a New Service Solutions & Testing Unit ------------------------------------------------------------ Silicon science pioneer Dow Corning Corp. recently launched a new Service Solutions Unit that offers a broad range of environment, health and safety (EH&S) and analytical testing services to clients worldwide. "Dow Corning has been providing these services to our own company and to our product customers for 60 years," John Torgerson, market development manager for the new Dow Corning services unit, said. "Now we're making our expertise available to others, whether they purchase our products or not." The Service Solutions Unit offers individual and integrated EH&S services designed to help customers lower their costs, comply with industry regulations and meet stringent product safety standards. Depending on their unique needs, customers can choose from toxicology, environmental and chemistry testing and consulting; chemical and product inventory registration assistance; product compliance reviews; material safety data sheet development; and SAP EH&S module implementation support. As one of the first companies to implement SAP's EH&S module on a global scale, Torgerson said Dow Corning possesses unique knowledge customers can use to get their own SAP system up and running more quickly. Dow Corning's Toxicology group is equipped to perform descriptive toxicology studies as well as more specialized investigations. The Environmental Sciences group offers environmental fate and effects testing, including acute and chronic aquatic toxicity testing. Both groups provide consulting in health and environmental exposure and risk assessment. Kathy Plotzke, director of Dow Corning's Health and Environmental Sciences department, said, "Our laboratory is highly unique in that we offer both health and environmental testing plus custom synthesis of radiolabeled materials. These capabilities are supported by very strong analytical, chemistry and quality assurance groups, all within one facility." "With our experience in handling complex studies and program management, we can offer comprehensive testing packages. We can also design integrated study packages capable of taking a material from the testing stage through exposure and risk assessment. And, because we have the capability to synthesize radiolabeled materials in-house, we can reduce the timeline for initiating a study by as much as eight weeks," she said. In addition to EH&S solutions, Dow Corning also offers analytical chemistry services, including material analysis and characterization, problem solving, method development and consultation. The Analytical Sciences and Solutions group provides expertise and utilizes modern instrument capability in the fields of chromatography, molecular characterization, thermal/physical property characterization and surface and microscopy analysis. More than a third of the global staff is comprised of Ph.D. chemists. While the group has the capability to test and analyze all types of materials, it specializes in silicon-based materials, which offer unique challenges to many laboratories. Patrick Langvardt, director of Analytical Sciences and Solutions, says, "Most labs focus on organic materials; Dow Corning delivers added value by providing total analysis solutions for both silicone and organic materials." He says Dow Corning literally "wrote the book" on analyzing silicones -- The Analytical Chemistry of Silicones -- and has extensive experience in analyzing materials and troubleshooting problems from diverse markets ranging from microelectronics to construction, paper and cosmetics. For example, because Dow Corning has a high degree of experience in dealing with global differences in regulatory, labeling and testing requirements, it is ideally suited to help its customers navigate the regulatory maze more quickly, with fewer setbacks and, consequently, less expense. No longer simply a supplier of silicones, Dow Corning has evolved into a supplier of solutions. "It's all about giving our customers the choices and support they need to innovate, grow reliably or drive down costs," said Torgerson. "That support can range from a simple helping hand all the way to turn-key contract manufacturing." To learn more about the full range of service solutions available from Dow Corning, visit http://www.dowcorning.com/services Dow Corning -- http://www.dowcorning.com-- develops, manufactures and markets diverse silicon-based products and services, and currently offers more than 7,000 products to more than 25,000 customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Inc. (NYSE: GLW). More than half of Dow Corning's $2.7 billion in annual sales are outside the United States. Dow Corning filed for chapter 11 protection in 1995. Dow Corning's Amended Joint Plan of Reorganization dated February 4, 1999 (as modified on July 28, 1999 and supplemented on July 30, 1999) was confirmed by the U.S. Bankruptcy Court for the Eastern District of Michigan on Nov. 30, 1999. Four remaining appeals (brought by the Department of Defense, the Health Care Financing Administration, the Indian Health Service and the Department of Veterans Affairs) from the Confirmation Order await resolution by Judge Hood in the District Court and two January 2003 appeals (brought by the Class Five Nevada Claimants and the Australia Claimants) pend before the Sixth Circuit. Those appeals stand in the way of the Plan taking effect. Dow Corning's commercial creditors (whose claims accrue 6.28% interest day-by-day) await the Effective Date of that Plan. DT INDUSTRIES: Obtains Waiver of Covenant Defaults in Q2-Q3 2003 ---------------------------------------------------------------- DT Industries, Inc. (Nasdaq: DTII), a designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, announced that it has been awarded certain customer purchase orders totaling approximately $23 million in the last two weeks. Steve Perkins, president and chief executive officer, stated, "We received $10 million in orders from a large computer/electronics company, a $7 million order from a glass manufacturer and $6 million in purchase orders from three auto- related customers. We hope these orders are an indication that conditions are improving in our targeted markets." The company expects third quarter fiscal year 2003 net sales to approximate the level of net sales for its second quarter of fiscal year 2003, but expects that the anticipated net loss in the third quarter will be reduced from the net loss in the second quarter of fiscal 2003, reflecting the result of recent cost reduction initiatives. Perkins added, "We expect to see the full effect of the cost reduction initiatives in the fourth quarter of FY 2003 and if net sales remain at the same level as the second quarter of FY 2003 and the expected level for the third quarter of FY 2003, then the company expects to break even on a pre-tax basis for that fourth quarter." The company also announced that it has finalized an amendment to its senior credit facility that provides a permanent waiver of financial covenant defaults in the second and third quarters of fiscal 2003. The amendment also established new financial covenant levels for the remainder of the term of the facility and reduced the senior credit facility to $61 million. The company believes that cash flows from operations, together with available borrowings under the senior credit facility, will be sufficient to meet its currently anticipated working capital, capital expenditures and debt service needs up until the maturity of the credit facility on July 2, 2004. ENCOMPASS SERVICES: Overview of Debtors' Joint Chapter 11 Plan -------------------------------------------------------------- In response to the rejection of the proposed prepackaged reorganization plan that Encompass Services Corporation and its debtor-affiliates proposed in October and November 2002, the company continued formulating a Plan acceptable to their creditors while completing their asset divestitures. The Debtors focused on a reorganization around the Residential Debtors due to the concerns about the Debtors' future abilities to obtain sufficient surety bonding capacity because the Residential Debtors' operations generally have substantially lower bonding capacity requirements. After their discussions with the DIP Lenders and the Senior Lenders, however, the Debtors believed that it was necessary to solicit alternative competing offers for the equity interests in and associated assets of the Residential Debtors. Consequently, the Debtors approached potential counterparties that they believed might have an interest in investing in the Residential Debtors. The Debtors received bids from three parties. After evaluating each proposal, the Debtors determined that Wellspring Capital Management LLC's offer represents the highest and best offer for the investment. A free copy of Encompass' Disclosure Statement is available at: http://bankrupt.com/misc/Encompass_disclosure_statement.pdf A free copy of Encompass' Reorganization Plan is available at: http://bankrupt.com/misc/Encompass_reorganization_plan.pdf The Debtors' Joint Plan generally provides for the reorganization of the Debtors in two distinct groups: (a) the Reorganized Residential Debtors, which will be transferred and conveyed to Newco Holding LLC. The Reorganized Residential Debtors will consist of those Debtors who will generally continue operating their businesses on and after the effective date of the Plan; and (b) the Reorganized Non-Residential Debtors, which will consists of the Reorganized Encompass and those Debtors whose assets have been largely sold before the Confirmation Date. Upon the Confirmation and consummation of the Plan, the Reorganized Non- Residential Debtors will continue to exist for the limited purpose of winding up their affairs. Sale of the Residential Debtors The Plan contemplates that the equity interests of each Reorganized Residential Debtor will be sold to Newco Holding in accordance with the terms of a purchase agreement free and clear of any claims, liens or encumbrances. Newco Holding will be an entity formed by Wellspring Capital Management LLC or its designee and Encompass' management group, which is composed of Eric Salzer, Timothy Johnston and any other persons as may be designated in any supplement to the Plan. The purchase price will comprise a portion of the Asset Sale Proceeds and will be distributed in accordance with the terms of the Plan. The confirmation of the Plan will constitute the approval of the proposed sale of the Reorganized Residential Debtors' Common Stock to Newco Holding. On or after the Effective Date, Newco Holding and one or more of the Reorganized Residential Debtors may enter into other or further debt or equity financings for the Reorganized Residential Debtors' working capital and other general operating needs. Appointment of Disbursing Agent As part of the wind-down of their operations, the Reorganized Non-Residential Debtors will appoint a disbursing agent, with the consent of the holders of any claims arising under the Debtors' Prepetition Credit Agreement, dated February 22, 2000, as amended, with Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, as syndication agent, Wachovia Bank National Association, as documentation agent, and ABN-AMRO Bank NV, The Bank of Nova Scotia, Bank One, N.A., Credit Lyonnais, New York Branch, GMAC Commercial Credit LLC, Mercantile Bank National Association and Union Bank of California, N.A., as co- managing agents -- Existing Credit Agreement Claims. The Disbursing Agent will have the rights and powers of a debtor-in-possession under Section 1107 of the Bankruptcy Code and other rights, powers and duties incident to causing the performance of the Debtors' and the Reorganized Debtors' obligations under the Plan. This includes, without limitation: (1) the duty to assess the merits of claims and object to those claims that the Disbursing Agent determines to be, in whole or in part, without merit; (2) to prosecute the objections and defend claims and counterclaims; (3) to prosecute causes of action; (4) to liquidate Estate assets; (5) to wind up the businesses, assets, properties and affairs of the Non-Residential Debtors; (6) to make distributions under the Plan; and (7) other duties as are necessary to effectuate the provisions of the Plan. The Disbursing Agent will continue to exist until the Court enters a final order closing the Debtors' Chapter 11 Cases. As soon as practicable after the final distribution is made and all cash has been distributed or paid, the Disbursing Agent will seek entry of a Final Order closing the Chapter 11 Cases pursuant to Section 350 of the Bankruptcy Code. Issuance of New Common Stock On the Effective Date, all of the Debtors' existing common stock, existing preferred stock, all incentive stock option, non-qualified stock options and stock appreciation rights granted under any Debtor-sponsored stock option plan, Senior Subordinated Notes and Junior Subordinated Notes will be cancelled and the Debtor' obligations under the securities and related transactions will be terminated and discharged. The Reorganized Encompass will issue new shares of common stock, which will be held by the Disbursing Agent for the benefit of the holders of claims against the Debtors. Revesting of Assets The Plan also contemplates that the property of each Non- Residential Debtor, together with any property of each Non- Residential Debtor that is not property of its Estate and that is not specifically disposed of pursuant to the Plan, will revest in the applicable Non-Residential Debtor on the Effective Date. However, the holders of the Existing Credit Agreement Claims will retain liens on the property that revests and that property will be treated in accordance with the terms of the Plan. The Reorganized Residential Debtors' Common Stock will be sold to Newco Holding. As of the Effective Date, the Reorganized Residential Debtors may operate their businesses and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. Directors & Executive Officers The term of each member of Encompass' current board of directors will automatically expire on the Effective Date. The initial board of directors of the Reorganized Encompass on and after the Effective Date will consist of one member, who will be designated by the Disbursing Agent. The Reorganized Encompass Board will have the responsibility for the management, control, and operation of the Reorganized Encompass on and after the Effective Date. The officers of the Reorganized Residential Debtors will be designated by Newco Holding and identified in subsequent supplements to the Plan. Feasibility of the Plan The Debtors assert that the Joint Plan meets the "feasibility requirements" under Section 1129(a)(11) of the Bankruptcy Code. The Debtors tell the Court that their financial projections have indicated that the Reorganized Debtors will have sufficient cash flow to make the payments required under the Plan on the Effective Date. The Reorganized Debtors will also be capable of maintaining their operations on a going-forward basis. Bankruptcy Code Section 1129(a)(11) requires that the confirmation of the Debtors' Plan must not likely be followed by the liquidation or the need for further financial reorganization of the Debtors. The Debtors advise the Court that they will file exhibits of the Financial Projections at least five business days before the Confirmation Hearing. Reorganization Beats Liquidation The Debtors believe that the reorganization contemplated by the Joint Plan will provide greater recovery for the impaired creditors than a liquidation of their assets under Chapter 7 of the Bankruptcy Code. The Debtors based their contention primarily on the consideration of the effects that a Chapter 7 liquidation would have on the ultimate proceeds available for distribution to the impaired creditors, including: (a) the increased costs and expenses of a Chapter 7 liquidation arising from the fees payable to a Chapter 7 trustee and the professional advisors to the trustee; (b) the erosion in value of assets in a Chapter 7 case in the context of the Chapter 7 liquidation; (c) the adverse effects on the Debtors' businesses as a result of the likely departure of key employees and the probable loss of customers; (d) the substantial increases in Claims, like estimated contingent Claims, which would be satisfied on a priority basis or on parity with the impaired creditors of the Chapter 11 Cases; (e) the reduction of value associated with a Chapter 7 trustee's operation of the Debtors' businesses; and (f) the potentially substantial delay in distributions to the impaired creditors that would likely ensue in a Chapter 7 liquidation. Although the Plan contemplates a liquidation of the Encompass' holdings in the Reorganized Debtors, the Debtors believe that the liquidation pursuant to the Plan as part of the Chapter 11 cases will not have as great of an effect on the value that the impaired creditors will receive as would be applicable in a Chapter 7 liquidation. The Debtors will file a Liquidation Analysis to support their arguments at least five days before the Confirmation Hearing. (Encompass Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON: Seeking Court Nod on Settlement Deal with Orange County -------------------------------------------------------------- Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York, relates that prepetition, Enron Energy Services, Inc. and Orange County Register entered into an Infrastructure Construction Contract dated June 18, 1999 to design and install a 1,350-ton HVAC system at OCR's Santa Ana, California offices. The construction cost is estimated at $4,700,000. Contemporaneous with the Construction Agreement, EES and OCR entered into an Operating Lease Agreement dated June 18, 1999 pursuant to which OCR leases certain equipment required in connection with the Energy Project. Under the Operating lease Agreement, OCR agreed to pay EES $52,118 per month for 120 months. The obligation to pay the Monthly Payments was triggered by OCR's execution of the project Acceptance Letter. At the end of the Term, OCR may elect to: (a) surrender the equipment at Enron's expense; (b) extend the Operating Lease Term for a minimum of 36 months; or (c) purchase the Equipment for $1,600,000 to be paid in 2011. In connection with the Energy Project, Mr. Berger informs Judge Gonzalez, Enron Energy Services North America, Inc. entered into a Non-Residential Standard Performance Contract Program with Southern California Edison Company to obtain certain rebates that are available to businesses for implementing certain energy efficiency related projects like the Energy Project. In addition to the Construction Agreement and the Operating Lease Agreement, OCR and EESNA entered into an Agreement to Share Savings, dated May 17, 2000. Pursuant to the Energy Credit Agreement, EESNA and OCR agreed to share the Energy Credits and the costs associated with obtaining them under the SCE Agreement. Pursuant to the terms of the Energy Credit Agreement, EESNA was obligated to distribute to OCR 70% of all Energy Credit refunds received, less an expense reimbursement of up to $40,000. To date, EES received $189,000 in refunds for the Energy Credits under the SCE Agreement, but has not distributed any funds to OCR. OCR signed a "Project Acceptance Letter" on June 6, 2001. The Project Acceptance Letter signified that the Energy Project was complete or substantially complete and that the Monthly Payments pursuant to the Operating Lease Agreement would commence. OCR has made all of the Monthly Payments required under the Operating Lease Agreement to date. During April 2002, Mr. Berger informs Judge Gonzalez that Pacific Project Management LLC approached EES and expressed its interest in purchasing the Equipment and assuming the Maintenance and Operating Lease agreements. On April 30, 2002, EES and Pacific Project entered into a Confidentiality Agreement to allow Pacific Project to begin its due diligence in connection with the possible purchase of the Equipment and acquisition of the Agreements. On June 5, 2002, Pacific Project offered to purchase the Equipment and accept the assignment of the Operating Lease Agreement and the Maintenance Agreement for $2,138,000. However, Mr. Berger notes, Pacific Project's offer requires EES to: (a) pay expenses associated with approval of its offer totaling $90,000; and (b) agree to a $100,000 break-up fee. The cash component of Pacific Project's offer was later reduced to $2,007,000 for the Operating Lease Agreement only. Yet, Pacific Project continued to require its expense reimbursement, reduced by $2,300 and the break-up fee components. On the other hand, on June 5, 2002, EES entered into a Confidentiality Agreement with OCR to permit it to conduct due diligence regarding its interest in the Energy Assets and the Agreement. By a letter dated June 28, 2002, OCR offered to purchase EES' rights under the Operating Lease Agreement and the Energy Credit Agreement for $2,071,453 -- the First Offer Amount. In addition to the payment of the First Offer Amount, OCR agreed to provide non-cash consideration to the Debtors: (a) OCR agreed to assume and satisfy all claims and liens asserted against Enron or OCR by mechanics' lien claimants on account of any and all Mechanics' Lien Claims and the mechanics' lien claimants have asserted or perfected or may be entitled to assert or perfect against the Energy Project, estimated at $600,000; (b) OCR agreed to assume the cost of completing all services and punch list items required to finish the Energy Project, estimated at $300,000; and (c) OCR agreed to assume responsibility for all future costs associated with the rebate applications contemplated by the Energy Credit Agreement and SCE agreement, as well as the risk associated with a potential denial of rebate requests by Southern California Edison. With regard to the Mechanics' Lien Claims to be assumed by OCR, the parties specifically acknowledge and agree that the assumption extends only to Mechanics' Lien Claims for goods and services provided to the Energy Project and to Control Air Conditioning Service Corporation's claim, and not to any claims which may be asserted against the Debtors for fraud, misrepresentation or other legal theory not based directly on a mechanics' lien or stop notice right to payment for goods and services provided. After substantial analysis and arm's-length negotiations, OCR increased the cash portion of its offer to $2,750,000 -- the Purchase Price. Thus, the Debtors determined that the monetary and non-cash forms of consideration make the OCR offer substantially better than that of Pacific Project. Pursuant to the Termination and Settlement Agreement, OCR will pay the Debtors $2,750,000. In addition, OCR will waive all claims against the Debtors' estates and it will assume various liabilities for mechanics' liens and claims arising out of the Agreements. Furthermore, OCR will bear the cost of completing all punch list items that my be required to finish the Energy Project and OCR will assume all of the costs and risks regarding the collection of the remaining Energy Credits. In return, the Debtors will: (a) transfer the Equipment under the Operating Lease to OCR free and clear of all liens, claims and encumbrances in favor of EES, EESNA and the Debtors, but subject to any validly perfected Mechanics' Lien Claims; (b) retain $189,000 in Energy Credits that it has already received from Southern California Edison; (c) assume and assign any and all rights and duties remaining pursuant to the SCE Agreement to OCR; and (d) waive the Debtors' rights to assert any potential preference claim arising from a prepetition assignment of the Maintenance Agreement from EES to IPT. Mr. Berger contends that EESI's entry into the Termination and Settlement Agreement is warranted because: (a) it allows the Debtors' estates to immediately collect 90% of the present day value of: -- the income stream generated by the Operating Lease Agreement; and -- the Equipment. Absent the Settlement, the Debtors will have to perform pursuant to the Operating Lease Agreement through 2011 and satisfy $600,000 of Mechanics' Lien Claims and $200,000 of punch-list items and litigate OCR's possible claims against the Debtors' estates; (b) it will eliminate a 9-year credit risk associated with OCR and its parent companies, which are privately held entities that make it difficult to determine the financial condition of the OCR companies and the long- term exposure under the Operating Lease Agreement risky; (c) OCR will obtain title to the Energy Assets free and clear of all liens, claims and encumbrances in favor of EES, EESNA and the Debtors, but subject to any validity perfected Mechanics' Lien Claims, on an "as is, where is" basis; (d) the cash component of the OCR Offer exceeds Pacific Project's offer by more than $750,000 and by more than $1,000,000 in total value when other claims and liabilities related to the Energy Assets are considered; (e) it eliminates the possible cost and complexity of litigation resulting from OCR's various claims for damages, including the viability of the Debtors' liens against the Equipment; (f) the SEC Agreement offers no benefit to the Debtors' estates since the Energy Project for which the Energy Credits were given is being transferred to OCR; (g) the opportunity for OCR to collect further Energy Credits pursuant to the terms of the SCE Agreement is an essential aspect of the Termination and Settlement Agreement; and (h) the negotiations that culminated in the terms of the Termination and Settlement Agreement were conducted at arm's-length between disinterested parties that were represented by counsel. (Enron Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392- 0900) FASTENTECH: S&P Takes Back B- Senior Subordinated Note Rating ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B-' rating on FastenTech Inc.'s proposed offering of $175 million senior subordinated notes due in 2011 (144A with registration rights), because FastenTech has postponed the offering. Standard & Poor's withdrew its 'BB' secured bank loan rating on FastenTech's proposed $40 million revolving credit facility due in 2008. The 'B+' corporate credit rating was affirmed on privately held FastenTech Inc. The outlook is stable. The closely held Bloomington, Minnesota-based company is a growing global manufacturer and marketer of highly engineered specialty fasteners. It had about $170 million of debt outstanding at December 31, 2002. "Ratings are not expected to change over the intermediate term, as the company is expected to maintain its current financial profile even as it pursues acquisitions," said Standard & Poor's credit analyst John Sico. FastenTech has recently improved its operating margins notwithstanding difficult economic conditions. Productivity improvements in addition to labor reductions totaled $$5 million in fiscal 2002. Although steel is the largest purchased component, recent tariff increases do not affect steel rod and inconel, which comprise about two-thirds of its steel purchases. However, annual fixed-price contracts for the company's steel supply expire in December 2003 and account for about 80% of its steel purchase. In addition, the company has agreements with five unions that cover half of its workforce. Three of these contracts expire in December 2003, May 2004, and June 2004, respectively. FEDERAL-MOGUL: Court Okays $28 Million Camshafts Sale to Asimco --------------------------------------------------------------- After the Court approved the Letter of Intent between Asimco International Inc. and established the bidding procedures for the sale of Federal-Mogul Corporation and its debtor-affiliates' U.S. Camshafts Business in June 2002, the Debtors relate that they have negotiated with Asimco regarding the assumption of certain assets and liabilities. The Debtors have just recently concluded the negotiations and resolved the open issues related to an Asset Purchase Agreement that the parties entered. The salient terms of the Asset Purchase Agreement are: A. Purchase Price Asimco has agreed to purchase the U.S. Camshafts Business for $28,079,000. In the Letter of Intent, Asimco originally proposed to pay $32,500,000 for the Camshafts Business, less $6,800,000 in accounts receivable to be retained by the Debtors. The Purchase Price consists of: (a) a $250,000 deposit; (b) $12,486,000 to be paid in cash at the Closing; (c) a $750,000 six-year promissory note; and (d) as part of the consideration making up the Purchase Price, the Debtors will retain the U.S. Camshafts Business' accounts receivable, which is estimated to be $11,093,000. B. Purchase Price Adjustment The Purchase Price is subject to a dollar-for-dollar adjustment based on the amount by which the Net Working Capital as of the Closing exceeds or is less than the amount of the Estimated Net Working Capital. The Net Working Capital is the inventory, net of reserves of the U.S. Camshafts Business, less the trade accounts payable and obligations that will be assumed by Asimco. C. CapEx Reimbursements Aside from the Purchase Price, Asimco will reimburse the Debtors on the Closing Date for certain capital expenditures currently estimated at $2,200,000. The CapEx Reimbursements are in addition to the Purchase Price consideration to be received by the Debtors. Asimco will also assume the U.S. Camshafts Business' accounts payable arising after the losing Date. D. Assets to be Sold Asimco will purchase the assets of and interest in the U.S. Camshafts Business, including, without limitation, all inventory, goods, machinery and equipment and intellectual property rights used in or related to the U.S. Camshafts Business, and certain real property, fixtures and improvements which are owned or leased by the Debtors or Federal-Mogul Assembled Camshafts, Inc. The Debtors will retain all cash and accounts receivable. The Debtors will also remain liable for accounts payable and other obligations before the Closing Date. FMAC operates a business that manufactures camshafts for vehicle engines at the Grand Haven facility. FMAC is a non- debtor party to the Purchase Agreement, although the Debtors hold an 80% ownership in FMAC. E. Deposit Asimco has deposited the $250,000 into an interest bearing account established by the Debtors' counsel. The Deposit will be paid to the Debtors at the Closing or refunded to Asimco in accordance with the terms of the Purchase Agreement, in the event that the Debtors materially breach the Purchase Agreement or Asimco does not prevail as the successful purchaser. F. Grand Haven Facility Lease The Debtors and Asimco have valued the Grand Haven Leases at $3,500,000 to the Debtors. The parties are still negotiating the terms of the Grand Haven leases. G. Assumption of Contracts Asimco will assume certain contracts, agreements, leases and commitments related to the U.S. Camshafts Business. Certain contracts involved purchase order arrangements or relationships with vendors. The Debtors reiterate that they need to sell the U.S. Camshafts Business to cut administrative costs associated with its continued operations and to maximize the value for the benefit of the Debtors' estates. Based on historical performance and returns, the Debtors believe that the U.S. Camshafts Business will provide insufficient returns on their investments to warrant the Debtors retaining the Business. The Debtors further ask the Court to permit the assignment of the contracts to Asimco. The Debtors believe that Asimco is financially capable of satisfying the obligations under the contracts going forward. The Debtors have already notified the non-debtor party to the contracts that will be assigned to Asimco. No default exists under the contracts. * * * Recognizing that Asimco's bid is the highest and best offer, Judge Newsome authorizes the Debtors to sell the U.S. Camshafts Business as well as assign certain contracts related to the Business pursuant to the Purchase Agreement. (Federal-Mogul Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRESH AMERICA: Liquidating Assets Under Court Supervision --------------------------------------------------------- Fresh America Corp. (OTCBB:FRES), a major North American food distribution company it is now in the process of liquidating its assets under court supervision. As a wholesale produce buyer, Fresh America operated under the jurisdiction of the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. Section 499a et seq. PACA requires that any produce-related assets be paid to the produce suppliers of Fresh America. On January 23, 2003, the United States District Court for the Northern District of Texas, in a case entitled Produce Alliance, et al. v. Fresh America Corp., et al., Case No. 3:03 CV-0152-P, entered an order freezing the assets of Fresh America to avoid dissipation of those assets. On February 19, 2003, the District Court entered an Order, which established a claims procedure for the distribution of the assets of Fresh America to the produce suppliers. The Order required Fresh America to notify all of its creditors of the claims procedure, and such notification has been sent to all creditors. All produce suppliers are required to intervene and submit a PACA Proof of Claim by March 24, 2003. The funds, being held by court order, are to be paid to the eligible produce suppliers by May 12, 2003. If there are any funds remaining after the distribution to the produce suppliers, there will be further proceedings and notification will be sent to the affected creditors. For further information, you may contact the law office of McCarron & Diess, 4910 Massachusetts Avenue, N.W., Suite 18, Washington, D.C. 20016, Phone: (202) 364-0400, e-mail: ldiess@mccarronlaw.com. FOUNTAIN VIEW: Files Reorganization Plan in C.D. California ----------------------------------------------------------- Fountain View Inc. filed its Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court. The Plan of Reorganization is supported by the Company's major constituencies, including the principal holders of its public debt. Filing the Plan is a key step forward for the Company in its efforts to successfully emerge from Chapter 11. The Disclosure Statement and Plan were filed in the United States Bankruptcy Court for the Central District of California. The Honorable Sheri Bluebond is presiding over the Fountain View Chapter 11 case. A Court hearing on the adequacy of the Disclosure Statement is scheduled for April 15, 2003. Court approval of the Disclosure Statement will allow Fountain View to commence solicitation of votes from its creditors and shareholders and to seek confirmation of the Plan by the Bankruptcy Court. Fountain View will seek to conclude the solicitation and court confirmation processes in order to emerge from Chapter 11 this summer. "Fountain View expects to emerge from this process as a more competitive and financially stronger company," said Chief Executive Officer, Boyd Hendrickson. "The company would not be in a position to obtain the financing to confirm this full payment plan but for an extraordinary improvement in performance achieved through the hard work and dedication of its employees and its management team. Our operating income has increased dramatically in 2002, by well over 30% compared to 2001 results, and shows continuing improvement notwithstanding the challenges imposed by reductions in government reimbursement rates for healthcare services and difficult general economic conditions, as well as the special challenge of operating in a bankruptcy environment. But I am most proud of the Fountain View employees who were never distracted by our financial reorganization. They continue to provide our residents with the high quality healthcare that has long been Fountain View's trademark." Key elements of the Plan, as proposed, and subject to approval by the Bankruptcy Court include: -- Providing for the payment of all unsecured claims in full with interest. -- Existing shareholders will receive substantially all of the equity of the reorganized company. -- The Company will cure any defaults under those executory contracts and unexpired leases necessary to its continuing operations and assume the rights and obligations under those agreements. In related news the Company also announced that to fund the payments required under its reorganization plan it has received commitments for $150 million in exit financing from CapitalSource Finance LLC and Highbridge/Zwirn Special Opportunities Fund L.P., as well as another unnamed financial institution. Mark Jrolf, a Partner at Heritage Partners, Inc., the advisor to the private equity fund that is Fountain View's controlling shareholder, stated that "We've believed all along in the value of the equity in Fountain View and are extremely pleased that the Company was able to file a Plan of Reorganization and Disclosure Statement with the Court that will allow unsecured creditors to be paid in full and shareholders to retain substantially all of their equity in the Company. We are extremely proud of the hard work this management team put into the successful restructuring of the Company." "While this has, at times, been difficult and contentious, the Fountain View case shows the Chapter 11 process at its best. The Company's management engineered a remarkable operating turnaround that, with the breathing spell provided by Chapter 11, has permitted the Company to obtain commitments for the new financing that will enable it to fund a consensual full payment plan without significantly liquidating assets or diluting its existing shareholders," noted Dan Bussel, a partner at Klee Tuchin Bogdanoff & Stern LLP, bankruptcy counsel to Fountain View. The Company along with 22 operating subsidiaries filed its voluntary petitions for Chapter 11 reorganization on October 2, 2001 in the Central District of California, Los Angeles Division. Klee Tuchin Bogdanoff & Stern LLP of Los Angeles is Fountain View's bankruptcy counsel. Fountain View is a leading operator of long-term care facilities and provider of a full continuum of post-acute care services, with a strategic emphasis on sub-acute specialty medical care. Presently headquartered in Foothill Ranch, California, the Company employs approximately 6,400 employees who serve approximately 5400 residents daily in facilities throughout Southern and Central California, as well as in 18 counties in Texas, including 43 skilled nursing and five assisted living facilities. In addition to long-term care, the Company provides a variety of high-quality ancillary services such as physical, occupational and speech therapy and pharmacy services. The Company generates annual revenues in excess of $340 million. GENCORP INC: Plans to Appeal Court Decision in Case Against Olin ---------------------------------------------------------------- GenCorp Inc. (NYSE: GY) announced it is pursuing its appeal of a partial judgment in the case of GenCorp Inc v. Olin Corporation, rather than seek further review of an Order of the United States Sixth Circuit Court of Appeals issued on February 13, 2003. In order to move forward with this appeal, the Company has posted a supersedeas bond covering the judgment and related interest in the amount of approximately $30 million. While the bond impacts liquidity, the Company currently believes that its existing cash and cash equivalents, forecasted operating cash flows and borrowings available under its credit facilities will provide sufficient funds to meet its operating plan for 2003. As discussed more fully in its recently filed annual report, the Company has concluded that it is not currently appropriate to accrue additional amounts related to this matter beyond previously established reserves for potential liability for contamination at the Olin TDI facility and related offsite contamination. GenCorp is a multi-national, technology-based manufacturer with operations in the automotive, aerospace, defense and pharmaceutical fine chemicals industries. Additional information about GenCorp can be obtained by visiting the Company's web-site at http://www.GenCorp.com As previously reported in Troubled Company Reporter, Standard & Poor's assigned its preliminary double-'B' and single-'B'-plus ratings to senior unsecured and subordinated debt securities, respectively, filed under GenCorp Inc.'s $300 million SEC Rule 415 shelf registration. At the same time, Standard & Poor's affirmed its existing ratings on GenCorp, including the double-'B' corporate credit rating. The outlook is stable. GENERAL CREDIT: S.D. New York Court OKs Consolidation of Estates ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approves a substantive consolidation of the estates of Carly Holding, Inc., General Armored Corporation and G.S. Capital Corporation into the estate of General Credit Corporation, creating a single consolidated estate, at the behest of Official Committee of Unsecured Creditors of General Credit Corporation. The Court rules that that the substantive consolidation of the Debtors' estates into the GCC estate will mean: (a) all assets and liabilities of the estates of each of the Debtors, shall be treated as though they were assets and liabilities of the GCC estate; (b) for all purposes related to confirmation of any chapter 11 plan, the Debtors' estates shall be deemed to be one consolidated estate for GCC including, for purposes of tallying acceptances and rejections of the plan, distributions, and claim allowances; (c) any obligation of any Debtor and all guarantees thereof executed by one or more of the Debtors shall be deemed to be one obligation of the consolidated GCC estate; (d) any claims filed in connection with such obligations and such guarantees shall be deemed one claim against the consolidated GCC estate; and (e) each and every claim filed in the Debtors' chapter 11 cases against any of the Debtors shall be deemed filed against the consolidated GCC estate and shall be deemed to be one claim as an obligation of the GCC estate. GCC will be considered the surviving estate and the attributes and characteristics of GCC will remain unaffected by this substantive consolidation. General Credit Corporation is engaged in the business of providing working capital financing to its customers through check factoring, which is the discounted purchase of corporate checks made payable to the Debtors' corporate customers. The Debtors filed for chapter 11 protection on July 19, 2002 (Bankr. S.D.N.Y. Case No. 02-13506). Joshua Joseph Angel, Esq., at Angel & Frankel, P.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $6,010,455 in total assets and $9,988,032 in total debts. GENESEE CORP: Issues Statement of Net Assets in Liquidation ----------------------------------------------------------- Genesee Corporation (Nasdaq: GENBB) issued its statement of net assets in liquidation and statement of changes in net assets in liquidation as of and for the third fiscal quarter ended January 25, 2003. The Corporation is currently operating under a plan of liquidation and dissolution that was approved by shareholders in October 2000. Under this plan, the Corporation has divested its operating businesses and liquidated substantially all of its other assets. The Corporation sold its brewing and equipment leasing businesses in December 2000 and its Foods Division in October 2001. In May 2002 the Corporation sold its investment in the Clinton Square office building in Rochester, New York. In September 2002, the Corporation sold its two remaining real estate holdings to its partners in those investments, which completed the liquidation phase of the plan. The Corporation has distributed the net proceeds of these transactions, after reserving for taxes, contingent liabilities and post closing obligations related to those transactions, in a series of liquidating transactions. As of January 25, 2003, five liquidating distributions totaling $56.1 million, or $33.50 per share, have been paid to shareholders. On February 21, 2003, the Corporation announced a sixth liquidating distribution in the amount of $4.2 million, or $2.50 per share, payable on March 17, 2003 to Class A and Class B shareholders of record on March 10, 2003. In accordance with generally accepted accounting principles, the Corporation has adopted the liquidation basis of accounting. Under the liquidation basis of accounting, the Corporation does not report results from continuing or discontinued operations. Instead, the Corporation reports only net assets in liquidation and changes in net assets in liquidation. The Corporation reported net assets in liquidation at January 25, 2003 of $15.5 million, or $9.28 in net assets per share, compared to net assets in liquidation at October 26, 2002 of $15.2 million, or $9.10 in net assets per share. The $300,000 increase in net assets in liquidation in the third fiscal quarter reflects the following adjustments and transactions: * $239,000 in interest income received by the Corporation during the third quarter. * $200,000 increase in accrued compensation and other expenses to reflect management's current estimate of the cost to complete the Corporation's plan of liquidation and dissolution based on management's revised estimate that the plan will be completed by April 2004. * $115,000 decrease in other accrued expenses to reflect a reduction in New York sales tax liability as the result of modified preliminary audit findings related to the Corporation's former brewing business. * $91,000 in escrow funds received by the Corporation as the final proceeds from the January 1999 sale of the Corporation's interest in Lloyd's Food Products. * $91,000 in lease revenue and proceeds from the sale of equipment related to the leases retained by the Corporation following the sale of its equipment leasing business. After payment of the $2.50 per share liquidating distribution payable on March 17, 2003, the Corporation estimates that net assets in liquidation will be $11.3 million, or $6.78 per share. The net assets in liquidation reported reflect management's current estimates of the net realizable value of the Corporation's assets and the settlement costs of the Corporation's liabilities. The actual values and costs are expected to differ from the amounts shown herein and could be greater or lesser than the amounts recorded. NOTE: The Corporation has paid partial liquidating distributions of $7.50 per share on March 1, 2001, $13.00 per share on November 1, 2001, $5.00 per share on May 17, 2002, $5.00 per share on August 26, 2002 and $3.00 per share on October 11, 2002 under the plan of liquidation and dissolution adopted by the Corporation's shareholders in October 2000. The Corporation has announced a liquidating distribution of $2.50 per share to be paid on March 17, 2003 to shareholders of record on March 10, 2003. GILAT SATELLITE: Discloses Impending Changes in Top Exec. Posts --------------------------------------------------------------- Gilat Satellite Networks Ltd. (NASDAQ:GILTF), a worldwide leader in satellite networking technology, announced the resignations of the company's Chairman and CEO Yoel Gat and President Amiram Levinberg, both co-founders of the company effective upon the meeting of the new Board of Directors expected in April. The voluntary resignations open the way for the appointment of a new Chairman and President and CEO at the upcoming meeting of the new Board of Directors in April where it is expected that Shlomo Rodav will become Chairman of the company and Oren Most will be appointed the new President and CEO. Both Rodav and Most join Gilat with a wealth of financial, business and managerial experience and are well positioned to carry the company forward into a new era of growth. Shlomo Rodav, who is expected to assume the position of Chairman of Gilat, is the successful owner and manager of numerous companies in the high-tech, infrastructure, environment, food and holdings areas. Oren Most, who is expected to be appointed Gilat's President and CEO, joins the company from Cellcom (Israel), the county's largest and most successful cellular phone company, where he was one of the company's founders and served as Deputy CEO and Head of the Customers Division. Prior to his work at Cellcom, Most led two successful corporate turnarounds, as CEO of Keter, one of Israel's largest book publishing and printing companies, and as Managing Director of Gibor-Sabrina's Pantyhose Division. Oren Most's experience also includes management positions in banking and venture capital in the United States. Most, 52, received his MBA degree from New York University in 1981. The impending change in the company's top executive positions coincides with the successful conclusion of Gilat's restructuring plan that was authorized by the courts last Thursday. Both Gat and Levinberg, who are committed to helping the new Chairman and President and CEO make the transition with the existing Gilat professional management team, will continue in their present positions until the new Board is elected in April. Yoel Gat, outgoing Chairman and CEO said, "After bringing the company's restructuring plan to a successful conclusion, following which Gilat's viability is no longer in question, I felt that stepping aside was the right thing to do. After sixteen great years that we have dedicated to Gilat, it was time to give a new management team the opportunity to take the Company forward to the next level." Amiram Levinberg, outgoing President said, "As the new shareholders are expected to prefer the nominated CEO to come from outside the Company, I think it is the right time to take a new course in my personal career. We leave behind a very strong and professionally experienced management team at Gilat that has been serving the Company for many years, which will ensure, with our help, a smooth transition for the incoming Chairman and President and CEO. Both Yoel and myself agreed to remain as Directors on the new Board and will continue to provide any assistance we can for the success of Gilat, which will always remain dear to our hearts." "In my view," said Oren Most, Gilat's expected incoming President and CEO, "Gilat represents some of Israel's finest technological development capabilities and international marketing achievements. I am thankful to the Company's new shareholders for the opportunity to lead Gilat's excellent and professional team in tackling the turnaround challenge." Gilat expects to be in a position to hold a shareholder's meeting in April at which time the new Board will be elected. The Board will then meet and is expected to appoint the new Chairman and President and CEO. Proxy statements for the meeting will be sent out in mid-March. The following individuals are presently expected to be proposed at the Company's upcoming Shareholders' meeting to serve on the new Board: Gideon Chitayat, Yoel Gat, Linda Harnevo, Amiram Levinberg, David Milgrom, Shlomo Rodav, Meir Shamir, Doron Steiger, Shally Tshuva. The definitive slate will be the one contained in the Company's proxy statement. Further information regarding these individuals will be set forth in the Company's proxy statement. About Gilat Satellite Networks Ltd. Gilat Satellite Networks Ltd., with its global subsidiaries Spacenet Inc., Gilat Latin America, Inc. and rStar Corporation (RTRCE), is a leading provider of telecommunications solutions based on Very Small Aperture Terminal (VSAT) satellite network technology - with nearly 400,000 VSATs shipped worldwide. Gilat markets the Skystar Advantage, DialAw@y IP, FaraWay, Skystar 360E and SkyBlaster* 360 VSAT products in more than 70 countries around the world. The Company provides satellite-based, end-to- end enterprise networking and rural telephony solutions to customers across six continents, and markets interactive broadband data services. The Company is a joint venture partner in SATLYNX, a provider of two-way satellite broadband services in Europe with SES GLOBAL. Skystar Advantage(R), DialAw@y IP(TM) and FaraWay(TM) are trademarks or registered trademarks of Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at www.gilat.com. (*SkyBlaster is marketed in the United States by StarBand Communications Inc. under its own brand name.) GLOBAL CROSSING: Creditors Back Hutchison/ST Purchase Pact ---------------------------------------------------------- The Official Committee of Unsecured Creditors in the Global Crossing Chapter 11 proceedings reaffirmed its support for the company's reorganization plan under which Hutchison Telecommunications and Singapore Technologies Telemedia will acquire a majority stake in the reorganized telecom firm. The Hutchison/ST Telemedia transaction was the culmination of a good faith auction process and related negotiations among Global Crossing, its creditor groups, Hutchison/ST Telemedia and other parties that resolved the numerous, complex issues raised by Global Crossing's bankruptcy. The Creditors' Committee firmly believes that this transaction provides the Global Crossing unsecured creditors -- who have suffered severe losses -- with the best means to recoup some of their losses. Under the Hutchison/ST Telemedia transaction, unsecured creditors collectively will be receiving a substantial equity interest in a reorganized Global Crossing. Hutchison and ST Telemedia are highly regarded investors in the global telecommunications industry whose long term goal is to maximize the value of the company's unparalleled global network, and thereby substantially enhance the value of creditor equity interests. The Hutchison/ST Telemedia transaction has been overwhelmingly approved by creditors, and has been confirmed by the bankruptcy court. Virtually all conditions necessary for Global Crossing to emerge successfully from bankruptcy have been satisfied. The only significant regulatory approval needed to complete the transaction is by the Committee on Foreign Investment in the United States ("CFIUS"). "The Creditors' Committee is hopeful that the transaction with Hutchison Telecommunications and Singapore Technologies Telemedia will be approved on a timely basis by CFIUS," said Edward S. Weisfelner, counsel to the Creditors' Committee. Mr. Weisfelner added that: "The Creditors' Committee believes Global Crossing is working diligently and in good faith toward final regulatory approval." The Creditors' Committee is concerned by press reports that purport to characterize the status of what is a dynamic CFIUS review process, and the apparent intervention by third parties expressing an interest in an alternative transaction. All of these parties had a full and fair opportunity to submit a bid during the bankruptcy auction process that extended over many months. Expressions of interest from parties that failed to bid in that process are not now credible and appear intended to scuttle the Hutchison/ST Telemedia transaction. To protect the interests of the unsecured creditors of Global Crossing, the Creditors' Committee intends to take all appropriate actions to ensure that the CFIUS review process is permitted to run its course without interference by any third parties. GLOBAL CROSSING: Releases Special Committee's Fraud Report ---------------------------------------------------------- Pursuant to an order of the U.S. Bankruptcy Court for the Southern District of New York, Global Crossing Ltd. filed with the Court the Report of Investigation of the Special Committee on Accounting Matters of the Company's Board of Directors. The Special Committee on Accounting Matters, whose members are independent directors of the Company, was created in 2002 to investigate and report on allegations made by a former Company employee. The Company anticipates that the materials constituting the Report of Investigation will be available on the Court's Internet site (whttp://www.nysb.uscourts.gov)under Case Number 02-40188 through an account obtained from PACER Service Center at 1-800-676-6856. GOODYEAR TIRE: S&P Ratchets Class A-1 Trust Note Rating to BB- -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' rating on Corporate Backed Trust Certificates Goodyear Tire & Rubber Note- Backed Series 2001-34 Trust's class A-1 certificates on CreditWatch with negative implications. Corporate Backed Trust Certificates Goodyear Tire & Rubber Note- Backed Series 2001-34 Trust is a swap-independent synthetic transaction that is weak-linked to the underlying securities being the Goodyear Tire & Rubber Co.'s 7% notes due March 15, 2028. The CreditWatch placement on this synthetic transaction follows the recent placement of the underlying securities on CreditWatch with Negative implications. RATING PLACED ON CREDITWATCH NEGATIVE Corporate Backed Trust Certificates Goodyear Tire & Rubber Note- Backed Series 2001-34 Trust $43.628 million corporate bond- backed certs Rating Class To From A-1 BB-/Watch Neg BB- DebtTraders reports that Goodyear Tire & Rubber's 7.857% bonds due 2011 (GT11USR1) are trading at 67 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GT11USR1for real-time bond pricing. HOLLINGER INT'L: Amends Debt Arrangements with Hollinger Inc. ------------------------------------------------------------- Hollinger International Inc. (NYSE: HLR) announced that it has repurchased shares of its Class A common stock and redeemed shares of Series E preferred stock from its controlling shareholder, Hollinger Inc. (TSX: HLG) and has revised certain debt arrangements it has in place with Hollinger Inc. These transactions were completed in conjunction with Hollinger Inc. closing a private placement of US$120 million of 11-7/8% Senior Secured Notes due 2011. Contemporaneously with the closing of the private placement, Hollinger International: -- repurchased for cancellation, from one of Hollinger Inc.'s wholly-owned subsidiaries, 2,000,000 shares of Class A common stock of Hollinger International at US$8.25 per share for total proceeds of US$16.5 million; and -- redeemed, from the same subsidiary of Hollinger Inc., pursuant to a redemption request, all of the 93,206 outstanding shares of Series E Redeemable Convertible Preferred Stock of Hollinger International at the fixed redemption price of C$146.63 per share. Proceeds from the repurchase and redemption were offset against debt due from Hollinger Inc.'s subsidiary, resulting in net outstanding debt due to Hollinger International Inc. of approximately US$20.4 million. The remaining debt bears interest at market rates and is subordinated to the Hollinger Inc. Notes (so long as the Notes are outstanding), guaranteed by The Ravelston Corporation Limited, the controlling shareholder of Hollinger Inc., and secured by certain assets of Ravelston. Following a review by a special committee of the Board of Hollinger International comprised entirely of independent directors of all aspects of the transaction relating to the changes in the debt arrangements with Hollinger Inc. and the subordination of this remaining debt, the special committee approved the new debt arrangements, including the subordination. Hollinger International Inc. is a global newspaper publisher with English- language newspapers in the United States, Great Britain, and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator magazine in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. * * * 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. HYPERFEED: Posts Net Losses for Fourth Quarter and Year-End 2002 ---------------------------------------------------------------- HyperFeed Technologies, Inc. (Nasdaq: HYPR), a provider of managed services, financial information and ticker plant technologies to financial institutions, exchanges, value-added distributors and trading professionals reports results for the fourth quarter and year ended December 31, 2002. The Company reported a $2.8 million net loss, or ($.11) per share, for the three months ended December 31, 2002. Excluding the impact of a $2.0 million restructuring charge, the fourth quarter loss would have been $0.8 million, or ($.03) per share compared with a net loss of $0.3 million, or ($.01) per share, for the same period in 2001. Revenue was $4.5 million for the three months ended December 31, 2002 versus $6.2 million for the same period in 2001. For the year ended December 31, 2002, the net loss was $4.6 million, or ($.19) per share. Excluding the same restructuring charge, the net loss would have been $2.6 million, or ($.11) per share versus a net loss of $2.4 million, or ($.13) per share, for 2001. Revenue was $19.8 million for the year 2002 versus $33.3 million for the comparable period in 2001. HyperFeed's cash position at December 31, 2002 was $1.1 million, and increased by $0.5 million since December 31, 2001. According to Jim Porter, HyperFeed's CEO, "Fourth quarter and year-end 2002 numbers reflect the performance of HyperFeed's consolidated data feed offerings to the institutions servicing the retail customer. Those institutions have been negatively impacted over the past several years due to diminished market conditions. In response, HyperFeed has refocused its product and sales strategies to leverage its core ticker plant technologies for servicing exchanges, large financial institutions and content providers. We are confident we will show positive growth in 2003." As of December 31, 2002, Hyperfeed Technologies' liquidity is strained with total current assets at $2,289,172 against total current liability at $3,815,052. About HyperFeed Technologies, Inc. HyperFeed's ticker plant technology and financial exchange managed services are designed specifically to support the delivery of real-time data, data management, data reporting, and value added services for use in distributing and receiving financial content with a competitive edge. Beginning with a comprehensive understanding of the diverse needs of the financial equities industry, the Company applies advanced technologies to the processing, delivery, distribution and access to financial market data. HyperFeedr offers one of the fastest, most complete and reliable managed exchange platform services that can be used with industry-leading APIs, third- party applications or online desktop solutions. For more information, visit HyperFeed's Web site at http://www.hyperfeed.com HYPERTENSION DIAGNOSTIC: Ability to Continue Operations Doubtful ---------------------------------------------------------------- Hypertension Diagnostics, Inc., is engaged in the design, development, manufacture and marketing of proprietary medical devices that it believes non-invasively detect subtle changes in the elasticity of both large and small arteries. Vascular compliance or arterial elasticity has been investigated for many years and clinical studies suggest that a lack of arterial elasticity is an early indicator of vascular disease. The Company is currently marketing three versions of its Product: the HDI/PulseWave, CR-2000 Research CardioVascular Profiling System, the CVProfilor DO-2020 CardioVascular Profiling System and the CVProfilor MD-3000 CardioVascular Profiling System. The CR-2000 Research System is being marketed worldwide, has a medical device CE Mark (CE0123) which allows it to be marketed as a medical device in the European Union and is being marketed "for research purposes only" in the United States (that is, not for screening, diagnosing, or monitoring the treatment of patients). The CVProfilor DO-2020 System is being marketed to primary care physicians and other health care professionals on a "per-patient-tested" rental basis. Utilizing its Central Data Management Facility (the "CDMF"), the Company is able to track utilization of the CVProfilor DO-2020 System in each physician's office and medical clinic and to invoice its physician customers on the number of CardioVascular Profile Reports which they generate each month. Management anticipates that marketing the CVProfilor DO-2020 System under a "per-patient-tested" rental program (as opposed to a capital sale approach) will allow Hypertension Diagnostics to accelerate the rate of Product acceptance in the medical marketplace and should allow physician usage fees to eventually generate the majority of its revenue. However, as of December 31, 2002, the Company had an accumulated deficit of $19,486,099, attributable primarily to research and development and general and administrative expenses. Until it is able to generate significant revenues from its activities, the Company expects to continue to incur operating losses. Total Equipment Sales Revenue for the six months ended December 31, 2002 was $150,388, compared to $293,851 for the six months ended December 31, 2001. This decrease is mainly due to the anticipated revenue shift from the CR-2000 Research System (Equipment Sales) to the CVProfilor DO-2020 System (per-patient- tested rental program). The reason for the shift in strategic focus to the CVProfilor DO-2020 System was: a) FDA 510(k) clearance to market it in the United States on November 1, 2000; and b) the potential practicing physician market is significantly larger than the research market for the CR-2000 Research System. The majority of Company time and attention is now, and will continue to be, focused on expanding CVProfilor DO-2020 System placements and utilization in United States physicians' medical offices and clinics. This shift in strategic focus began in the fourth quarter of fiscal year 2001. Net loss was $1,878,080 and $3,310,427 for the six months ended December 31, 2002 and 2001, respectively. As of December 31, 2002, the Company had cash and cash equivalents of $605,946. Management anticipates that these funds, in conjunction with revenue anticipated to be earned from placements of the CVProfilor DO-2020 Systems, anticipated sales of the CR-2000 Research Systems, as well as anticipated operating cost reductions, are estimated to allow the Company to pursue its business development strategy for approximately the three months following December 31, 2002. At February 1, 2003, it had cash and cash equivalents of approximately $480,000. Revenues from placements of the CVProfilor DO-2020 Systems and sales of the CR-2000 Research Systems are not expected to be sufficient, either alone or together, to provide the Company with sufficient working capital to support operations during the twelve month period following December 31, 2002. These matters raise substantial doubt about Hypertension Diagnostics' ability to continue as a going concern. If it does not receive substantial additional capital in the three months following December 31, 2002, it will be forced to cease operations. If it is forced to cease operations, it will seek to eliminate all operating expenses while it reassesses its strategic options. INBUSINESS: Obtains $2MM Capital Infusion from Treklogic Tech ------------------------------------------------------------- InBusiness Solutions Inc. (TSX Venture: BIZ.T) entered into an agreement with TrekLogic Technologies Inc. (TSX Venture: TKI) regarding an equity private placement of $2,000,000 in gross proceeds. Pursuant to the Funding, InBusiness will issue 30,000,000 equity units as follows: - $500,000; 10,000,000 common shares at $0.05 per share and 10,000,000 common share warrants where one warrant plus $0.10 will entitle the holder to acquire one share for a period of twenty-four (24) months from the Closing Date; and - $1,500,000; 20,000,000 common shares at $0.075 per share and 20,000,000 common share warrants where one warrant plus $0.10 will entitle the holder to acquire one share for a period of twenty-four (24) months from the Closing Date. Currently, InBusiness has 18,485,807 common shares issued and outstanding. Pursuant to the agreement, TrekLogic will provide InBusiness with an immediate $500,000 secured working capital loan in the form of a 12% convertible debenture on the terms noted above. Subject to TrekLogic closing an equity funding, a further $1,500,000, 12% convertible debenture on the terms noted above, will be advanced to the Company prior to March 31, 2003. Shareholder approval is required to permit the contemplated transaction to close. The common shares issueable on conversion of the debenture and exercise of the warrants will then be subject to a Tier 1 Value Escrow which releases escrowed stock at various times over an 18 month period. Failure to secure shareholder approval will result in the convertible debenture becoming due and payable on May 31, 2003. As previously disclosed, the past twelve months have been a restructuring year for the Company which has moved aggressively to optimise its cost structure, dispose of assets and businesses unrelated to the core Information Technology business and recapitalize the business operations. As part of the restructuring, significant changes have been made to the management and Board of Directors. Advisors, including investment bankers, were engaged to assist in sourcing and evaluating options that would provide optimal value for the Company that would best protect the interests of creditors, shareholders, employees, consultants and customers alike. After reviewing various options, the TrekLogic investment was determined by the Board of Directors, management and advisors to be the option that was best for all stakeholders. The core IT services operations of InBusiness have been consistently profitable from their inception. The financial difficulties experienced by InBusiness over the past 24 months were the direct result of a business strategy that expanded the Company into select media and dot-com based activities. The current management team and Board are fully committed to the core IT services business and have worked hard with all of our employees, consultants and clients in executing a successful restructuring. This private placement will significantly improve the immediate working capital position of InBusiness and provide capital for continued growth. On receipt of the $500,000 working capital loan, the Board of Directors of InBusiness will, subject to regulatory approvals, immediately appoint John McKimm as a Director of InBusiness and subsidiary companies to fill an immediate vacancy created by the passing of Director, David Jolley. As a result of closing the $2,000,000 financing, and upon shareholder approval and conversion to InBusiness shares, TrekLogic will have a controlling shareholding in InBusiness. John McKimm, Chairman and CEO of TrekLogic, states, "InBusiness fits well with TrekLogic's business strategy. TrekLogic has been looking to add an Ottawa base, and InBusiness certainly meets all our requirements. The business mix is very similar and we expect significant synergies to result during the coming year." Mark Quigg, President of InBusiness, states, "Mr. McKimm is very familiar with InBusiness. He was active with our Company from 1987 through 2000 as a Director and Advisor. He left the Board of Directors with the advent of our media and dot-com strategy. We are pleased to be working with Mr. McKimm and TrekLogic, and believe the combination has the potential to create significant value for our shareholders, employees, consultants and clients and provide InBusiness with a strong financial and operational base from which to grow." Conditional regulatory approval has been received for the funding. Final approval is subject to shareholder approval, expected to be obtained over the period to April 30, 2003. Coincident with reaching the agreement with TrekLogic, the Company has concluded a Forbearance agreement with its primary banker effective to May 31, 2003 when it is expected that further arrangements will be made to repay all outstanding debt with the Bank of Montreal. Negotiations are ongoing with one other significant creditor. InBusiness is an established IT solutions and services company that delivers technology solutions in business intelligence, Oracle applications, systems integration and wireless/portal applications. With a team of over 160 IT professionals, InBusiness' clients include Fortune 500 corporations and government departments located in both Canada and the United States. For more information on InBusiness' IT solutions and services, please contact the Company's web site at http://www.inbusiness.comor telephone (877) 761-9436. TrekLogic is an Information Technology Services company providing software solutions and IT contract staffing services to a high profile client base in Canada and the United States. The software solutions business is primarily in the U.S. and is built around a number of high value-added specialty practice areas where TrekLogic has a competitive advantage, either due to specialized expertise or proprietary software tools used in the provision of services. The IT contract staffing business is focused on the Toronto and Ottawa markets. TrekLogic has a history of strong profitability with a debt-free balance sheet and a positive working capital position of $1,449,142 at September 30, 2002. TrekLogic's working capital position as at December 31, 2002 was further improved to $1,809,675. Pre-tax profitability for the year ending September 30, 2002 was $1,704,969 or 26.3% of revenues, translating to $0.08 per common share. Pre-tax profitability for the first quarter ending December 31, 2002 was $395,153 or 18.3% of revenue, translating to $0.018 per common share. The first quarter is traditionally TrekLogic's weakest quarter due to the Christmas season. Tax loss carryforwards, from companies acquired, eliminate any requirement to pay taxes. For more information on TrekLogic, please contact the TrekLogic web site at http://www.TrekLogic.com. INSILCO HOLDING: Judge Carey Approves Asset Sales ------------------------------------------------- Insilco Holding Co. announced that following a hearing held March 7, 2003 before the U.S. Bankruptcy Court for the District of Delaware, Bankruptcy Judge Kevin J. Carey signed orders approving the going concern sales of substantially all of the assets of the Company's three business segments. "We are extremely pleased with the progress being made relative to the sale of the company's assets," said David A. Kauer, President and Chief Executive Officer. "We can now focus on the orderly transition of substantially all of the assets of our three business segments to their new owners." The Bankruptcy Court approved the sale of the Company's going concern assets pursuant to previously announced contracts. Specifically: * Amphenol Corporation emerged as the successful bidder in a competitive auction for the majority of Insilco Technologies, Inc.'s custom assembly business assets for approximately $14 million, subject to closing adjustments. * Bel Fuse Ltd. will purchase the passive components business for approximately $35 million; * SRDF Acquisition Company LLC, a private investor group, will purchase the stamping assets for approximately $13 million; and * LL&R Partnership, a private investor group, will purchase the North Myrtle Beach custom assembly business for approximately $1.7 million. * Insilco Technologies, Inc. has also agreed to sell the Ireland-based custom assembly business to that facility's general manager, Mr. Stephen Bullock, under terms that return approximately $850,000 to the Insilco entities. The closing of the transactions remain subject to, among other things, customary closing conditions. Insilco Holding Co., and certain of its domestic subsidiaries, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (Bankr. Del. Case No. 02-13672) on December 16, 2002, with the stated intention to facilitate the planned sales of the company's assets as going concerns. At the March 7, 2003 hearing, counsel to the Insilco Debtors, counsel to the agent for the Debtors' senior secured lender group, and counsel to the official committee of unsecured creditors informed the Bankruptcy Court that a tentative agreement had been reached to settle the creditors' committee's motion for appointment of an operating trustee or an examiner; if that settlement is consummated, the creditors' committee will withdraw its motion, with prejudice. The creditors' committee also informed the Court at the hearing that it was withdrawing its objections to the proposed sales. The proposed settlement among the Company, the Debtors' senior secured lender group and the creditors' committee also sets forth the general terms for an anticipated Chapter 11 plan of liquidation that would seek to distribute remaining assets to unsecured creditors. About Insilco Holding Co. Insilco Holding Co., through its wholly-owned subsidiary Insilco Technologies, Inc., is a leading global manufacturer and developer of a broad range of magnetic interface products, cable assemblies, wire harnesses, high-speed data transmission connectors, power transformers and planar magnetic products, and highly engineered, precision stamped metal components. Insilco maintains more than 1.5 million square feet of manufacturing space and has 21 locations throughout the United States, Canada, Mexico, China, Ireland and the Dominican Republic serving the telecommunications, networking, computer, electronics, automotive and medical markets. For more information visit our sites at http://www.insilco.comor http://www.insilcotechnologies.com. INSILCO: Bel Acquisition of Passive Components to Close by March ---------------------------------------------------------------- Bel Fuse Inc. (Nasdaq:BELFA) (Nasdaq:BELFB) announced that on March 7, 2003, the United States Bankruptcy Court, District of Delaware approved the Company's previously announced acquisition of the passive components group from Insilco Technologies, Inc. Subject to certain customary procedures, Bel currently expects the acquisition to be completed before the end of March 2003. On December 16, 2002, Bel announced a definitive agreement to acquire the assets of the passive components business from Insilco Technologies, Inc. for approximately $35 million in cash and the assumption of certain liabilities. The agreement proposed to acquire the assets of Insilco Technologies subsidiaries Stewart Connector Systems, Inc., InNet Technologies, Inc., and Signal Transformer Co., Inc. Insilco's passive components business designs, manufactures and sells transformers and connectors, among other products. As Insilco disclosed in its 10-Q for the period ended September 2002, net sales for its passive components segment during the nine month period ended September 27, 2002 were $52.6 million. About Bel Bel -- http://www.BelFuse.com-- and its subsidiaries are primarily engaged in the design, manufacture and sale of products used in networking, telecommunications, high speed data transmission, automotive and consumer electronics. Products include magnetics and connectors for voice and data transmission, fuses, DC/DC converters, delay lines and hybrid circuits. The Company operates facilities around the world. KAISER ALUMINUM: Summit Purchase Agreement Gets Court Nod --------------------------------------------------------- In connection with the sale of their interests in the Kaiser Center, Kaiser Aluminum Corporation and its debtor-affiliates sought and obtained Court approval for an Agreement of Purchase and Sale dated October 16, 2002, as amended on November 19, 2002, with Summit Commercial Properties, Inc. The Debtors will sell the Kaiser Center assets to Summit free and clear of liens, claims and encumbrances, except for certain permitted liens. The salient terms of the purchase agreement include: A. Property Interests To Be Sold (1) The fee simple interest in the Kaiser Center grounds; (2) All lease interests of Kaiser Aluminum & Chemical Corporation, Kaiser Center, Inc. and Alwis Leasing, Inc. with respect to the Kaiser Center; (3) The Parking Lot; (4) The Zenith Note and the ReProp Note; and (5) The related security agreements and documentation and all permits, licenses, contracts, personal property, cash, receivables and security deposits related to the operation of the Kaiser Center. B. Purchase Price Summit will pay $65,600,000. Of that amount, $3,100,000 will be deposited before the closing. The remainder will be payable at closing. C. Due Diligence Periods Summit is allowed certain property and title due diligence periods, each of which is anticipated to expire soon. Summit has waived the financing conditions in the Agreement. D. "As-Is" Condition Summit will take the Kaiser Center Assets in "as-is" condition, with all faults. This includes the physical condition of the property, as well as the terms, covenants, conditions and limitations of all leases, contracts, notes, deeds of trust and security interests being acquired. E. Assumed Executory Contracts & Unexpired Leases The Debtors will assume and assign to Summit all of their rights, title and interests in and to all executory contracts and unexpired leases related to the Kaiser Center Assets. Summit may also elect to have one or more of the leases rejected by notifying the Debtors in writing to that effect before the closing. F. Permitted Liens (a) The First Deed of Trust dated as of August 15, 1983, made by Newkirk Kalan and Kaiser Center Inc. for the benefit of The Variable Annuity Life Insurance Company to secure a $79,575,000 promissory note; (b) The Second Deed of Trust dated as of August 15, 1983, made by Newkirk Kalan and Kaiser Center for the benefit of American General Life Insurance Company of Delaware to secure a $9,000,000 promissory note; (c) The Third Deed of Trust dated August 15, 1983, which encumbers the Kaiser Center Inc.'s and Newkirk Kalan's interests in the Kaiser Center; (d) The Fourth Deed of Trust dated August 15, 1983 which encumbers Newkirk's interests in the Kaiser Center; (e) The subordination, non-disturbance and attornment agreements dated August 15, 1983 by and among: (i) Variable Annuity, Alwis, Kaiser Aluminum, Kaiser Center and Newkirk Kalan; (ii) Variable Annuity, Alwis, Kaiser center and Newkirk Kalan; (iii) American General, Alwis, Kaiser Aluminum, Kaiser Center and Newkirk Kalan; and (iv) Alwis, Kaiser Center and Newkirk Kalan. (f) Any security interest related to the liens; (g) The effect of any recorded leasehold interest in respect to the Kaiser Center assets; and (h) All other encumbrances deemed accepted by Summit. G. Claims Indemnity Summit must hold and save the Debtors harmless from any and all loss, cost, damage, injury or expense arising directly or indirectly out of or as a result of the rejection of the leases, including but without limitation, any claim, demand or liability to Newkirk Kalan or to any tenant under any tenant leases in the building. At the closing of the sale transaction, Summit will deliver to the Debtors a Claims Indemnity. The Claims Indemnity will be secured by a junior lien on the Kaiser Center assets. (Kaiser Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) LA QUINTA: Bank Lenders Agree to Relax Financial Covenants ---------------------------------------------------------- Information obtained from http://www.LoanDataSource.comshows that La Quinta Corporation entered into an amendment to its $225 million Credit Agreement dated as of June 6, 2001, with Canadian Imperial Bank of Commerce, as administrative agent for CIBC, Inc., and Fleet National Bank. The amendment provides for: (1) relaxation of the maximum total leverage ratio: Maximum Total Testing Period Leverage Ratio -------------- -------------- 4th Fiscal Quarter, Fiscal Year 2002 4.60:1.00 1st Fiscal Quarter, Fiscal Year 2003 4.85:1.00 2nd Fiscal Quarter, Fiscal Year 2003 5.00:1.00 and thereafter (2) modification of a minimum fixed charge ratio covenant: La Quinta agrees not to permit the ratio of (i) Consolidated EBITDA minus the Capital Expenditure Reserve to (ii) Fixed Charges for any four consecutive Fiscal Quarter period ending on the last day of any Fiscal Quarter to be less than: (a) so long as no Fixed Income Refinancing has been consummated, 1.55:1.00, (b) if a Fixed Income Refinancing in a principal amount of at least $150,000,000 but less than $200,000,000 has been consummated, 1.45:1.00, (c) if a Fixed Income Refinancing in a principal amount of at least $200,000,000 but less than $250,000,000 has been consummated, 1.40:1.00 and (d) if a Fixed Income Refinancing in a principal amount of at least $250,000,000 has been consummated, 1.35:1.00. (3) modification of a minimum interest coverage ratio covenant: La Quinta agrees not to permit the ratio of (i) Consolidated EBITDA to (ii) Consolidated Net Interest Expense for any four consecutive Fiscal Quarter period ending on the last day of any Fiscal Quarter to be less than: (a) so long as no Fixed Income Refinancing has been consummated, 2.50:1.00, (b) if a Fixed Income Refinancing in a principal amount of at least $150,000,000 but less than $200,000,000 has been consummated, 2.30:1.00, (c) if a Fixed Income Refinancing in a principal amount of at least $200,000,000 but less than $250,000,000 has been consummated, 2.20:1.00 and (d) if a Fixed Income Refinancing in a principal amount of at least $250,000,000 has been consummated, 2.10:1.00. (4) elimination of the minimum lodging EBITDA covenant; and (5) an agreement to limit capital expenditures to $80,000,000 to $95,000,000 depending on the amount owed to the lenders and and the holders of the 7.82% Senior Notes due September 2026 and the 7.51% Medium Term Notes due 2003. The facility will be reduced from $225 million to $175 million and may be further reduced by up to $50 million, based upon the effect of a future financing. Furthermore, the facility, which had been scheduled to mature on May 31, 2003, subject to certain extension rights, will now mature on December 31, 2003, subject to a further extension under certain circumstances. The interest rates and other pricing under the credit facility remain unchanged. "We are pleased to announce the amendment to our revolver," said David L. Rea, Executive Vice President and Chief Financial Officer. "We appreciate the strong support provided by our lenders as we continue to manage through a difficult lodging environment." About La Quinta Corporation Dallas-based La Quinta Corporation (NYSE: LQI), a leading limited service lodging company, owns, operates or franchises over 350 La Quinta Inns and La Quinta Inn & Suites in 33 states. Today's news release, as well as other information about La Quinta, is available on the Internet at http://www.LQ.com. * * * As reported in Troubled Company Reporter's Sept. 9, 2002 edition, Standard & Poor's revised its outlook on La Quinta Corp., to stable from negative. The action followed the lodging company's improved credit measures resulting from its successful asset-sale program and use of proceeds towards debt reduction. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating and other ratings on the Dallas, Texas, company. Debt outstanding totaled $812 million at June 30, 2002, down from $1 billion at the end of 2001. As of June, the company had reduced the size of its health-care assets to $51 million (net of impairments) and had used all proceeds to reduce debt. LEGACY HOTELS: Initiates Amendments to Management Structure ----------------------------------------------------------- Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) announced a number of changes to its management structure. In addition, the Trustees are proposing changes to Legacy's Declaration of Trust to be considered at its Annual and Special Meeting of Unitholders being held on April 24, 2003 at The Fairmont Royal York in Toronto. Neil J. Labatte has been appointed President and Chief Executive Officer. Mr. Labatte has been with Legacy since 1999 as President and Chief Operating Officer and continues to hold the office of Senior Vice President, Real Estate of Fairmont Hotels & Resorts Inc. (TSX/NYSE: FHR). The Trustees have also determined that the appointment of a full-time Chief Financial Officer is warranted. An executive search is underway for this position. Commenting on the announcements, Richard A. Goldstein, Legacy's Chairman, said, "Given Legacy's revenue and asset growth since its inception in 1997, the Trustees felt it was important to have a CEO devoting the majority of his time to Legacy as well as a full-time CFO. An important part of this consideration was to ensure that the synergistic benefits associated with the relationship between Legacy and FHR remained intact." In addition, the Trustees are recommending that unitholders approve amendments to the Declaration of Trust that would change the number of Trustees from a fixed number of seven to a minimum of five and a maximum of eight. This proposed change would provide the opportunity to increase the number of Independent Trustees from four to five and therefore broaden the board's scope of experience and breadth of expertise. Although FHR, Legacy's largest investor with a 35% interest, is entitled to appoint three Trustees pursuant to the Declaration of Trust, FHR has advised that it intends to appoint only two at this time. FHR reserves the right to appoint another nominee in the future. Mr. Fatt, Legacy's Vice Chairman, will continue to serve as a Trustee. The terms of Mr. Cahill and Mr. Patava expire at the close of the Annual and Special Meeting of Unitholders and Mr. Labatte will be appointed a Trustee at that time. Legacy is Canada's premier hotel real estate investment trust with 22 luxury and first-class hotels and resorts in Canada and one in the United States. The portfolio includes landmark properties such as Fairmont Le Chateau Frontenac, The Fairmont Royal York and The Fairmont Empress. The management companies of FHR operate all of Legacy's properties. At Dec. 31, 2003, the Company's total current liabilities eclipsed total current assets by about C$130 million. LEGACY HOTELS: First Quarter Distribution Will Be On April 20 ------------------------------------------------------------- Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) announced a first quarter distribution of $0.185 to unitholders of record as of March 31, 2003. Payment will be made on or about April 20, 2003. This distribution is consistent with quarterly distributions made throughout 2002. Legacy is Canada's premier hotel real estate investment trust with 22 luxury and first-class hotels and resorts in Canada and one in the United States, consisting of over 10,000 guestrooms. The portfolio includes landmark properties such as Fairmont Le Chfteau Frontenac, The Fairmont Royal York and The Fairmont Empress. The management companies of Fairmont Hotels & Resorts Inc. operate all of Legacy's properties. LEHMAN ABS CORP: Fitch Ratchets Ratings on Classes M-2 & B-1 ------------------------------------------------------------ Fitch Ratings takes rating actions on the following residential mortgage-backed securitization: Lehman ABS Corporation, series 1998-1 -- Class A-1 ($14,459,526 outstanding) is affirmed at 'AAA'; -- Class M-1 ($9,594,810 outstanding) downgraded to 'BBB' from 'A' and removed from Rating Watch Negative. -- Class M-2 ($1,872,007 outstanding) downgraded to 'CCC' from 'B'; -- Class B-1 ($927,474 outstanding) downgraded to 'D' from 'CCC'. This action is the result of a review of the level of losses expected and incurred to date and the current high delinquencies relative to the applicable credit support levels. As of the Feb. 25, 2003 distribution: Lehman ABS Corp., series 1998-1 remittance information indicates that approximately 7.48% of the current pool is over 90 days delinquent and cumulative losses are $2,982,598 or 2.19% of the initial pool. Currently, class B-1 has 0% of credit support, class M-2 has 3.45% of credit support remaining, class M-1 has 10.42% of credit support remaining, and class A-1 has 46.15% of credit support remaining. LEHMAN BROS: Fitch Downgrades 2000-LLF C7 Class L & M to BB+/B+ --------------------------------------------------------------- Fitch Ratings downgrades Lehman Brothers floating-rate commercial mortgage pass-through certificates, series 2000-LLF C7 $46.9 million class L to 'BB+' from 'BBB-' and $25.2 million class M to 'B+' from 'BB-'. In addition, the classes have been removed from Rating Watch Negative. The actions are due to a decline in the operating performance of the Boykin Hotel Portfolio loan. The Fitch adjusted debt service coverage ratio for the trailing twelve months ended January 31, 2003 was 1.42 times compared to 1.65x at issuance. For more information, please refer to the press release dated December 2, 2002. MAGELLAN HEALTH: Files for Chapter 11 Protection in S.D.N.Y. ------------------------------------------------------------ Magellan Health Services, Inc., (OCBB:MGLH) has reached agreement on the terms of a proposed financial restructuring plan with a number of its key creditors. This agreement is with creditors holding approximately 52% of Magellan's senior notes, approximately 35% of Magellan's senior subordinated notes, approximately 45% of Magellan's senior secured bank debt, as well as with the Company's largest customer, Aetna. Implementation of the proposed restructuring plan will result in a viable long-term capital structure for Magellan that will serve to enhance its business and reduce Magellan's more than $1 billion of overall indebtedness by approximately $500 million. In order to implement the financial restructuring, the Company and substantially all of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The restructuring plan is to be effected pursuant to a Chapter 11 Plan of Reorganization, which the Company has filed with the Bankruptcy Court Tuesday. Magellan stated that it is operating as usual, without interruption, and that it has sufficient cash to fund all of its operating obligations during the reorganization process, including obligations to employees, providers and customers. Magellan is seeking Bankruptcy Court approval to pay in the ordinary course all pre-Chapter 11 obligations to employees, providers and customers and is optimistic that this approval will be granted shortly. The Company has determined that the most expeditious manner in which to effect the restructuring is through the Chapter 11 process. Based upon the creditor support that already has been obtained, the Company believes that it can consummate the restructuring and emerge from Chapter 11 by the end of the third quarter of this calendar year. The Company's Plan of Reorganization contemplates an equity investment in reorganized Magellan in the amount of $50 million pursuant to a rights offering to be made available to unsecured creditors. The Company has obtained a commitment from certain holders of its senior subordinated notes to purchase any portion of the $50 million offering not subscribed to by other creditors. The proceeds of this equity investment will be available to the Company for general corporate purposes. Steven J. Shulman, chief executive officer of Magellan Health Services, stated, "Our plan will reduce Magellan's debt substantially and will provide a healthy financial foundation for our business operations. I am also delighted by the commitment of those creditors who will make an additional $50 million equity investment in our Company upon our emergence from reorganization. Once we complete our restructuring, not only will we have a sound capital structure, we will also free up an enormous amount of management time, energy and attention that we can reinvest in managing our business. We are looking forward to all we can accomplish once our debt concerns are behind us." "Magellan is the market leader in managed behavioral health care. It has outstanding assets and employees that make it a valuable long-term partner to customers, providers and members, and we believe the Company can be even more valuable in the future," said Saul E. Burian, director of Houlihan Lokey Howard & Zukin, which is the financial advisor to the Ad Hoc Committee of Noteholders. "The financial restructuring plan, which was unanimously supported by the committee of Magellan's noteholders, reflecting the confidence of the committee, will enable Magellan to capitalize on its significant business opportunities and should assure its long-term viability." "We support Magellan's efforts to reduce its debt and strengthen its long-term financial position," said Mark Bertolini, Aetna's senior vice president of specialty products. "We have extended our partnership with Magellan, and believe that these efforts to regain momentum are important to our continued collaboration. At the same time, with regard to customer service, Magellan is meeting or exceeding our service targets. Aetna also strongly supports Magellan's efforts to protect the interests of providers by seeking authority to pay them in the ordinary course of business." Under the proposed restructuring plan, the Company will reduce its more than $1 billion of indebtedness by more than $500 million. Holders of the Company's $625 million of 9% Senior Subordinated Notes due 2008 will receive, in satisfaction of their claims, substantially all of the common stock of the reorganized entity. Holders of general unsecured claims (other than senior note claims and subordinated note claims) will receive, in satisfaction of their claims, common stock and new senior subordinated unsecured notes of the reorganized entity as set forth in the Plan of Reorganization. The existing Series A redeemable preferred stock of the Company will be cancelled and the holders thereof will receive approximately 2.0% of the common stock of the reorganized entity, as well as warrants to purchase a like number of shares of common stock. The existing common stock of the Company will also be cancelled and the holders thereof will receive approximately 0.5% of the common stock of the reorganized entity, as well as warrants to purchase a like number of shares of common stock. Pursuant to the restructuring, the Company's secured bank debt, consisting of term loans of approximately $115 million, revolver borrowings of approximately $45 million and outstanding letters of credit of approximately $75 million, will be converted to secured term loans having maturities of November 30, 2005. Holders of the Company's $250 million of 9 3/8% Senior Notes due 2007 will exchange their Notes and all accrued and unpaid interest thereon for new senior subordinated unsecured notes in an equal amount, which will mature on November 15, 2007. As part of, and subject to, consummation of the restructuring plan, Aetna and Magellan have agreed to renew their contract, pursuant to which the Company will continue as the provider of behavioral health care to Aetna's members for an additional two years, through December 31, 2005. Pursuant to the restructuring plan, the Company will pay $15 million of its current $60 million obligation to Aetna upon emergence from Chapter 11 and provide Aetna with an interest-bearing note for the balance, which will mature on December 31, 2005. Additionally, the contract may be extended by Aetna at its option through December 31, 2006, in which event, one-half of the Note will be payable on December 31, 2005, and the remainder will be payable on December 31, 2006. The effectiveness of the restructuring is conditioned on confirmation and consummation of the Plan of Reorganization in accordance with the U.S. Bankruptcy Code. Gleacher Partners LLC is serving as financial advisor to Magellan Health Services, and Weil, Gotshal & Manges LLP is bankruptcy counsel to Magellan Health Services. Headquartered in Columbia, Md., Magellan Health Services (OCBB: MGLH), is the country's leading behavioral managed care organization, with approximately 68 million covered lives. Its customers include health plans, government agencies, unions, and corporations. MAGELLAN HEALTH: Case Summary & 50 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Magellan Health Services, Inc. 6950 Columbia Gateway Drive Suite 400 Columbia, Maryland 21046 Telephone (410) 953-1000 Fax (410) 953-5200 Bankruptcy Case No.: 03-40515 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CMG Health of New York, Inc. 03-40514 Advantage Behavioral Systems, Inc. 03-40516 AdvoCare of Tennessee, Inc. 03-40517 AGCA New York, Inc. 03-40518 AGCA, Inc. 03-40519 Alliance Health Systems, Inc. 03-40520 Allied Specialty Care Services, LLC 03-40521 Care Management Resources, Inc. 03-40522 Charter Alvarado Behavioral Health System, Inc. 03-40523 Charter Bay Harbor Behavioral Health System, Inc. 03-40524 Charter Behavioral Health System at Fair Oaks, Inc 03-40525 Charter Behavioral Health System at Hidden Brook, 03-40526 Charter Behavioral Health System at Potomac Ridge, 03-40527 Charter Behavioral Health System of Columbia, Inc. 03-40528 Charter Behavioral Health System of Dallas, Inc. 03-40529 Charter Behavioral Health System of Delmarva, Inc. 03-40530 Charter Behavioral Health System of Lake Charles, 03-40531 The Charter Behavioral Health System of Northwest 03-40535 Charter Behavioral Health System of Paducah, Inc. 03-40536 Charter Behavioral Health System of Toledo, Inc. 03-40537 Charter Behavioral Health System of Lafayette, Inc 03-40538 Charter Centennial Peaks Behavioral Health System, 03-40539 Charter Fairmount Behavioral Health System, Inc. 03-40540 Charter Fenwick Hall Behavioral Health System, Inc 03-40541 Charter Forest Behavioral Health System, Inc. 03-40542 Charter Grapevine Behavioral Health System, Inc. 03-40543 Charter Hospital of Mobile, Inc. 03-40544 Charter Hospital of Santa Teresa, Inc. 03-40545 Charter Hospital of St. Louis, Inc. 03-40546 Charter Linden Oaks Behavioral Health System, Inc. 03-40547 Charter Medical-Clayton,County,Inc. 03-40548 Charter Lakeside Behavioral Health System, Inc. 03-40549 Charter Medical-Long Beach, Inc. 03-40550 Charter Medical of East Valley, Inc. 03-40551 Charter Medical of Puerto Rico, Inc. 03-40552 CMCI, Inc. 03-40556 CMFC, Inc. 03-40557 CMG Health, Inc. 03-40558 Continuum Behavioral Healthcare Corporation 03-40559 Correctional Behavioral Solutions of Indiana, Inc. 03-40560 Correctional Behavior Solutions of New Jersey 03-40561 GPA Pennsylvania, Inc. 03-40563 Green Spring Health Services, Inc. 03-40564 Green Spring of Pennsylvania, Inc. 03-40565 Group Plan Clinic, Inc. 03-40566 Hawaii Biodyne, Inc. 03-40567 Human Affairs International of Pennsylvania, Inc 03-40568 iHealth Technologies, LLC 03-40569 Magellan CBHS Holdings, Inc. 03-40577 Magellan HRSC Inc. 03-40578 Premier Holdings, Inc. 03-40600 Vivra, Inc. 03-40601 Westwood/Pembroke Health System Limited Partnership 03-40602 Type of Business: Magellan Health Services, Inc., through its subsidiaries, is the nation's largest provider of behavioral managed healthcare services. Chapter 11 Petition Date: March 11, 2003 Court: Southern District of New York Judge: Prudence Carter Beatty Debtors' Counsel: Stephen Karotkin, Esq. Allison R. Axenrod, Esq. Amrita Prabhakar Barth, Esq. Weil, Gotshal & Manges LLP, 767 Fifth Avenue New York, New York 10153 Telephone (212) 310-8000 Fax (212) 310-8007 Total Assets: $998,917,000 Total Debts: $1,559,239,000 Debtor's 50 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Subordinated Note Holders Senior $625,000,000 c/o Bank One Global Subordinated Corporate Trust Services Notes 1111 Polaris Parkway, Ste. 1K Columbus, OH 43240 Attn: Robert H. Major 614-248-6334 Senior Note Holders Senior Notes $250,000,000 c/o HSBC Bank USA 452 5th Avenue New York, NY 10018 Attn: Robert A. Conrad 212-525-1314 Aetna U.S. Healthcare Customer Payable $62,301,083 980 Jolly Road Bluebell, PA 19422 Attn: John Burns 215-775-5085 The Bank of New York Unsecured Bond $6,420,000 Trust Company of Debt Florida, N.A., as Trustee 600 N. Pearl Street Suite 420 Dallas, TX 75201 Attn: Kristel Richards (214) 880-8222 State of Ohio Unclaimed Property $4,336,035 Division of Unclaimed (Contingent) Property 77 South High Street 20th Floor Columbus, OH 43215-6108 Attn: Jessie Baker 614-466-7281 Commonwealth of Virginia Customer Payable $4,107,364 Office of Health Benefit (Contingent) Programs 101 North Fourteenth Street Richmond, VA 23219 Attn: George Gibbs 804-786-0350 State of Delaware Unclaimed Property $3,705,584 Division of Unclaimed (Contingent) Property Bureau of Unclaimed Property P.O. Box 8931 Wilmington, DE 19899 Attn: Diane Breighner 302-577-8205 Humana Florida Customer Payable $3,646,436 3501 Southwest 160 Avenue Miramar, FL 33027 Attn: Balbino Vazquez 305-626-5343 Internal Revenue Service Tax Withholdings $2,786,000 Department of Treasury (Contingent) Kansas City, MO 6499 Attn: Bonnie Reekers 859-669-3325 State of Maryland State Economic $2,535,980 Department of Business Incentive & Economic Development (Contingent) 217 East Redwood Street 22nd Floor Baltimore, MD 21202 Attn: D. Gregory Cole 410-767-6376 CareFirst Blue Cross Employee Medical $2,158,210 Blue Shield Benefits 10455 Mill Run Circle (Subject to Setoff) Owings Mill, MD 21117 Attn: Paul Chopper 410-998-7534 Empire Blue Cross Customer Payable $2,100,000 Blue Shield 11 West 42nd Street New York, NY 10036 Attn: Mike Paduano 212-286-3409 Regence Blue Cross Customer Payable $1,830,000 Blue Shield 1800 9th Avenue P.O. Box 21267 Mailstop S1012 Seattle WA 98111-3267 Attn: Eric Tanaka 206-626-6224 Independence Blue Cross Customer Payable $1,649,853 901 Market Street (Contingent) Philadelphia, PA 19107 Attn: Jeff Danilo 215-241-2453 BCBS Inroads Illinois Customer Payable $1,360,281 300 East Randolf St. 27th Floor Chicago, IL 60601 Attn: Janice Knight 312-653-6726 Devereux Hospital Provider Payable $1,313,195 Victoria Texas 1150 Devereux Drive League City, TX 77573 Attn: Mildred Knutson 713-575-8271 Tennessee Christian Provider Payable $1,225,269 Medical Center 500 Hospital Drive Building 2 Madison, TN 37115 Attn: Pam Smith 615-860-6427 Peninsula Hospital Provider Payable $1,207,931 P.O. Box 1999 Louisville, TN 37777 Attn: Darlene Kelly 856-970-1295 State of Maryland Unclaimed Property $1,094,554 Department of Business (Contingent) and Economic Development 301 West Preston Baltimore, MD 21201 Attn: Lynn Hall 800-782-7383 Crozer Taylor Springfield Provider Payable $1,038,659 2600 W. 9th St. Chester, PA 19013 Attn: Kevin Capeto 610-874-5257 Cherokee Health Systems Provider Payable $1,000,000 6350 W. Andrew Johnson Hwy. Talbott, TN 37877 Attn: Jeff Howard 423-586-5031 Meadows Psychiatric Center Provider Payable $941,189 132 Meadows Drive Centre Hall, PA 16828-6828 Attn: Alan Peters 814-364-2161 Central Montgomery Provider Payable $928,298 MH MR Center 1100 Powell Street Norristown, PA 19401 Attn: Debbie Hunter 610-277-4600 Blue Cross Blue Shield Customer Payable $868,000 of Vermont 1 East Road P.O. Box 186 Montpelier, VT 05601-0186 Attn: Donald George 802-371-3252 Community Health Network, CT Customer Payable $850,000 290 Pratt Street (Subject to Setoff) Meridien, CT 06450 Attn: Anthony Bruno 203-237-3118 Centennial Medical Center Provider Payable $788,444 HCA Health Services of TN 3055 Lebanon Bldg. 1 Fl 4 Nashville, TN 37214 Attn: Tim Scarvey 615-886-4911 AT&T Customer Payable $750,000 295 N. Maple Avenue Basking Ridge, NJ 07920 Attn: Marilyn King 908-221-2000 Butler Hospital Providence Provider Payable $740,165 P.O. Box 2499 Providence, RI 02906 Attn: David Lonardo 401-455-6200 Universal Health Systems Provider Payable $725,000 367 S. Gulph Drive (Contingent) King of Prussia, PA 19406 (Disputed) Attn: George H. Brunner Jr. 610-768-3300 EPOTEC Trade Payable $700,000 56 W. Main Street, #204 Christiana, DE 19702 Attn: Shirley Haeckl 215-918-0885 Peachford BHS of Atlanta Provider Payable $698,599 2151 Peachford Road Atlanta, GA 40448 Attn: Helen Denhaese 770-455-3200 Youth Villages, Inc. Provider Payable $691,709 5515 Shelby Oaks Drive Memphis, TN 38134 Attn: Pat Lawler 901-252-7665 Parkridge Health Systems Provider Payable $676,007 Brentwood, TN 37027 Attn: Tim Scarvey 615-886-4900 Community Behavioral Health Provider Payable $650,082 2911 Brunswick Road Memphis, TN 38113 Attn: Tara Shields 901-377-4709 Elwyn, Inc. Mainsite Provider Payable $629,111 111 Elwyn Road Elwyn, PA 19063 Attn: Susan Proulx 610-891-2574 Montgomery Co. Emergency Svc. Provider Payable $625,891 50 Beech Drive Norriston, PA 19403 Attn: Bob Bond 610-279-6100 Penndel Mental Health Center Provider Payable $623,664 1517 Durham Road Penndel, PA 19047 Attn: Karen Graff 215-752-1541 Northwestern Institute Provider Payable $622,632 450 Bethlehem Pike Ft. Washington, PA 19034 Attn: Richard Mangano 215-641-5374 Lynn Bertram Legal Claim Unliquidated c/o Wilson & Quint LLP (Contingent) 505 Sansome St., Suite 1800 (Disputed) San Francisco, CA 94111 Attn: Gregory F. Wilson 415-288-6700 David McClane Legal Claim Unliquidated c/o Keefer, Wood, (Contingent) Allen & Rahal (Disputed) 210 Walnut ST. Harrisburg, PA 17108 Attn: Charles H. Rubendall II 717-255-8010 Midtown Mental Health Center Legal Claim Unliquidated c/o David Zager (Contingent) 611 Commerce St., Suite 2909 (Disputed) Nashville, TN 37203 Attn: David Parker Young 615-242-9090 Watershed Legal Claim Unliquidated c/o The Watershed (Contingent) 200 Congress Park Drive (Disputed) Suite 100 Delray Beach, FL 33445 Attn: Jeff Miller 888-814-6840 American Continental Legal Claim Unliquidated Insurance Co. (Contingent) c/o Venable Baetjer & Howard (Disputed) 201 Allegheny Ave. Towson, MD 21285 Attn: John H. Zink III 410-494-6200 MTS Health Partners, Inc. Legal Claim Unliquidated c/o Reboul, MacMurray, (Contingent) Hewitt & Maynard (Disputed) 45 Rockefeller Plaza New York, NY 10111 Attn: Robert Sills 212-841-5700 Berry Network Legal Claim Unliquidated c/o Faruki Ireland & Cox PLL (Contingent) 500 Courthouse Plaza, SW (Disputed) 10 North Ludlow St. Dayton, OH 45402 Attn: Charles J. Faruki 937-227 3705 Dr. Fernando Cabrera Legal Claim Unliquidated c/o Quetglas Law Offices (Contingent) P.O. Box 16606 (Disputed) San Juan, PR 00908 Attn: Jose F. Quetglas Jordan 787-722-0635 Wachovia Bank Legal Claim Unliquidated c/o Haynesworth Sinkler Boyd (Contingent) 1201 Main Street, Suite 2200 (Disputed) P.O. Box 11889 Columbia, SC 29211 Attn: Hamilton Osborne, Jr. 803-779-080 Jane & John Doe Legal Claim Unliquidated c/o Cohen Milstein, (Contingent) Hausfeld & Toll (Disputed) New York Avenue NW West Tower Suite 500 Washington DC 20005-3964 Attn: Stephen Annand 202-408-4600 Jane & John Doe Legal Claim Unliquidated c/o Berger & Montague, PC (Contingent) 1622 Locust Street (Disputed) Philadelphia, PA 19103 Attn: Peter Nordberg 215-875-3000 United States of America Legal Claim Unliquidated c/o United States (Contingent) Department of Justice (Disputed) Commercial Litigation Branch 601 D. Street NW Washington DC 20530 Attn: T. Reed Stephens 202-307-0404 West Penn Allegheny Legal Claim Unliquidated Health System (Contingent) 320 East North Avenue (Disputed) Pittsburgh, PA 15212 Attn: Jerry J. Fedele 412-359-4918 MALLON RESOURCES: Black Hills Completes $53 Million Acquisition --------------------------------------------------------------- Black Hills Corporation (NYSE: BKH) announced it has completed its acquisition of Denver-based Mallon Resources Corporation (OTC Bulletin Board: MLRC). The total cost of the transaction was approximately $53 million, which includes $30.5 million for the October 2002 acquisition of Mallon's debt and the settlement of outstanding hedges. Mallon shareholders received 0.044 of a share of Black Hills common stock for each share of Mallon. Mallon Resources' June 30, 2002 balance sheets show a working capital deficit of about $28.8 million, and a total shareholders' equity deficit of about $7 million. Mallon Resources' proved reserves, as reported on December 31, 2001, were 53.3 billion cubic feet equivalent (BCFE), which was determined based on the year-end 2001 NYMEX price of $2.57 per MMBtu for natural gas. The reserves are located primarily on the Jicarilla Apache Nation in the San Juan Basin of New Mexico and are comprised mostly of natural gas in shallow sand formations. The oil and gas leases of the acquisition total more than 66,500 gross acres (56,000 net), most of which are contained in a contiguous block that is in the early stages of development. Black Hills believes that additional reserves could be recoverable from the shallow sands. More gas could be recoverable from deeper horizons that have yet to be explored but are productive elsewhere in the San Juan Basin. Current daily net production from the Mallon properties is approximately 12 million cubic feet of gas equivalent (MMCFE). Mallon operates 152 of 174 total gas and oil wells, with working interests averaging 90 to 100 percent in most of the wells and undeveloped acreage. The acquisition will increase Black Hills' gas and oil production by nearly 50 percent and more than double proved reserves. Daniel P. Landguth, Chairman and CEO of Black Hills Corporation, said, "We welcome the former Mallon shareholders to Black Hills. The low-risk, shallow gas drilling opportunities make this acquisition an excellent strategic fit. As operator of these properties, we intend to launch a drilling and workover program in the near future, through which we expect to realize additional increases in production later this year. We expect the Mallon acquisition to contribute strongly to earnings in 2004 and beyond, as we fully develop the properties." Landguth said, "We firmly believe that natural gas is the fuel of choice and that U.S. gas demand will remain strong. Our Denver-based marketing subsidiary, Enserco Energy, provides gas marketing and transportation expertise as we increase our presence in the Rocky Mountain region. We look forward to working with the Jicarilla Apache Nation to responsibly develop the gas resources contained beneath these leases." Black Hills Corporation ( www.blackhillscorp.com ) is a diverse energy and communications company. Oil and gas operations, conducted in nine states with a concentration of resources in the Rocky Mountain region, are part of the Black Hills Energy, the integrated energy business unit which generates electricity, produces natural gas, oil and coal and markets energy; Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Black Hills FiberCom, a broadband communications company offering bundled telephone, high speed Internet and cable entertainment services. MATRIA HEALTHCARE: S&P Affirms Low-B Corp. Credit Rating at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Matria Healthcare Inc. and removed Matria's ratings from CreditWatch, where they were placed on September 10, 2002. In late 2002, protracted delays installing new information technology systems and a new packaging line frustrated Matria's efforts to achieve sales and margin targets, and the company violated certain financial covenants under its senior secured bank facility. Matria resolved the covenant violations by replacing the bank facility with a new $35 million two-year senior secured revolving credit line with more flexible financial covenants. And both the IT and packaging systems are now operating successfully. The outlook is stable. As of December 31, 2002, Matria had approximately $119 million of debt outstanding. Marietta, Georgia-based Matria provides disease-state management, telemedicine, and fulfillment services to patients, physicians, and health plans. "Despite a leading niche-market position, Matria's ratings reflect the company's limited scale of operations, somewhat lengthy sales cycle in disease-state management, its position as a small vendor supplying products for larger medical products manufacturers, and an aggressive capital structure," said Standard & Poor's credit analyst Jill Unferth. Partly offsetting these limitations, Matria has acquired businesses during the past few years that have broadened its clinical infrastructure and disease-state management platforms. Employers and managed-care organizations are Matria's targeted clients, and the company has recently signed important new contracts and built a pipeline of several more. Still, Matria's ability to further increase sales and anticipate changing client needs remain important credit factors. Pharmaceutical costs also could continue to pressure margins. Although Matria's recent operating problems are largely resolved, with minimal customer loss, future expansion could reveal unforeseen limitations. In addition, to remain competitive, Matria must stay abreast of changing trends in disease treatment protocols, technologies, pharmaceuticals, medical practices, and reimbursement. MICROFINANCIAL: Engages Triax to Assist in Debt Restructuring ------------------------------------------------------------- MicroFinancial Incorporated (NYSE-MFI), a leader in Microticket leasing and finance, announced its preliminary financial results for the fourth quarter and the year ended December 31, 2002. The Company also announced that it is actively considering various financing, restructuring and strategic alternatives. During the quarter, the Company engaged a financial and strategic advisory firm, Triax Capital Advisors, LLC, to assist in this process. As previously disclosed, as of September 30, 2002, MicroFinancial was in default of certain debt covenants in its credit facility and securitization agreements. The fixed charge coverage covenant that was in default was the result of a $35 million additional allowance reserved against certain dealer receivables, as well as delinquent portfolio assets. The credit facility failed to renew on September 30, 2002, and consequently, the Company was forced to suspend new origination activity as of October 11, 2002. Management received a waiver through April 15, 2003 for the covenant violations in connection with the securitization facility. The Company had obtained a Forbearance and Modification Agreement from the senior credit facility that expired on February 7, 2003. Upon expiration of that Agreement, the loan balance with interest and fees became due and payable immediately per the terms of the Company's credit facility. To date, the Company has fulfilled all of its debt obligations in a timely manner. Based upon the preliminary results for the fourth quarter, the Company continues to be out of compliance with certain debt covenants. Management and its advisors continue to work closely with the Company's lenders to obtain long-term agreements. These events had an adverse effect on the Company's fourth quarter and year to date financial results. Originations in fiscal 2002 were down $37.1 million to $74.0 million as compared to the prior year. Preliminary fourth quarter revenue for the period ended December 31, 2002 decreased 24.0%, or $8.9 million, to $28.0 million compared to $36.9 million last year. The net loss for the quarter was $7.7 million, or ($0.60) per diluted share, as compared with net income of $2.1 million, or $0.16 per diluted share in the prior year's fourth quarter. The decline in net income for the quarter is primarily the result of a 30.4% decline in lease and loan revenues to $11.2 million, a 46.1% decline in service fee and other revenues to $4.0 million, and a 32.7% increase in the provision for credit losses to $22.5 million as compared with the fourth quarter ended December 31, 2001. While revenue reductions were primarily related to lower origination volume, the additional provision for credit losses was required to maintain the Company's reserve policy requirements. Total operating expenses for the quarter, before the provision for credit losses, remained relatively flat at $18.4 million compared to the same period in 2001. Interest expense declined 1.0% to $3.0 million as a result of lower debt balances of approximately $34.0 million offset by increased interest costs. Based on the terms of the Forbearance and Modification Agreement for the senior credit facility, the interest rate accrued on outstanding borrowings increased by 275 basis points during the fourth quarter of 2002. Selling, general and administrative expenses decreased $200,000 to $11.2 million for the fourth quarter ended December 31, 2002 versus $11.4 million for the same period last year. The decrease was attributable to reductions in personnel related expenses of approximately $1.8 million, which was offset by increases in legal expenses. The provision for credit losses increased to $22.5 million for the quarter ended December 31, 2002 from $16.9 million for the same period last year, while net charge offs increased to $28.8 million. Past due balances greater than 31 days delinquent at December 31, 2002 increased to 22.9% from 17.2% last quarter. Net cash provided by operating activities for the quarter decreased 4.0% to $29.1 million compared to $30.2 million during the same period in 2001. Preliminary revenues for the year ended December 31, 2002 decreased 18.0% to $126.8 million compared to $154.0 million during the same period in fiscal 2001. The net loss for the year ending December 31, 2002 was $22.1 million versus net income of $16.3 million for the same period last year. Fully diluted earnings per share for the year was a loss of $1.72 on 12,862,834 shares. Total operating expenses for the year, before the provision for credit losses, increased 2.0% to $74.7 million compared to $73.6 million in 2001. Interest expense declined 25.0% to $10.8 million as a result of lower average debt balances of approximately $17.3 million and lower average interest rates, which declined approximately 122 basis points. Selling, general and administrative expenses increased $600,000 to $45.5 million for the year ended December 31, 2002 versus $44.9 million for the same period last year. The decrease was driven by a reduction in personnel related expenses of approximately $2.1 million, as management reduced headcount from 380 to 203, but this was offset by increases in legal expenses. Depreciation and Amortization increased 28.0% to $18.3 million compared to $14.4 million in 2001. The provision for credit losses, including the additional provision of $35.0 million taken in the third quarter of 2002, increased to $88.9 million for the year ended December 31, 2002 from $54.1 million for the same period last year. The additional provision was required to reserve against dealer receivables and certain portfolio assets. Net charge-offs increased 27.0% to $65.0 million and gross lease investment was down 16.0% or $71.1 million from the same period last year, primarily caused by lower origination volume activity in 2002. Net cash provided by operating activities for the year ended December 31, 2002 decreased 1.0% to $120.6 million compared to $122.3 million for the year ended December 31, 2001. MicroFinancial Incorporated continues to operate without the use of gain on sale accounting treatment and a balance sheet with total liabilities less subordinated debt to total equity plus subordinated debt of 2.2 to 1. MicroFinancial Inc. (NYSE: MFI), headquartered in Waltham, MA, and with an additional location in Woburn, MA, is a financial intermediary specializing in leasing and financing for products in the $500 to $10,000 range. The company has been in operation since 1986. MOBILE TOOL: Asks Court for Permission to Hire Keen Realty ---------------------------------------------------------- Mobile Tool International, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to bring-in Keen Realty, LLC as their Realtor and Real Estate Consultant. The Debtors are selling MTI Insulated Products, Inc.'s assets In connection with the liquidation of the MTI-IP assets, the Debtors seek to sell certain real estate owned and used in conjunction with the operation of MTI-IP. Consequently, the Debtors have determined that engaging Keen Realty to assist them in the marketing and sale of the Property. The Debtors agree that Keen Realty will: a) review documents related to the Property; b) consult with the Debtors and develop a marketing program with respect to the Property; c) communicate with and provide information relating to the Property to potential purchasers; d) resort to the Debtors regarding the progress of its efforts to sell the Property; e) assist the Debtors in negotiations of the terms of sale of the Property; and f) appear and testify at court hearings. Keen Realty will be compensated in an amount equal to 5.5% of the Gross Proceeds from the successful transaction pertaining to the Property. In the event that the successful purchaser is represented by a third party broker, the commission will be increased to 6.5% of the Gross Proceeds. Mobile Tool International, Inc., is an employee owned manufacturer and distributor of equipment, including aerial lifts, digger derricks and pressurization and monitoring systems, for the telecommunications, CATV, electric utility and construction industries. The Company filed for chapter 11 protection on September 30, 2002 (Bankr. Del. Case No. 02- 12826). Steven M. Yoder, Esq., and Christopher A. Ward, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $65,250,000 in total assets and $46,580,000 in total debts. NAT'L CENTURY: Wants to Reject Agreements with Former Officers -------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates seek the Court's authority to reject the employment agreements with Donald Ayers, Rebecca Parrett and Lance Poulsen and the consulting agreements with Donald Ayers and Rebecca Parrett. Matthew A. Kairis, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, recounts that all of the Former Officers resigned or retired from their positions prior to the Petition Date. On November 8, 2002, Lance K. Poulsen, the former NCFE Chairman of the Board of Directors and Chief Executive Officer, resigned all of his director and officer positions with the Debtors. The other co-founders of NCFE, who include Mr. Ayers, Ms. Parrett and Ms. Poulsen, also have resigned their positions as members of NCFE's Board of Directors. Mr. Ayers and Ms. Parrett retired from employment with the Debtors on June 30, 2001. The Employment Agreements provide that: A. Avers Employment Agreement On September 1, 2000, NCFE and Donald Ayers entered into an Employment Agreement in which Mr. Ayers agreed to serve as NCFE Vice Chairman and Chief Operating Officer. The Ayers Employment Agreement provides for an initial term of two years, with the term automatically extending by an additional year unless one of the parties to the agreement delivers a notice of intent to terminate the agreement no later than 150 days prior to the end of the term of the agreement, as extended. Mr. Ayers was to receive a compensation package consisting of: (a) a $715,500 base salary; (b) an incentive bonus equal to twice the gross quarterly bonus amount paid to NCFE's most highly compensated strategic and core management core members, due and payable within 30 days of the end of each calendar quarter; (c) incentive compensation, including, but not limited to, the right to receive and exercise stock options and stock appreciation rights; (d) a $1,000 automobile allowance per month; (e) the use of the Debtors' aviation resources for up to 24 round trips; (f) payment of taxes on the value of the aviation benefits; and (g) participation in the Debtors' employee benefit plans for which he was eligible. The Ayers Employment Agreement also provides that, if Mr. Ayers resigns or retires, he will receive all compensation to which he would be entitled for a period of two years after the date of resignation or retirement, except that his right to the incentive bonus will continue for only 18 months after the cessation of employment. The Ayers Employment Agreement prohibits Mr. Ayers from competing against the Debtors for a period of three years after the termination of employment. Mr. Ayers retired on June 30, 2001. B. The Parrett Employment Agreement On September 1, 2000, NCFE and Ms. Parrett entered into an employment agreement under which Ms. Parrett agreed to serve as NCFE Vice Chairman and Secretary/Treasurer. The Parrett Employment Agreement is on substantially the same terms as the Ayers Employment Agreement, including a $715,500 base salary and similar bonuses and other benefits. The Parrett Employment Agreement also includes retirement benefits and a non-competition clause substantially identical to those included in the Ayers Employment Agreement. Ms. Parrett retired on June 30, 2001. C. The Poulsen Employment Agreement On May 31, 2002, NCFE and Mr. Poulsen entered into an employment agreement under which Mr. Poulsen agreed to serve as NCFE Chairman and President. The Poulsen Employment Agreement provides for an initial term through September 1, 2006, with the term automatically extending for an additional year unless one of the parties delivers a notice of intent to terminate the agreement no later than 150 days prior to the termination of the agreement. Under the Poulsen Employment Agreement, Lance Poulsen received a compensation package consisting of: (a) a $1,115,400 base salary; (b) a financial performance incentive bonus of 50% of a pool of funds equal to 8% of NCFE's net income after taxes for each fiscal year during which the Poulsen Employment Agreement is in effect; (c) incentive compensation, including, but not limited to, the right to receive and exercise stock options and stock appreciation rights; (d) a $1,000 automobile allowance per month, (e) the use of the Debtors' aviation resources for up to 24 round trips; (f) payment of taxes on the value of the aviation benefits; and (g) participation in employee benefit plans for which he was eligible. The Poulsen Employment Agreement also provides that if Mr. Poulsen resigns or retires, he will receive all compensation to which he would be entitled for a period of two years after the date of resignation or retirement, except that his right to the incentive bonus will continue for only 18 months after the termination date. The Poulsen Employment Agreement also prohibits Mr. Poulsen from competing against the Debtors for a period of three years after the termination of employment. Mr. Poulsen resigned on November 8, 2002. After the retirements of Mr. Ayers and Ms. Parrett, the Debtors retained both as consultants. As consultants, Mr. Ayers and Ms. Parrett were to receive approximately $2,500 per day for the provision of consultation and advice to the Debtors. Mr. Oellermann explains that rejection of the Employment Agreements and the Consulting Agreements ensure that no administrative expense obligations can be asserted or continue to accrue under these agreements. In addition, the Debtors no longer need any consulting services under the terms of the Consulting Agreements. Accordingly, Mr. Oellermann asserts, the rejection of each of these agreements should be approved. (National Century Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) NAT'L STEEL: Court Grants Lift Stay to Set Off Worthington Claim ---------------------------------------------------------------- National Steel Corporation and its debtor-affiliates sought and obtained Court approval of a stipulation with Worthington Steel Company to modify the automatic stay to set off amounts they owed to Worthington to the amounts Worthington owed them. The Debtors and Worthington are parties to a series of agreements in which Worthington provided the Debtors with processing services while they supplied Worthington with certain steel products. Pursuant to these Agreements, the Debtors owe $579,853 to Worthington. Likewise, Worthington owed the Debtors $1,343,327. After the set-off, Worthington will be obligated and indebted to the Debtors in the prepetition amount equal to $763,473.38. (National Steel Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSRENT: Seeks Nod on Case Credit & New Holland Agreements -------------------------------------------------------------- After the Petition Date, NationsRent Inc., and its debtor- affiliates initiated a comprehensive review of each of their equipment leases to determine which of the leases they will assume, reject, recharacterize or renegotiate. As part of this process, the Debtors entered into arm's-length discussions with New Holland Credit Company, LLC and Case Credit Corporation regarding their obligations under certain agreements. The Debtors are parties to prepetition leasing and financing arrangements with New Holland and Case Credit, which are characterized as leases. The Prepetition Agreements allow the Debtors to regularly obtain equipment for their rental fleet. The parties' discussions culminated into a Master Inventory Financing, Security and Settlement Agreement which provides for the termination of the Prepetition Agreements and the Debtors' purchase of certain inventory subject to the Prepetition Agreements. The salient terms of the Master Agreement include: A. Sale of Inventory and Terms of Sale New Holland and Case Credit will sell to the Debtors all their equipment under schedules C-C1 through C-C10 to the Master Agreement. The Debtors will finance the purchase of the Inventory by borrowing $12,484,913 from New Holland and Case Credit. B. Loans New Holland and Case Credit will loan these amounts: Inventory Description Maturity Date Loan --------------------- ------------- ---- Schedule C-C1 July 1, 2003 $1,216,820 Schedule C-C2 January 1, 2004 127,798 Schedule C-C3 July 1, 2004 233,871 Schedule C-C4 October 1, 2004 1,278,972 Schedule C-C5 October 1, 2004 128,544 Schedule C-C6 January 1, 2005 1,441,405 Schedule C-C7 July 1, 2005 1,195,455 Schedule C-C8 October 1, 2006 122,547 Schedule C-C9 July 1, 2006 406,037 Schedule C-C10 January 1, 2006 6,333,462 Total: $12,484,913 For each loan, the Debtors will issue to New Holland and Case Credit a promissory note. Beginning on January 2, 2003, the unpaid principal amount of each Loan began to accrue interest at 7% per annum. The Debtors will pay the interest quarterly in arrears beginning on April 1, 2003 and on the first business day of each quarter thereafter. C. Security Interest in Purchased Inventory To secure the Debtors' outstanding obligations under the Master Agreement and with respect to the Loans, New Holland and Case Credit will be granted a purchase money security interest in the Inventory. The parties further agree to modify the automatic stay to permit New Holland and Case Credit to: -- file necessary or appropriate documents to perfect their security interests and liens granted with respect to the Master Agreement; and -- on the occurrence of an Event of Default: (a) terminate the Master Agreement, each Note and any other documents, agreements or instruments executed or delivered in connection with the Loans; (b) declare the Debtors' outstanding obligations under the Master Agreement and the Notes immediately due and payable; (c) exercise the rights of a secured party under the Uniform Commercial Code to take possession and dispose of the collateral under the Master Agreement and the Loans; and (d) exercise any other rights or remedies permitted to New Holland and Case Credit under applicable law. An Event of Default occurs when: (i) the Debtors fail to make any payments of principal or interest with respect to the notes within five days after becoming due and owing; (ii) any statement, warranty or representation of the Debtors in connection with or contained in the financing agreement and related other related transactions, or any financial statements furnished to New Holland and Case Credit by or on the Debtors' behalf, is false or misleading in any material respect; (iii) the Debtors breach any material covenant, term, condition or agreement stated in the financing agreement or other related transaction and that breach remains unremedied within 30 days after the Debtors receive a written notice from New Holland and Case Credit; (iv) the Debtors cease to do business, sell all its assets, dissolve, merge or liquidate, except as provided in the a reorganization plan; (v) any attachments, execution, levy, forfeiture, tax lien or similar writ or process -- to the extent the same does not constitute a Permitted Lien -- is issued against the Collateral and is not removed within 30 calendar days after filing, unless an adverse action is being contested in good faith and does not present a material risk to New Holland and Case Credit's interest in the Collateral; (vi) the lenders under the Fifth Amended and Restated Revolving Credit and Term Loan Agreement dated August 2, 2000, as amended, declare the Debtors in default and have accelerated the indebtedness due or there is a material payment default under the Credit Agreement or any successor or replacement agreement; (vii) except in connection with these Chapter 11 cases, the Debtors: * make an assignment for the benefit of their creditors; * admit in writing their inability to pay or generally fail to pay their debts as they mature or become due; * petition or apply for the appointment of a trustee or other custodian, liquidator, receiver or receiver and manager of any of the Debtors or substantially part of the Debtors' assets; or * commence any case or other proceeding under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, or liquidation law; or (viii) a petition or application for a trustee or custodian of the Debtors or their assets is filed or any reorganization or insolvency proceeding is commenced and the Debtors indicate their approval or the petition or application is not dismissed within 90 days after the filing. D. Termination of the Prepetition Agreements The parties agree to terminate the Prepetition Agreements. New Holland and Case Credit will be allowed unsecured non-priority claims for the deficiency claims and other general unsecured claims arising with respect to the Prepetition Agreements. The Claims will be determined after giving the Debtors a credit for the aggregate original principal amount of the Loans. New Holland and Case Credit will have no further claims against the Debtors with respect to the Prepetition Agreements. E. Mutual Release On the Effective Date Both parties will fully release the other from any and all claims and liabilities arising under the prepetition agreements. The Debtors asserts that their entry into the Master Agreement is warranted. The Master Agreement provides for the purchase of the Inventory at a reasonable price and on reasonable financing terms. The monthly payments due New Holland and Case Credit pursuant to the Master Agreement will be significantly less than the Debtors are currently paying for the use of the Inventory under the Prepetition Agreements. The Debtors also note that at the end of the term of the Master Agreement, they will continue to own, and will be able to utilize, the purchased Inventory for its remaining useful life. The Debtors further assert that the allowance of the Claims represents a fair and reasonable resolution of New Holland and Case Credit's claims. New Holland and Case Credit have agreed to give the Debtors a credit for the aggregate original principal amount of the Loans against any amounts owing with respect to the Prepetition Agreements. Accordingly, the Debtors ask the Court to approve the Master Agreement and related transactions including the financed purchase of the Inventory and the granting of the security interest to the Lenders. (NationsRent Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXT LEVEL: Motorola Waives Condition and Extends Tender Offer -------------------------------------------------------------- Motorola, Inc., (NYSE: MOT) announced that it was amending its offer to (a) waive a condition to the offer that Motorola own at least 90% of the issued and outstanding shares of Next Level (Nasdaq: NXTV) common stock as a result of the offer and (b) clarify that, based on information about Next Level's capitalization provided to Motorola by Next Level's financial advisors, Motorola believes that it needs only 12,904,456 shares tendered in order to satisfy the "Minimum Tender Condition." This number is approximately 1.5 million shares less than the number that Motorola had originally estimated was required. Motorola also announced that, in light of these changes to the offer, Motorola has extended the tender offer deadline for shares of Next Level Communications that it does not own until 5:00 p.m., Friday, March 14, 2003. As of Friday, March 7, 2002, approximately 4.3 million shares of Next Level stock had been tendered or committed to be tendered as part of the tender offer first announced on January 13, 2003, and commenced on January 27, 2003, consisting of approximately 3,350,292 shares that have been tendered, and notices of guaranteed delivery that have been received in respect of approximately 953,347 additional shares. Don McLellan, Corporate Vice President of Mergers and Acquisitions, stated that "through the tender offer, Motorola is offering a solution that we believe provides Next Level shareholders a significant premium to Next Level's intrinsic value and preserves Next Level's technology for its customers." In fact, the $1.04 offer price represents a premium of 11.8% to the closing price of $0.93 on Friday, March 7, 2003, a premium of 14.4% premium over the closing price on January 10, 2003, the day before Motorola announced the Offer and premiums of 28.6%, 22.6% and 17.7% over the 90, 20 and 5 trading days ending on January 10, 2003. Next Level May Consider Financing at Levels Below $1.04 In addition to announcing that it currently does not have enough financing to remain a going concern beyond the third quarter of 2003, Next Level recently stated that it was considering third party financing alternatives that depend on Motorola's willingness to surrender rights granted to Motorola to induce Motorola to invest in Next Level over the past two years and which represent fundamental economic elements of these investments. "To enable Next Level stockholders to make an informed decision regarding Next Level's financial condition in the event our tender offer is not completed, Motorola believes that Next Level should publicly disclose the terms of the financings that Next Level claims might be available," McLellan said. "During discussions that took place last week, a representative of the independent committee of Next Level's board of directors indicated that Next Level may propose financing transactions at valuations below Motorola's offer of $1.04 per share. Motorola's offer of $1.04 provides stockholders with certainty of value. Motorola encourages all Next Level shareholders who have not already done so to tender their shares and receive value significantly in excess of Next Level's current trading price," McLellan added. Next Level shareholders who have any questions or need assistance, including assistance in tendering shares should contact the Information Agent, Georgeson Shareholder Communications, toll free at (866) 203-9357. Notice For Next Level Securityholders Next Level securityholders and other interested parties are urged to read Motorola's tender offer statement and other relevant documents filed with the SEC because they contain important information. Next Level security holders will be able to receive such documents free of charge at the SEC's web site, http://www.sec.gov,from Motorola, Inc. at 1303 E. Algonquin Road, Schaumburg, Illinois 60196, ATTN: Investor Relations, or by calling Georgeson Shareholder toll free at (866) 203-9357. Copies of the full text of the Chancery Court's opinions denying Next Level's motions for preliminary injunction and interlocutory appeal are also available by contacting Motorola at the above address or by calling Georgeson Shareholder at the above telephone number. About Motorola Motorola, Inc. (NYSE: MOT - News) is a global leader in providing integrated communications and embedded electronic solutions. Sales in 2002 were $26.7 billion. Motorola is a global corporate citizen dedicated to ethical business practices and pioneering important technologies that make things smarter and life better for people, honored traditions that began when the company was founded 75 years ago this year. For more information, please visit: http://www.motorola.com. NEXTEL: Fitch Revises Rating Outlook to Positive from Stable ------------------------------------------------------------ Fitch Ratings has revised the Rating Outlook on Nextel Communications Inc. to Positive from Stable. The Positive Outlook applies to Nextel's senior unsecured note rating of 'B+', the senior secured bank facility of 'BB' and the preferred stock rating of 'B-'. The Positive Outlook reflects Fitch's view that favorable financial and operating trends will continue over the next several quarters based on the positive momentum produced from the following factors during 2002: -- The significant improvement in operating performance through strong cost containment, low churn and solid ARPUs despite a somewhat unfavorable climate within the wireless industry and a weak economic environment. -- The reduction in financial risk due to the repurchase of $3.2 billion in debt and associated obligations. -- A strong competitive position relative to other operators due to the unique push-to-talk application that allows Nextel to target higher-value and lower churn business users. Expectations are for Nextel to strengthen credit protection measures further in 2003 to 3.4 times Debt-to-EBITDA or less. The improvement in cash generation should lead to at least $500 million in positive free cash flow based on management's expectations for 2003. With past access to the equity market and a substantial cash position bolstered by FCF, Fitch expects Nextel management to consider additional debt reduction in the future, as it deems appropriate. Nextel's strong cost controls, stable ARPU and solid net additions during 2002 have increased margins to 38% for the year compared to 29% for 2001 driving expected operating cash flow to $3.1 billion for 2002, an increase of $1.2 billion from 2001. CCPU costs are down approximately 12% over the last year due to the outsourcing of customer care and back office support costs along with cost improvements associated with the new billing platform and the reduction in bad debt expense. Additional improvement in costs of equipment sales with lower priced handsets have contributed to stronger cash flows. These cost enhancements and further scaling of operations can be seen through the amount of revenue growth falling to EBITDA, which averaged approximately 74% in 2002. During 2002, Nextel reduced financial risk materially by retiring $3.2 billion in face value of debt ($1.9 billion) and preferred securities ($1.3 billion) using a combination of cash ($843 million) and equity (173 million shares), which exceeded Fitch's expectations for debt reduction. These transactions allow Nextel to avoid payments of $5.4 billion in principal, interest and dividends over the life of the securities or approximately $294 million in interest and dividend savings annually. In combination with Nextel's rapidly improving cash flow and a substantial decrease in capital requirements, credit protection measures improved materially by the end of 2002 with a Debt-to-EBITDA of 3.9x compared with 7.8x in 2001. Even though Fitch expects Nextel's positive operating trends to continue during 2003, challenges and risks remain which, could moderate the pace of anticipated credit profile improvement. Shorter-term issues include the decision by the FCC on the 800 MHz consensus plan, weak economic environment and fundamentals within the wireless industry. From an intermediate to longer- term perspective, the concerns include the competitive threats to Nextel's Direct Connect offering, potential funding requirements of the 800 MHz consensus plan and technical viability of the iDEN platform. Perhaps Nextel's biggest longer-term challenge is the competitive PTT threat from other wireless operators. While CDMA competitors have indicated the potential for a PTT service in the marketplace during 2003, Fitch believes near-term concerns have been exaggerated as competitive PTT services will clearly have their own hurdles to overcome. Potential PTT issues include: PTT call setup latencies, lack of intercarrier operability, uncertainty regarding other technical issues and PTT handset functionality. Moreover, Nextel operates from a firmly entrenched position and competitive PTT offerings will have to emphasize coverage, niche markets, new feature capabilities and price to compensate for any service limitations. Thus, Fitch believes competitive PTT offerings will have a negligible effect on Nextel in 2003 while possibly gaining some traction and dampening net subscriber growth in 2004. Nextel's consumer segment, which constitutes approximately 20%-25% of Nextel's subscriber base, is likely to be vulnerable as well as Nextel's ability to attract existing subscribers on competing networks that require PTT capabilities. Fitch would consider a possible rating upgrade depending on further clarification to the following issues: --A FCC ruling on the Consensus Plan that would provide greater visibility concerning the potential operational and financial impacts of the FCC's decision on Nextel's operations. --Further deleveraging of the balance sheet through excess cash from operations and equity considerations. --Strong execution on financial and operating targets leading to sustainable trends within the business. OWENS CORNING: Gets Extension of Intercompany Tolling Agreement --------------------------------------------------------------- Owens Corning and its debtor-affiliates sought and obtained authority to enter into an extended tolling agreement, which would toll all intercompany avoidance actions through December 31, 2003. J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, reminded the Court that by Order dated June 20, 2002, the Court authorized the Debtors to enter into an agreement which tolled intercompany avoidance actions through March 31, 2003, without prejudice to the Debtors' right to request authority to enter into further tolling agreements. Pursuant to the Order, the Debtors duly executed a tolling agreement with their appropriate affiliates and subsidiaries. Ms. Stickles pointed out that the Debtors have proposed a plan, which provides for substantive consolidation as well as the disposition of other intercompany avoidance actions. Given the terms of the plan, commencement of intercompany litigation at this point would appear to be an significant waste of estate assets, as well as a major distraction from the litigation scheduled to commence on April 1, 2003 and the other matters in these cases that are case-dispositive. The proposed Extended Tolling Agreement is designed to ensure, in the event substantive consolidation is determined not to be appropriate, and the Debtors' contemplated plan is not confirmed, that any and all intercompany avoidance actions are preserved for the benefit of all parties. The Extended Tolling Agreement basically provides that: A. Any and all limitation periods applicable, by virtue of Section 546(a) of the Bankruptcy Code or otherwise, to bar any claim or remedy or the bringing of any action or proceeding that could be brought under any applicable law to avoid or recover all or any portion of transfers of property recoverable by the Debtors under applicable law or the value are to be tolled and extended through and including December 31, 2003; B. The extension provided for does not prevent the commencement of litigation with respect to avoidance actions; and C. It binds and inures to the benefit of the parties, their successors and assigns, the Debtors' estates and creditors, and any agent or authorized representative appointed in any of the Debtors' cases or in connection with any plan of reorganization or liquidation. (Owens Corning Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) PEABODY ENERGY: Fitch Rates New Facility & Sr. Notes at BB+/BB -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' to Peabody Energy's proposed $600 million revolving credit facility and a new $600 million bank term loan and a 'BB' to its proposed issuance of $500 million of senior unsecured notes due 2013. The Rating Outlook remains Positive. A portion of the proceeds from the new credit facility and senior unsecured note offering will be used to fund the repurchase of the company's existing 8 7/8% senior notes and 9 5/8% senior subordinated notes, which the company is seeking to acquire through a tender offer commenced on Feb. 27, 2003. At the completion of Peabody's refinancing the rating on its senior subordinated notes, currently rated 'B+', will be withdrawn. Since March 31, 1999, Peabody has reduced its total debt by over $1.5 billion. At the end of FY2002 Peabody has a Debt/EBITDA of approximately 2.5 times and an EBITDA/Interest of 4.0x. Internally generated funds will be used for further debt reduction. The ratings also incorporate the likelihood of tuck- in acquisitions as the industry continues to consolidate. However, any large acquisition that would substantially increase leverage could affect the company's financial flexibility and negatively impact Peabody's credit quality. Peabody's legacy postretirement health care and pension liabilities are significant but Fitch feels that these are manageable. Peabody is the world's largest coal company with approximately 9.1 billion tons in proven and probable reserves as of Dec. 31, 2001 located in four primary operating regions: Powder River Basin, Southwestern, Appalachia and Midwest. The company continues to implement its strategy of shifting from high sulfur, high cost operations to low-sulfur, low-cost operations. Future capital expenditures, estimated at approximately $200 million per year, will be concentrated in the company's low cost operations. PERKINELMER: Launches New Business to Reshape Laboratory Service ---------------------------------------------------------------- PerkinElmer, Inc. (NYSE: PKI), a leading provider of drug discovery, life science research, and analytical solutions, announced the launch of OneSource(TM), a new business that will provide comprehensive service and support for laboratories worldwide. "Within the life and analytical sciences marketplace, customers are seeking to streamline their supply chain through fewer, more value-added partnerships, enabling them to focus on their core competencies," said Peter Coggins, president of PerkinElmer Life and Analytical Sciences. "We have launched our OneSource Laboratory Services business in response to this emerging trend, providing our customers with the means to improve productivity and reduce costs within their laboratories." Today's intensifying regulatory environment and an ever- increasing need for greater efficiency are both challenging the traditional instrument service model where service is viewed simply as a follow-on to an instrument purchase. "There is an increasing demand for service partnerships that extend far beyond essential maintenance and repair of individual instruments," said John Danner, vice president and general manager, OneSource Laboratory Services Business. "In addition to the demand for higher productivity within the lab, compliance with regulatory requirements has significantly increased the complexity of installing instruments, qualifying operators, and documenting laboratory processes. By partnering with PerkinElmer OneSource, customers can take advantage of a wide range of service offerings, from on-demand repairs to validation certification to education and training. This enables customers to better focus on their core research and analytical tasks." OneSource customers can choose from a variety of service-level agreements, with offerings including preventative maintenance, 24-hour response times, or daily on-site support. OneSource service engineers are currently engaged in numerous large-scale service partnerships, in some cases with PerkinElmer engineers residing full-time on-site with customers, performing repair, maintenance and validation of instruments provided by PerkinElmer and other suppliers. PerkinElmer is unique among instrument vendors in its broad product scope, which ranges from basic research instruments to high-throughput drug discovery tools to environmental testing and general analytical instrumentation. The OneSource business is comprised of more than 1,000 factory-trained service professionals operating in 120 countries to service the PerkinElmer installed base of hundreds of thousands of instruments. "Because we have expertise in nearly all technologies used in the major analytical and life science laboratories, we offer a breadth of technical competence that is unmatched in the industry," said Danner. "PerkinElmer is increasingly the service partner of choice for global pharmaceutical, chemical and environmental customers." PerkinElmer OneSource anticipates launching new service offerings throughout the year to fully enable these comprehensive service partnerships. PerkinElmer, Inc. is a global technology leader focused in the following businesses - Life and Analytical Sciences, Optoelectronics, and Fluid Sciences. Combining operational excellence and technology expertise with an intimate understanding of its customers' needs, PerkinElmer creates innovative solutions - backed by unparalleled service and support - for customers in health sciences, semiconductor, aerospace, and other markets whose applications demand absolute precision and speed. The Company markets in more than 125 countries, and is a component of the S&P 500 Index. Additional information is available through http://www.perkinelmer.comor 1-877-PKI-NYSE. * * * As previously reported, Standard & Poor's lowered its corporate credit and senior unsecured note ratings on PerkinElmer Inc., to 'BB+' from 'BBB-', based on weak credit measures for the rating and subpar operating performance in 2002. At the same time, Standard & Poor's assigned a 'BB+' bank loan rating to the proposed $445 million senior secured credit facilities due 2008 and a 'BB-' rating to the proposed $225 million of senior subordinated notes due 2012. Ratings were removed from CreditWatch where they were placed on October 30, 2002. The prior bank loan rating and the short-term rating were withdrawn. The outlook on the Wellesley, Massachusetts-based diversified technology provider is stable. Total debt outstanding is $661 million (including synthetic leases and accounts receivable securitization). PLANVISTA: ComVest-Led Group Acquires Bank Group's Interest ----------------------------------------------------------- PlanVista Corporation (OTCBB:PVST), the Tampa, Florida-based medical cost management firm, announced that PVC Funding Partners LLC, an affiliate of Commonwealth Associates, LP, and ComVest Venture Partners have acquired 96% of the Company's outstanding convertible preferred stock previously held by the Company's senior lenders and $20.5 million of the Company's outstanding bank debt. The transaction reduces the bank group's collective interest in PlanVista from over $71 million to $20.6 million and transfers the referenced preferred shares, with potential convertibility into control of the Company, into the hands of a strategic partner with successful healthcare and investment experience. Commonwealth Associates is a Merchant and Investment Bank established in 1988 that is dedicated to serving as an equity value oriented investor and creating long-term value for its corporate clients and investors. Through its affiliated fund, ComVest Venture Partners, Commonwealth contributes its own capital and its partners' capital into each transaction, typically serving as the lead investor in each investment that it sponsors. According to PlanVista Chairman and Chief Executive Officer Phillip S. Dingle, "This transaction represents a significant milestone in our Company's history and reflects the investment community's confidence in our business model and strategy. An important part of our future no longer resides with our bank group, but rather with a resourceful and aggressive financial partner whose equity ownership and focus are aligned with investors, and that has a successful track record in health care, a proven growth model, and long-term vision. This is good news for our shareholders, our customers, and our employees." In connection with the transaction, the Company announced that current directors Christopher Garcia, David Ferrari, and Randy Sugarman are voluntarily relinquishing their Board positions. They will be replaced by Michael S. Falk and Harold S. Blue of Commonwealth Associates, and Dr. Richard Corbin. Mr. Falk co- founded Commonwealth Associates in 1988 and is currently Chairman of Commonwealth Associates Group Holdings and the Managing Partner of Comvest Ventures. Primarily through Commonwealth Associates, Mr. Falk has been actively investing in healthcare, technology, and service businesses for over 15 years. He is currently a director of ProxyMed, Inc. (Nasdaq:PILL) and Comdial Corporation (BB:CMDZ). Mr. Blue is President of Commonwealth Associates Group Holding and from 1993 to 2000, was Chairman and CEO of ProxyMed. During his career, Mr. Blue has founded and sold a pharmacy chain, a generic pharmaceutical distributor known as Best Generics, which was sold to IVAX (AMEX:IVX), the largest generic drug manufacturer in the U.S., and a physician practice company. He was formerly a director of IVAX and is currently a director of eB2B Commerce, Inc., Notify Corporation, and Commonwealth Associates Group Holdings. Dr. Corbin was active in dental practice acquisitions from 1991-1996, was a member of the board of directors of Accumed International, and is currently in private practice. He recently served on the board of directors of Bioplexus until its sale to ICU Medical (Nasdaq:ICUI) in 2002. Commonwealth President Harold S. Blue said, "PlanVista has developed a business model based on recurring revenues, high margins, and a fixed cost structure that drives bottom line profits. The revenues are derived from a broad customer base including insurance companies, third-party administrators, and self-funded employer groups. Clients have access to approximately 400,000 physicians and 4,000 hospitals through PlanVista's expansive, national provider network. We are excited at the prospect of working with and supporting a seasoned management team that has prevailed through turbulent times. Added Dingle, "The entire management team is encouraged and enthusiastic about growing our business this year and in the future. We welcome our new financial partner and also sincerely appreciate the good service, advice, and counsel of our departing Board members. Perhaps most importantly, we thank our valued customers for their continued trust, and renew our commitment to provide excellent services and innovative products to the marketplace." PlanVista Solutions is a leading provider of technology-enabled medical cost management solutions for the healthcare industry. We provide integrated national Preferred Provider Organization network access, electronic claims repricing, and claims and data management services to health care payers, such as self-insured employers, medical insurance carriers, third party administrators, health maintenance organizations, and other entities that pay claims on behalf of health plans, and health care services providers, such as individual providers and provider networks. Visit the Company's website at http://www.planvista.com. At September 30, 2002, Planvista reported a total shareholders' equity deficit of about $14 million. PURCHASEPRO.COM: U.S. Trustee Moves for Chapter 7 Liquidation ------------------------------------------------------------- R. Palmer Cundick, Assistant United States Trustee for Region 17, asks the U.S. Bankruptcy Court for the District of Nevada to convert the chapter 11 case of PurchasePro.com, Inc., to a liquidation proceeding under chapter 7 of the Bankruptcy Code. The Assistant UST points out that the debtor is no longer operating and has sold most if not all of its assets. The Assistant UST maintains that at best, only a Liquidating Plan would be filed in this case and the same can be accomplished easily under Chapter 7 of the Code. Moreover, the appointment of a trustee could ensure that all potential causes of action, including avoidance actions, are fully investigated and pursued. Mr. Cundick explains that pursuant to Section 1112(b), this case, in particular, should be converted or dismissed because: a) the debtor is no longer operating; b) the debtor continues to incur Chapter 11 administrative expenses; c) conversion of the case to Chapter 7 will facilitate liquidations of the assets and distribution of the proceeds to creditors; d) no benefit is served by allowing this case to proceed in Chapter 11 vis-a-vis Chapter 7; e) appointment of a trustee will facilitate liquidation by an impartial third party and will ensure that all potential causes of action are investigated and litigated in the best interests of creditors. PurchasePro.com which offers strategic sourcing and procurement software solutions, filed for chapter 11 protection on September 12, 2002 (Bankr. Nev. Case No. 02-20472). Gregory E. Garman, Esq., at Gordon & Silver, Ltd., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $41,943,000 in total assets and $20,058,000 in total debts. RCN CORPORATION: Senior Lenders Agree To Amend Credit Agreement --------------------------------------------------------------- RCN Corporation (Nasdaq: RCNC) announced that it has received consent from its senior lenders to amend the terms of its existing senior secured credit facility. The amendment provides RCN greater flexibility in incurring up to $500 million of additional senior secured debt, adjusts the operating and financial covenants in the facility and modifies certain other restrictions that existed under the previous agreement. Under the amendment, RCN retains much of the operational and financial flexibility existing under the previous credit agreement. In return for new and retained flexibility, RCN has agreed to reduce the amount available under its revolving loan facility, under which it currently has no borrowings outstanding, to $15 million, and to maintain a cash collateral account of at least $100 million for the benefit of the lenders under its credit facility. RCN further agreed to increase the percentage of future aggregate asset sale proceeds that it will use to pay down its senior secured term loans and to increase amortization payments under its term loans by an amount equal to 50% of interest savings from new repurchases of senior notes, not to exceed $25 million. The amendment also includes the ability of RCN to incur up to $500 million of new senior indebtedness that may be secured by a second lien on RCN's assets and to use up to $125 million of existing cash and the proceeds of new indebtedness described above to repurchase outstanding senior notes. Additionally, certain covenants are revised to reflect RCN's current long-term business plan with adequate cash cushions built in. As of 12/31/02, RCN had an aggregate of approximately $1.74 billion of indebtedness outstanding, including $547 million under its senior secured credit facility. For further details, please refer to the amendment, which has been filed in a Form 8-K with the Securities and Exchange Commission. About RCN RCN Corporation (Nasdaq: RCNC) is the nation's first and largest facilities-based competitive provider of bundled phone, cable and high speed Internet services delivered over its own fiber- optic local network to consumers in the most densely populated markets in the U.S. RCN has more than one million customer connections and provides service in the Boston, New York, Philadelphia/Lehigh Valley, Chicago, San Francisco, Los Angeles and Washington D.C. metropolitan markets. DebtTraders reports that RCN Corporation's 11.000% bonds due 2008 (RCNC08USR2) are trading between 30 and 32. See http://www.debttraders.com/price.cfm?dt_sec_ticker=RCNC08USR2 for real-time bond pricing. QWEST COMMS: CFO Shaffer to Speak at Janco Partners Conference -------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) vice chairman and CFO Oren G. Shaffer will speak at the Janco Partners, Inc. 8th Annual Media & Telecommunications Conference in Denver at 12:15 p.m. EST on Thursday, March 13, 2003. Shaffer's remarks will be available via webcast (live and replay) at http://www.qwest.com/about/investor/meetings/. About Qwest Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 50,000-plus employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at www.qwest.com. Qwest Communications' December 31, 2002 balance sheet shows a working capital deficit of about $1.2 billion, and a total shareholders' equity deficit of about $1 billion. SCORES HOLDING: Restructuring Outstanding Debt ---------------------------------------------- Scores Holding Company Inc. (OTC Bulletin Board: SCOH), formerly Internet Advisory Corporation, announced that it had reached an agreement to restructure outstanding debt held by a private equity fund. The Company had been obligated to pay $1,500,000 by March 31, 2003 to retire this debt. The restructured debt will have a balance of $1,110,000 due on August 7, 2007. One half of the restructured debt is convertible into the Company's common stock at a 50% discount to market at the time of conversion. Richard Goldring, Chairman and CEO of the Company, said, "We believe that our shareholders long term interests will be served by extending our time to pay this debt. We believe we can use the cash that will now be available to pursue our corporate objectives of expanding the revenue base of the 'Scores' brand." Construction continues at the Company's new adult nightclub, which will include a gourmet restaurant, to be operated under the "Scores" name at 533-535 West 28th Street, New York, NY. The nightclub is presently scheduled to open in the latter part of May 2003. The Company had previously announced that the nightclub would open during the latter part of March 2003. The new club will have 10,000 square feet of space, the maximum permitted by New York City law, allocated for adult entertainment purposes. "We are very pleased with the progress we have made to date and excited about the future of Scores Holding Company. We have laid the groundwork for the growth and success of the 'Scores' brand," said Mr. Goldring. As of its latest Form 10-Q filing at September 30, 2002, the company posted a working capital deficit of $254,025 and total shareholders' equity deficit of $38,441. STELCO: 175 Jobs Lost as Welland Pipe Unit Closes Permanently ------------------------------------------------------------- Stelco Inc. announced the permanent closure of its Welland Pipe Ltd. subsidiary, which will result in the loss of approximately 175 jobs at the large-diameter pipe mills located in Welland, Ontario. Stelco Inc. will take an approximate $5 million after-tax charge ($0.05 per common share) in Quarter 1, 2003 as a result of this closure. J. C. Alfano, President and Chief Executive Officer, stated, "Welland Pipe served Stelco and its large-diameter pipe customers very well over many years and we greatly appreciate the contribution from all current and past employees. Unfortunately, Welland Pipe's operations have been idle since June 30, 2002, due to a lack of orders and we do not foresee any near-term order prospects which would make the business viable. As a result, the plant will be closed effective this date." Stelco will continue to have a significant investment and commitment to the North American large-diameter pipe market through its joint venture ownership of Camrose Pipe Company, located in Camrose, Alberta. Stelco Inc. is Canada's largest and most diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Stelco has a presence in six Canadian provinces and two states of the United States. Consolidated net sales in 2002 were $2.8 billion. * * * As reported in the Troubled Company Reporter's January 15, 2002 edition, Standard & Poor's assigned its single-'B' subordinated debt rating to Stelco Inc.'s CDN$90 million convertible subordinated debt issue due February 1, 2007. At the same time, Standard & Poor's assigned its preliminary double-'B'-minus senior unsecured debt rating and preliminary single-'B' subordinated debt rating to the company's CDN$300 million shelf. In addition, the ratings outstanding on the company, including the double-'B'-minus corporate credit rating, were affirmed. The outlook is negative. The ratings on Stelco reflect a weakened financial profile due to the effect of the ongoing economic downturn and the prevailing difficult steel industry conditions on its financial results, offset by the company's fair business position. TANGIBLE ASSET: Substantial Losses Prompt Going Concern Doubts -------------------------------------------------------------- Tangible Asset Galleries Inc. has sustained recurring operating losses, negative cash flows from operations, significant debt that is in default and callable by the creditor, and has limited working capital. These items raise substantial doubt about the Company's ability to continue as a going concern. The Company's principal line of business is the sale of rare coins, jewelry, fine art and collectibles on a retail, wholesale, and auction basis. Its retail and wholesale operations are conducted in virtually every state in the United States and in several foreign countries. Through its Superior Galleries subsidiary, it also provides auction services for customers seeking to sell their own coins, jewelry, fine art and collectibles. The Company markets its services nationwide through broadcasting and print media and independent sales agents, as well as on the Internet through third party websites such as Sotheby's, eBay and Yahoo and through its own websites at TAGZ.com and SGBH.com. It was organized as a Nevada corporation on August 30, 1995 and is currently headquartered in Newport Beach, California, where its primary gallery is located. Its Superior Galleries subsidiary maintains its operations in Beverly Hills, California. The Company recorded a loss from continuing operations for the twelve months ended June 30, 2002 of $4,867,048 as compared to a loss of $2,137,036 for the twelve months ended December 31, 2000, a deterioration of operating results of $2,730,012. The increased loss is attributed primarily to an increase in selling, general and administrative expenses and an approximate 2% decrease in gross profit margins. Tangible Asset Galleries recorded a net loss for the twelve months ended June 30, 2002 of $7,904,589 as compared to a net loss of $1,629,850 for the twelve months ended December 31, 2000. The additional net loss of $6,284,739 is the result of an increased operating loss and a loss from discontinued operations of $3,037,541, related primarily to the sale of its subsidiary, HI. The Company may not become profitable or significantly increase its revenues. As states, the Company incurred a net loss of $7,904,589 for the twelve months ended June 30, 2002, a net loss of $409,199 for the six months ended June 30, 2001, and a net loss of $1,629,850 for the twelve months ended December 31, 2000. Management intends to implement several initiatives which it believes will enable the Company to return to profitability, including exiting unprofitable lines of business, reducing manpower and other costs, and focusing on higher margin products. The working capital at June 30, 2002 was $390,134, which reflects a significant decrease from the working capital of $1,003,589 at June 30, 2001. There can be no assurance that the Company's revenue or results of operations will not decline further in the future, that the Company will not continue to have losses, or that the Company will be able to continue funding such losses if they continue. The limited capital could adversely affect the Company's ability to continue its operations. TCW LINC: Fitch Hatchets Ratings on 5 Note Classes to Junk Level ---------------------------------------------------------------- Fitch Ratings downgraded and removed from Rating Watch Negative seven classes of notes issued by TCW Linc III CBO 1999-1 Ltd. Two classes of notes that were not previously on Rating Watch Negative are also being downgraded, and one class of notes is being affirmed. The following rating actions are effective immediately and all classes which were previously on Rating Watch Negative will be removed from Rating Watch Negative in conjunction with the downgrade: TCW Linc III CBO 1999-1 Ltd.: -- $113,762,781 class A-1L notes affirmed at 'AAA'; -- $15,000,000 class A-1F notes downgraded to 'AA' from 'AAA'; -- $96,000,000 class A-1 notes downgraded to 'AA' from 'AAA'; -- $21,500,000 class A-2 notes downgraded to 'BB' from 'AAA' and removed from Rating Watch Negative; -- $82,000,000 class A-2L notes downgraded to 'BB' from 'AAA' and removed from Rating Watch Negative; -- $34,000,000 class A-3A notes downgraded to 'CC' from 'A-' and removed from Rating Watch Negative; -- $45,000,000 class A-3B notes downgraded to 'CC' from 'A-' and removed from Rating Watch Negative; -- $22,000,000 class B-1 notes downgraded to 'C' from 'BBB-' and removed from Rating Watch Negative; -- $13,000,000 class B-2A notes downgraded to 'C' from 'BB-' and removed from Rating Watch Negative; -- $7,000,000 class B-2B notes downgraded to 'C' from 'BB-' and removed from Rating Watch Negative. TCW Linc III CBO 1999-1 Ltd. is a collateralized bond obligation managed by TCW Funds Management, Inc. The CBO was established in July 1999 to issue debt and equity securities and to use the proceeds to purchase high yield bond collateral. According to its Jan. 17, 2003 trustee report, TCW Linc III CBO 1999-1 Ltd.'s collateral includes a par amount of $64.995 million (14.05%) defaulted assets. The class A overcollateralization test is failing at 98.05% with a trigger of 110% and the class B OC test is failing at 88.57% with a trigger of 103%. In reaching its rating actions, Fitch reviewed the results of its cash flow model runs after running several different stress scenarios. Fitch will continue to monitor this transaction. TRANSCARE: Seeks to Extend Solicitation Period through May 12 ------------------------------------------------------------- TransCare Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend the time period within which only the Debtors have the exclusive right to solicit acceptances of their chapter 11 Plan. The Debtors remind the Court that they have filed their Plan and the accompanying Disclosure Statement at the outset of these cases. However, plan solicitation has been delayed due to the Debtors' attempts to negotiate resolution of certain issues relating to the Plan and Disclosure Statement with certain of their various creditor constituencies to proceed with these cases on a consensual basis. In this connection, the Debtors want to stretch their Exclusive Solicitation Period to run through May 12, 2003. The Debtors argue that the size and complexity of these cases, and the substantial progress made to date justifies the extension requested. Simply, additional time is needed to address adequately the procedural and substantive complexities of these cases before the Plan can be fully implemented. TransCare, one of the largest privately owned providers of ambulance and ambulette services in the United States providing both emergency and non-emergency services, primarily on a fee- for-service basis, filed for chapter 11 protection on September 9, 2002 (Bankr. S.D.N.Y. Case No. 02-14385). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. When the Debtors sought protection from its creditors, it listed an estimated assets of $10 million to $50 million and debts of over $100 million. TYCO INTL: Will Webcast Institutional Investors Meeting Tomorrow ---------------------------------------------------------------- Tyco International Ltd. (NYSE-TYC, BSX-TYC, LSE-TYI) announced that its meeting for institutional investors on Thursday, March 13, 2003 will be webcast live. The meeting will include presentations by Tyco's Chairman and Chief Executive Officer Edward Breen, Chief Financial Officer David FitzPatrick, and management from each of the business segments. Investors and other interested parties may visit Tyco's website at http://www.tyco.comfor access to a simultaneous webcast of the event, beginning at 8:00 a.m. EST on Thursday, March 13, 2003. The meeting will begin at 8:15 a.m. EST. A replay of the event will be available at the same website through Thursday, March 20, 2003. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. Tyco International Ltd.'s December 31, 2002 balance sheet shows a working capital deficit of about $3 billion. TYCO INT'L: Newly Elected Board Makes Committee Assignments ----------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced that its new Board of Directors, meeting for the first time since its election at the Annual General Meeting of Shareholders, voted to take several actions, beyond those that had already been implemented under the Company's new management, to improve corporate governance at Tyco. The new measures include: -- The re-election by the independent directors of John A. Krol as Lead Director. In this role, Mr. Krol facilitates and chairs executive sessions of the Board, which are held after every Board meeting, sets the agenda for Board meetings, and coordinates the information flow to the Company. -- New assignments for membership on the Board's committees. -- The adoption of new Board Governance Principles, which document the responsibilities of the directors in overseeing the management of Tyco's businesses in the best interests of shareholders. -- The adoption of a new employee Guide to Ethical Conduct, which provides explicit guidelines on conduct that is expected of everyone at Tyco. -- The adoption of a new Delegation of Authority policy to strengthen control over cash disbursements at the Company. -- A decision to study in detail the issues related to the Company's incorporation in Bermuda. -- A decision to adopt new severance guidelines for senior executives at the next Board meeting. The Board also determined that, except for Chairman and CEO Edward D. Breen, all members of the Board are considered "independent members." Institutional Shareholder Services, Inc., one of the world's leading providers of proxy voting and corporate governance services, has also determined these nine members of the Board are independent according to its standards. "Tyco now has in place an entirely new Board of Directors elected by our shareholders," commented Edward D. Breen, Chairman and Chief Executive Officer of the Company. "The clear mission of this Board is to ensure that the new Tyco adheres to the highest standards of corporate governance and that all of us at the Company dedicate ourselves to building value for our shareholders." "The actions taken today are only among the first steps in a continuing drive by the Board and management to establish clear and uncompromising standards of conduct in every aspect of our management and financial reporting and to strengthen specifically the performance of our businesses. The Board as a whole, together with each of its committees, will work to achieve these goals through informed, substantive and probing deliberations. We are determined to distinguish Tyco for its leadership in corporate governance while also unlocking the potential of the strong portfolio of businesses that make up this Company." Board Reorganization In organizing its committees, the Board appointed the following members: -- John A. Krol is to chair the Corporate Governance and Nominating Committee. Bruce S. Gordon and H. Carl McCall were also appointed as committee members. The Senior Vice President for Corporate Governance reports to Mr. Krol as Chairman of this committee. -- Jerome B. York is to chair the Audit Committee. Brendan O'Neill and Sandra Wijnberg were also appointed as committee members. Additionally, all three of these directors were determined by the Board to be "financial experts" according to SEC regulations. The Vice President of Corporate Audit and the Corporate Ombudsman report to Mr. York as Chairman of this committee. -- Mackey J. McDonald is to chair the Compensation Committee. Adm. Dennis C. Blair (U.S. Navy, Ret.) and George W. Buckley were also appointed as committee members. Other Governance Actions The governance initiatives announced today are the product of an in-depth five-month review and analysis that involved benchmarking proposed changes at Tyco against "best practices" companies. The Board drew upon the expertise of such recognized governance specialists as Charles Elson, of the University of Delaware Corporate Governance Center, Michael Useem of the Wharton School of Business at the University of Pennsylvania, and Jay Lorsch of Harvard Business School. Tyco also formed a special working group of the Board, with Ira Millstein of law firm Weil, Gotshal & Manges, serving as an expert outside advisor, to advance the process. As one key outcome of this comprehensive review analysis, the Board approved new Board Governance Principles, a new Delegation of Authority policy to strengthen control over cash disbursements at the Company, and a new employee Guide to Ethical Conduct. The new Board Governance Principles describe the mission and values of the Board of Directors of the Company. The document delineates the responsibilities of the Directors in overseeing the management of Tyco's businesses in the best interest of shareholders and in a manner that is consistent with good corporate citizenship. The Board Governance Principles reflect the Board's belief that good governance requires not only an effective set of specific practices, but also a company-wide culture of integrity and accountability that starts with its leadership. The Company's Delegation of Authority policy provides precise guidelines and matrices that draw clear lines of authority and accountability, coupled with budgetary responsibility, for expending company funds. This policy encompasses such areas as employee compensation, borrowings and capital expenditures, acquisitions, travel and entertainment, investments and charitable contributions. The employee Guide to Ethical Conduct provides explicit guidelines on what is expected of everyone who works at Tyco. It includes the four core values of the company -- integrity, excellence, teamwork and accountability. It also provides a close look at a variety of on-the-job issues such as ethical conduct, fraud, financial controls, conflicts of interest, record-keeping, protection of confidential information, harassment, substance abuse, and inappropriate gifts. The Guide also clearly explains how employees worldwide can report a violation of the code of conduct or seek guidance on particular issues, with complete confidentiality, by calling Tyco's toll free CONCERNline or by contacting the office of the Tyco Ombudsman. Tyco recently announced the hiring of Richard Baran as its first Corporate Ombudsman. The governance practices announced today implement and in some instances exceed the requirements of the Sarbanes-Oxley Act, New York Stock Exchange listing requirements and the Company's own high standards of good corporate governance. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. UNIROYAL TECH: Retirees Committee Employs Levy Ratner as Counsel ---------------------------------------------------------------- The Official Committee of Pre-86 Plastic Retirees of Uniroyal Technology Corporation, wants to employ Levy, Ratner & Behroozi, P.C. as its legal counsel, nunc pro tunc as of October 9, 2002. The Committee unanimously decided during a meeting to employ Levy Ratner as attorneys in all matters in these bankruptcy cases. As of December 20, 2002, the Committee points out that numerous matters in which the Committee had an immediate interest, were pending and needed Levy Ratner's immediate and continued services. The Committee asks for authority from the U.S. Bankruptcy Court for the District of Delaware to retain Levy Ratner as counsel because the firm has extensive experience in and knowledge of retiree health and related benefits under the Taft-Hartley Act & Erisa. The Committee believes that Levy Ratner is well qualified to represent it in these cases in an efficient and cost effective manner. Levy Ratner is expected to: a. advise the Committee as to its rights, powers and duties; b. advise the Committee in connection with proposals and leadings submitted by the Debtors or others to the Court; c. investigate the actions of the Debtors and the assets and liabilities of the estates; d. advise the Committee in connection with negotiation and formulation of any plans of reorganization; e. review all applications and motions filed by parties other than the Committee and to represent the interest of the Committee in and outside of court with respect to all applications and motions; f. generally advocate positions that further the interests of the Pre86 Plastic Retirees represented by the Committee; and g. perform other services that are in the interests of the Committee. The current hourly rates for the attorneys most involved in this retention are: Richard Dom $395 per hour David Slutsky $225 per hour 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: AT&T Holds $205 Million Unpaid Lease Claim ----------------------------------------------------------- AT&T notifies the Court that as of February 7, 2003, it held claims against United Airlines Inc., and its debtor-affiliates totaling $205,530,630. James H. Hodge, AT&T Assistant Treasurer, explains that the claims stem from unpaid Aircraft lease payments and unpaid telecommunications bills. (United Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that United Airlines' 10.670% bonds due 2004 (UAL04USR1) are trading between 4 and 6. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. US AIRWAYS: MBIA Exercises Right to Purchase Trust Certificates --------------------------------------------------------------- MBIA Insurance Corp. (NYSE: MBI) announced that it exercised its right to purchase the 8.11% Class G Pass Through Certificates due August 20, 2018, the 8.02% Class G Pass Through Certificates due August 5, 2020, the 7.89% Class G Pass Through Certificates due September 1, 2020 and the 7.076% Class G Pass Through Certificates due September 20, 2022 issued by US Airways 2000-1G Pass Through Trust, US Airways 2000-2G Pass Through Trust, US Airways 2000-3G Pass Through Trust and US Airways 2001-1G Through Trust, respectively. Under the terms of the applicable trust agreements relating to these certificates, MBIA has the right to purchase these certificates due to the bankruptcy filing by US Airways. Under the terms of such trust agreements, the purchase price for the certificates will be approximately $1.5 billion and will include their outstanding balance plus accrued interest through March 20, 2003, the effective date of the purchase. MBIA has arranged for the immediate sale of substantially all of the certificates to a third party as a means of funding MBIA's purchase of the certificates. As a result of the purchase, MBIA will gain voting rights over the certificates. MBIA will continue to insure these certificates, and its exposure to US Airways will not change as a result of the purchase of the certificates. MBIA has $536 million of net par exposure to equipment trust certificates backed by aircraft leased to US Airways. MBIA does not expect to incur a loss with respect to this exposure. MBIA Inc., through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. Please visit MBIA's Web site at http://www.mbia.com. US STEEL: Sees Loss for Q1 2003 Due To Increased Benefit Costs -------------------------------------------------------------- United States Steel Corporation (NYSE: X) filed its Annual Report on Form 10-K for the year ended December 31, 2002 with the Securities and Exchange Commission. In the outlook provided in Management's Discussion and Analysis, U. S. Steel noted that it expects a loss from operations and a net loss for the first quarter of 2003, due primarily to the previously reported increase in pension and other postretirement benefit costs from the fourth quarter of 2002 of approximately $50 million, substantially higher natural gas costs and the normal negative seasonal effects related to iron ore and transportation operations. The outlook further states that a price increase of at least $30 per net ton has been announced for new oil country tubular goods orders for shipment after March 1, 2003. For the second quarter of 2003, U. S. Steel has also announced a $30 per net ton price increase on all domestic sheet orders and a minimum 20 euro per metric ton price increase on all U. S. Steel Kosice (USSK) orders. The Company also noted in the filing that reported net income for the fourth quarter of 2002 was $11 million or 10 cents per diluted share, and year 2002 net income was $61 million or 62 cents per diluted share. U. S. Steel said that these amounts are $1 million, or 2 cents per diluted share, lower than the preliminary results announced January 28, 2003, due primarily to additional legal accruals to reflect a settlement in late February 2003 of prior-year vehicular cases. * * * As previously reported, Fitch Ratings has assigned a 'B+' rating to U.S. Steel's Series B mandatory convertible preferred stock, which is consistent with current ratings ('BB' for senior unsecured, 'BB+' for secured bank debt). All ratings remain on Rating Watch Negative following the company's bid for certain assets of National Steel. The company has stated that proceeds from the preferred offering will be used for general corporate purposes, including funding working capital, financing potential acquisitions, debt reduction and voluntary contributions to its employee benefit plans. If the company was successful in acquiring the assets of National Steel, the proceeds may be used to finance a portion of the purchase price. The preferred stock is not being issued to recapitalize the company. WALTER INDUSTRIES: Senior VP Anthony Hines To Retire on April 1 --------------------------------------------------------------- Walter Industries, Inc. (NYSE: WLT) announced that Anthony L. Hines, Senior Vice President- Operations, is retiring effective April 1. Mr. Hines has played a major role in improving Walter Industries' performance since his arrival in January 2001. Using such methods as Six Sigma and lean manufacturing, the Company has significantly improved productivity the past two years. These improvements have been critical in Walter Industries' success in a difficult economic environment. "Tony's leadership and knowledge has helped us accelerate our productivity by improving our processes and adding more analytical tools," said Don DeFosset, Chairman and Chief Executive Officer of Walter Industries. "Tony has made a major impact on our Company." In addition to serving as Senior VP-Operations, Mr. Hines served as interim President of U.S. Pipe & Foundry for a 10-month period in 2002. Among Mr. Hines' accomplishments, JW Aluminum increased profitability by 125% in 2002 vs. the previous year, while U.S. Pipe & Foundry improved its tons-per-man-day performance by 19% over the same time frame. Mr. Hines came to Walter Industries with deep experience in manufacturing gained at Navistar International and Honda. Mr. Hines also spent a number of years in academia, including a position of Dean of the College of Engineering at the University of Missouri. For more information about Walter Industries, please contact Walter Industries at (813) 871-4132 or visit the corporate Web site at http://www.walterind.com Walter Industries, Inc. is a diversified company with five principal operating businesses and revenues of approximately $1.9 billion. The company is a leader in homebuilding, home financing, water transmission products, energy services, and specialty aluminum products. Based in Tampa, Florida, the company employs approximately 6,300 people. The Troubled Company Reporter related yesterday that Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Walter Industries Inc., and its preliminary 'BB' rating to the company's proposed $500 million senior secured credit facility. The outlook is stable. WORLDCOM INC: Enters Into Settlement Pact with Cable & Wireless --------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates seek entry of an Order pursuant to Section 363(b) of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedures authorizing them to compromise certain claims, enter into a settlement agreement with Cable & Wireless USA, Inc., and terminate certain agreements. The proposed settlement agreement resolves all claims arising from ten sets of contracts between WorldCom and C&W except the Pending Arbitration. The total amount in dispute with respect to these contracts is $32,200,000. Timothy W. Walsh, Esq., at Piper Rudnick LLP, in New York, relates that C&W and WorldCom and their affiliates entered into various agreements for the provision of telecommunication services by WorldCom to C&W. For over two years, the Parties engaged in disputes regarding the amounts charged pursuant to these agreements and the services provided. The Parties have now executed a Settlement Agreement and Release, which resolves the Parties' disputes arising out of the C&W/WorldCom Agreements. The contracts that are the subject of the Settlement Agreement are: A. The TSA: WorldCom Network Services, Inc. d/b/a WilTel and C&W have entered into an agreement whereby WilTel provided C&W with switched telecommunication services and other associated services. The TSA does not have minimum purchase commitments. WorldCom contended that C&W owed $1,300,000 for services provided under the TSA. C&W has disputed this amount. B. The DSA: WorldCom Network Services, Inc. and C&W have entered into a multi-year Carrier Digital Services Agreement for the provision of dedicated digital telecommunications by WorldCom to C&W. WorldCom contended, and C&W denied, that C&W owed $1,700,000 pursuant to the DSA for services rendered. C. MCI Carrier Agreement: MCI Telecommunications Corporation and C&W have entered into a multi-year agreement whereby MCI provided certain specified domestic interstate services, international services and intrastate common carriage services. C&W disputes $2,400,000 in billings rendered pursuant to this agreement. D. Master Agreement: On September 14, 1998, MCI sold iMCI, a former MCI affiliate, to C&W in connection with the MCI/WorldCom merger. At that time, the iMCI business was not operated as a separate, stand-alone business, but was integrated throughout MCI's global operations. The sale of the iMCI business to C&W therefore involved not only the transfer to C&W of certain assets and Internet customers, but also required MCI to provide support and services to C&W following the Closing Date. The parties contemplated that those services and support would be required for a period of time to allow C&W to integrate the iMCI business into its existing operations. As a result, concurrently with the Stock Purchase Agreement, the parties entered into various ancillary agreements, including the Master Agreement. The Master Agreement sets forth the terms and conditions under which MCI WorldCom provided telecommunications, network transportation, collocation and support services to C&W following the Closing Date. Attachment A to the Master Agreement, entitled "Domestic Interstate Service(s), International Services, Local Access Services, and Dial-Up Transport Services," contains the agreed-on terms and conditions under which MCI WorldCom would provide telecommunications network transportation to C&W. The Master Agreement has expired by its terms. WorldCom has contended that Cable & Wireless failed to pay $8,807,000 for services provided pursuant to the agreement for the period of November 2000 through December 2001. The parties arbitrated these issues in May 2002 and are engaged in post-hearing arbitration procedures. The subject matter of that arbitration is outside of the scope of the Settlement Agreement. C&W has disputed an additional $1,032,000 billed by WorldCom for services provided under the Master Agreement that were not the subject of the arbitration. These include: -- The SPSA Agreement: On June 1, 1998, WorldCom Network Services, Inc. and C&W entered into an agreement for the continuation of services being provided under System Purchase and Use Agreements through which Dedicated digital telecommunications interexchange, local access and ancillary services were provided by WorldCom to C&W. Pursuant to Section 7(E) of the SPSA, C&W agreed to pay WorldCom a monthly maintenance fee equal to $471,979.20. The term of this agreement continues through December 31, 2013. C&W contested $2,400,000 in monthly maintenance fee billings for periods covered by July 20, 2002 through November 5, 2002 invoices. -- Emerging Markets MSA: MCI WorldCom Communications, Inc. and C&W have entered into a multi-year Master Services Agreement. Pursuant to the Emerging Markets MSA, MCI WorldCom provided C&W with intralata dedicated services. The amount of billings contested by C&W pursuant to this Agreement was $7,100,000. -- Dark Fiber Agreements: MCI Metro Access Transmission Services LLC and Cable & Wireless Communications, Inc. have entered into nine agreements whereby WorldCom leased "dark fiber" capacity to C&W. The amount of disputed billings pursuant to these leases was $900,000. -- Global Services Agreement: MCI WorldCom Communications, Inc. and Digital Island, Inc. have entered into a multi-year Global Services Agreement whereby MCI WorldCom provided interstate and international voice services, domestic frame relay and private line services, dedicated access service, metro private line service and interstate audio conferencing. Digital Island, Inc. was subsequently acquired by C&W. Schedule 1 of the agreement contained a minimum volume requirement of $1,750,000 per month. The amount of disputed billings pursuant to the GSA was $11,000,000. -- Internet Service Agreement: On May 4, 2001, UUNet Technologies, Inc. entered into an agreement with Digital Island, Inc. to provide dedicated internet connections and associated services. The agreement had a 24-month term after the first day of the month following the service activation date of the first circuit ordered. The amounts of billings in dispute pursuant to this agreement was $3,200,000. The Internet Service Agreement called for monthly minimum payments of up to $600,000 depending on the amount of international traffic utilized by C&W. -- International Private Line Service Order: MCI WorldCom, Inc. and Digital Island, Inc. have entered into an International Private Line Service Order. The amount of billings in dispute is $1,000,000. Mr. Walsh admits that the relationship between WorldCom and C&W frequently has been contentious. In 2001, C&W initiated arbitration against WorldCom pursuant to the MCI Master Services Agreement. C&W contended that WorldCom had overbilled C&W $8,800,000 pursuant to this agreement. WorldCom counterclaimed against C&W, alleging that all billings were proper and in accord with the terms of the MSA. The focal points of the billing disputes related to: -- international direct connection fees; and -- charges billed by local exchange companies to WorldCom for the services being provided to C&W, which WorldCom passed through to C&W. This arbitration proceeded to a two-week evidentiary hearing in May 2002. The parties filed post-trial arbitration briefs in January 2003, and a decision is expected in Spring 2003. MCI WorldCom has paid several hundreds of thousands of dollars in litigation expenses, including attorneys' fees, expert fees, and other costs associated with the arbitration. In February 2003, Mr. Walsh informs the Court that WorldCom and C&W agreed to the Settlement Agreement, which is being filed under seal. The Settlement Agreement is intended to resolve all disputes relating to the C&W/WorldCom Agreements for billing periods covered by invoices dated through November 5, 2002, except the Pending Arbitration. The principal terms of the Settlement Agreement are: A. Within ten business days of the Effective Date, C&W agrees to pay WorldCom $28,000,000 less a credit for $85,000 previously paid in full and final satisfaction of $32,200,000 of disputed billings arising from the C&W/WorldCom Agreements and for terminating the SPSA and the Internet Service Agreement. B. C&W agrees to grant WorldCom an option to obtain transatlantic capacity on its network, which WorldCom management believes has a value of $4,300,000. The option has an exercise period of 18 months. C. Following receipt of the Settlement Payment, WorldCom agrees to apply a credit in the amount necessary to bring all accounts due under the Terminated Agreements and the Contested Accounts Receivable for amounts due through the November 5, 2002 invoices to zero, except for the amounts in dispute in the Pending Arbitration. D. The parties agree that the SPSA Agreement and the Internet Service Agreement will be terminated. E. The parties will release each other for all services provided by WorldCom to C&W for periods up to and including the November 5, 2002 invoice, the Contested Accounts Receivable and the Terminated Agreements. The Release specifically excludes the amounts in dispute in the Pending Arbitration. F. The parties agree to negotiate in good faith to: -- consolidate the remaining C&W/WorldCom agreements into one contract on or before March 31, 2003; and -- to form an appropriate business construct for the continuing business relationship between C&W and WorldCom. Any failure to accomplish these objectives, however, does not affect the remainder of the agreement. Mr. Walsh believes that approval of the Settlement Agreement is important and beneficial to the WorldCom bankruptcy estate. As a result, authority should be granted for WorldCom to enter into and perform in accordance with the Settlement Agreement. Under the terms of the Settlement Agreement, C&W agrees to pay WorldCom $28,000,000 in cash within ten business days of the Effective Date of the Settlement Agreement. It also agrees to provide an option for needed transatlantic capacity at a significantly discounted price. In return, WorldCom has agreed to a sum that results in a discounting of its disputed accounts receivable and termination of certain contracts which had minimum volume requirements. The Settlement Agreement offers these benefits to WorldCom: A. WorldCom obtains $28,000,000 on an immediate basis. This immediate influx of cash to WorldCom from C&W is particularly advantageous due to C&W's publicly reported financial challenges. Had the disputes related to the C&W/WorldCom Agreements proceeded to litigation, there would be, in all likelihood, no resolution for at least a one to two year period of time. Even assuming that WorldCom prevailed after litigation, there can be no guarantee of C&W's ability to satisfy a substantial judgment a year or two hence. B. The agreement allows WorldCom to obtain an option to acquire much needed transatlantic capacity at a discounted price. WorldCom management believes that the value of this option is $4,300,000. C. Pursuant to WorldCom's allocation of the settlement amount, WorldCom received a fair price for the present value of the income stream represented by the minimum volume commitments of the SPSA, given the application of a discount rate appropriate to reflect the risk associated with C&W's expected ability to make payments over a 10-year period of time. D. The Settlement Agreement contains a general commitment by the Parties to negotiate in good faith a new business construct for a continued relationship between C&W and WorldCom. This provision contemplates that C&W will continue to purchase services from WorldCom, thereby generating additional revenue for the Company. E. The Settlement Agreement will result in significant cost savings in terms of legal fees and related expenses. The ten sets of contracts in dispute had varying dispute resolution clauses so that, unless the Parties subsequently agreed otherwise, these disputes would have been litigated in at least three different fora. Based on the expense incurred in litigating just one of these contracts in the Pending Arbitration, it is reasonable to assume that WorldCom would have been required to expend several million dollars in legal fees, expert fees and other costs had all of the disputes relating to all of the C&W/WorldCom Agreements been litigated to conclusion. F. The Settlement Agreement will remove the uncertainty associated with the numerous disputes pending between WorldCom and C&W and will allow the parties to move forward with their business relationship. WorldCom and C&W believe that the resolution of these disputes, which have plagued the relationship for years, will clear the way for new business opportunities and will eliminate or greatly reduce any ongoing problems that have adversely impacted the business relationship. In exchange for these benefits, WorldCom made these concessions to C&W: A. C&W obtained a release of the total amount of the Contested Accounts Receivable. B. C&W obtained a termination of the SPSA Agreement and the Internet Service Agreement, both of which had minimum volume commitments. An analysis of the four factors utilized by courts to determine whether to approve a settlement or compromise clearly demonstrates that the Settlement Agreement is "fair, reasonable, and in the interest of the estate," and therefore should be approved. These factors are: A. Likelihood of Success on the Merits: C&W has disputed $32,200,000 in billings rendered by WorldCom pursuant to the C&W/WorldCom Agreements. WorldCom believes that it would prevail on some, but not all, of the claims related to the Contested Accounts Receivable. Nevertheless, potentially significant issues do exist with other material amounts of the Contested Accounts Receivable. Thus, WorldCom believes that the compromise reached with respect to the Contested Accounts Receivable represents a reasonable resolution, given the uncertainty and risks attendant to litigating these claims. B. Likely Difficulties in Collection: The Settlement Agreement provides for an immediate payment of $28,000,000. Absent a settlement agreement, WorldCom would be forced to litigate these claims, with the opportunity for any recovery of any amount delayed for at least one or two years. Similarly, pursuant to the Settlement Agreement, WorldCom will realize amounts from the early termination of the SPSA and the ISA. Without this agreement, WorldCom would have to rely on C&W's ability to make minimum volume requirement payments under the SPSA through 2013. WorldCom cannot know with any certainty whether C&W would be in a position to satisfy a substantial judgment obtained one to two years from now, or to make minimum volume requirement payments through 2013. The Settlement Agreement, therefore, avoids the risk that C&W will not be able to make payments in the future. C. Complexity, Expense, Inconvenience, and Delay: MCI WorldCom and C&W have been engaged in disputes relating to the C&W/WorldCom Agreements for over two years. The parties are already engaged in one arbitration that cost both sides hundreds of thousands of dollars in litigation-related expenses. The current disputes between the Parties involve complex issues of contract interpretation, the state of the telecommunications industry, WorldCom's business, and various economic calculations, all of which are likely to involve numerous experts on both sides. Given the parties' experience in the earlier arbitration, hundreds of thousands, if not millions, of pages of documents will need to be reviewed and exchanged. It will take a year, or more, to resolve all of the current disputes between WorldCom and C&W. Using past costs as a guide, it likely would cost the parties millions to litigate the current disputes to completion. The resulting uncertainty and delay would only further strain the relationship between C&W and WorldCom. WorldCom believes that a definitive resolution of all existing and potential disputes with C&W, rather than engaging in factually complex, "paper intensive" litigation, is the most cost effective path to follow. D. Paramount Interest of Creditors: Approval of the Settlement Agreement is in the best interests of the creditors. First and foremost, the settlement will result in the recovery of $28,000,000 in cash payments by WorldCom's estate. In addition, it provides WorldCom with an option valued at $4,300,000 to obtain transatlantic capacity. Finally, the Settlement Agreement establishes a platform for the Parties to launch a new, mutually profitable business construct. As a result, the Settlement Agreement will maximize the opportunity for substantial revenues to continue to flow into the estate. The proposed settlement of the C&W/WorldCom Agreements disputes will bring a prompt, inexpensive, comprehensive, and favorable resolution to these matters. (Worldcom Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says 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. * Meetings, Conferences and Seminars ------------------------------------ March 20-21, 2003 AMERICAN CONFERENCE INSTITUTE Outsourcing In Financial Services Marriott East Side, New York Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com March 26, 2003 NEW YORK INSTITUTE OF CREDIT Asset-Based Lending Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org March 27-28, 2003 FINANCIAL RESEARCH ASSOCIATES Commercial Loan Workout Techniques New York Helmsley Hotel, New York City, NY Contact: 1-800-280-8440 or http://www.frallc.com March 27-30, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Litigation Institute II Flamingo Hilton, Las Vegas, Nevada Contact: 1-770-535-7722 or http://www.nortoninstitutes.org March 31 - April 01, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Healthcare Transactions: Successful Strategies for Mergers, Acquisitions, Divestitures and Restructurings The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com April 10-11, 2003 AMERICAN CONFERENCE INSTITUTE Predaotry Lending The Westin Grand Bohemian, Florida Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 10-13, 2003 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 28-29, 2003 AMERICAN CONFERENCE INSTITUTE Credit Derivatives Waldorf Astoria, New York Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 29, 2003 NEW YORK INSTITUTE OF CREDIT Corporate Governance Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org May 1-3, 2003 ALI-ABA Chapter 11 Business Organizations New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 8-10, 2003 ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 14, 2003 NEW YORK INSTITUTE OF CREDIT Factoring Panel Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 4, 2003 NEW YORK INSTITUTE OF CREDIT 24th Credit Smorgasbord Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 19-20, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Corporate Reorganizations: Successful Strategies for Restructuring Troubled Companies The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***