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/raid1/www/Hosts/bankrupt/TCR_Public/030318.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 18, 2003, Vol. 7, No. 54 Headlines 360NETWORKS: Sub Inc. Unit Asks Court to Dismiss Chapter 11 Case AES CORP: Soliciting Consents to Amend Senior Notes' Indenture ALLEGHENY ENERGY: Shareholders Approve Proposal to Amend Charter ALROSA: S&P Ups Rating to B Due to 5-Year Diamond Export Quota AMAZON.COM INC: Will Webcast Conference Presentation Tomorrow AMES DEPARTMENT: Gets OK to Assign Weymouth Lease to Building 19 ANTIGUA: Selling Majority Stake for $10.25MM to Pay Off Debts AQUILA INC: Work Progressing on Renewal of Short-Term Financing AUDIOVOX: Banks Waive Covenant Violations Under Credit Pact BETHLEHEM STEEL: Lukens Steel Retirees Sought for USWA Meeting BETHLEHEM STEEL: USWA Will Hold Steelton Meeting Tomorrow BIOTRANSPLANT INC: Commences OTCBB Trading Effective March 14 BIOTRANSPLANT: Wants Until April 3 to File Bankruptcy Schedules BOMBARDIER DE HAVILLAND: Wins CAW Members' Nod for 3-Year Pact BROADWING INC: Fitch Downgrades Various Ratings to Low-B Levels BURLINGTON: Court Approves Modified Asset Sale Bidding Protocol CANAL CAPITAL: Todman & Co. Expresses Going Concern Doubt CINEMARK USA: Reports Improved Operating Results for Q4 & 2002 COMDISCO: Makes Optional Partial Redemption of $75M of 11% Notes COMMSCOPE CORP: S&P Keeps Watch on BB+ Corporate Credit Rating CONSECO FINANCE: Pushing for Replacement DIP Facility Approval CONSECO INC: CIHC Wants Approval of U.S. Bank Pledge Agreement CORUS GROUP: S&P Cuts L-T Ratings to BB- after Failed Asset Sale DIXIE: Settles $50-Mil. in Obligation to Ex-Fabrica Shareholders EAGLE-PICHER INDUSTRIES: S&P Affirms B+ Corporate Credit Rating ELCOM INT'L: Says Current Funds Sufficient Only Until June/July ENCOMPASS SERVICES: Court Okays Receivable Collections Program ENRON: EOP Wants to Defer Payments to Preserve Set-Off Rights EPICEDGE: Commenced Trading on Pink Sheets Effective March 13 EXIDE TECH.: Court Approves Bayard as Co-Counsel for Committee FAIRFAX FIN'L: AM Best Hatchets Various Fin'l Strength Ratings FEDERAL-MOGUL: Dimensional Fund Discloses 3.12% Equity Stake FISHER COMMS: Elects Jerry A. St. Dennis as New Board Member GENUITY INC: Earns Nod to Reject Four Leases and One Sublease GOODMAN FIELDER: S&P Lowers Long-Term and Debt Ratings to 'B+' GREAT ATLANTIC: Selling New England Stores to GU Family Markets GXS CORP: S&P Assigns 'B' Rating to $105-Mill. Sr. Secured Notes HANOVER COMPRESSOR: Exchange Offers for Sr. Secured Notes Expire HARBISON-WALKER: Halliburton Has 75% Support from DII Claimants HOLMES GROUP: Dec. 31 Net Capital Deficit Widens to $74 Million IESI CORP: Dec. 31 Balance Sheet Insolvency Doubles to $36 Mill. INTERNATIONAL PAPER: S&P Assigns BB+ Preferred Share Ratings ITEX CORP: January 31 Working Capital Deficit Stands at $1 Mill. J.P. MORGAN: S&P Assign Prelim. Low-B Ratings on 6 Note Classes JP MORGAN COMM'L: Fitch Keeps Watch on BB+/B+ Note Class Ratings K & F IND.: Says EBITDA Slides while Ops. Cash Flow Climbs 12% KAISER ALUMINUM: Completes Kaiser Center Sale for $65.6 Million KMART CORPORATION: Fitch Withdraws Various 'D' Ratings LONGVIEW ALUMINUM: Lynch Wants Inquiry into Joe Baldi's Action LUTHERAN HOME: Fitch Hatchets $3.4-Million Revenue Bonds to BB+ MAGELLAN HEALTH: Has Until April 23, 2003 to Use Cash Collateral MC SHIPPING: S&P Withdraws B- Corp. Credit & Junk Debt Ratings MEDICALCV INC: Nasdaq Knocks Off Shares from SmallCap Market METRIS MASTER: S&P Puts 9 BB-Rated Transactions on Watch Neg. METROMEDIA FIBER: Files Chapter 11 Reorganization Plan in SDNY MIDWEST EXPRESS: Continues Aircraft Financing Negotiations MOBILE KNOWLEDGE: Ontario Court OKs Asset Sale to Longitude Fund MORGAN GROUP: Gets Nod to Bring-In FM Stone as Real Estate Agent NATIONAL CENTURY: Sues Boston Medical to Recoup Over $3M in Cash NATIONSRENT INC: Files Exhibits to its Consensual Reorg. Plan NEXTCARD: Gets Court Nod to Extend Exclusivity Until June 16 NTELOS INC: Court Okays Marcus Santoro as Conflicts Counsel OCWEN FINANCIAL: Fitch Affirms B/D Senior & Individual Ratings PENTON MEDIA: Dec. 31 Balance Sheet Upside-Down by $61 Million RADNOR HOLDINGS: S&P Ups Corporate Credit Rating to B+ from B- SAFETY-KLEEN: Solicitation Exclusivity Extended to May 30, 2003 SAIF CORP: S&P Hatchets Counterparty Credit Rating Down to BBpi SEQUA CORP: Reports Improved Operating Performance for Year 2002 SIERRA HEALTH: Completes Senior Convertible Debenture Offering SPIEGEL: Files for Chapter 11 Protection in Manhattan SPIEGEL: Case Summary & 30-Largest Unsecured Creditors SPIEGEL: Names Geralynn Madonna Head of Catalog and Newport News SPIRET TRUST: S&P Cuts Junk Series 2002-1 Certs. Rating to CC TERAYON COMMS: Implementing Worldwide Restructuring Initiatives TODAY'S MAN: Seeking Open-Ended Lease Decision Period Extension TRANSBIOTICS: Capital Resources Insufficient to Continue Ops. TRINITY ENERGY: Provides Chapter 11 Update UNITED AIRLINES: S&P Places Some Ratings Still on Watch Negative US AIRWAYS: Plan Confirmation Hearing Set to Commence Today WARNACO: Court Clears Claims Dispute Settlement with ILGWU Nat'l WHEELING-PITTSBURGH: Amends Application for Steel Loan Guarantee WHEELING-PITTSBURGH: UST Says Discl. Statement Lacks Information WICKES INC: Obtains New $125-Million Senior Credit Facility WINDSOR WOODMONT: Gets OK to Tap Alvarez & Marsal as Consultant WORLDCOM INC: William Barney Wants to Pursue HK MCI Litigation * Wachovia Hires F. Dominguez & L. Laskiewicz as Consultants * Large Companies with Insolvent Balance Sheets ********* 360NETWORKS: Sub Inc. Unit Asks Court to Dismiss Chapter 11 Case ---------------------------------------------------------------- 360networks sub inc., seeks the Court's authority to voluntarily dismiss its Chapter 11 case pursuant to Sections 349 and 1112(b) of the Bankruptcy Code and Rules 1017 and 2002 of the Federal Rules of Bankruptcy Procedure. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York, relates that 360 Sub is a special purpose direct 100% subsidiary of the Debtors' ultimate Canadian parent, 360networks inc. 360 Sub was created solely in anticipation of an unconsummated prepetition merger transaction with NetRail, Inc., in which 360networks would acquire NetRail's stock and merge it into 360Sub. The proposed merger transaction never closed and was subsequently terminated. When 360 Sub filed its schedules of assets and liabilities, Mr. Lipkin notes that 360 Sub listed no assets and liabilities. Prior to the Bar Date, only five claims were filed against 360 Sub's estate. However, those claims were either filed in error or against the wrong entity. Pursuant to 360 Sub's U.S. bankruptcy filing, Mr. Lipkin relates that it also filed a voluntary petition pursuant to the CCAA in Canada. However, 360 Sub was not was one of the Debtors proposing or covered by the Debtors' plan of restructuring approved in the CCAA proceedings. Accordingly, the CCAA protection afforded to it has ended. KPMG Inc. was appointed the receiver of 360networks in Canada shortly after the implementation of the plan of restructuring. Hence, as a wholly owned subsidiary of 360networks, 360 Sub is now under KPMG's control. Mr. Lipkin informs Judge Gropper that KPMG consents to the dismissal of 360 Sub's Chapter 11 case. Mr. Lipkin contends that there is no reason to continue 360 Sub's Chapter 11 case since it will not be able to: (i) effectuate a plan; (ii) make a distribution; or (iii) obtain access to additional funds to continue the administration of its Chapter 11 case, and has no assets or liabilities. Moreover, conversion of the 360 Sub Chapter 11 case to one under Chapter 7 is not warranted because it does not have any assets and the administrative cost of a Chapter 7 trustee to liquidate 360 Sub would be unnecessary. If the case dismissal is granted, Mr. Lipkin assures the Court that the Debtors have agreed to satisfy any unpaid fees related to 360 Sub payable to the U.S. Trustee pursuant to Section 1930(a)(6) of the Judiciary Procedures Code. In addition, the Court will retain jurisdiction, as is legally permissible, for these purposes: (a) to resolve any dispute arising out of or related to 360 Sub's obligations to the U.S. Trustee; and (b) to support and enforce any orders entered in the 360 Sub's case. (360 Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) AES CORP: Soliciting Consents to Amend Senior Notes' Indenture -------------------------------------------------------------- The AES Corporation (NYSE:AES) has launched a consent solicitation seeking to amend certain of the events of default contained in certain of its outstanding senior and senior subordinated notes to generally conform such provisions to those contained in its recently issued senior secured notes due 2005. AES is offering a consent fee of $1.25 per $1,000 principal amount to holders of record of such securities at the close of business on March 13, 2002 that validly tender consents to the proposed amendments by 5:00 p.m., New York City time, on March 27, 2003. AES' obligation to accept consents and pay a consent fee to consenting holders is subject to numerous conditions which are set forth in the consent solicitation statement. The consent solicitation relates to AES' 8.75% Senior Notes, Series G, Due 2008, 9.50% Senior Notes, Series B, Due 2009, 9.375% Senior Notes, Series C, Due 2010, 8.875% Senior Notes, Series E, Due 2011, 7.375% Remarketable or Redeemable Securities Due 2013 (puttable in 2003), 8.375% Senior Subordinated Notes Due 2007, 10.25% Senior Subordinated Notes Due 2006, 8.50% Senior Subordinated Notes Due 2007 and 8.875% Senior Subordinated Notes Due 2027. AES intends to launch a consent solicitation on substantially similar terms with respect to its 8.00% Senior Notes, Series A due 2008, 8.375% Senior Notes, Series F due 2011 and 4.50% Convertible Junior Subordinated Debentures due 2005 to holders of record thereof as of the close of business on March 24, 2002 once it has complied with certain notification and filing requirements of the Securities Exchange Act of 1934, the New York Stock Exchange and the Luxemburg Stock Exchange. No default or event of default currently exists under any of these instruments. Holders of all such securities are urged to read the applicable consent solicitation statement when it becomes available because it contains important information. Holders can obtain a copy of the applicable consent solicitation statement, when available, free of charge from AES. In addition, the consent solicitation statement applicable to the 4.50% Convertible Junior Subordinated Debentures will be available for free from the Securities and Exchange Commission's Web site at http://www.sec.govonce it is available. Questions concerning the terms of the consent solicitation or requests for copies of the consent solicitation statement, the consent form or other related documents should be directed to the solicitation agent: Salomon Smith Barney, 390 Greenwich Street, New York, New York 10013, Attn: Liability Management Group. The solicitation agent can also be reached at (212) 723- 6106 or (800) 558-3745 (toll free). AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 160 facilities totaling over 55 gigawatts of capacity, in 30 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. For more general information visit the Company's Web site at http://www.aes.com AES Corporation's 10.250% bonds due 2006 (AES06USR1) are trading at about 65 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. ALLEGHENY ENERGY: Shareholders Approve Proposal to Amend Charter ---------------------------------------------------------------- Allegheny Energy, Inc., (NYSE: AYE) announced that more than 50 percent of the shares of common stock entitled to vote were voted to approve a proposal to amend the Company's charter to eliminate a preemptive rights provision during a special meeting of Allegheny Energy stockholders in New York, NY, and that the proposal was, therefore, adopted. "We are pleased that our stockholders voted to remove the preemptive rights provision," said Alan J. Noia, Chairman of the Board, President, and Chief Executive Officer of Allegheny Energy. "Although more common many years ago, today few public companies have preemptive rights. By eliminating preemptive rights, we will remove a significant impediment to any private sale of equity securities and will now have greater flexibility to raise additional capital as we work to restore the financial health of our Company." With headquarters in Hagerstown, Md., Allegheny Energy is an integrated energy company with a balanced portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities and supplies energy and energy-related commodities in selected domestic retail and wholesale markets; Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; and a business offering fiber-optic and data services. More information about the Company is available at http://www.alleghenyenergy.com As reported in Troubled Company Reporter's February 28, 2003 edition, Fitch reported its ratings of the Allegheny group are as follows: Allegheny Energy, Inc. -- Senior unsecured debt 'B+'. West Penn Power Company -- Medium-term notes 'BB+'. Potomac Edison Company -- First mortgage bonds 'BBB-'; -- Senior unsecured notes 'BB'. Monongahela Power Company -- First mortgage bonds 'BBB-'; -- Medium-term notes/pollution control revenue bonds (unsecured) 'BB'; -- Preferred stocks 'BB-'. Allegheny Energy Supply Company LLC -- Senior unsecured notes 'B'. Allegheny Generating Company -- Senior unsecured debentures 'B'. Allegheny Energy Supply Statutory Trust 2001 -- Senior secured notes 'B'. -- All ratings listed above remain on Rating Watch Negative. ALROSA: S&P Ups Rating to B Due to 5-Year Diamond Export Quota -------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on Russia-based diamond mining company ALROSA Co., Ltd., to 'B' from 'B-' following the new five-year diamond export quota the company obtained in March 2003. The outlook is stable. "The upgrade on Alrosa reflects the new quota, which will make sales more predictable, the improving operating environment in Russia and access to international finance markets, and the progress achieved by Alrosa in its underground mining program," said Standard & Poor's credit analyst Elena Anankina. The rating on the company is constrained by its high capital requirements, reduction in sales, high and increasing leverage with a short-term maturity profile, and close links with the Republic of Sakha (Yakutia). The rating on Alrosa is also constrained by the company's challenging capital expenditure program, and access to long-term finance has been limited by country factors and industry regulations. This is offset by ongoing lucrative sales to the South African diamond giant De Beers (45% owned by Anglo American PLC {A-/Stable/A-2}), a solid position in the relatively stable diamond industry, and rich reserves--although these have not been verified by a third party. Standard & Poor's does not expect the government of the Russian Federation (local currency BB+/Stable/B; foreign currency BB/Stable/B)--a 37% shareholder--to necessarily provide timely and direct support if a situation of financial stress were to occur at Alrosa. "The stable outlook reflects expectations that Alrosa's free cash flows after capital expenditure will be limited for the next few years, and Standard & Poor's will closely monitor the company's progress with its capital expenditure program," added Ms. Anankina. AMAZON.COM INC: Will Webcast Conference Presentation Tomorrow ------------------------------------------------------------- Amazon.com, Inc., (Nasdaq:AMZN) will be speaking at the Merrill Lynch Retailing Leaders Conference in New York tomorrow, at 10:20 a.m. PT/1:20 p.m. ET. The audio of this event will be Webcast live and be available for three months thereafter, at http://www.amazon.com/ir Amazon.com's main site offers millions of books, CDs, DVDS, and videos (which account for about 70% of sales), not to mention toys, tools, electronics, health and beauty products, prescription drugs, and services such as film processing. Expansion is propelling the company in many directions; it owns stakes in online sellers of prescription drugs, wine, wedding services, and more. Long a model for Internet companies that put market share ahead of profits and make acquisitions funded by meteoric market capitalization, Amazon.com is now focusing on profits. At December 31, 2002, Amazon.com's balance sheet shows a total shareholders' equity deficit of about $1.3 billion. AMES DEPARTMENT: Gets OK to Assign Weymouth Lease to Building 19 ---------------------------------------------------------------- In view of ABRO Corporation's objection, Ames Department Stores, Inc., and its debtor-affiliates, and Building #19 Inc. agreed to modify the Assignment Agreement to provide additional assurance of future performance on top of the $1,000,000 personal guaranty. The parties agree that: -- Building 19 will guarantee the payment of the greater of minimum annual percentage rent amounting to $22,651 and the actual percentage rent; -- within five business days after the Closing date, Building 19 will give ABRO a $356,721 cash security deposit. The deposit is equal to two times the sum of the $155,709 base rent plus the Guaranteed Percentage Rent; and -- Building 19 will prepay the $178,360 annual rent at the start of each year of the Lease term. The prepayment amount is equal to the Base Rent plus the Guaranteed Percentage Rent. The parties also agreed that, subject to the satisfaction of all Closing Conditions, Building 19 will pay the Debtors $1,338,000 by wire, certified or bank check on the Closing Date. On the next business day after the Closing Date, the Debtors will hold in escrow $150,000 for the lesser of 30 days and the date of the Court order directing the disposition of the Escrow, in connection with any and all claims that ABRO may assert against the Debtors and their estates. * * * After reviewing the revised Agreement and the merits of the proposed Assignment, Judge Gerber authorizes the Debtors to consummate the transaction. Building 19 will not be liable for any cure amount under the Lease. After ABRO receives the payment for its claim with respect to the Lease, Judge Gerber rules that, any and all of ABRO's proofs of claim filed against the Debtors will be deemed withdrawn and expunged without further Court order. Any dispute between the Debtors and ABRO regarding the payment of any cure amount under the Lease will not affect the validity of the lease assumption, assignment and sale. * * * As previously reported, Ames Department Stores, Inc., and its debtor-affiliates wanted to assume and assign an unexpired non- residential real property lease to Building #19, Inc. or its designee. The lease with ABRO Corporation for Ames Store No. 740 is located in Weymouth, Massachusetts. The Debtors have determined that the amount they owe ABRO to satisfy all the arrears under the Lease is $33,871. The Debtors assure the Court that they will pay the cure amount when they receive the payment from Building 19. Pursuant to an assumption and assignment agreement, but prior to the modifications mentioned above, the Debtors and Building 19 agreed that: (a) The Debtors will assign to Building 19 all of their right, title, and interest under the Lease for the remainder of the Lease term; (b) The total consideration to be paid by Building 19 will be $1,338,000 for the Lease. Building 19 will pay a deposit equal to 5% of the consideration or $66,900. Building 19 will pay the $1,271,100 balance at the Closing; (c) The Lease will be sold and assigned in an "as is, where is" basis, free and clear of any claims, liens or interests. Any liens, claims and encumbrances will attach to the net proceeds paid to the Debtors; (d) The assignment is subject to higher or better offers. If the Court does not approve the Debtors' assignment to Building 19 because a higher or better offer has been received, or for any reason other than Building 19's material breach of the agreement, then all escrowed funds will be released to Building 19 and it will have no further claims against the Debtors; (e) If Building 19 fails to close the transaction for any reason other than the Debtors' material breach of the agreement, which is not cured within five business days from the receipt of written notice, then Building 19's deposit will become non-refundable and will be forfeited to the Debtors' favor; and (f) Gerald Elovitz, Building 19's Chairman of the Board, will guaranty $1,000,000 as adequate assurance of Building 19's future performance under the Lease. (AMES Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANTIGUA: Selling Majority Stake for $10.25MM to Pay Off Debts ------------------------------------------------------------- Antigua Enterprises Inc., (OTC: ANTGE.PK) (TSXVenture: ANE) has entered into an agreement to sell to Ashley NA, LLC common and preferred shares representing a controlling interest in the company for US$10.25 million. Under the agreement, Ashley NA will purchase 27,299,480 of the company's common shares for US$5,000,000, or US$0.18315 per share, and 5,250,000 of the company's Preferred Class A shares for US$5,250,000, or US$1.00 per share. The company will use the proceeds to repay all of its outstanding debt that is past due and payable. Under the terms of the agreement, the entire purchase price will be placed into an escrow account pending shareholder and regulatory approval of the transaction. Ashley NA is owned in common with the Sports Soccer and Lillywhites chains of sporting goods stores in the United Kingdom. Upon closing of the transaction, Antigua will obtain from Donnay International S.A. a royalty-free non-exclusive license for the Donnay brand on apparel, headwear and bags in the United States, Canada and Puerto Rico. "This agreement ends a long process of trying to find the right transaction for Antigua to resolve its balance sheet issues and return its focus to increasing profits. We are delighted to be associated with Sports Soccer's ownership, because of their experience in growing a business from a small enterprise to a large one," commented Benjamin Adams, the company's chairman and chief executive officer. The company's President, Ronald McPherson, stated: "We believe this transaction not only gives us an ability to sell Antigua products in the United Kingdom but we are also excited to sell Donnay products in North America. The license with Donnay gives us the opportunity to sell products into new distribution channels." The company's board of directors unanimously approved the transaction with Ashley NA and will recommend that the shareholders approve the transaction. AQUILA INC: Work Progressing on Renewal of Short-Term Financing --------------------------------------------------------------- Information obtained from http://www.LoanDataSource.comshows that UtiliCorp United, Inc. (n/k/a Aquila, Inc.), closed on a 364-day revolving credit line totaling $325 million in April 2002, to replace an existing credit facility and help support the company's commercial paper program as well as provide working capital, additional liquidity and letters of credit. Citibank served as the agent on the transaction. Credit Suisse First Boston, Toronto Dominion and UBS Warburg were the co- syndication agents, http://www.LoanDataSource.comreports. "We are in constructive discussions with our lead lenders and are working with them to achieve a restructuring of our bank facilities that will be acceptable to the company as well as the banks," said Rick Dobson, Aquila's interim chief financial officer. "We are all working to achieve this outcome by April 11." Aquila is providing an update on the company's work on its restructuring plan at: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ila&script=1200 The material posted summarizes steps taken to date and outlines actions being pursued in the short term. As previously discussed with the investment community, the company's current short-term credit facility is due to expire on April 12. Aquila is working closely with its banking group to renew this facility, using available non-regulated collateral as well as pursuing filings with state regulatory commissions. The company will update the investment community as developments occur in coming weeks. Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks, serving customers in seven states and in Canada, the United Kingdom, and Australia. The company also owns and operates power generation assets. More information is available at http://www.aquila.com Aquila Inc.'s 6.625% bonds due 2011 are currently trading at about 70 cents-on-the-dollar. AUDIOVOX: Banks Waive Covenant Violations Under Credit Pact ----------------------------------------------------------- Audiovox Corporation (Nasdaq: VOXX) postponed its conference call and announced unaudited financial results for its fiscal year ended November 30, 2002. Conference Call The Company has postponed its conference call scheduled for 10 a.m. (EST), Friday, March 14, 2003 and failed to file its annual report on Form 10-K for 2002 yesterday, the Securities and Exchange Commission deadline to file its annual report under a 15-day extension. The reason for this delay in filing is related to the resolution of the Company's response to an SEC comment letter on the Company's prior Form 10-K and 10-Q Filings. There can be no assurance that the Company will not be required to make changes to the financial information set forth herein or prior financial information as a result of the SEC review. Audiovox Corporation will be hosting a results conference call after it files the 10-K for the fiscal year ended November 30, 2002. At such time, a conference call notice and invitation will be announced. Fiscal Year 2002 (Unaudited) For the fiscal year ended November 30, 2002, net sales were $1.1 billion. For the fiscal year ended November 30, 2002, the Company's majority-owned subsidiary, Audiovox Communications Corp., had revenues of $727.5 million on sales of 4.9 million units. The average selling price was $136 per unit due to higher priced, new product introductions during the fourth quarter. Wireless sales were impacted by reduced consumer demand, price erosion and delivery delays by some of ACC's suppliers. For the fiscal year-ended November 30, 2002, the Company's wholly owned subsidiary, Audiovox Electronics Corp., posted sales of $373.8 million. Sales in AEC were positively impacted by continued growth in the mobile video, security and consumer product categories. For the fiscal year ended November 30, 2002, net loss and loss per common share were $10.0 million and $0.46 per share, both basic and diluted, respectively. For the fiscal year ended November 30, 2002, ACC's loss before taxes was $23.4 million. Income before taxes for AEC was $18.8 million. The Company reports its operating segments on an income before taxes basis and retains certain expenses at the corporate level, which are not allocated to the operating segments. For the fiscal year ended November 30, 2002, the Company reported income before taxes of $3.7 million. As a result of the additional sale of shares of ACC to Toshiba Corporation, Audiovox Corporation's majority ownership of ACC was reduced to 75%. For Federal Income Tax purposes, ACC will no longer be consolidated in the parent company's Federal Tax returns. The Company has recorded a valuation allowance of $11.3 million on the deferred tax assets of ACC. Fourth Quarter Results (Unaudited) Net sales for the fourth quarter of fiscal 2002 were $317.2 million. Net sales for ACC were $210.9 million for the fourth quarter with 1.5 million total units sold at an average selling price of $137. Fourth quarter net sales for AEC were $106.3 million. The Company reports its operating segments on an income before taxes basis and retains certain expenses at the corporate level, which are not allocated to the operating segments. Net loss and loss per common share for the quarter, which includes a valuation allowance on ACC's deferred tax assets were $12.4 million and $0.57 basic and diluted, respectively. ACC's fourth quarter loss before taxes was $7.9 million. AEC's fourth quarter income before taxes was $3.2 million. The Company reports its operating segments on an income before taxes basis. There were several charges taken by ACC during the fourth quarter. The Company has recorded a valuation allowance of $11.3 million on the deferred tax assets of ACC. In addition, markdowns were recorded on ACC's inventory and the Company increased its provision for doubtful accounts for a PCS carrier and for customers in Venezuela and Argentina, due to the current economic conditions there. AEC provided for additional foreign currency translation costs relating to the Company's Venezuelan subsidiary. The Electronics group also provided an additional provision for inventory as a result of fourth quarter order cancellations from some of its mass merchant customers. This markdown reflects future resale value of the inventory based on current market conditions. Operating Expenses and other (Unaudited) For the fiscal year ended November 30, 2002, operating expenses were $102.5 million. Operating expenses included additional provisions for doubtful accounts, compensation related expenses from the Toshiba purchase of shares in ACC, additional operating expenses that resulted from the acquisition of the assets of Code Alarm Inc., increased insurance expenses, and increased audit and legal fees. Other expenses increased as a result of foreign currency translation costs related to the Company's Venezuelan subsidiary. Balance Sheet-Selected Items (Unaudited) Accounts receivable for the fiscal year ended November 30, 2002 were $184.5 million. Inventory at the end of fiscal 2002 was $292.7 million. ACC inventory levels were at $184.4 million, due to increased purchases for anticipated first quarter 2003 sales. AEC inventory levels were at $108.1 million, due to cancelled fourth quarter sales of certain video products by mass merchandiser customers. The Company's shareholder equity was $310.6 million as of November 30, 2002, which reflects the sale of 20% ACC shares to Toshiba, losses and profits from operations and the effect of the valuation allowance on ACC's deferred tax assets. Quarterly Restatement (Unaudited) After a review of the effect of EITF 01-9 on the Company's financial statements and adjustments for sales cutoffs, litigation accruals, foreign currency for its Venezuelan subsidiary, inventory pricing and tax provision, the Company will restate its first, second and third quarters for fiscal 2002. The net effect of the restatement for the nine months ended August 31, 2002 is a reduction of $462,000 in revenue and an increase in net income of $36,000. Guidance For the first fiscal quarter 2003 ended February 28, 2003, the Company's guidance is for revenues in the range of $290 - $305 million as a result of improved performance in both operating subsidiaries, which represents an increase of 56% - 61% over fiscal first quarter 2002. The Company's invested cash position as of February 28, 2003 was $42 million. In addition as of February 28, 2003, the Company had no direct borrowings under its main bank facility. During March 2003, the Company requested its banking group to reduce the Company's committed bank lines from $250 million to $200 million, based on the Company's improved cash flow position and turnover. This reduction will reduce fees paid on unused portions of the Company's bank lines. The Company has also received waivers from its bank group on covenant violations related to income tests for all of fiscal 2002. Audiovox Corporation is an international leader in the marketing of cellular telephones, mobile security and entertainment systems, and consumer electronics products. The Company conducts its business through two subsidiaries and markets its products both domestically and internationally under its own brands. It also functions as an OEM (Original Equipment Manufacturer) supplier to several customers. For additional information, please visit Audiovox on the Web at http://www.audiovox.com BETHLEHEM STEEL: Lukens Steel Retirees Sought for USWA Meeting -------------------------------------------------------------- About 1,300 USWA-represented steelworker retirees who were employed at bankrupt Bethlehem Steel Corp.'s Lukens Division at both the Coatesville and Conshohocken facilities are urgently being sought to attend a mass information meeting at the Coatsville union hall today. Benefit representatives of the USWA, the state insurance commission and others plan to make a presentation on healthcare insurance options for retirees, following earlier announcements by Bethlehem Steel that health and life insurance benefits will be terminated on Mar. 31. Family members and dependents of the Lukens retirees are welcome. There will be a series of three meetings to accommodate all steelworker retirees, their dependents and surviving spouses. Meeting times will be 8:30 am; 11:30 am and 2:30 pm. The Coatesville USWA Local 1165 Hall is at: 750 Charles St. A press briefing will be held in the Local 1165 Hall at 10:45 am. Individual counseling sessions for all Lukens retirees are also scheduled at the Local 1165 Hall, Mar. 19-21, 10:00 am to 4:00 pm. Information kits on the COBRA rates and the different healthcare insurance options will be available. All replacement insurance will require out-of- pocket payments by retirees. Most Bethlehem Steel retirees receive modest pensions and Social Security, while about 25 percent of the Lukens retirees are not yet Medicare eligible. Although press seating is available to news reporters to cover the proceedings, the USWA is limiting TV cameras and photographers to the opening moments of each meeting in order to minimize any disruption to the participants. Retirees with Internet access can obtain basic information on the health insurance options at the USWA-sponsored Web site http://www.uswa.org/retireebenefitwatch/default.htm/ BETHLEHEM STEEL: USWA Will Hold Steelton Meeting Tomorrow --------------------------------------------------------- About 4,000 USWA-represented steelworker retirees who were employed at bankrupt Bethlehem Steel Corp's. Steel Technologies Division are urgently being sought to attend a mass information meeting at the Steelton union hall tomorrow. Benefit representatives of the USWA, the state insurance commission and others plan to make a presentation on healthcare insurance options for retirees, following earlier announcements by Bethlehem Steel that health and life insurance benefits will be terminated on Mar. 31. Family members and dependents of the Lukens retirees are welcome. There will be a series of three meetings to accommodate all steelworker retirees, their dependents and surviving spouses. Meeting times will be 8:00 a.m.; 10:30 a.m.; 2:00 p.m. and 4:00 p.m. The Steelton USWA Local 1688 Hall is at: 200 Gibson St. A press briefing will be held in the Local 1688 Hall at 10:00 a.m. Individual counseling sessions for all Steelton retirees are also scheduled at the Local 1688 Hall, Mar. 31-Apr. 4, 10:00 a.m. to 4:00 p.m. Information kits on the COBRA rates and the different healthcare insurance options will be available. All replacement insurance will require out-of-pocket payments by retirees. Most Bethlehem Steel retirees receive modest pensions and Social Security, while about 25 percent of the Steelton retirees are not yet Medicare eligible. Although press seating is available to news reporters to cover the proceedings, the USWA is limiting TV cameras and photographers to the opening moments of each meeting in order to minimize any disruption to the participants. Retirees with Internet access can obtain basic information on the health insurance options at the USWA-sponsored Web site http://www.uswa.org/retireebenefitwatch/default.htm/ BIOTRANSPLANT INC: Commences OTCBB Trading Effective March 14 ------------------------------------------------------------- BioTransplant Incorporated (OTC Bulletin Board: BTRNQ.OB) announced that the Company's common stock has begun trading on the OTC Bulletin Board (OTCBB), effective as of today, March 14, 2003. The OTCBB is a regulated quotation service that displays real- time quotes, last-sale prices, and volume information in over- the-counter equity securities. An OTC equity security generally is any equity that is not listed or traded on Nasdaq or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts and Direct Participation Programs. As previously announced, the Company's securities were delisted from the Nasdaq National Market on March 11, 2003 as a result of the Company's filing of a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code on February 27, 2003. BioTransplant Incorporated, a Delaware corporation located in Medford, Massachusetts, is a life science company whose primary assets are intellectual property rights that it has exclusively licensed to third parties. The Company's strategy is to maximize the potential future value of these licensed intellectual property rights. The Company has exclusively licensed Siplizumab (MEDI-507), a monoclonal antibody product, to MedImmune, Inc. Siplizumab is in Phase II clinical trials for the treatment of psoriasis. The Company's assets also include the AlloMune System technologies, which are intended to treat a variety of hematologic malignancies and improve outcomes for solid organ transplants, and the Eligix HDM Cell Separation Systems, which use monoclonal antibodies to remove unwanted cells from bone marrow, peripheral blood stem cell and donor leukocyte grafts used in transplant procedures. BioTransplant also has an interest in Immerge BioTherapeutics, Inc., a joint venture with Novartis, to further develop both companies' individual technology bases in xenotransplantation. BIOTRANSPLANT: Wants Until April 3 to File Bankruptcy Schedules --------------------------------------------------------------- BioTransplant Incorporated asks the U.S. Bankruptcy Court for the District of Massachusetts to stretch the time period within which it must file its Schedules of Assets and Liabilities, and Statements of Financial Affairs. The Company wants an extension through April 3, 2003. The Debtor has started compiling the information and documents necessary to prepare its schedules and statements. Because of the complexity of the Debtor's affairs, the number of creditors and stockholders and the reduced number of administrative employees, the Debtor will require additional time beyond March 14, 2003 within which to complete its compilation of necessary information, determine the proper disclosure of assets, liabilities, and other information to be reported in its schedules and statements, and prepare such schedules and statements. In addition, certain of the disclosures required in the schedules and statements need to be reviewed with counsel to ensure consistent and accurate disclosure by the Debtor. The Debtor tells the Court that the extension will provide it with time to complete the schedules and statements, and should ensure that the statements and schedules will be completed in advance of the Section 341 meeting of creditors to be scheduled by the United States Trustee. Biotransplant Incorporated discovers, develops and commercializes therapeutics, therapeutic devices and therapeutic regimens designed to suppress undesired immune responses and enhance the body's ability to accept donor cells, tissues and organs. The Company filed for chapter 11 protection on February 27, 2003 (Bankr. Mass. Case No. 03-11585). Daniel C. Cohn, Esq., at Cohn Khoury Madoff & Whitesell LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,338,300 in total assets and $6,960,338 in total debts. BOMBARDIER DE HAVILLAND: Wins CAW Members' Nod for 3-Year Pact -------------------------------------------------------------- CAW members at Bombardier de Havilland voted overwhelming in favor of a new three year agreement with 88 per cent of production workers and 89 per cent of trades workers, members of CAW Local 112, in favor of the deal. In Local 637, 87 per cent of the office and technical workers voted in favour. "We went into bargaining under extraordinarily difficult circumstances with the orders down or cancelled as airlines in the U.S. declare bankruptcy and the threat of war depresses travel," said CAW president Buzz Hargrove. "We were able to protect income and jobs - the Global Express and Dash 8 production will remain at the facility. As well we increased the retirement incentive substantially to allow senior people decent retirement and protect the jobs of junior workers." "There is, however, a long way to go to rebuild the confidence of our members in Bombardier de Havilland and that will be on the shoulders of management," added Hargrove. It was, he said, the most difficult set of bargaining he has experienced as the company came into bargaining with major concession demands. BROADWING INC: Fitch Downgrades Various Ratings to Low-B Levels --------------------------------------------------------------- Fitch Ratings has announced the following rating actions on the debt issued by Broadwing, Inc., and its subsidiaries: BRW's senior secured bank facility has been downgraded to 'BB-' from 'BB', BRW's 7.25% senior secured notes due 2023 has been downgraded to 'BB-' from 'BB', BRW's 6.75% convertible subordinated notes due 2009 has been downgraded to 'B' from 'B+', and BRW's 6.75% convertible preferred stock has been downgraded to 'B-' from 'B'. Fitch Ratings has affirmed the 'BB+' rating of Cincinnati Bell Telephone's senior unsecured notes and MTNs. Fitch has downgraded the rating of Broadwing Communications, Inc.'s 9.0% senior subordinated notes due 2008 to 'CC' from 'B+' and has affirmed the 'C' rating on BCI's 12.5% junior exchangeable preferred stock. Fitch has placed all of the ratings on Rating Watch Negative. Fitch expects that the Rating Watch will be resolved pending the outcome of the company's efforts to amend its existing bank facility. If the company is successful, Fitch expects to remove the Rating Watch and establish a Stable Rating Outlook. These rating actions affect approximately $2.6 billion of debt and preferred stock. Fitch's rating actions contemplate the successful closing of the asset sale between Broadwing Communications Services, Inc. (a wholly owned subsidiary of BCI) and C III Communications, LLC and the related assumption of operating liabilities and contracts. The downgrade reflects the company's anticipated leverage and an expectation that EBITDA and free cash flow levels will continue to be pressured by moderate access line erosion and competitive impact on wireless net additions and ARPU. The company's leverage will be more reflective of the current rating category over the next couple of years. Cincinnati Bell Telephone and Cincinnati Bell wireless are market share leaders. CBT's access line losses and revenue growth have been impacted by competition from CLECs but not to the extent experienced by the RBOCs. Stemming in part from the relative lack of competition in the Cincinnati markets, Fitch expects the ILEC to continue to generate EBITDA margins that are higher than the RBOC peer group. Fitch also anticipates that CBT will continue to contribute free cash flow to the BRW parent. Cincinnati Bell Wireless provides BRW with a mature wireless business that also generates free cash flow for the BRW parent. CBW is the market share leader in the Cincinnati and Dayton BTAs and provides an avenue for CBT to offer a bundled service package. Free cash flows during 2003 could be impacted by additional capital expenditures required to upgrade its wireless network from TDMA to a GSM platform. The network upgrade is needed to remain competitive and to capture roaming revenue from AT&T subscribers utilizing CBW's network. Fitch still anticipates that CBW will generate free cash flow through the network upgrade process, however free cash flow could be affected by competitive and pricing pressures as subscriber growth slows. On a consolidated basis, Fitch expects BRW to generate positive free cash flow during 2003 and over the medium term. Fitch expects free cash flow to be earmarked for debt reduction. Fitch expects BRW's leverage to range between 5.0 and 5.2 times by the end of 2003. Both of BRW's core businesses are mature so Fitch does not foresee material growth in free cash flow or revenue in the near term that would accelerate debt reduction. BURLINGTON: Court Approves Modified Asset Sale Bidding Protocol --------------------------------------------------------------- With Berkshire's termination of its cash offer, Burlington Industries, Inc., and its debtor-affiliates presented the Court with modified bidding procedures. Judge Newsome approves this new protocol: (a) The Company may offer and pay to the Qualified Bidder the Company determines, in its sole discretion, after consultation with its advisors and the Creditors' Committee and Prepetition Lenders' financial advisors, has submitted the highest or otherwise best bid prior to the Auction -- the Opening Bidder -- a reasonable breakup fee in an amount not to exceed 1% the aggregate purchase price offered under the Marked Agreement of the Opening Bidder; provided, however, that any Breakup Fee will only become due and payable if: -- the Opening Bidder is not in breach of the Marked Agreement; and -- the Company closes a Transaction with a Successful Bidder other than the Opening Bidder; (b) The form and manner of notice of the Solicitation Notice and the Sale Notice, as modified to reflect the Modified Bidding Procedures, are approved; (c) On June 12, 2003, at 2:00 p.m. (Eastern Time), the Court will conduct a hearing to approve the results of the Auction; and (d) The Court will retain jurisdiction over any matter or dispute arising from or relating to the implementation of this Order or the Modified Bidding Procedures. Modified Bidding Procedures The bidding procedures are modified as to these terms: A. Bid Deadline Qualified Bidders must submit their bids by 4:00 p.m. Eastern time on May 28, 2003. B. Bid Requirements A bid must be a written irrevocable offer from a Qualified Bidder: (a) stating that the Qualified Bidder offers to consummate the Transaction as contemplated by the Agreement, as contemplated by the Agreement, upon the terms and conditions set forth in a copy of the Agreement, marked to show those amendments and modifications to the Agreement, including price and terms, that the Qualified Bidder proposes; (b) confirming that the offer will remain open until the completion of the closing under a Plan incorporating the bid of the Successful Bidder; (c) enclosing a copy of the proposed Marked Agreement; and (d) accompanied with: -- a certified or bank check, or wire transfer, for $10,000,000 payable to the order of the Company as a good-faith deposit, immediately upon the selection of the bid as the Successful Bid; and -- written evidence of a commitment for financing or comparable evidence of the bidder's ability to consummate the proposed Transaction, subject to no closing conditions. In addition to these requirements, the Company will consider a bid only if the bid: (i) provides that all cash and securities which are components of the purchase price are denominated in U.S. dollars only; (ii) is not conditioned on obtaining financing or the outcome of unperformed due diligence by the bidder with respect to the Company, but may be subject to the same conditions, but only those conditions, set forth in the Agreement; and (iii) fully discloses the identity of each entity that will be bidding for the Company or otherwise participating in connection with the bid, and the complete terms of any participation. C. Auction If another Qualified Bid is received by the Bid Deadline, the Company will conduct an auction with respect to the Transaction. The Auction will take place at 10:00 a.m. Eastern time on June 3, 2003 at the offices of Jones Day at 222 Past 41 Street in New York 10017. At the Auction, Qualified Bidders will be permitted to increase their bids. The bidding at the Auction will start at the purchase price stated in the Opening Bid, plus the amount of any Breakup Fee, and continue in increments of at least $3,000,000. Prior to the commencement of the Auction, the Company may adopt rules for the Auction that, in its business judgment, will better promote the goals of the Auction. All these rules will provide that: (1) the procedures must be fair and open, with Qualified Bidders being treated in substantially the same manner, to the extent reasonably possible; (2) all bids will be made and received in one room, on an open basis, and all other bidders will be entitled to be present for all bidding with the understanding that the true identity of each bidder will be fully disclosed to all other bidders and that all material terms of each Qualified Bid will be fully disclosed to all other bidders throughout the entire Auction; and (3) unless otherwise agreed to by the Company, no Qualified Bidder will be permitted more than one hour to respond to the previous bid at the Auction. D. Approval of Successful Bid The Company may also present the results of the Auction and the Marked Agreement to the Bankruptcy Court at a hearing on June 12, 2003 at 2:00 p.m. Eastern time at which the Company will request that the Bankruptcy Court make certain findings regarding the Auction, including: (1) that the Company conducted the Auction and selected the Successful Bidder in accordance with these Bidding Procedures, (2) that the Auction was fair in substance and procedure, and (3) that the Marked Agreement constitutes the highest and best offer for the Company. Without limitation, the Company will not be obligated to select a Qualified Bidder or pursue a Transaction and no bidder will be entitled to reimbursement of costs or other compensation regardless of the circumstances, except and solely to the extent approved in a specific order of the Bankruptcy Court. The Company may: (a) determine, in its business judgment and in its sole discretion, after consultation with its advisors and the Creditors' Committee's and the Prepetition Lenders' financial advisors, which Qualified Bid, if any, is the Successful Bid and the Next Best Bid; and (b) reject at any time before entry of an order approving the Auction Approval Motion, any bid that, in the Company's sole discretion, is: -- inadequate or insufficient, -- not in conformity with the requirements of the Bankruptcy Code, the Bidding Procedures, or the terms and conditions of the Transaction, or -- contrary to the best interests of the Company and its estate. E. No Auction The Company reserves the right, after consultation with its advisors and the Creditors' Committee's and the Prepetition Lenders' financial advisors, not to hold the Auction if the Qualified Bids received do not offer sufficient value for the Company or are not otherwise in the best interests of the Company's estate. If the Company receives only one Qualified Bid and if the Company determines, in its business judgment and in its sole discretion, after consultation with its advisors and the Creditors' Committee's and the Prepetition Lenders' financial advisors, that the Qualified Bid is the best and highest offer for the Company, the Company may select the Qualified Bid as the Successful Bid for purposes of these Bidding Procedures without conducting an Auction. F. Good Faith Deposit The Good Faith Deposit of the Successful Bidder will be held until the closing of the Transaction and applied in accordance with the Marked Agreement. (Burlington Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) Burlington Industries' 7.250% bonds due 2005 (BRLG05USR1) are trading at about 38 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1 for real-time bond pricing. CANAL CAPITAL: Todman & Co. Expresses Going Concern Doubt --------------------------------------------------------- "[T]he Company has suffered recurring losses from operations in eight of the last ten years and is obligated to continue making substantial annual contributions to its defined benefit pension plan. All of these matters raise substantial doubt about the Company's ability to continue as a going concern." These remarks are included in Todman & Co., CPA's, P.C.'s Auditors Report, dated March 11, 2002, at New York, N.Y., concerning the financial condition of Canal Capital Corporation for the period ended January 31, 2003. Canal Capital Corporation, incorporated in the state of Delaware in 1964, commenced business operations through a predecessor in 1936. Canal is engaged in two distinct businesses - the management and further development of its real estate properties and stockyard operations. Canal's real estate properties located in five Midwest states are primarily associated with its current and former agribusiness related operations. As a result of an August 1, 1999 asset purchase agreement, Canal now operates two central public stockyards located in St. Joseph, Missouri and Sioux Falls, South Dakota. Canal's revenues from continuing operations consist of revenues from its real estate and stockyards operations. Total revenues increased slightly by $20,000, or 1.4%, to $1,458,000 for the three month period ended January 31, 2003, as compared to revenues of $1,438,000 for the same period in fiscal 2002. The fiscal 2003 increase in revenues is due primarily to a $103,000 increase in revenue from the sales of real estate which was offset to a certain extent by softer than anticipated stockyard revenues. Canal recognized net income of $186,000 for the three month period ended January 31, 2003 as compared to net income of $377,000 for the same period in fiscal 2002. After recognition of preferred stock dividend payments of $42,000 and $78,000 for the three month periods ended January 31, 2003 and 2002, respectively, the Company recognized net income applicable to common stockholders of $144,000 ($0.03 per common share) and net income applicable to common stockholders of $299,000 ($0.07 per common share) for the three month periods ended January 31, 2003 and 2002, respectively. Included in the 2003 results is a sale of a 12 acre parcel of land located in St. Joseph, Missouri which generated operating income of approximately $61,000 and the sale of a piece of contemporary art which generated other income of approximately $33,000. Included in the 2002 results is other income of approximately $323,000 received by Canal as a demutualization compensation payment from an insurance company, from which, Canal had purchased annuity contracts in the early 1980's for certain of its retired stockyards employees. Canal's cash flow position has been under significant strain for the past several years. Canal indicates that it is continuing to closely monitor and reduce where possible its operating expenses and plans to continue to reduce the level of its art inventories to enhance current cash flows. Management believes that its income from operations combined with its cost cutting program and planned reduction of its art inventory will enable it to finance its current business activities. There can, however, be no assurance that Canal will be able to effectuate its planned art inventory reductions or that its income from operations combined with its cost cutting program in itself will be sufficient to fund operating cash requirements. CINEMARK USA: Reports Improved Operating Results for Q4 & 2002 -------------------------------------------------------------- Cinemark USA, Inc., a leader in the motion picture exhibition industry, reported revenues, operating income, net income and EBITDA for the fourth quarter and year ended December 31, 2002. Cinemark USA, Inc.'s revenues for the fourth quarter ended December 31, 2002 increased 5.3% to $226.7 million from $215.2 million for the fourth quarter ended December 31, 2001. Operating income for the fourth quarter of 2002 was $23.4 million in comparison with an operating loss of $4.7 million for the fourth quarter of 2001. Net income for the fourth quarter of 2002 was $4.3 million as compared to a net loss of $4.6 million for the fourth quarter of 2001. Net income for the fourth quarter of 2002 includes a non-recurring write-off of $3.1 million of fees (before tax) associated with the proposed initial public offering of the Company's parent, Cinemark, Inc., the closing of which was postponed due to unfavorable market conditions. Earnings before interest, taxes, depreciation, amortization and other non-cash expenditures (EBITDA) for the fourth quarter of 2002 increased to $43.7 million (after the $3.1 million write-off of IPO fees) from $43.3 million for the fourth quarter of 2001. For the year ended December 31, 2002, revenues increased 10.0% to $939.3 million from $853.7 million for the year ended December 31, 2001. Operating income for the year ended December 31, 2002 was $128.9 million in comparison with operating income of $57.6 million for the year ended December 31, 2001. Net income for the year ended December 31, 2002 was $35.6 million as compared to a net loss of $4.0 million for the year ended December 31, 2001. Net income for the year ended December 31, 2002 includes a non-recurring write-off of $3.1 million of fees (before tax) associated with the proposed initial public offering of the Company's parent, Cinemark, Inc., the closing of which was postponed due to unfavorable market conditions and a $3.4 million charge (net of tax) as a result of the cumulative effect of a change in accounting principle with respect to the amortization of goodwill and other intangible assets. EBITDA for the year ended December 31, 2002 increased 20.6% to $205.0 million (after the $3.1 million write-off of IPO fees) from $170.0 million for the year ended December 31, 2001. Lee Roy Mitchell, Cinemark's Chief Executive Officer, said, "The distributors provided the industry a strong slate of family oriented film product in 2002 resulting in historic industry performance. Cinemark increased its EBITDA margin in 2002 to 21.8% from 19.9% in 2001 and continued to utilize operating cash flow to reduce net debt resulting in an $88.4 million reduction in long-term debt and an increase in cash and cash equivalents of $13.5 million. We will continue our focus in 2003 on strengthening our capital structure through debt retirement while maintaining a strategically focused domestic and international building program." In February 2003, the Company extended the maturity dates of its long-term debt as the Company issued $150 million principal amount of 9% Senior Subordinated Notes and entered into a new Senior Secured Credit Facility consisting of a $75 million revolving credit line and a $125 million term loan. The new facilities were utilized to retire the Company's existing senior revolving credit facility and a $77 million mortgage facility. Cinemark USA, Inc., continues to be a leader in the development of stadium seating theatres. During 2002, the Company opened seven new stadium seating theatres, with 58 screens, and added two screens to an existing theatre bringing its aggregate screen count at December 31, 2002 to 3,031 in the United States, Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Colombia and the United Kingdom. The Company has commitments to open thirteen new theatres, with 132 screens and add seven screens to existing theatres scheduled to open in 2003 and thereafter. The Company, headquartered in Plano, TX, has a Web site at http://www.cinemark.comwhere it sells tickets over the internet. As previously reported in Troubled Company Reporter, Standard & Poor's revised its outlook on movie exhibitor Cinemark USA Inc., to stable from positive following the company's postponement of its planned IPO and bank loan refinancing. Standard & Poor's withdrew its double-'B'-minus bank loan rating on the company's proposed $250 million bank facility. All other ratings, including the single-'B'-plus corporate credit rating, are affirmed. The Plano, Texas-based company had $784 million in debt outstanding as of March 31, 2002. COMDISCO: Makes Optional Partial Redemption of $75M of 11% Notes ---------------------------------------------------------------- Comdisco Holding Company, Inc., (OTC:CDCO) will make an optional partial redemption of $75 million principal amount of its 11% Subordinated Secured Notes due 2005. The outstanding principal amount of the Subordinated Secured Notes after this redemption will be $85 million. Comdisco previously redeemed $65 million, $200 million, $100 million, $50 million and $75 million principal amounts of the 11% Subordinated Secured Notes on November 14, 2002, December 23, 2002, January 9, 2003, February 10, 2003 and March 3, 2003, respectively. The $75 million principal amount of Subordinated Secured Notes will be redeemed at a price equal to 100% of their principal amount plus accrued and unpaid interest to the redemption date. The partial redemption will occur on April 2, 2003. Wells Fargo Bank will serve as the paying agent for this redemption. A notice of the redemption containing information required by the terms of the indenture governing the Subordinated Secured Notes will be mailed to holders. This notice will contain details of the place and manner of surrender in order for holders to receive the partial redemption payment. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money the remaining assets of the corporation in an orderly manner. Rosemont, IL-based Comdisco -- http://www.comdisco.com-- provided equipment leasing and technology services to help its customers maximize technology functionality and predictability, while freeing them from the complexity of managing their technology. Through its former Ventures division, Comdisco provided equipment leasing and other financing and services to venture capital backed companies. COMMSCOPE CORP: S&P Keeps Watch on BB+ Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating on Hickory, N.C.-based CommScope Corp., the leading U.S. manufacturer of broadband cable products, on CreditWatch with negative implications. The CreditWatch listing is the result of weakened operating performance over multiple quarters, reflected in sequential declines in revenues and lower profitability. CommScope had $183 million of debt outstanding at Dec. 31, 2002. "We are concerned that weak demand for broadband cable products from cable operators will persist, resulting in profitability and debt protection metrics that are substandard for the rating level," said Standard & Poor's credit analyst Joshua Davis. Revenues in the current quarter, ending March 31, 2003, are expected to be $120 million-$130 million, down from $135 million in the December 2002 quarter. CommScope's revenues have declined fairly steadily each quarter from $248 million in the December 2000 quarter. Weak sales to domestic cable operators have been the primary reason for the declines, but spotty demand from local area network (LAN) and international customers has also been a factor. Standard & Poor's will meet with CommScope management to assess the prospects that demand will recover in the company's key markets and to consider other actions that will help improve profitability. CONSECO FINANCE: Pushing for Replacement DIP Facility Approval -------------------------------------------------------------- The Conseco Finance Debtors seek the Court's authority to enter into a Commitment Letter and pay an Interim Commitment Fee and Expense Reimbursement to a new postpetition lender. James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells Judge Doyle that the CFC Debtors obtained a commitment letter from a syndicate of entities affiliated with Goldman Sachs Credit Partners LP. The Replacement DIP Lenders agree to extend $845,000,000 in postpetition financing. Mr. Sprayregen explains that the Replacement DIP Facility secures postpetition financing through the confirmation of a Plan, allows for extinguishment of existing DIP Credit Facilities with FPS and Lehman Brothers and allows the CFC Debtors to convert the Replacement DIP Facility into exit financing to cover the post-confirmation period. Indeed, to the extent that existing DIP Facilities are in effect upon entry on an Order approving the Replacement DIP Facility, the CFC Debtors intend to terminate them by paying the balance in full. According to Mr. Sprayregen, the Replacement DIP Facility is critical to the Asset Sale process and operations thereafter. All bids were due on February 24, 2003 and the CFC Debtors went forward with the auction. The Debtors received multiple bids. The CFC Debtors want the freedom and range of options in the event the auction did not yield reasonable value. The ability to borrow under the Replacement DIP Facility allows maximization of alternative sale or restructuring options. The CFC Debtors have the support of the Official Committee of Unsecured Creditors. The salient terms of the Replacement DIP Facility are: Borrowers: CFC and Conseco Finance Credit Corp. Commitment: $845,000,000 facility $745,000,000 on a term loan basis $100,000,000 on a revolving basis CFCC will use $1,000,000 of the revolver to maintain its regulatory obligations to continue operations in New York State. Interest Rate: 10% annually or the Eurodollar Loan Rate plus an applicable margin depending on the date and amounts outstanding. Term: The earlier of: 1) the Effective Date of a Plan filed by the Holding Company Debtors; and 2) June 30, 2003. Asset Sale: Proceeds from an Asset Sale, in excess of a predetermined amount, will be applied to prepay the Replacement DIP Facility. Commitment Fee: $3,750,000 Expense Reimbursement: $5,000,000 The Replacement DIP Facility may be converted into a standard credit agreement post-confirmation if the outstanding principal has been reduced to $350,000,000 and there are no outstanding events of default. At a hearing on February 26, 2003, Judge Doyle authorized the Debtors to pay the Interim Commitment Fee and Expense Reimbursement. However, Judge Doyle has yet to approve the terms of the Agreement. Objection Teachers Insurance and Annuity Association of America, Metropolitan Life Insurance Company, Business Men's Assurance Company of America, Deutsche Asset Management, Putnam Investments and Northwestern Mutual Life Insurance Company, individually and on behalf of other members of the Ad Hoc Committee of Conseco Securitization Holders, ask the Court to vacate or modify its Order approving the Commitment Letter and payment of $8,750,000 in fees. Daniel J. Carragher, Esq., at Day Berry & Howard, in Hartford, Connecticut, contends that the Order was entered without proper notice to his clients. The Ad Hoc Committee did not receive notice of the Debtors' Motion with any time to prepare a response. "This was not mere oversight, nor was it the unavoidable product of an emergency," Mr. Carragher says. The Debtors managed to give notice and secure the attendance of parties who were not interested in opposing the Motion. Only parties likely to object, like the Ad Hoc Committee and CFN, were kept in the dark. The Committee was indisputably prejudiced by its inability to object. Had the proper procedures been followed, Mr. Carragher asserts that the Debtors' Motion would have been denied. The Debtors have not demonstrated how the Commitment Letter or the $8,750,000 payment to Goldman Sachs would likely to benefit the estate. Mr. Carragher believes that the payment does not reflect expenses incurred by Goldman Sachs. "Instead, it serves to relieve some of the B-2 holders of private debts they incurred via their own retention of Goldman," Mr. Carragher says. Discovery is necessary to clarify this situation, Mr. Carragher contends. Furthermore, Mr. Carragher continues, the Debtors failed to demonstrate that the Goldman transaction is the best available financing alternative. Given the sparse details in the Debtors' Motion, it is impossible to evaluate whether the deal is worth pursuing via a commitment letter. Without the merits of the Motion on the table, there is no way any party can sanction the $8,750,000 payment from the estate. (Conseco Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO INC: CIHC Wants Approval of U.S. Bank Pledge Agreement -------------------------------------------------------------- Conseco Inc., and its debtor-affiliates ask Judge Doyle to authorize CIHC to enter into a pledge agreement and replacement letter of credit with U.S. Bank. On March 19, 2002, Conseco entered into a $3,000,000 letter of credit agreement with U.S. Bank in Bank One's favor. Bank One acts as the Debtors' automated clearing house processing bank for payments and collections. Automobile Underwriters Incorporated, a non-debtor subsidiary of CIHC, pledged $3,300,000 to secure the letter of credit. At Bank One's request, U.S. Bank increased the letter of credit to $5,000,000 and AUI pledged an additional $2,200,000. This amended letter of credit expires on March 31, 2003. Bank One informed the Debtors that it will not continue to act as its processing bank after this date unless the Debtors enter a new letter of credit agreement. U.S. Bank has indicated that it will not renew the existing letter of credit agreement. However, U.S. Bank will issue a replacement letter of credit when the Debtors receive the necessary Court authority. The replacement letter of credit has the same terms as the original, save two provisions. First, U.S. Bank will issue the replacement letter of credit to CIHC rather than Conseco. This suits the Debtors fine since CIHC has a closer relationship to the non-debtor insurance company subsidiaries than any other Debtor. Second, to induce U.S. Bank to issue the replacement, CIHC, rather than AUI, will execute a pledge agreement with U.S. Bank. CIHC will agree to reimburse U.S. Bank for any amounts drawn under the replacement and will deposit with U.S. Bank $5,500,000 to secure reimbursement obligations. (Conseco Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Conseco Inc.'s 10.750% bonds due 2008 (CNC08USR1) are trading at about 13 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for real-time bond pricing. CORUS GROUP: S&P Cuts L-T Ratings to BB- after Failed Asset Sale ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on U.K.-based steel consortium Corus Group PLC and related entities to 'BB-' from 'BB'. The ratings remain on CreditWatch with negative implications, where they were placed on March 12, 2003. "The downgrade follows the announcement that the group will not be allowed to proceed with the sale of its Dutch aluminum division to Pechiney SA of France, as had been previously expected, following internal dissension at Corus," said Standard & Poor's credit analyst Olivier Beroud. Standard & Poor's will continue to monitor the situation to determine whether the group is likely to obtain an extension, or renewal, of its key ?1.4 billion ($1.5 billion) bank line, which matures in January 2004. The group's failure to dispose of its aluminum division will undoubtedly be a set back in its negotiations concerning this bank line. Any future rating actions, which could be by one or more notches, will depend on the following factors: -- Whether the sale of the aluminum assets to Pechiney will eventually be allowed to go ahead or whether the group will be forced to break up following the internal dissensions that have led to the disposal being blocked. -- Whether Corus will manage to meaningfully extend its short-term bank lines--which currently expire in January 2004-- or replace them with long-term financing and, therefore, ease a liquidity situation that could become constrained. -- Whether Corus can generate enough free operational cash flows in 2003 and beyond to cover its capital expenditures, dividends, interest, and taxes. Although Standard & Poor's expects that Corus will continue to lag its main European competitors in terms of margins and return on capital, the group will benefit from favorable steel prices and the continual strength of the euro in first-half 2003. The ratings on the group reflect Corus' weak business position, despite its continuous efforts and progress in the restructuring of its U.K. and European operations. Standard & Poor's will meet with the management of Corus in the coming weeks to discuss the issues mentioned above in an effort to resolve the CreditWatch status. DIXIE: Settles $50-Mil. in Obligation to Ex-Fabrica Shareholders ---------------------------------------------------------------- The Dixie Group, Inc., (Nasdaq/NM:DXYN) has issued $37.0 million of senior term notes, due May 2007, amended its senior credit facility, and settled the $50.0 million obligation that was due in April 2003 to the former shareholders of Fabrica. The amended senior credit facility provides revolving credit of up to $90 million, a $38.4 million term loan, and additional borrowing availability under the Company's borrowing base. After completing the transactions, including payment of the Fabrica obligation, the Company's unused borrowing capacity under its new credit arrangements was approximately $19.4 million. Dixie's Chairman and Chief Executive Officer Daniel K. Frierson said, "Completing this financing improves our financial flexibility and will allow us to devote more of our energy to our operations. While we will continue to reduce debt, we now can focus more intently on profitably growing our business." The Dixie Group -- http://www.thedixiegroup.com-- is a leading carpet and rug manufacturer and supplier to higher-end residential and commercial customers serviced by Masland Carpets and Fabrica International, to consumers through major retailers under the Dixie Home and the Bretlin brands, and to the factory- built housing and recreational vehicle markets through Carriage Carpets. Dixie's Candlewick Yarns serves specialty carpet yarn customers. * * * As previously reported, Standard & Poor's lowered its corporate credit rating for carpet and rug manufacturer The Dixie Group Inc., to single-'B'-minus from single-'B'. EAGLE-PICHER INDUSTRIES: S&P Affirms B+ Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Eagle-Picher Industries Inc. The outlook on the auto and industrial parts provider has been revised to stable from negative. The company had total debt of about $380 million at fiscal year-end Nov. 30, 2002. "The outlook revision reflects Eagle-Picher's improved financial profile and stronger credit protection measures, following a period of restructuring by new management," said Standard & Poor's credit analyst John R. Sico. Debt levels have declined to about $380 million at year-end 2002 from about $450 million at the end of 2001 and debt to EBITDA is now in the 4x area versus about 5x in 2001. The ratings on Phoenix, Ariz.-based Eagle-Picher reflect the broad product and customer diversity in niche end markets, largely offset by its heavy debt burden, exposure to the challenging automotive sector, and the refinancing risks associated with its senior secured bank facility due 2004. Eagle-Picher is a niche provider to the highly fragmented automotive, aerospace, defense, and telecommunications end markets with sales of about $700 million at the end of fiscal 2002. The company's largest segment is automotive, which represented about two-thirds of consolidated revenues. Despite the challenging pricing environment of the automotive parts industry in the last few years, segment performance has shown modest improvement. Good geographic diversity, reflected in sales to major automakers in North America, Europe, and Asia, combined with improved product design and development capabilities have helped the company compete against stronger and better-positioned competitors in the industry, which also includes original equipment manufacturers. With the phasing out of a transmission pump product and the expected sale of the company's Hillsdale, U.K. operations, current efforts are focused on improving customer relationships and new product development. Standard & Poor's expects Eagle-Picher will continue to realize benefits from ongoing restructuring and productivity enhancements. The demonstrated ability of new management to improve operating performance should continue to offset the impact of slower top-line revenue growth in its automotive segment in the near term to ensure credit protection measures will remain in line with the rating. ELCOM INT'L: Says Current Funds Sufficient Only Until June/July --------------------------------------------------------------- Elcom International, Inc. (OTC Bulletin Board: ELCO), announced operating results for its fourth quarter and fiscal year ended December 31, 2002. The Company's audited Financial Statements will be filed with the Company's Annual 2002 Report on Form 10-K on or about March 13, 2003. As a result of the sale of the Company's United Kingdom information technology products business in December 2001 and the sale of certain assets and the assignment of the Company's United States IT Products and services business in March 2002, the attached income statement, balance sheet information and financial summary table have been prepared giving effect to the financial reporting requirements for discontinued operations, pursuant to which all historical results of the IT Products and services businesses are included in the results of discontinued operations for all periods presented. As a result, net sales, gross profit (loss), operating loss and net loss from continuing operations only reflect the Company's ongoing U.S. and U.K. eProcurement and eMarketplace technology licensing and consulting businesses. In order to assist stockholders to better assess its progress, the Company has included a summary financial table, reflecting 2002 sequential quarterly information from continuing operations, in the Fairness Disclosure section. Please reference this table in the Fairness Disclosure section for a sequential quarterly summary of revenues and expenses from continuing operations. Net sales from continuing operations for the quarter ended December 31, 2002, which represented eSourcing technology license and related fees, were $1.7 million compared to $3.2 million in the comparable quarter of 2001, a decrease of $1.5 million or 47%. Net sales in the 2002 quarter included $1.4 million in license and professional service fees related to the Company's Government of Scotland PECOS Internet Procurement Manager system, the majority of which had been previously recorded as deferred revenue at September 30, 2002. The Scottish Government License agreement was signed in November 2001 and did not impact the comparable 2001 quarter's financial results. Net sales in the 2001 quarter included $2.9 million arising from a one-time sale of proprietary software to Elcom Information Technology Limited, an a company formed by former members of the Company's U.K. IT Products remarketing business which also acquired the Company's U.K. IT Products reseller business on December 31, 2001. At December 31, 2002, the Company had recorded $0.3 million of deferred revenue related to the Scottish Government License, compared to $1.6 million as of September 30, 2002. The Company expects to recognize the majority of this deferred revenue in its fiscal first and second quarters of 2003. The Company anticipates that revenues for the first quarter of 2003 will be lower than that recorded in the fourth quarter of 2002. For the year ended December 31, 2002, the Company recorded net sales from continuing operations of $4.8 million compared to $4.2 million in 2001 period, an increase of $0.6 million, or 15%. Included in the $4.8 million of net sales in 2002 were $3.5 million in license and professional service fees related to the Scottish Government License. Net sales in the 2001 fiscal year included $2.9 million arising from a one-time sale of proprietary software to Elcom Information Technology Limited, as discussed elsewhere herein. For the quarter ended December 31, 2002, gross profit from continuing operations was $1.5 million compared to $2.9 million reported for the quarter ended December 31, 2001. The higher gross profit recorded in the 2001 quarterly period compared to the 2002 quarterly period reflects the higher license and related fees in the 2001 quarterly period. For the year ended December 31, 2002, the Company recorded a gross profit of $3.7 million, compared to a gross profit of $2.9 million in the year ended December 31, 2001, an increase of $0.8 million or 28%. Cost of sales in the 2002 annual period included $423,000 of amortized software costs and maintenance-related expenses and $131,000 of salary-related expenses, which were incurred in various PECOS implementations. In the comparable 2001 annual period, amortized software costs and maintenance-related expenses amounted to $446,000 with no significant implementation-related costs. The Company reported an operating loss from continuing operations of $1.3 million for the quarter ended December 31, 2002 compared to a loss of $1.2 million reported in the comparable quarter of 2001, a decrease of $0.1 million, or 7%. This increased operating loss from continuing operations in the fourth quarter of 2002 compared to the 2001 quarter results from a decrease in gross profit of $1.4 million offset by operating cost savings, of $1.3 million, associated with numerous cost containment measures taken throughout 2002 that more than offset the lower revenue recorded in the 2002 fourth quarter compared to the 2001 fourth quarter. In the three month period ended December 31, 2002, the Company recorded a $1.1 million reduction in selling, general and administrative expenses. The Company's on-going cost containment measures were designed to better align its infrastructure costs with lower than anticipated technology- related revenues due to the continuing soft economy. The principal reductions in SG&A expenses in the fourth quarter of 2002 compared to the fourth quarter of 2001 resulted from reductions in personnel and depreciation expense. The Company's operating loss for continuing operations for the year ended December 31, 2002 was $10.4 million compared to $23.4 million for the same period last year, a reduction of $13.0 million, or 55%. As well as recording higher revenues in the year ended December 31, 2002 compared to the 2001 period, the Company reduced its SG&A expenditures by $10.7 million, a reduction of 45%, reflecting the Company's on-going cost containment measures described above. The Company recorded a net loss from continuing operations for the 2002 fourth quarter of $1.6 million, compared to a net loss from continuing operations of $1.3 million in the fourth quarter of 2001, an increase of $0.3 million, or 25%. The net loss from continuing operations for the year ended December 31, 2002 was $9.7 million as compared to $23.5 in the prior year, an improvement of $13.6 million, or 59%. The Company reported a net profit from discontinued operations of $0.6 million in the fourth quarter of 2002, compared to a net loss from discontinued operations in the comparable 2001 quarter of $1.8 million. The net loss from discontinued operations for the year ended December 31, 2002 was $0.8 million as compared to a profit of $0.8 million for the prior year. Included in discontinued operations were the financial results related to the divested IT Products and services business in the U.S. and the IT Products business in the U.K. In the fourth quarter of 2002, the Company recorded a net gain resulting from the divestiture of its U.S. IT Products and services business in March 2002 of $21,400, specifically related to the release of certain contingent sale proceeds previously held in escrow. In the comparable 2001 quarter, the Company recorded a gain on the sale of discontinued operations (net of tax) from the sale of its U.K. remarketing business of $2.7 million. The gain from the disposal of discontinued operations (net of tax) for the year ended December 31, 2002 was $1.1 million compared to a gain of $2.7 million for the year ended December 31, 2001. The 2002 gain of $1.1 resulted from the sale of the Company's U.S. IT Products and service business while the 2001 gain of $2.7 million resulted from the sale of the U.K. IT Products reseller business. The Company's 2002 fourth quarter net loss from total operations (includes both continuing and discontinued operations) was $0.9 million compared to a loss of $0.4 million in the 2001 quarter. Basic and diluted net loss from continuing operations per share for the fourth quarter of 2002 were $0.05, compared with a basic and diluted net loss from continuing operations per share of $0.04 in the fourth quarter of 2001. The Company recorded a net loss from total operations of $9.6 million in the year ended December 31, 2002 compared to a net loss from total operations of $19.9 million in 2001, an improvement of $10.3 million, or 52%. Basic and diluted net loss from continuing operations per share for the year ended December 31, 2002 and 2001 were $0.32 and $0.76, respectively. The Company's cash and cash equivalents as of December 31, 2002 were $2.3 million. Other than finance leases incurred in the normal course of business, the Company has no outstanding debt. Although the Company recorded a net loss of $0.9 million for the quarter ended December 31, 2002, cash and cash equivalents decreased by $1.6 million between September 30, 2002 and December 31, 2002. The Company's December 31, 2002 balance sheet shows a working capital deficit of about $500,000, while total shareholders' equity has shrunk to about $1.6 million from about $11 million at the year-ago date. Although the Company recorded a net loss from total operations of $9.6 million for the year ended December 31, 2002, cash and cash equivalents decreased by $8.5 million between December 31, 2001 and December 31, 2002. The principal differences between the net loss and the decrease in cash and cash equivalents during the period were due to the Company's recording non- cash expenses of $3.3 million, offset by proceeds from the sale of the US reseller business of $2.1 million. Robert J. Crowell, Chairman and CEO stated, "After over one year of effort and continual cost containment, the Company has created a new operating and financial structure based on a variable fee license model. The Company has three variable fee eMarketplace agreements in place, one of which became operational in February, 2003 and two of which are expected to become operational in March, 2003. The Company's new operating and financial model is based on transaction or user-oriented 'variable' fees which are a function of volume or usage, rather than a straight license fee and associated monthly hosting and other fees. This allows the Company to share in the growth of individual eMarketplaces over the years and creates a predictable and continually expanding revenue stream. With three agreements in place, and two more initiatives in discussions, we believe these variable fee-type agreements and initiatives have, combined with our ongoing cost containment programs, created a new operating engine to allow the Company to expand during 2003 and beyond." Mr. Crowell continued, "The Company has several options to raise additional working capital in the near term. Although the markets continue to be difficult, we anticipate that one of our clients will generate a significant license fee in the very near future. With that cash in place, the Company expects to have sufficient funds until June/July. I believe this additional working capital, in conjunction with the Company's new operating model and low stock price, will make investing in the Company a very attractive proposition." As evidenced by the continued reduction in SG&A expenditures in the fourth quarter of 2002, the Company's implementation of cost containment programs has significantly reduced its expenses and cash requirements from previous levels. Improvements in revenues and operating results from continuing operations in future periods will depend on the Company's ability to generate additional license fees. The Company continues in its efforts to seek a strategic partner or investor(s) for the purpose of raising additional capital. Alternatively, the Company may seek to sell certain assets and/or rights to its technology in certain specific vertical markets and/or geographies. The Company believes that it has sufficient liquidity to fund operations into April 2003 without additional working capital becoming available. See the Risk Factors in the Company's 2002 Annual Report on Form 10-K. The Company wishes to inform its stockholders that no additional agency licenses were signed under the Scottish Executive license during the period January 1, 2003 through March 13, 2003. Management believes this is due in part to the upcoming elections in Scotland in May. The Company also believes that activity will accelerate in various agencies after the elections. Elcom International, Inc., (OTC Bulletin Board: ELCO) is a leading international provider of remotely-hosted eProcurement and private eMarketplace solutions. Through its elcom, inc. subsidiary, Elcom's innovative remotely-hosted technology establishes the next standard of value and enables enterprises of all sizes to realize the many benefits of eProcurement without the burden of significant infrastructure investment and ongoing content and system management. PECOS Internet Procurement Manager, elcom, inc.'s remotely-hosted eProcurement and eMarketplace enabling platform was the first "live" remotely-hosted eProcurement system in the world. Additional information can be found at http://www.elcominternational.com ENCOMPASS SERVICES: Court Okays Receivable Collections Program -------------------------------------------------------------- At present, Encompass Services Corporation and its debtor- affiliates are owed substantial amounts for unpaid services rendered to customers. Experience suggests that the longer the accounts receivable remain outstanding, the more difficult they become to collect and the greater the likelihood that they will never be collected. Accordingly, the Debtors anticipate that their accounts receivable will decrease in value as they age. In addition to the usual difficulties associated with collections, the Debtors discovered that due to an overall decline in employee morale, and the expected sale of many of the their operating companies, their employees haven't adequately focused their energies on collecting outstanding accounts receivable on behalf of the estates. In an effort to remedy this circumstance and to provide appropriate incentives, the Debtors, with the consent of their prepetition and postpetition secured lenders, have adopted the Collections Program. The Collections Program Designed to facilitate the effective collection of the Debtors' outstanding accounts receivable, Lydia T. Protopapas, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, reports that the Collections Program will incentivize employees to collect a greater percentage of outstanding accounts receivable. The Debtors will continue to experience significant harm as a result of their difficulties in collecting amounts properly owed to them, if the Collections Program is not implemented. The Collections Program, effective January 1, 2003 through April 30, 2003, discloses that the Debtors intend to provide incentive compensation to: (a) the personnel on the ESR Collections Task Force; (b) the Debtors' regional operating vice presidents; and (c) designated key regional finance personnel Ms. Protopapas notes that the Collections Program is comprised of two component parts: 1. PART A -- designed to incentivize collections of accounts receivable under 90 days past due; -- effective January 10, 2003 through April 11, 2003; -- provides that for every five percent that is collected above the forecasted cash receipts shown in the Debtors' approved thirteen-week cash flow forecast, $100,000 will be added to a pool of funds which will later be distributed to qualified Program Participants provided that the amount will be limited to a maximum of $500,000 over the life of the Collections Program. 2. PART B -- designed to incentivize collections of accounts over 90 days past due; -- effective January 1, 2003 through April 30, 2003; -- provides that for every accounts receivable dollar collected that is more than 90 days past due as of December 31, 2002, ten percent of the accounts receivable collected will be added to a pool of funds which will later be distributed to qualified Program Participants, up to a maximum of $2,000,000 over the life of the Collections Program. It is critical that the Debtors incentivize the Program Participants and be permitted to pay these Program Participants for their efforts in the ordinary course of business to provide sufficient motivation. Furthermore, it is more cost efficient for the Debtors to incentivize the Program Participants through the Collections Program rather than to hire additional personnel specifically to perform the collections function, for whom the Debtors would be required to provide compensation and benefits to perform these tasks. Moreover, the estates, creditors, and parties in interest will not receive the benefit of additional fund contributions to the estates from which to satisfy existing obligations. * * * Accordingly, the Court approved the Debtors motion on an interim basis. (Encompass Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON: EOP Wants to Defer Payments to Preserve Set-Off Rights ------------------------------------------------------------- Pursuant to Sections 105(a), 363(e), 542(b) and 553(a) of the Bankruptcy Code, EOP Operating Limited Partnership seeks the Court's authority to defer payments to Enron Energy Services, Inc. to preserve its rights of set-off and recoupment with respect to certain prepetition amounts that may be owing to EESI. Andrew P. Lederman, Esq., at Sonnenschein Nath & Rosenthal, in New York, relates that EOP and EESI entered into: (a) an Electric Energy Services and Sales Agreement for the state of Massachusetts on May 11, 2001 -- the MA Contract; (b) an Electric Energy Services and Sales Agreements for the State of Illinois on April 18, 2001 -- the IL Contract; (c) an Electric Energy Services and Sales Agreements for the State of New York on April 18, 2001 -- the NY Contract; (d) a Master Electric Energy Services and Sales Agreement dated June 29, 2001 pursuant to which EESI agreed to provide electric energy and billing services to EOP facilities in California -- the CA Contract; (e) a Master Electric Energy Services and Sales Agreement dated June 29, 2001, pursuant to which EESI agreed to provide electric energy and billing services to California facilities owned by Spieker Properties, LP, a predecessor- in-interest to EOP -- the Spieker Contract; and (f) a Retail Power Sales Agreement dated March 24, 1998, pursuant to which EESI, as successor-in-interest to PG&E Energy Services Corporation, agreed to provide electric energy services to EOP facilities in California. Mr. Lederman informs the Court that in the course of reviewing and reconciling payments that EOP has made on invoices EESI issued under the six contracts, EOP discovered that EESI overbilled them and consequently made substantial overpayments: -- $123,594 on the IL Contract; -- $1,384,059 on the MA Contract; and -- $181,476 on the NY Contract. Pursuant to the IL, MA and NY Contracts, EOP is entitled to offset this overpayment claim against amounts that may remain to be paid by EOP. Moreover, EOP is also entitled to offset and recoup against EESI on its $3,923,995 additional claim arising out of the three CA Contracts. Under the CA and Spieker Contracts, EESI was to provide Direct Access Services to EOP. The California Direct Access Program enabled electric power customers, including EOP, to select electric power providers like EESI, instead of traditional utility providers, and to obtain overall pricing significantly lower than that available from traditional utility providers. EOP learned that approximately 30% -- by kilowatt volume -- of its California facilities that should have been on Direct Access are still not on Direct Access and that other accounts were finally put on Direct Access Service only on an untimely basis. Thus, Mr. Lederman asserts, EOP is entitled to offset and recoup this claim for failure to provide Direct Access Services against amounts remaining to be paid by EOP to EESI. "EOP is owed $5,613,124 by EESI," Mr. Lederman concludes. However, EOP may owe EESI an amount in excess of what EESI owes EOP. Thus, to preserve set-off and recoupment rights, the Court should preserve EOP's rights and allow it to defer any payments due to EESI up to the amount of its Proof of Claim until the Claim is resolved. If necessary, Mr. Lederman proposes that EOP will place amounts it determines, based on the ongoing reconciliation process, to be due to EESI into an interest bearing escrow account pending resolution of EOP's Proof of Claim. The escrow account would serve as adequate protection for the setoff and recoupment rights and preserve the secured position of EOP's claim pending the claim resolution. According to Mr. Lederman, the Court should grant the Debtors' because: (a) Section 553(a) of the Bankruptcy Code preserves set-off rights that exist under applicable non-bankruptcy law, in this case, the Contracts; (b) the mutual debts owing between EOP and EESI satisfy the required elements of set-off; and (c) EOP has valid set-off rights against EESI with respect to their reciprocal prepetition obligations. (Enron Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 15 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. EPICEDGE: Commenced Trading on Pink Sheets Effective March 13 ------------------------------------------------------------- EpicEdge, Inc. (OTC: EPED), an information technology consulting firm, announced that trading in its common stock on the Pink Sheets commenced on March 13, 2003. The Company's common stock is now trading under the symbol "EPED." To view a last sale price or for more information, see http://www.pinksheets.com EpicEdge, Inc., whose September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $11 million, is an information technology consulting firm that helps state and local government agencies, as well as commercial enterprises, meet their business goals through implementation and support of client/server and Internet-enabled PeopleSoft enterprise resource planning software applications, custom Web application development, and strategic consulting. We deliver successful IT project-based services by combining the elements of market- leading products, highly skilled technical personnel, and proven project methodologies. Our business technology solutions help clients maximize ROI and lower their total cost of ownership. EXIDE TECH.: Court Approves Bayard as Co-Counsel for Committee -------------------------------------------------------------- The Official Committee Of Unsecured Creditors of Exide Technologies and its debtor-affiliates obtained the Court's authority to retain The Bayard Firm as special litigation co- counsel, nunc pro tunc to January 13, 2003. The Bayard Firm will serve as the Committee's Delaware special litigation counsel to assist Sonnenschein. The Bayard Firm's hourly rates range from: Directors $350 - 475 Associates 180 - 325 Paralegals and Assistants 80 - 130 (Exide Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) FAIRFAX FIN'L: AM Best Hatchets Various Fin'l Strength Ratings -------------------------------------------------------------- A.M. Best Co., has affirmed the various financial strength ratings of the operating subsidiaries of Fairfax Financial Holdings Limited (Toronto, Canada) (NYSE: FFH), with the exception of TIG Insurance Group, which was lowered to B+ (Very Good) from B++ (Very Good). Concurrently, the senior debt rating of Fairfax was lowered to "bb+" from "bbb-", the senior notes of TIG Holdings were lowered to "bb-" from "bb+" and the capital securities of TIG Capital Trust I were lowered to "b+" from "bb". The outlook on all ratings is negative. These rating actions are the result of a comprehensive review of Fairfax and each of its insurance and reinsurance subsidiaries including ORC Re, its Dublin reinsurance subsidiary. The downgrade of Fairfax's debt ratings was based on the decreased flexibility in the company's cash flows, diminished refinancing options and reliance upon the non-public markets for refinancing to maintain holding company liquidity. Management has historically utilized the non-public markets to create options to provide several avenues to liquidity. As such, Fairfax has been in a position over the past few years to provide capital to its subsidiaries and to meet corporate obligations without heavily relying on subsidiary dividends. However, reliance upon non-public markets, sale of assets, realized investment gains, uncertain future liquidity and the potential for unforeseen financial shocks warrant debt ratings below the investment grade level. Currently, the capital levels of each of Fairfax's operating companies meet or exceed the level commensurate with their financial strength ratings. No additional operating capital requirement is anticipated in 2003 if premium growth projections are maintained. The lowering of TIG's financial strength rating reflects the ultimate run-off nature of the restructured operation. There are currently ongoing books of profitable business within TIG, which A.M. Best anticipates will be moved to other Fairfax subsidiaries within the next twelve months. Further, A.M. Best believes that Fairfax will continue to meet its obligations without compromising the capital levels of the subsidiaries. Fairfax maintained approximately C$500 million of holding company cash at year-end 2002 and anticipates additional cash flow, including subsidiary dividends sufficient to cover all of its corporate obligations in 2003. The subsidiaries relied upon for these dividends include the Canadian companies and ORC Re. A.M. Best believes that ORC Re maintains some dividend capacity while continuing to maintain adequate capital for its combined run-off operations. Furthermore, Fairfax maintains C$740 million of bank lines, of which C$386 million is used for internal letters of credit; however, these bank lines decline to C$528 million by September 30, 2003. Fairfax's obligations in 2003 will consume most of the cash if maturing debt and other obligations are not refinanced. Financing obligations will decrease considerably in 2004 to approximately C$350 million and will include no external debt maturities. Management's corporate policy of maintaining C$500 million of cash at year-end will most likely require utilizing certain private financing options and/or refinancing its foreign exchange contracts and 7.75% notes due December 2003. The additional sale of select assets is also considered an option. A.M. Best has performed a comprehensive review of the assets, capital, cash flows and reinsurance provisions and protections of Dublin-based ORC Re. The company was originally established to provide acquisition financing to Fairfax Inc., a downstream U.S.-based holding company and immediate parent of all the U.S. operating subsidiaries. This structure has provided ORC Re with a substantial flow of funds since 1997, a portion of which remains in its capital base. ORC Re subsequently became the consolidating entity of Fairfax's European run-off operations and is currently the provider of financial and internal reinsurance to the U.S. operating companies. Additionally, certain third-party reinsurance transactions with U.S. operating companies were novated to ORC Re. The cash flows, discount rates of the run-off operations and reinsurance contracts appear reasonable, and capital levels are sufficient to provide Fairfax with dividend capacity in 2003. However, dividend capacity beyond 2003 will vary depending upon run-off of the reserves and reported earnings. Finally, ORC Re's reserves are protected by the US$267 million remaining under the US$1 billion Swiss Re adverse development cover that was put into place in May 1999. A.M. Best believes that the respective management teams at each of Fairfax's ongoing operating subsidiaries have made considerable progress in improving operating fundamentals. The consolidated combined ratio for 2002 was favorable at 100.1%, including 95.8% for the Canadian companies, 106.0% for TIG ongoing operations and 99.1% for Odyssey Re. In particular, Crum & Forster's reported results for 2002 at a 103% combined ratio are a noticeable improvement over the 131% reported in 2001. A.M. Best believes that Crum & Forster's well regarded management team has made significant progress in stabilizing the balance sheet and re-focusing operations on underwriting profitability. A.M. Best's ratings on these companies are prospective, and it anticipates further improved 2003 combined ratios at or below 100% for ongoing operations. A.M. Best capital models for each of Fairfax's subsidiaries have been stressed to consider the potential for varying degrees of loss reserve deficiencies, catastrophe losses and certain asset impairments. The capital levels also include significant remaining reinsurance protections for Crum & Forster totaling USD 285 million, while TIG is protected with a USD 300 million adverse development cover currently provided by ORC Re. A.M. Best recognizes that while Fairfax's heavy reliance upon third- party reinsurance provides some short-term capital relief, future earnings could be constrained by the resulting decrease in investment income, placing heavy reliance upon producing combined ratios below 100%. Nonetheless, on a consolidated basis, Fairfax's capital level more than adequately supports the affirmation of the financial strength ratings. A.M. Best believes that Fairfax's long history of positive investment performance may be difficult to duplicate in 2003, since realized capital gains for the most part have been harvested. However, 75% of invested assets are currently invested in Treasuries, providing management the agility to benefit from future investment opportunities. In addition, the retention of interest rate put options can partially protect 2003 investment performance. Fairfax maintains C$13 billion of reinsurance recoverables covered by C$4.6 billion of security held, while a reserve of C$970 million has been set up against the remaining C$8.4 billion. Fairfax maintains significant exposure to recoverables, although the company's ceded leverage (after accounting for security held and reserves) is about the same as the commercial lines industry at 1.8 times when measured against operating capital at the subsidiary level. However, recoverables (including those of the run-off operations) are under the control of RiverStone Management, an internal group of professionals dedicated and experienced in recovery. RiverStone has proven its skills in the successful run-off of International Insurance Company, acquired in 1997 from Talegen to manage the run-off of various European subsidiaries since 1999 and which now has responsibility for the run-off operations of the merged TIG/IIC. The negative outlook on all of Fairfax's ratings is due to constrained financial flexibility of the holding company to meet any unforeseen capital needs. Fairfax currently maintains a number of private market financing options; however, those options are not unlimited. Should Fairfax utilize its existing private market options to replenish the CAD 500 million of holding company liquidity in 2003, its future financing options to maintain balance sheet quality and financial strength ratings, if required, would be diminished. Conversely, should Fairfax's operating subsidiaries meet or exceed 2003 projections and holding company liquidity and financial leverage improves, A. M. Best will reevaluate its current rating outlook. For a complete listing of Fairfax's financial strength and debt ratings, please visit http://www.ambest.com/press/031402fairfax.pdf A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com FEDERAL-MOGUL: Dimensional Fund Discloses 3.12% Equity Stake ------------------------------------------------------------ In a February 3, 2003 regulatory filing with the Securities and Exchange Commission, Dimensional Fund Advisors Inc. discloses that it beneficially owns 2,578,400 shares of Federal-Mogul Corporation, in its role as investment advisor or manager. This represents 3.12% of all shares Federal-Mogul issued. Dimensional Fund's Vice President and Secretary, Catherine L. Newell, however, emphasizes that the Federal-Mogul common stocks are owned by certain investment companies, trusts and accounts. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. Dimensional is a Delaware corporation and an investment advisor as defined in Section 240.13d-1(b)(1)(ii)(E) of the Securities and Exchange Act and registered under Section 203 of the Investment Advisors Act of 1940. According to Ms. Newell, "all securities reported are owned by advisory clients of Dimensional Fund Advisors, no one of which, to the knowledge of Dimensional, owns more than 5% of the class. Dimensional disclaims beneficial ownership of all such securities." (Federal-Mogul Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) FISHER COMMS: Elects Jerry A. St. Dennis as New Board Member ------------------------------------------------------------ Fisher Communications' (Nasdaq:FSCI) directors elected Jerry A. St. Dennis a director of the company. Commenting on the election, Donald G. Graham, Jr., Chairman of the Board, said that St. Dennis, who is associated with Cascade Investment, L.L.C., brings to the Fisher Board an extensive background in business, finance and investment management. St. Dennis is a member of the class of directors that will be presented for election at the annual meeting of shareholders to be held on April 24, 2003. Fisher Communications, Inc., is a Seattle-based communications and media company focused on creating, aggregating, and distributing information and entertainment to a broad range of audiences. Its 12 network-affiliated television stations are located in the Northwest, and its 28 radio stations broadcast in Washington, Oregon, and Montana. Other media operations include Fisher Entertainment, a program production business, as well as Fisher Pathways, a satellite and fiber transmission provider, and Fisher Plaza, a digital communications hub located in Seattle. As reported in Troubled Company Reporter's November 12, 2002 edition, Fisher Communications retained Goldman, Sachs & Co., as financial advisor to assist in reviewing its strategic alternatives. In announcing its decision to review strategic alternatives, the company issued this statement: "Our Board of Directors is fully committed to acting in the best interests of the company and its shareholders. Accordingly, and in light of industry conditions, we have determined that it is appropriate at this time to review a range of strategic alternatives for the company." GENUITY INC: Earns Nod to Reject Four Leases and One Sublease ------------------------------------------------------------- Genuity Inc., and its debtor-affiliates sought and obtained the Court's authority to reject these unexpired leases of non- residential real property: Landlord Location ------------------------ ---------------------------- CEP Second St. Investors San Francisco, California Robert C. Samuel Mercer Island, Massachusetts Polaris Ventures IV Ltd. Columbus, Ohio Sun Life Assurance Co. Alpharetta, Georgia The Debtors also obtained Judge Beatty's permission to reject the sublease entered into with the French American Schools of Puget Sound for the Mercer Island leased location. Erin T. Fontana, Esq., at Ropes & Gray, in Boston, Massachusetts, informs the Court that the Leases have been excluded from the Asset Purchase Agreement and therefore, are not subject to assumption and assignment to Level 3. In addition, in light of their intent to liquidate any remaining assets not subject to the sale to Level 3, the Debtors have determined that the Leased Premises are unnecessary to their ongoing business operations. The Debtors have already vacated all of the Leased Premises, although some furniture, equipment and other personal property may remain. Because the Leased Premises are unnecessary to the Debtors' ongoing operations, the $196,824 monthly rental payments under the Leases constitute an unnecessary financial drain on the Debtors' estates. According to Ms. Fontana, the Debtors are not party to any sublease in connection with the Lease pertaining to the premises located at 303 Second Street, San Francisco, CA; 8800 Lyra Drive, Columbus, Ohio, or 3650 Mansell Road, Alpharetta, GA. The Debtors' aggregate monthly rent obligation under the Lease pertaining to these Leased Premises is $184,387. The Debtors do not believe that they could obtain any value from assuming and assigning these Leases to a third-party. With respect to the subleased Premises, Ms. Fontana relates that the monthly revenue generated by the Debtors pursuant to their sublease of these premises is equal to the monthly rental obligations under the Lease. Accordingly, the Debtors would be unable to obtain any value for this Lease by assumption and assignment to the sublessee. In addition, the Debtors also believe that they would be unable to obtain any value for this Lease by assumption and assignment to third parties. The Debtors have already sent each affected landlord a letter notifying the landlords of the intended rejection. The keys, if any, to each of the Leased Premises have been or will be returned to the landlords by separate letter or by hand delivery as soon as the Debtors sell, abandon and remove any remaining Personal Property from the Leased Premises. (Genuity Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392- 0900) GOODMAN FIELDER: S&P Lowers Long-Term and Debt Ratings to 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Goodman Fielder Ltd., and the rating on the company's debt issues to 'B+' from 'BBB+'. At the same time, the 'A-2' short-term rating on the company was withdrawn. The long-term rating remains on CreditWatch with negative implications. Goodman is a diversified food and ingredients manufacturer focused principally on the Australian market. Its business units cover a wide range of packaged food and ingredient products. This rating action follows Burns, Philp & Co. Ltd.'s (Burns Philp, B+/Watch Neg/-) move to make its A$2 billion predominantly debt-funded bid for Goodman Fielder unconditional and final, and Goodman's agreement to provide Burns Philp with board representation. Burns Philp raised its final offer price to Goodman shareholders to A$1.635 (after dividends) from A$1.615. "The rating on Goodman will now track the rating on its majority shareholder, Burns Philp, whose shareholding was 54.29% at March 14, 2003," said Lucie Kistler, rating specialist, Corporate & Infrastructure Finance Ratings. Burns Philp's rating remains on CreditWatch with negative implications, where it was placed on Dec. 13, 2002, following the announcement of the Goodman transaction. The CreditWatch on Goodman and Burns Philp will be resolved when the transaction is completed. "The rating will be evaluated in the context of the substantial increase in Burns Philp's debt load and the significant integration risks associated with an acquisition of this size," Ms. Kistler said. GREAT ATLANTIC: Selling New England Stores to GU Family Markets --------------------------------------------------------------- The Great Atlantic & Pacific Tea Company (NYSE:GAP) announced an agreement to sell eight stores in northern New England to GU Family Markets. Completion of the transaction is subject to customary conditions and reviews. The Company said that when completed, the transaction will conclude A&P's previously announced divestiture of operations in northern New England. Founded in 1859, A&P was one of the nation's first supermarket chains, and is today one of North America's largest. The Company currently operates approximately 690 stores in 15 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Kohl's, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. The Company also manufactures and distributes the Eight O'Clock line of whole bean coffees. As reported in Troubled Company Reporter's January 15, 2003 edition, Standard & Poor's lowered its corporate credit rating on The Great Atlantic & Pacific Tea Co., Inc., to 'B+' from 'BB- '. The downgrade is based on the company's deteriorating operating performance and diminished cash flow protection. The outlook is negative. Montvale, New Jersey-based A&P had $928 million in debt at November 30, 2002. "The weak earnings are only partially mitigated by A&P's satisfactory market shares in its major operating areas. Most of A&P's markets are experiencing increased promotional activity from both traditional supermarkets and nontraditional channels of distribution, as operators fight for market share in a soft consumer spending climate," said Standard & Poor's credit analyst Mary Lou Burde. "Trading down to lower-margin products by consumers and deflation in certain product categories are compounding the challenges in the sector. Moreover, A&P has had difficulties in executing its store format effectively, and is burdened by a high cost structure." GXS CORP: S&P Assigns 'B' Rating to $105-Mill. Sr. Secured Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to GXS Corp.'s new $105 million senior secured floating-rate notes due 2008 and withdrew its 'B+' rating on the company's previously proposed $175 million floating-rate notes issue. At the same time, Standard & Poor's assigned the company's $100 million senior secured bank loan rating a 'BB', and withdrew its 'BB+' bank loan rating on the company's proposed $40 million revolving credit facility, which did not close. The company's new credit facility consists of a $70 million term loan and a $30 million revolving credit facility. The proceeds from the notes issue and the term loan, totaling $175 million, will be used to repay GXS' existing $175 million senior secured term bank loan. Standard & Poor's also affirmed its 'BB-' corporate credit and 'B' subordinated debt ratings on the Gaithersburg, Md.-based company, which provides electronic data interchange (EDI) services. GXS Corp., is expected to have total funded debt following the recapitalization of about $410 million. The outlook is negative. "The bank loan rating reflects improved recovery prospects following repayment of the term loan. The $105 million senior secured notes are rated two notches below GXS' corporate credit rating, reflecting the amount of bank debt with first-priority liens in the capital structure," said Standard & Poor's credit analyst Emile Courtney. The notes have second-priority liens on the same assets. Both the notes and the company's $100 million credit facility are to be secured by substantially all assets of GXS Corp., and its guarantors, a pledge by GXS' equity sponsors of all stock owned in the company, and a pledge by GXS of all stock owned in its U.S. subsidiaries and 66% of the stock owned in its material foreign subsidiaries. HANOVER COMPRESSOR: Exchange Offers for Sr. Secured Notes Expire ---------------------------------------------------------------- Hanover Compressor Company (NYSE:HC), the leading provider of outsourced natural gas compression services, announced that the exchange offers for the Senior Secured Notes of Hanover Equipment Trust 2001A and Hanover Equipment Trust 2001B, special purpose Delaware business trusts, expired at 5:00 p.m., Eastern time, on March 13, 2003, and that the Trusts accepted all notes tendered for exchange in the exchange offers. In the exchange offers, the Trusts offered to exchange new 8.50% Senior Secured Notes due 2008 and new 8.75% Senior Secured Notes due 2011, respectively, which new notes have been registered under the Securities Act of 1933, as amended, for their outstanding 8.50% Senior Secured Notes due 2008 and outstanding 8.75% Senior Secured Notes due 2011, which old notes had not been registered under the Securities Act. The offers to exchange were made pursuant to, and subject to the conditions set forth in Prospectuses dated Feb. 11, 2003, and related Letters of Transmittal. At least $298 million of the $300 million aggregate principal amount of the old A notes and all of the $250 million aggregate principal amount of the old B notes were tendered in the offers. Due to delays in effecting the exchange offers, the Trusts have been accruing additional interest of approximately $15,000 per day since Jan. 28, 2002, which has resulted in corresponding increases in Hanover's rent payments to the Trusts. Hanover's rent payments to the Trusts have been included in Hanover's financial statements under leasing expense. Upon the consummation of the exchange offers, the Trusts will no longer incur such additional interest and Hanover will reduce its leasing expense by approximately $15,000 per day. Hanover Compressor Company -- http://www.hanover-co.com-- is the global market leader in full service natural gas compression and a leading provider of service, financing, fabrication and equipment for contract natural gas handling applications. Hanover sells and provides this equipment on a rental, contract compression, maintenance and acquisition leaseback basis to natural gas production, processing and transportation companies that are increasingly seeking outsourcing solutions. Founded in 1990 and a public company since 1997, Hanover's customers include premier independent and major producers and distributors throughout the Western Hemisphere. As reported in Troubled Company Reporter's November 18, 2002 edition, Standard & Poor's placed its ratings on Hanover Compressor Co., ('BB' corporate credit rating) on CreditWatch with negative implications, reflecting the company's announcement that the SEC was changing the status of its review of financial restatements to formal from informal. DebtTraders says that Hanover Compressor's 4.750% bonds due 2008 (HC08USR1) are trading at about 70 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HC08USR1for real-time bond pricing. HARBISON-WALKER: Halliburton Has 75% Support from DII Claimants --------------------------------------------------------------- Halliburton (NYSE: HAL) announced the filing of an affidavit with the court in the Harbison-Walker bankruptcy case that it believes is consistent with the court order of February 18, 2003. The court order had extended its previously issued temporary restraining order, staying the more than 200,000 pending asbestos claims against Halliburton's subsidiary, DII Industries, LLC, until March 21, 2003. The court order also stated that oral arguments would be held on March 21, 2003 on a motion to lift the stay, unless DII filed an affidavit by March 14, 2003 stating that executed agreements had been signed by an estimated 75% of DII's asbestos plaintiffs. The affidavit filed by DII stated that DII and KBR have definitive written agreements, or written "highly confident" representations that such definitive agreements are forthcoming, from attorneys representing an estimated 75% of claimants. These estimates are based on certain assumptions and exclude the impact of certain claims in the Harbison-Walker bankruptcy, for which the Company indicated it had certain defenses or did not have reliable information. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services Group and Engineering and Construction Group business segments. The company's World Wide Web site can be accessed at http://www.halliburton.com HOLMES GROUP: Dec. 31 Net Capital Deficit Widens to $74 Million --------------------------------------------------------------- The Holmes Group, Inc., reported its fourth quarter and 2002 year-end results. Net sales for the fourth quarter ended December 31, 2002 increased 3% to $205.8 million from $200.1 million in the comparable period of 2001. After adjusting net sales for the fourth quarter of 2001 to exclude the Pollenex(R) brand personal care appliance business that the Company sold in January 2002, net sales increased 6% during the fourth quarter of 2002. The Company incurred a net loss of $10.5 million during the fourth quarter of 2002 as compared to a net loss of $2.7 million in the fourth quarter of 2001. Both quarterly periods were adversely affected by one-time items. The results for the fourth quarter of 2002 include non-recurring charges of $24.9 million related to the closing of the Company's domestic manufacturing facilities, which was announced on December 2, 2002. The fourth quarter of 2001 included a charge of $14.1 million related to the Kmart bankruptcy filing. Excluding one-time items, the Company's adjusted net income was $14.4 million in the fourth quarter of 2002, a 26% increase above the adjusted net income of $11.4 million in the comparable period of 2001. For the 2002 fiscal year, the Company's net sales totaled $608.6 million, a slight decrease from the net sales of $612.2 million achieved in fiscal 2001. Net sales increased 2% in 2002 after adjusting the 2001 sales total for the Pollenex(R) business. The Company reported a net loss of $57.9 million in 2002, which included an extraordinary gain of $22.4 million related to the repurchase of debt and a $79.8 million non-cash charge representing the cumulative effect of an accounting change associated with the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Before the extraordinary gain and goodwill impairment charge, the Company's net loss totaled $0.5 million in 2002, compared to a net loss of $15.6 million in 2001. The results for the year ended December 31, 2002 also included $28 million of severance and facility exit costs and asset writedowns related to the restructuring actions, and $7.2 million of inventory writedowns associated with the decision to close domestic manufacturing facilities. The 2002 restructuring charges were partially offset by a gain of $9.5 million realized on the sale of the personal care appliance business in January 2002. In 2001, the Company's net loss included $15.8 million of one-time charges related to the Kmart bankruptcy and the closing of a manufacturing facility. On an adjusted EBITDA basis, the Company made substantial progress in improving its operating earnings during the year with adjusted EBITDA in 2002 increasing 18% to $70.5 million from $59.8 million of adjusted EBITDA in 2001. The Company defines EBITDA as the total of operating income before depreciation and amortization, other income and joint venture earnings. Adjusted EBITDA excludes certain charges related to restructuring activities, bank financing and other one-time gains and charges. The Holmes Group's December 31, 2002 balance sheet shows a total shareholders' equity deficit of about6 $74 million. Peter J. Martin, President and CEO of The Holmes Group, Inc., commented, "We are encouraged by the sales increase that the Company delivered in the fourth quarter of fiscal 2002, especially given the challenging retail sales environment. For the full year, our Rival(R) brand business posted a solid double-digit sales gain for the second year in a row by entering new product categories in the kitchen electric business and by continuing to offer innovative product features in our core category of Crock-Pot(R) slow-cookers. While the extremely competitive retail marketplace resulted in lower sales of our Holmes(R) and Bionaire(R) brand home environment products during 2002, we made profitability improvements in the business and we continue to maintain a leading market share in these product categories. From a balance sheet standpoint, our increased profitability and our continuing efforts to improve working capital management allowed for a substantial debt reduction during the year. At the end of December 2002, the Company's total debt stood at $275 million, a reduction of $78 million or 22% below our debt level of a year ago." Mr. Martin continued, "Finally, although the restructuring actions that we announced in December 2002 were difficult ones as they involved the elimination of approximately 800 loyal employees in our domestic manufacturing operations, these changes were necessary for our business and they should help make Holmes an even stronger product resource for our customers in the future." This announcement includes certain pro forma or adjusted financial information, which management believes provides a more thorough understanding of the Company's results of operations and the trends from which to measure performance. Summary financial information for the 2002 and 2001 fourth quarter and year, along with a reconciliation of adjusted EBITDA to GAAP operating income, follows this release. The Holmes Group, Inc., a fully integrated consumer products company, headquartered in Milford, Massachusetts, with offices and manufacturing facilities worldwide, is a leading manufacturer of consumer products for Home Environment, Kitchen and Lighting. With well-known brands such as Bionaire(R); Crock- Pot(R); FamilyCare(R); Holmes(R); MASTERGLOW(R); Patton(R); Rival(R); and White Mountain(R), The Holmes Group continuously develops, manufactures and distributes innovative, high quality products to meet consumer demands. IESI CORP: Dec. 31 Balance Sheet Insolvency Doubles to $36 Mill. ---------------------------------------------------------------- IESI Corporation reported that revenue for the three months ended December 31, 2002 increased 17.7% to $56.7 million, as compared with revenue of $48.2 million for the corresponding three-month period in 2001. Income from operations for the three months ended December 31, 2002 was $3.9 million, as compared with $3.7 million for the corresponding period in 2001. EBITDA (earnings before income taxes, loss on the extinguishment of debt, loss on termination of interest rate swaps, interest expense, depreciation, depletion, and amortization) for the three months ended December 31, 2002 was $11.6 million, as compared with EBITDA of $10.6 million for the corresponding period in 2001. Net income for the three months ended December 31, 2002 was a loss of $175,000, as compared with net income of $583,000 for the corresponding period in 2001. For the year ended December 31, 2002, revenue increased 14.7% to $212.9 million, as compared with revenue of $185.7 million for 2001. Income from operations for the year ended December 31, 2002 was $19.9 million, as compared with $16.1 million for 2001. EBITDA for the year ended December 31, 2002 was $47.7 million, as compared with EBITDA of $41.6 million for 2001. Adjusted EBITDA, which represents EBITDA before business development and financing charges for the year ended December 31, 2002 was $48.6 million, as compared with $43.2 million for 2001. During the year ended December 31, 2002, charges of $980,000 were incurred to write-off certain discontinued landfill and transfer station development projects and costs related to aborted acquisition transactions. In 2001, charges of $1.6 million were incurred to write-off certain landfill development projects and costs related to an aborted equity and debt transaction. Net income for the year ended December 31, 2002 was $606,000, as compared with $2.2 million for 2001. At December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $36 million. Mickey Flood, President and Chief Executive Officer commenting on the Company's performance for 2002 said, "I'm very pleased with our Company's results in spite of a poor economy, cost pressures from insurance and fuel, a new per ton landfill tax in Pennsylvania and the uncertainty in the world. Throughout the year we acquired approximately $25 million of annualized revenue, including 7 new hauling operations, 7 new transfer stations, 3 new operating landfills and 2 more landfills under construction that we expect to open in mid-2003." In the first quarter of 2002, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets". In accordance with SFAS 142, the Company ceased amortizing goodwill and intangibles with indefinite lives effective January 1, 2002. The Company performed the first of the required impairment tests of goodwill and indefinite lived intangible assets based on the carrying values as of January 1, 2002 and incurred no impairment of goodwill upon the initial adoption of SFAS 142. The Company also completed the required annual test during 2002 and incurred no impairment. IESI is one of the leading regional, non-hazardous solid waste management companies in the United States and has grown through a combination of strategic acquisitions and internal growth. IESI provides collection, transfer, disposal and recycling services to 256 communities, and more than 485,000 residential customers and 51,000 commercial and industrial customers in nine states. INTERNATIONAL PAPER: S&P Assigns BB+ Preferred Share Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services has assigned its 'BBB' senior unsecured debt rating to International Paper Co.'s $1 billion of senior notes to be issued under Rule 144a with registration rights ($300 million due 2008 and $700 million due 2015). At the same time, Standard & Poor's said that it has assigned its preliminary 'BBB' senior unsecured debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to International Paper Co.'s $6 billion mixed shelf registration. Standard & Poor's also assigned its 'BBB' senior unsecured debt rating to the company's new $1.5 billion three-year revolving credit facility. Standard & Poor's said that its 'BBB' and 'A-2' corporate credit ratings on the company are affirmed. The outlook remains stable. "The bank loan rating is the same as the corporate credit rating, reflecting the lenders' senior unsecured status", said Standard & Poor's credit analyst Cynthia Werneth. The new $1.5 billion revolving credit facility, which is currently undrawn, replaces a maturing 364-day facility of the same size. Financial covenants include minimum consolidated net worth of $9 billion and maximum debt to capital of 60%. Pricing is determined via a ratings-based grid. Standard & Poor's said that its ratings on International Paper continue to reflect the company's above-average position as the world's largest forest products manufacturer, broad product diversity, and moderate financial policies, offset by current weak market conditions and a financial profile that is sub-par for the ratings. ITEX CORP: January 31 Working Capital Deficit Stands at $1 Mill. ---------------------------------------------------------------- ITEX Corporation (OTCBB:ITEX), a leading business services and trading company, announced the operating results for its second fiscal quarter ending January 31, 2003. Second Quarter Results For the quarter ending January 31, 2003, the Company generated net income of $3,000 compared to a net loss of $155,000 for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $150,000 compared to $28,000 for the same period last year. Revenue from the trade exchange increased $109,000 or 4.1% from the same period last year. ITEX Corporation Second Quarter Operational Highlights: -- Included in selling, general and administrative expenses, salaries and wages, payroll taxes and medical benefits decreased $144,000 or 22% over the same period prior year ($679,000 or 40% compared to the same period last year). -- Decrease in equipment rent expense of $13,000 or 44%, related to management's successful settlement of several large capital lease obligations ($48,000 or 58% compared to the same period last year). -- Decrease in office rent, utilities and telephone expense of $33,000 or 27% ($110,000 or 38% compared to the same period last year), primarily related to the sale of previously owned corporate offices to independent licensed brokers. -- Decrease in depreciation expense of $43,000 or 60% ($146,000 or 72% compared to the same period last year), related to the disposal of the corporate headquarters building in January 2002. -- The Company has made efforts to reduce legal fees expense by creating agreements and payment arrangements with legal counsel. Legal fees decreased $46,000 over the same period last year. ITEX Corporation's January 31, 2003 balance sheet shows that total current liabilities exceeded its total current assets by about $1 million. Lewis "Spike" Humer, ITEX president and chief executive officer, stated, "Our second quarter was impacted by several non- recurring events, most notably the proxy contest. While we absorbed $151,000 in costs this quarter related to a contested election of directors, we will benefit by the substantial on- going savings and the increased cash flow resulting from the greatly reduced board compensation. In the third and fourth fiscal quarters of fiscal 2003, our net cash savings in board and board committee fees are expected to be approximately $75,000 over the same fiscal quarters last year. While we are in the early stages of our working relationship, the new board is demonstrating a commitment to support the management team and our vision to enhance shareholder value and to grow ITEX Corporation." Humer continued, "This has been a difficult climate to increase revenues; however, our sales have continued to grow modestly. During the second quarter of fiscal 2003, we placed three ITEX franchise operations and we expect the rate of placements to increase in the forthcoming quarters. Our short-term revenues related to the placement of new franchises were a bit below our initial projections; however, the franchising marketing effort has resulted in a large number of qualified ITEX Franchise leads. In addition, we have now received the required approval to offer ITEX franchises in almost every state in the U.S. in which we have applied. Given the importance of the franchise revenue to our top line growth, I am committed to keeping our shareholders and the investment community informed of our progress as it unfolds." Humer concluded by stating, "Operationally, we will continue to restructure and to reinvest in our infrastructure to strive for maximum efficiency and effectiveness for both the immediate future and our long-term growth. In the last six fiscal quarters, our highest non-asset producing costs were director, legal, and professional fees related to matters outside of our core business and routine operations. Given the changes in the latter part of the second quarter, we should be better positioned to invest in revenue producing and asset sustaining activities." Founded in 1982, ITEX Corporation -- http://www.itex.com-- is a business services and trading company with domestic and international operations. ITEX has established itself as the leader among the roughly 450 trade exchanges in North America by facilitating barter transactions between member businesses of its Retail Trade Exchange. At the retail, corporate and international levels, modern barter business enjoys expanding sophistication, credibility, and acceptance. ITEX helps its member businesses improve sales and liquidity, reduce cash expenses, open new markets and utilize the full business capacity of their enterprises by providing an alternative channel of distribution through a network of five company offices and more than ninety licensees worldwide. J.P. MORGAN: S&P Assign Prelim. Low-B Ratings on 6 Note Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Corp.'s $1.1 billion commercial mortgage pass-through certificates series 2003-C1. The preliminary ratings are based on information as of March 14, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property-type diversity of the loans. Classes A-1, A-2, B, C, D, and E are currently being offered publicly. The remaining classes are being offered privately. Standard & Poor's analysis determined that, on a weighted- average basis, the pool has a debt service coverage ratio of 1.55x based on a weighted-average coupon of 6.21%, a beginning loan-to-value ratio of 86.3%, and an ending LTV of 70.6%. Unless otherwise indicated, pool statistics, including weighted averages, do not consider the B notes for Westheimer at Sage Office/Retail Complex, Bishops Gate, and Brickyard Apartments, which are not included in the trust, or the junior non-pooled component of the Concord Mills loan. PRELIMINARY RATINGS ASSIGNED J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2003-C1 Class Rating Amount ($) A-1 AAA 267,000,000 A-2 AAA 595,147,000 B AA 34,700,000 C AA- 10,676,000 D A 32,031,000 E A- 14,680,000 F BBB+ 17,350,000 G BBB 17,350,000 H BBB- 12,011,000 J BB+ 16,015,000 K BB 10,677,000 L BB- 6,673,000 M B+ 8,007,000 N B 4,004,000 P B- 1,776,000 NR N.R. 19,577,504 CM-1 BBB+ 2,315,882 CM-2 BBB 4,259,161 CM-3 BBB- 14,363,563 X-1 AAA 1,067,676,504 X-2 AAA 1,023,168,000 JP MORGAN COMM'L: Fitch Keeps Watch on BB+/B+ Note Class Ratings ---------------------------------------------------------------- Fitch Ratings upgrades J.P. Morgan Commercial Mortgage Finance Corp.'s commercial mortgage pass-through certificates, series 1997-SPTL-C1, $5.7 million class D to 'AA' from 'AA-'. At the same time, Fitch places the $6.1 million class F, rated 'BB+' and the $2 million class G, rated 'B+' on Rating Watch Negative. In addition, Fitch affirms the interest only class X at 'AAA', $10.2 million class E at 'BBB+' and $3 million class H at 'B'. Fitch does not rate the $6.4 million class NR certificates. The rating actions follow Fitch's annual review of the transaction, which closed in June 1997. The upgrade of class D is attributed to the increased subordination levels due to loan amortization and payoffs and low delinquency rates and stable performance of the remaining loans. The Rating Watch placement of classes F and G is a result of interest shortfalls, due to trust expenses, special servicing fees, and other non-recoverable expenses, incurred by these two classes. The shortfalls, in addition to accrued interest on the shortfalls, are expected to be repaid in full. Classes H and NR are principal-only classes and therefore do not incur interest shortfalls. Fitch is concerned about the timely interest payments on these two classes. In February 2003, class F recouped some of the shortfall which has been in place since November 2002. The interest shortfall to class G continues to increase. Based on the transaction's waterfall structure, the interest shortfall will have to be paid off before the class H principal balance can be paid. Therefore, as long as the outstanding balance of classes H and NR remains sufficient to cover the shortfalls, classes F and G are guaranteed to recover the shortfall. As of the February 2003 distribution date, three loans (4.2%) were specially serviced and no loans were delinquent. Cumulative realized losses in the pool totaled $833,833, or 0.4% of the pool's original principal balance. The pool's aggregate principal balance has decreased by 84%, to $33.3 million from $203.1 million at issuance. The certificates are currently collateralized by 128 adjustable-rate mortgage loans, ranging from $14,787 to $2.9 million, with the largest loan representing 3% of the pool. The collateral consists primarily of multifamily (71%) and mixed-use (15%) properties, with significant concentrations in California (47%), Washington (17%), and Arizona (11%). A stress scenario was applied whereby specially serviced and other potentially problematic loans were assumed to default. Even under these stress scenarios, subordination levels were sufficient to justify the upgrade to class D. Fitch will continue to monitor this transaction for developments on the interest shortfall, the specially serviced loans, and other potential issues. K & F IND.: Says EBITDA Slides while Ops. Cash Flow Climbs 12% -------------------------------------------------------------- K & F Industries, Inc., reported its results for the quarter and year ended December 31, 2002. In a year hampered by a sluggish economy and a slowdown in the aerospace industry, K & F's annual sales, operating income and EBITDA (earnings before interest, taxes, depreciation and amortization) declined slightly while operating cash flow rose 12 percent. For the year ended December 31, 2002: - Sales totaled $349 million, down two percent from $355 million a year ago. - Military revenues rose $13 million or 14 percent, offset by a decline in commercial and general aviation sales of $19 million or seven percent. - Operating income was $94 million ($85 million after a $9 million non-recurring charge), down two percent from $96 million last year. - EBITDA was $106 million ($97 million after a $9 million non-recurring charge) a six percent decrease from $113 million due primarily to lower sales volume, the year's revenue mix and higher investments in original equipment provided to aircraft manufacturers. - Operating cash flow before interest paid increased 12 percent to $117 million from $105 million. - Total debt increased by $149 million to end 2002 at $435 million, as a result of the financing described below. - Bookings were $341 million, reflecting a five percent decrease compared with the prior year. - Backlog decreased slightly to $142 million from $150 million last year. - The Company spent $51 million for capital equipment, research and development, and program investments. Over the last three years, $159 million has been invested in these discretionary items. - ABSC revenue totaled $301 million versus $305 million and bookings were $288 million compared to $312 in 2001. EBITDA before the charge was $100 million, a decline from $107 million in 2001. - EFC achieved record bookings of $53 million, up from $46 million in 2001, a positive indicator of renewed demand. EFC had sales of $47 million in 2002, versus $50 million the prior year. In the fourth quarter of 2002, K & F issued $250 million 9 5/8 percent Senior Subordinated Notes due 2010 and entered into a new $30 million revolving credit facility. The net proceeds of the note were used to repay our former credit facility, pay a $200 million dividend to shareholders, pay transaction expenses and pay $9 million to holders of common stock options, which was a non-recurring charge. Diversification of Programs Cushions K & F "K & F's brakes and brake systems are used on 28,000 aircraft in the commercial, general aviation and military sectors," stated Kenneth M. Schwartz, K & F's president and chief operating officer. "In addition, our programs tend to be long-term, generally up to the 20 to 25 year life of the aircraft. It is this diversification and long-term commitment that cushions us from today's volatile economic environment." Regional Jet Transport Continues to Grow K & F's strategy is to supply its Aircraft Braking Systems Corporation subsidiary's wheels and brakes to high cycle aircraft like regional jets, which make the most landings and have experienced the highest growth rate when measured by aircraft entering service and traffic growth year over year. Regional jet operations in the United States continued to expand in 2002 with the top ten regional jet carriers' average traffic growth exceeding 30 percent. K & F is the largest supplier of aircraft wheels and brakes to the regional transport sector of commercial air transportation, equiping every Bombardier CRJ- 100, 200, 440, 700 and 900. K & F also is the exclusive supplier to Embraer on its new family of regional jets including the ERJ- 170, 175, 190 and 195 aircraft with seating capacities ranging from 70 to 108 passengers. ABSC Continues Development of Products for New Aircraft in 2002 During 2000 and 2001, ABSC was selected in several competitions to supply new airplanes with wheels, brakes and brake control systems. Progress towards certification was made on these and other new platforms in 2002. In the commercial transport market two significant technical milestones were achieved: Bombardier's CRJ900, an 86 passenger regional jet with ABSC's wheels and steel brakes, was certified for commercial use; and the first flight of the all new 70- passenger Embraer 170 was accomplished. For 2003, ABSC is preparing for 2 additional aircraft program first flights - the 75-passenger Embraer 175 and the 108-passenger Embraer 195. In the general aviation market ABSC proceeded with the design and development of wheels, carbon brakes and the brake control system for the all new Dassault Falcon 7X business jet. ABSC also supported the final certification phase of the Falcon 900EX-EASy flight test program. This aircraft is the latest derivative of Dassault's popular Falcon 900 family of long-range business aircraft. Other ABSC-equipped business jets currently in flight test include the super-mid-size Raytheon Hawker Horizon and the Sino-Swearingen SJ-30 entry level jet. Initial hardware deliveries were made to support the future flight testing of Gulfstream's next generation G-IV, and a proof-of- concept-prototype light category business jet being developed by Honda Research and Development Corporation. Also in 2002, first flight was achieved by the Agusta-Bell AB-139 helicopter, which uses ABSC wheels and brakes. In the military market successful first flights were achieved by the Korean Aerospace Industries T-50 military trainer and the Saab JAS39C/D fighter aircraft. In Japan, the Mitsubishi Heavy Industries F-2 fighter entered initial operational capability with the first 30 of an expected 130 aircraft entering service with the Japanese Self Defense Forces. All three of these advanced military aircraft feature ABSC wheels, carbon brakes and brake control system equipment. In 2001, ABSC received a large order for B-1B replacement parts and booked the production lot 3 for the Swedish JAS39 fighter aircraft. Through lot 3, 204 JAS39 aircraft have been ordered, with orders expected from other foreign nations. EFC Achieves Record Bookings in 2002 Engineered Fabrics Corporation sales of $47 million in 2002 declined year over year due primarily to weakened demand in the general aviation market for fuel tanks and iceguards. Bookings, however, reached the highest total in EFC history, signaling an increase in demand going forward. EFC recorded $53 million of orders, led by fuel tank orders totaling $42 million, also a record. EFC is the world's leading manufacturer of flexible bladder-type fuel tanks, supplying approximately 80 percent of the commercial and general aviaton sectors and over 50 percent of the U. S. military market. K & F Industries, Inc., through its Aircraft Braking Systems Corporation subsidiary, is a worldwide leader in the manufacture of wheels, brakes and brake control systems for commercial transport, general aviation and military aircraft. K & F's other subsidiary, Engineered Fabrics Corporation, is a major producer of aircraft fuel tanks, de-icing equipment and specialty coated fabrics used for storage, shipping, environmental and rescue applications for commercial and military uses. At September 30, 2002, K&F Industries' balance sheet shows a total shareholders' equity deficit of about $28 million. As reported in Troubled Company Reporter's December 11, 2002 edition, Standard & Poor's Ratings Services assigned its 'B' rating to K & F Industries Inc.'s proposed $250 million senior subordinated notes due 2010 offered under Rule 144A with registration rights and its 'BBB-' rating to a new $30 million senior secured revolving credit facility maturing 4.5 years from closing. At the same time, Standard & Poor's affirmed its ratings, including the 'BB-' corporate credit rating, on K & F, a braking system supplier. The outlook is stable. "The affirmation of the current ratings is based on an expectation that the firm will employ its sizable free cash flow to reduce significantly higher debt levels incurred from the $200 million dividend," said Standard & Poor's credit analyst Roman Szuper. KAISER ALUMINUM: Completes Kaiser Center Sale for $65.6 Million --------------------------------------------------------------- Kaiser Aluminum has completed the previously announced sale of its interests in the Kaiser Center office complex in Oakland, Calif., to Summit Commercial Properties Inc., for a gross cash purchase price of $65.6 million. Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of alumina, primary aluminum, and fabricated aluminum products. Kaiser Aluminum's 12.750% bonds due 2003 (KLU03USR1) are trading at about 3 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for real-time bond pricing. KMART CORPORATION: Fitch Withdraws Various 'D' Ratings ------------------------------------------------------ Fitch Ratings has withdrawn the 'D' rating of Kmart Corporation's notes, debentures, lease certificates, and convertible preferred securities. The action reflects Kmart's effort to emerge from Chapter 11, which will result in a new debt structure for the company, including a proposed $2 billion, 3-year exit financing. DebtTraders says that Kmart Corp.'s 9.000% bonds due 2003 (KM03USR6) are trading at about 15 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. LONGVIEW ALUMINUM: Lynch Wants Inquiry into Joe Baldi's Action -------------------------------------------------------------- To clarify the evolution and status of various legal actions undertaken by or against Longview Aluminum, LLC as a result of the bankruptcy of its affiliated entity McCook Metals, Michigan Avenue Partners Chairman Michael Lynch has submitted a request for a formal investigation into the actions of U.S. Trustee Joe Baldi in Chapter 11 bankruptcy of McCook Metals, LLC and its affiliated entity McCook Equipment, LLC. In a letter to U.S. Trustee Program Director Lawrence A. Friedman, Lynch detailed numerous incidents of incompetence and breaches of fiduciary duty by Baldi, who was appointed trustee of the estate of McCook Metals in October 2001. Lynch indicated that, if the U.S. Trustee's office declines to take action in this matter, he would pursue legal remedies against Baldi and his attorneys. Baldi's appointment had been made following a request by Lynch, who at the time was chairman of McCook Metals, and the company's board of managers as debtors in possession as a way to protect the assets and jobs at McCook and prevent its lender GE Capital from liquidating the company. The request for the investigation of Baldi's actions in this matter followed an extensive discovery process conducted as part of litigation filed by Lynch and McCook against both GE Capital and the law firms of Seyfarth Shaw and Shaw Gussis Fishman & Wolfson. This litigation motion seeks declaratory judgment and damages and was initiated to prevent the firms from representing the interests of the now-liquidated McCook Metals and McCook Equipment, LLC, as well as the interests of court-appointed trustee Joe Baldi who oversaw the auction of the McCook aluminum plate company in March 2002. The Actions of U.S. Trustee Baldi in the McCook Metals Bankruptcy and Liquidation In August 2001, McCook Metals filed a voluntary Chapter 11 bankruptcy as a result of pressure from its major creditor GE Capital following McCook's self- report of potential discrepancies in inventory reporting. Rather than conducing a complete audit and accepting McCook's offer to "make whole" any resulting irregularities that would be identified, GE Capital instead issued a demand for immediate payment of all outstanding debt, forcing the company's Chapter 11 filing. In announcing McCook Metals bankruptcy petition, Lynch stressed the negative impact of ongoing monopolistic behavior by the industry's largest multinational competitor Alcoa, adding that McCook Metals was also victimized by GE Capital's dominance as a leading source of financing in the industry. When the merger of the United States aluminum industry's number one and number three companies (Alcoa and Reynolds) was first proposed in August 1999, Michigan Avenue Partners was one of the few companies to publicly echo concerns from industry analysts that the merger would be bad for competition, consumers and U.S. manufacturing jobs, and result in higher prices and less innovation. Lynch was a vocal and proactive opponent to the merger of the U.S. aluminum industry giants speaking frequently to the media, at industry conferences and in public and private hearings with the U.S. Department of Justice and European Union. "Independent, entrepreneurial companies like McCook Metals were the industry's only hope of preserving the little market integrity that remained," said Lynch at the time. "We did everything we could to save this company and protect these U.S. manufacturing jobs," said Lynch, adding that Michigan Avenue Partners' bid had the full support of United States Steelworkers. Indeed, Lynch and the company's other equity owners did submit an offer to repurchase the plant at the bankruptcy auction. "Unfortunately for the almost 600 workers at our plant, our major creditor GE Capital and Mr. Baldi rejected our offer to reacquire the plant at the bankruptcy auction -- despite the fact that our offer was at least $25 million greater than the others and the only offer that would have maintained the plant as an ongoing concern," said Lynch. It was found during discovery that at least two other viable competitors submitted bids to purchase McCook as an ongoing concerns, which Lynch asserts would have been in the best interest of the estate. Instead, the plant's intellectual property assets, customer databases and some equipment were sold at auction to Pechiney Rolled Products. This move effectively liquidated McCook Metals, which had been the second largest aluminum plate company in North America. McCook was a leading producer of specialty products for aircraft, aerospace and defense industries, such as the aluminum lithium alloy plate for NASA's Space Shuttle Program and for military aircraft and had a regional economic impact of $406 million. The discovery process has revealed that, in allowing this sale, Baldi and his attorneys deliberately sought to circumvent U.S. Antitrust Laws by allowing Pechiney, through the liquidation, to sell more than 75 percent of the equipment to Alcoa. "Our discovery process revealed Trustee Baldi's overt and consistent bias toward Alcoa, even at the expense of the McCook estate," said Lynch. "We believe his actions to be both improper and illegal and will work closely with the U.S. Justice Department to provide all documentation necessary to facilitate their investigation into this matter." Other acts detailed in Lynch's letter requesting a formal investigation into Baldi's actions included: * Falsification of 2014 affidavits by Baldi's attorneys, Seyfarth Shaw and Robert Fischman. These affidavits are a formal requirement in bankruptcy hearings and are used to identify potential conflicts of interest. While acting under Baldi's oversight, neither Seyfarth Shaw nor Fischman revealed their concurrent representation of McCook's lender GE Capital and the company's major competitor Alcoa. * Agreement to hold Alcoa harmless for its environmental indemnification and remediation responsibilities for the cleanup of the McCook properties they assumed at purchase of Reynolds Metals Company, the previous owners of the property. Reynolds had operated the McCook plant as a manufacturing facility for almost 60 years, resulting in significant PCB and chlorinated solvent contamination on the property. Lynch stated that Baldi's action, which vacated Alcoa's $30-$60 million responsibility for the cleanup, in effect destroyed the value of the land and burdened the estate of the company with this liability. * Agreement to release Alcoa from patent litigation claims against them by McCook. This action stayed litigation filed by McCook upon discovering through patent investigation that, after both McCook and Boeing had paid more than 20 years of licensing fees to Alcoa for use of the T-6151 technology used to manufacture airplane wing skins, Alcoa did not have true right to this patent. This agreement was also made without economic considerations to the estate. * Refusal to pursue Alcoa for its Pension Benefit Guaranty Corporation (PBGC) claw back liability on behalf of McCook. Claw back liability is a statutory provision that requires that if, within five years of purchase, a company files bankruptcy, is liquidated or otherwise ceases to exist, the court-appointed trustee and/or PBGC can request that responsibility for this obligation revert to the seller. In this case, Baldi's refusal to seek such protection resulted in a $40 million cost to the McCook estate. * Agreement to provide GE Capital with blanket indemnification from its lender liability responsibilities. Baldi's actions in this regard, taken without approval from bankruptcy Judge Eugene Wedoff, were taken despite the fact that GE Capital's loan to McCook had been paid in full. As a result of this agreement, the assets of the McCook estate must now be used to finance the defense of any prior bad acts by GE Capital relative to McCook. Additionally, Lynch has requested that the U.S. Trustee consider numerous defamatory statements made by Baldi in the media about Lynch and the other principals of U.S. Aluminum, when they attempted to purchase the assets of McCook as an ongoing concern. Conflict of Interest by Seyfarth Shaw Additionally, through due diligence conducted as part of his bid to acquire the McCook plant at bankruptcy auction, Lynch discovered that Seyfarth Shaw, the law firm that had represented his business interests since 1997, had been concurrently providing legal counsel to his adversarial creditor GE Capital, as well as its parent corporation General Electric Company. Through its representation of Lynch and his partners, Seyfarth had provided legal counsel regarding, among other things, tax and financing advice; labor, employment and pension counseling, environmental, litigation and bankruptcy services, and advice. Seyfarth also advised Lynch and his partners on the formation, financing and operation of their various acquired entities and the Longview Aluminum smelter, which was acquired in February 2001. "The fact that Seyfarth Shaw, with whom we had an attorney/client and fiduciary relationship, was simultaneously representing the conflicted and adverse interests of GE Capital is and was professionally negligent and a clear breach of our contract with them," said Lynch. The lawsuit filed by Lynch on May 15 against Seyfarth in the Chancery Division of the Circuit Court of Cook County requests relief through an estimated $200 million in actual, compensatory, consequential and punitive damages, as well as legal fees and court costs, through a jury trial. Longview Aluminum Motion to Disqualify Seyfarth Shaw and Shaw Gussis In May 2002, Lynch filed an emergency motion to disqualify the law firms of Seyfarth Shaw and Shaw Gussis from representing the interests of the now-liquidated McCook Metals, LCC, McCook Equipment, LLC, as well as the interests of Chapter 11 Trustee Joseph Baldi. This disqualification is mandated under governing case law and rules of professional conduct for the legal profession. "The conflict of interest on the part of Seyfarth Shaw is evident," said Lynch in announcing the motion. "However, as counsel to Mr. Baldi, Shaw Gussis also received the confidential information Seyfarth obtained through its representation of Longview, case law indicates that they too must be disqualified from representing either the McCook entities or Mr. Baldi." Baldi's lack of action in this matter was also detailed in Lynch's letter to the U.S. Department of Justice, particularly his refusal to pursue malpractice claim(s) and Rule 11 sanctions against Seyfarth Shaw. Rule 11 sanctions would have requirement the repayment of more than $2 million in legal fees paid by McCook back to the company's estate. Longview Aluminum is a high-purity aluminum smelting facility in Longview, Washington. Michigan Avenue Partners is a Chicago-based investment group and acquisition company. LUTHERAN HOME: Fitch Hatchets $3.4-Million Revenue Bonds to BB+ --------------------------------------------------------------- Fitch Rating has downgraded the rating on the approximate $3.4 million outstanding New Jersey Health Care Facilities Financing Authority revenue bonds (Lutheran Home of Moorestown Issue) series 1989A to 'BB+' from 'BBB-'. The Rating Outlook is Stable. The downgrade is due to Lutheran Home at Moorestown's (Home) decline in financial performance, flat revenue growth, and poor disclosure. The Home's financial profile has deteriorated since fiscal 1998 and liquidity remains light with 103 days cash on hand at Nov. 30, 2002. Profitable operations from fiscal 1998- 2000 have reversed with a negative 1.0% excess margin through the 11 months ended Nov. 30, 2002. Revenue growth is constrained due to the composition of the Home's payor mix, which includes 45% Medicaid. Fitch has had a difficult time accessing management and disclosure has been poor with late audits and lack of quarterly information. Ongoing credit strengths include its solid occupancy, and manageable debt load. Occupancy remains a high 92% in the skilled nursing facility. The majority of the residents are referred from the Lutheran congregations in the service area. The Home's light debt load yielded a favorable cash to debt ratio of 97% at Nov. 30, 2002 and debt service coverage is satisfactory at 1.5x. However, the Home has future expansion plans, which would pressure current debt ratios. The financing of the expansion plan has not been finalized to date. Fitch believes the Home is stable at the lower rating level. The Home will continue to be challenged by industry pressures including rising labor expenses and exposure to reductions in Medicaid reimbursement. Management's inability to provide timely and adequate information to Fitch also contributed to the downgrade. Management has indicated that they will start providing quarterly financial information to Fitch. Located in Burlington County, New Jersey, the Lutheran Home at Moorestown currently operates 201 skilled nursing beds and 15 residential health care beds. Total revenue in fiscal 2001 was $11.3 million. MAGELLAN HEALTH: Has Until April 23, 2003 to Use Cash Collateral ---------------------------------------------------------------- Magellan Health Services, Inc., and its debtor-affiliates need continued access to cash as it rolls in the door from customers to fund their postpetition operations and pay their day-to-day bills. That cash was pledged years ago to secure repayment of the Company's Bank Debt. The Debtors ask Judge Beatty to approve a consensual arrangement allowing the Company continued access to the Lenders' Cash Collateral through and including December 15, 2003, in exchange for a basket of protections for the benefit of the Lenders. Stephen Karotkin, Esq., at Weil Gotshal & Manges LLP, in New York, reminds Judge Beatty that under the Credit Agreement, dated as of February 12, 1998, among Magellan, Charter Behavioral Health System of New Mexico, Inc. and Merit Behavioral Care Corporation, as Borrowers, JPMorgan Chase Bank, as administrative agent and collateral agent for the Lenders, the Lenders made and extended Loans and other financial accommodations to or for the benefit of the Borrowers. As of the Petition Date, the Borrowers were: -- indebted to the Lenders for loans totaling $160,762,200; -- contingently liable to the Lenders for $75,317,200, on account of the Borrowers' reimbursement obligations under letters of credit; and -- liable to the Lenders for fees and expenses incurred in connection with these loans and letters of credit as provided in the Credit Agreement. In addition, a majority of the Debtors are party to a guarantee executed and delivered in respect of the Prepetition Obligations and, as of the Petition Date, were contingently liable to the Lenders pursuant to this guarantee. To secure the Prepetition Obligations, Mr. Karotkin relates, the Borrowers and the Guarantors granted to the Lenders' Agent, as collateral agent, on behalf of and for the benefit of the Lenders' Agent and the Lenders, pursuant to the Loan Documents, liens and security interests in substantially all of their property, including all right, title and interest in and to the Borrowers' and Guarantors' accounts receivable, documents, equipment, general intangibles, inventory, investment property, trademarks, patents, copyrights, proceeds, all debt securities and all shares of capital stock except: -- shares of non-Guarantor domestic subsidiaries; and -- shares of any entity with a specific prohibition on a pledge of its capital stock. Cash and other amounts on deposit in the Debtors' bank accounts constitute Prepetition Collateral or proceeds of the Prepetition Collateral and, therefore, are cash collateral of the Lenders within the meaning of Section 363(a) of the Bankruptcy Code. Mr. Karotkin tells the Court that the Lenders' Prepetition Liens constitute valid, binding, enforceable and perfected first priority liens on the Prepetition Collateral subject only to validly existing liens permitted by the Credit Agreement, and are not subject to avoidance or subordination. The Prepetition Obligations constitute the legal, valid and binding obligations of the Borrowers and the Guarantors, enforceable in accordance with their terms, no offsets, defenses or counterclaims to the Prepetition Obligations exist, and no portion of the Prepetition Obligations is subject to avoidance or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law. Mr. Karotkin admits that the Debtors do not have available sources of working capital and financing to carry on the operation of their businesses without the use of the Cash Collateral. The Debtors' ability to maintain business relationships with their customers, providers, and suppliers and to meet payroll and other operating expenses is essential to the Debtors' continued viability and the value of their businesses as going concerns. In the absence of the use of the Cash Collateral, the continued operation of the Debtors' businesses would not be possible, and serious and irreparable harm to the Debtors and their estates would occur. The use of the Cash Collateral is therefore critical to preserve and maintain the going concern value of the Debtors and essential to the reorganization effort. The Debtors propose that, as adequate protection for the use of the Cash Collateral, the use, sale, lease, depreciation, decline in market price or other diminution in value of the Prepetition Collateral and the imposition of the automatic stay: A. the Lenders' Agent be granted, pursuant to the proposed Cash Collateral Order, for the benefit of the Lenders, valid, binding and enforceable security interests in and liens on all currently owned or hereafter acquired property and assets of the Debtors of any kind or nature whatsoever and all proceeds thereof to secure an amount of the Prepetition Obligations equal to the aggregate diminution in value, if any, of the Prepetition Collateral whether by use, sale, lease, depreciation, decline in market price or otherwise; B. the Debtors will make quarterly interest payments due under the Credit Agreement at these non-default rates in effect on January 1, 2003: -- with respect to Revolving Loans, the Alternate Base Rate plus 2.50%, -- with respect to L/C Participation Fees, 3.50%, -- with respect to Tranche B Term Loans, the Alternate Base Rate plus 3.25%, and -- with respect to Tranche C Term Loans, the Alternate Base Rate plus 3.50%; without giving effect to any additional interest that the Lenders may be entitled to as a result of the existence of prepetition Events of Default under the Credit Agreement; provided, however, that, with respect to interest accruing under the Credit Agreement for the period from January 1, 2003 through January 15, 2003, the Borrowers will pay interest at the rate set forth in Amendment No. 11 and Waiver dated as of January 1, 2003 and, with respect to interest accruing under the Credit Agreement for the period from January 16, 2003 to March 11, 2003, the Borrowers will pay interest at the default rate determined in accordance with Section 2.07 of the Credit Agreement; and C. the Debtors will pay all letter of credit and agent's fees and all reasonable professional fees and expenses of the Lenders' Agent, including Wachtell, Lipton, Rosen & Katz, Cravath, Swaine & Moore and Alvarez & Marsal, whether incurred prepetition or postpetiton, in accordance with, and pursuant to, the terms of the Credit Agreement. The Debtors further propose that the Replacement Liens be subject and subordinate only to: -- a $2,500,000 Carveout for payment of the Debtors' and any Official Committees' professionals and fees payment to the U.S. Trustee or Court Clerk; -- validly perfected, binding and enforceable liens or security interests in existence in the Postpetition Collateral as of the Petition Date; and -- valid liens perfected after the Petition Date to the extent the perfection in respect of a prepetition claim is expressly permitted under the Bankruptcy Code. In connection with the Debtors' use of the Cash Collateral, the Debtors' further propose that, after the Borrowers' request, the Lenders will be obligated to renew or extend Letters of Credit currently outstanding and the obligations of the Borrowers with respect to these Letters of Credit so renewed or extended will be prepetition obligations under the Credit Agreement, subject to all reimbursement obligations of all Revolving Lenders to the issuers as provided in the Credit Agreement. Mark S. Demilio, Magellan's Executive Vice President and Chief Financial Officer, relates that the Company is projecting $90,000,000 in cash receipts over the next 30 days and that it will disburse approximately $80,000,000. That means the Company's bank account balance is projected to swell by $10,000,000 this coming month. With replacement liens, the Lenders' interests in the Cash Collateral are adequately protected. * * * Judge Beatty finds that it's clear the Debtors need to dip into the Lenders' cash collateral or they'll be forced to shut down. On an interim basis, Judge Beatty authorizes the Debtors to use the Lenders' Cash Collateral, through April 23, 2003. On April 23, the Court will convene a Final Cash Collateral Hearing to consider entry of an order giving the Debtors continued access to Cash Collateral through December 15, 2003. (Magellan Bankruptcy News, Issue No. 2: Bankruptcy Creditors' Service, Inc., 609/392-0900) Magellan Health's 9.375% bonds due 2007 (MGL07USA1) are trading at about 82 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=MGL07USA1for real-time bond pricing. MC SHIPPING: S&P Withdraws B- Corp. Credit & Junk Debt Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B-' corporate credit and 'CCC' senior unsecured debt ratings on Monaco-based MC Shipping Inc., at the company's request. The outlook was stable. MC Shipping operates a fleet of 17 ships, comprising eight container vessels, two multipurpose sea-river vessels, one very large gas carrier, and six small gas (LPG) carriers. MEDICALCV INC: Nasdaq Knocks Off Shares from SmallCap Market ------------------------------------------------------------ MedicalCV, Inc. (Nasdaq: MDCVU), a Minnesota-based heart valve manufacturer, did not appeal the Nasdaq Staff Determination that its securities would be delisted from The Nasdaq SmallCap Market at the opening of business March 17, 2003. "We concluded that we would be unable to regain compliance with all of the criteria for continued listing on the timeline required by Nasdaq," said President and Chief Executive Officer, Blair P. Mowery. "We remain focused on improving the capital structure and financial performance of our business. With the recent improvement in our gross margins and heart valve unit sales, we are now developing a path to profitability." As a result of the delisting, MedicalCV securities will become subject to additional rules of the SEC. Such rules require broker-dealers to make a suitability determination for purchasers and to receive the purchaser's prior written consent for a purchase transaction, thus restricting the ability to purchase or sell the securities in the open market. Trading, if any, will be conducted in an over-the-counter market established for securities that do not meet Nasdaq listing requirements. MedicalCV, Inc., is a Minnesota-based heart valve manufacturer with a fully integrated manufacturing facility, where it designs, tests and manufactures all of its products. Based on its Omnicarbon(TM) heart valve's 18 years of excellent clinical results in Europe, Japan and Canada, the U.S. Food and Drug Administration gave premarket approval for the Omnicarbon valve in July 2001 for use in the United States, without requiring additional U.S. clinical trials. To date, more than 30,000 Omnicarbon valves have been implanted in patients in more than 30 countries. For more information on the company, visit its Web site at http://www.medcvinc.com * * * Liquidity and Capital Resources In its SEC Form 10-Q for the period ended October 31, 2002, the Company reported: "Cash and cash equivalents decreased to $210,032 at October 31, 2002, from $2,781,675 at April 30, 2002. The decrease in cash in the current fiscal year was attributable primarily to funding operating losses and working capital requirements. Net cash used in operating activities was $882,680 in the second quarter ended October 31, 2002, and $558,221 in the same period last year. Net cash used in operating activities for the six-month period in fiscal 2003 was $2,412,438 compared to $1,302,895 in the prior year. "Net cash used in operating activities increased $324,459 in the quarter and $1,109,543 in the six-month period over the same periods in the prior year due primarily to funding higher operating losses and increases in inventory . Inventories increased $254,189 in the current quarter and $486,559 in the six-month period due primarily to carrying additional Omnicarbon 3000 inventory to support the U.S. product launch. "Net cash used in investing activities was $97,768 and $86,006 for the six-month periods ended October 31, 2002 and 2001, respectively. We invested $97,768 in property, plant, and equipment in the six-month period ended October 31, 2002, compared to $45,006 in the same period last fiscal year. "Net cash used in financing activities was $61,437 in the six- month period ended October 31, 2002, and consisted of principal payments on long-term debt and capital leases. In the six-month period ended October 31, 2001, net cash provided by financing activities was $1,434,808. In that period, we borrowed an additional $1,522,305 on our bank line of credit, and $500,000 in convertible bridge notes, partially offset by $526,882 of principal payments on our bank line of credit, long-term debt, and capital leases combined with $61,115 in deferred financing costs. "From March 1992 through July 2002, our primary source of funding has been private sales of equity securities, which totaled $9,775,704 in gross cash proceeds. We have also funded our operations through collateralized equipment financing term loans and equipment leases. In addition, we financed our operations since fiscal year 2000 through a bank line of credit collateralized by our real estate, tangible and intangible property and a guarantee by a principal shareholder. This line of credit, which was scheduled to mature in November 2002, has been extended to February 2003. Amounts borrowed under this line of credit currently bear interest at 6.5 percent per year. As of October 31, 2002, we had borrowed the maximum amount available of $2,500,000 under this line of credit. "As part of our credit agreement with Associated Bank Minnesota, we were required to maintain a minimum tangible net worth of not less than $3,000,000, measured as of the last day of each fiscal quarter. At April 30, 2001, we failed to comply with the minimum tangible net worth covenant. On August 24, 2001, Associated Bank Minnesota waived such covenant defaults, and we amended our credit agreement, which now provides that we must maintain a minimum tangible net worth of not less than $1,000,000, measured as of the last day of each calendar month. We were in compliance with our debt covenants as of October 31, 2002. However, absent an infusion of equity capital during the quarter ending January 31, 2003, our tangible net worth will fall below the required $1,000,000 minimum. "As of October 31, 2002, we had cash and cash equivalents of $210,032 and had borrowed the maximum $2,500,000 under our line of credit with Associated Bank. In November 2002, the maturity date of our revolving line of credit was extended to February 2003. In November 2002, we also obtained access for up to $500,000 of temporary financing from a principal shareholder intended as a bridge loan for the next 90 days or until we are able to obtain permanent financing, whichever comes first. In addition, we received a $60,000 unsecured advance from an executive officer in December 2002. "We are currently pursuing the refinancing of our revolving line of credit and are seeking other financing to fund our operations and working capital requirements. However, we cannot provide any assurance that such additional financing will be available on terms acceptable to the Company or at all. We will need to obtain additional capital prior to the maturity date of our revolving line of credit to continue operations. "Subject to the uncertainties surrounding our need for financing as described above, we expect to continue developing our business and to build market share in the U.S. now that we have FDA premarket approval of our Omnicarbon 3000 heart valve for sales in the U.S. These activities will require significant expenditures to develop, train and supply marketing materials to our independent sales representatives and to build our sales and marketing infrastructure. As a result, we anticipate that our sales and marketing and general and administrative expenses will continue to constitute a material use of our cash resources. The actual amounts and timing of our capital expenditures will vary significantly depending upon the speed at which we are able to expand our distribution capability in domestic and international markets and the availability of financing. "We expect that our operating losses and negative operating cash flow will continue in fiscal years 2003 and 2004 as we expand our manufacturing capabilities, continue increasing our corporate staff to support the U.S. roll-out of our Omnicarbon 3000 heart valve, and add marketing programs domestically and internationally to build awareness of and create demand for our Omnicarbon heart valves. As described above, we will need to obtain additional capital prior to the maturity date of our revolving line of credit to continue operations. We anticipate that we will need to raise between $2,000,000 and $3,000,000 of additional equity or debt financing to fund operations and working capital requirements in the next 1 to 6 months. This is in addition to refinancing our current $2,500,000 of bank debt which matures in February 2003. We also anticipate the need to raise a minimum of $1,500,000 in new financing within 6 to 9 months. We may also seek to dispose of certain assets and enter into a sale / leaseback arrangement involving our corporate headquarters and manufacturing facility as a means to improve liquidity. We expect to face substantial difficulty in raising funds in the current market environment and we have no commitments at this time to provide the required financing. If we obtain $2,000,000 to $3,000,000 of additional financing and refinance our bank debt, we believe we will have sufficient capacity to operate and fund the growth of our business for the remainder of fiscal year 2003. Our capital requirements may vary depending upon the timing and the success of the implementation of our business plan, regulatory, technological and competitive developments, or if: -- operating losses exceed our projections, -- our manufacturing and development costs or projections prove to be inaccurate, -- we determine to license or develop additional technologies, -- we experience substantial difficulty in gaining U.S. market acceptance or delays in obtaining FDA clearance of our proprietary carbon coating process for heart valves sold in the U.S. market, or -- we make acquisitions. "We cannot assure you that we will be able to raise sufficient capital on terms that we consider acceptable, or at all. If we are unable to obtain adequate financing on acceptable terms, we may be unable to continue operations." METRIS MASTER: S&P Puts 9 BB-Rated Transactions on Watch Neg. ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on various Metris Master Trust-related transactions on CreditWatch with negative implications. The CreditWatch placements reflect continued adverse performance trends displayed by the Master Trust collateral, consisting of VISA and MasterCard credit card receivables. In addition, on Feb. 5, 2003, Standard & Poor's lowered its long-term counterparty credit rating on Metris to 'CCC+' from 'B' to reflect the company's difficulties in improving asset quality and restoring profitability. The Metris Master Trust has displayed deteriorating performance trends during the past two years, but the deterioration has been more pronounced during the past three months, as the trust has reported increased delinquency and charge-off rates. These Metris Master Trust-related transactions have benefited from a lower interest rate environment, but the lower base rate costs have not been able to wholly offset the master trust's increased charge-off rate. As a result, despite having a lower cost of funds, the excess spread levels for the transactions have dropped significantly. As of the January 2003 reporting period, the total delinquency rate was 12.00%, which is significantly higher than the 9.79% average total delinquency rate experienced during the past two years. The average total delinquency rate has risen to 10.59% in 2002 from 8.73% in 2001 and 8.03% in 2000. Also, the charge-off rate has increased to a current level of 20.41%, up from the two-year average of 15.04%. More recently, charge-off rates have increased since Standard & Poor's previous Metris Master Trust downgrade in December 2002, from the October 2002 charge-off rate of 16.56% to the January 2003 charge-off rate of 20.41%. The trust charge-off rate increased to 16.28% in 2002 from an average of 13.16% in 2001, and an average of 11.29% in 2000. Furthermore, the increased charge-off rate has negatively affected excess spread rates, causing excess spread levels to fall from their two-year average of 6.63% to a current three- month average of 2.31%. It should be noted that the recent delinquency and charge-off rates displayed by the master trust have been negatively affected by the attrition of the master trust receivables balance. The current payment rate of 6.30% is in line with the historical payment rate for this trust. In addition, the trust yield has remained stable, averaging between 26.00% and 27.00% during the past few years, despite a decreasing interest rate environment. On April 17, 2002, Metris Cos. Inc.'s subsidiary, Direct Merchants Credit Card Bank N.A., entered into an agreement with its chief regulator, the Office of the Comptroller of the Currency, to implement a number of reforms in the bank's operations. Since that time, Metris' management has implemented strategies that are intended to improve the loss severity of its portfolio, including reducing the number of credit line extensions that are granted to customers and lowering credit lines to higher risk customers. As previously mentioned, Standard & Poor's lowered its ratings on all series of Metris Master Trust in December 2002 based on adverse collateral performance. Since that time, charge-off rates have continued to increase. Standard & Poor's will complete a detailed review of the credit performance of the aforementioned Metris Master Trust relative to the remaining credit support in order to determine if any rating actions are necessary. RATINGS PLACED ON CREDITWATCH NEGATIVE Metris Master Trust Series 2000-1 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2000-2 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2000-3 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2001-1 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2001-2 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2001-3 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2001-4 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2002-1 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Master Trust Series 2002-2 Rating Class To From A AA-/Watch Neg AA- B BBB+/Watch Neg BBB+ Metris Secured Note Trust Series 2000-1 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2000-2 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2000-3 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2001-1 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2001-2 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2001-3 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2001-4 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2002-1 Rating Class To From Notes BB/Watch Neg BB Metris Secured Note Trust Series 2002-2 Rating Class To From Notes BB/Watch Neg BB METROMEDIAL FIBER: Files Chapter 11 Reorganization Plan in SDNY --------------------------------------------------------------- Metromedia Fiber Network, Inc. (MFN), the leading provider of digital communications infrastructure solutions, has filed its Plan of Reorganization with the United States Bankruptcy Court in Southern District of New York Court in White Plains. This is a critical step forward for the Company in its efforts to emerge successfully from Chapter 11. "We promised our customers that we would do everything possible to emerge as quickly as we could and I intend to fulfill that promise with the filing of this plan," said John Gerdelman, President and Chief Executive Officer of MFN. "We expect to emerge from this process a more financially stable and competitive company. We have been EBITDAR positive in excess of projections for the past five months, our cash position has almost doubled from $38 million when we filed for protection in May to $73 million and we have paid down more than $17 million of our bank debt. This is truly a survivor story that is the direct result of the hard work and extraordinary commitment of our employees." MFN's post-bankruptcy business strategy includes continued operation of all its core business segments - metropolitan fiber network, data centers, IP transit and managed services. MFN is the leading provider of digital communications infrastructure solutions. The Company combines an extensive metropolitan area fiber network with a global optical IP network, state-of-the-art data centers, award-winning managed services and extensive peering relationships to deliver fully integrated, outsourced communications solutions to Global 2000 companies. The all-fiber infrastructure enables MFN customers to share vast amounts of information internally and externally over private networks and a global IP backbone, creating collaborative businesses that communicate at the speed of light. On May 20, 2002, Metromedia Fiber Network, Inc., and most of its domestic subsidiaries commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York. For more information on MFN, please visit the Company's Web site at http://www.mfn.com MIDWEST EXPRESS: Continues Aircraft Financing Negotiations ---------------------------------------------------------- Midwest Express Holdings, Inc., (NYSE: MEH) met Thursday with aircraft lessors and debt providers to present a restructuring proposal regarding obligations on the financed portion of the airline holding company's fleet. The other week, the company announced a 100-day suspension of aircraft lease and debt payments to provide it the opportunity to renegotiate the obligations to bring them in line with market conditions and better reflect the reduced market values of the aircraft. The discussions are part of Midwest Express Holdings' comprehensive strategic plan to achieve savings of more than $4 million monthly, with restructuring of aircraft-related obligations constituting a part of the targeted savings. As of March 13, the company had an unrestricted cash position of approximately $31 million. Robert S. Bahlman, senior vice president and chief financial officer, said after the first meeting that the parties were engaged in meaningful discussions, and that the company is hopeful they will reach a mutually agreeable resolution in due course. In the meantime, he said, the company continues to pay other financial obligations in full and on time. "Midwest Airlines and Midwest Connect are continuing to operate as scheduled, with no interruption in service," Bahlman reassured passengers. "Customers can purchase tickets or redeem their frequent flyer awards with confidence, knowing we have no expectation that our ability to continue operating will change." Midwest Airlines features nonstop jet service to major destinations throughout the United States. Skyway Airlines, Inc. - its wholly owned subsidiary -- operates Midwest Connect, which offers connections to Midwest Airlines as well as point-to-point service between select markets on regional jet and turboprop aircraft. Together, the airlines offer service to 51 cities. More information is available at http://www.midwestairlines.com MOBILE KNOWLEDGE: Ontario Court OKs Asset Sale to Longitude Fund ---------------------------------------------------------------- Longitude Fund Limited Partnership, a merchant-banking fund managed by Latitude Partners of Toronto, has acquired the business of Mobile Knowledge. The new, privately-owned company will continue to operate under the name Mobile Knowledge, servicing the customers of its predecessor and selling the full line of award-winning wireless dispatch and mobile media products to the taxi and transit markets worldwide. Friday last week, the Ontario Superior Court approved the acquisition of the assets of Mobile Knowledge Inc., by a company owned by the Longitude Fund, marking the conclusion of the sale process initiated by the Interim Receiver, Richter & Partners Inc., on January 29, 2003. The new company plans to keep operations intact, including the management team and the more than 50 jobs in Ottawa. "We have emerged from this process as a healthy private company with a strong balance sheet, reinvigorated employees and industry-leading products," said David Levy, who will continue to serve as President and CEO. "We have been gratified by the support we received from our customers, suppliers, and employees as well as the financial support of Latitude, all of which enabled us to get through the receivership process so smoothly," he added. Since taking over as CEO in late 2001, Mr. Levy has led a complete restructuring and turnaround of Mobile Knowledge. A new management team was brought in, several non-core operations were closed, a new line of next- generation dispatch and mobile media products was developed and brought to market and programs of expense reduction and continuous improvement were implemented. "Mobile Knowledge is very different today than it was just 18 months ago," said Mr. Levy. "Our employees have notched up many hard-won achievements in that time, and now that we have emerged from receivership as a strong, vibrant company, we are finally in a position to capitalize on those achievements". "Everyone at Mobile Knowledge is extremely optimistic now that we have come out of receivership as a well-grounded company, and we see great opportunities ahead of us," Mr. Levy concluded. MORGAN GROUP: Gets Nod to Bring-In FM Stone as Real Estate Agent ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Indiana gave its nod of approval to The Morgan Group, Inc., and its debtor-affiliates' application to employ FM Stone Commercial as their real estate listing agent. The Debtors relate that they acquired several pieces of real estate which will need to be disposed of during their Chapter 11 cases. To that end, FM Stone will provide both traditional and electronic marketing of the properties on a national scale, with exposure through several national real estate listing services and multiple exchange associations, and will also develop and implement an aggressive and proactive advertising campaign to ensure that the highest values are obtained for the properties. FM Stone has received no retainer in this case, and the terms of FM Stone's compensation will be: Property Expiration Date Commission -------- --------------- ---------- Middlebury, IN June 30, 2003 8% of sales price Elkhart, IN June 30, 2003 5% of sales price up to $1,475,000; 6% of sales price over $1,475,000 Wakarusa, IN June 30, 2003 8% of sales price Mocksville, NC June 30, 2003 10% of sales price Montevideo, MN June 30, 2003 10% of sales price Woodburn, OR June 30, 2003 10% of sales price (Parcel R106971, Industrial Park) The Morgan Group is a holding company; its Morgan Drive Away and TDI subsidiaries manage the delivery of manufactured homes, trucks, specialized vehicles, and trailers. The Debtors filed for chapter 11 protection on October 18, 2002 (Bankr. N.D. Ind. Case No. 02-36046). Andrew T. Kight, Esq., at Sommer Barnard Ackerson PC represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $17,278,000 of total assets and $16,625,000 of total debts. NATIONAL CENTURY: Sues Boston Medical to Recoup Over $3M in Cash ---------------------------------------------------------------- According to Drew H. Campbell, Esq., at Bricker & Eckler, in Columbus, Ohio, one of National Century Financial Enterprises, Inc.'s estate properties is $3,799,652 in cash proceeds of a failed settlement that is currently in an escrow account held for the benefit of the Unsecured Creditors' Committee of the Boston Regional Medical Center, Inc. The cash proceeds were deposited at Boston Federal Savings Bank. The balance as of September 30, 2002 was approximately $3,848,304. Consequently, the Debtors demand Boston Medical Regional Center and its Unsecured Creditors' Committee to turnover these funds. Prior to its bankruptcy, Boston Regional operated a 195-bed acute care hospital in Stoneham, Massachusetts. In July 1995, Boston Regional and the Debtors entered into a Sale and Subservicing Agreement, for the sale of Boston Regional's accounts receivable. Then, on February 4, 1999, Boston Regional commenced a Chapter 11 case in the U.S. Bankruptcy Court for the District of Massachusetts. Mr. Campbell recounts that on January 18, 2000, Boston Regional filed an adversary proceeding against the Debtors. The complaint, as amended from time to time, alleged breaches of the SSA, as well as breaches of alleged financing agreements in connection with a proposed sale of the hospital. A second adversary proceeding was commenced against the officers and trustees of Boston Regional -- the D&O Complaint. The Unsecured Creditors' Committee asserted claims of breach of fiduciary duty and gross negligence in connection with the failure of the hospital. The defendants filed third party claims for indemnity and contribution against the Debtors in this case. After extensive negotiations, Boston Regional, the Unsecured Creditors' Committee, and the Debtors entered into a settlement agreement on October 10, 2001. The agreement settled all claims against the Debtors, as well as dismissal of all third-party claims against them. In connection with the Settlement Agreement, the Debtors wired $3,799,652 to counsel for the Unsecured Creditors' Committee. It represented the cash payment portion of the total settlement paid to the Unsecured Creditors Committee. The Settlement Agreement provides that as a condition precedent to performance by the Debtors, its "Effective Date" would not occur until a "Final Order" had been issued dismissing both the Boston Regional and the D&O Complaints as well as all third- party claims. However, Mr. Campbell points out, the Settlement Agreement was never approved by any court, no bar order ever issued, and the complaints were never dismissed. As a result of the NCFE bankruptcy, Judge Carol J. Kenner of the United States Bankruptcy Court, District of Massachusetts, Eastern Division, entered an order staying both the Boston Regional and the D&O cases, and stating that the automatic stay included "efforts to collect debts against NCFE, including the proceedings concerning the present compromise." On December 16, 2002, the Debtors' counsel made a demand upon Boston Regional for the return of the Cash, plus interest. To date, Boston Regional and its Unsecured Creditors' Committee have failed and refused to return the Cash to the Debtors. Thus, the Debtors commenced this Complaint for turnover of money by Boston Regional on these counts: A. Count I: Turnover Mr. Campbell emphasizes that the Cash is property of the Debtors' estate, pursuant to Section 542(a) of the Bankruptcy Code, and is of more than inconsequential value or benefit to the estate. Moreover, the Debtors have demanded, and Boston Regional has refused, to return the Cash. "The Debtors are entitled to immediate turnover of the Cash," Mr. Campbell asserts. B. Count II: Conversion The Cash has been and remains in the possession, custody, or control of the Unsecured Creditors' Committee of Boston Regional. Accordingly, the Debtors have demanded return of the Cash and Boston Regional and its Unsecured Creditors' Committee have refused to return the Cash. Mr. Campbell explains that the continued exercise of dominion and control over the Cash is wrongful as to the Debtors and has damaged them in an amount in excess of the value of the Cash. Thus, the NCFE Plaintiffs demand: (a) the immediate turnover of $3,799,652, plus interest; (b) an accounting; (c) punitive damages; and (d) all costs of prosecuting this action, including attorney's fees. (National Century Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392- 0900) NATIONSRENT INC: Files Exhibits to its Consensual Reorg. Plan ------------------------------------------------------------- NationsRent, Inc. (NRNQE), has filed exhibits for its consensual plan of reorganization. These exhibits provide additional details about the plan, including the slate of initial directors of the reorganized Company, and are available in their entirety on the Company's Web site at http://www.nationsrent.com Among the new directors is Thomas J. Putman, age 52, who will serve as the Chief Executive Officer of the reorganized company. Mr. Putman is an investment partner of Phoenix Rental Partners, L.L.C. and an industry veteran of 28 years. Mr. Putman most recently served Fluor Corporation for 26 years in a number of capacities, including Group President for the Fluor Daniel Diversified Services Group and President and Chief Executive Officer of American Equipment Company from 1990 to 1997. Founded in 1947, AMECO is a leading global full-service supplier of site services and fleet outsourcing for industries in the construction, mining, government and industrial markets located in Canada, the U.S., Mexico, the Caribbean and South America. In addition to his direct industry background, Mr. Putman has served on numerous private and charity boards, and has held leadership roles in industry associations, including service as president of the Association of Construction Equipment Managers. "Jeff is a knowledgeable, seasoned executive with a wealth of experience," stated D. Clark Ogle, the Company's current Chief Executive Officer. Ogle continued, "His familiarity with the industry will be a genuine advantage for NationsRent as it emerges from chapter 11." Headquartered in Fort Lauderdale, Florida, NationsRent is one of the country's leading construction equipment rental companies and operates 246 locations in 26 states. NationsRent branded stores offer a broad range of high-quality construction equipment with a focus on superior customer service at affordable prices with convenient locations in major metropolitan markets throughout the U.S. More information on NationsRent is available on its home page at http://www.nationsrent.com Phoenix Rental Partners, L.L.C. was formed in 2001 for the specific purpose of acquiring debt securities of NationsRent in the secondary markets. In 2002, Phoenix formed an investment alliance with the Baupost Group, L.L.C. to leverage the combined talents and capital of each organization as it relates to distressed investment opportunities in the construction equipment rental industry. Bryan Rich and Douglas Suliman are Phoenix's majority owners, who have over 30 years of operating and financing experience in the construction equipment rental industry. NEXTCARD: Gets Court Nod to Extend Exclusivity Until June 16 ------------------------------------------------------------ By order of the U.S. Bankruptcy Court for the District of NexCard, Inc., obtained an extension of its exclusive periods. The Court gives the Debtor, until June 16, 2003, the exclusive right to file its plan of reorganization and until August 13, 2003, to solicit acceptances of that Plan from creditors. NextCard, Inc., was founded to operate an internet credit card business. The Debtor's business was to use the Internet as a distribution channel for credit card marketing and to issue credit cards and extend customer credit through NextBank, a bank that was a wholly-owned subsidiary. The Company filed for chapter 11 petition on November 14, 2002 (Bankr. Del. Case No. 02-13376). Brendan Linehan Shannon, Esq., at Young, Conaway, Stargatt & Taylor and Kathryn A. Coleman, Esq., at Gibson, Dunn & Cruther LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $18,000,000 in total assets and $5,000,000 in total debts. NTELOS INC: Court Okays Marcus Santoro as Conflicts Counsel ----------------------------------------------------------- NTELOS Inc., and is debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to retain and employ Marcus, Santoro & Kozak, P.C., as Co-Counsel to the Debtors. Concurrently, the Debtors seek to employ the law firm of Hunton & Williams as their general bankruptcy counsel. The Debtors point out that Marcus Santoro will work as conflicts counsel to serve along with Hunton & Williams. As conflicts counsel to the Debtors, Marcus Santoro's responsibilities will include: a. representing the Debtors in matters where Hunton & Williams has a perceived conflict of interest or is otherwise unable to represent the Debtors; and b. such other matters in which the Debtors determine to consult with Marcus Santoro because of its particular strength in a given area, provided that Marcus Santoro does not duplicate work being performed by Hunton & Williams. Frank J. Santoro, a director of Marcus Santoro will head the legal team representing the Debtors in these cases. The firm's current hourly rates range from: Attorneys $160 to $260 per hour Paralegals $ 35 to $ 90 per hour NTELOS Inc., a regional integrated communications provider offering a broad range of wireless and wireline products and services, filed for chapter 11 protection on March 4, 2003 (Bankr. E.D. Va. Case No. 03-32094). Linda Lemmon Najjoum, Esq., at Hunton & Williams represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, it listed $800,252,000 in total assets and $784,976,000 in total debts. OCWEN FINANCIAL: Fitch Affirms B/D Senior & Individual Ratings -------------------------------------------------------------- Fitch Ratings has affirmed the 'B' senior rating and 'D' individual rating of Ocwen Financial Corp (OCN). In addition, Fitch has raised the Long-term deposit rating of Ocwen Federal Bank (OFN), OCN's primary banking subsidiary to 'B+' from 'B' and affirmed all other ratings of OFB. The Rating Outlook for OCN and OFB has been revised to Stable from Negative. Approximately $133 million of bank and holding company debt is affected by this action. A complete list of affected ratings is detailed at the end of this release. Fitch's Outlook revision to Stable highlights OCN's progress in disposal of non-core assets and good cash position at the holding company relative to maturing debt obligations. Over the course of 2002, OCN reduced non-core assets by 55% or $297 million and remaining non-core assets now stand at $246 million. In addition, OCN has repurchased $73.5 million of holding company debt and strengthened the cash position of the bank and the holding company. Fitch believes that OCN should have sufficient cash and liquidity to repay $44 million of maturing debt in October 2003. Fitch's upgrade of the long-term deposit rating reflects the fact that previously, the long-term deposit ratings was equalized with the senior rating of the holding company due to the deteriorating finances of the group. However, given the change in Outlook and national depositor preference, the long-term deposit rating has been raised to 'B+'. Positively, OCN's rating continues to reflect its market position in mortgage servicing, reduction in non-core assets, and declining leverage. OCN mortgage servicing has remained a positive contributor to earnings and profitability given its growing scale. Although the company's technology investments have yet to break-even, losses in this segment have steadily declined. Moreover, the continued reduction in non-core assets should allow OCN to direct its resources more fully to its core servicing and technology businesses. Fitch's rating concerns continue to reflect the company's weak core operating performance, less developed funding profile, potential challenges in transferring servicing operations overseas, and need to maintain servicing portfolio scale. Core operating performance has mainly been weighed down by OTX, the company's technology services business, which continues to post losses. OCN's less developed funding profile effectively limits upward momentum in the rating since OCN mainly relies on short term secured credit lines to fund its operations. Fitch notes that OCN recently resolved litigation that will require an additional pretax charge to earnings of $2.25 million to be taken in the fourth quarter of 2002. The company has one other major lawsuit outstanding and a highly unfavorable outcome in this litigation could have negative rating repercussions for OCN. Ocwen Financial Corp., is a financial services company based in West Palm Beach, Florida. The company provides servicing and special servicing of non-conforming, sub-performing residential and commercial mortgages to third parties. OCN is also active in developing servicing related software. At Dec. 31, 2002, OCN's servicing portfolio totaled $30.7 billion. Ratings affirmed; Rating Outlook revised to Stable Ocwen Financial Corp. -- Senior debt 'B'; -- Short-term 'B'; -- Individual 'D'; -- Support '5'. Ocwen Federal Bank -- Short-term deposits 'B'; -- Subordinated debt 'B-'; -- Individual 'C/D'; -- Support '5'. Ratings raised; Rating Outlook revised to Stable Ocwen Federal Bank -- Long-term deposits to 'B+' from 'B'. PENTON MEDIA: Dec. 31 Balance Sheet Upside-Down by $61 Million -------------------------------------------------------------- Penton Media, Inc. (NYSE: PME), a diversified business-to- business media company, announced fourth-quarter 2002 revenues of $63.8 million, and adjusted EBITDA (net income before interest, taxes, depreciation and amortization, non-cash compensation and unusual items) of $5.3 million. These results compared with revenues of $86.7 million and adjusted EBITDA of $11.9 million in the fourth quarter of 2001. The Company had net income in the quarter of $12.9 million, primarily due to a $30.7 million tax benefit, compared with a net loss of $67.9 million in the year-ago quarter. The net income applicable to common stockholders was $12.3 million, compared with a loss of $67.9 million in fourth quarter 2001. The most significant impact on quarterly operating results was the performance of trade shows in the Technology Media segment. Revenues for technology events declined nearly 75% compared with last year. In addition, technology publishing revenues declined about 24%. Results for the Technology Media segment reflected severely challenging conditions in Internet and telecommunications markets. Several Internet and telecom-related media products were recently sold by the Company due to uncertain near-term recovery prospects for these market segments. On a product line basis, Publishing adjusted EBITDA improved 61.3%, producing a 14.4% margin compared with an 8.1% margin in the year-ago quarter. These improvements came on revenues of $39.9 million - down 9.7% from fourth quarter 2001 - reflecting the impact of cost reductions and process improvements put in place during the year. Trade Shows and Conferences experienced a 48.7% revenue decline in the quarter and a 71.3% decline in adjusted EBITDA, again reflecting downturns in Internet and telecom markets and Penton's events for those segments, many of which have been divested. Online Media revenues grew 30.4% and generated $1.2 million in adjusted EBITDA, a significant improvement versus a $0.4 million loss in the year-ago quarter. FULL-YEAR RESULTS Penton's performance in 2002 was adversely impacted by marketing cutbacks in technology and manufacturing businesses, which faced persistently declining sales and market turmoil during the year. Annual revenues were $235.1 million, a decline of $123.8 million, and adjusted EBITDA was $14.5 million, a decrease of $27.1 million, compared with 2001. The declines were due primarily to sharp business downturns for the Company's global portfolio of trade shows serving Internet and telecom-related markets. The declines for these events represented 63.0% of Penton's annual revenue decline and more than 100% of its adjusted EBITDA decline. The Company had a net loss of $286.3 million for the year compared with a net loss of $104.1 million in 2001. The net loss applicable to common stockholders was $332.5 million, or $10.27 per diluted share, compared with a loss of $104.1 million, or $3.26 per diluted share, in 2001. The Lifestyle Media and Retail Media segments, which together comprised 22.3% of Penton's revenues, saw expanded revenues in 2002, reflecting stronger conditions in consumer end markets such as natural products and foodservice. Adjusted EBITDA increased 13.9% for Lifestyle Media, producing a 36.1% margin, compared with a 32.7% margin in 2001. Retail Media adjusted EBITDA grew 22.0% and the margin expanded to 26.9% from 23.4% in 2001. Growth in these two segments was offset by results in the Technology Media (38.4% of revenues) and Industry Media (39.3% of revenues) segments. Technology Media experienced a 53.7% full-year revenue decline and an adjusted EBITDA decline of 99.3%. Revenues for the Industry Media segment fell 18.5%, and adjusted EBITDA declined 17.7%; however, margin grew modestly to 16.7%. On a product line basis, Publishing revenues declined 20.7% for the year. Process efficiencies and cost management initiatives improved adjusted EBITDA over 2001 and contributed to an expanded margin of 16.4%, up from 12.9% in 2001. Trade Shows and Conferences suffered significantly, as a majority of the Company's events in 2002 served the battered global Internet and broadband markets. Revenues for events in 2002 fell 58.9%, and adjusted EBITDA declined 84.8%. Online Media revenues grew 4.9% in 2002 and produced a significant increase in adjusted EBITDA to $3.3 million, compared with a loss of $3.1 million in 2001, reflecting successful portfolio management and product enhancements. Net loss for the year was impacted by: -- Restructuring charges totaling $15.4 million; -- A non-cash impairment charge of $39.7 million, or $1.23 per diluted share, related to the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets"; -- A non-cash impairment charge of $203.3 million, or $6.28 per diluted share, related to an additional impairment review under SFAS No. 142; -- A non-cash charge of $20.0 million, or $0.61 per diluted share, related to other intangible assets; -- A tax benefit of $40.5 million, which is the result of the Company's 2002 net operating loss available for carryback, less a valuation allowance for the Company's net deferred tax assets and net operating loss carryforwards not expected to be utilized. PRO FORMA RESULTS FOR DIVESTITURES On a pro forma basis, excluding the results of recently divested media properties, fourth-quarter revenues would have been $62.1 million compared with $80.4 million in the fourth quarter of 2001, and adjusted EBITDA would have been $5.5 million, compared with $11.0 million in the year-ago quarter. On the same basis, full-year revenues would have been $227.5 million compared with $331.7 million. Adjusted EBITDA would have been $15.8 million compared with $33.5 million in 2001. COST STRUCTURE AND LIQUIDITY IMPROVEMENTS "Last year was very disappointing; however, we responded aggressively to offset the dramatic downturn in our business by reducing Penton's operating costs approximately $97.0 million, including a $10.7 million, or 30.9%, reduction in general and administrative costs," said Thomas L. Kemp, chairman and chief executive officer. "These cost reductions should have a favorable impact on 2003 cash flows, assuming business remains stable at current volumes." Throughout the B2B media recession of the past two years, Penton has implemented process improvements and organizational changes that it expects will provide permanent cost structure benefits to the Company, Kemp said. "We have embedded meaningful efficiencies in the organization that position Penton for significant operating leverage when global economies improve, and when we begin to see an upturn in the technology and manufacturing sectors," he said. Kemp noted, however, that Penton's planning for 2003 assumes no recovery in global economies or in the Company's B2B markets, and that the Company continues to carefully monitor its liquidity to ensure that it can operate comfortably through the bottom of the B2B media recession. Kemp added that, despite challenging business conditions, Penton continues to invest in portfolio development, with a focus on strengthening its core media brands and leveraging business opportunities in emerging industries that tie to its existing market positions. Liquidity highlights include: -- Cash at December 31, 2002, of $7.4 million; -- Receipt of a 2002 tax refund of $52.7 million on January 29, 2003, reflecting the maximum benefit of a tax loss carryback for the year; -- Access to an undrawn revolving credit facility, with current availability of approximately $15.0 million. At December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $61 million. Q1 PREVIEW: ADJUSTED EBITDA GROWTH The first quarter of 2003 is developing consistent with the Company's plan. Revenues for ongoing properties are expected to decline by approximately 10% from the first quarter of 2002. However, the benefits of the Company's cost reduction program are expected to result in a meaningful increase in adjusted EBITDA and adjusted EBITDA margins. The Company is experiencing solid growth in its natural products and foodservice media portfolios in the first quarter, offset by continuing weakness for products serving the manufacturing and electronics OEM markets. The Company's important enterprise IT business appears to be stabilizing in a continuing turbulent market sector. Visibility remains limited in many of Penton's markets, particularly given the high level of concern surrounding geopolitical events. Until the uncertainty that continues to depress business spending lifts substantially, Penton management expects visibility to remain challenging, and therefore plans to continue to provide guidance only on a quarter-by-quarter basis. "During this period of heightened concern in the markets Penton serves, our strategic focus is on improving earnings and margins by strictly controlling costs," Kemp said. "However, we are also investing in our leading media brands and aggressively promoting the value they provide in helping our customers achieve their sales and marketing objectives." Penton Media -- http://www.penton.com-- is a diversified business-to-business media company that produces market-focused magazines, trade shows and conferences, and a broad offering of online media products. Penton's integrated media portfolio serves the following industries: Internet/broadband; information technology; electronics; natural products; food/retail; manufacturing; design/engineering; supply chain; aviation; government/compliance; mechanical systems/construction; and leisure/hospitality. RADNOR HOLDINGS: S&P Ups Corporate Credit Rating to B+ from B- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on packaging manufacturer Radnor Holdings Corp., to 'B+' from 'B-' following the company's announcement that it had successfully completed its debt refinancing. All ratings were also removed from CreditWatch. The current outlook is stable. At the same time, Standard & Poor's raised its rating on Radnor's senior unsecured notes to 'B' from 'B-'. "The completed refinancing has enhanced financial flexibility, and eliminated near-term refinancing pressures", said Standard & Poor's credit analyst Liley Mehta. "The $135 million senior notes are rated one notch below the corporate credit rating, reflecting the amount of priority debt in the company's capital structure, following the establishment of its $90 million credit facility, which would limit note holders' prospects for full recovery under a default scenario". With annual sales of about $323 million, Radnor, based in Radnor, Pa., produces expanded polystyrene foam disposable cups and EPS resins in the U.S. and Europe. Following the recent completion of its debt refinancing, Radnor has total outstanding debt of about $215 million. The rating revision reflects Radnor's improved liquidity position and extended debt maturity profile. In addition, ratings also recognize the company's improved operating and financial performance. SAFETY-KLEEN: Solicitation Exclusivity Extended to May 30, 2003 --------------------------------------------------------------- Safety-Kleen Corp. and its debtor-affiliates obtained Judge Walsh's approval to extend their exclusive period to solicit acceptances of their plan for an additional 90 days, or to May 30, 2003. (Safety-Kleen Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-0900) SAIF CORP: S&P Hatchets Counterparty Credit Rating Down to BBpi --------------------------------------------------------------- Standard & Poor's Rating Services lowered its counterparty credit and financial strength ratings on SAIF Corp., to 'BBpi' from 'BBBpi'. "This rating action was based on SAIF's decline in surplus, weak liquidity, high leverage, and geographic and product concentrations," said Standard & Poor's credit analyst Allison MacCullough. SAIF is licensed only in Oregon. The company is a not-for- profit, publicly owned workers' compensation company. SAIF was created by an act of the Oregon legislature to make inexpensive workers' compensation available to Oregon employers. SEQUA CORP: Reports Improved Operating Performance for Year 2002 ---------------------------------------------------------------- Sequa Corporation (NYSE: SQAA) -- whose senior unsecured debt has been downgraded by Fitch Ratings to 'BB-' from 'BB+' -- recorded lower sales but posted operating income gains for 2002. The improved operating performance was achieved despite the unfavorable effects of the decline in the commercial airline industry on Chromalloy Gas Turbine, the company's largest operating unit, and is a reflection of the balance afforded by the company's diversified operating base. For the year ended December 31, 2002, Sequa's sales totaled $1.7 billion, slightly lower than the $1.8 billion recorded a year ago. The decline primarily reflects lower sales at the large Chromalloy Gas Turbine unit and the smaller MEGTEC Systems operation, both of which combated severe market conditions throughout the year. Operating income for 2002 rose sharply to $61.2 million from $25.9 million in 2001. It is important to note that reported operating income for 2002 includes the benefit of reduced restructuring charges and related provisions ($4.5 million in 2002 and $22.4 million in 2001) and the absence of a large environmental charge ($13.3 million) and goodwill amortization ($13.1 million) in 2001. After adjusting to eliminate these factors, pro forma operating income amounted to $65.7 million in 2002 and $74.7 million in 2001. While Chromalloy's pro forma operating income declined sharply and MEGTEC Systems posted a loss for 2002, all other operating units generated noteworthy improvement for the year. Income from continuing operations - before the effect of a required accounting change - rose to $9.2 million or 68 cents per share in 2002. As previously announced, net income for 2002 was lowered by two factors: a required change in accounting for goodwill, which reduced net results by $114.8 million or $11.02 per share; and a loss from a discontinued financial services operation (Sequa Capital) that reduced final results by $11.0 million or $1.05 per share. The loss from discontinued operations stems from the write-off of an aircraft lease with bankrupt United Airlines and the write-down of other aircraft leases in the Sequa Capital portfolio. As a result of these factors, final net for the year was a loss of $116.5 million or $11.39 per share. Net income for 2001 totaled $8.0 million or 58 cents per share and included the benefit of a tax settlement that added $36.0 million or $3.47 per share to final results. Summary of Results by Segment Aerospace: Chromalloy Gas Turbine's sales declined 10 percent last year, a reflection of the drop in airline travel and consequent pressure on commercial airlines that began in the aftermath of September 11 and persisted throughout 2002. Operating income declined 32 percent, despite cost-reduction actions to counter the effects of lower demand and pricing constraints. Chromalloy also increased provisions for slow- moving parts inventories. Chromalloy's military and industrial turbine businesses moved sharply higher in 2002, while the original equipment portion of its commercial operations declined. In light of the continuing difficulties in the airline industry, Chromalloy is not expected to return to its pre- September 11 performance level in 2003. Moreover, depending on changes in the condition of the commercial airline industry, Chromalloy may implement further restructuring actions during the current year. Propulsion: Atlantic Research - which produces automotive airbag inflators and propulsion systems for missile and space applications - generated higher results in 2002, posting a sales increase of six percent and a turnaround in operating income. The automotive unit recorded higher domestic and foreign sales. Operating results also improved due to productivity gains derived from the company's Six Sigma program and lower operating expenses. The propulsion unit posted higher sales under tactical weapons programs and the initiation of development work on contracts for air breathing rocket systems. The advance in operating income for this unit reflects the inclusion of a technology transfer payment of $4.0 million in 2002, as well as the absence of a large environmental provision ($10.2 million) that had affected operating income for 2001. Metal Coating: Precoat Metals - which coats coils of steel and aluminum for industrial end users - posted slightly lower sales for 2002, the result of the continued contraction in its largest market, commercial construction. Nonetheless, Precoat Metals' profits - after adjusting to exclude restructuring charges and goodwill amortization - advanced five percent in 2002. The increase reflects market share gains and the combined benefits of restructuring actions taken in 2001 and the company's ongoing Six Sigma program. Specialty Chemicals: Results of United Kingdom-based chemicals supplier Warwick International were strong for 2002, with double-digit increases in both sales and operating income. The improvements were derived primarily from stronger sales of the detergent additive, TAED, and the enhancement of internal operating efficiencies derived from Six Sigma initiatives. Results also benefited from improved profitability at an international network of distribution companies and from the favorable effect of currency movements. Other Products: Results of the four operations in the other products segment were mixed in 2002. MEGTEC Systems, the largest unit, recorded a 15 percent decline in sales and posted a large operating loss for the year, despite the sales and income added by a business acquired in late 2001. The declines reflect the impact of substantial weakness in graphic arts, MEGTEC's largest market, combined with softness in other industrial equipment markets of Europe and Asia. Restructuring charges of $2.3 million in 2002 added to the unfavorable results for this unit, though the actions taken will lower costs in 2003. Sequa Can Machinery - which has endured a multi-year contraction of the container industry - achieved a turnaround in 2002, with sales up six percent and profitability restored. The machinery unit began 2003 with a strengthened backlog of orders and a positive outlook for the first half of the current year. Automotive products supplier Casco Products produced higher sales and income for 2002, due to advances at European operations and to the effects of restructuring actions taken in 2001. Men's formalwear maker, After Six, posted lower sales but generated improved profitability in 2002, the latter due to restructuring actions of 2001. With an improved backlog position at the end of 2002 and further restructuring completed, results are expected to strengthen in 2003. Summary of Fourth Quarter Results Sales for the fourth quarter of 2002 advanced five percent to $452.9 million from $429.7 million in the same period of 2001, with increases at four of the company's five segments. The advance in reported operating results to $19.8 million for the fourth quarter of 2002 was more pronounced, as the operating loss of $22.4 million posted for the 2001 fourth quarter included goodwill amortization of $3.4 million, restructuring and related provisions of $13.5 million and environmental charges of $13.3 million, whereas the fourth quarter of 2002 included only a restructuring charge of $1.8 million. After adjusting for these factors, pro forma operating income was $21.6 million in the fourth quarter of 2002 and $7.8 million in the fourth quarter of 2001. Income from continuing operations for the final quarter of 2002 was $6.4 million or 56 cents per share. After including the loss from discontinued operations of $11.0 million or $1.05 per share, the final result for the fourth quarter of 2002 was a loss of $4.6 million or 49 cents per share. In the fourth quarter of 2001, the company recorded a net loss of $25.6 million or $2.51 per share. SIERRA HEALTH: Completes Senior Convertible Debenture Offering -------------------------------------------------------------- Sierra Health Services Inc., (NYSE:SIE) completed its offering of $115 million aggregate principal amount of its 2-1/4% senior convertible debentures due 2023, which includes $15 million aggregate principal amount of debentures issued pursuant to an option granted to the initial purchasers. The sale of $100 million of debentures was completed on March 3, 2003, and the sale of the additional $15 million of debentures was completed on March 14, 2003. The debentures are convertible, at the option of the holders, into shares of Sierra Health Services Inc. common stock at a conversion price of $18.29 (which represents a conversion premium of 47.5% over the Feb. 25, 2003, closing price of $12.40), upon certain conditions including the sale price of Sierra's common stock exceeding 120% of the conversion price at specified times. The debentures are puttable to Sierra for cash or Sierra common stock, at Sierra's election, on March 15 in 2008, 2013 and 2018 and upon certain corporate events. The debentures can be called for cash beginning on March 20, 2008. The debentures have not been and will not be registered under the Securities Act or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale for the debentures in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state. Sierra Health Services Inc., based in Las Vegas, is a diversified health care services company that operates health maintenance organizations, indemnity and workers' compensation insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. As reported in Troubled Company Reporter's Friday Edition, Standard & Poor's assigned its 'B+' counterparty credit rating to Las Vegas, Nevada-based Sierra Health Services Inc., based on Sierra's marginal level of consolidated capital adequacy at the operating-company level, geographic/client concentration, and historical earnings weakness stemming from its presence in Texas healthcare market and the California workers' compensation market. Offsetting factors include its very good business position in Nevada (particularly the high-growth Las Vegas area), more focused business profile, and improved financial leverage and interest coverage. Standard & Poor's also said that it assigned its 'B+' senior debt rating to Sierra's $100 million 2.25% senior convertible debentures, which are due in 2023. The outlook is stable. SPIEGEL: Files for Chapter 11 Protection in Manhattan ----------------------------------------------------- In order to address its financial and operational challenges, Spiegel, Inc., and its principal operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Spiegel has secured a $400 million senior secured debtor-in- possession (DIP) financing facility from Bank of America, N.A., Fleet Retail Finance, Inc., and The CIT Group/Business Credit, Inc. Banc of America Securities LLC arranged this financing. This facility will be used to supplement the company's existing cash flow during the reorganization process. The company anticipates that this financing, together with its current cash reserves and cash flow from its operations, will be sufficient to fund its operations during the reorganization process. The company expects to be able to access $150 million of this facility upon Bankruptcy Court approval of an interim financing order. Access to the full facility is subject to final Bankruptcy Court approval at a later date and satisfaction of certain other conditions. During this process, the company expects to continue to provide the same high-quality goods and services as it has in the past. All stores and catalog operations are open and serving customers. The company's gift certificates and merchandise credits will be honored as always and its return and exchange policies will not be affected by the filing. The Spiegel Group companies included in the filing are continuing to pay employee wages and salaries, to offer the same medical, dental, life insurance, disability and other benefits and to accrue vacation time without interruption. In conjunction with today's filing, the company filed a variety of "first day motions" to support its associates and vendors, together with its customers and other stakeholders, during this process. The court filings include requests to approve the interim DIP financing and maintain existing cash management programs; to retain legal, financial and other professionals to support the company's reorganization case; and for other relief. During the restructuring process, vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization. "This filing is an important step in a controlled process that we expect will allow The Spiegel Group to address its immediate liquidity needs, restructure its debt obligations and other financing arrangements and improve its prospects for future growth and profitability," said William C. Kosturos, chief restructuring officer and interim chief executive officer of The Spiegel Group. "We are grateful for the loyalty and commitment of our associates and the constructive relationships with our vendors and service providers." The company's bank subsidiary, First Consumers National Bank (FCNB), and FCNB's subsidiary are not part of the filing. The bank is being liquidated under the terms of a preexisting consent order entered into with the Office of the Comptroller of the Currency in May 2002. As previously disclosed, the company is no longer honoring the private- label credit cards issued by FCNB to customers of Spiegel's merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). FCNB also recently discontinued charging privileges on all MasterCard and Visa bankcards issued by FCNB to its customers. While the inability of customers to use their private-label cards to make purchases from the merchant companies will adversely affect the company's net sales, the company cannot yet predict the severity of this decline. In order to enable its merchant companies to issue new private- label credit cards as soon as possible, the company is actively seeking a third-party service provider to finance and service receivables generated from these new cards. As previously announced, the company appointed William Kosturos, a managing director at Alvarez and Marsal, as interim CEO and chief restructuring officer, effective March 1, 2003. Together with the company's management team, he will be actively engaged in advising the company on reorganization matters and working to rebuild and reposition the company. The company also has retained Alvarez & Marsal as advisors. In its filing documents, Spiegel, Inc and its filing subsidiaries listed total assets with a book value of $1.737 billion and total liabilities of $1.706 billion as of February 22, 2003. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, 560 specialty retail and outlet stores, and e- commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. The company's Class A Non- Voting Common Stock trades on the over-the-counter market ("Pink Sheets") under the ticker symbol SPGLA. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SPIEGEL: Case Summary & 30-Largest Unsecured Creditors ------------------------------------------------------ Debtor entities filing separate chapter 11 petitions: Case No. Debtor -------- ------ 03-11539 Newport News, Inc. 03-11540 SPIEGEL, INC. 03-11541 Spiegel Catalog, Inc. 03-11542 Spiegel Publishing Co. 03-11543 Ultimate Outlet Inc. 03-11544 Spiegel Catalog Services, LLC 03-11545 Spiegel Marketing Corporation 03-11546 Spiegel Management Group, Inc. 03-11547 Eddie Bauer, Inc. 03-11548 Eddie Bauer Diversified Sales, LLC 03-11549 Eddie Bauer International Development, LLC 03-11550 Eddie Bauer Services, LLC 03-11551 Eddie Bauer of Canada, Inc. 03-11552 Newport News Services, LLC 03-11553 New Hampton Realty Corp. 03-11554 Distribution Fulfillment Services, Inc. 03-11555 Spiegel Group Teleservices, Inc. 03-11556 Spiegel Group Teleservices Canada, Inc. 03-11557 Retailer Financial Products, Inc. 03-11558 Gemini Credit Services, Inc. Chapter 11 Petition Date: March 17, 2003 Bankruptcy Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green, 5th Floor New York, New York 10004-1408 Telephone (212) 668-2870 Bankruptcy Judge: The Honorable Cornelius Blackshear Debtors' Bankruptcy Counsel: James L. Garrity, Jr., Esq. Marc B. Hankin, Esq. Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Telephone (212) 848-4000 Fax (212) 848-7179 Debtors' Bankruptcy Advisors: Alvarez & Marsal, Inc. 101 East 52nd Street, 6th Floor New York, NY 10022 Telephone (212) 759-4433 Fax (212) 759-5532 - and - Alvarez & Marsal, Inc. 55 West Monroe Street, Suite 3700 Chicago, IL 60603 Telephone (312) 601-4220 Fax (312) 803-1875 William C. Kosturos, is serving as Interim Chief Executive Officer and Chief Restructuring Officer, and Peter Briggs, William Roberti, Daniel Ehrmann, Doug Lambert, Scott Brubaker, Nate Arnett, and Vince Hsieh serve as Assistant Restructuring Officers Debtors' Financial Advisor: Henry S. Miller Miller Buckfire Lewis & Co., LLC 1301 Avenue of the Americas, 42nd Floor New York, NY 10019 Telephone (212) 895-1801 Fax (212) 895-1850 fax Claims Agent: Ron Jacobs Bankruptcy Services LLC Heron Tower 70 East 55th Street, 6th Floor New York, New York 10022 Telephone (212) 376-8902 U.S. Trustee: Carolyn S. Schwartz Office of United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 Consolidated list of The Spiegel Group's 30-largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Commerzbank AG Bank Debt $103,000,000 20 South Clark Street Suite 2700 Chicago, IL 60603 Phone 312-236-5300 Fax 312-236-3275 Attn: Mark D. Monson, Vice President Dresdner Kleinwort Bank Debt $92,500,000 Wasserstein 1301 Avenue of the Americas New York, NY 10019-6118 Phone 212-429-2100 Fax 212-429-2127 Attn: Gerd Lengfeld, Director DZ Bank AG (Deutsche Zentral Bank Debt $86,000,000 Genossenschaftsbank) DG Bank Building 609 Fifth Avenue New York, NY 10017-1021 Phone 212-745-1574 Fax 212-745-1556 Attn: Jochen Breiltgens, Vice President Bank of America Bank Debt $85,857,142 231 South LaSalle Street Chicago, IL 60697 Phone 312-828-3122 Fax 312-974-8974 Attn: Patricia P. DelGrande, Managing Director Deutsche Bank AG Bank Debt $78,500,000 31 West 52nd Street, 24th Fl. New York, NY 10019 Phone 212-469-8237 Fax 212-469-2930 Attn: Rolf-Peter Mikolayczk, Managing Director Landesbank Hessen-Thuringen Bank Debt $76,000,000 420 5th Avenue, 24th Fl. New York, NY 10018 Phone 212-703-5220 Fax 212-703-5256 Attn: Fred W. Musch, Senior Vice President Bankgesellschaft Berlin Bank Debt $71,000,000 AG, Zentrales Firmenkundengeschaft, Hardenbergstrasse 32 Postfach 121709 D-1000 Berlin 12 GERMANY Phone 011-4930-3109-2978 Fax 011-4930-3109-3725 Attn: Klaus Henner Schuett, Managing Director J.P. Morgan Chase & Co. Bank Debt $66,000,000 380 Madison Avenue, 9th Floor New York NY 10017 Phone 212-270-0426 Fax 212-622-3783 Attn: Tom Maher Westdeutsche Landesbank Bank Debt $56,000,000 1211 Avenue of the Americas New York, NY 10036 Phone 312-930-9200 Fax 312-930-9281 Attn: Klaus Nuenning, Vice President ABN AMRO North America, Inc. Bank Debt $52,500,000 135 South LaSalle Street Chicago, IL 60603 Phone 312-904-4912 Fax 312-904-1821 Attn: John E. Robertson, Group Vice President The Bank of New York Bank Debt $52,500,000 One Wall Street New York, NY 10286 Phone 212-635-7869 Fax 212-635-1483 Attn: Charlotte Sohn Fuiks, Vice President HSBC Bank USA Bank Debt $52,500,000 New York Branch 452 Fifth Avenue New York, NY 10018 Phone 212-525-2474 Fax 212-525-2479 Attn: Anne Serewicz, Senior Vice President HypoVereinsbank, Bayerische Bank Debt $46,000,000 Hypo-und Vereinsbank AG 150 East 42nd Street New York, NY 10017-4679 Phone 212-672-5385 Fax 212-672-5529 Attn: Curt Schade, Managing Director Den Danske Bank Bank Debt $41,000,000 280 Park Avenue New York, NY 10017-1218 Phone 212-984-8402 Fax 212-599-2493 Attn: Lars Emmery, Vice President Norddeutsche Landesbank Bank Debt $41,000,000 Girozentrale 1114 Avenue of the Americas, 37th Floor New York, NY 10036 Phone 212-812-6805 Fax 212-812-6860 Attn: Josef Haas, Vice President Credit Suisse First Boston Bank Debt $38,000,000 The AT&T Building, 42nd Fl. 227 West Monroe Chicago, IL 60606 Phone 312-750-3252 Fax 312-750-0661 Attn: Charles B. Edelstein, Managing Director Credit Lyonnais Bank Debt $21,000,000 1301 Avenue of the Americas New York, NY 10019-6022 Phone 212-261-7177 Fax 212-459-3174 Attn: Richard Laborie, Vice President Intesa BCI Bank Debt $21,000,000 New York Branch One William Street New York, NY 10004 Phone 212-607-3862 Fax 212-809-2124 Attn: Antonio DiMaggio, Vice President Morgan Guaranty Trust Co. Bank Debt $12,500,000 of New York 380 Madison Avenue, 9th Flr. New York, NY 10017 Phone 212-270-0426 Fax 212-622-3783 Attn: Tom Maher R.R. Donnelley Vendor $3,431,045 77 W. Wacker Drive Chicago, IL 60601 Phone: 312-326-8373 Fax: 312-326-8344 Attn: Ruby Kerr D Clase Apparel Intl Vendor $2,071,367 Carr Luperon KM 61/2 Parque Indust Zona Franca Gurabo Stgo DOMINICAN REPUBLIC Phone: 954-838-0088 Fax: 809-736-7584 Attn: Armando De Los Santos Controller Monty Vendor $1,932,744 Calle 19, #113 Montecristo Merida, Yucatan MEXICO 97133 Phone: 011-52-9999-447668 Fax: 011-52-9999-4433688 Attn: James Poon, President AT&T Utility $1,225,572 One AT&T Way Bedminster, NJ 07921 Phone: 312-230-2495 Attn: Jaames Grudus Kentucky Apparel LLP Vendor $1,194,593 1001 Capp Harlan Road Tompkinsville, KY 42167 Phone: 270-487-0322 Fax: 270-487-0387 Attn: Dave Wilkerson, CFO International Paper Co. Vendor $964,960 6400 Poplar Road, Tower 1 Memphis, TN 38197 Phone: 901-419-7485 Fax: 901-419-7698 Attn: Robert Mundy, Director of Finance Yale de Mexico Vendor $959,197 Calzada Javier Rojo Gomez #1330 Col Barrio San Miguel Iztapalap CP 09370 DF MEXICO Phone: 011-52-55-5-686-0011 Fax: 011-52-55-5-686-0855 Attn: Mateo Beja, President Seta Corp. Vendor $789,755 6400 E Rogers Circle Boca Raton, FL 33499 Phone 561-994-2660 Fax: 561-997-5975 Attn: John Amatangelo, CFO Provell Vendor $633,232 301 Carlson Parkway Minnetonka, MN 55305 Phone 952-258-2184 Fax: 952-258-2100 Attn: Brad Beckman, CFO Grupo M Industries Vendor $611,261 c/o CBI Resources 7435 West 18th Lane Hialeah, FL 33014 Phone: 305-826-8568 (x223) Fax: 305-826-8604 Attn: Orsman Rodriquez Inland Paperboard Vendor $480,015 & Packaging P.O. Box 360853M Pittsburgh, PA 15250 Phone: 740-383-4061 (x108) Fax: 740-383-2752 Attn: Jennifer Justus, Controller SPIEGEL: Names Geralynn Madonna Head of Catalog and Newport News ---------------------------------------------------------------- The Spiegel Group announced that Geralynn Madonna has been named president and chief executive officer of Spiegel Catalog and Newport News. Ms. Madonna previously held the position of president and chief operating officer of Newport News. "Geralynn has been a key member of The Spiegel Group team for many years," said William Kosturos, chief restructuring officer and interim CEO of The Spiegel Group. "I have great confidence in Geralynn's ability to provide reinvigorated and refocused leadership for both Spiegel Catalog and Newport News. We are fortunate to be able to draw upon her many talents and experiences." "Spiegel and Newport News are very powerful direct mail brands and I am looking forward to the opportunity to further strengthen and differentiate both brands," said Ms. Madonna. "We have an extremely talented and dedicated group of associates, and I am confident that together we will be able to make significant progress." Ms. Madonna will take over the management responsibilities of Melissa Payner, former president and chief executive officer of Spiegel Catalog, and George Ittner, former chairman and chief executive officer of Newport News, both of whom have resigned from the company to pursue other interests. Mr. Ittner has agreed to provide consulting services to the company. Ms. Madonna has been with the company for more than 21 years. In her most recent position as president and chief operating officer of Newport News, she oversaw all company-wide operations, including merchandising, product design and development, and financial management. The Spiegel Group (OTC Pink Sheets: SPGLA) is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, 560 specialty retail and outlet stores, and e-commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News, Spiegel Catalog and First Consumers National Bank. The company's Class A Non-Voting Common Stock trades on the over-the-counter market ("Pink Sheets") under the ticker symbol: SPGLA. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SPIRET TRUST: S&P Cuts Junk Series 2002-1 Certs. Rating to CC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on SPIRET Trust's series 2002-1 certificates to 'CC' and removed it from CreditWatch with negative implications where it was placed Jan. 31, 2003. The lowered rating reflects the downgrade of FC CBO Ltd./FC CBO Corp.'s 8.43% second priority senior notes and the removal of its rating from CreditWatch with negative implications on March 12, 2003. SPIRET Trust's series 2002-1 is a swap-dependent synthetic transaction that is weak-linked to the underlying collateral, FC CBO Ltd./FC CBO Corp.'s 8.43% second priority senior notes. RATING LOWERED AND REMOVED FROM CREDITWATCH SPIRET Trust $4 million trust certs series 2002-1 Rating Class To From Certs CC CCC-/Watch Neg TERAYON COMMS: Implementing Worldwide Restructuring Initiatives --------------------------------------------------------------- Terayon Communication Systems, Inc. (Nasdaq: TERN), a leading supplier of broadband solutions, announced a worldwide restructuring designed to reduce its operating costs, improve efficiencies and re-align resources to focus on its core product offerings for the world's leading cable operators. Measures implemented include a reduction in force of approximately 100 employees, or 20 percent of the workforce, and the closure of certain remote facilities. Terayon anticipates realizing approximately $12 million to $15 million in annualized savings from these actions, combined with related operational savings including curtailment of certain program and discretionary expenses. The company expects to record total charges in the range of approximately $4 million to $5 million associated with the realignment and the writedown of certain related assets in the quarter ending March 31, 2003. "We are committed to achieving profitability and are taking the necessary steps to facilitate reaching this key milestone," said Zaki Rakib, Terayon's CEO. "We have identified areas of our operations to streamline and consolidate, while retaining the key resources to deliver upon the commitments we have made to our customers and to continue investing strategically for the future. We are encouraged by the strong interest customers are showing in Terayon's data, video and voice product lines and are looking to generate positive momentum in the coming quarters." Terayon Communication Systems, Inc., provides innovative broadband systems and solutions for the delivery of advanced voice, data and video services that are deployed by the world's leading cable television operators. Terayon, headquartered in Santa Clara, California, has sales and support offices worldwide, and is traded on the Nasdaq under the symbol TERN. Terayon can be found on the Web at http://www.terayon.com * * * As previously reported, Standard & Poor's revised its outlook on cable Internet equipment company Terayon Communications Systems Inc., to negative from stable after Terayon said that it expected lower revenues for the June 2002 quarter than it had previously. At the same time, Standard & Poor's affirmed Santa Clara, California-based Terayon's single-'B'-minus corporate credit rating and triple-'C' subordinated debt rating. Terayon lowered its revenue expectations following a drop in sales of proprietary cable products. The company also faces cable modem pricing pressures and customer financial difficulties. TODAY'S MAN: Seeking Open-Ended Lease Decision Period Extension --------------------------------------------------------------- Today's Man, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for an extension of time within which the Debtors must elect whether to assume, assume and assign, or reject unexpired nonresidential real property leases. The Debtors want to extend their lease decision period through and until their confirmation of a chapter 11 plan of reorganization. The Debtors relate that prior to the Petition Date, they were in the process of formulating their business plan and evaluating their lease locations; however, given the magnitude of preparing to file their petitions, Debtors have not completed their review as of this time. The Debtors note that their decision to assume or reject the Leases is almost wholly dependent on its ultimate plan of reorganization. Until Debtors have had an opportunity to finalize their reorganization plan, they cannot determine exactly which Leases should be assumed or rejected. The Debtors' decision whether to assume, assign or reject particular Leases, as well as the timing of such assumption or rejection, depends in large part on Debtors' business plans for the future (i.e., whether the leased premises will play a role in Debtors' strategic operating plans going forward). At this time, it is not yet possible for Debtors to determine whether or not each of the locations covered by the Leases will play a part in Debtors' business going forward. Consequently, the Debtors believe that it is just and proper to enlarge their lease decision period through the Plan Confirmation. The Debtors assure the Court that they will remain current on all of their postpetition rent obligations under the Leases so as not to prejudice landlords under the Leases. Today's Man, Inc., an operator of men's wear retail stores specializing in tailored clothing, furnishings, sports wear and shoes, filed for chapter 11 protection on March 4, 2003 (Bankr. N.J. Case No. 03-16677). Michael J. Shavel, Esq., at Blank, Rome, Comisky & McCauley represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $37,800,000 in total assets and $36,500,000 in total debts. TRANSBIOTICS: Capital Resources Insufficient to Continue Ops. ------------------------------------------------------------- Transbiotics Corporation conducts the business previously carried on by Netzler and Dahlgren Company Technologies, Inc., NDC Systems, Inc., and NDC Automation, Inc. The Company changed its name from NDC Automation, Inc. to Transbotics Corporation in 2002. The Company's current core business is to be a supplier of controls hardware, software, engineering services and other components that are incorporated into automated guided vehicles and into systems that incorporate one or more such vehicles. AGVs are driverless, computer-controlled vehicles that are programmed to transport materials through designated pickup and delivery routines within a particular facility (usually a manufacturing or distribution facility) and to transmit information concerning system status, inventory tracking and system controls to a system controller. Net revenues decreased by $1,697,956, or 28.2%, from $6,015,214 for the fiscal year ended November 30, 2001 to $4,317,258 for the fiscal year ended November 30, 2002. The decrease is primarily due to a slow economy which resulted in decreased project AGV system sales and aftermarket revenues for the Company compared to the prior year. The Company revenues during 2002 were primarily derived from the automotive, packaging, food and beverage Industries. Cost of goods sold decreased from $3,959,246 to $2,844,282, or 28.2%, due primarily to the lower revenues. As a percentage of net revenues, cost of goods sold remained unchanged compared to the prior year. Gross profit decreased by $582,992, or 28.4%, from $2,055,968 to $1,472,976. The Company closed on the sale of its land and building in March 2001 for $1,600,000 and realized a gain of $581,023 after deducting moving expenses of approximately $30,000. In the new location, the Company combined all its operations for testing, development, manufacturing and distribution to improve its operating efficiencies. The Company had no such sale in 2002. Selling expenses decreased from $673,671 to $527,450, or 21.7%, primarily due to lower personnel and travel costs compared to the prior year. General and administrative expenses decreased by $151,801 from $1,226,321 to $1,1,074,520, or 12.4%. The decrease compared to the prior year was primarily due to the reductions in personnel cost, bad debt expense and professional fees. The Company continued to invest in the development of new AGV products and increased its expenditures by 65.5%, or $52,803, in the 2002 compared to 2001 expenditures. Primarily as a result of the foregoing, the operating income decreased by $918,796 from an operating income of $656,437 to an operating loss of $262,359 for the current year. Net interest expense decreased from $72,566 to $13,753, a decrease of 81.1%. The repayment of the mortgage loan and line of credit in March 2001 significantly lowered the Company's 2002 borrowing costs compared to the prior year. Primarily due to the income from the sale of the land and building in 2001 and lower revenues in 2002, offset in part by lower general and administrative expenses as described above, the Company's net income decreased by $856,930 from a net income of $580,818 in the year ended 2001 to a net loss of $276,112 in the year ended 2002. The Company experiences needs for external sources of financing to support its working capital, capital expenditures and acquisition requirements when such requirements exceed its cash generated from operations in any particular fiscal period. The amount and timing of external financing requirements depend significantly upon the nature, size, number and timing of projects and contractual billing arrangements with customers relating to project milestones. The Company has relied upon bank financing under a revolving working capital facility, long-term debt, capital leases and proceeds of its public and private offerings to satisfy its external financing needs. During the year ended November 30, 2002 net cash used in operating activities was $221,068. The Company continues to experience deficiency in its cash flow. At November 30, 2002 approximately $320,000 of payables were not being paid according to the vendor terms. The Company has been operating under adverse liquidity conditions due to an equity deficit and negative working capital. The accounts payable balance to Netzler & Dahlgren (its major supplier of technology) at November 30, 2002 was approximately $199,375. In 2001, the Company's receivables were pledged to Netzler & Dahlgren to secure a note receivable from the Company, such note having a principal balance of $27,051 at November 30, 2002, in exchange for the security interest previously held by Netzler & Dahlgren in the office property. The note was paid in full December 2002 and the pledge on the Company's receivables released as of that date. Netzler & Dahlgren has indicated to the Company that Netzler & Dahlgren's financial exposure to the Company must be reduced by timely payment of its payables. To ensure prompt payments, the Company must remain profitable or raise additional equity and/or debt to improve its working capital. In the first quarter of 2002, the Company began paying vendors on a deferred basis to meet its obligation to Netzler & Dahlgren on the note payable and retain its license agreement. Notwithstanding the pay off of the Netzler and Dahlgren note, the Company continues to be unable to satisfy the payment terms with Netzler & Dahlgren for its current payables, the Company risks termination of its license agreement with Netzler & Dahlgren if it can not meet the payable terms. There are no assurances that the deficiency in the cash flow will not continue. The Company continues exploring the possibility of raising additional equity capital or subordinated debt, either directly or possibly through a business combination, in order to improve its financial position and have the working capital to address potential growth opportunities. The Company is also reviewing the possibility or feasibility of going private to reduce its operating expenses. The Company's current expenses relating to being public are approximately $175,000 annually. There can be no assurances that the Company will be successful in regaining its profitability or raising the additional capital or subordinated debt that may be necessary for the Company's operations. There is substantial doubt about the Company's ability to continue as a going concern if the Company is not able to improve its working capital and liquidity. TRINITY ENERGY: Provides Chapter 11 Update ------------------------------------------ Trinity Energy Resources, Inc., (OTCBB:TRGC) released a status report on developments in its efforts to reorganize under Chapter 11 of the U.S. Bankruptcy Code, for which it filed for protection on January 31, 2003. With reference to the expansion of one of its Texas assets, the company filed a motion on February 28, 2003, for authority to enter into a term assignment agreement with Midland, Texas-based Seaboard Oil Co. If approved by the court, the agreement will provide for the near term development of a Ward County, Texas property believed to hold significant oil and gas reserves. Terms call for Seaboard to: -- Become the operator of the joint venture -- Pay Trinity's share of the expenses for drilling of the first well in the venture -- Provide a bonus payment to Trinity as part of the agreement and -- Commit to the drilling of additional wells at 180-day intervals, beginning approximately July 1, 2003. Additionally, Trinity has also filed a motion seeking expedited approval to engage outside accountants to assist in the filing of its annual report on Form 10-K, and is awaiting notice of a hearing date on this matter. Pending court approval, the company said it might not be able to complete its annual audit and file its report on Form 10-K, as originally planned, on or before March 31, 2003. Separately, Trinity did receive notice of a motion filed by a creditor, seeking the appointment of a trustee and dismissal of the Chapter 11 case, claiming fraud and misrepresentation related to an investment the investor made in the company in 1999. Trinity has no comment regarding the allegations made in the motion, beyond its belief that they are false and erroneous, and said that it is moving forward aggressively with its plan to emerge from Chapter 11 as soon as reasonably practical. UNITED AIRLINES: S&P Places Some Ratings Still on Watch Negative ---------------------------------------------------------------- UAL Corp. (D) disclosed on March 13, 2003 that its United Air Lines Inc. (D) subsidiary had generated positive operating cash flow (about $1 million per day) in January 2003, despite a $382 million net loss, and that the airline should meet its first debtor-in-possession (DIP) covenant test (which measures cumulative EBITDAR from December 2002 through the end of February 2003). United's January results were helped by interim wage cuts (about $70 million per month) and less-than-anticipated loss of traffic. In addition the airline did not have to pay on its aircraft debt and leases in the first 60 days following its Dec. 9, 2002, bankruptcy filing. UAL's unrestricted cash at Jan. 31, 2003, was about $1.2 billion. Standard & Poor's Ratings Services said its ratings on debt that are not in payment default remain on CreditWatch with negative implications. The most important issues facing UAL and United in the near term remain the airline's efforts to dramatically reduce labor costs, and the effect of a potential Iraq war on revenues and cash flow. United has threatened to ask the bankruptcy court to void existing labor contracts if negotiated agreements are not reached by March 17. The prospect of an attack by the U.S. and its allies against Iraq has driven up fuel prices and weakened traffic, particularly on international routes, for all large U.S. airlines. Accordingly, United may violate its second covenant test (measuring EBITDA through the end of March) if these effects are serious enough, which would allow DIP lenders to either waive the violation or accelerate their $700 million of loans, potentially causing the airline to cease operations and liquidate. US AIRWAYS: Plan Confirmation Hearing Set to Commence Today ----------------------------------------------------------- The independent agent tabulating the vote on US Airways' proposed plan of reorganization filed its report with the U.S. Bankruptcy Court in Alexandria, which disclosed that sufficient votes in favor of the Plan have been received to confirm the Plan. The confirmation hearing is scheduled to commence on Tuesday, March 18, 2003. The filing by Logan & Company, Inc., said that all necessary creditor classes of all eight debtors in the Chapter 11 cases had voted to accept the reorganization plan. The minimum acceptance rate by claim holders voting was 80.77 percent and by claim amount voting was 81.18 percent, well above the required two-thirds vote needed for approval. The report includes all provisional ballots that were cast by claimants that had sought provisional approval of their claims for voting purposes, as well as acceptance of the reorganization plan filed by the Pension Benefit Guaranty Corporation. The provisional and PBGC ballots remain subject to review and approval of the Bankruptcy Court, as does the voting report itself. The company said that holders of the company's common stock and subordinated securities claims will not receive anything under the reorganization plan and are deemed to have rejected the plan. The company will ask the Bankruptcy Court at Tuesday's hearing to confirm the reorganization plan notwithstanding the cancellation of current equity interests and over the objections filed by individual creditors and shareholders. WARNACO: Court Clears Claims Dispute Settlement with ILGWU Nat'l ---------------------------------------------------------------- Warnaco Inc., was a party to a collective bargaining agreement with the Union of Needletrades, Industrial and Textile Employees. Pursuant to the Collective Bargaining Agreement, Warnaco was obligated to make contributions to ILGWU National Retirement Fund's plan on behalf of certain of its employees. In June 2002, Warnaco permanently ceased all covered operations under the Employee Plan and ceased to have an obligation to the Fund, thereby completely withdrawing from the Fund. Accordingly, on January 1, 2003, the Fund filed Proof of Claim Number 2329 against Warnaco, which asserted a general unsecured claim for $2,316,645, with respect to Warnaco's complete withdrawal from the Fund. Claim No. 2329 amended and superceded these Claims: (i) Claim No. 2197 filed on June 20, 2002; (ii) Claim No. 1152 filed on December 20, 2001; and (iii) Claim No. 2 filed on June 19, 2001. Moreover, the Fund filed identical proofs of claim against each of the other Debtors on the basis of "control group" liability. To recall, the Debtors' Plan was confirmed on January 16, 2003. Under the Plan, "claims against more than one Debtor with respect to a single obligation, by reason of guaranty, joint or control group liability, or otherwise, shall be deemed to be a single Claim in the allowed amount of such obligation for purposes of voting, allowance, distribution and all other purposes under this Plan." On December 16, 2002, the Debtors filed an objection to the Fund's Proofs of Claim seeking to expunge the Fund's Proofs of Claim and allow only Claim Number 2169. The Fund objected to the Debtors' disallowance. On January 14, 2003, the Fund further sent a letter to Warnaco Operations Corporation, Warnaco's non-Debtor affiliate, alleging liability for the Withdrawal Liability. Warnaco Operations is a non-operating entity with no assets except for intercompany claims, which have been discharged pursuant to the Plan. Consequently, the Parties have agreed to settle the claims dispute pursuant to the terms of their Stipulation, which provides that: A. Proof of Claim Number 2329 is allowed as a non-priority general unsecured claim for $2,316,645; B. Proof of Claim Number 2, 1041-1054, 1058-1063, 1066, 1137- 1152, 1170, 2169-2206, 2302-2328, 2330-2335, and 2342-2346 are expunged with prejudice; C. The Opposition to the Debtors' Omnibus Objection is withdrawn with prejudice; and D. With regard to any liability or distribution on the Allowed Proof of Claim provided for under the Plan, the Parties fully, finally and forever release and discharge each other of and from any further claims, obligations and liabilities to the other whether known or unknown, including, without limitation, any and all claims, obligations and liabilities with respect to the Withdrawal Liability. Accordingly, Judge Bohanon approves the terms of the parties' Stipulation. (Warnaco Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHEELING-PITTSBURGH: Amends Application for Steel Loan Guarantee ---------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation announced that the Royal Bank of Canada has filed information amending its application to the Emergency Steel Loan Guarantee Board for its $250 million loan guarantee. The updated financial proposal was presented to staff members of the loan guarantee board during the past week. "We have worked with representatives of the Emergency Steel Loan Guarantee Program to strengthen areas that were of concern in our original application," said James G. Bradley, President and CEO of Wheeling-Pittsburgh Steel. "Wheeling-Pittsburgh Steel, its bank, and its financial advisors are confident that the substantial additional contributions from our creditors, suppliers, employees and the states of West Virginia and Ohio materially improve the company's business plan and further ensures that Wheeling-Pittsburgh Steel will be able to repay the loan. "The bottom line is: there should be no doubt we can repay every penny of this loan," Bradley stressed. A major component of the company's application and plan of reorganization remains the installation of a $110 million electric arc furnace. The EAF would replace one of the company's two operating blast furnaces. An EAF typically uses recycled scrap steel and scrap alternatives as 100 percent of its feedstock. Wheeling-Pittsburgh Steel, however, will have the capability to feed both scrap and liquid iron from its remaining blast furnace into its EAF. Wheeling-Pittsburgh is the nation's eighth largest domestic steel producer. It filed for Chapter 11 bankruptcy protection in November 2000. WHEELING-PITTSBURGH: UST Says Discl. Statement Lacks Information ---------------------------------------------------------------- Saul Eisen, the United States Trustee for Region 9, tells Judge Bodoh that Wheeling-Pittsburgh Steel Corp.'s Disclosure Statement -- as it stands -- does not meet the statutory requirement of adequate information. Andrew R. Vara, Trial Attorney for the U.S. Trustee, notes that regarding the Corporate Structure and Equity Ownership, the Disclosure Statement does not supply sufficient information on ownership and affiliation of the Debtors. There are nine corporations under the protection of Chapter 11. In addition, there are several non-debtor entities, including WHX Corporation, which either own or are affiliated with the Debtors. "It would be helpful if the Debtors would present a chart, similar to that used at the first meeting of creditors, showing the organizational structure of these companies," Mr. Vara says. The chart should identify each Debtor and non-Debtor affiliate and indicate the equity holders for each Debtor. A corresponding chart should be presented illustrating changes in structure and ownership post-confirmation. Regarding the identification of Assets and Claims, Mr. Vara points out that the Disclosure Statement does not clearly identify or estimate the value of assets and claims for each Debtor company. Since the Plan does not provide for substantive consolidation, separate information must be presented for the entities in Chapter 11. As drafted, Mr. Vara says, the Debtors do not offer adequate financial information. The U.S. Trustee proposes that a separate liquidation analysis be prepared and appended to the Disclosure Statement for each Debtor in Chapter 11. The liquidation analyses should present the value of assets for each company in comparison to administrative expenses and secured, unsecured, priority and general unsecured claims. In addition, Mr. Vara continues, the Debtors place WPSC's general unsecured claims in Class 7. Certain unsecured claims of PC are treated under Classes 5 and 6. Similar to the previous concern, the Debtors do not provide specific treatment for claims of any of the other entities in Chapter 11. "This deficiency must be explained and remedied," Mr. Vara emphasizes. Consistent with the Bankruptcy Code's requirements, the Debtors should present a table identifying their officers and directors both prepetition and postpetition. The Debtors should also disclose their current and proposed compensation. Under the Plan, Mr. Vara notes, persons holding equity interests in the Debtors other than WPC will retain their ownership unchanged. The Debtors propose to pay a lump sum of $10,000 to interest holders in WPC. By permitting equity to retain their ownership and, in WPC's case, receive pro rata distribution, the Debtors potentially violate the absolute priority rule. The Debtors should explain how they intend to obtain confirmation in light of the Bankruptcy Code's requirements. Furthermore, a reorganized debtor is obligated to continue paying quarterly fees to the U.S. Trustee post-confirmation until a case is closed, dismissed or converted. The Disclosure Statement should inform creditors of this continuing obligation and identify which entity will be responsible for making this payment and submitting appropriate financial reports to the United States Trustee for monitoring. Moreover, the Debtors should clarify that the Trustee is not required to file an administrative expense claim to be paid appropriate statutory fees. The U.S. Trustee also observes that the percentage allocation of stock offered by the Debtors adds up to 110%. The Debtors should clarify how stock will be issued and to whom. According to Mr. Vara, the release and exculpation provisions in the Plan provide broad releases of liability for numerous parties and also broadly extend a release and discharge to non- debtor entities. The Trustee reserves the right to object at confirmation to these provisions because: (i) The Debtors fail to establish that the non-debtor releases satisfy the seven-part test identified by the Sixth Circuit in Class Five Nevada Claimants v. Dow Corning Corp.; (ii) Rather than allowing creditors to affirmatively consent to the releases on the ballot by checking an appropriate box, the Debtors place the burden on creditors to know the releases are in the Plan and opt out; (iii) The releases impermissibly extend to professionals, including attorneys, accountants and financial advisors. Exculpating these professionals ignores and contravenes their fiduciary duties; and (iv) The release sanction negligence by professionals, providing limitation only for gross negligence or willful misconduct. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) WICKES INC: Obtains New $125-Million Senior Credit Facility ----------------------------------------------------------- Dresner Investment Services, Inc., a Chicago-based investment bank and NASD-registered broker/dealer, arranged a $125 million senior credit facility for Wickes Inc., a leading distributor of building materials and manufacturer of value-added building components. This facility replaces Wickes' existing senior credit facility and will provide additional sources of working capital to enable the company to execute on its business plan. Dresner Investments acted as the exclusive financial advisor to Wickes in the structuring, placement and negotiation of the senior debt, which includes a $100 million revolving loan facility and a $25 million term loan on behalf of Wickes Inc., with a group of lenders led by Merrill Lynch Capital. James A. Hopwood, Wickes' Chief Financial Officer, said, "The completion of the refinancing is a major milestone for our company. The additional liquidity generated by the new loan facility provides us with the flexibility to continue to strengthen our core business. We sincerely appreciate the support and confidence expressed by the lending community in Wickes, as well as the diligent efforts of the Dresner team that enabled us to complete the refinancing." Steven M. Dresner, President of Dresner Investments said, "The Dresner team, led by Gregg Pollack and Alan Bernstein, guided Wickes through a challenging lending environment to assist the company in completing this substantial refinancing of its senior debt. It is a true testament to the strength of the Wickes management team and its strategy for growth that it has attracted a stellar group of lenders, led by Merrill Lynch Capital, to provide this debt package." Mark K. Gertzof, Director of Merrill Lynch Capital, stated "Our lead role in this financing transaction was based on the completion of a structured process that required the cooperation of many parties, including the financial staff of Wickes and Dresner Investment Services. Dresner Investments assisted in completing our due diligence, documentation and syndication processes and their expertise and resources certainly contributed to the timely closing of this financing." Dresner Investment Services, Inc., is a regional investment banking firm providing corporate finance advisory services to the middle market. Dresner Investments advises large corporations, privately held companies, private equity groups, and other institutional investors regarding mergers & acquisitions, private placements, valuations and fairness opinions, and other strategic financial advisory issues. Dresner Investments has advised clients in a variety of industries, including industrial manufacturing, healthcare, educational products and services, and business services. For more information on Dresner Investment Services, Inc., please visit http://www.dresnerco.com Wickes Inc., is a leading distributor of building materials and manufacturer of value-added building components in the United States, serving primarily building and remodeling professionals. The Company distributes materials nationally and internationally, operating building centers in the Midwest, Northeast and South. The Company's building component manufacturing facilities produce value-added products such as roof trusses, floor systems, framed wall panels, pre-hung door units and window assemblies. Wickes Inc.'s Web site, http://www.wickes.comoffers a full range of valuable services about the building materials and construction industry. Merrill Lynch Capital is a leading commercial finance business providing a broad range of structured financing solutions to middle-market companies. Based in Chicago and with regional offices nationwide, Merrill Lynch Capital is focused on four major market segments - corporate finance, equipment finance, healthcare finance and real estate finance. Merrill Lynch Capital is a division of Merrill Lynch Business Financial Services Inc., a wholly owned subsidiary of Merrill Lynch Bank USA. For more information on Merrill Lynch (NYSE:MER), please visit http://www.ml.com * * * As reported in Troubled Company Reporter's March 3, 2003 edition, Standard & Poor's lowered its corporate credit rating on building materials distributor Wickes Inc., to 'SD' from 'CC' and removed the rating from CreditWatch with negative implications. Vernon Hills, Illinois-based Wickes has about $64 million of rated debt. The rating action is based on the company's announcement that it has completed its offer to exchange its new senior secured notes due 2005 for its outstanding senior subordinated notes due Dec. 15, 2003. Approximately 67% of the $64 million of senior subordinated notes were tendered in this transaction. The company also completed the refinancing of its senior credit facility with a new $125 million facility. WINDSOR WOODMONT: Gets OK to Tap Alvarez & Marsal as Consultant --------------------------------------------------------------- Windsor Woodmont Black Hawk Resort Corporation sought and obtained approval from the U.S. Bankruptcy Court for the District of Colorado to hire and employ Alvarez & Marsal, Inc., as its financial consultant. In this role, Alvarez & Marsal will: a. review the financial condition and capital structure of the company with a view towards identifying revenue enhancement opportunities, cost reduction opportunities and debt restructure options based on meetings with management and various creditor constituents; b. assist with the preparation and implementation of a turnaround plan, focusing on transition issues and the formulation of a debt restructuring plan to be used as the basis of a plan of reorganization; c. evaluate the Debtor's key functional areas to assess the cash and capital needs of the Debtor; and d. other activities as are reasonably requested by the Debtor. Alvarez & Marsal will bill the Debtors at their current hourly rates which are: Managing Directors $400 per hour Directors $350 per hour Associates $250 per hour Analysts $175 per hour Windsor Woodmont Black Hawk Resort Corporation, owner and developer of Black Hawk Casino by Hyatt Casino in Black Hawk, Colorado, filed for chapter 11 protection on November 7, 2002 (Bankr. Colo. Case No. 02-28089). Jeffrey M. Reisner, Esq., at Irell & Manella LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $139,414,132 in total assets and $152,546,656 in total debts. WORLDCOM INC: William Barney Wants to Pursue HK MCI Litigation -------------------------------------------------------------- William L. Barney asks the Court for relief from the automatic stay to proceed with his counterclaims pending in the Hong Kong High Court against MCI Worldcom International, an indirect subsidiary of Worldcom, Inc. Scott Rosenblatt, Esq., at Reitler Brown LLC, in New York, recounts that on March 19, 1999 William L. Barney and MCI International entered into a Letter of Understanding- International Assignment governing the terms and conditions of Mr. Barney's employment for MCI International in Hong Kong. Under the 1999 Contract: -- the International Assignment would have a duration of two years expiring on April 14, 2001, which could be extended after the mutual written agreement of the parties; and -- Mr. Barney would receive a base salary of $160,000 per annum and a bonus of 10% of his base salary for every 1% over-achievement of MCI International's revenue targets. For 1999, the revenue target was $35,000,000 and the revenue achieved was $58,000,000 -- resulting in an over-achievement 165.7%. Therefore, Mr. Barney was entitled to receive a $1,051,200 bonus. On May 8, 2000, Mr. Rosenblatt reports that Bernard J. Ebbers, the former President and Chief Executive Officer of Worldcom, Inc. sent a memorandum to Mr. Barney granting him a $502,000 bonus in exchange for his commitment to remain with MCI International through July 1, 2002. On June 25, 2000, Mr. Barney was paid $279,529.03 -- which represents a bonus of US$502,000 minus applicable withholding taxes -- as described in the Ebbers Memorandum as a retention bonus. On February 28, 2001, Mr. Barney entered into another Letter of Understanding-Foreign Assignment Extension with MCI International, which contained new terms and conditions on which Mr. Barney would continue to work for MCI International in Hong Kong and extended the Assignment for a new maximum term expiring on April 15, 2003. By its terms, the 2001 Contract superseded any and all other oral or written agreements between the Debtors and Mr. Barney and it represented a complete expression of all agreements with respect to Mr. Barney's employment with MCI International. On October 3, 2001, Mr. Barney resigned from his position with MCI International. Mr. Rosenblatt contends that MCI International breached both the 1999 Contract and the 2001 Contract. In breach of the 1999 Contract, as amended, MCI International only paid Mr. Barney $220,000, rather than the $1,051,200 due under the amended bonus provision. The remaining unpaid portion of the 1999 bonus equals $831,200. Pursuant to the 1999 Contract, MCI International also agreed to pay on Mr. Barney's behalf any and all host country personal income taxes due to the host country revenue authorities. In breach of the 1999 Contract and 2001 Contract, MCI International failed to meet the Tax Equalization Obligation resulting in $510,892 in damages to Mr. Barney. Mr. Rosenblatt relates that the 2001 Contract also provided that MCI International would provide financial assistance to Mr. Barney for residential accommodation in Hong Kong during the term of his assignment. By e-mail sent on October 4, 2001 to Mr. Barney, MCI International agreed to extend the date for Mr. Barney to vacate his residence from October 3, 2001 until November 31, 2001. However, on October 19, 2001, MCI International breached the Accommodation Agreement and demanded that Mr. Barney vacate his residence within seven days from the date of the letter. The rental obligation paid by Mr. Barney for the period from October 3, 2001 through November 13, 2001 was HK$190,000. In further breach of the 1999 Contract and 2001 Contract, MCI International failed to: -- pay Mr. Barney's wages up to the date of termination amounting to $14,678.46; -- pay Mr. Barney's accrued but untaken annual leave up to the date of termination amounting to $9,230; and -- reimburse Mr. Barney for expenses incurred on behalf of MCI International totaling HK$47,000. On March 25, 2002, Mr. Rosenblatt informs the Court that MCI International commenced an action against Mr. Barney in the Labor Tribunal in Hong Kong for the return of $502,000, alleging that this amount was paid to Mr. Barney as a retention bonus for Mr. Barney remaining in the employ of MCI International and that Mr. Barney failed to meet this condition. On May 2, 2002, Mr. Barney filed his Outline of Defences and Counterclaims to the Hong Kong Action. On June 17, 2002 the Hong Kong Action was transferred from the Labor Tribunal in Hong Kong to the Hong Kong High Court. On November 4, 2002, MCI International filed its Statement of Claim in the Hong Kong High Court against Mr. Barney for return of the Retention Bonus. On November 19, 2002, Mr. Barney's filed an Amended Defence and Counterclaim seeking the Unpaid Incentive Bonus, the Tax Equalization Obligation, the Accommodation Claim and the Termination Obligations totaling US$1,366,000.46 and HK$237,000. On January 22, 2003, the Debtors filed a motion in the Southern District of New York Bankruptcy Court to hold Mr. Barney in contempt for violation of the automatic stay for his filing of the counterclaims to the Hong Kong Action. Mr. Rosenblatt asserts that sufficient cause exists for the Bankruptcy Court to modify the automatic stay and permit the Hong Kong Action to proceed in the Hong Kong High Court. The Debtors commenced the action in Hong Kong and the Hong Kong Action is already in the discovery stage. The Hong Kong High Court and Hong Kong counsel are familiar with the claims and with the legal issues inherent in resolving these claims. Finally, the events relating to the claims and the parties with knowledge of the claims are present in Hong Kong. In addition, cause exists to modify the automatic stay for these reasons: -- it will result in a complete resolution of the issues by the Hong Kong High Court; -- the Hong Kong Action lacks any connection with or interference with the bankruptcy proceeding; -- allowing Mr. Barney to proceed with his counterclaims would not prejudice any of MCI International's other creditors of the Debtors; -- the interests of judicial economy and the expeditious and economical resolution of the Hong Kong Action and counterclaims, warrant lifting the automatic stay; and -- the failure to modify the stay will cause undue hardship to Mr. Barney. (Worldcom Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Wachovia Hires F. Dominguez & L. Laskiewicz as Consultants ------------------------------------------------------------ Wachovia Corporate and Institutional Trust has added two consultants to Wachovia Information Consulting Group. The group provides comprehensive, cost-effective consultation for claims processing and similar information management needs of corporations, law firms and government agencies. Frank Dominguez and Larry Laskiewicz will work out of Wachovia's Jacksonville office and will report to Tony Reid, executive managing director of Wachovia Information Consulting Group. "Frank's project management experience with claims administering and processing, coupled with Larry's legal expertise and experience in mass tort claims processing, discovery services and litigation, will help provide efficient and cost-effective solutions to complex business and litigation challenges," said Reid. * Frank Dominguez, managing consultant, previously worked for the Financial and Claims Services division of Navigant Consulting as a senior engagement manager, where he specialized in claims processing and data management consulting. Dominguez received a B.A. in Business Administration from New Mexico State University. * Larry Laskiewicz, director, is an attorney who joined Wachovia from Georgia-Pacific Corporation, where he served as Corporate Counsel-Litigation, and for more than 13 years was responsible for directing asbestos litigation with Owens Corning. Laskiewicz received his J.D. from the University of Akron and his B.A. from the University of Toledo. "The addition of Frank and Larry to WICG illustrates our commitment to providing top-notch solutions to organizations that process volumes of claims, transactions or other types of paper or electronic data," said Reid. "We are excited about taking this group to the next level." Wachovia Information Consulting Group is a full-service operation that helps clients plan and implement data management and processing solutions. The group also offers banking and investment services, such as escrow, positive pay, check clearing and account reconciliation, through other Wachovia units. WICG services include: * Information management consulting * Class action settlement administration * Mass tort/complex claims management * Bankruptcy claims management * Data collection and conversion * Litigation discovery services * Escrow and investment management * Call center operations Wachovia Information Consulting Group is part of the Corporate and Institutional Trust group of Wachovia Bank, N.A., which offers retirement services, bond administration, custody services, insurance products and investment management to institutional clients worldwide. Based in Charlotte, N.C., Wachovia Corporate and Institutional Trust has 40 regional locations in 17 states and the District of Columbia. Wachovia Corporation (NYSE: WB), created through the September 1, 2001, merger of First Union and Wachovia, had assets of $342 billion and stockholders' equity of $32 billion at December 31, 2002. Wachovia is a leading provider of financial services to retail, brokerage and corporate customers throughout the East Coast and the nation. The company operates full- service banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C., and offers full-service brokerage with offices in 49 of the 50 states. Global services are provided through more than 30 international offices. Online banking and brokerage products and services are available through http://www.wachovia.com * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Advisory Board ABCO (16) 48 (20) Air Canada AC (1,888) 7,816 (821) Alliance Imaging AIQ (79) 658 (25) Alaris Medical AMI (47) 573 129 Amazon.com AMZN (1,353) 1,990 550 Anteon Int'l. Corp. ANT (3) 307 27 Arbitron Inc. ARB (169) 127 (17) Alliance Resource ARLP (46) 288 (16) Altiris Inc. ATRS (6) 13 (8) Actuant Corp ATU (44) 295 18 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (24) 346 N.A. Big 5 Sporting Goods BGFV (23) 252 66 Choice Hotels CHH (114) 314 (37) Campbell Soup Co. CPB (114) 5,721 (1,479) Echostar Comm DISH (778) 6,520 2,024 Dun & Brad DNB (20) 1,431 (82) Euronet Worldwide, Inc. EEFT (8) 61 3 Gamestop Corp. GME (4) 607 31 Graftech Int'l GTI (307) 797 112 Hollywood Casino HWD (92) 553 89 Imclone Systems IMCL (5) 474 295 Gartner Inc IT (5) 824 18 Jostens JOSEA (540) 375 (40) Journal Register JRC (36) 711 (26) Kos Pharmaceuticals KOSP (58) 83 27 Ligand Pharmaceuticals LGND (58) 117 22 Level 3 Comm Inc. LVLT (240) 8,963 581 Mega Blocks Inc. MB (37) 106 56 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (304) 505 12 Medical Staffing MRN (33) 162 55 MicroStrategy MSTR (69) 104 23 MTC Technologies MTCT 0 26 10 Petco Animal PETC (86) 473 68 Proquest Co. PQE (45) 628 (140) Per-Se Tech Inc. PSTI (50) 203 24 Qwest Communications Q (1,094) 31,228 (1,167) RH Donnelley RHD (111) 296 0 Sepracor Inc. SEPR (392) 727 430 St. John Knits Int'l SJKI (76) 236 86 Talk America TALK (74) 165 36 United Defense I UDI (166) 912 (55) UST Inc. UST (47) 2,765 828 Valassis Comm. VCI (33) 386 80 Ventas Inc. VTR (54) 895 N.A. Western Wireless WWCA (274) 2,370 (105) ********* 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. 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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. 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