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/raid1/www/Hosts/bankrupt/TCR_Public/030409.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, April 9, 2003, Vol. 7, No. 70 Headlines 3D VISIT INC: Sells Most of Company's Assets 360NETWORKS: Court Dismisses sub inc. Unit's Chapter 11 Case ADELPHIA COMMS: Reorganizing Regional Management Structure AIR CANADA: Robert Brown Appointed Board Vice-Chairman AIRGATE PCS: Nasdaq Knocks-Off Shares Effective April 8, 2003 AIRTRAN HLDGS: Will Hold Q1 Earnings Conference Call on April 22 AMERCO: Executes Standstill Agreement with Holders of $100M Note AMERICA WEST: Stock Clerks Ratify Five-Year Labor Agreement AVALANCHE NETWORKS: Jan. 31 Balance Sheet Upside Down by $205K AVCORP INDUSTRIES: Continues Re-negotiations with Major Lenders BAY VIEW CAPITAL: Sells Auto Loans Totaling $35.7 Million BETHLEHEM STEEL: Asks Court to Clear ISG Asset Purchase Pact BRITISH ENERGY: Nonpayment of Principal Prompts Concern at Fitch BURLINGTON INDUSTRIES: Outlines Progress in Bankruptcy Emergence CENTENNIAL HEALTHCARE: Taps Buck as Human Resource Consultant CLAYTON HOMES: Fitch Keeps Ratings Watch over Proposed Merger CONSECO INC: TOPrS Committee Wins Court Nod to Tap Raymond James DELTA AIR LINES: S&P Cuts Ratings on Two Related Deals to B DIRECTV LATIN AMERICA: Hires Bankruptcy Services as Claims Agent EAGLE FOOD CENTERS: Case Summary & 20 Largest Unsec. Creditors EAGLE FOOD CENTERS: Receives Court Approval of First-Day Motions ENRON: Co-Liability for $111M Tax Won't Affect PGE's Ratings ENRON: EPMI Sues Snohomish Public Utility for $117MM in Damages FAO INC: Judge King Confirms Chapter 11 Plan of Reorganization FAO INC: Committee Signs-Up Traub Bonacquist as General Counsel FLEMING: Honoring $50MM of Employee Compensation Obligations FOCAL COMMS: Turns to Ryan & Company for Tax Consulting Services FOSTER WHEELER: Appoints Kenneth A. Hiltz as Chief Fin'l Officer FRONTIER AIRLINES: March Revenue Passenger Miles Slides-Up 14.1% GAP INC: Promotes Lee Bird to Chief Operating Officer, Gap Div. GENUITY: Wants to Expand Scope of Alvarez & Marsal's Engagement GLOBAL CROSSING: Settles Claims Dispute with Teleglobe Entities GOODYEAR TIRE: Applauds Steelworkers' Willingness to Negotiate HARTMARX CORP: First Quarter 2003 Results Show Improved EBIT I2 TECHNOLOGIES: Fails to Comply with Nasdaq Listing Guidelines HAWAIIAN AIRLINES: Paul Weiss Named Special Corporate Counsel INTERSTATE BAKERIES: Mulling Closure of Bakery in Sacramento KAISER ALUMINUM: Court Okays Fourth Amendment to DIP Financing L-3 COMMS: Will Publish March Quarter Results on April 22, 2003 LOMA LINDA UNIVERSITY: S&P Raises L-T Revenue Bond Rating to BB MADGE NETWORKS: Nasdaq Intends to Knock-Off Shares Today MAGELLAN HEALTH: Files 1st Amended Plan and Disclosure Statement MCDERMOTT INT'L: Balance Sheet Erosion Triggers S&P Downgrades METALS USA: Pushing for Court Approval of IPSCO Stipulation MOUNTAIN OIL INC: Recurring Losses Raise Going Concern Doubt NAT'L CENTURY: NPF XII Subcommittee Gets Okay to Hire Milbank NEXLAND, INC.: Ability to Continue Operations is Suspect NHC COMMS: Initiates CDN$1-Million Senior Management Financing NORTHWESTERN CORP: Names William Austin to Executive Team as CRO NQL DRILLING: Violates Profit-Based Covenants Under Credit Pact NTELOS: Wants Nod to Access $35M DIP Wachovia Financing Facility OWENS CORNING: Seeks PI Claimants Notice Protocol Clarification PACIFIC GAS: Court Clears $2.8 Million Gas Transport Collateral PAXSON: NBC Elects Not to Exercise Preferred Redemption Right PENN TREATY: A.M. Best Affirms B- Financial Strength Ratings PHOENIX CDO: Fitch Puts Three Note Class Ratings on Watch Neg. POLAROID: Examiner Mandarino Turns to Traxi for Financial Advice POLYONE: Fitch Hatchets Senior Debt Ratings to Lower-B Level PONY EXPRESS USA: Needs Additional Capital to Fund Business Plan PRINCETON VIDEO: Resources Insufficient to Meet Debt Obligations RADIANT ENERGY: Misses Interest Payment on 7.75% Debentures RAND MCNALLY: Emerges from Chapter 11 Reorganization Proceedings RECOTON CORP: Files for Chapter 11 Reorganization in S.D.N.Y. RECOTON CORP: Case Summary & 30 Largest Unsecured Creditors REDBACK NETWORKS: Will Publish Q1 Financial Results on April 16 RIDER RESOURCES: Dec. 31 Working Capital Deficit Tops $4.6 Mill. SIERRA PACIFIC: Parent Delivers Extensive Documentation to FERC SONIC FOUNDRY: Considering Term Sheets Related to Asset Sale SONICBLUE: Opta Systems Pitches Winning Bid for GoVideo Assets SPIEGEL INC: Names Bankruptcy Services as Claims & Notice Agent TESORO PETROLEUM: Fitch Assigns BB- Senior Secured Debt Rating TIMCO AVIATION: Delays Filing of 2002 Annual Report on Form 10-K TRAY INC: Case Summary & 6 Largest Unsecured Creditors UNITED AIRLINES: Argenbright Demands Payment of $8MM TSA Funds UNITY WIRELESS: External Auditors Express Going Concern Doubt US AIRWAYS: Wants to Modify Plan to Remedy Technical Lapses US AIRWAYS: Ranks First in Annual Airline Quality Rating VESTA INSURANCE: Fitch Downgrades IFS Ratings to BB from BBB- VIRAGEN: External Auditors Doubt Ability to Continue Operations WHEELING-PITTSBURGH: Wants Mashuda Landfill & License Deals OK'd WICKES INC: Riverside Transfers 2 Million Shares to Imagine Inv. WILBRAHAM CBO: S&P Keeps Watch on Low-B & Junk Note Ratings W.R. GRACE: SEC Imposes Cease-and-Desist Order vs. Ex-CEO Bolduc * Phoenix Management Doesn't See Lenders Cheering Any Time Soon * Buchanan Ingersoll Boosts IP in San Diego & Banking in NY * Meetings, Conferences and Seminars ********* 3D VISIT INC: Sells Most of Company's Assets -------------------------------------------- Creditors of 3D Visit Inc., (CDNX: VIS) accepted the company's proposal by majority in a meeting held in Ottawa on March 31st, 2003. The sale of most of the assets of 3D Visit Inc., including: The portal, the domain names, the equipment and the customer base have been sold by court order on Friday April 4th 2003. 360NETWORKS: Court Dismisses sub inc. Unit's Chapter 11 Case ------------------------------------------------------------ 360networks sub inc., obtained 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. As previously reported, 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. Pursuant to 360 Sub's U.S. bankruptcy filing, 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. (360 Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMS: Reorganizing Regional Management Structure ---------------------------------------------------------- Adelphia Communications Corporation (OTC: ADELQ) is modifying the structure of its regional operations to better serve Adelphia customers by placing more responsibility, authority and resources in the field. Going forward, Adelphia will be organized into four primary regions - Northeast, Central, Southeast and California and one smaller Western region [as opposed to seven regions, as it had been in the past]. At the same time, the company will expand the size and capabilities of the local management teams in each region to further decentralize Adelphia's management structure and ensure local decisions are made closer to Adelphia's customers. "Consolidating into four large regions enables us to cost- effectively augment regional staffs and resources to best serve our customers," said Ron Cooper, President and Chief Operating Officer of Adelphia. "This operating model is used by several other MSOs and, after careful consideration, it is the right approach to empower Adelphia's regional management teams." The company has appointed Bob Wahl, Bill Kent, Dan Hebert and Lee Perron as Senior Vice Presidents to lead the Northeast, Central, Southeast and California regions, respectively. Steve Delgado will continue to serve as Vice President of the Western Region. Each of these executives is currently part of Adelphia's regional management team. "I am very pleased to promote these four proven Adelphia executives," added Mr. Cooper. "I look forward to providing them with the support and the resources they need to successfully lead our regional efforts and, most importantly, meet the needs of our customers." As part of this decentralization effort, Adelphia will be adding new vice president positions in marketing/sales, engineering/construction, legal/government affairs, human resources and finance to each of the four large regions. This will insure that they have the leadership and experience necessary to successfully take on their new responsibilities. "Expanding the size, depth and expertise of the regional staffs will enable us to effectively transition to this new organizational structure," added Cooper. "I firmly believe the result of this regional consolidation will be a stronger, more customer-centric company." Adelphia's four regional offices will be located in Charlottesville, Va. (Central Region), West Palm Beach, Fla. (Southeast Region), Woodland Hills, Calif. (California Region), and a location yet to be determined for the Northeast Region. The Western Region will be located in Monument, Colo. Adelphia Communications Corporation is the fifth-largest cable television company in the country. It serves 3,500 communities in 32 states and Puerto Rico, and offers analog and digital cable services, high-speed Internet access (Adelphia Power Link), and other advanced services. AIR CANADA: Robert Brown Appointed Board Vice-Chairman ------------------------------------------------------ Air Canada announced the appointment of Robert E. Brown as Vice- Chair of the Board of Directors, effective Monday, April 7, 2003. "Bob's extensive experience in the aviation industry will serve Air Canada well as we work to restructure the airline. I have known Bob for many years and I look forward to working closely with him," said Robert Milton, President and Chief Executive Officer. Mr. Brown will replace John Fraser as Chairman of the Board on May 13, 2003. Mr. Fraser will continue as a member of the board until his retirement to take effect at the next Annual General Meeting. The date of the next Annual General Meeting is under review. "We are grateful for Jack's dedication and enormous contribution to this company since privatization," said Mr. Milton. Mr. Brown was President and CEO of Bombardier Inc. from 1999 to December 2002. He held various senior positions during his career at Bombardier, including President and CEO of Bombardier Aerospace Group-North America in 1992, with responsibility for Canadair, Learjet and deHavilland. In 1996, he was named President and CEO of Bombardier Aerospace. Prior to joining Bombardier in 1987, Mr. Brown held various senior positions with the federal government of Canada. Mr. Brown joined Air Canada's Board of Directors on March 12, 2003. Air Canada represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. Air Canada is the seventh largest North American airline and thirteenth largest airline in the world, based on Revenue Passenger Miles. Air Canada obtained an order from the Supreme Court of Ontario providing creditor protection under the Companies' Creditors Arrangement Act (CCAA) on April 1, 2003. The company also filed for Section 304 protection in the United States (Sec. 304 Petition S.D.N.Y. Case No. 03-11971). Matthew A. Feldman, Esq. and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher are the petitioners' U.S. Counsels. At December 31, 2002, the company reported total assets of about C$7.8 billion and total debts of C$9.7 billion. DebtTraders reports that Air Canada's 10.250% bonds due 2011 (AC11CAR1) are trading at about 24 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AC11CAR1for real-time bond pricing. AIRGATE PCS: Nasdaq Knocks-Off Shares Effective April 8, 2003 ------------------------------------------------------------- AirGate PCS, Inc. (NASDAQ/NM: PCSA), a PCS affiliate of Sprint, announced that a Nasdaq Listing Qualifications Panel has determined that the Company does not satisfy the requirements for continued listing on the Nasdaq National Market. As previously announced, the Company was notified by Nasdaq on January 28, 2003 of the Company's failure to regain compliance with the minimum $1.00 bid price per share requirement contained in Marketplace Rule 4450(a)(5) and its noncompliance with the minimum $10 million stockholders' equity requirement contained in Marketplace Rule 4450(a)(3), under Maintenance Standard 1, and the market value of publicly held shares and minimum bid requirement contained in Marketplace Rule 4450(b)(3) and (4), under Maintenance Standard 2, for continued listing on The Nasdaq National Market. Accordingly, Nasdaq has determined to delist the Company's securities from the Nasdaq National Market effective at the open of business on April 8, 2003. The Company's common stock is now trading on the OTC Bulletin Board under the same symbol "PCSA" following its delisting from Nasdaq. Commenting on the announcement, Thomas M. Dougherty, president and chief executive officer of AirGate PCS, said, "Obviously we are disappointed with Nasdaq's decision. Daily closing price quotations on AirGate PCS' shares will be available to investors through brokerage terminals, most popular Web sites and the OTC Bulletin Board site, http://www.otcbb.com More importantly, we continue to focus on the execution of our business plan with the primary objective of improving our operations and enhancing long-term shareholder value." AirGate PCS, Inc., excluding its unrestricted subsidiary iPCS, is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in territories within three states located in the Southeastern United States. The territories include over 7.1 million residents in key markets such as Charleston, Columbia, and Greenville-Spartanburg, South Carolina; and Augusta and Savannah, Georgia. At December 31, 2002, AirGate PCS' balance sheet shows a total shareholders' equity deficit of about $340 million. iPCS, Inc., a wholly owned unrestricted subsidiary of AirGate PCS, Inc., is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in 37 markets in Illinois, Michigan, Iowa and eastern Nebraska. The territories include over 7.4 million residents in key markets such as Grand Rapids, Michigan; Champaign-Urbana and Springfield, Illinois; and the Quad Cities areas of Illinois and Iowa. AirGate and iPCS are separate corporate entities that have discrete and independent financing sources, debt obligations and sources of revenue. As an unrestricted subsidiary, iPCS's lenders, noteholders and creditors do not have a lien or encumbrance on assets of AirGate. Further, AirGate generally cannot provide capital or other financial support to iPCS. iPCS has filed a Chapter 11 petition under the federal bankruptcy laws for the purpose of effecting a court-ordered reorganization. Sprint operates the largest, 100-percent digital, nationwide PCS wireless network in the United States, already serving more than 4,000 cities and communities across the country. Sprint has licensed PCS coverage of more than 280 million people in all 50 states, Puerto Rico and the U.S. Virgin Islands. In August 2002, Sprint became the first wireless carrier in the country to launch next generation services nationwide delivering faster speeds and advanced applications on Vision-enabled Phones and devices. For more information on products and services, visit www.sprint.com/mr. PCS is a wholly-owned tracking stock of Sprint Corporation trading on the NYSE under the symbol "PCS." Sprint is a global communications company with approximately 72,000 employees worldwide and nearly $27 billion in annual revenues and is widely recognized for developing, engineering and deploying state-of-the art network technologies. AIRTRAN HLDGS: Will Hold Q1 Earnings Conference Call on April 22 ---------------------------------------------------------------- AirTran Holdings, Inc., (NYSE:AAI) will provide an online, real- time webcast of its first-quarter earnings conference call on Tuesday, April 22, 2003, at 10:00 a.m. (EST). Beginning approximately two hours after the initial conference call is completed, a replay of the webcast will be available. To access the webcast, go to the "Investor Relations" area of AirTran Airways' Web site -- http://www.airtran.com-- accessible from the homepage. Once there, click on either the "Overview" or "Calendar" buttons, and follow the prompts for the webcast. The broadcast will also be available at http://www.streetevents.com AirTran Airways is America's second-largest low-fare airline - employing more than 5,000 professional Crew Members and serving 448 flights a day to 43 destinations. The airline's hub is at Hartsfield Atlanta International Airport, the world's busiest airport (by passenger volume), where it is the second largest carrier operating 172 flights a day. The airline never requires a roundtrip purchase or Saturday night stay, and offers an affordable Business Class, assigned seating, easy online booking and check-in, the A-Plus Rewards frequent flier program, and the A2B corporate travel program. AirTran Airways also is a subsidiary of AirTran Holdings, Inc., (NYSE: AAI), and the world's largest operator of the Boeing 717, the most modern, environmentally friendly aircraft in its class. As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its single-'B'-minus corporate credit ratings on AirTran Holdings Inc., and subsidiary AirTran Airways Inc., and removed all ratings from CreditWatch, citing the airline's relatively good operating performance amid difficult industry conditions. The ratings were placed on CreditWatch on September 13, 2001. Approximately $166 million of rated debt is affected. The outlook is negative. "Ratings have been affirmed and removed from CreditWatch due to AirTran's relatively good operating performance, within an industry that continues to incur massive losses," said Standard & Poor's credit analyst Betsy Snyder. AMERCO: Executes Standstill Agreement with Holders of $100M Note ---------------------------------------------------------------- AMERCO (Nasdaq: UHAL), the parent company of U-Haul, and the holders of $100 million in notes issued by Amerco Real Estate Company and guaranteed by AMERCO, executed another Standstill Agreement. Terms of the Standstill Agreement extend through May 30, 2003. As part of the Standstill Agreement, three affiliates of Nationwide Mutual Insurance Company (Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance Company, and Nationwide Indemnity Company) have agreed to dismiss the lawsuit they filed against AREC and AMERCO on March 24, 2003 in the Southern District of New York. AREC will continue to make all required interest payments owing under the Note Agreement, and AMERCO will provide the Noteholders with timely information on the progress of the Company's recapitalization initiatives. The Standstill also calls for AREC and AMERCO to use their best efforts to seek other sources of funds, which will be used to repay all amounts due under the Note Agreement. "This Standstill Agreement represents another significant step towards obtaining standstill agreements with all of the Company's major lenders," stated Joe Shoen, AMERCO's Chairman. "Over the past few weeks we have made excellent progress in our restructuring initiatives, including accepting a proposal for a four-year, $865.75 million secured credit facility. We remain committed to meeting all of our financial commitments and to establishing a solid financial structure that will allow us to build upon our core strengths as the acknowledged leader in the self-moving and self-storage industry." The Noteholders are: Monumental Life Insurance Company, Transamerica Life Insurance Company, AUSA Life Insurance Company, The Northwestern Mutual Life Insurance Company, Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance Company, Nationwide Indemnity Company and the Canada Life Assurance Company. AMERCO is the parent company of U-Haul International, Inc., Republic Western Insurance Company, Oxford Life Insurance Company and Amerco Real Estate Company. For more information about AMERCO, visit http://www.uhaul.com AMERICA WEST: Stock Clerks Ratify Five-Year Labor Agreement ----------------------------------------------------------- America West Airlines (NYSE: AWA) announced that a five-year collective bargaining agreement has been ratified by the carrier's stock clerks, represented by the International Brotherhood of Teamsters, and approved by the company's board of directors. The contract, tentatively agreed last month between the company and the IBT, was approved by 88 percent of the voting employees. "We are pleased to have reached this agreement," said Douglas Parker, chairman and chief executive officer. "The contract addresses key issues raised by America West's stock clerks while recognizing the company's current financial condition. The contract is also consistent with the terms of our agreement with the Air Transportation Stabilization Board." The stock clerks workgroup includes approximately 55 employees. Terms of the agreement were not disclosed. Founded in 1983 and proudly celebrating its 20-year anniversary in 2003, America West Airlines is the nation's second largest low-fare airline and the only carrier formed since deregulation to achieve major airline status. Today, America West serves 92 destinations in the U.S., Canada and Mexico. As previously reported in the Troubled Company Reporter, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. AVALANCHE NETWORKS: Jan. 31 Balance Sheet Upside Down by $205K -------------------------------------------------------------- Avalanche Networks Corporation (TSX Venture Exchange: AVH), a business technology solutions provider, announced the financial results for its third quarter of Fiscal 2003, ended Jan. 31, 2003. Copies of the most recent filings, including the audited financial statements for Fiscal 2002 can be obtained on SEDAR at http://www.sedar.com/command_servlet?cmd=DisplayCompanyDocuments&issuerNo=00 001063 Highlights: * Revenues for the third quarter of Fiscal 2003 ended January 31, 2003 were $706,000, down 57% from $1,625,000 in third quarter sales a year ago. * The company experienced a loss in the third quarter of Fiscal 2003 of $448,036, as compared to a profit of $1,059 a year ago. * Non-cash expenses included the amortization of $401,063 in goodwill related to the Automated Design Systems division, depreciation of $18,756 and a loss on disposition of assets related to the closing of offices of $13,441. * Gross profit decreased 36.5% to $341,000 from $537,000 a year ago. * Sales from the AvalancheSearch search engine optimization services grew by 45% over sales during the previous quarter. "The expected increase in third quarter sales from our Automated Design Systems division did not materialize, despite end-user promotions from our primary supplier of CAD software", stated company CEO, Bruce Lamb. "The continuing losses in this division despite cost-cutting earlier in the year, led to our decision at the end of this quarter to get out of the CAD software business." "The sales of our AvalancheSearch search engine marketing product continue to grow, and the internal systems and processes required to expand the sales of this product further are almost complete. AvalancheSearch guarantees first-page placement of client web sites in major search engines, such as MSN, Yahoo, Google, AOL and more, and our customers have been experiencing excellent returns from their AvalancheSearch marketing investment. The web division of the company continues to contribute positively to the corporate overhead and the profitability of this division continues to improve." The company's objectives are to continue to grow the market for AvalancheSearch, while maintaining a small but profitable plotter supplies business within the Automated Design Systems subsidiary. The company plans to grow beyond its current geographic boundaries in order to expand its client base for its AvalancheSearch initiative. The company has recently moved its head office to a new location at 36 Keefer Court, Unit 5, Hamilton, Ontario, L8E 4V4. The main phone number is now 905- 297-3352 and the fax number has changed to 905-297-3356. At January 31, 2003, the Company reported a total shareholders' equity deficit of about $205K. Notes to Interim Financial Statements Restructuring: On January 31, 2003, the company announced that its Automated Design Systems division is getting out of sales and training for Computer Aided Design software. It will maintain a small but profitable section of the company that sells plotter supplies to the company's CAD clients. Accounting Policies: These Interim Financial statements follow the same accounting policies as the April 30, 2002 financial statements with the exception of the following: Avalanche has adopted the recommendations of the CICA in connection with the accounting for goodwill and intangible assets. These standards require that goodwill and any intangible assets with an indefinite life no longer be amortized and be assessed annually to determine the existence of any impairment by comparing the fair value of these assets with their carrying amounts. Intangible assets with definite lives will continue to be amortized over their useful lives. Accordingly, Avalanche recorded amortization of all goodwill attributed to Lamb Computer Systems Inc., operating as Automated Design Systems, due to that division exiting the CAD business and being put into receivership, as announced on January 31, 2003. AVCORP INDUSTRIES: Continues Re-negotiations with Major Lenders --------------------------------------------------------------- Avcorp Industries Inc., (TSX:AVP), whose September 30, 2002 balance sheet shows a working capital deficit of about C$11 million, has arranged additional short-term financing with a Canadian chartered bank. The bank has agreed to increase the previously announced short-term $12 million loan to $15 million subject to the Company being able to provide security to the bank's satisfaction. The Company continues to work towards a sale and leaseback of its land and building and has signed a conditional agreement for a sale and leaseback with a Canadian insurance company. The Company continues other debt re-negotiations with major lenders. Avcorp Industries Inc., is a Canadian aerospace industry manufacturer. The Company is a single-source supplier for engineering design, manufacture and assembly of subassemblies and complex major structures for aircraft manufacturers. BAY VIEW CAPITAL: Sells Auto Loans Totaling $35.7 Million --------------------------------------------------------- Bay View Capital Corporation (NYSE: BVC) announced the sale of auto loans totaling $35.7 million in outstanding principal balances. These were recreational vehicle loans purchased from March 1996 through December 1999. The sales price included a premium that was consistent with the mark-to-market adjustment previously recorded on this portfolio. This sale represents a further step in completing the Company's plan of dissolution and stockholder liquidity. "We are pleased to have completed this sale of RV loans. These were loans previously purchased on a flow basis outside of our core auto lending business," said Charles G. Cooper, Bay View Capital Corporation CEO. Bay View Capital Corporation is a commercial bank holding company headquartered in San Mateo, California and is listed on the NYSE: BVC. For more information, visit http://www.bayviewcapital.com As reported in Troubled Company Reporter's March 25, 2002 edition, Standard & Poor's Ratings Services withdrew all its ratings on Bay View Capital Corp., and its subsidiaries (including Bay View Bank N.A.) except the 'B-' preferred stock rating on its subsidiary, Bay View Capital Trust I. These ratings are being withdrawn as the company liquidates itself. The preferred stock rating on Bay View Capital Corp.'s subsidiary, Bay View Capital Trust I, is based on the parent organization's liquidation strategy. The majority of assets have been sold, and liquidation accounting has been adopted to facilitate the orderly wind-down of operations and the eventual dissolution of all assets and net cash proceeds to be paid back to stockholders. All formerly rated debt has been retired and there remains only the $90 million of preferred stock of Bay View Capital Trust I. This debt will remain outstanding until the issue can be called at the end of 2003. BETHLEHEM STEEL: Asks Court to Clear ISG Asset Purchase Pact ------------------------------------------------------------ Concurrent with the proposed sale of all their assets, Bethlehem Steel Corporation and its debtor-affiliates ask the Court to approve the Asset Purchase Agreement dated March 12, 2003 with International Steel Group Inc., and ISG Acquisition Inc. A copy of the Asset Purchase Agreement is available for free at: http://bankrupt.com/misc/ISG_APA.pdf ISG Will Acquire Debtors' Assets & Liabilities Under the terms of the Asset Purchase Agreement, ISG will: (i) acquire substantially all of Bethlehem and its debtor- and non-debtor affiliates' assets and properties, (ii) assume certain liabilities, and (iii) assume certain executory contracts and unexpired leases. The Debtors will sell their assets free and clear of all liens, claims, encumbrances and interests, except for the liabilities ISG will assume. ISG will acquire the Debtors' the steelmaking operations in: * Burns Harbor, Indiana; * Sparrows Point, Maryland; * Steelton, Pennsylvania; * Coatesville, Pennsylvania; and * Conshohocken, Pennsylvania. ISG will also purchase the Debtors' interests in Hibbing Taconite Mining Company in Hibbing, Minnesota; the steel finishing plants in Ohio, New York, and Indiana; and joint ventures in Illinois, Indiana, Mississippi and Florida. ISG will also acquire the Martin Tower office building in Bethlehem, Pennsylvania, other properties and working capital. The Debtors intend to sell substantial non-core assets, including the real property associated with their former and existing operations in Lackawanna, New York; Bethlehem, Pennsylvania; and western Pennsylvania. These "non-core" assets carry with them potentially substantial environmental liabilities to be assumed by ISG, thus limiting the Debtors' post-closing obligations as they carry on the task of seeking to confirm a liquidating Chapter 11 plan. Along with the major Assets, the Debtors will sell: * all their Cash, * owned and leased real property, * owned equipment, * machinery, * furniture, fixtures, and improvements, * tooling and spare parts, * Sale Orders and Purchase Orders, * postpetition Contracts, except, among others, those having post-Closing obligations not in excess of $100,000, * all accounts and notes receivable, * Inventory and Supplies, * Intellectual Property and Technology, and * all Employee Benefit Plans. In addition, ISG will assume or satisfy by virtue of the consideration paid under the Agreement: (a) all liabilities and obligations after the Closing relating to the Acquired Contracts including all cure costs; (b) all liabilities and obligations arising after the Closing relating to the Acquired Assets; (c) all environmental liabilities and obligations relating to the Acquired Assets except for those retained by the Debtors; (d) accounts payable as of the Closing Date for real and personal property taxes; (e) certain liabilities and obligations as of the Closing Date for real and personal property taxes not exceeding $42,000,000; (f) all liabilities and obligations as of the Closing Date for vacation pay for hourly employees over $10,000,000, not to exceed $20,000,000; (g) 50% of all liabilities and obligations as of the Closing Date for vacation pay for salaried employees, not to exceed $6,500,000; (h) the operating liabilities of the Debtors' railroad subsidiaries, Columbus Coatings Company, and Columbus Processing Company, LLC, excluding certain collective bargaining agreement or employee benefit plan. The Railroad Subsidiaries include Brandywine Valley Railroad Company LLC, Upper Merion & Plymouth Railroad Company LLC, Lake Michigan & Indiana Railroad Company, LLC, Conemaugh & Black Lick Railroad Company LLC, Keystone Railroad LLC, Cambria & Indiana Railroad Company, Patapsco & Back Rivers Railroad Company LLC and Steelton & Highspire Railroad Company LLC; and (i) all liabilities and obligations relating to the Acquired Benefit Plans. The Debtors contemplate that all secured claims, including the debtor-in-possession financing facility and prepetition inventory loan, will be satisfied out of the cash proceeds of the Sale. Debtors Will Keep Certain Assets & Liabilities However, the Debtors will retain certain Assets: Excluded Assets Amount --------------- ------ Escrow Bond Deposit $2,500,000 Collateral Investments 700,000 Life Insurance 4,200,000 South Buffalo Railway Company Escrow Agreement Mamoraton Mining Company, Ltc. Pension Plan Surplus 450,000 BethIntermodal Letter of Credit 100,000 Interocean Shipping Company Capital stock Plaintiff's lawsuits Surplus in the Great Lakes Protective Association 80,000 Prepaid insurance 7,700,000 The Debtors will likewise retain: (1) any proceeds from the disposition of these assets; (2) any asset that is conveyed, leased, or disposed of from March 12, 2003 until the Closing Date; (3) all Contracts ISG will not acquire; (4) all of the Debtors' equity or other ownership interest in the ship business, other than any interest in the M/V Stewart Cort and the M/V Burns Harbor; (5) all shares of Capital Stock; and (6) all Employee Benefit Plans sponsored by the Debtors or their ERISA affiliates other than the Benefit Plans ISG will acquire. ERISA Affiliate refers to any entity, any trade or business: -- under common control within the meaning of Section 4001(b)(1) of ERISA with such Person; or -- which together with such Person is treated as a single employer under Sections 414(b), (c), (m), (n) and (o) of the Internal Revenue Code of 1986, as amended. The Debtors will also keep these obligations: (a) all liabilities and obligations: -- for any environmental, health, or safety matter: (i) relating to any property or assets other than the Acquired Assets; (ii) resulting from the transport, disposal, or treatment of any hazardous materials by any Debtor by the Closing Date to or at any location other than the Real Property sold to ISG; and (iii) relating to any personal injury resulting from exposure to hazardous materials or otherwise on or before the Closing Date; -- for any fine imposed on or before the Closing Date by any government agency for acts or omissions of the Debtors or the Joint Venture relating to any environmental, health, or safety matter; -- for damages relating to defects: (i) in products that the Debtors sold prepetition or arising under warranties issued by the Debtors prepetition; or (ii) in buildings or structures manufactured by the Debtors or that incorporate products sold or manufactured by the Debtors prepetition; -- under any collective bargaining contract or other Contract with any labor union or employment Contract or severance Contract except those that ISG will assume; -- to all present and former employees of any Debtor and their spouses and dependents, including: (i) all liabilities for welfare benefits under Section 3.1 of ERISA; and (ii) all liabilities in connection with the Worker Adjustment and Retraining Notification Act of 1988 (WARN) Act, the continuation coverage requirements of the Internal Revenue Code Section 4980B, the COBRA and the Coal Industry Retiree Health Benefit Act of 1992; -- relating to any Debtor Benefit Plan; -- relating to the Ship Business, other than any liability under any Acquired Contract with respect to the M/V Stewart Cort or the M/V Burns Harbor; and -- arising under the Coal Act; (b) all asbestos claims; and (c) all other liabilities and obligations not assumed by ISG. ISG Will Pay $1,500,000,000 Aside from the assumption of certain liabilities, ISG offers to pay $798,600,000 in cash, subject to these provisions: (A) The Amount will be increased on a dollar-for-dollar basis by an amount equal to all principal payments on the Debtors' Capital Leases and all payments on the Operating Leases actually made by the Debtors on or after December 31, 2002 through the Closing Date; (B) If the Court determines that the aggregate Cure Costs required to be paid in connection with the assumption and assignment of the Acquired Contracts exceeds $40,108,345, the Amount will be reduced by the excess; (C) If the outstanding principal amount under the DIP Facility as of the Closing Date is less than $280,720,962, the Amount will be decreased by the shortfall; and (D) The Amount will be decreased on a dollar-for-dollar basis by an amount equal to the Debtors' indebtedness assumed by ISG under the November 18, 1999 Loan and Security Agreement, between Columbus Coatings Company and Columbus Steel Facility, LLC, or the March 14, 1996 Credit Agreement among Chicago Cold Rolling, LLC, Bank of America, N.A. as Agent, and a syndicate of other lenders; ISG will further hand out $36,000,000 in cash for all the Debtors' liabilities and obligations as of the Closing Date for the accrued and unpaid payroll, payroll taxes and all other withheld amounts for all their employees. ISG will pay another $120,000,000 as consideration for the Assets in accordance with these schedules: * $40,000,000 on the 15th day after the Closing Date; * $40,000,000 on the 45th day after the Closing Date; and * $40,000,000 on the 75th day after the Closing Date; The aggregate consideration for the Assets will also include a number of shares of ISG Class B common stock equal to the quotient obtained by dividing: -- $15,000,000 by -- (x) the per share price used on a private placement, in the event ISG completes the private placement of the ISG Class B Common Stock on or before the Closing Date; or (y) $92,500, in the event ISG does not complete the private placement on or before the Closing Date. The Class B Common Stock is convertible to ISG Common Stock. ISG Escrows $10,000,000 The Debtors and ISG also entered into a performance escrow agreement with The Huntington National Bank, as escrow agent. ISG has deposited $10,000,000 with Huntington as security for the performance of its obligations. The Performance Deposit will be held and disbursed in accordance with the terms of the Performance Escrow Agreement and the Asset Purchase Agreement. At the Closing, ISG will direct Huntington to pay the Performance Deposit to the Debtors by wire transfer of immediately available funds to the Debtors' Account. ISG will pay the cash portion of the Purchase Price reduced by the Performance Deposit. ISG will also deliver a certificate representing the Consideration Shares. Transition Services Agreement The Purchase Agreement also contemplates that the Debtors and ISG will negotiate and execute a Transition Services Agreement, which imparts the nature, scope, extent, and duration of: (i) the Debtors' access to and use of the Acquired Assets; and (ii) the Debtors' services, if any, as ISG reasonably requests. The Transition Services Agreement will provide that the party receiving the services will reimburse the party providing the services for all third-party costs incurred by the Providing Party in performing the Services. Purchase Price Adjustment No later than 90 days after the Closing Date, ISG will deliver to the Debtors a statement setting forth its good-faith calculation of the Debtors' net working capital as of the close of business on the Closing Date. If ISG and the Debtors are unable to reach an agreement as to Closing Working Capital, Ernst & Young, LLP will review the Purchase Agreement and the disputed items or amounts and calculate Closing Working Capital. Ernst & Young will calculate the Closing Working Capital at ISG's expense. Notwithstanding, if the Final Working Capital is: -- greater than or equal to $981,000,000, no adjustment will be made to the Purchase Price; and -- less than $981,000,000, the Purchase Price will be reduced by the amount of the difference. Debtors and ISG Enter into Covenants 1. PBGC and USWA Releases Before the Closing, ISG will obtain the release of all claims for retiree welfare benefits held by retirees represented by the USWA, including their spouses and dependents. ISG and the Debtors will also use commercially reasonable efforts to obtain, a written release of: (a) All Claims, Liens, and other rights of the PBGC, any Benefit Plan that is subject to Title IV of ERISA, or any trustee, against: -- the Acquired Assets; -- the Joint Venture assets; -- ISG and its affiliates; and -- all non-Debtors; and (b) All secured Claims and all Claims against the Debtors entitled to priority under Section 507 of the Bankruptcy Code, which arise, or may in the future arise, under Title II or Title IV of ERISA, the Internal Revenue Code, or otherwise, by reason of any fact or circumstance related to the under-funding or termination of any Benefit Plan. ISG will negotiate and enter into an agreement with the PBGC that provides for ISG's: (i) delivery to the PBGC, at the Closing, of ISG Class B Common Stock having a value of not less than $25,000,000; and (ii) agreement that, if the Consideration Shares are not distributed to the Prepetition Claimholders, then ISG will deliver to the PBGC a number of shares of ISG Class B Common Stock at least equal to the number of shares of ISG Class B Common Stock that the PBGC would have received upon the distribution, as determined by the PBGC and ISG. 2. Joint Ventures ISG will also attempt to secure all Consents necessary to the transfer of interests in all Joint Ventures. With respect to any Joint Venture where an entity exercised its right to acquire or any entity has otherwise purchased the Debtors' or any subsidiaries' interest in a Joint Venture, the Debtors will pay to ISG any net proceeds received from the transfer of the Joint Venture Interest. If a Joint Venture Interest cannot be sold or transferred to ISG or any other entity, the Debtors will cause the Joint Venture Interest to be held in a liquidating trust for ISG's benefit. 3. Tax Appeals The Debtors will withdraw all Tax appeals pending against the Town of Burns Harbor, Indiana and Porter County, Indiana. 4. Transfer of Hibbing Entities The Debtors will use all efforts, at ISG's expense, to: (a) negotiate and conclude a transfer of either (i) all of the Debtors' equity interests in Hibbing Land Corporation and Bethlehem Hibbing Corporation or (ii) all or substantially all of Hibbing Land's and Bethlehem Hibbing's assets to Cleveland-Cliffs Inc. in exchange for consideration consisting solely of cash or the assumption of certain liabilities. Cleveland-Cliffs supplies iron ore pellets to ISG; and (b) obtain any Consent that may be necessary in connection the transaction. If the Hibbing Sale is not concluded on the Closing Date, the Debtors will assign all their equity interest in Hibbing Land and (i) all their equity interest in Bethlehem Hibbing Corporation, or (ii) all or substantially all of Bethlehem Hibbing's assets to ISG. The Debtors will also assign any agreements related to the Hibbing Sale to ISG. 5. Chapter 11 Filings At ISG's request, the non-Debtor Sellers will petition for Chapter 11. ISG will pay all costs and expenses of any Newly Filed Entity's estate that are entitled to administrative expenses treatment pursuant to Section 503 of the Bankruptcy Code, including the funding of any pre-filing retainers. 6. Railroad Subsidiaries If, as of the Closing Date, (x) the Railroad Subsidiaries can convey all their Acquired Assets free and clear of all Liens but the approvals for the conveyance are not obtained yet or are unacceptable to ISG, or (y) if the Debtors are unable to convey the Railroad Subsidiaries' assets, ISG may: (a) eliminate a Railroad Subsidiary's Assets from the Acquired Assets without any adjustment to the Purchase Price; or (b) until the later of the election in Section 5.6(c)(ii)(C) or the first anniversary of the Closing Date, require the Debtors to: -- continue to operate the Railroad Subsidiary in the ordinary course of business or as ISG reasonably directs; -- enter into any reasonable arrangement designed to provide them with the ownership benefits of the Railroad Subsidiaries' assets and have ISG bear the related costs and expenses; and (c) convey the Railroad Subsidiaries' assets for $1 to itself or to any other entity as ISG would request. 7. Indemnification If the Closing occurs, ISG will indemnify and hold harmless the Debtors and their affiliates against any and all losses that arise out of: (a) the Assumed Liabilities; (b) all Taxes arising: -- as a result of the Sale transactions; -- during the period beginning on the Closing Date and ending on the last day of the Debtors' Bankruptcy Cases, but only where the Taxes would not have otherwise been due had the Sale to ISG not qualified as transactions under the Internal Revenue Code Section 368(a)(1)(G); and -- as a result of any indemnity payment; (c) ISG's failure to obtain the transfer of permits required to operate the Acquired Assets under applicable environmental laws, or any post-Closing violation of any Permit; and (d) relating to or arising out of the continued operation of the Railroad Subsidiaries between the Closing Date and the date on which ISG either closes on the purchase of the assets of the Railroad Subsidiaries or elects to eliminate the assets from the Acquired Assets. Debtors will File Liquidating Plan Pursuant to the Purchase Agreement, the Debtors will formulate and obtain confirmation of a liquidation plan. The Liquidation Plan will provide that, after the full payment of all Claims that are or will be entitled to secured or priority treatment under Section 506 or 507 of the Bankruptcy Code, the Consideration Shares as well as all the Debtors' Claims assertable or arising under Chapter 5 of the Bankruptcy Code, including, without limitation, all preference, fraudulent transfer, and other Claims to avoid a transfer -- Avoidance Assets -- will be distributed to the holders of prepetition claims. The Debtors will have the right to transfer Consideration Shares solely to the Prepetition Claimholders pursuant to the Liquidation Plan at any time before July 1, 2004. If the Consideration Shares are not distributed solely to the Prepetition Claimholders before that time or if before July 1, 2004, any Liquidation Plan or Reorganization Plan not meeting the criteria is confirmed, on July 1, 2004 or the effective date of an alternative plan, the Debtors will: (1) pay $15,000,000 to ISG by wire transfer of immediately available funds or to an account designated by ISG; or (2) deliver the Consideration Shares to ISG. At the Closing, the Debtors will grant to ISG a first priority security interest in the Consideration Shares. The security interest will terminate when a Liquidation Plan is confirmed before July 1, 2004 or the Debtors will satisfy their obligation to pay $15,000,000 to ISG or deliver the Consideration Shares. No Tax Exemption The Purchase Agreement provides that all Taxes, including all state and local Taxes in connection with the transfer of the Acquired Assets, and all recording and filing fees that may be imposed by reason of the sale, transfer, assignment, and delivery of the Acquired Assets and that are not exempt under Section 1146(c) of the Bankruptcy Code, will be borne 50% by ISG and 50% by the Debtors. The Debtors relate that the Purchase Agreement may be terminated before the Closing: (a) by mutual written consent of the parties. In this case, the Performance Deposit will be returned to ISG and, in circumstances where, at the time of the termination, the PBGC Release has not been obtained, the Debtors will pay ISG 50% of the Expense Reimbursement in cash, up to a maximum of $2,500,000; (b) by either party on or after September 12, 2003 if the Closing has not occurred by the Termination Date. In this case, the Performance Deposit will be returned to ISG; (c) by either party if any injunction or other order of any court or Government agency that declares this Agreement invalid or unenforceable has become effective. In this event, the Performance Deposit will be returned to ISG provided that the terminating party used commercially reasonable efforts to remove the injunction or other order; (d) by either party if the other fails to remedy an inaccuracy of certain representations or warranties within ten days of notice. In case of ISG's failure, the Debtors keep the Performance Deposit. In case of the Debtors' failure, the Performance Deposit and the Expense Reimbursement will be returned to ISG in cash; (e) by ISG if any adverse change affecting its general affairs, management, financial position or stockholders' equity, or any disruption in the financial, banking or capital markets has occurred. The Performance Deposit will be returned to ISG provided that ISG will not have the right to terminate the Agreement if it is in material breach; (f) automatically, if the Debtors consummate an alternative transaction, in which case ISG will be entitled to: -- the return of the Performance Deposit; -- a $27,000,000 break-up fee in cash; and -- up to $5,000,000 in expense reimbursement in cash. The Break-Up Fee and Expense Reimbursement will be payable directly from and secured by the cash component consideration of the Alternative Transaction. (Bethlehem Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) Bethlehem Steel Corp.'s 10.375% bonds due 2003 (BHMS03USR1) are trading at about 4 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BHMS03USR1 for real-time bond pricing. BRITISH ENERGY: Nonpayment of Principal Prompts Concern at Fitch ---------------------------------------------------------------- Following the recent announcement by British Energy that it had entered into formal standstill agreements with a number of its creditors and postponed principal repayment on guaranteed bonds due 25 March 2003, 25 March 2006 and 25 March 2016, Fitch Ratings has re-examined the CDO transactions it rates for exposures to the debt issued by British Energy. The postponement of principal repayment legitimizes the calling of a Restructuring credit event under the terms of the standard credit default swap agreement. The agency's current Senior Unsecured rating for British Energy is 'C' Rating Watch Negative. The timing of any future downgrade of British Energy's Senior Unsecured rating would be dependent upon creditors' formal agreement to a final form of restructuring or cancellation of the standstill agreement and resultant formal insolvency procedures. Twelve publicly rated synthetic CDOs have been identified, with a total exposure of EUR133 million to British Energy. The exposure per transaction ranges from EUR4.6m to EUR25m, with an average exposure of EUR11m per structure. Transaction exposure to British Energy as a percentage of total assets ranges from 0.16% to 1.45%, with an average exposure of approximately 0.71%. The majority of identified publicly-rated transactions do not warrant any rating action at this time since an imminent credit event of British Energy, including the possibility of default, had already been factored into the analysis in recent reviews. Five of the 12 publicly rated CDOs have one or more debt tranches sufficiently exposed as to warrant placing their ratings on Rating Watch Negative. In most cases, these CDOs have already experienced some erosion of collateral credit quality, thereby increasing the impact of their exposure to British Energy. The securities placed on Rating Watch Negative are as follows: * BarCLO Finance (1999) Ltd., Class B rated 'A', Class C rated 'BBB', and Class D rated 'B-' * CDO Master Investments 2 S.A. Class A rated 'AAA', Class B rated 'AA' and Class C rated 'BBB' * Petra I - Classes B rated 'AA+', Class C rated 'A+' and Class D rated 'BBB+' * Illiad Investments Plc Series 2 Class C rated 'BBB' * Helix Capital (Netherlands) B.V. Series 2002-15 rated 'AAA' The other seven publicly rated transactions with exposure to British Energy are listed below. Their ratings and recent rating actions can be found on the agency's web site, http://www.fitchratings.com Spices Finance Series 2001-5 EPOCH 2000-1 Helix series 2001-9a and 2001-9 notes Helix series 2001-5A and 2001-5 notes Vintage Capital Marylebone CDO II London Wall 2002-1 plc BURLINGTON INDUSTRIES: Outlines Progress in Bankruptcy Emergence ---------------------------------------------------------------- Burlington Industries, Inc., (OTC Bulletin Board: BRLG) is continuing its progress towards emerging from Chapter 11 reorganization this summer. The Court has extended the Company's period of exclusivity to solicit acceptances of its plan of reorganization through July 31, 2003 and approved the Company's motion for modified bidding procedures for the solicitation of offers to purchase the Company. Under the approved bidding procedures, the deadline for bids to purchase the Company will be July 10, 2003 with the auction for qualified bidders to be held on July 21, 2003. The Company has hired Miller Buckfire Lewis & Co., LLC, an investment banking firm, to oversee the bid solicitation and auction process. These amended procedures and retention of an investment banker will assure a more comprehensive sale and auction process. The Company's secured bank lenders and the Official Committee of the Unsecured Creditors joined the Company in seeking the Court's approval of the modified procedures. "We have made significant progress and continue to move forward in our emergence process," said George W. Henderson, III, Chairman and Chief Executive Officer. "The modified bidding procedures established today strengthen our solicitation process and provide further assurance that the resulting outcome will be the best for the Company and our creditors. "Over the last 17 months we have aggressively transitioned the Company and implemented a new business model that expands and strengthens our capabilities through more focused North American assets, expanded product and global capabilities of Burlington WorldWide and differentiated fabric performance developed by Nano-Tex. In addition, we have repaid $140 million of debt during this period and will seek court approval to repay another $50 million next month. Through the tremendous efforts of our employees and support from our customers we are achieving our reorganization objectives and are positioned well as we enter the final stages of our emergence." With operations in the United States, Mexico and India and a global manufacturing and product development network based in Hong Kong, Burlington Industries is one of the world's most diversified marketers and manufacturers of softgoods for apparel and interior furnishings. CENTENNIAL HEALTHCARE: Taps Buck as Human Resource Consultant ------------------------------------------------------------- Centennial Healthcare Corporation and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Georgia to retain Buck Consultants, Inc., as their human resource consultants. Buck will assist and advise Centennial on matters relating to personnel employment, compensation, and retention decisions. Buck, a subsidiary of Mellon Financial Corporation, has been providing human resources consulting since 1916. Buck ranks among the top five global human resource consulting firms. The Debtors note that Buck has extensive experience in bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, advising debtors, creditors and other parties-in-interest. Debtors anticipate that Buck's services will include: (a) assisting in the design and development of a Key Employee Retention Program, which may include: (i) a pay-to-stay component; (ii) a management incentive compensation plan; (iii) severance benefits; and (iv) a discretionary incentive pool; (b) conducting appropriate research and benchmarking market-competitive cash compensation levels, long-term incentive opportunities, and retention awards and severance benefits prevalent in the general market and approved in major bankruptcy cases; (c) presenting findings and recommendations to management and the Board of Directors; and (d) any other services requested by the Debtors with respect to human capital and human resource management. Buck will bill for services at its current hourly billing rates: Principals $464 to $660 Associate Principals $380 to $452 Senior Consultants $272 to $360 Consultants $240 to $272 Senior Associates $196 to $216 Associates $140 to $192 other technical and general operating personnel $140 Centennial HealthCare Corporation, which operates and manages 86 nursing homes in 19 states, filed for Chapter 11 petition on December 20, 2002 (Bankr. N.D. Ga. Case No. 02-74974). Brian C. Walsh, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million each. CLAYTON HOMES: Fitch Keeps Ratings Watch over Proposed Merger ------------------------------------------------------------- The ratings of Clayton Homes, Inc. and some of its Vanderbilt Mortgage manufactured housing securitizations have been placed on Rating Watch Positive by Fitch Ratings. Currently, Fitch has an indicative senior unsecured rating of 'BB+' for Clayton Homes. Clayton Homes has entered into a definitive agreement to merge with Berkshire Hathaway (BRK.A; BRK.B). Under terms of the agreement Clayton's shareholders will receive cash of $12.50 per share in the merger. The Clayton management group will remain in place following the merger. The merger is expected to be completed over the next two and a half to three months, if there are no unexpected developments. The current rating is based on the company's historically conservative corporate financial policy, broad vertical integration, high recurring stream of income and substantial free cash flow generation that results from its operating model. Management clearly understands the dynamics of the manufactured housing sector and had the discipline to not over-expand during the last cyclical upturn. Concerns with Clayton center on the high-risk credit profile of the financial services operations (Vanderbilt Mortgage), dependence on secured funding facilities, capital constraints required to run a financial services unit, and declining portfolio performance measures as a result of the slowdown in the manufactured housing industry. Continued pressures relating to industry consumer and wholesale credit availability are also concerns. Clayton provides limited guarantees for 21 classes in 12 Vanderbilt Mortgage manufactured housing securitizations rated by Fitch. The ratings on these classes have been placed on Rating Watch Positive. The following classes are placed on Rating Watch Positive 'BB+': 1998-A: I B-2 1998-B: I B-2 1998-C: I B-2 1998-D: I B-2 1999-A: I B-2 1999-B: I B-2 1999-C: I B-2 1999-D: I B-2 2000-A: I B-2 2000-C: I B-2 2000-D: I B-2 2001-A: I B-2 The following classes have the support of over-collateralization in addition to the limited guarantee and therefore have a rating higher than the indicative rating of Clayton Homes. The following classes are placed on Rating Watch Positive 'BBB': 1998-A: II B-3 1998-B: II B-3 1998-C: II B-3 1998-D: II B-3 1999-A: II B-3 1999-B: II B-3 1999-C: II B-3 1999-D: II B-3 2000-A: II B-3 The Positive Rating Watch reflects the pending acquisition of Clayton by Berkshire Hathaway, an AAA rated company. A positive ratings outcome depends on Berkshire Hathaway's demonstration of implicit or explicit support of Clayton and Vanderbilt's outstanding and future debt. Without such support credit ratings may remain at current levels. A final decision on ratings adjustments awaits more details about the structure post-merger. CONSECO INC: TOPrS Committee Wins Court Nod to Tap Raymond James ---------------------------------------------------------------- The Official Committee of Conseco Trust Originated Preferred Debtholders of Conseco Inc., and debtor-affiliates obtained permission from the Court to retain Raymond James & Associates as its financial advisor. As financial advisor, Raymond James will: a) analyze the Debtors' business, operations, properties and financial condition; b) monitor the Debtors' cash expenditures, receivable collections, asset sales and projected cash requirements; c) advise the Committee on employee retention plans; d) help with any investigation on the Debtors' prepetition acts; e) review the Debtors' business plan; f) provide DIP financial analysis; g) prepare and present to the Committee analyses and updates on diligence performed; h) evaluate any proposed restructuring plan by the Debtors; i) assist the Committee in analyzing the valuation of any competing offers as part of the Plan; j) assist the Committee in finding financing sources for a recapitalization; and k) provide any other financial advisory services requested by the Committee. Raymond James will charge a $175,000 flat monthly fee. Raymond James will be reimbursed for all out-of-pocket expenses and will receive a $600,000 completion fee at the end of the engagement. (Conseco Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Conseco Inc.'s 10.75% 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. DELTA AIR LINES: S&P Cuts Ratings on Two Related Deals to B ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-1 certificates issued by Corporate Backed Trust Certificates Series 2001-6 Trust and Corporate Backed Trust Certificates Series 2001-19 Trust. The ratings remain on CreditWatch, where they were placed with negative implications March 20, 2003. The series 2001-6 and series 2001-19 Corporate Backed Trust Certificates Trusts are synthetic transactions that are weak- linked to the underlying securities, Delta Air Lines Inc.'s 8.3% senior unsecured notes due Dec. 15, 2029. The rating actions reflect the current credit quality of the underlying securities. RATINGS LOWERED AND REMAIN ON CREDITWATCH NEGATIVE Corporate Backed Trust Certificates Series 2001-6 Trust $57 million corporate-backed trust certs series 2001-6 Rating Class To From A-1 B/Watch Neg BB-/Watch Neg Corporate Backed Trust Certificates Series 2001-19 Trust $27 million corporate-backed trust certs series 2001-19 Rating Class To From A-1 B/Watch Neg BB-/Watch Neg DIRECTV LATIN AMERICA: Hires Bankruptcy Services as Claims Agent ---------------------------------------------------------------- DirecTV Latin America, LLC seeks the Court's authority to employ Bankruptcy Services LLC as its notice, claims and balloting agent, pursuant to Section 156(c) of the Judiciary Procedures Code. Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that the numerous creditors and other parties-in-interest involved in the Chapter 11 case of DirecTV may impose heavy administrative and other burdens on the Court and the Office of the Clerk of Court. To relieve these burdens, DirecTV proposes to engage the services of Bankruptcy Services. By appointing Bankruptcy Services as its notice, claims and balloting agent, DirecTV's estate and creditors will benefit from Bankruptcy Services' significant experience as agent in other cases and the efficient and cost-effective methods it has developed. Mr. Waite assures the Court that Bankruptcy Services is one of the country's leading Chapter 11 administrators with experience in noticing, claims processing, claim reconciliation and distribution, and balloting and vote tabulation. In addition, Bankruptcy Services has substantial experience in the matters in which it is to be engaged. Bankruptcy Services has acted has acted as official notice, claims and balloting agent in several large cases in a number of jurisdictions, including Chapter 11 cases filed in Delaware. Moreover, Bankruptcy Services is fully equipped to handle the volume involved in properly sending the required notices to, and processing the claims and ballots of, creditors and other interested parties in this Chapter 11 case. Bankruptcy Services will follow the notice, claim and balloting procedures that conform to the guidelines the Clerk of the Bankruptcy Court and the Judicial Conference promulgated. At the request of DirecTV or the Clerk's Office, Bankruptcy Services will provide computerized bankruptcy support services and bankruptcy administrative services. Specifically, Bankruptcy Services will: (a) maintain copies of all proofs of claim and proofs of interest filed; (b) maintain official claims registers; (c) implement necessary security measures to ensure the completeness and integrity of claims registers; (d) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available upon request of a party-in- interest or the Clerk's Office; (e) provide access to the public for examination of copies of the proofs of claims or interest without charge during regular business hours; (f) record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of the transfers as required by Bankruptcy Rule 3001(e); (g) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, order and other requirements; (h) promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; (i) provide advice to DirecTV and its professionals regarding all aspects of the plan solicitation process, including, timing issues, voting and tabulation procedures and documents needed for voting; (j) mail voting documents to creditors and equity security holders, if necessary; (k) receive and examine all ballots cast by creditors and equity security holders; and (l) tabulate all ballots received prior to the voting deadline in accordance with established procedures and prepare a vote certificate for filing with the Court. In return, Bankruptcy Services will be compensated in this manner: A. Mailing/Noticing Print & Mail (first page) $0.20 each Additional Pages 0.10 each Single Page (duplex) 0.24 each Change of Address 0.46 each B. Printing and Reproduction Reports 0.10 per page Photocopies 0.15 per page Labels 0.05 per page Fax 0.50 per page Document Imaging 0.40 per image C. Newspaper and legal notice publication quoted as required D. Professional Fees Kathy Gerber $210 per hour Senior Consultants 185 per hour Programmer 130 to 160 per hour Associates 135 per hour Data Entry/Clerical 40 to 60 per hour Schedule Preparation 225 per hour In addition, DirecTV further seeks the Court's permission to pay Bankruptcy Services a $15,000 retainer to be applied against the final invoice. Ron Jacobs, President of Bankruptcy Services LLC, represents that, among other things: (a) Bankruptcy Services will not consider itself employed by the United States government and will not seek any compensation from the United States government in its capacity as the notice agent and claims agent in this Chapter 11 case; (b) by accepting employment in this Chapter 11 case, Bankruptcy Services waives any rights to receive compensation from the Untied States government; (c) in its capacity as the notice agent and claims in this Chapter 11 case, Bankruptcy Services will not be an agent of the United States and will not act on the United States' behalf; and (d) Bankruptcy Services will not employ any past or present employees of DirecTV in connection with its work as the notice agent and claims agent in this Chapter 11 case. Bankruptcy Services also acknowledges that it will perform its duties if it is retained by DirecTV regardless of payment and, to the extent it requires redress, it will seek appropriate relief from the Court. Bankruptcy Services will also continue to perform the services contemplated by the Agreement in the event the Chapter 11 case is converted to a Chapter 7 case. Furthermore, Mr. Jacobs assures the Court that if Bankruptcy Services is terminated, it will perform its duties until a complete transaction with the Clerk's Office or any successor claims/noticing/balloting agent occurs. (DirecTV Latin America Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) EAGLE FOOD CENTERS: Case Summary & 20 Largest Unsec. Creditors -------------------------------------------------------------- Lead Debtor: Eagle Food Centers Inc. 801 First Street East Milan, Illinois 61264 Bankruptcy Case No.: 03-15299 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Eagle Pharmacy Co. 03-15300 Milan Distributing Co. 03-15301 Eagle Country Markets, Inc. 03-15302 Bogo's Inc. 03-15303 Type of Business: Eagle Food Centers, Inc. is a leading regional supermarket chain headquartered in Milan, Illinois. Chapter 11 Petition Date: April 7, 2003 Court: Northern District of Illinois Judge: Pamela S. Hollis Debtors' Counsel: Skadden Arps Slate Meagher & Flom 333 W. Wacker Drive Suite 2100 Chicago, IL 60606 Tel: 312-407-0700 Total Assets: $180,208,000 (as of Nov. 2, 2002) Total Debts: $177,440,000 (as of Nov. 2, 2002) Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ U.S. Bank Senior Notes $64,075,937 Attn: Rick Prokosch, Account Officer 180 East 5th Street Suite 200 St. Paul, MN 66101 McCormick & Co. Grocery $956,504 Austin Nooney 2408 Collections Center Drive Chicago, IL 60693 Tel: 410-527-4050 Fax: 410-527-6001 Dean Foods Co. (Milk) Dairy $914,365 Shannon Trimble PO Box 71184 Chicago, IL 60694 Tel: 309-216-9804 Fax: 309-793-1910 Amboy Specialty Division PO Box 71184 Chicago, IL 60694 Gibson Greetings, Inc. General Merchandise $697,239 Jim Rainey PO Box 640782 Pittsburgh, PA 15264-0782 Tel: 708-346-0828 Fax: 708-952-4607 Chas Levy Circulating General Merchandise $654,537 Attn: Customer Relations PO Box 95117 Chicago, IL 60694-5117 Tel: 630-810-0800 Fax: 630-353-2676 Pepsi Cola General Grocery $381,531 Robin Carter PO Box 75944 Chicago, IL 60657 Tel: 630-250-6932 Fax: 630-773-4318 Coca Cola Enterprises Grocery $348,633 Mike Garrity 135 South LaSalle Street Dept. 2335 Chicago, IL 60674-2335 Tel: 847-600-2233 Fax: 847-647-0414 Central States Coca Cola Grocery $343,404 Scott Hemple PO Box 18781 St. Louis, MO 63178-0781 Tel: 217-747-8206 Fax: 217-544-8749 Fleming Wire Purchases General Merchandise $323,827 7215 South Topeka Blvd. Topeka, KS 66619 Tel: 785-862-2266 Fax: 785-267-8024 EDS Information Tech Service $300,528 Ron Hoppensted 5400 Legacy Drive Plano, TX 75024-3199 Tel: 972-604-6000 Fax: 972-605-5629 Edys Grand Ice Cream Frozen Foods $271,964 3863 Collections Center Drive Chicago, IL 60693 Tel: 630-924-7755 Fax: 630-924-8337 Earthgrains Co. Grocery $224,603 Magaware Inc. of California General Merchandise $215,301 Adplex-Rhodes Advertising $209,488 RJO Grocery $201,788 Adplex Advertising $196,923 Chicago Tribune Advertising $192,990 OCAMPO Landlord $172,131 American Bottling Co. Grocery $166,474 FBG Service Corporation Maintenance Service $165,096 EAGLE FOOD CENTERS: Receives Court Approval of First-Day Motions ---------------------------------------------------------------- Eagle Food Centers, Inc., which owns and operates 61 supermarkets in Illinois and Iowa, has received Bankruptcy Court approval to, among other things, pay pre-petition and post- petition employee wages, salaries and benefits during its voluntary restructuring under Chapter 11. The Company also received permission to honor its various customer programs, including the Eagle Savers' Card. As previously announced, in order to effectuate its restructuring initiatives and provide sufficient liquidity to continue to operate its business, the Company filed voluntary petitions for reorganization in the Northern District of Illinois in Chicago earlier this morning. The Court also approved on an interim basis the Company's debtor-in-possession (DIP) financing agreement to continue operations, pay employees, and purchase goods and services going forward. In conjunction with the filing, Eagle Foods Centers received a commitment for $40 million in DIP financing from its existing lender, Congress Financial Corporation. The final hearing on the DIP agreement has been set for April 25, 2003. Eagle Chairman, Chief Executive Officer and President Robert J. Kelly said he was pleased with the Bankruptcy Court's prompt approval of its "first-day" orders and interim DIP financing. "We expect the DIP financing to provide adequate funding for our post-petition trade and employee obligations," said Mr. Kelly. "The Company will continue to focus its resources on maintaining the quality of our operations while we explore sale alternatives." Mr. Kelly said operations continue without interruption during the Chapter 11 process. "Our operations are all up and running as usual and we will continue our commitment to providing high quality products and superior service to our customers. Vendors will be paid for all goods furnished and services provided after the filing. Employee wages and benefit programs will continue as before." Eagle operates 60 Eagle Country Markets and one Bogo's Food and Deals. The company employs approximately 3,550 at its stores and its headquarters and central distribution facility in Milan, Illinois. ENRON: Co-Liability for $111M Tax Won't Affect PGE's Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services said that the IRS claim for $111 million in taxes in the Enron bankruptcy case, for which Portland General Electric (PGE; BBB+/Developing/A-2) could be partly liable, will not affect PGE's ratings. Standard & Poor's notes that a $63 million setoff exists in the form of tax refunds owed to Enron by the IRS. It is unclear how much of the residual amount will be PGE's share or when such amounts would be payable. This amount by itself is not likely to negatively affect PGE's ratings. Also, in its March 26 pronouncement, the FERC calculated that higher refunds were due to California, for which PGE's potential liability increased to between $40 million and $50 million from $20 million to $30 million. However, this is amount is offset in full by a $62 million receivable from sales in California. PGE has also reserved for a $20 million liability. PGE's ratings are sustained by its ring-fenced structure from parent Enron Corp. (D/--/--) and, as such, primarily reflect its standalone credit quality. Only penalties large enough to harm PGE's standalone credit quality would be material, not other aspects of Enron's bankruptcy proceedings. 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. ENRON: EPMI Sues Snohomish Public Utility for $117MM in Damages --------------------------------------------------------------- On January 16, 2001, Enron Power Marketing, Inc. and the Public Utility District No. 1 of Snohomish County entered into a Master Power Purchase and Sale Agreement. Pursuant to the Master Agreement, during the course of 2001, the parties entered into a series of transactions whereby EPMI agreed to sell wholesale power to Snohomish at a specified price and Snohomish agreed to accept delivery of and pay for its power on specific dates in the future. Moreover, the Master Agreement provides a list of "Events of Default", including, inter alia: (i) the failure to make, when due, any payment required pursuant to the Master Agreement if the failure is not remedied within three business days after written notice of the failure; (ii) any representation or warranty made by a Party will at any time prove to be false or misleading in any material respects; (iii) the failure to perform any covenant set forth in the Master Agreement; (iv) the bankruptcy of a Party; and (v) the failure of a Party to satisfy the creditworthiness or collateral requirements pursuant to Article 8 of the Master Agreement. If one Party's conduct triggers an Event of Default, the Non- Defaulting Party may, for so long as the Event of Default is continuing, designate an early termination date on which all Transactions will terminate. When an Early Termination Date has been designated, one Party owes the other a Termination Payment. The Non-Defaulting Party will calculate, in a commercially reasonable manner, a Settlement Amount for each Terminated Transaction by calculating its Gains and Losses resulting from the termination. Jonathan D. Polkes, Esq., at Cadwalader, Wickersham & Taft, in New York, relates that the Gains and Loses will be determined by calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of the Terminated Transactions. The Non-Defaulting Party will aggregate Settlement Amounts with respect to all Terminated Transactions together with other amounts due under the Agreement into a single net amount, the Termination Payment, and notify the Defaulting Party, in writing, of the amount of the Termination Payment and whether the Termination Payment is due to or due from the Non- Defaulting Party. The Termination Payment will be made by the Party that owes it within two business days after the notice is effective. Mr. Polkes notes that the Master Agreement expressly contemplates that either Party's credit position could be downgraded. The Master Agreement further provides that if there is a Downgrade Event with respect to EPMI's credit rating, Snohomish may require EPMI to provide it with Performance Assurance in an amount determined by Snohomish in a commercially reasonable manner. If EPMI fails to provide the requested Performance Assurance, an Event of Default will be deemed to have occurred and Snohomish is entitled to declare default and designate an Early Termination Date. On November 28, 2002, in light of a downgrade in Enron Corp.'s credit rating and EPMI's and Enron Corp.'s imminent bankruptcy filing, Snohomish sent a letter to EPMI stating that it was suspending further performance under the Master Agreement. The letter also advised EPMI that it was in "potential" default of the Master Agreement and, thus, pursuant to Section 5.2 of the MPPSA, Snohomish was immediately terminating the Agreement. However, Mr. Polkes points out that Snohomish's purported termination of the Master Agreement was improper because as it acknowledged in its letter that no Event of Default by EPMI had yet occurred. Realizing that its purported termination on November 28, 2001 was improper, on December 21, 2001 Snohomish sent EPMI a second letter advising EPMI that it was in Default and that Snohomish was terminating the Master Agreement. But Mr. Polkes asserts that the second purported termination notice is also invalid. In light of EPMI's filing for bankruptcy protection on December 2, 2001, Snohomish's purported termination was improper and invalid as a matter of law because it violated the automatic stay of Section 362(a) of the Bankruptcy Code. While Section 556 of the Bankruptcy Code does permit the termination of certain agreements notwithstanding the automatic stay, Snohomish, as a governmental unit, cannot avail itself of Section 556. To the extent the termination was effective, Mr. Polkes explains that Sections 5.3 and 5.4 of the Master Agreement obligated Snohomish to calculate a Termination Payment amount and to notify EPMI, in writing, of the Termination Payment amount and whether the Termination Payment was due to or from Snohomish. Notwithstanding this clear obligation, in its December 21, 2001 letter, Snohomish advised EPMI that it was not going to calculate or pay the Termination Payment. Accordingly, on May 17, 2002, EPMI sent Snohomish a letter informing Snohomish that: (a) its termination was ineffective and that it was obligated to continue accepting power from EPMI; and (b) in any event, it was obligated under the Master Agreement to calculate the Termination Payment amount and to provide EPMI with notice of a Termination Payment amount. However, Mr. Polkes informs the Court that Snohomish refused to either accept continued performance or submit a termination calculation. Rather, on June 19, 2002, Snohomish sent EPMI a letter once again stating that it would not accept additional power from EPMI and would not calculate or provide EPMI with the Termination Payment. EPMI made its own calculation and determined that, because the forward price curve for wholesale power had dropped between the date of the transactions and the Early Termination Date, EPMI was entitled to a Termination Payment of at least $116,847,876, plus interest at the contract rate. On July 30, 2002, EPMI notified and demanded from Snohomish this Termination Payment. But, to date, Snohomish has failed and refused to pay the Termination Payment of at least $116,847,876, plus interest at the contract rate. Thus, by this Complaint, EPMI asks the Court to: (a) order Snohomish to turnover the Termination Payment to EPMI, which is property belonging exclusively to the estate, pursuant to Section 542 of the Bankruptcy Code; (b) declare that Snohomish violated the automatic stay provided for by Section 362 of the Bankruptcy Code; (c) EPMI has been damaged in the amount of at least $116,847,876, plus interest at the contract rate for Snohomish's failure to accept continued performance of the Contract and pay the Termination Payment -- a breach of contract; (c) declare that EPMI has suffered substantial damages in an amount to be proven at trial as a direct result of Snohomish's conduct; (d) declare that any claims by Snohomish for fraud in the inducement and rescission of the Master Agreement is a core issue involving property of the estate under Section 541(c) of the Bankruptcy Code; (e) declare that Snohomish is not entitled to rescission of the Master Agreement as it cannot establish -- the elements of fraud in the inducement, that is it entitled to the equitable remedy of rescission, and that it has not ratified the Master Agreement and waived any right to rescission after receiving knowledge of the alleged fraudulent acts; (f) declare that the arbitration provision in the Master Agreement cannot be enforced given implications of the core issues and Bankruptcy Code provisions that require the application of fundamental principles of Bankruptcy law; and (g) award to EMPI its attorneys' fees and other expenses incurred in this action. (Enron Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 609/392- 0900) FAO INC: Judge King Confirms Chapter 11 Plan of Reorganization -------------------------------------------------------------- FAO, Inc. (Nasdaq: FAOOQ), a leader in children's specialty retailing, received confirmation of its Plan of Reorganization from the U.S. Bankruptcy Court for the District of Delaware. The Honorable U.S. Bankruptcy Judge Lloyd King signed the Order confirming the Plan. The Court's ruling allows the Company to emerge from Chapter 11 and begin making distributions to creditors pursuant to the terms of the Plan. "The Plan of Reorganization is a 'stand-alone' plan and should become effective this month," said David Levene of Levene, Neale, Bender, Rankin & Brill LLP, FAO, Inc.'s reorganization counsel. "FAO, Inc. will formally emerge from Chapter 11 at that time." As part of its Plan of Reorganization, the Company stated that it had received a commitment for up to $77 million in bank financing to be used to fund the Company's operations once the Plan becomes effective. The bank financing includes a $67 million revolving credit facility being provided by a group of banks led by Fleet Retail Finance Inc. and a $10 million term loan being provided by Back Bay Capital Funding LLC. In addition, the Company has received agreements for the purchase of $30 million in convertible preferred stock from a group of investors led by Kayne Anderson Capital Advisors, L.P. After issuance of the preferred stock and securities issued to creditors under the bankruptcy plan, existing equity holders are expected to retain approximately 11% of the Company's outstanding equity on a fully diluted basis. The exact percentage retained will depend on the final amount of preferred stock the Company issues at closing. Mr. Levene said, "The Company completed its Chapter 11 reorganization in only 83 days, which is a remarkable achievement considering this is a public company, there are no "lock-up" or "pre-pack" agreements in place and a multitude of difficult issues had to be addressed. The result is a testament to the outstanding effort put forth by the senior management team, company associates, Board of Directors, major shareholders, and outside professionals. All of these groups contributed greatly to the successful reorganization of FAO, Inc. and should be commended for their efforts." Mr. Levene continued, "The new bank line of credit provided by Fleet Retail Finance combined with the significant equity contributed by the investor group should allow FAO, Inc. to emerge from bankruptcy as a well capitalized company with a solid balance sheet." FAO, Inc., owns a family of high quality, developmental, educational and care brands for infants, toddlers and children and is a leader in children's specialty retailing. FAO, Inc. owns and operates the renowned children's toy retailer FAO Schwarz; The Right Start, the leading specialty retailer of developmental, educational and care products for infants and toddlers; and Zany Brainy, the leading retailer of development toys and educational products for kids. FAO, Inc., assumed its current form in January 2002. The Right Start brand originated in 1985 through the creation of Right Start Catalog. In September 2001, the Company purchased assets of Zany Brainy, Inc., which began business in 1991. In January 2002 the Company purchased the FAO Schwarz brand, which originated 141 years ago in 1862. For additional information on FAO, Inc. or its family of brands, visit the Company on line at http://www.irconnect.com/faoo/ FAO INC: Committee Signs-Up Traub Bonacquist as General Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of FAO, Inc., authority to retain Traub, Bonacquist & Fox LLP as general counsel, nunc pro tunc to January 21, 2003. The Committee expects Traub Bonacquist to: a) provide legal advice to the Committee with respect to its duties and powers in these cases; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the disposition of the Debtors' assets, and any other matter relevant to the cases or to the formulation of a plan(s); c) participate in the formulation of a plan of reorganization; d) assist and advise the Committee in its examination and analysis of the conduct of the Debtors affairs and the causes of their insolvency; e) assist and advise the Committee with regard to its communications with the general creditor body regarding the Committee's recommendations on any proposed plan(s) of reorganization; f) assist the Committee in requesting the appointment of a trustee or examiner, should such action become necessary; g) review and analyze all applications, orders, statements of operations and schedules filed with the Court by the Debtors or other third parties and advise the Committee as to their propriety, and, after approval by the Committee, object or consent thereto on its behalf; and h) perform such other legal services as may be required and in the interest of the creditors, including, but not limited to, the commencement and pursuit of such adversary proceedings as may be authorized. Traub Bonacquist's standard hourly rates in matters of this kind are: Partners $310 to $495 per hour Of Counsel $295 to $350 per hour Associates $185 to $350 per hour Paraprofessionals $85 to $120 per hour FAO, Inc., along with its wholly-owned subsidiaries, is a specialty retailer of high-quality, developmental, educational and care products for infants and children and high quality toys, games, books and multimedia products for kids through age 12. The Company filed for Chapter 11 protection on January 13, 2003 (Bankr. Del. Case No. 03-10119). Rebecca L. Booth, Esq., Mark D. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A. and David W. Levene, Esq., and Anne E. Wells, Esq., at Levene, Neale, Bender, Rankin & Brill represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $257,400,000 in total assets and $238,374,000 in total debts. FLEMING: Honoring $50MM of Employee Compensation Obligations ------------------------------------------------------------ Fleming Companies, Inc., and its debtor-affiliates want to pay certain prepetition payroll and commission obligations to their employees. The Debtors estimate that they owe $20,000,000 on account of prepetition Employee Payroll Obligations as of the Petition Date. Aside from the Payroll Obligations, certain employees are also entitled to receive commissions aside from their base compensation. Depending on the type of compensation program, the Debtors pay the commissions to eligible employees on a rolling basis as the commissions are earned. If the Debtors are unable to honor their Payroll and Commission Obligations, Scotta E. McFarland, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., asserts that employee morale and loyalty will be jeopardized at a time when employee support is critical. Ms. McFarland tells Judge Walrath that many of the Debtors' employees live from paycheck to paycheck. These employees rely exclusively on receiving their full compensation or reimbursement of their expenses in order to continue to pay their daily living expenses. The Debtors currently employ 20,000 full and part-time personnel including management, officers, directors, and salaried and hourly employees. Ms. McFarland reports that $17,500,000 of the estimated prepetition Payroll Obligations is attributable to the payroll of 22 Fleming Debtors. The remaining $2,500,000 is attributable to the payroll of Core-Mark International, Inc., C/M Products, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark MidContinent, Inc., Marquise Ventures Company, Inc., General Acceptance Corporation and ASI Office Automation, Inc. -- Core-Mark Debtors. The Debtors believe that a vast majority of their employees would have a priority claim of up to $4,650 with respect to all of their accrued but unpaid prepetition wages or salaries earned within the 90 days before the Petition Date. According to Ms. McFarland, the Fleming Debtors and Core-Mark Debtors administer separate payroll and make their payroll disbursements through their own set of bank accounts. The Core- Mark Debtors maintain two payroll periods. Certain employees are paid every Friday on a weekly basis while the remaining Core-Mark employees are paid on alternating Fridays, on a bi- weekly basis. While the weekly paid Core-Mark employees are paid on a current basis, those paid bi-weekly are paid one week in arrears. The Fleming Debtors also maintain two payroll periods. Some of the Fleming employees are paid every Friday while the others are paid on a bi-weekly basis. But unlike the Core-Mark Employees, the weekly paid Fleming employees are paid one week in arrears while those Fleming employees paid bi-weekly are paid on a current basis. In the ordinary course of business, the Debtors incur $58,000,000 in Payroll Obligations per month. About $8,000,000 of the monthly Obligations is attributable to the Core-Mark Debtors' payroll while other $50,000,000 is attributable to the payroll of the other Fleming Debtors. The Fleming Debtors also process $275,000 per month in commission payments. In addition, the Debtors estimate that less than 35 employees will be owed over $4,650 on account of prepetition wages, salaries and commissions, earned or accrued prepetition -- Allocated Obligations. Most of these employees are key management personnel who are essential to the Debtors' continued operations. Ms. McFarland maintains that any failure by the Debtors to reimburse the key management personnel may destabilize employment relationships and negatively impact the Debtors' ability to generate new business going forward. Thus, given the critical importance of retaining the key management personnel, the Debtors also propose to pay the Allocated Obligations. * * * After reviewing the merits of the case, Judge Walrath allows the Debtors to pay, in their sole, discretion, prepetition Employee Payroll Obligations and Employee Commission Obligations not to exceed $20,000,000. The Debtors may also pay up to $55,000 in prepetition Allocated Obligations to their key management personnel. (Fleming Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) Fleming Companies' 10.625% bonds due 2007 (FLM07USR1) are trading at about a penny on the dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FLM07USR1for real-time bond pricing. FOCAL COMMS: Turns to Ryan & Company for Tax Consulting Services ---------------------------------------------------------------- Focal Communications Corporation and its debtor-affiliates ask for permission from the U.S. Bankruptcy Court for the District of Delaware to hire Ryan & Company, Inc., to provide sales and use tax consulting services. Specifically, the Debtors seek to retain Ryan to perform two separate assignments: 1) a multistate sales and use tax credit review to identify tax refund or tax reduction opportunities for the Debtors for all tax periods open by law through December 31, 2002; 2) assisting the Debtors with minimizing Focal's proposed Texas sales and use tax liability resulting from a recent audit performed by the Texas Comptroller of Public Accounts for all periods open by law through August 31, 2002. Ryan, with its headquarters in Dallas, Texas, is the largest independent state and local tax consulting firm in America. The Debtors tell the Court that Ryan has significant experience in providing sales and use tax consulting services. In this engagement, the Debtors will pay Ryan: A) for Multistate Work: i) 33-1/3% of the first $100,000 recovered; ii) 30% of any amounts recovered between $100,000 and $200,000; and iii) 25% of any amounts recovered in excess of $200,000. B) for Tax Refunds from Taxing Authorities: i) 33-1/3%, including interest and penalties; and ii) 40% of any such tax refunds, credits or reductions as a result of any administrative hearing or other legal action. Focal Communications Corporation other related Debtors are national communicational providers of voice and data services to communications-intensive users in major cities and metropolitan areas in the United States. The Debtors filed a chapter 11 petition on December 19, 2002 (Bankr. Del. Case No. 02-13709). Laura Davis Jones, Esq., and Christopher James Lhulier, Esq., at Pachulski Stang Ziehl Young & Jones PC represent the Debtors in their restructuring efforts. When the Company filed for protection form its creditors it listed $561,044,000 in total assets and $609,353,000 in total debts. FOSTER WHEELER: Appoints Kenneth A. Hiltz as Chief Fin'l Officer ---------------------------------------------------------------- Foster Wheeler Ltd., (NYSE:FWC) announced the appointment of Kenneth A. Hiltz as chief financial officer. Hiltz, 50, a principal with AlixPartners, LLC, has an extensive background in balance-sheet restructurings and corporate financial leadership. He replaces Joseph T. Doyle, who has left the company. Ken will work closely with Ryan J. Esko, also with AlixPartners, who will continue as treasurer. Esko was appointed treasurer in November 2002, and has been working with Foster Wheeler on worldwide cash management since March 2002. "Over the past year, Foster Wheeler made significant improvement to the company's operations, which enabled us to end 2002 with our strongest cash position in 15 years," said Raymond J. Milchovich, chairman, president and chief executive officer. "As a result, we expect to generate EBITDA from operations in 2003 that would be approximately 30 percent higher than we have achieved over the last three years. "In addition to this operational improvement, we must also reduce debt and improve our balance sheet. Ken has a proven track record and brings an unparalleled depth of experience and financial skills in these critical areas. He will work with Mike Rosenthal, our chief restructuring officer, and our outside advisors to lead the company through this process." Prior to joining Foster Wheeler, Hiltz served as chief restructuring officer for Hayes Lemmerz International, Inc., one of the world's leading global suppliers of automotive and commercial highway components. Previously, he was senior vice president and chief financial officer for Harnischfeger Industries, now known as Joy Global, Inc., a global manufacturer of mining equipment and pulp/paper-making machinery. Hiltz has designed and implemented turnaround programs, and helped restructure debt for numerous manufacturing, retail and industrial companies. "By strengthening Foster Wheeler's senior leadership team and strategically aligning with firms like AlixPartners in 2002, we were able to vastly improve our cash management, increase the rigor of our financial and project controls, and implement vastly improved contracting standards," added Milchovich. "With Ken to assist in the next phase of Foster Wheeler's restructuring, we are ensuring that we have the people to execute our plan and build a better and stronger company." Hiltz holds a bachelor of business administration degree from Xavier University and an MBA from the University of Detroit. He has also attended the executive education program at Harvard Business School. Hiltz is a Certified Management Accountant and CPA. Foster Wheeler Ltd., whose December 2002 balance sheet shows a total shareholders' equity deficit of about $781 million, is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. The corporation is domiciled in Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit the company's Web site at http://www.fwc.com Foster Wheeler Corp.'s 6.750% bonds due 2005 (FWC05USR1) are trading at about 58 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FWC05USR1for real-time bond pricing. FRONTIER AIRLINES: March Revenue Passenger Miles Slides-Up 14.1% ---------------------------------------------------------------- Frontier Airlines (Nasdaq:FRNT) announced preliminary traffic results for March 2003. Revenue passenger miles (RPMs) increased 14.1 percent to 356,288,000 for March 2003 from the same period last year. Available seat miles (ASMs) increased 17.2 percent to 543,042,000 for March 2003 from the same period last year. This resulted in a load factor for March 2003 of 65.6 percent, a decrease of 1.8 points from March 2002. The airline carried 396,082 passengers during March 2003. The airline reported an average fare of $108 for the month of March 2003, a 14.3 percent decrease from March 2002, when the airline's average fare was $126. "Given the impact of Denver's worst winter storm in 90 years, March traffic results are in line with our reduced expectations, especially considering that the Easter travel weekend fell in the month of March last year. Advance bookings continue to be affected by hostilities in Iraq and the slow economic recovery," said Sean Menke, vice president of marketing and planning. The following table represents comparisons for March, fiscal and calendar year-over-year traffic results. Denver-based Frontier Airlines employs approximately 3,100 aviation professionals and is the second largest jet service carrier at Denver International Airport. Frontier and its regional jet partner Frontier JetExpress offer service to 39 cities. Frontier's fleet consists of 36 aircraft, which feature a single-class configuration. In 2002, for the fourth consecutive year, Frontier's maintenance and engineering department has received the Federal Aviation Administration's highest award, the Diamond Certificate of Excellence. This award signifies 100 percent of the airline's maintenance and engineering employees have completed advanced aircraft maintenance training programs. In April 2002, Entrepreneur ranked Frontier one of two "Best Low-Fare Airlines." Frontier provides capacity information and other corporate information on its Web site, which may be viewed at http://www.frontierairlines.com * * * As previously reported, Frontier Airlines (Nasdaq: FRNT) has received conditional approval from the Air Transportation Stabilization Board for a $63 million federal loan guarantee of a $70 million commercial loan facility. "The events of September 11 and its aftershocks have had a debilitating effect on the capital markets. We are in the midst of our fleet improvement/transition plan, and access to capital is a critical success factor. Obtaining conditional approval for this government-backed loan helps to ensure that we can continue our business strategy, bring competitive air travel options to more communities and preserve competition in the aviation industry. We are especially grateful for the professional manner in which the ATSB and their staff conducted this process. We found their knowledge of our industry and the unique challenges we face to be thorough and comprehensive, and we thank them for their efforts," said Frontier President and CEO Jeff Potter. Congress enacted the ATSB loan guarantee program in September 2001 in order to provide financial stability for airlines impacted by the September 11 terrorist attacks. GAP INC: Promotes Lee Bird to Chief Operating Officer, Gap Div. --------------------------------------------------------------- Gap Inc., (NYSE:GPS) announced that executive Lee Bird has been promoted to Chief Operating Officer of the company's domestic Gap division, and Patti Johnson has been hired to succeed Mr. Bird as Chief Financial Officer for the company's Old Navy division. Mr. Bird, 38, who will report to Gap President Gary Muto, joined the company in April 2001 as head of finance for Old Navy. Before joining the company, Mr. Bird held senior finance positions at Gateway, Inc., Allied Signal Inc. and Ford Motor Company. Ms. Johnson, 45, joins Old Navy from Kohl's Corporation, where she was Chief Financial Officer for the $9 billion specialty department store chain. Prior to Kohl's, Ms. Johnson held senior finance positions for The Disney Store, Inc., and Family Restaurants Inc. Ms. Johnson will report to Old Navy President Jenny Ming and to Gap Inc.'s Chief Financial Officer Byron Pollitt. "Patti and Lee have the broad operating and financial management skills we need to continue our turnaround momentum at Old Navy and Gap, drive greater operating discipline and efficiency, and position the brands for sustainable growth," said Gap Inc. President and CEO Paul Pressler. "Lee has been a strong operational partner to Jenny Ming in helping to improve performance and support Old Navy's turnaround," Mr. Pressler said. "With this foundation in place, Patti's experience in value-oriented retailing will be an asset as Old Navy sharpens its ability to compete in that market. "Lee's new role at Gap underscores our commitment to sharing talent, experience, and best practices across divisions," Mr. Pressler said. "Lee's demonstrated ability to lead strategic change and drive sustainable results will help Gary in Gap's turnaround efforts and support longer-term initiatives." Mr. Bird succeeds Ron Beegle, who is leaving the company. Since joining Gap Inc. in 1996, Mr. Beegle, 40, had held senior management positions in the company's Banana Republic, online and Gap divisions. He had been Chief Operating Officer of the Gap division since June 2001. "On behalf of the company, I want to thank Ron for the many contributions he has made in leadership roles at three of our operating divisions, and for the work he has done to help improve Gap's performance," Mr. Pressler said. "We wish him much success in the future." * * * As previously reported, the outlook on Gap Inc., was revised to negative from stable. The 'BB+' long-term and 'B' short-term corporate credit ratings on the company were also affirmed. The outlook revision was based on continuing negative sales trends in the company's Old Navy and Gap divisions. The ratings on the San Francisco, California-based company reflect management's challenge to improve business fundamentals in its three brands in an industry that will continue to experience intense competition, and to improve its weakened credit protection measures. These factors are partially offset by the company's strong business position in casual apparel, its geographic diversity, and strong cash flow before capital expenditures. GENUITY: Wants to Expand Scope of Alvarez & Marsal's Engagement --------------------------------------------------------------- Don S. DeAmicis, Esq., at Ropes & Gray, in Boston, Massachusetts, reminds the Court that Genuity Inc., and its debtor-affiliates previously filed an application to employ Alvarez & Marsal, Inc. as Restructuring Consultants on December 19, 2002. A hearing on the Original Application has not yet been noticed and consequently, the Court has not yet entered an order approving A&M's retention. In the Original Application, the Debtors sought the Court's authority to employ A&M for: a) assistance in the preparation of financial information for distribution to creditors and others; b) assistance in restructuring issues; and c) other activities as approved by the Debtors and agreed to by A&M. Mr. DeAmicis reports that A&M has already assisted the Debtors with various financial matters in connection with the Sale to Level 3. By this amended application, the Debtors seek the Court's permission to employ A&M nunc pro tunc to November 27, 2002 for services rendered in connection with the Sale. In light of the benefits of A&M's assistance to the Debtors and their estates, the Debtors contend that A&M should be compensated for all the work it has performed to date. Although the Debtors believe that the principal aspect of A&M's engagement was concluded on February 5, 2003, by this Amended Application, the Debtors also seek the Court's authority to employ A&M in the future on a limited basis, as necessary, as a consultant in connection with certain post-closing matters. Mr. DeAmicis expects that any Post-Closing Services will primarily involve consultation with respect to cure amounts, rejection claims, and other issues pertaining to the services that A&M has already provided to the Debtors. As a result of A&M's assistance with the Sale, the Debtors believe that A&M has acquired extensive knowledge of the Debtors, their businesses, and their capital structure, financing documents and other material agreements. This knowledge may be a valuable resource to the Debtors going forward as they work with Level 3 on a variety of post-closing matters, evaluate cure amounts and rejection claims, determine whether to assume or reject certain executory contracts excluded from the Sale by Level 3, and calculate post-closing adjustments. (Genuity Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Settles Claims Dispute with Teleglobe Entities --------------------------------------------------------------- Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, in New York, relates that the Global Crossing Debtors are party to six agreements with Teleglobe USA, Inc. and Teleglobe, Inc. relating to the provision of telecommunications services. On May 28, 2002, Teleglobe USA, together with certain affiliates, filed a voluntary petition for relief under the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. On May 15, 2002, Teleglobe Inc., together with certain of its affiliates, commenced a proceeding under the Canadian Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice. Ernst & Young Inc. was appointed monitor of Teleglobe Inc. and its affiliates during the CCAA Proceeding. Mr. Basta informs Judge Gerber that there are numerous amounts owing under the Agreements from both the GX Debtors to Teleglobe and from Teleglobe to the GX Debtors. Following extensive arm's-length negotiations, the GX Debtors and Teleglobe have reached a global settlement agreement that provides for mutual releases and the resolution of all claims relating to the Agreements. By this motion, the GX Debtors ask the Court to approve the Settlement Agreement. The GX Debtors and Teleglobe are parties to these Agreements: (i) Telecommunications Services Agreement dated December 1996; (ii) Telecommunications Services Agreement dated October 1996; (iii) Telecommunications Services Agreement entered into on March 12, 2001; (iv) Carrier Wholesale Service Agreement dated July 29, 1997; (v) International Private Line Service Order Forms; and (vi) Carrier Services Agreement dated July 24, 2002. Pursuant to the Services Agreements, Mr. Basta explains that Teleglobe and Global Crossing agreed to provide each other with certain telecommunications services, including private line and voice carrier services. Under the Carrier Services Agreement, Global Crossing provides capacity to Teleglobe, including a 10 Gbps wavelength between London and New York. In addition, pursuant to the Carrier Services Agreement, Global Crossing granted Teleglobe an option to purchase an indefeasible right of use in one 10 Gbps wavelength of capacity between London and New York. The initial price of the Carrier Services Agreement was $2,200,000, to be paid in monthly installments of $67,000 per month, inclusive of monthly maintenance charges. To exercise the Conversion Option, Teleglobe is required to make a lump-sum payment of the difference between $2,200,000 and the amounts paid under the Carrier Services Agreement. To date, Teleglobe has made four payments for a total of $268,000. As of March 7, 2003, the Debtors are indebted to Teleglobe under the Service Agreements for: (i) $1,015,401.92 for services rendered before the Global Crossing Petition Date; and (ii) $6,583,323.57 for services rendered after the Global Crossing Petition Date. On the other hand, Teleglobe is indebted to the Debtors under the Service Agreements for: (i) $3,066,747.15 for services rendered before the Teleglobe Petition Date; and (ii) $3,881,365.90 for services rendered after the Teleglobe Petition Date. These amounts are exclusive of the $1,932,000 that Teleglobe would be required to pay the Debtors to exercise the Conversion Option. On February 24, 2003, after extensive arm's-length negotiations, the Debtors and Teleglobe executed the Settlement Agreement. The salient terms of the settlement are: A. Both the Debtors and Teleglobe agree to relief for each other from the automatic stay of Section 362(d) of the Bankruptcy Code in the other's Chapter 11 case to effectuate the terms of the Settlement Agreement. B. The Debtors and Teleglobe have executed a capacity purchase agreement, pursuant to which Teleglobe will exercise the Conversion Option. The annual maintenance fee will be $90,000 per year. C. Within ten calendar days of the latest to occur of approval of this Agreement by the Bankruptcy Court in the Debtors' Chapter 11 cases, the Delaware Bankruptcy Court in Teleglobe's Chapter 11 cases, and the Monitor, Teleglobe will pay to Global Crossing $1,281,387.56 in cash, in full satisfaction, settlement, release, and discharge of all amounts due as of the Effective Date under the Agreements and the Capacity Purchase Agreement, including the exercise of the Conversion Option. D. Both the Debtors and Teleglobe will endeavor in good faith to file appropriate pleadings in their Chapter 11 cases seeking approval of the Settlement Agreement. In addition, Teleglobe will endeavor in good faith to cause the Monitor to approve this agreement not later than the date of approval of the Settlement Agreement by the Delaware Bankruptcy Court. E. As of the Effective Date, both the Debtors and Teleglobe fully and forever irrevocably release one another and all their present and former parent corporations and subsidiaries, officers, directors, employees, agents, representatives, attorneys, advisors, partners, successors, and assigns from any and all claims relating to the Agreements, except for claims relating to the Debtors' and Teleglobe's ongoing performance obligations under the Capacity Purchase Agreement and any other Agreements still in effect as of the Effective Date. Mr. Basta asserts that the Settlement Agreement is a fair resolution of the disputes between the parties. The Debtors and Teleglobe have numerous claims against each other relating to the Agreements. The Settlement resolves those claims without any payment being made by the Debtors. Pursuant to the Settlement Agreement, the Debtors will receive a lump sum payment of $1,281,387.56 from Teleglobe. Moreover, because Teleglobe will execute the Conversion Option pursuant to the Settlement Agreement, the Debtors will benefit from the continued income stream of $90,000 per year arising from the maintenance payments from Teleglobe under the Capacity Purchase Agreement. (Global Crossing Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) GOODYEAR TIRE: Applauds Steelworkers' Willingness to Negotiate -------------------------------------------------------------- Goodyear applauds the USWA decision and looks forward to the dialogue that will be necessary to reach a mutually beneficial agreement. The company remains convinced that Goodyear management and employees are best served by a contract that is structured to address specific Goodyear challenges. Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. Goodyear employs more than 95,000 people worldwide, and more than 35,000 in its North American Tire operations. Goodyear Tire & Rubber's 8.500% bonds due 2007 (GT07USR1) are trading at about 76 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GT07USR1for real-time bond pricing. HARTMARX CORP: First Quarter 2003 Results Show Improved EBIT ------------------------------------------------------------ Hartmarx Corporation (NYSE: HMX) reported operating results for its first quarter ended February 28, 2003. Sales were $131.8 million in 2003 compared to $139.4 million in 2002. Earnings before interest and taxes ("EBIT") improved to $4.5 million compared to $2.4 million in 2002. After consideration of interest expense, an $.8 million pre-tax refinancing charge in 2003 and income taxes, net earnings were $1.1 million or $.03 per share in 2003 compared to a loss of $1.1 million or $.03 per share in 2002. Homi B. Patel, president and chief executive officer of Hartmarx Corporation, commented, "We are pleased that we achieved first quarter profitability in a very difficult retail environment. Even after accounting for the $.8 million of financing expense in 2003 associated with the early retirement of $10.3 million of 12.5% senior unsecured notes, pre-tax earnings improved to $1.8 million compared to a loss of $1.8 million in last year's first quarter. Earnings of $.03 per diluted share in the current quarter, compared to a loss of $.03 last year, represents our third consecutive quarter of positive earnings. We anticipate that global uncertainties will continue to impact the retail environment negatively and that conditions will remain very challenging for the second quarter ending May 31, historically our weakest quarter. Nonetheless, we are focused on those areas we have control over and continue to anticipate improved operating margins and lower interest costs in every quarter, just as we had in the first quarter. We believe that we are on track to report a significant earnings improvement for the full year 2003," Mr. Patel concluded. First Quarter Pre-Tax Improvement Resulting from Higher Gross Margins, Lower Expenses And Interest Costs The increase in first quarter EBIT to $4.5 million from $2.4 million in 2002 reflected an improved gross margin rate of 29.5% compared to 26.9% in 2002. Selling, general and administrative expenses decreased $1.1 million on the lower sales. Interest expense declined to $1.9 million from $4.2 million in 2002 from reduced average borrowing levels and a lower effective interest rate which was favorably impacted by the August 2002 refinancing and subsequent repayments of high cost debt. Current period results also included the $.8 million pre-tax charge associated with the January, 2003 retirement of the remaining 12.5% senior unsecured notes, representing the non-cash write-off of unamortized debt discount and financing fees. At February 28, 2003, total debt was $138.8 million, $32.0 million lower than the year earlier period. The Company's interest rate under its current senior credit facility was approximately 3.9% compared to 6.7% in the year earlier period under its previous credit facility. The weighted average interest rate at February 28 on all borrowings was approximately 5.3% compared to 10.5% at the year earlier date. Hartmarx produces and markets business, casual and golf apparel under its own brands including Hart Schaffner & Marx, Hickey- Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch, Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In addition, the Company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberrys men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone, Pierre Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. * * * As previously reported by the Troubled Company Reporter, Standard & Poor's lowered its corporate credit rating on Hartmarx Corp., to 'SD' (selective default) from double-'C' and the senior subordinated debt rating to single-'D' from single-'C'. The ratings were removed from CreditWatch, where they were placed on October 4, 2001. Subsequently, the single-'D' rating on Hartmarx' senior subordinated 10.875% notes due January 15, 2002 was withdrawn. The downgrade reflects the completion of an exchange offer on the 10.875% notes due January 15, 2002 with bonds maturing in 2003 plus an amount of cash and common stock. In December 2001, Hartmarx claimed in an 8-K filing that, if the company is unsuccessful in completing the exchange or obtaining additional financing, it would need to restructure its debt. Standard & Poor's considers the completion of the exchange to be tantamount to a default, given the coercive nature of the offer. I2 TECHNOLOGIES: Fails to Comply with Nasdaq Listing Guidelines --------------------------------------------------------------- i2 Technologies, Inc., (Nasdaq:ITWOE) announced that The NASDAQ Stock Market has furnished the Company with a notice of intent to delist its common stock, stating that the Company's inability to timely file its annual report on Form 10-K for the year ended December 31, 2002 violates NASDAQ's continued listing requirement set forth in Marketplace Rule 4310(c)(14). The delay in filing i2's 2002 Form 10-K results from the previously announced decision to re-audit the Company's financial statements for the years ended December 31, 2000 and 2001, as well as the recent determination to expand the re-audits to include the Company's financial statements for the year ended December 31, 1999. In accordance with NASDAQ's rules, i2 plans to submit a request for a hearing to appeal the delisting notification and will request additional time to complete the re-audits from the hearing panel. No delisting action will take place prior to the hearing, which is typically held within 30 days after the date of the hearing request. However, there can be no assurance that the hearing panel will grant i2 the additional time the Company requires. NASDAQ initiated a trading halt on i2's stock on March 31, 2003 and has requested the Company to provide it with additional information concerning the potential scope and magnitude of expected material adjustments to i2's previously reported financial results. The Company reported that it is working diligently with its independent accountants to accumulate the requested information in as timely a manner as possible. However, as the re-audits are ongoing and as i2 only recently determined to expand the re-audits to include its 1999 financial statements, there can be no assurance that the information will be ready for submission by i2 prior to the date of the delisting hearing or that the information, when submitted, will be sufficient to allow NASDAQ or the hearing panel to lift the trading halt. As a result of i2's inability to timely file its 2002 Form 10-K, the Company's trading symbol has been changed by NASDAQ from "ITWO" to "ITWOE" and will not revert to "ITWO" until such time as the re-audits have been completed and the Company has filed its 2002 Form 10-K and regained compliance with NASDAQ's Marketplace Rules. i2 also announced that it is reviewing the effect of the re- audits and the resulting delay in filing the 2002 Form 10-K on its outstanding indebtedness. The indenture governing i2's $350 million of convertible notes due in 2006 requires the Company to deliver its 2002 Form 10-K to the trustee within 15 days after the day it is required to be filed with the SEC. The indenture contains a 60-day cure period for covenant non-compliance. i2 is working diligently to complete the re-audits so that it may file its 2002 Form 10-K and satisfy its reporting obligations under the convertible note indenture. Although there can be no assurances, i2 believes that the cure period should be sufficient to allow for the completion of the re-audits and the filing of the 2002 Form 10-K. The Company has also concluded that the delay in filing the 2002 Form 10-K does not result in a default under the $60.9 million convertible promissory note issued by the Company in connection with its acquisition of Trade Service Corporation, which matures in September 2003. i2's $20.0 million letter of credit facility contains certain covenants relating to the delivery of financial information to the lender. The lender has waived the Company's compliance with, and any default under, the letter of credit line to the extent that any non-compliance or default results from or is connected with the re-audits or the resulting delay in filing the 2002 Form 10-K. The obligation of the lender to issue letters of credit under the line, which is fully cash-collateralized, terminates on April 30, 2003. The lender's waiver is effective until July 15, 2003, and i2 currently anticipates that it will be able to negotiate a new letter of credit facility with the lender or a replacement bank prior to the expiration of the waiver. HAWAIIAN AIRLINES: Paul Weiss Named Special Corporate Counsel ------------------------------------------------------------- Hawaiian Airlines, Inc., asks for permission from the U.S. Bankruptcy Court for the District of Hawaii to retain Paul, Weiss, Rifkind, Wharton & Garrison LLP as Special Corporate Counsel. The Debtor tells the Court that Paul Weiss has acquired extensive familiarity with the Debtor's business, capital structure and material contractual agreements through its representation of the Debtor in multiple corporate matters. The Debtor submits that Paul Weiss' continued representation is in the best interest of the estate and will avoid disruption in the Debtor's business and legal affairs. Specifically, the Debtor wants Paul Weiss to: a) advise and assist the Debtor with respect to the Debtor's general corporate transactions, including matters pertaining to any filings by its parent corporation with the Securities and Exchange Commission, the American Stock Exchange, the Pacific Exchange and similar exchanges as required from time to time; b) advise and counsel the Debtor in connection with any contemplated restructuring, including the drafting of appropriate corporate documents with respect thereto and counseling the Debtor in connection with the closing with of such restructuring; c) advise and counsel the Debtor with respect to its general corporate matters arising in or outside of bankruptcy; d) since the Debtor currently does not employ a chief legal officer or general counsel, perform functions typically within the scope of such an officer's duties; and e) perform the full range of necessary services. Paul Weiss will charge the Debtors at its customary hourly rates, which are: Partners $525 to $725 per hour Counsel $495 to $525 per hour Associates $260 to $485 per hour Paralegals $140 to $195 per hour The attorneys who will have primary responsibility in this retention and their current hourly rates are: Judith R. Thoyer $725 per hour Stephen J. Shimshak $725 per hour James H. Millar $475 per hour Denny O. Kwon $420 per hour Hawaiian Airlines Incorporated provides primarily scheduled transportation of passengers, cargo and mail. Flights operate within the South Pacific and to points on the west coast as well as Las Vegas. The Company filed for chapter 11 protection on March 21, 2003 (Bankr. Hawaii Case No. 03-00817). Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of more than $100 million each. INTERSTATE BAKERIES: Mulling Closure of Bakery in Sacramento ------------------------------------------------------------ Interstate Bakeries Corporation (NYSE: IBC) announced plans to close its sourdough roll bakery in Sacramento, Calif. The closing, scheduled for June 7, 2003, will affect 52 employees. Production from the Colombo bakery, which primarily bakes rolls under the Colombo brand name, will be transferred to IBC's other Colombo bakery in Oakland. Distribution of these products to food stores in northern California markets will not be affected by this decision. "This business decision was driven by our need to streamline our operation by consolidating production under one roof," said James R. Elsesser, IBC's Chief Executive Officer. The Colombo bakery in Sacramento first opened in 1985. Mr. Elsesser added, "Closing a bakery is never an easy decision to make. This bakery turns out a great product and our workforce should be proud of their efforts. We intend to dismantle the Sacramento roll production line and install a portion of it in our Colombo bakery in Oakland." Most of the employees affected by this decision are represented by various labor unions. Severance arrangements for these employees will be guided by our agreements with these unions. Employees wishing to transfer to any of our other four bakeries in northern California will be given consideration in filling open positions. Information regarding charges and other expenses associated with the closing of our Colombo facility in Sacramento, together with those associated with other restructuring activities, will be presented in our third quarter Form 10-Q, which we plan to file with the Securities and Exchange Commission by late April 2003. Interstate Bakeries Corporation is the nation's largest baker and distributor of fresh baked bread and sweet goods in the United States selling products under various brand names including Wonder, Hostess, Dolly Madison, Home Pride, and Merita. The Company, with 60 bread and cake bakeries located in strategic markets from coast to coast is headquartered in Kansas City, Missouri. * * * As previously reported, Moody's Investors Service confirmed the senior secured and senior implied ratings for Interstate Bakeries Corporation and its guaranteed subsidiaries. Outlook remains negative. Rating Confirmations: Interstate Bakeries Corporation: * Senior implied rating - Ba1 * Senior unsecured issuer rating - Ba2 * Preferred Shelf at - (P)B1 Interstate Brands Corporation and Interstate Brands West Corporation as Co-borrowers: * $300 million senior secured revolving credit facility - Ba1 * $375 million senior secured Term Loan A facility - Ba1 * $125 million senior secured Term Loan B facility - Ba1 Interstate Bakeries Corporation, Interstate Brands Corporation, Interstate Brands West Corporation as joint and several obligors: * Senior unsecured shelf - (P)Ba2 * Subordinated shelf - (P)Ba3 KAISER ALUMINUM: Court Okays Fourth Amendment to DIP Financing -------------------------------------------------------------- Judge Fitzgerald approves the Fourth Amendment to Kaiser Aluminum Corporation and its debtor-affiliates' DIP Credit Agreement. The Debtors are authorized and obligated on a final basis to comply with and perform, and are bound by, all of the terms, conditions and waivers contained in the Amendment. * * * As previously reported, pursuant to the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code, the Debtors were required on January 15, 2003 to make a $17,000,000 liquidity contribution to the Kaiser Aluminum Salaried Employees Retirement Plan Pension. Beginning April 15, 2003, the Debtors are also obligated to make additional liquidity contributions and other minimum funding payments with respect to the Salaried Pension Plan and other pension plans. But for some reasons, the Debtors opted not to make the January liquidity contribution. The Debtors also expect that they will not make future liquidity contributions or minimum funding payments with respect to their pension plans. Failure to make the required payments results in the automatic creation of a lien, enforceable by the Pension Benefit Guaranty Corporation on all assets of the plan sponsor and all members of the plan sponsor's "controlled group". The termination of a pension plan also would give rise to a lien on the plan sponsor's and the controlled group's assets to the extent of any under-funding of the plan. The failure to make the mandatory pension payments could result in the imposition of certain taxes, which, if not paid, would again result in the creation of a lien on the plan sponsor's and the controlled group's assets. Pursuant to 26 U.S.C. Section 412(c)(11), a "controlled group" consists of two or more corporations that are part of a parent- subsidiary relationship where one corporation controls, directly or indirectly, at least 80% of the outstanding voting stock or 80% of the total value of all stock of one or more corporations. Although the potential liens could not arise with respect to the Debtors and their assets because of the automatic stay, the liens could be imposed on certain non-debtor affiliates in the Debtors' controlled group. Even if the non-debtor affiliates are inactive or have minimal assets, the imposition of liens nevertheless could trigger an event of default under the DIP Facility. It would prevent the Debtors from making certain representations and warranties that are required as a condition to any credit extension under the DIP Facility. On January 13, 2003, the Debtors obtained a short-term waiver from the Lenders to account for potential events of default under the DIP Facility that would result from the Debtors' failure to make the January liquidity contribution. The Debtors and Bank of America also agreed to amend the DIP Credit Agreement to avoid potential events of default based on the Debtors' failure to make pension plan payments. The amendments will permit the Debtors to obtain credit extensions despite the imposition of certain permitted liens. The Fourth DIP Credit Amendment has been circulated to the Lenders for approval. The Debtors expect to obtain the requisite Lenders' approval before March 17, 2003. The Fourth Amendment adds to the Postpetition Credit Agreement certain definitions related to the Debtors' pension funding contributions. These additional definitions include: (a) "January Liquidity Contribution," which refers to the $17,000,000 liquidity contribution that the Debtors failed to make to the trust established under the Salaried Pension Plan on January 15, 2003; (b) "Future Minimum Funding and Liquidity Contributions," which refers to the minimum funding and additional liquidity contributions required to be made by the Debtors under the ERISA to the trust established under the Salaried Pension Plan and other pension plans of the controlled group after January 15, 2003; and (c) "Permitted PBGC Liens," which refers to: -- unperfected liens, if any, imposed under the ERISA or the IRC on assets of the Debtors, Valco and Trochus as a result of: (i) the failure to make the January Liquidity Contribution and the Future Minimum Funding and Liquidity Contributions on or before the dates when due or the failure to pay any imposed taxes; or (ii) the termination of any pension plans; and -- perfected or unperfected liens imposed under the ERISA or the IRC on the assets of controlled group members other than the Debtors, Valco and Trochus as a result of: (i) the failure to make the January Liquidity Contribution and the Future Minimum Funding and liquidity Contributions on or before the dates when due or the failure to pay any imposed taxes; or (ii) the termination of any pension plan. The Fourth Amendment also modifies the DIP Credit Agreement to: -- prevent any breach of the representation and warranty indicated in the DIP Credit Agreement as the result of the imposition of Permitted PBGC Liens; -- include the Permitted PBGC Liens as permitted liens; and -- provide that the imposition of the Permitted PBGC Liens will not trigger an event of default under the DIP Credit Agreement. As a condition to the effectiveness of the Fourth Amendment, Debtors Alwis Leasing, LLC and Kaiser Center, Inc., and New Debtors Alpart Jamaica Inc., KAE Trading, Inc., Kaiser Bauxite Company, Kaiser Center Properties, Kaiser Export Company and Kaiser Jamaica Corporation would each: (1) provide unsecured guarantees of the DIP Facility; and (2) grant superpriority administrative status to any claims by Bank of America and the Lenders arising under the DIP Credit Agreement. Other than Kaiser Center and Alwis Leasing, the Debtors are all either secured guarantors or borrowers under the DIP Facility. The Debtors have granted superpriority administrative expense status to the Lenders' claims under the DIP Facility. The members of the lending consortium under the Fourth Amended DIP Credit Agreement are: * Bank of America, N.A., * General Electric Capital Corporation, * Foothill Capital Corporation, * The CIT Group/Business Credit Inc., * Merrill Lynch Business Financial Services Inc., * PNC Bank, National Association, * GMAC Commercial Finance LLC, and * The Provident Bank. (Kaiser Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) 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. L-3 COMMS: Will Publish March Quarter Results on April 22, 2003 --------------------------------------------------------------- L-3 Communications (NYSE: LLL) intends to release its first quarter results for the period ended March 31, 2003 on Tuesday, April 22, 2003 before the open of the market. In conjunction with this release, L-3 Communications will host a conference call on the same day at 4:00 PM EDT to review first quarter results, which will be simultaneously broadcast live over the Internet. Frank C. Lanza, chairman and chief executive officer, Robert V. LaPenta, president and chief financial officer, and Cynthia Swain, vice president, corporate communications, will host the call. Tuesday, April 22, 2003 4:00 PM EDT 3:00 PM CDT 2:00 PM MDT 1:00 PM PDT Listeners may access the conference call live over the Internet at the following web address: http://www.firstcallevents.com/service/ajwz377839782gf12.html Please allow fifteen minutes prior to the call to visit the site to download and install any necessary audio software. The archived version of the call may be accessed at this site, or by dialing (800) 642-1687 (passcode: 9563055), beginning approximately two hours after the call ends through Tuesday, April 29, 2003 at 11:59 PM EDT. Headquartered in New York City, L-3 Communications is a leading merchant supplier of Intelligence, Surveillance and Reconnaissance (ISR) products, secure communications systems and products, avionics and ocean products, training products, microwave components and telemetry, instrumentation, space and wireless products. Its customers include the Department of Defense, selected US government intelligence agencies, aerospace prime contractors and commercial telecommunications and wireless customers. To learn more about L-3 Communications, please visit the company's Web site at http://www.L-3Com.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's expected to raise its corporate credit rating on New York, New York-based L-3 Communications to double-'B'-plus from double-'B' after the defense company completes its offering of approximately $900 million in common stock and $750 million in senior subordinated debt and assuming that any pending acquisition activity is on a scale that can be accommodated by the company's enhanced financial resources. At the same time, the rating on the company's subordinated debt would be raised to double-'B'-minus from single-'B'-plus. The outlook would be stable. The company's ratings remain on CreditWatch with positive implications, where they were placed on June 6, 2002. LOMA LINDA UNIVERSITY: S&P Raises L-T Revenue Bond Rating to BB --------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term rating to 'BB' from 'BB-' on Loma Linda, California's outstanding revenue bonds, issued for the Loma Linda University Medical Center, based on improved profitability and liquidity and a strong market position. The outlook on the bonds is now stable. "Financial performance at the medical center has improved significantly over the past three years, with a substantial increase in operating revenues and income," said Standard & Poor's credit analyst James Cortez. "The center is also the dominant player in the competitive 'Inland Empire' region east of Los Angeles, and discharges showed a slight increase between 2001 and 2002 despite the numerous rival facilities." The raised rating affects about $56 million in outstanding revenue debt. The medical center has no immediate future debt plans. Loma Linda University Medical Center is a 789-bed facility serving an approximate service area population of 2.8 million in San Bernardino and Riverside Counties. MADGE NETWORKS: Nasdaq Intends to Knock-Off Shares Today -------------------------------------------------------- Madge Networks N.V. (NASDAQ: MADGF), a global supplier of advanced wired and wireless networking product solutions, has received notification that the Company's securities will be delisted from the Nasdaq SmallCap market at the start of trading on Wednesday April 9, 2003. The notification states that the market value of the Company's listed securities have been below US$35 million for more than 10 consecutive trading days and therefore the Company has failed to comply with Marketplace Rule 4310(C)(2)(B)(ii), despite the 30 calendar days given by the Nasdaq on February 21, 2003 to regain compliance. The notification also states that there is an additional basis for delisting the Company, as it has failed to comply with MarketPlace Rule 4310(C)(13) by not paying certain fees due to the Nasdaq in respect of its listing. Madge Networks N.V., (NASDAQ: MADGF) is a global supplier of advanced wired and wireless networking product solutions to large enterprises, and is the market leader in Token Ring. Madge Networks is pioneering next generation networking solutions, which enable the painless deployment of Wireless and also 100Mbps and Gigabit speed IP-based applications within existing corporate networks while protecting customers' investments in Token Ring. Madge Networks also has an associate company, Red- M(TM), a market leader in Wireless networking solutions. Madge Networks' main business centers are located in Wexham Springs, United Kingdom and New York. Information about Madge Networks' complete range of products and services can be accessed at http://www.madge.com At December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $10 million, and a working capital deficit of about $6 million. MAGELLAN HEALTH: Files 1st Amended Plan and Disclosure Statement ---------------------------------------------------------------- Magellan Health Services, Inc., and its debtor-affiliates present the Court with their First Amended Reorganization Plan and Disclosure Statement dated March 26, 2003. Prior to the Petition Date, Magellan entered into extensive discussions with certain of the holders of the Senior Note Claims and the Senior Subordinated Note Claims. These holders formed an informal committee of noteholders, which included holders of 64% of the principal amount of the Senior Notes and 48% of the principal amount of the Senior Subordinated Notes. The Informal Committee unanimously approved the restructuring set forth in the Plan. In connection therewith, holders of 52% of the Senior Note Claims and 35% of the Senior Subordinated Note Claims executed lock-up and voting agreements pursuant to which the holders of these Claims have agreed to vote to accept the Plan. The Debtors believe that approval of the Plan maximizes the recovery to creditors and Equity Interest holders. The new capital structure for Reorganized Magellan will consist of: A. New Senior Secured Credit Agreement: Composed of $115,800,000 in term loans, $45,000,000 in loans under a rollover facility and $75,300,000 in reimbursement obligations for outstanding letters of credit, which will be obligations of Reorganized Magellan, guaranteed by the wholly owned subsidiaries of Reorganized Magellan and secured by substantially all of the assets of Reorganized Magellan and its subsidiaries that guarantee the New Facilities; B. New Senior Notes: Up to $300,000,000 in unsecured senior notes of Reorganized Magellan; C. New Aetna Note: $46,700,000 note of Reorganized Magellan; D. New Common Stock: 13,605,442 shares of common stock of Reorganized Magellan, par value $0.01 per share -- 10,000,000 shares of New Common Stock issued to holders of Claims and Interests in the Debtors and up to 3,605,442 shares of New Common Stock issued after exercise of the Equity Subscription Right and to the Equity Standby Purchasers to the extent the Equity Subscription Rights are not exercised; E. New Warrants: Warrants to purchase 250,000 shares of New Common Stock; F. New Aetna Warrant: Warrants to purchase 100,000 shares of New Common Stock; and G. Option or other stock-based awards: 10% of the New Common Stock after giving effect to the Equity Offering reserved for issuance. A copy of the Debtors' First Amended Reorganization Plan and Disclosure Statement is available for free at: http://bankrupt.com/misc/97_AmendedPlan.pdf and http://bankrupt.com/misc/99_DisclosureStatement.pdf (Magellan Bankruptcy News, Issue No. 4: Bankruptcy Creditors' Service, Inc., 609/392-0900) MCDERMOTT INT'L: Balance Sheet Erosion Triggers S&P Downgrades -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on McDermott International Inc., and its subsidiary, McDermott Inc., to 'CCC+' from 'B'. The rating on McDermott Inc.'s senior unsecured debt is lowered to 'CCC-' from 'B', and is rated two notches below the corporate credit rating, reflecting a subordinated position to secured bank debt and other priority liabilities. All ratings are removed from CreditWatch where they were first placed on Nov. 7, 2002. "The downgrade reflects erosion of the firm's balance sheet, concern regarding operating issues, and expected negative cash flow generation in 2003 that will result in heightened liquidity concerns in the last half of the year," said Standard & Poor's credit analyst Daniel DiSenso. The outlook on the New Orleans, Louisiana-based marine construction and government services company is negative. Outstanding debt totaled about $140 million at year-end 2002. McDermott recently hired a new president for its marine construction services business and continues efforts to improve this operation by strengthening project estimating, bidding, and project management procedures; selling inefficient assets; and reducing overhead. This year is being characterized by management as a turnaround year, as the company works to complete several money-losing projects, most notably three EPIC spar projects for which McDermott took a total of $149 million in pretax charges in 2002 for cost overruns. METALS USA: Pushing for Court Approval of IPSCO Stipulation ----------------------------------------------------------- Johnathan C. Bolton, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, recounts that on July 2, 2002, IPSCO Inc., on behalf of its affiliates and subsidiaries, filed a secured claim for $6,330,674.09. Metals USA, Inc., and its debtor-affiliates objected to the Claim to the extent it claimed security. The Debtors asserted that IPSCO's claim for the sales of materials is a general unsecured claim. IPSCO has agreed that its total prepetition claim is $5,479,110.05 and the claim will be treated as a Class 4 General Unsecured Claim. The Debtors have agreed to allow IPSCO's claim as a Class 4 General Unsecured Claim for $5,479,110.05 in full satisfaction of all IPSCO's prepetition claims against the Debtors and IPSCO will receive its distribution of shares in the next scheduled distribution. The Debtors further agree to release IPSCO from any claims under Chapter 5 of the Bankruptcy Code. Thus, the Debtors ask the Court to approve their stipulation with IPSCO. (Metals USA Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) MOUNTAIN OIL INC: Recurring Losses Raise Going Concern Doubt ------------------------------------------------------------ Mountain Oil, Inc., a Utah corporation formed on July 30, 1999, is an independent oil and gas exploration and development company that holds 11,989 acres of leased mineral rights located within a thirty-mile radius of Duchesne, Utah. On its acreage it has ten wells producing oil and gas as of December 31, 2002, with pumps in place. An additional ten of its wells are capable of producing with pumps in place, but not in production now because of the previously low price of oil. Mountain Oil believes it can successfully rework the wells it is swabbing and four additional wells for production, but does not intend to do so until it can locate additional capital to fund the project. On January 19, 2001, the Company commenced a registered public offering of 1,000,000 shares of common stock at a gross sales price of $2,250,000. On February 28, 2001, the Company closed its public offering after selling 715,068 shares resulting in gross proceeds of $1,609,000. Net proceeds of the offering were approximately $1,524,053. The Company used approximately $374,722 of the net proceeds to purchase oil well equipment, $547,071 to rework wells, and $252,233 to purchase service equipment. On March 1, 2003, Mountain Oil executed an agreement that, subject to the fulfillment of the terms by both parties, effectively reduces the outstanding shares of the Company, eliminates the Company's debt, and leases the Company's four highest producing well properties with their corresponding equipment to a new entity named Mountain Oil and Gas (MOG), of which Craig Phillips and Daniel Sam would be the officers and directors. Craig Phillips and Daniel Sam would be removed from the Board of Directors of Mountain Oil and would no longer be officers of the Company. Joseph Ollivier would become President of Mountain Oil and Lynn Stratford would be added to the Board of Directors and also become the Secretary, Treasurer, and Chief Financial Officer of the Corporation. Mountain Oil would reduce the amount of shares outstanding by 807,266, which would mainly come from stock held by Craig Phillips and Daniel Sam. Mountain Oil would also receive a lease payment of $6,500 per month and the current debt by Mountain Oil would also be transferred to MOG. MOG has the right to lease the properties and equipment from Mountain Oil for one year and also has the ability to purchase certain of Mountain Oil's equipment for $650,000 after the lease term is over. This agreement is only effective once all terms have been fulfilled by both parties. If the terms of the agreement between MOG and Mountain Oil are not met, Mountain Oil's plan for the coming year is to preserve its leases through limited production of its wells, seek additional financing to fund operations and pursue the rework project on its existing wells, and seek farm out or joint drilling arrangements to drill new wells on its undeveloped acreage. If joint drilling arrangements can not be secured, the Company will seek to lease its properties and wells to another company and cut all overhead. During the year ended December 31, 2002, Mountain Oil had a loss from operations of $331,000 on revenues net of royalty interests, of $578,000, as compared to a loss from operations of $1,606,000 on revenues, net of royalty interests, of $1,053,000 for calendar year 2001. The decrease in loss from operations from 2001 to 2002 is attributable to substantial decreases in Company operating costs related to the decline in production due to pressure fluctuations of its developed oil wells, general and administrative expenses, impairment of property and equipment, depletion and amortization expenses. The Company had a net loss of $324,000 in 2002, compared to a net loss of $1,579,000 in 2001. Liquidity and Capital Resources At December 31, 2002, Mountain Oil had a working capital deficit of $251,000, compared to a working capital deficit of $86,000 at December 31, 2001. This difference in working capital deficit is a result of reductions in production volumes affecting cash flows from sales and the limited availability of long-term debt financing or equity funding compared to 2001. In February 2001, when Mountain Oil closed the public offering after selling the 715,068 shares, resulting in net proceeds of $1,524,053, it used $374,722 to purchase oil well equipment, $547,071 to rework wells, $252,233 to purchase service equipment, $282,000 to repay outstanding loans from directors of Mountain Oil, $18,527 for payment of interest, and $49,000 for general and administrative expenses. Mountain Oil suffered from the substantial drop in oil prices from the middle of 2001 to the middle of 2002. As a result of that period of low of oil prices, it is only operating nine of its oil wells at reduced rates to maintain its existing leases. The remaining productive wells were not economical at previous oil prices and the Company did not pursue further rework projects on the remaining wells while oil prices were at lower levels. During late 2001 and early 2002 it took steps to substantially reduce its operating expenses by laying off employees and reducing or eliminating other items. The Company indicates that it cannot predict at this time whether it can reach a break-even point of operation, or whether it will continue to operate at a net loss. The foregoing factors, as well as its recurring history of losses, raises substantial doubt of Mountain Oil's ability to continue as a going concern. If unable to further implement cost-saving measures, which will enable it to support with revenues its operating structure, it may be forced to seek debt or equity financing from outside sources. There is no assurance that it will be successful in efforts to sustain its operations internally, or locate financing from outside sources on terms that are acceptable to Mountain Oil, or at all. NAT'L CENTURY: NPF XII Subcommittee Gets Okay to Hire Milbank ------------------------------------------------------------- The Official Subcommittee of Noteholders of NPF XII, Inc. (debtor-affiliate of National Century Financial Enterprises, Inc.) obtained the Court's authority to retain, compensate, and reimburse Milbank, Tweed, Hadley & McCloy, LLP as counsel, nunc pro tunc to January 10, 2003. Milbank pursuant to Sections 328(a) and 1103(a) of the Bankruptcy Code will: (a) advise the NPF XII Subcommittee with respect to its rights, powers, and duties in the NCFE Cases; (b) assist and advise the NPF XII Subcommittee in its consultations with the Debtors relative to the administration of the NCFE Cases; (c) assist the NPF XII Subcommittee in analyzing the claims of the Debtors' creditors and in negotiating with the creditors; (d) assist with the NPF XII Subcommittee's investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors and the operation of the Debtors' businesses and, if appropriate, bring actions based upon the investigations in the name of the NPF XII Subcommittee or, with appropriate authorization, the NPF XII estate; (e) monitor, review relevant pleadings, and negotiate on the NPF XII noteholders' behalf with respect to NPF XII provider bankruptcies and proposed portfolio sales, buyouts, workouts, settlements and plans of reorganization; (f) assist the NPF XII Subcommittee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to the terms of a liquidating plan of reorganization for the Debtors; (g) assist and advise the NPF XII Subcommittee with respect to its communications with the general body of NPF XII noteholders regarding significant matters in the NCFE Cases; (h) review and analyze all applications, orders, statements of operations, and schedules filed with the Court and advise the NPF XII Subcommittee as to their propriety; (i) assist the NPF XII Subcommittee in reviewing and preparing pleadings, complaints and applications as may be necessary in furtherance of the NPF XII Subcommittee's interests and objectives; (j) represent the NPF XII Subcommittee at all hearings and other proceedings; and (k) perform other legal services as may be required and are deemed to be in the interests of the NPF XII Subcommittee in accordance with the NPF XII Subcommittee's powers and duties as set forth in the Bankruptcy Code. Milbank will seek compensation at its standard hourly rates, which are based on the professional's level of experience. The current hourly rates charged by Milbank are: Partners $550 - 725 Counsel 550 - 660 Senior/Specialist Attorneys 225 - 495 Associates 225 - 480 Legal Assistants 125 - 265 These rates may change from time to time in accordance with Milbank's established billing practices and procedures. (National Century Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXLAND, INC.: Ability to Continue Operations is Suspect -------------------------------------------------------- WindStar Resources, Inc., (before the name change to Nexland, Inc.) was formed in Arizona on March 22, 1995, (under the name Turtleback Mountain Gold Co., Inc.) to engage in the business of mineral exploration, and if warranted, development and production, or the sale of precious minerals. WindStar Resources, Inc. failed to achieve its goals and business objectives and in 1999 concluded it was no longer economical to continue as a public gold exploration mining company. Nexland, Inc. was incorporated in Florida on December 4, 1994, but was inactive until November 17, 1999 when it was acquired by Windstar. Nexland LP, a Florida limited partnership, formed on September 25, 1997, was an operating company until November 15, 1999 when it assigned all of its partnership assets to Nexland, Inc. in exchange for 17,000 of the latter's common shares. On November 17, 1999, Windstar acquired Nexland, Inc. in a reverse acquisition transaction resulting in the change of its business from mining to computer security equipment. Windstar changed its name to "Nexland, Inc." on December 8, 1999. As WindStar Resources, Inc., the Company never owned an operating mine and, prior to the Nexland, Inc. acquisition, had no other revenue-producing mining activities. Since the merger with Nexland, Inc., the Company has become a supplier of hardware routers and Internet firewall devices and have shed all connection with the mining business. Nexland had a working capital deficit of $0.5 million and $1.3 million and at December 31, 2002 and 2001, respectively. It had an accumulated deficit of $4.5 million and $4.9 million at December 31, 2002 and 2001, respectively. The ability to obtain additional funding will determine Nexland's ability to continue as a going concern. Accordingly, the Company indicates that it may experience significant liquidity and cash flow problems if unable to raise additional capital as needed and on acceptable terms. No assurances can be given that Nexland will be successful in reaching or maintaining profitable operations. Nexland's independent auditors have added explanatory paragraphs to their audit opinions issued in connection with the 2002 and 2001 financial statements which states that the Company is dependent on outside financing and has had losses in prior years that raise substantial doubt about Nexland's ability to continue as a going concern. The Company has historically lost money in prior years. For the year ended December 31, 2002, it had net income of $0.3 million. For the year ended December 31, 2001, it sustained losses of $1.67 million. Future losses are likely to occur. There has been a limited public market for Nexland common stock and there can be no assurance that an active trading market for its common stock will develop. As a result, this could adversely affect the Company's shareholders' ability to sell its common stock in short time periods, or possibly at all. Nexland's common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of its common stock without regard to its operating performance. In addition, Nexland management believes that factors such as quarterly fluctuations in financial results, announcements by competitors and changes in the overall economy or the condition of the financial markets could cause the price of Nexland common stock to fluctuate substantially. Perhaps driven by the above factors, on February 13, 2003, Nexland entered into a non-binding letter of intent to be acquired by Symantec Corp., a leader in internet security, for $21,700,000 in cash. Completion of the proposed transaction is subject to numerous conditions, including Symantec's due diligence investigation, approval by both companies' Boards of Directors, negotiation and execution of a definitive acquisition agreement, and approval of the transaction by Nexland stockholders. Nexland has had a joint development relationship with Symantec for the past two years. Symantec currently licenses Nexland's technology for use in the Symantec Firewall/VPN Appliance series, that combines Firewall, VPN, networking and other capabilities in a single unit to meet the unique needs of remote offices, branch offices and small businesses. NHC COMMS: Initiates CDN$1-Million Senior Management Financing -------------------------------------------------------------- NHC Communications Inc. (TSE: NHC), a leading provider of automated mainframe solutions for the copper-based telecommunications and Internet access markets, announced that it has reached an agreement in principle with certain members of senior management pursuant to which a minimum of approximately $1.09 million will be invested in convertible debentures of the Company. The debentures will have a five-year term, will bear interest at 9% per annum and will be secured by a movable hypothec over substantially all of the assets of NHC. The debentures will be repayable upon the occurrence of a change of control of the Company. The debentures will be convertible at any time into common shares of NHC at a conversion price of $0.60 per share, representing NHC's stock price at the closing of the markets earlier today. In addition, 1,667 warrants to acquire common shares will be issued for each $1,000 in principal amount of debentures. Each warrant will be exercisable for one common share of NHC and will have a term of five years. The debentures will be issued in two tranches, the first of which, in the amount of $500,000, will close upon receipt of applicable regulatory approvals and the second tranche, representing the balance of the subscription proceeds, will close within thirty days thereafter, subject to the right of subscribers to terminate their subscription prior to that date. Pending receipt of regulatory approvals, two senior members of management have agreed to advance a secured bridge loan for an aggregate of $350,000 to NHC, which amount will be repaid in full upon closing of the first tranche of the debenture financing. The issuance of the debentures and the warrants is subject to regulatory approval. As the terms of the note were not the object of a definitive agreement on April 7, 2003 and it was necessary that the closing of the bridge financing to occur without delay to allow NHC to satisfy certain payment obligations that were due, no earlier disclosure was made. The entering into of the financing arrangements by NHC was unanimously approved by the board of directors of NHC. NHC intends to use the net proceeds of this financing to satisfy certain payment obligations and for working capital and corporate development purposes. In addition to the financing initiatives, the board of directors of NHC has agreed to various cost cutting measures to address certain working capital issues the Company is currently facing. Specifically, the board has approved head count reductions at various levels of the Company as well as salary cuts of 10% to 20% at all levels. To compensate employees for salary cuts, the board of directors has approved the grants of options to acquire an aggregate of 188,731 common shares of the Company exercisable until April 7, 2008 at an exercise price of $0.60 per share. "NHC's management has again showed its commitment to the future of the Company. The debenture financing, together with the recent cost cutting initiatives, will assist the Company in achieving its business plan. Our current and prospective clients are still very enthusiastic and supportive of our solutions and the coming weeks could see resumption of deployment of our ControlPoint(TM) products for some, and initial deployments for others. Also, the Company will continue to seek out alternate sources of financing, however there can be no assurances that it will be successful in doing so." Said Sylvain Abitbol, NHC's C.E.O. and President. NHC Communications Inc., whose January 31, 2003 balance sheet shows a total shareholders' equity deficit of about CDN$1.1 million, is a leading provider of products and services enabling the management of voice and data communications for telecommunication service providers. NHC's ControlPoint(TM) solutions utilize a high-performance software driven Element Management System controlling an automated, true any-to-any copper cross-connect switch, to enable incumbent local exchange carriers and other service providers to remotely perform the four key tasks that historically have required manual on-site management. These four tasks fundamental to all operations are loop qualification, deployment and provisioning, fallback switching and service migration of Voice and Data services including DSL and T1/E1. Using ControlPoint(TM), NHC's customers avoid the risk of human error and dramatically reduce labour and operating costs. NHC maintains offices in Montreal, Quebec; Paris, France; and Manassas, Virginia. "ControlPoint(TM)" is a trademark of NHC Communications Inc. NHC may be contacted through its web site: http://www.nhc.com NORTHWESTERN CORP: Names William Austin to Executive Team as CRO ---------------------------------------------------------------- NorthWestern Corporation (NYSE: NOR) announced that William M. Austin has been named to the newly created position of Chief Restructuring Officer. The appointment is effective immediately and Mr. Austin reports to Gary G. Drook, Chief Executive Officer of NorthWestern. In his new role, Mr. Austin will spearhead the implementation of key initiatives designed to enhance the operational and financial performance of the Company's regulated utility and nonregulated businesses. Mr. Austin's responsibilities include optimizing the use of ongoing cash flows, identifying and executing on opportunities to generate cash from nonstrategic assets, and reducing costs. Mr. Austin will also oversee the Company's ongoing assessment of various operational and strategic alternatives. "We are delighted to welcome Bill to our executive team," said Drook. "Bill's extensive financial and operational experience combined with his knowledge of the energy and telecommunications industries will be integral to leading our turnaround initiatives." Austin added, "I look forward to working with Gary and the management team to realize NorthWestern's turnaround plan objectives and ensure the Company's long-term financial health and stability." During his career, Mr. Austin has held several senior-level management positions in the energy, technology and communications sectors. Most recently, Mr. Austin served as Chief Executive Officer of Cable & Wireless/Exodus Communications US. He also served as Executive Vice President and Chief Financial Officer of Exodus and led the company through a successful restructuring. Prior to joining C & W US, Mr. Austin was Senior Vice President and Chief Financial Officer of BMC Software and Vice President and Chief Financial Officer of MD Aerospace for the McDonnell Douglas Corporation. Mr. Austin began his career in finance with Bankers Trust Company where he rose to Managing Director, Acquisition and Structured Finance. For the majority of his tenure at Bankers Trust, Mr. Austin was Managing Director of the company's Southwest Energy Division, which handled several transactions involving regulated natural gas pipelines and other energy operations. Mr. Austin graduated with a BS in Electrical Engineering from Brown University, and holds an MS in Computer Science from Stevens Institute as well as an MBA from Columbia University. NorthWestern Corporation is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving more than 595,000 customers in Montana, South Dakota and Nebraska. NorthWestern also has investments in Expanets, Inc., one of the largest providers of converged communications solutions to mid-sized businesses; and Blue Dot Services Inc., a provider of heating, ventilation and air conditioning services to residential and commercial customers. As reported in Troubled Company Reporter's January 20, 2003 edition, Northwestern Corp.'s outstanding credit ratings have been downgraded by Fitch Ratings as follows: senior secured debt to 'BBB-' from 'BBB+'; senior unsecured notes and pollution control bonds to 'BB+' from 'BBB' and trust preferred securities and preferred stock to 'BB' from 'BBB-'. The ratings are removed from Rating Watch Negative where they were placed on Dec. 13, 2002. The Rating Outlook is Negative. Approximately $1.5 billion of securities are affected. The rating action follows Fitch's review of NOR's current and prospective credit profile including the impact of lower earnings expectations and anticipated non-cash charges during the fourth quarter of 2002 at NOR's two primary non-utility businesses - Expanets (communications solutions) and Blue Dot (HVAC services). NQL DRILLING: Violates Profit-Based Covenants Under Credit Pact --------------------------------------------------------------- NQL Drilling Tools Inc., expects a loss per share for the fourth quarter of 2002 in the range of $0.06 to $0.10. The Company also expects a loss per share for the year ended December 31, 2002, in the range of $0.21 to $0.25. NQL expects EBITDA for the fourth quarter and the full year ended December 31, 2002 to be approximately $4 and $12 million, respectively. NQL's preliminary 2002 financial results were affected by a slower than expected start to the Canadian winter drilling season while financial results of its international operations were negatively impacted by ongoing geopolitical uncertainty. Restatement of Historical Financial Results The Company has changed the manner in which it translates the results of certain of its foreign subsidiaries. Historically, the Company translated the financial statements of these subsidiaries from the local currency directly to the Canadian Dollar using the current rate method of accounting. However, as most of their activities are conducted in US dollars, the Company and its advisors have determined that the US Dollar better reflects the currency exposure of these foreign operations. Therefore, the operations of these subsidiaries are now translated first from the local currency to the functional currency (US currency) using the temporal method of accounting and then from the US Dollar to the Canadian Dollar using the current rate method. The subsidiaries affected by this change include companies in Venezuela, Bolivia, Argentina and Mexico. The Company has also made other changes surrounding the accounting for future income taxes with respect to the assigned value of certain assets in connection with the acquisition of CanFish Services Inc. and P&T Servicios Petroleros, C.A. These changes will impact the Company's results of operations in the areas of foreign exchange gains and losses and to a lesser extent, direct expenses and future income tax expense. These changes will also impact certain balance sheet items such as inventory, capital assets, future income tax liabilities, retained earnings and cumulative translation adjustments. As a result of the changes highlighted above, the Company plans to restate its financial statements for 2001 and 2000. As well, these changes are expected to impact the financial results previously released for the first nine months of 2002. The Company continues to work with its auditors to complete the 2002 audit and expects to release its fourth quarter and year ended December 31, 2002 financial results during the week of May 5, 2003. Update on Financing Arrangements Under the terms of its current financing arrangements the Company is subject to various financial covenants. Due to the aforementioned factors, the Company is presently in violation of its profit-based covenants. The Company's bankers continue to work with management on restructuring its debt facilities and have extended the bridge loan to April 9, 2003. The Company has appointed a Special Committee of the Board of Directors having as its mandate to work with management and its financial advisors to explore refinancing alternatives and to resolve issues relating to the Company's bridge financing. Update on First Quarter 2003 Activity While Canadian operations have performed slightly ahead of expectations, ongoing geopolitical uncertainty continues to affect the Company's operations in other areas of the world. The Company expects to report revenues for the first quarter of 2003 in the range of $32 to $35 million and loss per share in the range of $0.05 to $0.10. NQL expects to report EBITDA for the first quarter in the range of $4.5 to $6.5 million. However, sequential monthly results indicate that the international market is improving and notwithstanding the seasonal slowdown for the second quarter of the Canadian drilling operations, the outlook for Canada remains extremely positive. As a consequence, the Company expects to be profitable for 2003. NQL Drilling Tools Inc., is an industry leader in providing downhole tools, technology and services used primarily in drilling applications in the oil and gas, environmental and utility industries on a worldwide basis. NTELOS: Wants Nod to Access $35M DIP Wachovia Financing Facility ---------------------------------------------------------------- NTELOS, Inc., along with its debtor-affiliates wants to obtain Debtor-In-Possession Financing from Wachovia Bank, National Association. The Debtors ask the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to borrow up to $35 million of new money from Wachovia. The financing will mature at the earlier of: (i) September 4, 2003; and (ii) the effective date of the first confirmed plan of reorganization. Proceeds of the DIP Financing shall be used for general corporate purposes of the Debtors. As collateral for the DIP Financing, the Debtors will grant the DIP Agent: (i) a senior first priority priming lien on all assets of the Debtors that secure the obligations under the Prepetition Credit Facility, (ii) a senior first priority lien on all unencumbered assets of the Credit Parties, excluding claims and causes of action under, and (iii) a junior lien on all encumbered assets of the Credit Parties other than those referred to in clause (i). To provide the Lenders adequate protection, the Debtors will: a) make scheduled principal amortization payments of the Prepetition Credit Facility, b) make monthly cash payments of interest on the Prepetition Credit Facility after the Petition Date at the nondefault rate in effect on the Petition Date, c) grant the Pre-Petition Secured Lenders a second priority lien, d) reimburse, on a monthly basis, all the fees and expenses of the Prepetition Agent, and e) a requirement that, after any required prepayments of amounts outstanding under the DIP Facility, net proceeds of asset sales shall be applied to repay the Pre- Petition Secured Lenders as set forth in the DIP Facility. The Debtors will pay Wachovia a: i) $437,500 Facility Fee; ii) 0.50% per annum Unused Commitment Fee on the unused portion of the Commitment; and iii) $50,000 Administrative and Collateral Fee for first six months. The Debtors submit that their working capital needs can be satisfied only if they are authorized to borrow up to $35 million under the DIP Credit Agreement and to use the proceeds of such borrowings to fund their business operations. The Debtors point out that the credit provided by the DIP Credit Agreement will enable them to: a) provide wireless and wireline telecommunication services, cable television and pager services and transport services for long distance, Internet and private network providers on the Debtors' fiber optic network to their residential and commercial customers; and b) pay their employees and operate their businesses in the ordinary course to preserve and enhance the value of their assets for the benefit of their creditors and other parties in interest. Having the DIP Financing in place should improve the confidence of the suppliers of goods and services to the Debtors and promote their provision of such goods and services on terms acceptable to the Debtors. 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. OWENS CORNING: Seeks PI Claimants Notice Protocol Clarification --------------------------------------------------------------- J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, relates that Owens Corning and its debtor-affiliates have considered, and have discussed with the Asbestos Committee, certain of the procedural issues related to the Plan confirmation process and, more particularly, the process by which notice of the Disclosure Statement Hearing will be given to creditors asserting an asbestos-related personal injury claim and an asbestos-related wrongful death claim. Specifically, the Debtors have proposed, and the Asbestos Committee has agreed, that notice of the Disclosure Statement Hearing should be provided to the Asbestos Claimants through their attorneys. Although the notice procedures appear to be wholly consistent with the Court's prior Order Clarifying Case Notice Procedures, out of an abundance of caution, the Debtors seek Judge Fitzgerald's confirmation as to the manner in which Asbestos Claimants are to be given notice of the Disclosure Statement Hearing. Ms. Stickles believes that the Asbestos Claimants who may exceed 850,000 in these cases, rely heavily on their attorneys for information and advice regarding their claims against various asbestos defendants and, particularly, their claims against asbestos defendants in bankruptcy. Providing notice of the Disclosure Statement Hearing to the Asbestos Claimants directly, rather than through their attorneys, is likely to create significant confusion in, and cause significant upheaval among, the Asbestos Claimants, who likely will not understand the nature or significance of a disclosure statement and who likely will, as a result, overwhelm the Clerk, the Court, Debtors' counsel and other parties with questions and misplaced objections. Ms. Stickles contends that providing notice of the Disclosure Statement Hearing to the Asbestos Claimants' attorneys, rather than directly to the Asbestos Claimants themselves, will permit these attorneys to evaluate the most effective and appropriate manner in which the matters at issue should be communicated to their clients. This approach is likely to result in improved communications to Asbestos Claimants as well as a significantly decreased burden on the Court and the Debtors' estate. It will also spare the Debtors' estates the cost of mailing notice of the Disclosure Statement Hearing to almost 850,000 potential Asbestos Claimants. Notwithstanding this, the Debtors contemplate sending notice of the Disclosure Statement Hearing directly to any asbestos claimants who have filed proofs of claim in these cases, as well as to any asbestos claimant without an attorney, according to the Debtors' records, and any asbestos claimant who has filed an entry of appearances in these cases. The Debtors also intend to publish notice of the Disclosure Statement Hearing in The New York Times, The Wall Street Journal, USA Today and The Toledo Blade. (Owens Corning Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Court Clears $2.8 Million Gas Transport Collateral --------------------------------------------------------------- Pacific Gas and Electric Company obtained the Court's authority to incur $2,783,457 in postpetition secured debt in PG&E Gas Transportation Northwest Corporation's favor. The financing will allow PG&E to continue to serve its gas customers by obtaining necessary natural gas transportation services. PG&E relates that, since 1961, it has utilized GTN to transport natural gas supplies purchased in Canada. The Canadian gas supplies compromise 70% of PG&E's natural gas portfolio, from which it serves more than 3,000,000 core gas customers. Backgrounder PG&E Gas Transportation Northwest Corporation transports natural gas supplies that PG&E purchased in Canada in accordance with a Firm Transportation Service Agreement dated October 26, 1993. GTN transports the gas supplies through its pipeline located at the border of British Columbia in Canada and Idaho to the Oregon-California border, where the pipeline connects with PG&E's California transmission system. GTN is a subsidiary of PG&E National Energy Group Inc., a wholly owned subsidiary of PG&E Corporation. Under the Service Agreement, GTN provides PG&E with 609,968 decatherms per day of transportation. In turn, PG&E pays GTN a fixed monthly fee to reserve the right to use the 609,969- decatherm daily transportation capacity. PG&E also pays GTN volumetric fees based on actual quantities transported each month. The monthly reservation fee is currently fixed at $4,600,000. Pursuant to a tariff approved by the Federal Energy Regulatory Commission, "shippers" contracting gas transportation services with GTN that are or become solvent, like PG&E, are obligated to establish their creditworthiness as a condition for GTN's continued performance under the transmission agreements. Shippers who fail to meet the creditworthiness requirements have the option of providing a guarantee of financial performance or security acceptable to GTN. As a result of the downgrading of PG&E's credit rating in January 2001, GTN compelled PG&E to provide an $11,400,000 collateral for its performance under the Service Agreement. The amount represented three months of fixed reservation fees as well as three months of estimated volumetric fees at rates in effect at that time. On November 1, 2002, GTN increased the reservation rate by 930,000 per month making the $11,400,000 that PG&E previously deposited insufficient to cover three months of fees under the Agreement. GTN then asked an additional $2,783,457 to be deposited. (Pacific Gas Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 609/392-0900) PAXSON: NBC Elects Not to Exercise Preferred Redemption Right ------------------------------------------------------------- Paxson Communications Corporation (AMEX:PAX) announced that the current period of time it had granted to NBC to exercise its right to request a redemption of all or a portion of the Company's Series B Convertible Exchangeable Preferred Stock held by NBC had closed and NBC has elected not to exercise its redemption right. Under the terms of the Investment Agreement between the Company and NBC providing for such redemption right, NBC will have a period of 60 days beginning on September 15, 2003 and on each September 15th thereafter, during which it may demand that the Company redeem, or arrange for a third party to acquire, any shares of the Company's Series B Preferred Stock then held by NBC, in an amount equal to the liquidation preference of 10,000 per share plus accrued and unpaid dividends. For further information regarding the Company's relationship with NBC and NBC's rights with respect to the Company securities it holds, see the Company's Annual Report or Form 10K for the year ending December 31, 2002. Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system and PAX TV, family television. PAX TV reaches 88% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original series include, "Sue Thomas: F.B.Eye," starring Deanne Bray, "Doc," starring recording artist Billy Ray Cyrus and "Just Cause," starring Richard Thomas and Lisa Lackey. Other original PAX series include "It's A Miracle" and "Candid Camera." For more information, visit PAX TV's Web site at http://www.pax.tv * * * As previously reported in Troubled Company Reporter, Standard & Poor's placed its single-'B'-plus corporate credit and other ratings, on TV station and network owner Paxson Communications Corp., on CreditWatch with negative implications. The action follows the West Palm Beach, Florida-based company's lowered guidance for its 2002 second quarter, which includes relatively flat revenue and reduced earnings. Paxson has about $858 million in debt outstanding. PENN TREATY: A.M. Best Affirms B- Financial Strength Ratings ------------------------------------------------------------ A.M. Best Co., has affirmed the financial strength ratings of B- (Fair) of the subsidiaries of Penn Treaty American Corp (Allentown, PA). The subsidiaries are: Penn Treaty Network America Insurance Co, American Network Insurance Company (both of Pennsylvania) and American Independent Netwk Ins Co of NY (New York). Over the past year, Penn Treaty has executed many of the critical tasks it needed to complete, including refinancing the majority of its outstanding debt originally due in 2003, raising additional capital and has a quota share reinsurance agreement currently in place for up to 50% of its new business. However, A.M. Best believes it still faces an uphill battle if it is to have once more a meaningful presence in the long-term care market. Although Penn Treaty has received approval to write new business again in 34 states, it is still seeking approval from other key states. Additionally, the company has been slow to re-establish relationships with parts of its agency force, as evidenced by the modest level of submitted applications. This is not entirely negative, given the capital intensive nature of the long-term care business and the organization's relatively small surplus base. Going forward however, the company needs to either ramp up production considerably or reduce its expenses due to the current high expense structure in place. Over the past year, adding further challenges to its capital raising efforts, Penn Treaty's stock price has declined significantly. Since 2001, Penn Treaty has been able to raise capital--even at depressed prices--but this has caused considerable dilution to its existing stockholders. A.M. Best believes that an extended low stock price period would further challenge any future capital raising. Furthermore, while it currently has reinsurance in place for its new business, it may lose this coverage later in 2003 for reasons unrelated to Penn Treaty. PHOENIX CDO: Fitch Puts Three Note Class Ratings on Watch Neg. -------------------------------------------------------------- Fitch Ratings has placed the following three classes of Phoenix CDO II, Ltd. on Rating Watch Negative: -- $20,000,000 class C-1 notes 'B'; -- $10,500,000 class C-2 notes 'B'; -- $8,000,000 class D notes 'CCC'. The rating actions are based on negative credit trends in the collateral supporting the collateralized debt obligation (CDO). The CDO is currently failing its class B and class C overcollateralization tests due to a growing proportion of non- investment grade collateral in the portfolio. The portfolio contains exposure to several stressed sectors of the asset- backed securities market including manufactured housing, aircraft securitizations and tobacco settlement securitizations. Highlighting this risk is a $10.75 million exposure, which represents 2.72% of total collateral, to Atlas Air enhanced equipment trust certificates which were downgraded from 'BBB-', Rating Watch Negative, to 'B' on April 3, 2003. Fitch is currently reviewing the portfolio and available credit enhancement levels in detail and appropriate action will be taken when the analysis has been completed. POLAROID: Examiner Mandarino Turns to Traxi for Financial Advice ---------------------------------------------------------------- Pursuant to Sections 327 and 328 of the Bankruptcy Code, Polaroid Corporation's appointed Examiner Perry M. Mandarino, CPA, seeks the Court's authority to retain Traxi LLC as his financial advisors, nunc pro tunc to February 24, 2003. Mr. Mandarino relates that Traxi is well qualified to serve as financial advisors. Traxi was founded in 1999 and is a specialty consulting firm with expertise in financial restructurings. Traxi's professionals have extensive experience in working with financially troubled companies in complex financial restructurings. These professionals have advised debtors, creditors, equity constituencies and government agencies in more than 200 restructurings. Anthony J. Pacchia, a Partner in Traxi LLC, informs Judge Walsh that as financial advisors, Traxi will work closely with Mr. Mandarino by: (a) investigating whether the accounting methods, accounting practices and the alleged accounting irregularities materially undervalued the Debtors' assets and resulted in an inappropriate liquidation of the Debtors' assets; (b) reviewing financial information prepared by the Debtors, the Official Committee of Unsecured Creditors, the secured lenders of the Debtors and other parties-in- interest; (c) reviewing of the Debtors' periodic operating and cash flow statement; (d) participating in discovery requests as required; (e) assisting in preparation of the Examiner's report; (f) to the extent necessary, providing expert testimony; and (g) providing other advisory services related to the Examiner's fulfillment of his duties. Traxi will charge for the services rendered on an hourly basis based on these standard rates: Partners $400 - 550 Managers and Directors 275 - 400 Associates and Analysts 125 - 275 Traxi intends to apply to the Court for allowance of compensation and reimbursement of expenses in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and any other orders the Court entered on Compensation Procedures. According to Mr. Pacchia, Traxi is not connected with the Debtors, their creditors, other parties-in-interest, the U.S. Trustee, or any person employed by the office of the U.S. Trustee. To the best of Traxi's knowledge, after due inquiry, it does not, by reason of any direct or indirect relationship to, connection with or interest in the Debtors, hold or represent any interest adverse to the Debtors, their estates, any class of creditors or equity security holders with respect to the matters for which it is to be engaged, except to the extent that Traxi may have performed services for certain creditors in connection with matters unrelated to the Debtors. Accordingly, Mr. Pacchia assures the Court that Traxi is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. (Polaroid Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) Polaroid Corporation's 11.500% bonds due 2006 (PRDC06USR1) are trading at about 6 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=PRDC06USR1 for real-time bond pricing. POLYONE: Fitch Hatchets Senior Debt Ratings to Lower-B Level ------------------------------------------------------------ Fitch Ratings has downgraded PolyOne Corporation's senior unsecured debt rating to 'B' from 'BB' and its senior secured credit facility to 'B' from 'BB'. The ratings have been placed on Rating Watch Negative. The downgrade reflects the significant credit risk associated with liquidity deterioration, pending covenant tightening, pending termination of the company's accounts receivable (A/R) securitization program, and refinancing risk. Liquidity deterioration is evident from a reduction in the credit facility commitment to $125 million from $150 million; the use of this previously undrawn facility; and an increase in the balance of the A/R program. In 2002 cash from operations was negative $32.7 million. In addition, financial covenants, which were loosened for the first and second quarters of 2003, will tighten significantly after June 30, 2003 as follows. For the twelve- month periods ending March 31, 2003 and June 30, 2003, minimum interest coverage is 1.90x and maximum borrowed debt/EBITDA is 6.00x. For the twelve-month periods following June 30, 2003, interest coverage is 4.00x. Borrowed debt/EBITDA is 4.00x for the period ended Sept. 30, 2003 and 3.50x thereafter. As of Dec. 31, 2002, EBITDA-to-interest incurred was 2.1x and total debt (including the A/R program balance)-to-EBITDA was 7.6x. (Note that bank defined covenant definitions may differ from the Fitch Ratings definitions for interest coverage and leverage.) Moreover, a recent credit rating downgrade triggered the termination clause related to the A/R program. The termination clause has been waived through June 30, 2003. However, the outstanding balance is greater than the backstop credit facility commitment of $125 million. Finally, PolyOne has approximately $90 million of 9.375% senior notes due September 2003. The notes have not been refinanced yet and the A/R program and credit facility will likely not be available to fund these maturing notes. PolyOne is currently in negotiations with lenders regarding the credit facility and A/R program. In addition, the company is considering its options for refinancing the September note maturity and is expected to complete proposed refinancing in the near-term. The ratings were placed on Negative Rating Watch pending the resolution of the company's liquidity situation and refinancing. The Rating Watch status is expected to resolve prior to the end of June 2003. If PolyOne's proposed refinancing is unsuccessful, the company's ratings may be further downgraded. PolyOne is the largest compounder of plastics and rubber and one of the leading distributors of plastic resins in North America. The company had 2002 sales of $2.5 billion and EBITDA of approximately $97 million. PONY EXPRESS USA: Needs Additional Capital to Fund Business Plan ---------------------------------------------------------------- Pony Express USA Inc., operates a parcel and package delivery service in the Florida and South Georgia markets, providing primarily contracted pick-up and delivery service within every zip code in the State of Florida. The service offered by the Company comprises the most extensive ground delivery network in the State of Florida and competes throughout the State with air- express carriers such as United Parcel Service, Federal Express, Airborne Express, and DHL, all of which use air-network connections to provide similar service. The Company maintains operational `Depots' in each of: Orlando, Miami, Fort Lauderdale, Jacksonville, Tallahassee and Tampa, with secondary consolidation locations situated in Gainesville, Stuart, Fort Myers and Pensacola. The Company's Corporate Headquarters are located in Boca Raton, Florida from where the Administrative staff handles centralized customer service, sales, marketing and advertising coordination, and general administrative functions. The Company has over 1,500 customers that include numerous agencies of the State of Florida for whom it delivers payroll and important documents including State lottery tickets. Current annual revenues approximate $5MM, reliably above $400K per month, of which 30% are firmly grounded in delivery contracts with the State of Florida. The large majority of non-state accounts are comprised of large and medium-sized commercial entities in Florida. The Company had a net loss of $4,533,522 for the fiscal year ended December 31, 2002, and a net loss of $1,619,404 for the fiscal year ended December 31, 2001. The independent auditors' report and notes to its financial statements for the twelve months ended December 31, 2002 include an explanatory paragraph relating to the uncertainty of the Company's ability to continue as a going concern, which may make it more difficult for it to raise additional capital. The Company will require significant additional capital to implement both its short term and long term business strategies. There can be no assurance that such additional capital will be available, or if available, that the terms will be satisfactory for the Company. While the Company expects to be able to operate profitably during the current year, any inability to obtain additional financing at the required intervals and upon favorable terms will have a material adverse effect on the Company's ability to implement its complete business plan. Any additional financing could involve substantial dilution to the interests of the Company's then existing shareholders. Pony Express USA's financial condition is additionally burdened primarily by three large debts. The Company owes approximately $977,417 to Skynet Holdings, Inc., the owner of the business prior to its acquisition by Link. This debt is represented by a promissory note and is secured by essentially all of the assets of the Company other than its vehicles. The Company has recently reached an agreement with Skynet, subject to documentation, to recalculate the total amount due, reduce the interest rate to 5%, and establish a monthly principal payment of $15,000. The Company also owes approximately $653,960, including interest, in unpaid withholding taxes from periods prior to current management taking control of the Company. The Company is in discussions with the Internal Revenue Service seeking to obtain an affordable payment plan and has obtained a waiver of penalties. The Company also owes $1,390,000 to 6 individuals who have lent money to the Company. These obligations have an interest rate of 9% and are payable within three years. PRINCETON VIDEO: Resources Insufficient to Meet Debt Obligations ---------------------------------------------------------------- Princeton Video Image, Inc., is a Delaware corporation with principal offices located in Lawrenceville, New Jersey. PVI was founded in 1990 to develop and market a real-time video insertion system. Through its patented computer vision technology and proprietary hardware and software system, known as the Live Video Insertion System (L-VIS(R)), it is able to place computer-generated electronic images into live and pre- recorded television broadcasts of sports and entertainment programming. These electronic images range from simple corporate names or logos to sophisticated multi-media 3-D animated productions. During the broadcast of a sports or entertainment program, for example, an image can be placed to appear in various high visibility locations in the stadium, on the playing field, or as part of the natural landscape of the scene. The L- VIS(R) System has been used to insert images, including advertising images and program enhancements, into both live and pre-recorded television broadcasts. Since inception in 1990, the Company has devoted substantially all of its resources to developing, testing, building and marketing the L-VIS(R) System. Princeton Video Image has incurred substantial operating losses since its inception and as of December 31, 2002, December 31, 2001, June 30, 2001 and 2000, the Company had an accumulated deficit of approximately $90,603,384, $69,395,675, $62,405,000,and $50,725,000, respectively. This deficit is the result of product development expenses incurred in the development and commercialization of the Live Video Insertion System and iPoint(TM), an advanced application of PVI's patented technology that supports state of the art in-program advertising over the Internet or interactive television, expenses related to field testing of the L-VIS(R) System and its deployment pursuant to customer contracts, operating expenses relating to field operations and sales and marketing activities, and general administrative costs. The Company expects to incur additional losses in the next fiscal year as it strives to evolve into a sports and entertainment focused global, media services company. It will continue its business strategy of developing new products and increasing penetration in both the domestic and international markets in the field of real-time virtual image insertion. Princeton Video Image's net loss increased 62% to $21,207,709 for the year ended December 31, 2002 from $13,129,123 for the year ended December 31, 2001. Since inception the Company has primarily financed operations from (i) the net proceeds from private placements of common stock, warrants and redeemable preferred stock, (ii) the payment of a $2,000,000 licensing fee by Presencia en Medios, S.A. de C.V. in consideration of the license Princeton Vidwo Image granted to Publicidad, (iii) the proceeds of a bridge loan financing which closed in October 1997, (iv) the proceeds from the initial public offering of its common stock which closed in December 1997, (v) the investment in PVI and the prepayment of license fees by PVI Holding, LLC, a subsidiary of Cablevision Systems Corporation, (vi) revenues and license fees relating to use of the L-VIS(R) System, (vii) investment income earned on cash balances and short term investments, and (viii) the sale of a portion of its state net operating loss and research and development tax credits. As of December 31, 2002, the Company had cash and cash equivalents of $937,421, a decrease of $7,422,932 from its balance at December 31, 2001. Net cash used in operating activities increased to $10,882,580 for the year ended December 31, 2002 from $7,333,949 for the year ended December 31, 2001 due to several important factors. The primary cause was an increase in net losses of approximately $3.4 million. A second significant factor was the inflow of cash from PVI Holding, LLC, a subsidiary of Cablevision, for prepaid royalties, net of a deferred revenue credit of approximately $3.1 million during the year ended December 31, 2001 with no corresponding transaction in the year ended December 31, 2002. Also contributing to the decrease in cash was a reduction in accounts payable and accrued expenses balance of approximately $5.7 million as payments were made to television rights holders for virtual advertising rights. These were partially offset by the reduction in the prepayment of approximately $3.7 million of television network airtime, reduction in the Company's accounts receivable of $1.8M, reduction in the Notes Payable to Presencia of $553,000, an increase in the non-cash Interest Expense from Cablevision of $2.3M, as well as an increase in advertising and production advances of approximately $265,000 from Company customers. Princeton Video Image has incurred net losses of approximately $21.2 million, $7.0 million, $11.7 million, $12.5 million and $9.7 million for the year ended December 31, 2002, for the six months transition period ended December 31, 2001, and the years ended June 30, 2001, 2000 and 1999, respectively. Its actual working capital requirements will depend on numerous factors, including the progress of product development programs, its ability to maintain its customer base and attract new customers to use the L-VIS(R) System, the level of resources it is able to allocate to the development of greater marketing and sales capabilities, technological advances, its ability to protect its patent portfolio and the status of its competitors. Again, the Company has the expectation of incurring costs and expenses in excess of expected revenues during the ensuing fiscal year as it continues to execute its business strategy of becoming a global, media services company by adding to its sales and marketing management force both domestically and internationally, and to strengthen existing relationships with rights holders, broadcasters and advertisers. The factors noted in the above paragraph raise substantial doubt concerning the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the support of its shareholders, creditors, and its ability to close debt or equity transactions to raise cash. In the event it is unable to liquidate its liabilities, planned operations may be scaled back or discontinued. Additional funding may not be available when needed or on terms acceptable to the Company, which could have a material adverse effect on its business, financial condition and results of operations. If adequate funds are not available, Princeton Video Image may delay or eliminate some expenditures, discontinue operations in selected U.S. or international markets or significantly downsize its sales, marketing, research and development and administrative functions. These activities could impact its ability to expand its business or meet its operating needs, and may also cause PVI to file for bankruptcy protection as a means to effectively deal with its creditors. In such event the value of current shareholder equity may be severely impaired or lost. In addition, it currently has outstanding three secured convertible promissory notes in the aggregate principal amount of $6,500,000 pursuant to the Note Purchase and Security Agreement with Presencia en Medios, SA de CV and PVI Holding LLC, a subsidiary of Cablevision Systems Corporation. The Secured Notes were issued in connection with the amendment to the Note Purchase and Security Agreement on March 20, 2003. The Secured Notes mature on July 31, 2003 and are secured by a security interest in all Company assets in favor of Presencia and Cablevision. Presencia and Cablevision have the right to extend the maturity of the Secured Notes for up to two years. In the event that either Presencia or Cablevision choose not to extend the maturity date of the Secured Notes held by them and Princeton Video Image is not able to obtain additional funding, it will not be able to repay the debt under the Secured Notes. This could result in a default and the exercise of their rights as a secured debtor by either Presencia or Cablevision. The Company's management is in the process of seeking additional financing through a variety of options including bridge loans or equity financing with existing shareholders, financial institutions or strategic investors. There is no assurance, however, that any such transactions will provide sufficient resources to repay the Secured Notes or support the Company until it generates sufficient cash flow to fund its operations. In such event, PVI may not be able to continue as a going concern and may have to file for bankruptcy protection as a means to effectively deal with its creditors. RADIANT ENERGY: Misses Interest Payment on 7.75% Debentures ----------------------------------------------------------- Radiant Energy Corporation (TSX Venture: YRD), announced that management anticipates filing its audited results for the fiscal year ended October 31, 2002 and its unaudited results for the three months ended January 31, 2003 before or on May 20, 2003. The late filing of the Financial Statements was due primarily to insufficient working capital to fund the audit by the filing date. The Company continues to take steps to raise equity by way of a private placement and is also investigating other means of generating the required working capital. Management also reported that interest of US $44,600 due April 4, 2003 on the 7.75% Unsecured Series A Convertible Debenture was not paid and that the Company plans to seek agreement with the debenture holders that the debentures are not deemed to be due and payable. Management further noted that the interest payment that was due October 4, 2002 had not been paid and continues to be outstanding. Should the Company fail to file its financial statements on or before May 20, 2003, the Ontario Securities Commission will impose a cease trading order that all trading in the securities of the Company cease for such period specified in the cease trading order. In accordance with OSC Policy 57-603, the Corporation intends to satisfy the provisions of the alternate information guidelines so long as it remains in default of its financial statement filing requirements. RAND MCNALLY: Emerges from Chapter 11 Reorganization Proceedings ---------------------------------------------------------------- Rand McNally & Company, the premier provider of mapping, routing and trip-planning tools, has completed its financial restructuring and recapitalization, and has emerged from Chapter 11. With the consummation of the reorganization, Leonard Green & Partners, L.P., a Los Angeles-based private equity firm, now owns a majority interest of the company. Michael K. Hehir, President and CEO of Rand McNally, said: "[Mon]day's emergence from Chapter 11 marks a landmark step forward for Rand McNally and is great news for our customers and employees. We are now a considerably stronger company with significantly less debt. With our improved capitalization and Leonard Green's sponsorship, we are positioned to expand on our leadership role in the mapping industry. The support of our customers, employees and creditors has made this successful recapitalization possible and allowed us to focus on the things that really matter -- innovation, customer service, and growth." "We are delighted with the outcome of the reorganization process which took less than 60 days from filing to confirmation and has reduced Rand McNally's debt by more than $250 million," said Peter Nolan, a managing partner at Leonard Green. "Rand McNally can now focus on growing its preeminent brand and operations and Leonard Green is committed to supporting this growth." Rand McNally & Company, founded in 1856, is America's indispensable travel guide, providing mapping, routing and trip- planning tools for the consumer, business, education and commercial transportation markets. The company produces print and electronic products featuring national and local maps for the United States and Canada, including the Rand McNally Road Atlas and Thomas Guides. Rand McNally offers trip planning on randmcnally.com and operates retail stores across the United States. For more information, call 800/333-0136 or visit http://www.randmcnally.com Leonard Green & Partners, L.P. is a Los Angeles-based private equity firm specializing in management buyouts of middle market companies. Since its founding in 1989, Leonard Green & Partners, L.P. has invested in 27 transactions. The recent closing of Green Equity Investments IV, L.P. brings the total amount of private capital managed by the firm to approximately $3.7 billion. RECOTON CORP: Files for Chapter 11 Reorganization in S.D.N.Y. ------------------------------------------------------------- Recoton Corporation (Nasdaq:RCOT), a global consumer electronics company, and all of its U.S.-based subsidiaries voluntarily filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York under Chapter 11 of the United States Bankruptcy Code. Debtor-in-possession ("DIP") financing for the bankruptcy proceedings has been arranged with Recoton's existing senior lenders, led by Heller Financial, Inc., and General Electric Capital Corporation. Upon approval, the DIP financing will provide immediate funding to support Recoton's ongoing business requirements. Robert L. Borchardt, President and Chief Executive Officer of Recoton, commented that the voluntary action was initiated, "to protect the value and viability of Recoton's operations and ensure that our customers receive necessary products, services and support while we seek to sell Recoton's assets as a going concern." The terms of the DIP financing require Recoton to sell its remaining businesses and all related assets and apply the proceeds from such sales to reduce Recoton's outstanding indebtedness. These sales, which are subject to the approval of the Bankruptcy Court, are expected to be consummated by June 30, 2003. Recoton has retained Stroock & Stroock & Lavan LLP as its bankruptcy counsel and Kroll Zolfo Cooper as its financial advisor. Recoton also has retained Jefferies & Company, Inc. as its investment banker to market Recoton's assets as going concerns. To date, Jefferies & Company, Inc., has received several expressions of interest from potential bidders for Recoton's assets and businesses. RECOTON CORP: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Recoton Corporation 2950 Lake Emma Road Lake Mary, Florida 32746 Tel: 212-806-5400 Bankruptcy Case No.: 03-12180 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Recoton Accessories, Inc. 03-12181 Christie Design Corporation 03-12182 Recoton International Holdings, Inc. 03-12183 Recoton Audio Corporation 03-12184 Recoton Mobile Electronics, Inc. 03-12185 Recoton Home Audio, Inc. 03-12186 ReCone, Inc. 03-12187 Recoton Japan, Inc. 03-12188 InterAct International, Inc. 03-12189 InterAct Holdings, Inc. 03-12190 InterAct Accessories, Inc. 03-12191 InterAct Technologies, Inc. 03-12192 Type of Business: The Debtor, together with its subsidiaries, is engaged in the development, manufacturing and marketing of consumer electronics accessories and home and mobile audio products. Chapter 11 Petition Date: April 8, 2003 Court: Southern District of New York (Manhattan) Debtors' Counsel: Kristopher M. Hansen, Esq. Lawrence M. Handelsman, Esq. Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 Tel: (212) 806-5400 Fax : 212-806-6006 Total Assets: $233,649,054 Total Debts: $234,605,283 Debtor's 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ PRUDENTIAL INSURANCE CO. Bank $23,816,000 OF AMERICA Gwendolyn Foster Four Gateway Center Newark, NJ 07102 973-802-2333 ING CAPITAL LLC Bank $17,862,000 Lawrence P. Eyink 1325 Avenue of the Americas 8th Floor New York, NY 10019 646-424-6390 NAMSUNG CORORATION Trade $3,752,648 Michael Yoon 197-22 Koolo-Dong Koolo-Ku, Seoul, Korea 822-857-8800 DAHAAM e-TEC CO. LTD. Trade $2,593,937 CK Jung 326-4 Kasan-Dong Kumchun-Ku, Seoul, Korea 822-865-9792 JEBSEE ELECT CO. LTD SKTSAI Trade $2,233,865 Amy Yang 24-3 Sinlo Rd Tainin, Taiwan, ROC 866-6264-7622 NASACO ELECTRONICS LTD. Trade $1,857,738 George Ching 190 Middle Road 16-02 Fortune Ctr Singapore 852-2563-0592 TIME INTERCONNECT LTD. Trade $1,762,870 Rebecca Hui Unit 1306 Vanta Ind Ctr 21-33 Tai Lin Pai Road Kwai Chung Hong Kong 852-2425-4399 MAXWISE MANUFACTURING Trade $1,696,736 LIMITE John Yang Unit 2610 China Merchants Tower Shun Tak Ctr, 168-200 Connaught Rd Hong Kong 852-2537-0787 ARROW ELECTRONICS INC. Trade $1,426,259 Tom Paone 55 Skyline Drive, Suite 2500 Lake Mary, FL 32746 407-333-9300 VIVA MAGNETICS LTD. Trade $1,347,273 Benita Chung 16/F, E on FTY Bldg. 14 Wong Chuk Hang Road Hong Kong 852-2870-0119 EGL GLOBAL BROKERAGE Trade $1,188,669 Debbie Goodman 9080 Boggy Creek Road Orlando, FL 32837 832-601-5682 SMT ELECTRONIC TECHNOLOGY Trade $980,933 Richie Wang 4E No. 253, Sec 4 Chung Ching N Rd Taiwan, ROC 886-28811-5926 PRAM INDUSTRIES Trade $978,549 Peter Lee No 7 Lane 233, Yen Chi St., 1/F Taipei, Taiwan, ROC 866-22702-3388 SHENZHEN D&S INDUSTRIES Trade $908,760 Sara Tsang 6th Fl Bldg., 135 Jindi Ind Zone Shazui Rd, Futian Shenzhen, China 867-5583-401338 IBM CORPORATION Trade $891,340 Norman Toth North Castle Drive, M2 317 Armond, NY 10504 914-765-6260 FUJIKON INDUSTRIAL CO., Trade $871,472 LTD. Shirley Chan 23-25 Shan Mei St., 11/F Universal Ind Ctr. Fo Tan Shatin Nt, Hong Kong 852-2605-5008 KINGSON ELECTRONICS CO. Trade $759,825 Mr. Wang 1F No 9 Lane 46, An-Jiu St Taipei, Taiwan, ROC 886-2273-36402 EMERY WORLDWIDE Trade $740,604 Frank Voldenberg Box 371232 Pittsburgh, PA 15250-7232 570-969-3570 SONAVOX ELECTRONICS Trade $726,690 Danny Yong 15132 Clark Avenue Hacienda Heights, CA 91745 626-333-9999 KING BEST ENTERPRISES CO., Trade $711,107 LTD. Karen 6th Floor, No. 17 Teh-Wei St. Taipei, Taiwan, ROC 886-2259-44054 CNS INTERNATIONAL INC. Trade $682,309 Carmen Shyu P. O. Box 55-208 Taipei, Taiwan, ROC 02-2516-5835 GPI INTERNATIONAL LTD. Trade $656,930 Peter Ip 30-34 Kwai Wing Road Kwai Chung, NT, Hong Kong 852-2480-3991 RAY VALDES TAX COLLECTOR Trade $612,070 Customer Service P. O. Box 630 Sanford, FL 32772-0630 407-665-1000 GRAND DESTINY GROUP Trade $591,376 John Bosch 8502 E. Via De Ventura 101 Scottsdale, AZ 85258 480-778-8401 A.I. CREDIT CORP. Trade $584,882 160 Water Street New York, NY 10038 212-428-5431 HELLMANN WORLDWIDE Trade $580,854 Wayne Smith 8249 Parkline Blvd., Suite 400 Orlando, FL 32809 407-855-2828 STORM ELECTRONICS Trade $517,674 COMPANY LIMITED Cadom Shun 22 F. Com Web Plaza 12 Cheung Yue Street Cheung Sha Wan Kowloon, Hong Kong 852-2744-8888 WESONIC INDUSTRIES LTD. Trade $506,984 Thomas Leu 1803 Billion Trade Circle 31 Hung To Rd Kwun Tong Kowloon, Kong Kong 852-2790-8113 SAP AMERICA INC. Trade $451,390 Amy Whitehead 3999 West Chester Pike Newtown Square, PA 19073 404-943-3022 DELOITTE & TOUCHE Professional Fees $424,604 Dan Miele 4152 Collection Center Drive Chicago, IL 60693 212-436-6167 REDBACK NETWORKS: Will Publish Q1 Financial Results on April 16 --------------------------------------------------------------- Redback Networks Inc. (Nasdaq:RBAK), a leading provider of next- generation networking equipment, will announce financial results of its first quarter of 2003 on April 16, 2003. Executive management will discuss the first quarter results as well as business conditions. The details of the call are as follows: Redback Networks First Quarter 2003 Conference Call Wednesday, April 16, 2003 1:45 p.m. PT / 2:45 p.m. MT / 3:45 p.m. CT / 4:45 p.m. ET Dial in number: 1-847-413-3136 Live Webcast: You can also participate in the conference call via your computer by registering your name on Redback's Investor Center at: http://www.redback.com Telephone Replay available one hour after conclusion of call through April 23, 2003. Dial-in: 1-630-652-3019 Passcode: 7031477 To ensure that the conference begins in a timely manner, please dial in 10-15 minutes prior to the scheduled start time. Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a global customer base of more than 350 carriers and service providers, including major local exchange carriers, inter-exchange carriers, PTTs and service providers. Recent and archived news releases, and other company information can be found on Redback's Web site at http://www.redback.com As previously reported, Standard & Poor's lowered its corporate credit rating on Redback Networks Inc., to triple-'C'-plus from single-'B'-minus. At the same time, Standard & Poor's rating on the company's convertible subordinated notes was lowered to triple-'C'-minus from triple-'C'. The outlook is negative. The rating actions reflect Redback's reduced liquidity and significantly lower revenue outlook, amid expected continued weakness in telecommunications capital spending. RIDER RESOURCES: Dec. 31 Working Capital Deficit Tops $4.6 Mill. ---------------------------------------------------------------- Rider Resources Ltd., (formerly IEI Energy Inc.) announce the results of its oil and gas operations for 2002. On February 19, 2003, IEI Energy Inc. acquired 840927 Alberta Ltd., a private company comprised of the former Meota Resources Corp. executive and technical team along with $15.4 million of cash and securities. On February 20, 2003, the plan of arrangement between IEI Energy Inc., and Rider Resources Inc., was approved. On February 21, 2003, an amalgamation of IEI Energy Inc., Rider Resources Inc. and 840927 Alberta Ltd. created Rider Resources Ltd. Rider is now trading on the TSX Venture Exchange as "RID" with listing on the TSX Exchange expected prior to mid-year. MANAGEMENT'S DISCUSSION AND ANALYSIS This discussion and analysis for the year ended December 31, 2002 should be read in conjunction with the consolidated financial statements presented in this report. IEI Energy Inc., formerly Imperial Metals Corporation, was reorganized under a Plan of Arrangement completed on April 30, 2002. Under the plan, Imperial divided its operations into two distinct businesses, one focused on oil and natural gas and the other focused on mining. The existing oil, natural gas and investment assets were retained in the renamed company, IEI. All of Imperial's mining assets were then transferred to a new company. This Management discussion and analysis reviews the results of IEI's oil and natural gas business for the period from January 1, 2002 to December 31, 2002. Subsequent to the year-end, two transactions were completed that significantly transformed the Company. On February 19, 2003, the shareholders of IEI approved the acquisition of all the common shares of 840927 Alberta Ltd., a private company in exchange for common shares of IEI. In conjunction with the acquisition, a new management team and Board of Directors were appointed. This new management team, directors and certain of their associates had invested $12,400,000 in cash and liquid securities having a value of not less than $3,000,000 in Altaco. The following day, shareholders of Rider Resources Inc. approved a plan of arrangement whereby IEI exchanged 0.9448 of an IEI common share for each Rider common share. Prior to the arrangement Rider has 30,805,327 common shares and 2,488,802 share options outstanding. Rider is engaged in the exploration for, and the development and production of, oil and natural gas, primarily in the province of Alberta. In the fourth quarter of 2002, Rider produced approximately 800 barrels per day of crude oil and liquids and 7,400 mcf per day of natural gas. The Court of Queen's Bench of Alberta approved the Rider plan of arrangement on February 21, 2003. The combined company has been named Rider Resources Ltd. Production, revenues and royalties For the year 2002, IEI's natural gas production averaged 768 mcf per day while crude oil and natural gas liquids averaged 12 barrels. This equates to 140 barrels of oil equivalent (BOE) per day based on a conversion rate of six thousand cubic feet for one barrel of oil. Using this conversion, natural gas accounts for 91% of the daily production. During 2001, the daily volume averaged 147 BOE per day, with oil and natural gas liquids contributing 12 barrels per day. Third parties operated all of the company's production in both years. Oil and gas revenue, net of royalties, for the year ended December 31, 2002, amounted to $1,048,000, a decline of 25% from the previous year. The decrease is primarily due to lower gas prices in 2002 as the average price received during the year was $3.62 per mcf versus $5.06 per mcf in 2001. Royalties paid to provincial governments, freehold landowners, and override royalty owners amounted to $186,000, net of the Alberta Royalty Tax Credit. The effective royalty rate amounted to 16% in 2002 versus 17% in 2001. Expenses Production expenses of $161,200 ($3.16 per BOE) declined from $213,400 ($4.02 per BOE) in the previous year. No material workover or maintenance expenses were incurred in 2002. General and administrative expense of $104,000 increased 24% over the prior year as additional costs were incurred upon completion of the Imperial Plan of Arrangement that divided the oil and gas assets from the mining assets and relocated IEI's head office to Calgary. Interest expense of $607,900 was substantially higher than the $383,500 incurred in 2001 as IEI assumed a $3,000,000 loan that was not settled by the Imperial plan of arrangement. In addition, interest was also incurred on a marketable securities loan. Depletion and depreciation of $313,000 was 3% higher than the previous year and equals $6.14 per BOE. Other Items The corporation has a portfolio of marketable securities. A net loss of $13,000 was incurred on the sale of certain of these investments during 2002. In the prior year, a gain of $919,000 resulted from the sale of securities. However, this was offset by a marketable securities write-down of $1,277,000 recorded at December 31, 2001, reflecting the decline in market value of certain investments as at that date. No provision for income taxes has been recorded in 2002. As at December 31, 2002, IEI had tax pools in excess of $90 million available for deduction against future earnings. This included $22 million in Canadian exploration expense, $3 million in Canadian development expense and $60 million in capital and non- capital losses. Cash Flow and Net Income Cash flow decreased to $175,000 ($0.01 per share) in 2002 versus $708,000 ($0.08 per share) for the prior year. The net loss of $151,000 ($0.01 per share) compares to a net loss before discontinued operations of $310,000 ($0.04 per share) in 2001. Capital Expenditures During 2002, expenditures on property, plant and equipment totaled $356,000 versus $1,053,000 in the prior year. Since the company did not operate any oil and gas properties, it did not have an active capital program during the year. Liquidity and Capital Resources As at December 31, 2002, including the outstanding $3,000,000 credit facility as a current liability, IEI had a working capital deficiency of $4,639,000. With the successful completion of the transactions with Altaco and Rider on February 19, 2003, the loan was repaid and the Company had no outstanding debt, positive working capital and an established bank line of credit of $22 million. The lines include a $5 million acquisition line and a $5 million development line. When this strong financial position is combined with the cash flow from the Rider oil and gas properties, the company is in an excellent financial position to carry out its 2003 capital program. IEI Energy Inc.'s (formerly Imperial Metals Corporation) December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $3.2 million. Future While the Imperial Plan of Arrangement approved in April 2002 established IEI as an oil and gas entity, the acquisition of Altaco and Rider has transformed the Company into a well capitalized junior oil and gas company. Pursuant to the amalgamation of IEI, Rider and 840927 Alberta Ltd., Rider Resources Ltd. began trading on the TSX Venture Exchange effective March 3, 2003 under the symbol "RID". Plans for 2003 will include land purchases, seismic and drilling, and the evaluation and completion of possible acquisitions. The capital expenditure budget for 2003 is initially set at $20 million, which includes all approved projects to date. This budget is expected to increase upon further review of the undeveloped land held by Rider and upon acquisition of additional Crown land. SIERRA PACIFIC: Parent Delivers Extensive Documentation to FERC --------------------------------------------------------------- Sierra Pacific Resources (NYSE: SRP) has submitted extensive documentation to the Federal Energy Regulatory Commission demonstrating that its utility subsidiary, Sierra Pacific Power Company, "did not engage in gaming in violation of the Cal ISO or Cal PX tariffs, nor in the manipulation of the Western energy market." The submission by Sierra Pacific provides detailed information supporting the validity of an "unknown" transaction valued at $6,391 that was referenced in a FERC report issued Wednesday, March 26, 2003. In one section of "The Final Report on Price Manipulation in Western Markets," the FERC staff recommended that the Commission require all market participants identified in the Cal ISO Report dated January 6, 2003, to show cause why their behavior did not constitute gaming in violation of the Cal ISO and Cal PX tariffs. Sierra Pacific Power was listed along with 36 other companies in this section of the report. Walter Higgins, chairman, president and CEO of Sierra Pacific Resources, said, "We believe the materials we have submitted to the FERC make it very clear that Sierra Pacific Power was not involved in the manipulation of the Western energy market. Throughout the past year we have stated many times that the energy crisis in the West was the direct result of price manipulation leading to a dysfunctional marketplace. We applaud the FERC for identifying this problem and we welcome the close examination of all issues regarding what went on during the 2000-2001 crisis." * * * As reported in Troubled Company Reporter's February 21, 2003 edition, Standard & Poor's Ratings Services announced that the corporate credit ratings on utility holding company Sierra Pacific Resources and those of its utility subsidiaries, Nevada Power Co., and Sierra Pacific Power Co., were affirmed at 'B+' and removed from CreditWatch with negative implications, following the successful completion of Sierra Pacific's $300 million, 7.25% convertible notes issue announced on Feb. 11, 2003. The outlook on all ratings is now negative. In addition, Standard & Poor's assigned the 'B-' rating to the convertible notes issue, issued as a rule 144A private placement. Reno, Nev.-based Sierra Pacific has about $3.4 billion in outstanding debt. The 'B+' corporate credit rating reflects the adverse regulatory environment in Nevada, the substantial operating risk arising from the dependence on wholesale markets for over 50% of the utilities' energy requirements, and Sierra Pacific's substantially weakened financial profile following the disallowance by the Public Utility Commission of Nevada (PUCN) of $434 million in deferred power costs incurred by NP during the 2001 western U.S. power crisis. SONIC FOUNDRY: Considering Term Sheets Related to Asset Sale ------------------------------------------------------------ Sonic Foundry(R), Inc. (Nasdaq:SOFO), a leading digital media software solutions company, announced that since its last corporate filing it has received and is considering additional inquiries and terms sheets related to the sale of certain company assets. The company expects to close one or more sale transactions, which will be sufficient to retire existing short-term debt obligations. In connection with such transactions, the company may be required to obtain shareholder approval under certain circumstances. In such event, the company will present the proposals relating to the sale of assets to the company's shareholders at its next annual meeting scheduled in June. There cannot, however, be any assurances that any contemplated transactions will be consummated, or that shareholder approval will be obtained if such approval is necessary. Sonic Foundry also said it recently received a notice from NASDAQ regarding its listing requirements status on the National Market System. The company has been granted a waiver until June 23, 2003, to meet NASDAQ's NMS requirement of maintaining a $1 per share bid price for a minimum 10-day consecutive trading day period. Based on the terms of the waiver, the company must file a proxy on or before May 1 stating that it is seeking shareholder approval for a reverse stock split and show evidence of at least $10 million of equity in its 10-Q filing for the March 31, 2003, quarterly period (due to be filed with the SEC by May 15). In the event Sonic Foundry is unable to comply with the terms of the waiver, it may apply for listing on the NASDAQ SmallCap Market. In order for such application to be accepted, the company must be able to demonstrate compliance with all applicable maintenance criteria and an ability to sustain long- term compliance. The company is currently in compliance with all NASDAQ SmallCap Market maintenance criteria except for the $1 bid price. However, the company may be eligible for two additional waiver periods, which, if accepted, would give it until on or about January 9, 2004, to achieve and maintain the $1 minimum bid price required to remain on the NASDAQ SmallCap Market. The company has requested a record date of April 25 and has set a tentative annual meeting date of June 10, 2003. More details are expected to be available soon via public announcements, securities filings and on Sonic Foundry's Web site at http://www.sonicfoundry.com Founded in 1991, Sonic Foundry (Nasdaq:SOFO) is a leading provider of desktop and enterprise digital media software solutions. Its complete offering of media tools, systems and services provides a single source for creating, managing, analyzing and enhancing media for government, business, education and entertainment. Sonic Foundry, whose December 31, 2002 balance sheet shows a working capital deficiency of about $3 million, is based in Madison, Wis., with offices in Santa Monica, Toronto and Pittsburgh. For more information about Sonic Foundry, visit the company's Web site at http://www.sonicfoundry.com SONICBLUE: Opta Systems Pitches Winning Bid for GoVideo Assets -------------------------------------------------------------- SONICblue(TM) Incorporated announced that Opta Systems, LLC was the successful bidder for SONICblue's GoVideo(R) business unit. Opta Systems submitted a final bid, which was approved by the Bankruptcy Court. The purchase price is subject to adjustment and the consummation of the transaction is subject to certain closing conditions. The Companies anticipate the transition of assets to be completed by mid-April. "As the former Chief Executive Officer of Sensory Science Corporation, I understand the true value of this business unit," said Roger Hackett, Vice Chairman, Opta Systems. "I believe in the products and the GoVideo team and I am confident that together with management, we can leverage the tremendous growth in the digital video marketplace to achieve GoVideo's full potential." "We are confident that Opta is the best option, both for the future success of the product line, as well as for our customers," said Gregory Ballard, Chief Executive Officer, SONICblue. "We are pleased this phase of the process has been completed, and look forward to a smooth transition of assets." SONICblue is a leader in the converging Internet, digital media, entertainment and consumer electronics markets. Working with partners that include some of the biggest brands in consumer electronics, SONICblue creates and markets products that let consumers enjoy all the benefits of a digital home and connected lifestyle. SONICblue holds a focused technology portfolio that includes Rio(R) digital audio players; ReplayTV(R) personal television technology and software solutions; and GoVideo(R) integrated DVD+VCRs, Dual-Deck(TM) VCRs, and digital home theater systems. Opta Systems is a wholly owned subsidiary of Carmco Investments, LLC, an investment and development company that works with growing companies on a global basis to expand their businesses in the area of consumer products. Opta Systems has expertise in the areas of marketing, product and business development, logistics, operations, finance and consumer and vendor relations to achieve long term sustainable enterprise value. The Carmco team is an experienced and influential group of proven executives that offers a depth of expertise to its partner companies and acquisitions. Carmco works actively with entrepreneurs and management teams to address the challenges of building a successful company in today's global economy. SPIEGEL INC: Names Bankruptcy Services as Claims & Notice Agent --------------------------------------------------------------- The Spiegel Inc. and its debtor-affiliates seek the Court's authority to employ Bankruptcy Services LLC as the claims and noticing agent in connection with their chapter 11 cases on the terms and subject to the conditions of the Bankruptcy Services Agreement, dated March 7, 2003. William Kosturos, Spiegel Interim Chief Executive Officer and Chief Restructuring Officer, points out that Section 156(c) of Title 28 of the United States Code, which governs the staffing and expenses of the Bankruptcy Court, authorizes this Court to use facilities other than those of the Clerk's Office for the administration of bankruptcy cases. It provides: "Any court may utilize facilities or services, either on or off the court's premises, which pertain to the provision of notices, dockets, calendars, and other administrative information to parties in cases filed under the provisions of title 11, United States Code, where the costs of such facilities or services are paid for out of the assets of the estates and are not charged to the United States. 28 U.S.C. 156(c)." The Debtors estimate that there are potentially in excess of several thousand creditors and other parties-in-interest involved in the Debtors' cases, many of whom are expected to file proofs of claim. Mr. Kosturos anticipates that the noticing that will be required in these chapter 11 cases as well as the receiving, docketing, and maintenance of proofs of claim would be unduly time-consuming and burdensome for the Clerk's Office. According to Mr. Kosturos, BSI is a nationally recognized specialist in Chapter 11 administration. BSI has considerable experience in noticing and claims administration in chapter 11 cases. At the Debtors' request, BSI will: a. notify all potential creditors of the filing of the bankruptcy petitions and of the setting of the first meeting of creditors pursuant to Section 341 (a) of the Bankruptcy Code, under the proper provisions of the Bankruptcy Code and the Bankruptcy Rules; b. maintain an official copy of the Debtors' schedules of assets and liabilities and statements of financial affairs, listing the Debtors' known creditors and the amounts owed thereto; c. notify all potential creditors of the existence and amount of their claims as evidenced by the Debtors' books and records and as set forth in the Schedules; d. furnish a form for the filing of a proof of claim, after notice and form are approved by this Court; e. file with the Clerk a copy of any notice served by BSI, a list of persons to whom it was mailed -- in alphabetical order -- and the date the notice was mailed, within ten days of service; f. docket all claims received, maintaining the official claims registers for each Debtor on behalf of the Clerk, and provide the Clerk with certified duplicate unofficial Claims Registers on a monthly basis, unless otherwise directed; g. specify in the applicable Claims Register, this information for each claim docketed: (i) the claim number assigned, (ii) the date received, (iii) the name and address of the claimant and agent, if applicable, who filed the claim, and (iv) the classification of the claim -- e.g., secured, unsecured, priority, etc.; h. relocate, by messenger, all of the actual proofs of claim filed to BSI, not less than weekly; i. record all transfers of claims and providing any notices of the transfers required by Rule 3001 of the Federal Rules of Bankruptcy Procedure; j. make changes in the Claims Registers pursuant to a Court order; k. upon completion of the docketing process for all claims received to date by the Clerk's office, turn over to the Clerk copies of the Claims Registers for the Clerk's review; l. maintain the official mailing list for each Debtor of all entities that have filed a proof of claim, which list will be available upon request by a party-in-interest or the Clerk; m. assist with, among other things, the solicitation and the tabulation of votes, the distribution as required in furtherance of confirmation of plan(s) of reorganization and the reconciliation and resolution of claims; n. 30 days prior to the close of these cases, submit an Order dismissing BSI and terminating the services of BSI upon completion of its duties and responsibilities and upon the closing of these cases; and o. at the close of the case, box and transport all original documents in proper format, as provided by the Clerk's office, to the Federal Records Center. The Debtors will compensate and reimburse BSI in accordance with the payment terms of the BSI Agreement for all services rendered and expenses incurred in connection with these Chapter 11 cases. The Debtors believe that the compensation rates are reasonable and appropriate for services of this nature and comparable to those charged by BSI in other Chapter 11 cases in which it has served as claims and noticing agent, and by other providers of similar services. In addition, the Debtors seek the Court's permission to obtain a special post office box for the receipt of proofs of claim. In an effort to reduce the administrative expenses related to BSI's retention, the Debtors also seek Judge Blackshear's authority to pay BSI's fees and expenses in accordance with the provisions of the BSI Agreement, without the necessity of BSI filing formal fee applications. BSI has acknowledged that it will perform its duties if it is retained in Debtors' Chapter 11 cases regardless of payment and, to the extent that BSI requires redress, it will seek appropriate relief from this Court. BSI has agreed to continue to perform the services contemplated by the BSI Agreement in the event the Debtors' chapter 11 cases are converted to chapter 7 cases. In the event that BSI's services are terminated, Mr. Kosturos says, BSI will perform its duties until the occurrence of a complete transition with the Clerk's Office or any successor claims/noticing agent. BSI President Ron Jacobs attests that, "To the best of my knowledge, neither BSI, nor any employee thereof, represents any interest adverse to the Debtors' estates with respect to any matter upon which BSI is to be engaged; except that the parent company of BSI, EPIQ Systems, Inc., a Missouri corporation, and Bank of America have an exclusive national marketing agreement under which EPIQ Systems, Inc. offers its chapter 7 bankruptcy trustee customers technology products and Bank of America offers these same customers specialty banking services." The Debtors further propose that BSI serve, by postage-prepaid regular mail, the Section 341 Notice, substantially in the form of Official Bankruptcy Form 9 for Chapter 11 cases on those entities entitled to receive the notice, not more than five business days after the Debtors receive notice from the Office of the United States Trustee of the time and place of the Section341 Meeting. (Spiegel Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) TESORO PETROLEUM: Fitch Assigns BB- Senior Secured Debt Rating -------------------------------------------------------------- Fitch Ratings assigned a senior secured debt rating of 'BB-' to Tesoro Petroleum Corporation's $400 million senior secured note offering, proposed $650 million senior secured credit facility and proposed $150 million senior secured term loan. Fitch also rates the company's subordinated debt 'B'. The Rating Outlook remains Negative. Proceeds from the $400 million note offering, the new term loan and borrowings under the new credit facility will be used to repay the company's tranche A and B term loans. At Dec. 31, 2002, Tesoro had $918 million outstanding on the Term Loans, no cash borrowings on the revolver and $60 million in outstanding letters of credit. Balance sheet debt totaled $2.0 billion at year-end with total adjusted debt of approximately $2.8 billion. Tesoro's ratings and outlook reflect the company's significant leverage combined with the continued volatility in global crude markets and the U.S. refining sector. The company's financial flexibility has been hampered by the significant debt added to finance the company's acquisitions. In June 2002, Tesoro set a target of reducing debt by $500 million by the end of 2003. Based on Tesoro's June 30, 2002 results, this represents a goal of under $1.6 billion of balance sheet debt at year-end. Although continued debt reduction is the primary factor influencing Tesoro's ratings, Fitch is looking at several other factors to support a change in outlook and the potential for positive rating actions including: - Meaningful cash flow from operations over the next several months; - Ability to maintain a significant portion of the inventory reductions achieved in 2002; - Continued commitment to improving and maintaining a stronger balance sheet. Tesoro owns and operates six crude oil refineries with a rated crude oil capacity of 560,000 barrels per day. Four of the company's refineries are on the West Coast, with facilities in California, Alaska, Hawaii and Washington. The company sells refined products wholesale or through approximately 600 retail outlets. Tesoro Petroleum Corp.'s 9.625% bonds due 2008 (TSO08USN1) are trading at about 85 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TSO08USN1for real-time bond pricing. TIMCO AVIATION: Delays Filing of 2002 Annual Report on Form 10-K ---------------------------------------------------------------- During fiscal 2002, TIMCO Aviation Services, Inc., among other matters, completed a significant restructuring of its capital and equity, settled an outstanding securities class action lawsuit, completed a refinance of all of its senior debt obligations, sold one operating business and acquired a second operating business, and completed an extensive settlement agreement related to the sale of its redistribution operations in 2000. All of these activities are accounted for in the Company's results of operations for the year ended December 31, 2002. As a result, completion of the Company's 2002 financial information has been delayed. The Company expects to file its 2002 Form 10-K with the SEC on, or before, April 15, 2003. The Company expects to report net income for 2002 of approximately $5 million on revenues of $182 million (including a $27 million extraordinary gain arising as a result of the restructuring), compared to a net loss of $141 million on revenues of $264 million for 2001. TIMCO Aviation Services' September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $81 million. TRAY INC: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Tray, Inc. Perryville Corporate Park Clinton, New Jersey 08809 aka Glitsch, Inc. Bankruptcy Case No.: 03-11088 Chapter 11 Petition Date: April 7, 2003 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Maureen D. Luke, Esq. Young Conaway Stargatt & Taylor,LLP The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: 302 571-6600 Fax : 302-571-1253 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Molipak $319,941 Viale Dei Caduti nelle Guerra Di Lebarazione, 118 00128 Rome, Italy Marvin Webb Unliquidated Alicia Villareal Unliquidated Judy Nachtigall Unliquidated Glitch Process India Unliquidated Margaret Hoffman Unliquidated UNITED AIRLINES: Argenbright Demands Payment of $8MM TSA Funds -------------------------------------------------------------- Argenbright Security, Inc., asks Judge Wedoff to: -- compel the UAL Corp. Debtors to pay all postpetition invoices; -- direct the Debtors to remit funds received from the Transportation Security Authority to Argenbright; and -- direct the Debtors to account for funds received from the TSA since February 14, 2002. Prepetition, Argenbright performed passenger screening, airport security, sky cap, transportation and other aviation services for the Debtors at airports throughout the country. As of the Petition Date, the Debtors owed Argenbright $7,936,633. After September 11, 2001, Congress passed the Aviation and Security Act, creating the Transportation Security Administration, which became responsible for passenger, cargo screening and other related airport services. Air carriers were to collect a fee from passengers to cover the costs of security services. The funds were to be remitted to the TSA for ultimate disbursement. Christopher H. Murphy, Esq., at Cozen, O'Connor, in Chicago, Illinois, notes that Argenbright continued to provide security services for the Debtors but has not been paid yet. Mr. Murphy asserts that Argenbright provided the services in good faith under the assumption that the Debtors would merely hold the TSA funds temporarily in trust. If the Debtors are allowed to retain the funds, they would be unjustly enriched at Argenbright's expense. (United Airlines Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITY WIRELESS: External Auditors Express Going Concern Doubt ------------------------------------------------------------- Unity Wireless Corp., was incorporated in the State of Delaware on October 1, 1998 under the name Sonic Systems Corporation. It is the successor to M & M International Realty, Inc., a Florida corporation, which effected a merger on December 1, 1998, with Unity Wireless Corporation as the surviving corporation. Before the merger, the Florida corporation had no material commercial activity. On December 11, 1998, it acquired all of the issued and outstanding stock of Unity Wireless Systems Corporation, a British Columbia corporation, in exchange for 11,089,368 shares of its common shares. As a result, the former stockholders of Unity Wireless Systems Corporation owned a majority of the Company's outstanding stock. Therefore, for accounting purposes, Unity Wireless Systems Corporation was deemed to have acquired Unity Wireless Corporation. Unity Wireless Systems Corporation survived as a wholly-owned subsidiary. Prior to the introduction of the Company's radio frequency communications products, it had designed, manufactured, and sold an acoustic-based traffic signal preemption system under the trade name "Sonem." The system detected approaching sirens and issued commands to the traffic signal controller to adjust the traffic lights to give priority passage to the emergency vehicle(s). The Sonem product accounted for all revenues earned in the fiscal years ended December 31, 1998 and 1999, and the quarter ending March 31, 2000. In view of the Company's strategic repositioning toward radio frequency wireless products during 2000, it sold its Sonem business to Traffic Systems, L.L.C. on October 6, 2000. Accordingly, revenue from acoustic products ended in the third quarter of 2000. Also, in late 1999, the Company carried on an integration service business which consisted primarily of a contract with the Transportation Management Systems division of Orbital Sciences. Under this contract, Unity Wireless, through one of its wholly-owned subsidiaries, provided systems integration support, warranty and maintenance services for the Automatic Vehicle Management System to be delivered by Orbital and Sanyo Trading company to Singapore Bus Services Ltd. Revenue from this contract started in the quarter ended June 30, 2000, and continued for the rest of the year. As Unity continued to refocus upon radio frequency wireless products, it assigned this contract to Lyma Sales & Management Corp. on December 30, 2000, and therefore had no further interest in any revenue resulting from the contract. In 1999 and 2000, Unity Wireless designed a specialized radio frequency communication product with the trademark "UniLinx", which it introduced commercially in the later part of 2000. This wireless internet protocol gateway was deployed in the traffic control market and the remote point of sale market during 2000. Sales from UniLinx commenced in the quarter ended June 30, 2000, and continued for the rest of the year and into the first quarter of 2001. In order to focus solely on the radio frequency wireless products, Unity sold the UniLinx business and assets on June 12, 2001 to Horton Automation Inc. for CDN$150,000, which is payable on a percentage of unit sales by Horton. Consequently, revenue from the UniLinx business ended in second quarter on 2001. On November 16, 2000, Unity Wireless acquired Ultratech Linear Solutions Inc., a designer, developer and manufacturer of linear power amplifiers for the wireless network infrastructure industry. Ultratech's operations have been consolidated from the date of acquisition. The revenues from sales of Ultratech amplifiers from its inception on April 22, 1999 to December 31, 2000 were approximately $3,200,000. Unity received revenue from the sale of radio frequency power amplifiers starting in the quarter ended December 31, 2000. With the completion of the purchase of Ultratech Linear Solutions, the discontinuance of the contract with Orbital, the ending of active participation in the Sonem product and the sale of the UniLinx business, Unity Wireless has restructured its operations and staff complement to adjust for the needs of higher manufacturing volumes and development activities for radio frequency power amplifier products. During 2001, the Company focused on developing its marketing, sales and global distribution network by increasing the number of distributors from one to over twenty by year-end. In addition, it introduced over twenty-five new products into the marketplace. Its development activities were concentrated on increasing its engineering resources to develop its new products and the new feed forward radio frequency power amplifier technology. Feed forward is a technique to minimize the distortion effects introduced by amplification of radio frequency signals. During the year ended December 31, 2002, the Company's business strategy evolved and focused on securing long-term supply agreements with strategic key customers, thereby providing for a stabilized revenue base and consistent growth of its business and sales of its high power radio frequency amplifiers. The Company anticipates that it will require a greater amount of additional working capital for inventory, components and work in process and to expand its manufacturing capacity if it enters into contracts for large quantities of its amplifiers. It is incurring expenses in anticipation of future sales that may not materialize. If future sales fall significantly below expectations or if Unity incurs unanticipated costs or expenses its financing needs could be increased. Any inability to obtain sufficient capital to sustain existing operations, to meet commitments or to fund obligations under existing sales orders may require the Company to delay delivery of products, to default on one or more agreements or to significantly reduce or eliminate sales and marketing, research and development or administrative functions. The occurrence of any of these, or other adverse affects of inability to raise adequate capital may have a material adverse effect on Unity Wireless' business, financial condition and results of operations. The Company may not be able to obtain additional equity or debt financing on acceptable terms when it needs it. It may be less likely to raise future financing after the completion of a convertible debenture financing in November and December 2002 because, as part of that financing transaction, it has given security over all of its assets to the holders of these debentures. Potential financiers may be reluctant to provide Unity with further debt or equity financing as they will not be able to obtain a first charge over its assets or be able to realize on its assets should Unity's business fail. Even if financing is available it may not be available on terms that are favorable to the Company or in sufficient amounts to satisfy its requirements. If it is required, but the Company is unable to obtain, additional financing in the future, it may be unable to implement its business plan and its growth strategies, respond to changing business or economic conditions, withstand adverse operating results, consummate desired acquisitions and compete effectively. More importantly, if unable to raise further financing when required, its continued operations may have to be scaled down or even ceased. Unity Wireless has a history of losses and fluctuating operating results which raise substantial doubt about its ability to continue as a going concern. Since inception through December 31, 2002, it has incurred aggregate losses of $15,495,130. Its loss from operations for the fiscal year ended December 31, 2002 was $2,707,170. During fiscal 2002, Unity took steps to reduce cash expenditures by reducing the number of employees by approximately 50% and by reducing employee salaries. There is no assurance that it will operate profitably or will generate positive cash flow in the future. In addition, its operating results in the future may be subject to significant fluctuations due to many factors not within its control, such as the unpredictability of when customers will order products, the size of customers' orders, the demand for its products, and the level of competition and general economic conditions. If it cannot generate positive cash flows in the future, or raise sufficient financing to continue normal operations, then management has said the Company may be forced to scale down or even close its operations. Although the Company anticipates that revenues will increase, it expects an increase in development costs and operating costs. Consequently, it expects to incur operating losses and negative cash flow until its products gain market acceptance sufficient to generate a commercially viable and sustainable level of sales, and/or additional products are developed and commercially released and sales of such products made so that Unity Wireless is operating in a profitable manner. These circumstances raise substantial doubt about its ability to continue as a going concern, as described in the additional comments for United States readers in its independent auditors' report on the December 31, 2002 consolidated financial statements. US AIRWAYS: Wants to Modify Plan to Remedy Technical Lapses ----------------------------------------------------------- In Section 7.10(a)(v) of the Plan, which concerns the distribution of stock in Reorganized Group to the International Brotherhood of Machinists and Aerospace Workers, there is a technical defect. US Airways Group Inc., and its debtor- affiliates ask Judge Mitchell's permission to remedy this error. Specifically, the Debtors seek to include the IAMAW Designated Representative as one of the representatives entitled to receive Class A Common Stock in Reorganized Group on behalf of the IAMAW members. This mandate is consistent with the restructuring agreements entered into between the Debtors and their labor groups. John Wm. Butler, Jr., Esq., tells Judge Mitchell that, inadvertently, the IAMAW Designated Representative was omitted from the list of labor representatives included in Section 7.10(a)(v) of the Plan, which are entitled to receive 8,270,232 shares in Class A Common Stock of Reorganized Group. This omission was clearly an oversight and does not affect the economics of the Plan or the distributions to stakeholders. Accordingly, circumstances warrant that the Debtors be allowed to modify section 7.10(a)(v) of the Plan by including the IAMAW Designated Representative in the list of representatives entitled to receive Class A Common Stock on behalf of the IAMAW members. The Creditors' Committee and The Retirements Systems of Alabama support the Debtors' request. The International Association of Machinists and Aerospace Workers, AFL-CIO, makes the same request. Accordingly, the Court grants the Debtors' and IAMAW's request. (US Airways Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AIRWAYS: Ranks First in Annual Airline Quality Rating -------------------------------------------------------- US Airways was ranked first for 2002 in the annual Airline Quality Rating announced by the University of Nebraska and Wichita State University. US Airways moved up from its second place ranking in 2001, showing improvement in three of the four criteria tracked last year. On-time arrivals rose to 83.4 percent, compared to 78.2 percent in 2001. The airline's mishandled baggage rate decreased to 2.95 per 1,000 passengers, down from 3.86 in 2001. Customer complaints were also down for 2002, with 1.13 per 100,000 passengers, compared to 1.87 in 2001. In the fourth major category, denied boardings, US Airways' performance was virtually unchanged. "This is a great tribute to our employees who deserve to be nationally recognized for their devotion to customer service. I am honored to be a part of their team," said US Airways President and CEO Dave Siegel. The Airline Quality Rating is an annual study conducted jointly by the University of Nebraska at Omaha and Wichita State University. Each airline's score is calculated based on data reported monthly in the U.S. Department of Transportation's Air Travel Consumer Report. The full Airline Quality Rating 2003 report is available online at unomaha.edu/~unoai/aqr. US Airways, the US Airways Express carriers and US Airways Shuttle provide service to nearly 200 destinations worldwide, including 37 states in the U.S. In the Caribbean, US Airways serves Antigua, Aruba, Barbados, Belize, Bermuda, Cancun, Cozumel, Grand Bahama Island, Grand Cayman, Grenada, Montego Bay, Nassau, Providenciales, Punta Cana, San Juan, Santo Domingo, St. Kitts, St. Lucia, St. Thomas, St. Maarten and St. Croix. US Airways Express also serves North Eleuthera, Governors Harbour, Marsh Harbour and Treasure Cay from select cities in Florida. For more information on US Airways, visit US Airways online at http://www.usairways.com VESTA INSURANCE: Fitch Downgrades IFS Ratings to BB from BBB- ------------------------------------------------------------- Fitch Ratings lowered the Insurer Financial Strength ratings of the Vesta Insurance Group (NYSE: VTA) property/casualty insurance subsidiaries to 'BB' from 'BBB-'. Fitch also downgraded VTA's senior debt rating to 'B-' from 'BB-' and the capital securities rating of Vesta Capital Trust I to 'CCC' from 'B+'. The Rating Outlook remains Negative. The rating action reflects a decline in VTA's surplus that resulted from additional losses on discontinued operations and losses in reinsurance arbitration proceedings. At the same time, VTA's written premium has grown significantly in the past year resulting in a spike in operating leverage and a sharp decline in risk based capital. Additionally, VTA has other open reinsurance arbitrations and, therefore, remains exposed to further adverse decisions. Fitch believes VTA has become capital constrained and notes that the company recently entered into quota share reinsurance arrangements to support the premium written in its non-standard auto, life insurance and Texas homeowners' insurance businesses. VTA management has acknowledged the need for additional capital and has announced a capital initiative which may include the divestiture of a portion of its property/casualty business or its primary life insurance subsidiary, American Founders Life Insurance Company. Fitch views the initiative positively since such actions would both reduce VTA's capital needs and potentially raise additional capital through sale proceeds. However, the success of this initiative is not assured and, therefore, cannot yet be factored into Fitch's credit assessment. Due to the uncertainty related to the capital initiative and the remaining arbitration proceedings, Fitch's Rating Outlook remains Negative. Vesta Insurance Group, Inc., headquartered in Birmingham, AL, is a holding company for a group of insurance companies. Fitch ratings affected: Affirmative Insurance Co. Florida Select Insurance Co. Hawaiian Ins. & Guaranty Co. Insura Property and Casualty Ins. Co. Shelby Casualty Insurance Co. The Shelby Insurance Co. Vesta Fire Insurance Corporation Vesta Insurance Corporation Texas Select Lloyds Insurance Co. -- Insurer financial strength Downgraded 'BB'/Negative; Fixed-income securities ratings Vesta Insurance Group, Inc. -- Long term rating Downgraded 'B-'/Negative; -- Senior debt Downgraded 'B-'/Negative. Vesta Capital Trust I -- Deferrable Capital Securities Downgraded 'CCC'. VIRAGEN: External Auditors Doubt Ability to Continue Operations --------------------------------------------------------------- Viragen, Inc., and its subsidiaries are engaged in the research, development, manufacture and sale of certain immunological products for the treatment of life-threatening illnesses. It is also in the business of developing innovative technologies aimed at improving the manufacturing processes used to produce certain medical therapies. For the fiscal year ended June 30, 2002, the report of Viragen's independent auditors contains an explanatory paragraph indicating substantial doubt as to the Company's ability to continue as a going concern, due to its financial condition. Viragen's financial condition has not improved subsequent to its fiscal year end. If it is unable to raise additional debt or equity funding it will be necessary for the Company to significantly curtail or suspend a portion or all of its operations. No assurance can be given that additional funding will be available or if available, under what terms. During fiscal 2002, 2001 and 2000, Viragen incurred significant losses of approximately $11,089,000, $11,008,000 and $12,311,000, respectively, and has an accumulated deficit of approximately $92,088,000 as of December 31, 2002. Additionally, it had a cash balance of approximately $32,000 and a working capital deficit of approximately $2,258,000 at December 31, 2002. Management anticipates additional future losses as it commercializes its natural human interferon product and conducts additional research activities and clinical trials to obtain additional regulatory approvals. Accordingly, the Company will require substantial additional funding. These factors, among others, raise substantial doubt about its ability to continue as a going concern. WHEELING-PITTSBURGH: Wants Mashuda Landfill & License Deals OK'd ---------------------------------------------------------------- Wheeling-Pittsburgh Corporation seeks the Court's authority to enter into landfill and license agreements with Mashuda Corporation. Mashuda is a Pennsylvania corporation with its principal office in Cranberry Township, Pennsylvania. Mashuda is a contractor that has been retained by the West Virginia Department of Transportation, Division of Highways, in connection with the widening of State Route 2. The Landfill Agreement In connection with the Highway Project, Mashuda is responsible for excavating and removing excess shale, topsoil, dirt, rock and other fill material from the area of the highway that is to be widened. Because Mashuda does not have land on which to deposit the Fill Material, it must also locate an entity that is willing to allow it to deposit the Fill Material on its property. Currently, WPC owns approximately 325 acres of land, a certain portion of which is not level and contains many gullies and valleys, which make it unsuitable for industrial development. Once the WPC Property is leveled, it can be utilized by WPC and developed into an industrial property. Therefore, WPC desires to allow Mashuda to deposit the Fill Material onto a portion of the WPC Property. To accomplish this, WPC and Mashuda desire to enter into an agreement allowing Mashuda to deposit the Fill Material onto the WPC Property, as well as an accompanying incidental License Agreement allowing Mashuda a non-exclusive license for purposes of providing ingress and egress to the WPC Property. The salient provisions of the Landfill Agreement are: (1) Term. The term of the Transportation Agreement begins as soon as the Landfill Agreement is approved by Judge Bodoh and terminates 60 days after the final acceptance of the Highway Project by the WVDOT. (2) Property to Be Filled. WPC grants to Mashuda a non- exclusive license for purposes of entering onto, using and occupying the WPC Property for the purpose of depositing a minimum of 2,500,000 cubic yards of Fill Material on the areas of the WPC Property including a long gully leading to the Ohio River. Mashuda agrees to convey to WPC title to the Fill Material after it is deposited on the WPC Property. (3) Fees. Mashuda will pay WPC $1,000,000 for the use of the WPC Property on these terms: (i) $200,000 on signing of the Landfill Agreement; (ii) $200,000 on June 1, 2003; (iii) $200,000 on August 1, 2003; (iv) $200,000 on October 1, 2003; and (v) $200,000 on December 1, 2003. (4) WPC agrees not to dispose of any portion of the WPC Property without making the assignment of the Landfill Agreement a condition of the sale. (5) Necessary Approvals. The Landfill Agreement is subject to: (i) Mashuda obtaining the necessary approvals from all governmental agencies associates with its disposal area plans for the WPC Property; and (ii) the entry of an order by Judge Bodoh granting this Motion. The License Agreement The License Agreement is generally an agreement predicated on the facts of the Landfill Agreement granting Mashuda a non- exclusive license for purposes of providing ingress and egress to the WPC Property for the consideration of $10. Application of Consideration WPC agrees that the consideration it receives from the Landfill Agreement will be applied in accordance with the terms of the DIP Credit Agreement of November 2000 among WPC, WPSC, the remaining Debtors, Citibank NA, as Initial Issuing Bank, Citicorp USA as Agent, and the other DIP Lenders, and the terms of the Order approving settlement of inter-company disputes of May 2001. WPC asks Judge Bodoh for an expedited consideration of this request, asserting that the Landfill and License Agreements will have an important, positive impact on WPC's ability to continue its business operations as it will provide $1,000,000 in revenue to WPC as well as beneficial improvements to WPC's property, which will enable WPC to develop the property in the near future. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) WICKES INC: Riverside Transfers 2 Million Shares to Imagine Inv. ---------------------------------------------------------------- Riverside Group, Inc., (OTC Bulletin Board: RSGI) has transferred 2,797,743 shares of Wickes Inc., to Imagine Investments, Inc., in settlement of $13.9 million of debt owed to Imagine. The Company has also granted Imagine the option to acquire an additional 53,700 Wickes shares in settlement of an additional $268,500 of debt owed to Imagine. If Imagine sells or otherwise disposes of the Wickes shares in the next two years, Riverside will participate in 50% of any value realized for the exchanged shares over $5.00 per share plus yield accrued at the prime rate. The shares transferred to Imagine plus the option represent the entire ownership Riverside held in Wickes. Approximately 2.1 million of the shares transferred remain subject to a first lien with other Riverside creditors, which must be satisfied. Riverside continues to owe Imagine $2.2 million, secured by the remaining assets of the company. Riverside continues to hold its real estate and its Cybermax subsidiary. J. Steven Wilson, Chairman and CEO of Riverside, has served as the Chairman and CEO of Wickes since 1991, shortly after Riverside became a substantial shareholder of Wickes and was given Board representation. In light of Riverside disposing of its entire ownership interest in Wickes, Mr. Wilson has tendered his resignation from Wickes effective immediately. Mr. Wilson stated, "I have enjoyed working with everyone connected with Wickes over the years including my fellow associates, the customers and the vendors and wish them the best success in the future." In light of these developments, Riverside is currently reviewing its previously announced proposal to merge with a company affiliated with Mr. Wilson in order to become a private company. Riverside Group is a holding company engaged in e-business solutions including e-commerce, e-learning, website development and multi-media presentations through its 100% owned subsidiary, Cybermax, Inc. For more information on Riverside and its subsidiaries, visit them online at http://www.rsgicorp.comand http://www.cybermax.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. WILBRAHAM CBO: S&P Keeps Watch on Low-B & Junk Note Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1, A-2, B-1, B-2, and C notes issued by Wilbraham CBO Ltd. and managed by David L. Babson & Co. Inc., on CreditWatch with negative implications. The CreditWatch placements reflect several factors that have, during recent months, negatively affected the credit enhancement available to support the notes. These factors include par erosion of the collateral pool securing the rated notes, a downward migration in the credit quality of the assets within the pool, and a deterioration in the weighted average coupon generated by the performing assets within the collateral pool. The class B and class C overcollateralization ratios for Wilbraham CBO Ltd. continue to be out of compliance, and the class A overcollateralization ratio is slightly above its required minimum. As of the March 2, 2003 monthly trustee report, the class A overcollateralization ratio was 120.20%, versus the required minimum of 120%. The class B overcollateralization ratio was 106.30%, versus the required minimum of 113.00%. The class C overcollateralization ratio was 98.27%, versus the required minimum of 106.50%. The credit quality of the collateral pool has also continued to deteriorate. Currently, $19,468,611 (or approximately 6.56% of the collateral pool) has defaulted. In addition, $31,436,034 (or approximately 11.33%) of the performing assets in the collateral pool come from obligors with Standard & Poor's ratings currently in the 'CCC' range, $9,000,000 (or approximately 3.24%) of the performing assets in the collateral pool in the collateral pool come from obligors with Standard & Poor's ratings currently in the 'CC' range, and $44,105,000 (or approximately 12.62%) of the performing assets within the collateral pool come from obligors with Standard & Poor's long-term corporate credit ratings on CreditWatch negative. Finally, the weighted average coupon generated by the performing assets within the collateral pool has trended downward and is below its required minimum. Currently, the weighted average coupon of the performing assets is 9.49%, below the required minimum of 10.15%. Standard & Poor's will be reviewing the results of the current cash flow runs generated for Wilbraham CBO Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the rated interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the transaction's current collateral pool to determine whether the ratings assigned to the above mentioned notes are commensurate with the level of credit enhancement currently available. RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS Wilbraham CBO Ltd. Class Rating Balance (mil. $) To From Original Current A-1 AA+/Watch Neg AA+ 252.000 221.281 A-2 A+/Watch Neg A+ 19.000 19.000 B-1 BB-/Watch Neg BB- 8.000 8.324 B-2 BB-/Watch Neg BB- 21.000 23.024 C CCC-/Watch Neg CCC- 19.500 22.215 W.R. GRACE: SEC Imposes Cease-and-Desist Order vs. Ex-CEO Bolduc ---------------------------------------------------------------- Former W.R. Grace President and Chief Executive Officer, J.P. Bolduc, has consented to the entry of a "cease and desist" order in settlement of proceedings brought against him by the Securities and Exchange Commission. Mr. Bolduc was also a member of Grace's Board of Directors from 1991 through 1995. Between 1991 and 1995, National Medical Care Inc. was Grace's main health care subsidiary, with its headquarters in Waltham, Massachusetts. NMC provided kidney dialysis and home health services and manufactured specialized medical products. During the period of time relevant to the action against Mr. Bolduc, NMC comprised the bulk of Grace's Health Care Group, which was, until the first quarter of 1995, one of Grace's core businesses and was reported as a segment in Grace's consolidated financial statements. The Health Care Group contributed a significant portion of the consolidated pre-tax earnings of Grace during the majority of the period 1991 through 1995. During the fiscal years 1991 through 1995, both while Mr. Bolduc was an officer and continuing after his resignation, Grace engaged in fraudulent conduct by deferring income earned by NMC primarily to smooth the earnings of the Health Care Group. Grace deferred reporting income by increasing or establishing "excess reserves" that were not in conformity with generally accepted accounting practices. Grace used the reserves to manipulate the reported quarterly and annual earnings of the Health Care Group and Grace. Mr. Bolduc, first as the president and chief operating officer of Grace and later as the president and chief executive officer of Grace and a member of Grace's Board, through his actions or omissions, was a cause of: -- this fraudulent conduct, which resulted in Grace's filing false and misleading periodic reports with the Commission and making false and misleading statements in press releases and at analyst teleconferences; -- Grace's failure to make and keep books and records, which accurately reflected its transactions; and -- Grace's failure to maintain a system of internal accounting controls sufficient to provide assurances that transactions were recorded as necessary to permit the proper preparation of financial statements in conformity with GAAP. In his Settlement Offer, which the SEC accepts, Mr. Bolduc, without admitting or denying the Commission's findings, agrees that he will cease and desist from committing or causing any violations, or future violations, of the federal securities laws, and will cooperate with the Commission staff in preparing for and presenting any civil litigation or administrative proceedings concerning any transaction that is related to the Order. (W.R. Grace Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Phoenix Management Doesn't See Lenders Cheering Any Time Soon --------------------------------------------------------------- The protracted economic downturn and uncertainty over war in Iraq took a toll on lenders' attitudes last quarter, with most predicting the economy would perform at only a D+ level through mid-year. On top of that, lenders believe lending to all business segments will remain flat, bankruptcies and loan losses will rise, and most have modest or no expectations of growth from their customers, according to the results of the latest Phoenix Management "Lending Climate in America" survey. "Lenders are telling us they are seeing almost nothing encouraging on the short-term horizon," said E. Talbot (Tal) Briddell, president of Phoenix Management Services, which conducts the quarterly survey. "After three quarters of expecting a C level performance from the economy, lenders are placing the economy on academic probation with this downgrading to a D+. "This prolonged downturn and a less-than-certain resolution to matters in the Middle East have clearly tried lenders' patience." Most lenders said lending to corporate, middle market and small business customers would remain flat in the next six months. More than half of lenders said lending to international customers would be down. Sixty-three percent of respondents said bankruptcies would rise in the coming six months, while 56 percent predicted that loan losses would rise. Most lenders think interest rates, unemployment and bank failures will remain unchanged, although a significant 37 percent thought unemployment could rise further. When asked to assess their customers' growth expectations for the next six to 12 months, 65 percent of lenders said it would be moderate, and 32 percent said their customers expected no growth at all. This is the second quarter in a row that a third of lenders have said they anticipate no growth from their customers. "This is a depressing picture, no matter how you paint it," Briddell said. "Particularly troubling is the finding that lenders are very pessimistic about their own customers' growth expectations." When asked which industries were most attractive to their lending institution, lenders named three that have topped the list for six consecutive quarters: -- Light Manufacturing (80 percent), -- Industrial Distribution (76 percent) and -- Service Companies (61 percent). Start-ups / New Ventures (81 percent) and Technology (61 percent) were named by more than half of lenders as unattractive industries. Within the Technology industry, there were very few sectors that inspired any confidence among lenders. When asked which Technology sectors they considered most attractive, the highest scoring sector -- Hardware Manufacturers -- was named by only a weak 27 percent of respondents. When asked which technology sectors they considered unattractive, lenders were slightly less negative on key sectors than they were last quarter. "Rather than suggesting that they are beginning to warm to the technology industry again, we believe these new statistics are more indicative of a `who cares?' attitude," Briddell said. "Technology is simply not a relevant industry to most lenders right now." When asked to predict the Federal Reserve's next move in rates, half of said they expected a rate cut of 25 - 50 basis points in the next six months. Thirty-six percent expect no change, and 14 percent expect rates to rise. The Phoenix Management "Lending Climate in America" survey is conducted quarterly to gauge shifts in lenders' attitudes toward the economy. Lenders from commercial banks, commercial finance companies and factors across the country are surveyed each quarter. Phoenix Management Services (http://www.phoenixmanagement.com) is a Philadelphia-based turnaround management firm that assists companies encountering financial, operational or management difficulties. * Buchanan Ingersoll Boosts IP in San Diego & Banking in NY ----------------------------------------------------------- In its San Diego office, Buchanan Ingersoll has added Bradford J. Duft, a former Brobeck partner and the leader of its San Diego intellectual property practice from 2000-2001, as a shareholder in the firm's IP section. He will concentrate his substantial practice on the biotechnology industry where he has significant experience counseling national and international clients in IP strategy, deal-making and litigation. Mr. Duft also served as counsel for the prevailing party in the first biotechnology patent case ever tried in the United States, Hybritech Inc. v. Monoclonal Antibodies, Inc. In New York, Dan J. Schulman has joined the firm as Vice Chair of Banking Litigation. Also a former Brobeck attorney, Mr. Schulman headed that firm's bankruptcy and financial institutions group in New York, where he focused his practice on litigation and bankruptcy workouts for banks, broker/dealers, and substantial corporations. Mr. Schulman has extensive trial and appellate experience, and is on the faculty of the National Institute for Trial Advocacy (NITA). He also has six years experience in-house at The Bank of New York, the United States' oldest bank and the principal subsidiary of The Bank of New York Company, Inc. According to Karen S. Crawford, head of Buchanan Ingersoll's San Diego office, "Brad offers our clients sophisticated, high-level IP experience - particularly in the biotech, pharmaceutical and life sciences industries - which is extremely important in this market when a company's future often depends on its ability to protect and preserve its intellectual property. Combined with strong IP litigation, FDA, pharmaceutical and biotechnology practices not only in San Diego but throughout our firm, this is a tremendously effective combination that we will continue to build on and expand." William M. O'Connor, managing shareholder of the firm's New York office, commented, "Our financial institutions, bankruptcy and creditors' rights practice has gained considerable momentum over the last number of years, particularly in our New York office. With Dan coming on board, we've continued that growth and added a talented attorney who has significant and proven experience in bankruptcy and commercial litigation." Before entering private practice, Mr. Duft was a law clerk to Judge Giles S. Rich of the U.S. Court of Appeals for the Federal Circuit from 1980-1983. After leaving the court, he joined Lyon & Lyon in Los Angeles before opening the firm's San Diego office in 1989. He later served as Vice President and General Counsel of Amylin Pharmaceuticals from 1990-1998, during which time he continued his relationship with Lyon & Lyon as Of Counsel. He has authored numerous articles and is a frequent lecturer on matters relating to biotechnology and other areas of intellectual property law, and has worked with and counseled numerous biotechnology and life science clients. He graduated from George Washington University with an LL.M., with Highest Honors, in Patent and Trade Regulation, earned his J.D., Cum Laude, from California Western, and holds a B.S. in Molecular, Cellular and Developmental Biology from the University of Colorado. While at Brobeck, Mr. Schulman represented clients principally in the financial services industry in bankruptcy, workouts and complex commercial litigation, and led the New York office's bankruptcy group. Prior to that, he spent six years as Senior Counsel for The Bank of New York, during which time he was responsible for all national and international litigation and workout matters for the Bank and all of its affiliates. He also handled large-ticket equipment leasing, lending, real estate lending and recovered in excess of $35 million in 2001 from litigation with borrowers and lessees. He holds his law degree from Vanderbilt University, where he served on the Moot Court Board and as Editor of the Vanderbilt Journal of Transnational Law. Mr. Schulman also holds a bachelor's degree with Honors from Swarthmore College. Buchanan Ingersoll -- http://www.buchananingersoll.com-- is one of the 100 largest law firms in the United States. The firm serves clients from offices in New York City, San Diego, Pittsburgh, Washington, D.C., Philadelphia, Princeton, Wilmington, Miami, Tampa, Harrisburg, London and Dublin. * Meetings, Conferences and Seminars ------------------------------------ April 10-11, 2003 AMERICAN CONFERENCE INSTITUTE Predaotry Lending The Westin Grand Bohemian, Florida Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 10-13, 2003 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 28-29, 2003 AMERICAN CONFERENCE INSTITUTE Credit Derivatives Waldorf Astoria, New York Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 29, 2003 NEW YORK INSTITUTE OF CREDIT Corporate Governance Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org May 1-3, 2003 ALI-ABA Chapter 11 Business Organizations New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 8-10, 2003 ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 14, 2003 NEW YORK INSTITUTE OF CREDIT Factoring Panel Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 4, 2003 NEW YORK INSTITUTE OF CREDIT 24th Credit Smorgasbord Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 19-20, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Corporate Reorganizations: Successful Strategies for Restructuring Troubled Companies The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***