T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 29, 2003, Vol. 7, No. 83 Headlines 360NETWORKS: Has Until June 11, 2003 to File Claims Objections A NOVO BROADBAND: Inks Definitive Pact to Sell Assets for $1.8MM A.B. WATLEY: Capital Resources Insufficient to Fund Operations A-BEST PRODS.: Wants Plan Filing Exclusivity Extended to June 17 AIR CANADA: Judge Farley Amends Initial CCAA Order in Canada AIR CANADA: Adjourns Annual Shareholders' Meeting Sine Die ALLOU DISTRIBUTORS: Court Okays Jenkens & Gilchrist as Counsel AMERCO: Republic Western to Exit Non-U-Haul Lines of Business AMERICAN AIRLINES: Consensual Cost-Restructuring Back on Track AMERIGAS PARTNERS: Posts Increased Retail Propane Revenues in Q4 ANC RENTAL: Wins Nod to Amend Brown Bros.' Terms of Engagement ARI NETWORK: Completes $4-Million Debt Restructuring Transaction ATSI COMMS: AMEX Delists Shares Effective April 24, 2003 AUSPEX SYSTEMS: Nasdaq Intends to Delist Shares Effective Friday AUSPEX SYSTEMS: Case Summary & 20 Largest Unsecured Creditors BEARD COMPANY: Cole & Reed PC Expresses Going Concern Doubt BLACK BAY BREWING: Case Summary & 20 Largest Unsec. Creditors BLUE MOON GROUP: James C. Marshall Expresses Going Concern Doubt COMPACT DISC: Honoring Up to $4MM of Prepetition Vendor Claims CONSECO FINANCE: Claims Estimation Hearing to Convene on May 9 CONSECO INC: Committee Gets Go-Signal to Hire Financial Advisors COVANTA: Asks Court to Fix June 14 Bar Date for Debenture Claims DAN RIVER: Reports Improved Earnings Results for First Quarter DELTA AIR LINES: CEO Mullin Bullish about Company's Viability DIRECTV: Court OKs Bankruptcy Services as Claims & Notice Agent DIVERSIFIED CORPORATE: Annual Shareholders' Meeting on May 30 DOMAN INDUSTRIES: Canadian Court Extends CCAA Stay Until July 23 DOW CORNING: Reports Growth in Sales and Profits for Q1 2003 ENCOMPASS SERV.: Lease Decision Time Extension Hearing Tomorrow ENRON CORP: Selling Interests in CGAS Inc. to Enervest for $30MM FISHER COMMS: Board Elects Phelps K. Fisher as New Chairman FLEMING COMPANIES: AlixPartners' Rebecca Roof Serving as New CFO FLEMING COS.: Asks Court to Deem Utilities Adequately Assured FRUIT OF THE LOOM: Unsec. Trust Wants Time to Challenge Claims GLOBAL CROSSING: Simplifies Leadership Structure as Part of Plan GOLDSTATE: Initiates Restructuring via 1-For-15 Reverse Split GRAPHON CORP: Shares Delisted from Nasdaq SmallCap Market GREAT ATLANTIC & PACIFIC TEA: Red Ink Flows in 4th Quarter 2002 GREAT LAKES AVIATION: Ability to Continue Operations Uncertain HARD ROCK HOTEL: S&P Affirms B+ Rating Over Steady Ops. Results HAWAIIAN AIRLINES: Receives Extension from Two Aircraft Lessors HAWAIIAN AIRLINES: Says Boeing Request for Trustee Lacks Merit HAYES LEMMERZ: Exclusivity Extension Hearing Slated for May 7 HMP EQUITY: S&P Assigns B+/B- Credit & Sr Discount Note Ratings HORIZON NATURAL: Court Sets June 30, 2003 as Claims Bar Date ITIS HOLDINGS: Working Capital Deficit Tops $1MM at December 31 JUNIPER CBO: S&P Keeps Watch on Junk Class A-4L & A-4 Ratings LASERSIGHT INC: Asks Nasdaq to Extend Listing Status LEAP WIRELESS: First Meeting of Creditors to Convene on May 20 LODGIAN: S.D.N.Y. Court Confirms Impac Plan of Reorganization LTV CORP: U.S. Trustee Disbands Unsecured Creditors' Committee MAGELLAN HEALTH: Wants Open-Ended Lease Decision Period MATLACK: Chapter 7 Trustee Taps PPM as Environmental Consultants MICROCELL: Expects Reorganization Plan to Become Effective May 1 MWAM CBO: Fitch Keeping Watch on BB- Preferred Shares Rating NATIONAL CENTURY: US Trustee Balks at Kaye Scholer's Engagement NATIONWIDE COMPUTERS: Ch. 11 Liquidator Brings-In Togut Segal OLYMPIC PIPE LINE: Gets Court Nod to Hire PricewaterhouseCoopers OWENS-BROCKWAY: Commences Tender Offer for Parent's 7.85% Notes OWENS CORNING: First Quarter 2003 Results Show Improvement OWENS CORNING: Brings-In Innisfree M&A as Balloting Agent PACIFIC GAS: ORA Recommends $170-Mill. Hike in Electric Revenues PHAR-MOR: Ohio Court Confirms 1st Amended Joint Liquidating Plan PHILIP MORRIS: Plaintiffs Seek to Halt Div. Payments to Altria POLAROID CORP: Judge Walsh Directs KPMG LLC to Produce Documents RELIANT RESOURCES: Gen. Counsel Hugh Rice Kelly to Retire May 1 SIEBEL: Outlook Changed to Negative over Lower License Revenues SIGNATURE EYEWEAR: Completes Recapitalization Transactions SMARTSERV ONLINE: Red Ink Continues to Flow in Fourth Quarter SMITHWAY MOTOR: Narrows First Quarter Net Loss to $1.6 Million SOLUTIA INC: Weakening Performance Spurs S&P Rating Cut to BB- SONICBLUE INC: D&M Completes $36MM Acquisition of Certain Assets SOUTH STREET CBO: S&P Keeps Watch on Three Junk Note Ratings SPIEGEL GROUP: Court Approves BSI's Appointment as Claims Agent TECO ENERGY: Fitch Downgrades Low-B Ratings over High Leverage TRITON PCS: S&P Places Lower-B Ratings on CreditWatch Negative UNITED AIRLINES: State Street Discloses Equity Stake in UAL Corp ULTRA CHEMICAL: Case Summary & 20 Largest Unsecured Creditors UNOVA INC: First Quarter 2003 Net Loss Slides-Down to $15 Mill. US AIRWAYS: Settles Claims Dispute with NY & NY Port Authorities USA BIOMASS: Enters Letter of Intent to Acquire MDF Transport WICKES INC: Jim O'Grady Returns as New Company President WORLDCOM INC: Wants Nod to Sell Missouri Property for $15 Mill. * Large Companies with Insolvent Balance Sheets ********* 360NETWORKS: Has Until June 11, 2003 to File Claims Objections -------------------------------------------------------------- At the Reorganized 360networks Debtors' behest, the U.S. Bankruptcy Court for the Southern District of New York granted an extension of time within which the Reorganized Debtors' or the Creditors' Committee may object to claims filed in the Debtors' cases to June 11, 2003. (360 Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) A NOVO BROADBAND: Inks Definitive Pact to Sell Assets for $1.8MM ---------------------------------------------------------------- A Novo Broadband, Inc., (Pink:ANVB) has entered into a definitive agreement to sell substantially all of the assets used in its ongoing business for $1.8 million in a transaction pursuant to Secs. 363 of the Bankruptcy Code. The proposed sale to Teleplan Holdings USA, Inc. is subject to higher and better offers and to certain conditions, including the approval of the transaction by the court in A Novo Broadband's pending Chapter 11 case. The agreement supersedes a previously reported non-binding letter of intent with another potential buyer. William Kelly, A Novo Broadband's President, said the Company did not expect to be able to complete a reorganization in the Chapter 11 case or to make any distribution to shareholders following the proposed sale or any other asset dispositions. He said the Company plans to continue operations and actively seek business pending the sale and that it was Teleplan's intention to maintain customer and supplier relationships following the sale. The proposed sale does not include certain inventory and other assets. The Company is continuing efforts to sell all of its remaining assets. A Novo Broadband provides equipment repair and related services to manufacturers of digital modems and set-top boxes and to cable system operators who utilize the equipment. A.B. WATLEY: Capital Resources Insufficient to Fund Operations -------------------------------------------------------------- A.B. Watley Group Inc. is a U.S. public corporation. The Company conducts business primarily through its principal subsidiaries, A.B. Watley, Inc. and Integrated Clearing Solutions, Inc. A.B. Watley and Integrated are registered broker-dealers with the Securities and Exchange Commission, and are members of the National Association of Securities Dealers, Inc. A.B. Watley is an introducing broker-dealer, conducting business in electronic trading, information and brokerage services, as well as institutional block trading. Integrated is an introducing broker-dealer conducting sales of mutual funds to institutional clients. A.B. Watley and Integrated clear all transactions through clearing brokers on a fully disclosed basis. Accordingly, A.B. Watley and Integrated are exempt from Rule 15c3-3 of the Securities Exchange Act of 1934. The Company has significant deficits in both working capital and stockholders' equity. These factors raise substantial doubt about the Company`s ability to continue as a going concern. Total revenues for the quarter ended December 31, 2002 were $4,179,700 - a decrease of 50%, as compared to revenues of $8,288,701 for the quarter ended December 31, 2001. Loss before Income Taxes and Extraordinary Item decreased from $6,154,989 for the three-month period ending December 31, 2001 to $1,674,827 for the three-month period ending December 31, 2002. Trading volume has significantly decreased and the Company has lost customers in its direct access business. To respond to its liquidity and capital resource needs management has implemented various cost cutting initiatives including renegotiating its clearing agreements at more favorable rates, the restructuring of its software license with E*Trade Group, Inc. and the sale of its software programs known as Ultimate Trader II and Watley Trader. The Company is also looking into more traditional lines of business such as fixed income and equity capital markets, as well as, the feasibility of expanding its existing business to attract active traders and hedge funds. As a further fund raising alternative the management of ABWG may seek to raise additional capital from time to time to fund operations through private placements of equity or debt instruments. There can be no assurance that any of these alternatives will be successful. A-BEST PRODS.: Wants Plan Filing Exclusivity Extended to June 17 ---------------------------------------------------------------- A-Best Products Company, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to extend the time period within which it has the exclusive right to file its chapter 11 plan and solicit acceptances of that plan from creditors. The Debtor tells the Court that it needs until June 17, 2003, to file its plan and until August 18, 2003, to solicit acceptances. The Debtor reports that it has been active and diligent in resolving important issues in this Chapter 11 case. Most important, the Debtor has successfully negotiated the terms of a consensual plan of reorganization with its Creditors' Committee, the Legal Representative for Future Claimants and other parties- in-interest. The 90-day extension of the Exclusive Periods will not harm the Debtor's creditors. Indeed, the Debtors warn, a termination of the Exclusive Periods would force the Debtor to file its proposed plan before other parties in interest have had a full opportunity to review and comment on the Debtor's proposed plan of reorganization. If the Exclusive Periods are terminated and any competing plan is filed, the inevitable litigation would consume what little resources the Debtor have -- to the clear detriment of its creditors. A-Best Products Company, Inc., a former manufacturer and seller of industrial safety clothing, field for chapter 11 protection on September 20, 2002 (Bankr. Del. Case No. 02-12734). Henry Jon DeWerth-Jaffe, Esq., at Pepper Hamilton LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $14,434,315 in total assets and $575,398 in total debts. AIR CANADA: Judge Farley Amends Initial CCAA Order in Canada ------------------------------------------------------------ Air Canada announced that Justice Farley of the Superior Court of Justice of Ontario amended his initial order dated April 1, 2003, as follows, thereby furthering the airline's restructuring under the Companies' Creditors Arrangement Act. DIP Financing Justice Farley confirmed a Debtor-In-Possession financing facility of USD $700 million with General Electric Capital Canada Inc. Closing and funding under this facility is subject to completion of the definitive loan and security documentation expected to take place April 30, 2003. A motion requesting approval of an agreement between Air Canada and CIBC on a new Aerogold Agreement and on an additional financing commitment for CAD $350 million is scheduled to be heard on April 29, 2003. Extension of the Stay Order Justice Farley also approved an extension of the original stay period order granted to Air Canada on April 1, 2003 to June 30, 2003. The purpose of the extension is to provide Air Canada sufficient time to develop a revised Business Plan, to continue negotiations with creditors and labor unions and to renegotiate aircraft leases, all of which must be completed before developing a final Plan of Arrangement. The target date for the Plan of Arrangement is July 31, 2003. Postponement of Air Canada Annual General Meeting Justice Farley approved Air Canada's request to extend the time to call the airline's Annual General Meeting pending further order of the court. AIR CANADA: Adjourns Annual Shareholders' Meeting Sine Die ---------------------------------------------------------- On April 9, 2003, Air Canada advised the United States Securities and Exchange Commission that the Annual General Meeting of shareholders slated for May 13, 2003 has been postponed on a yet-to-be-determined date. Air Canada also notified the Canadian Securities Administration and The Toronto Stock Exchange. (Air Canada Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALLOU DISTRIBUTORS: Court Okays Jenkens & Gilchrist as Counsel -------------------------------------------------------------- Allou Distributors, Inc., and its debtor-affiliates obtained a favorable nod from the U.S. Bankruptcy Court for the Eastern District of New York to employ Jenkens & Gilchrist Parker Chapin LLP as their chapter 11 counsel. The Debtors have selected Jenkens & Gilchrist because the Firm's professionals have considerable experience in, among other things, chapter 11 reorganization cases and general corporate, litigation, real estate, tax, environmental, and other matters. The Debtors expect Jenkens & Gilchrist to: a. give advice to the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; b. negotiate with creditors of the Debtors and other parties in interest in formulating a plan of reorganization, and to take legal steps necessary to confirm such plan, including, if need be, negotiations for financing such plan; c. prepare on behalf of the Debtors, as debtors-in- possession, necessary applications, motions, complaints, answers, orders, reports and other pleadings and documents; d. appear before this Court and the United States Trustee and to represent the interests of the Debtors before this Court and the United States Trustee; and e. provide general corporate, real estate, litigation, tax, environmental, and other services for the Debtors as debtors-in-possession, as they may request and as may be necessary, required or appropriate. The attorneys and paraprofessionals presently designated to represent the Debtors and their current standard hourly rates are: Partners -------- Mitchel H. Perkiel $585 per hour Lee W. Stremba $540 per hour Henry I. Rothman $495 per hour Counsel and Associates ---------------------- Paul H. Deutch $370 per hour John J. Leonard $240 per hour Paralegals ---------- Beth Friedman $160 per hour Sonia Shah $150 per hour Allou Distributors, Inc., is in the business of distributing consumer personal care products and prescription pharmaceuticals on a national basis. Three of the Debtors' creditors filed an involuntary chapter 11 petitions against all Debtors on April 9, 2003, which, shortly thereafter, the Debtors consented (Bankr. E.D.N.Y. Case No. 03-82321). Eric G. Waxman, III, Esq., and John Joseph Leonard, Esq., at Jenkens & Gilchrist Parker Chapin LLP represents the Debtors in their restructuring efforts. AMERCO: Republic Western to Exit Non-U-Haul Lines of Business ------------------------------------------------------------- AMERCO, (Nasdaq: UHAL) parent company of Republic Western Insurance Company (RepWest), announced that in connection with the Company's overall restructuring efforts, it is redirecting the operating focus of RepWest. In order to reduce costs and build upon the Company's core strengths, RepWest is exiting non-U-Haul-related lines of business. This exit may result in near term losses as these lines are eliminated. RepWest is already engaged in talks to cede some lines. "The decision to exit these lines of business is part of our restructuring initiatives, and we believe that it will be viewed as positive by the capital markets and rating agencies," said Joe Shoen, Chairman of AMERCO. "Insuring non-U- Haul risks is not a strategic fit with U-Haul. RepWest has previously disclosed losses of over $100 million writing non-U- Haul risks in recent years. It is time to focus on those lines of business that enhance our core do-it-yourself moving and storage business." "The following actions will allow us to take advantage of our core strengths and to build upon our established leadership position in the self-moving and self storage industries," said Shoen. "We believe that these changes are in the best long-term interests of RepWest policyholders and our shareholders." -- The Company expects staffing and other general expense reductions at RepWest to reflect the reduced scope of its operating activities. Size and timing of these reductions are being determined. -- RepWest will continue to source reinsurance for U-Haul's risks above a certain dollar amount. -- RepWest will continue to perform claims handling for U-Haul from eight offices across the United States and Canada. -- RepWest will continue to underwrite the Safe programs offered in connection with U-Haul self move and self store rentals. -- RepWest will continue to write lines of business that strategically fit with U-Haul, such as insurance for self- storage operators. The change in the RepWest's business focus should result in strengthening of capital ratios at RepWest and a renewed focus on U-Haul risk. RepWest and U-Haul renegotiated their insurance contracts for fiscal year 2003. The renegotiated contracts relieve RepWest's reserves, and create non-cash charges and reserve increases on U-Haul's financial statements. The reduction in non-U-Haul risks written at RepWest will have the effect of improving the transparency of AMERCO's financial reporting. As previously announced in August 2002, AMERCO engaged BDO Seidman as its public accountant. At the request of the AMERCO Audit Committee, BDO Seidman is in the process of a re-audit of AMERCO and its insurance subsidiaries for fiscal years 2001 and 2002. SAC Holding Corporation (SACH) will continue to be a consolidated entity. The reduction in non-U-Haul risks written at RepWest will have the effect of improving the transparency of AMERCO's financial reporting. 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 AMERICAN AIRLINES: Consensual Cost-Restructuring Back on Track -------------------------------------------------------------- American Airlines said its consensual cost-restructuring process is "back on track" as the company and its union leaders agreed to allow the immediate implementation of new labor contracts. Late last week, the AMR (NYSE: AMR) Board of Directors accepted the resignation of Chairman and CEO Don Carty and named Edward A. Brennan as Executive Chairman, and President and COO Gerard J. Arpey as the new Chief Executive Officer. Arpey continues as President. In a statement addressing the latest developments at the company, President and CEO Arpey said, "We enter a new era here at AMR. I appreciate the Board's confidence, and I very much appreciate the leadership the unions are showing and their dedication to helping save our great company." The ratified agreements permit the company to go forward with plans to reduce labor costs by $1.8 billion a year as part of a $4 billion restructuring plan crafted in cooperation with the leaders of the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union. The modified agreements make improvements to the restructured labor contracts and enhance the ability of employees to see benefits sooner if the company returns to profitability. These changes will shorten the duration of the labor contracts to five years and replace the variable wage adjustment with a mechanism that more closely links management performance incentives with opportunities for employees to share in any future success of the Company. Arpey stressed that while the ratified agreements were a vital component of the Company's restructuring process, the road ahead would be perilous. The Company faces a hostile business and financial environment that features higher fuel prices than anticipated, continuing conflict in the Middle East, the SARS outbreak and an economy that continues to struggle. "In the short term," Arpey said, "We confront external factors that pose a real threat to the success of the Company's consensual restructuring. By any measure, we have our work cut out for us. We are clearly not out of the woods yet." Among other things, the company must also still secure meaningful accommodations from vendors, lessors and suppliers. "Everyone has worked incredibly hard through some extremely difficult times to ratify the tentative agreements," Arpey said, reserving special praise for employees and thanking them for taking "this important step to move our company forward." He also stressed that the Company must "implement these agreements rapidly and without disruption." Arpey also recognized the North Texas Congressional delegation, characterizing their efforts as "one of the absolutely critical components to this success." In noting U.S. Senators Kay Bailey Hutchison's and John Cornyn's involvement, Arpey said, "They have been involved for weeks in doing everything possible to keep this process moving forward." U.S. Representatives Martin Frost, Joe Barton, Pete Sessions and Michael Burgess were singled out for their help in convening the successful "last ditch effort" meetings that brought the various parties together again. "Without that push, and further assistance from U.S. Reps. Jim Oberstar and Peter DeFazio, we simply wouldn't be standing here," said Arpey during his press conference announcing the agreements. At the press conference, held Friday at American Airlines headquarters in Fort Worth announced the latest developments, Arpey was flanked by American's new Chairman, Ed Brennan; AMR Board Member Roger Staubach; the company's two union leaders -- John Darrah, president of the APA and John Ward, president of the APFA; and Congressman Martin Frost and Congressman Michael Burgess. In his introductory remarks, Roger Staubach thanked former Chairman and CEO Don Carty for his "many contributions to the company," and emphasized that with the new leadership appointments of Arpey and Brennan, "AMR and American now will have two outstanding individuals with extensive management experience." He also observed that Brennan "brings a depth of experience in running a large corporation that AMR is fortunate to tap." Brennan, 69, is the retired chairman, president and CEO of Sears, Roebuck and Co., and has served on the AMR Board of Directors for over 16 years. "I am honored to accept the position of executive chairman of AMR Corporation. I love this company and know that we have the key ingredients necessary for success: the best service and the best employees in the business," Brennan stated. "The Board of Directors has complete confidence in Gerard and his ability to bring together the employees of AMR to serve our customers so that we may continue a legacy of aviation greatness that started back in the days of Charles Lindbergh," Brennan added. "I will continue to lead by example," Arpey said. "Actions, of course, speak louder than words. And you can expect me to ensure my actions are consistent with the high standards we set for all employees of American Airlines and American Eagle." Arpey, 44, has devoted his entire professional career to American Airlines, where he began as a financial analyst in 1982 and became a corporate officer in 1989. He holds a FAA multi- engine instrument rating and is an avid private pilot. AMERIGAS PARTNERS: Posts Increased Retail Propane Revenues in Q4 ---------------------------------------------------------------- AmeriGas Partners, L. P.'s retail propane revenues were $361.8 million in the 2002 three-month period ended December 31st, an increase of $63.0 million over the same period of 2001, reflecting a $46.1 million increase as a result of the greater retail volumes sold and a $16.9 million increase as a result of higher average selling prices. Wholesale propane revenues increased $8.4 million reflecting higher average wholesale selling prices and the increase in wholesale volumes sold. The higher average retail and wholesale selling prices in the 2002 three-month period reflect higher propane commodity prices. Total cost of sales increased $44.2 million reflecting the effects of the greater retail and wholesale volumes sold and the increase in the commodity price of propane. Total margin increased $29.5 million principally as a result of the weather-related increase in retail gallons sold during the 2002 three-month period and, to a lesser extent, a $4.4 million increase in margin from PPX(R). The increase in PPX(R) margin reflects higher volumes, and greater unit margins to fund the purchase of grill cylinder overfill protection devices in order to meet National Fire Protection Association guidelines. These guidelines require that propane grill cylinders refilled after April 1, 2002, be fitted with OPDs. The extent to which this greater level of PPX(R) margin is sustainable will depend upon a number of factors including the continuing rate of OPD valve replacement and competitive market conditions. The $23.8 million increase in EBITDA (earnings before interest expense, income taxes, depreciation and amortization, minority interests and income from equity investees) in the 2002 three- month period principally reflects higher total margin and a $2.1 million increase in other income partially offset by a $7.8 million increase in the Partnership's operating and administrative expenses. Although EBITDA is not a measure of performance or financial condition under accounting principles generally accepted in the United States, it is included in this analysis to provide additional information for evaluating the Partnership's ability to pay and declare the Minimum Quarterly Distribution of $0.55 and for evaluating the Partnership's performance. The Partnership's definition of EBITDA may be different from the definition of EBITDA used by other companies. Notwithstanding the significant increase in retail volumes sold in the 2002 three-month period, payroll and benefits expense increased only $2.0 million principally reflecting the full- period benefit of the consolidation of 90 Columbia Propane and AmeriGas Propane districts. In addition, 2002 three-month period operating and administrative expenses reflect higher provisions for doubtful accounts due in large part to the increased sales; greater general insurance and litigation expense; and an increase in delivery vehicle expenses due in large part to the greater retail volumes delivered during the 2002 three-month period. Other income in the prior-year three-month period was reduced by a $2.1 million loss from declines in the value of propane commodity option contracts. Operating income increased less than the increase in EBITDA principally as a result of higher depreciation expense associated with OPDs. FINANCIAL CONDITION AND LIQUIDITY The Partnership's long-term debt outstanding at December 31, 2002 totaled $1,035.7 million (including current maturities of $145.6 million) compared to $945.8 million of long-term debt (including current maturities of $60.4 million) at September 30, 2002. On December 3, 2002, AmeriGas Partners issued $88 million face amount of 8.875% Senior Notes due 2011 at an effective interest rate of 8.30%. The net proceeds of approximately $89.1 million, which are included in cash and cash equivalents at December 31, 2002, were used on January 6, 2003, subsequent to the end of the quarter, to redeem prior to maturity AmeriGas Partners' $85 million face amount of 10.125% Senior Notes due 2007 at a redemption price of 102.25%, plus accrued interest. The Partnership will recognize a loss of approximately $3.0 million in the quarter ending March 31, 2003 relating to the redemption premium and other associated costs and expenses. As reported in Troubled Company Reporter's April 15, 2003 edition, AmeriGas Partners, L.P.'s $32 million 8.875% senior notes due 2011, issued jointly and severally with its special purpose financing subsidiary AP Eagle Finance Corp., are rated 'BB+' by Fitch Ratings. The Rating Outlook is Stable. An indirect subsidiary of UGI Corp., is the general partner and a 51% limited partner for AmeriGas. AmeriGas in turn is a master limited partnership for AmeriGas Propane, L.P., an operating limited partnership. Proceeds from the new senior notes will be utilized to make a capital contribution to the OLP which in turn will use the funds as well as existing cash on hand to repay approximately $53.8 million of maturing debt. AmeriGas' rating reflects the subordination of its debt obligations to $577 million secured debt of the OLP including the OLP's $540 million privately placed 'BBB' rated first mortgage notes. In addition, Fitch's assessment incorporates the underlying strength of AmeriGas' retail propane distribution network. AmeriGas is viewed as one of the premier retail propane distributors evidenced by its efficient operations, favorable acquisition track record, and proven ability to sustain gross profit margins under various operating conditions. ANC RENTAL: Wins Nod to Amend Brown Bros.' Terms of Engagement -------------------------------------------------------------- ANC Rental Corporation and Brown Brothers obtained permission from the Court to amend the Engagement Letter pursuant to these terms: A. Paragraph 3 of the Engagement Letter is modified as: "Notwithstanding any other provision of the Engagement Letter commencing March 1, 2003, the Advisory Fee will terminate. After this date, to the extent ANC requests that Brown Brothers professionals attend outside or on-site meetings in connection with a transaction for ANC's European operations, ANC will compensate Brown Brothers at its standard per diem rate of $4,000 per professional." B. Subsections (a) and (b) of Paragraph 3 of the Engagement Letter will be amended and replaced in their entirety: 1. after the first to occur of a Sale or a restructuring of ANC Rental Corporation and Restructuring of substantially all of the Company's liabilities, Brown Brothers will be paid a Transaction Fee equal to $250,000; and 2. in the event of a Sale of the European operations of ANC, Brown Brothers will be entitled to a Transaction Fee equal to $500,000. Backgrounder On March 27, 2002, the Court entered an Order pursuant to Sections 327 and 330 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure authorizing ANC Rental Corporation and its debtor-affiliates to employ Brown Brothers as their investment banker, nunc pro tunc, to December 27, 2001. On February 26, 2002, the Court entered an Order approving the employment of Lazard Freres & Co, LLC as the Debtors' Investment Banker. In light of Lazard's engagement, Brown Brothers agreed to modify terms of its engagement by foregoing all fees to which it would otherwise be entitled in connection with a transaction involving the Debtors' United States operations in exchange for a payment of the Brown Brothers' monthly fee for January and February 2003, and a $250,000 fee in the event that all of the Debtors' operations are sold, or a $500,000 fee if the Debtors sell ANC International. Lazard's engagement letter also provides for an additional fee of $150,000 if Lazard provides testimony in Court. Lazard agreed to work solely on a contingency basis, with payment to be made only in the event of a sale or other similar transaction. Although Lazard agreed that they will market the Debtors' businesses as a whole, they will not receive a fee from a transaction involving solely the Debtors' International or Canadian operations. (ANC Rental Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARI NETWORK: Completes $4-Million Debt Restructuring Transaction ---------------------------------------------------------------- ARI (OTCBB:ARIS), a leading provider of electronic catalog- enabled business solutions that connect equipment manufacturers with their service and distribution networks, has successfully completed a restructuring of its $4.0 million convertible subordinated debenture, which was due April 27, 2003. "This is a good result," said Brian E. Dearing, ARI's chairman and chief executive officer. "By restructuring the debt with the new holders, we have strengthened the Company for the future and can now refocus our attention on the business. As we have said all along, ARI is a good company with blue chip customers, industry-leading products, and superb employees. We have proven ourselves capable of generating sufficient cash flow to satisfy our obligations, including this new one." In exchange for the debt, which had approximately $0.9 million in accrued and unpaid interest, and a warrant to purchase 600,000 shares of ARI common stock at $4.00 per share, ARI has given the new holders (in aggregate) $500,000 in cash, new unsecured notes for $3.9 million, and new warrants for 250,000 common shares at $1.00 per share. The interest rate on the new notes is prime plus two, with the first payment due March 31, 2004. The payment schedule provides for regular quarterly payments until the principal is paid in full on December 31, 2007. In connection with this restructuring, ARI has received a thirty-day extension on its receivables financing facility with Textron Growth Capital Division, which would have expired on April 24. The Company anticipates that a long-term arrangement will be negotiated before this most recent extension expires. "In addition to restructuring the debt, it is also significant that the new holders have assigned all their rights and claims against RGC International Investors (Rose Glen), and its affiliates to ARI," added Dearing. "Last fall, we negotiated a Stand-Still and Buy-Back Agreement with Rose Glen, the original holder of the debenture and warrants, which allowed us to satisfy our obligations for an initial payment of $500,000 and an additional payment of $1 million eight months later. After we accepted their offer, Rose Glen sold the Debenture to an investment consortium represented by Taglich Brothers, Inc. The assignment to us of their rights against Rose Glen further strengthens our position in seeking to obtain the benefit of the $1.5 million deal," Dearing concluded. ARI Network Services, Inc. is a leading provider of electronic catalog-enabled business solutions for sales, service and life- cycle product support in the manufactured equipment market. ARI currently provides approximately 80 parts catalogs (many of which contain multiple lines of equipment) for approximately 60 equipment manufacturers in the U.S. and Europe. More than 75,000 catalog subscriptions are provided through ARI to over 23,000 dealers and distributors in more than 100 countries. ARI serves a dozen segments of the worldwide manufactured equipment market including outdoor power, recreation vehicle, floor maintenance, auto and truck parts aftermarket, power sports, marine and construction. The Company builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services. ARI communications systems provide a global electronic pathway for parts orders, warranty claims and other transactions between manufacturers and their networks of sales and service points. In addition, ARI also provides a template- based dealer website service that makes it quick and easy for an equipment dealer to have a professional and attractive website. ARI currently operates three offices in the United States and one in Europe and has sales and service agents in Australia, England and France providing marketing and support of its products and services. ARI Network Services' January 31, 2003 balance sheet shows a working capital deficit of about $9 million, and a total shareholders' equity deficit of about $6 million. ATSI COMMS: AMEX Delists Shares Effective April 24, 2003 -------------------------------------------------------- ATSI Communications, Inc.'s (Amex: AI) stock was delisted from the American Stock Exchange effective April 24, 2003. The Exchange cited ATSI's failure to comply with certain standards and procedures adopted by the Exchange that are necessary for continued listing eligibility. The letter cited the following: The Company had failed to file its October 31, 2002 and January 31, 2003 form 10-Q with the SEC and therefore is not in compliance with Sections 132(C), 1002(d)(e), 1003(d), and 1101 of the AMEX Company Guide. The Company's July 31, 2002 Form 10-K reflected that the Company was out of compliance with Section 1003(a)(i) with shareholder equity less than $2 million and losses from continuing operations and/or net losses in two of its three most recent fiscal years; Section 1003(a)(ii) with shareholder equity less than $4 million and losses from continuing operations and/or net losses in three out of its four most recent fiscal years; and Section 1003(a)(iii) with shareholder equity of less than $6 million and losses from continuing operations and/or net losses in its five most recent fiscal years. The Exchange questioned whether the Company was in compliance with Section 1003(a)(iv) regarding its financial condition for continued operations. The Exchange's review of the Company's July 31, 2002 10K reflected a failure on the Company's part to show progress with the plan submitted to the Exchange on May 1, 2002 for continued listing. The Exchange felt that the Company was not in compliance with Section 121B(b)(i) of the AMEX Company Guide regarding its Audit Committee's composition. The Exchange felt the Company was not in compliance with Section 301 of the AMEX Company Guide, which states that a listed company is not permitted to issue or to authorize its Transfer Agent or Registrar to issue or register additional securities of a listed class until it has filed an application for listing of such additional securities and received notification from the Exchange that the securities have been approved for listing. The Exchange felt that the Company failed to notify the Exchange in a timely manner of Directors resignations announced in a press release issued by the Company of February 7, 2003, which is required by Section 921 of the AMEX Company Guide. The Exchange also cited the Company's failure to distribute its annual report to shareholders for fiscal year 2002 as required by Section 611 of the AMEX Company Guide. The Company has also failed to pay listing fees established by the Exchange in Section 1003(f)(iv) and failed to maintain the Exchange's listing requirements for common stock share price. ATSI Communications, Inc., filed for chapter 11 protection on February 4, 2003 (Bankr. W.D. Tex. Case No. 03-50753). When the Company filed for protection from its creditors, it listed over $10 million in assets and less than $10 million in debts. AUSPEX SYSTEMS: Nasdaq Intends to Delist Shares Effective Friday ---------------------------------------------------------------- Auspex Systems Inc. (Nasdaq: ASPX) received a Nasdaq Staff Determination on April 23, 2003, indicating that the company's securities will be delisted from the Nasdaq Stock Market at the opening of business on Friday May 2, 2003. The determination was based upon the Company filing for protection under Chapter 11 of the US Bankruptcy Code (Nasdaq Marketplace Rule 4330(a)(1)), concerns regarding the residual equity interest of the existing listed securities holders, (Nasdaq Marketplace Rule 4300) and concerns about the Company's ability to sustain compliance with all requirements for continued listing on The Nasdaq Stock Market. Additionally, the Company has not paid its 2003 SmallCap Market Annual Fee in the amount of $16,000, which was due as of January 30, 2003, which is an additional basis for delisting, (Nasdaq Marketplace Rule 4310(C)(13)). The Company has no basis for requesting a hearing in accordance with the Marketplace Rule 4800, and expects the delisting to take place as scheduled. Auspex introduced the world's first Network Attached Storage server shortly after its founding in 1987, creating a new breed of storage appliance offering significant performance and administrative benefits over general-purpose file servers. Auspex's enterprise-class network servers are used worldwide for consolidated information storage and delivery. Auspex also is leading the convergence of NAS with Storage Area Networks with the NSc3000 Network Storage Controller, the first multivendor SAN-to-NAS gateway. The company is headquartered in Santa Clara, California. Its shares are traded on the NASDAQ under the symbol ASPX. For more information, visit http://www.auspex.com AUSPEX SYSTEMS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Auspex Systems, Inc. 2800 Scott Blvd. Santa Clara, California 95050 Bankruptcy Case No.: 03-52596 Type of Business: Auspex is a manufacturer of network storage equipment. Chapter 11 Petition Date: April 22, 2003 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: J. Michael Kelly, Esq. Law Offices of Cooley Godward 1 Maritime Plaza 20th Floor San Francisco, CA 94111-3580 Tel: (415) 693-2000 Total Assets: $30,398,964 Total Debts: $13,987,908 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wal-Mart Stores Inc. Prepaid Service $936,232 1108 SE 10th Street Contracts Betonville, AR 72716-0845 Intel Corp. Prepaid Service $164,562 Contracts Lockheed Martin Prepaid Service $111,647 Contracts Net Brains Inc. Prepaid Service $63,247 Contracts Hitachi Data Systems Prepaid Service $56,625 Bell Microproducts Supplier $54,885 S&S Public Relations Service $47,261 Net Brains Inc. Prepaid Service $41,113 Contracts Tyco Packaging Supplier $39,791 AGI Mexicana Products; Prepaid Service $38,375 Contracts Electronic Data Systems Prepaid Service $35,058 Contracts Avaya Inc. Prepaid Service $34,809 Contracts Gennum Corp. Prepaid Service $32,293 Contracts Carrigan, Micha Accrued & unused vacation $31,971 & Holiday & Other Raytheon Systems Company Prepaid Service $31,175 Contracts Ludden, Thomas Accrued & unused vacation $30,641 & holiday & other Hoffman, Douglas Unpaid Commissions $29,783 Aprisma Management Prepaid Service $29,212 Contracts Legerity Inc. Prepaid Service $28,999 Contracts LSI Logic Corp. Prepaid Service $28,953 Contracts BEARD COMPANY: Cole & Reed PC Expresses Going Concern Doubt ----------------------------------------------------------- In 2002 Beard Company operated within the following operating segments: (1) the coal reclamation Segment, which is in the business of operating coal fines reclamation facilities in the U.S. and provides slurry pond core drilling services, fine coal laboratory analytical services and consulting services; (2) the carbon dioxide Segment, comprised of the production of CO2 gas; (3) the China Segment, which is pursuing environmental opportunities in China, focusing on the installation and construction of facilities which will utilize the proprietary composting technology of Real Earth United States Enterprises, Inc.; and (4) the e-Commerce Segment, whose current strategy is to develop licensing agreements and other fee based arrangements with companies implementing technology in conflict with Beard's intellectual property. The termination of the MCN Projects in January 1999 has had a material detrimental effect upon the Company's profitability since that date. Primarily as a result of the loss of its major revenue stream, coupled with the use of funds required to support the activities of its various startup activities, the Company's working capital decreased from $981,000 at year-end 1999 to a deficit of $284,000 at year-end 2002. The Company continues to take steps to mitigate future funding requirements by its poorly performing subsidiaries. Several projects are in various stages of development which, subject to arranging necessary financing, are ultimately expected to mature into operating projects. In the Coal Segment, Beard Technologies has entered into a memorandum of understanding and expects to finalize a definitive agreement on a project in the second quarter of 2003. The discontinued ITF Segment, which consumed $482,000 of cash from 1999 to 2001, generated cash of $96,000 in 2002 and is expected to generate approximately $140,000 of cash in 2003 as its remaining assets are sold. The discontinued BE/IM Segment is expected to contribute $110,000 or more of cash to Beard in 2003 as its remaining assets are liquidated. The WS Segment, which consumed $2,046,000 of cash from 1999 to 2000, generated $104,000 of cash from 2001 to 2002 and is expected to contribute $150,000 or more of cash to the Company in 2003 as its remaining assets are liquidated. Meanwhile, two private placements of notes and warrants totaling $1,800,000 were completed in May of 2002 and February of 2003. Such funds are expected to "bridge the gap" until (i) the anticipated McElmo Dome settlement has been distributed, and (ii) the contemplated new coal project and projects under development in China are underway. Nonetheless, the Auditors Report of Cole & Reed, P.C., of Oklahoma City, Oklahoma, dated April 8, 2003, states, in part: "[T]he Company's recurring losses and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern." At December 31, 2002, the Company was in a negative working capital position with a deficit in working capital of $284,000, and a current ratio of 0.67 to 1. The Company incurred losses from continuing operations totaling $8,896,000 during the past five years. The Company generated net losses totaling $17,220,000 during that period. The discontinued interstate travel facilities and natural gas well servicing businesses accounted for $3,650,000 and $2,397,000, respectively, of the losses, but those problems are now behind Beard Company and management expects to dispose of their remaining assets in 2003. The discontinued iodine business impacted earnings in the amount of $642,000 during the last five years, including $199,000 the last two years, but again, those problems are behind the Company, and management expects to dispose of its remaining assets in 2003. BLACK BAY BREWING: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: Back Bay Brewing Company, Ltd. 755 Boylston St Boston, Massachusetts 02116 dba Vox Populi Bankruptcy Case No.: 03-13022 Type of Business: Located across from the Prudential Center, the former brew pub is now and American cuisine restaurant with first floor bar an fireplace lounge, a second-floor bar overlooking Boylston Street, and an elegant second-floor dining area. Chapter 11 Petition Date: April 15, 2003 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: John M. McAuliffe McAuliffe & Associates, P.C. 430 Lexington Street Newton, MA 02466 Tel: (617) 558-6889 Total Assets: $9,000,000 Total Debts: $1,202,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Boston Magazine Trade Debt $10,077 Churchill Linen Services Trade Debt $8,289 Clever Ideas Trade Debt $22,625 Colonial LLC d/b/a Friel Trade Debt $9,987 Construction F&B Fruit & Produce Trade Debt $9,480 First Insurance Funding Trade Debt $6,870 Guest Informant Trade Debt $7,341 Hallsmith-Sysco Food Trade Debt $21,789 Service Horizon Beverage Trade Debt $28,078 Idine Restaurant Trade Debt $136,000 Key Equipment Financing Trade Debt $13,056 Levine, Katz, Nannis & Trade Debt $12,000 Soloman Looney & Grossman Trade Debt $19,560 M.S. Walker Trade Debt $7,657 Mill Pond Realty Trust Trade Debt $80,000 Nstar Electric Trade Debt $13,456 Paramount Insurance Co. Trade Debt $16,905 The Improper Bostonian Trade Debt $18,500 US Food Service Trade Debt $8,060 United Liquors Trade Debt $30,173 BLUE MOON GROUP: James C. Marshall Expresses Going Concern Doubt ---------------------------------------------------------------- "[T]he Company has suffered recurring losing (sic) from operations and has depleted working capital that raises substantial doubt about its ability to continue as a going concern." So states, in part, the Auditors Report of James C. Marshall, CPA, P.C., of Scottsdale, Arizona, under date of April 14, 2003, regarding the financial condition at December 31, 2002, of Blue Moon Group Inc. (formerly Open Door Online, Inc.). Blue Moon Group, Inc. is an entity that will provide traditional sales of recordings of artists under distribution contracts and other prerecorded music and recording operations. The Board of Directors has embarked on a search for the acquisition of various businesses in the entertainment industry. The Company is searching for active, profitable, positive cash flow opportunities with seasoned management in place. The Company wishes to broaden its base of business to include recording studios, artist development and marketing, concert promotion, entertainment video production and distribution and marketing of various entertainment-associated products. The following represents the results of operations of Blue Moon Group, Inc. for December 31, 2002 and Open Door Online, Inc. for December 31, 2001. December 31, December 31, 2002 2001 ---- ---- Summary of Operations Net Revenues $ 0 $ (32,243) Forgiveness of Debt 61,821 0 Cost of Sales 9,391 0 Gross Profit 52,430 (32,243) Operating Expenses 3,810,965 579,924 Net Profit (Loss) (4,059,577) (612,167) Summary Balance Sheet Data Total Assets $ 8,069,435 $ 10,501,696 Total Liabilities 945,007 1,917,604 Shareholder's Equity 7,124,428 8,584,092 As of December 31, 2002 Blue Moon Group had $0. Bills were being paid on as needed basis with funds borrowed by the Company up to the required amount for payment. Historically the Company has financed its operations with short-term convertible debt or through the issuance of equity in the form of its common stock. During the year ended December 31, 2002 it borrowed $16,955. During the period ended December 31, 2001 it raised $163,023 through issuance of notes. New capitalization will be required in the event a merger, sale or acquisition of a subsidiary with cash reserves is completed. There is no assurance that Blue Moon Group will be successful in raising the required capital or completing any other transaction. COMPACT DISC: Honoring Up to $4MM of Prepetition Vendor Claims -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave its nod of approval to Compact Disc World, Inc.'s application to pay $4,184,152 of prepetition claims owed to its critical vendors. The Debtor tells the Court that its primary sources of revenue are sales of music recorded on compact discs and movies recorded on digital video discs. CD sales account for approximately 70% of the Debtor's business and DVD sales account for approximately 20% of the Debtor's business. The Debtor purchases its CD and DVD inventory from, among others, WEA, BMG Distributions, Caroline Distributions, EMD/EMI Music Distributions, Sony Music (RED), Sony Music, Universal Music Video Distributions, Warner Home Video, Wax Works, and Galaxy Music Distributions. All Critical Vendors, other than Galaxy and Wax Works, have liens on all inventory which they sell to the Debtor, junior in priority to the liens securing the Debtor's obligations to Wachovia Bank. According to the Debtor's books and records, the Debtor owes the Critical Vendors $4,184,152 for product delivered prior to the Petition Date. To ensure that the Critical Vendors continue to do business with the Debtor and to ensure that the Debtor receives product to operate its business, the Debtor reached an agreement with each of the Critical Vendors to cap each of the Critical Vendors' credit exposure -- the Nine Month Program. Under the Nine Month Program, the Debtor agreed to consolidate any past due payables with February and March 2003 payables with respect to each Critical Vendor. The Debtor has agreed to pay 1/9 of the Consolidated Payables on the 15th day of every month over a nine month period starting in February 2003. The Debtor submits that the ratification of the Nine Month Program and payment of the Prepetition Claims of the Critical Vendors is necessary to enable the Debtor to continue its operations in the ordinary course of business and to facilitate a successful reorganization. Since the Debtor's CD and DVD sales comprise approximately 90% of the Debtor's business, if the Prepetition Claims of the Critical Vendors are not paid pursuant to the Nine Month Program, the Critical Vendors will likely cease doing business with the Debtor. Given that the Critical Vendors comprise approximately 80% of the CD and DVD market, the Debtor will be unable to find alternative suppliers whose product it can sell profitably. Thus, payment of the Pre-Petition Claims is essential for the Debtor's ability to continue as a going concern. Compact Disc World, Inc., is a retail music chain. The Company filed for chapter 11 protection on April 16, 2003 (Bankr. N.J. Case No. 03-22638). Boris I. Mankovetskiy, Esq., and Jack M. Zackin, Esq., at Sills Cummis Radin Tischman Epstein & Gross, P.A., represent the Debtor in their chapter 11 case. When the Company filed for protection from its creditors, it estimates it debts and assets of over $10 Million each. CONSECO FINANCE: Claims Estimation Hearing to Convene on May 9 -------------------------------------------------------------- Lehman Brothers and affiliates ask the Court to compel the Official Committee of Unsecured Creditors of the Conseco Finance Debtors to participate in the estimation procedures of the Lehman Claims. Lehman also wants to compel the CFC Committee to present any issues it may have on the Lehman Claims in the estimation proceeding. Robert J. Rosenberg, Esq., at Latham & Watkins, in New York City, argues that the CFC Committee's participation is: -- necessary for the proper estimation of the Lehman Claims; -- necessary to avoid fundamental unfairness to Lehman; and -- consistent with the parties' and Court's interests in judicial economy and efficiency. Mr. Rosenberg relates that Lehman is a secured creditor to the Special Purpose Entities of Green Tree Residential Finance Corp. I and Green Tree Finance Corp. Five, pursuant to secured and cross-collateralized financing facilities. Lehman has a claim against the SPEs for indemnification of expenses incurred in enforcing the Lehman Facilities. The obligations are guaranteed by CFC and CIHC. For example, CIHC has guaranteed up to a maximum of $125,000,000. It has been CFC's intention to sell the SPEs, along with its other assets. During negotiations to secure the $25,000,000 Lehman Warehouse Facility Financing, the Debtors waived their rights to challenge the Lehman Liens securing its Facilities. However, the related Orders preserved the CFC Committee's right to consolidate the assets and liabilities of the SPEs with CFC, or challenge the transfer of assets to the SPEs as not having been "true sales." According to Mr. Rosenberg, the CFC Committee intends to challenge the validity of the Liens and claims that Lehman has against the SPEs. The Asset Sale Order contemplates the purchase of the SPEs and payment to Lehman of proceeds to repay the Lehman Facilities in full. However, Lehman is sure the Committee plans to challenge this right to retain the proceeds. Regardless of the success or failure of the CFC Committee on this matter, Lehman will have a valid claim under the CIHC Guarantee. This is important to the Plan because it contemplates a full recovery to creditors with CIHC claims. The CFC Committee must participate in the claims estimation process because it surely intends to challenge Lehman's right to receive and retain proceeds from the SPE sale. Otherwise, the Court will listen to parties whose position on the estimation is predicated on satisfaction of the Lehman Facilities through the distribution of the proceeds from the CFC Asset sale, but not before the party that takes a contrary position. It would be inconsistent with the purpose of the estimation procedures for it to go forward under the specter of a subsequent challenge by the CFC Committee to the issues the Court will rule on in the estimation procedures, i.e. the CIHC guarantee and Lehman's right to a distribution of the proceeds from the Court-approved CFC Asset Sale. If the CFC Committee successfully challenges Lehman's rights to those proceeds, then the Lehman Facility not have been extinguished and Lehman will have a valid claim against CIHC under its guarantee. If the CFC Committee's challenge is unsuccessful, it would still give rise to a valid claim under the CIHC guarantee, because Lehman's right to indemnification costs incurred in defending this challenge are covered under the guarantee. If this indemnification right is triggered after Lehman receives the proceeds, it will pursue a claim under the CIHC guarantee. If the CFC Committee does not participate in the estimation proceedings, the Court may be asked to enter inconsistent rulings. For example, if the Court estimates the Lehman Claims at zero without the CFC Committee's involvement, the Court would face the prospect of a completely inconsistent ruling in connection with a CFC Committee challenge to Lehman's right under the Lehman Facilities. Mr. Rosenberg says that if the estimation procedures go forward without the CFC Committee, fundamental unfairness would result. The Lehman Claims cannot be subject to estimation in a procedure where the Debtors advocate estimation at zero, premised on the satisfaction of the Lehman Facilities, when another party not before the Court takes the position that it is likely to challenge that very premise. An Estimation Hearing is scheduled for May 9, 2003. (Conseco Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO INC: Committee Gets Go-Signal to Hire Financial Advisors ---------------------------------------------------------------- After overruling the U.S. Trustee's objection, the Court gave the Official Committee of Unsecured Creditors of Conseco Holding Company Debtors the authority to retain Greenhill & Co., and Houlihan, Lokey, Howard & Zukin as financial advisors. As financial advisors, Greenhill and Houlihan will: a) advise and assist the Committee in evaluating the Debtors' assets and liabilities; b) advise and assist the Committee's analysis and review of the Debtors' financial and operating statements; c) advise and assist the Committee in its analysis of the Debtors' forecasts and business plans; d) advise and assist the Committee in its assessment of the issues and options on the Debtors' asset sales and the Plan; e) advise and assist the Committee in assessing a proposed transaction; f) advise and assist the Committee in its claims resolution process and distributions; g) prepare and analyze transactions with various constituencies; h) evaluate the Debtors' debt capacity based on projected cash flows; j) analyze a proposed capital structure for the Debtors; k) assist the Committee in negotiations with the Debtors or any groups affected by the restructuring; l) monitor the Debtors' ongoing performance; m) provide testimony on the foregoing when requested; and n) provide specific valuation or other financial analyses as requested. Both firms have already provided considerable services in these cases and have become familiar with many aspects of the Debtors. Greenhill's and Houlihan's knowledge of the Debtors, their businesses and capital structure will not be easily replaced without the expenditure of money and time. Greenhill will be paid a $150,000 monthly cash advisory fee. If a Restructuring is consummated, Greenhill will be paid a $3,500,000 cash fee. Greenhill received $550,000 for advisory fees prepetition. Greenhill is holding a $15,462 deposit made by the Debtors prepetition, which will be applied to the firm's out-of-pocket expenses. In a postpetition Engagement Letter, Restructuring is defined as any recapitalization of Conseco's equity or debt securities, pursuant to any financial transaction or Plan, as long as Conseco is independent of government control. On the other hand, Houlihan will be paid a $175,000 monthly advisory fee in advance. If a Transaction is completed, Houlihan will be paid a fee in cash equal to 0.50% of the consideration received by all Bondholders. In their engagement letter, a Transaction is defined as a purchase of the Company in any form, any transfer of all assets or the confirmation of a Plan. (Conseco Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) Conseco Inc.'s 10.500% bonds due 2004 (CNC04USR2) are trading at about 37 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for real-time bond pricing. COVANTA: Asks Court to Fix June 14 Bar Date for Debenture Claims ---------------------------------------------------------------- Pursuant to Section 501 of the Bankruptcy Code and Rules 2002 and 3003(c)(3) of the Federal Rules of Bankruptcy Procedure, Covanta Energy Corporation, and its debtor-affiliates ask the Court to: (a) establish June 14, 2003 as the Bar Date in respect of the 5-3/4% Convertible Subordinated Debentures Due 2002 and the 6% Convertible Subordinated Debentures Due 2002; (b) establish June 14, 2003 as the Bar Date for any and all proofs of claims against Covanta Concerts Holdings, Inc.; (c) provide that for any claim related to the rejection of an executory contract or unexpired lease by Covanta Concerts pursuant to a Court order granting the motion but not before plan confirmation, the applicable bar date will be the later of: -- the Covanta Concerts Bar Date, and -- 30 days after the entry of the order authorizing the rejection; (d) establish the Bar Date in respect of any amended schedules Covanta Concerts filed as 30 days after the Debtors send notice of an amended schedule identifying the claimant as the holder of a disputed, contingent or unliquidated claim against Covanta Concerts; and (e) approve the form, timing and manner of the Bar Date notice, the Covanta Concerts Rejection Bar Date and the Covanta Concerts Amended Schedules Bar Date. Convertible Debentures Bar Date James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that prior to the Petition Date, Covanta issued the Convertible Debentures as both registered and bearer debentures. With respect to the bearer debentures, the Debtors do not have access to the name or addresses of the holders. Moreover, the Convertible Debentures were initially issued into the Eurodollar market and it is likely that a significant number of holders of the bearer debentures and the related Subordinated Debenture Claims are located in foreign jurisdictions. As the Debtors amended the Schedules, the actual holders of the Convertible Debentures are not identified because they are not all known to the Debtors. The Amended Schedules, like the Original Schedules, state that claims in respect of Convertible Debentures are "disputed and unliquidated". Thus, the Debtors seek Court approval of the Convertible Debentures Bar Date so that claim holders in respect of the Convertible Debentures would have additional time to file a proof of claim. Mr. Bromley explains that this motion is filed out of abundance of caution to provide additional time for claim holders to file a claim and for the Court to approve the form, manner and timing of notice of the Convertible Debentures Bar Date, including the publication notice. The Debtors propose to send notice of the Convertible Debentures Bar Date to all registered holders of the Convertible Debentures and holder of bearer bonds who have contacted the Debtors' counsel since the Petition Date and to publish notice of the Convertible Debentures Bar Date in the "Luxemburger Wort" and the "Financial Times of London" as contemplated by the related Fiscal Agency Agreements. Covanta Concerts Holdings Bar Date According to Mr. Bromley, Covanta, through its subsidiaries, owns 76% of Covanta Concerts' outstanding stock. All of Covanta Concerts' businesses have been sold, with the sole exception of its investment in Rent, LLC, which continues to generate some revenue for Covanta Concerts. Covanta Concerts is in the process of winding down its business operations. The Debtors propose that all Entities that have or seek to assert potential Convertible Debentures Claims or potential claims against Covanta Concerts be required to file a proof of claim by the applicable Bar Date in order to receive distributions on account of the claims. These Entities would not be required to file proofs of claim: (a) any Entity that has already properly filed with the Court a proof of claim in respect of Convertible Debentures Claims or Covanta Concerts Claims; (b) any Entity whose claim is listed on the schedule of creditors filed by Covanta Concerts Schedules and not identified as "disputed, contingent or unliquidated" and that agrees with the nature, classification and amount of the claim set forth in the Covanta Concerts Schedules; (c) any Entity holding a Convertible Debentures Claim or a Covanta Concerts Claim that previously has been allowed by, or paid pursuant to, a Court order, including the prepetition claims of the Debtors' postpetition employees and certain of their critical trade creditors; and (d) any Entity whose claim is allowable under Sections 502(b) and 507(a) of the Bankruptcy Code as an administrative expense. Mr. Bromley notes that it is possible that creditors may assert claims in connection with any Covanta Concerts rejection of executory contracts or unexpired leases pursuant to Section 365 of the Bankruptcy Code. The Debtors propose that for any claim related to a rejection that is approved by a Court order after entry of an order approving this request but before plan confirmation, the Covanta Concerts Rejection Bar Date will be the later of: -- the Covanta Concerts Bar Date, and -- 30 days after the Debtors send via first class U.S. mail a notice or copy of the order authorizing the rejection to the affected counterparty or lessor, as the case may be, which service will be made on or before the 11th day after the entry of the rejection order. In addition, the Debtors propose that the bar date for filing of proofs of claim against Covanta Concerts in respect of any disputed, contingent or unliquidated claim listed on any amended schedule Covanta Concerts files will be 30 days after the Debtors send via first class U.S. mail a notice of the relevant Amended Schedule identifying the claim. Mr. Bromley states that any Entity that wishes to assert a Convertible Debentures Claim or a Covanta Concerts Claim that is not listed or that is improperly classified in the Debtors' schedules of creditors, is listed in the Schedules in an amount disputed by the Entity, or is listed in the Schedules as disputed, contingent or unliquidated and that desires to participate in the Chapter 11 cases or share in any distribution in the Chapter 11 cases must file a proof of claim on or before the applicable Bar Date. Any Entity that relies on the Schedules will bear responsibility for determining that its claim is accurately listed therein. The Debtors will retain the right to: (i) dispute, or assert offsets or defenses against, any filed claim or any claim listed or reflected on the Schedules as to the amount, liability, classification or otherwise; or (ii) subsequently designate any claim as disputed, contingent or unliquidated. Pursuant to Bankruptcy Rule 3003(c)(2), any Entity that is required to file a proof of claim in these cases but fails to do so in a timely manner, should forever be barred, estopped and enjoined from: (a) asserting any claim against the Debtors or the Debtors' estate that the Entity has a claim in excess of the scheduled amount or is for a different amount, nature or classification; and (b) voting upon, or receiving distributions under, any plan of reorganization in these cases in respect of an Unscheduled Claim. The Debtors propose to serve by mail on all Entities identified on the Covanta Concerts Schedules as holding potential Claims: (i) a notice of the Covanta Concerts Bar Date, which includes instructions explaining the procedures for filing proofs of claims; and (ii) a proof of claim form substantially in the form of Official Form No. 10. In addition, the Debtors propose to serve a notice of the Convertible Debentures Bar Date and a proof of claim form to these Entities: (a) all registered holders of the Convertible Debentures and holders of bearer bonds who have contacted the Debtors' counsel since the Petition Date; (b) Euroclear Bank, N.V.; and (c) Clearstream Banking. Mr. Bromley explains that the Debtors cannot provide direct notice to all holders because many of the Convertible Debentures are bearer bonds. Both Euroclear and Clearstream agreed to provide notice of the Convertible Debentures Bar Date to their clients that are holders of the Convertible Debentures. Mr. Bromley assures the Court that the Debtors will provide the notice as soon as practicable, but in no event made no later than May 9, 2003. This is consistent with Bankruptcy Rule 2002(a)97) and the SDNY Guidelines, that notice will be provided to creditors no less than 35 days prior to the applicable Bar Date. Since most of the Convertible Debentures are bearer bonds, the Debtors believe that it is necessary to provide publication notice of the Convertible Debenture Bar Date. Hence, the Debtors wish to publish the notice to the Financial Times of London and the Luxemburger Wort on or prior to May 19, 2003. The Debtors do not propose to provide publication notice of the Covanta Concerts Bar Date. Each Entity holding a claim and is required to file a claim should deliver the Proof of Claim Form, together with supporting documents, if any, by first class U.S. mail, postage paid, to: Ogden New York Services, Inc. Claims Processing/BSI Bowling Green Station P.O. Box 5044 New York, NY 10274-5044 or, if sent by hand delivery or recognized overnight courier other than first class U.S. mail, to: Office of the Clerk of the Court U.S. Bankruptcy Court for the Southern District of New York Re: In re Ogden New York Services, Inc., et al. One Bowling Green Room 534 New Yo9r, NY 10004-1402 The proof of claim must be completed and signed, so as to be received on or before 4:00 p.m. on the Bar Date. Proof of claim forms sent vial facsimile or telecopy will not be accepted. All proofs of claim must be in the English language and be denominated in U.S. currency. Proofs of claim will be deemed filed only when actually received by the Court. All proofs of claim should attempt to specifically identify, to the extent possible, on the first page of the Proof of Claim Form the particular Debtor against which the person or entity holding the Claim is asserting the claim. All persons and entities asserting claims against more than one Debtor should attempt to clearly indicate the Debtor against which they are filing the claim. (Covanta Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) DAN RIVER: Reports Improved Earnings Results for First Quarter -------------------------------------------------------------- Dan River Inc. (NYSE: DRF) reported results for the first fiscal quarter ended March 29, 2003. Net sales for the quarter were $147.4 million, down $11.0 million or 7% from $158.4 million for the first quarter of fiscal 2002. Net income for the first quarter of fiscal 2003 was $2.8 million, or $0.12 per diluted share. Included in these results is a $0.4 million pre-tax gain related to the sale of surplus equipment. These results compare to a net loss of $5.1 million, or $0.24 per diluted share for the first quarter of fiscal 2002 before the effect of an accounting change related to the writedown of goodwill under SFAS No. 142, "Impairment of Goodwill and Intangible Assets". The results for the first quarter of fiscal 2002 include a one- time increase in income tax expense of $2.8 million, or $0.13 per diluted share attributable to the tax law changes associated with the Job Creation and Worker Assistance Act of 2002, and a $1.4 million pre-tax charge ($0.8 million after tax or $0.04 per diluted share) for bad debt expense related to the January 2002 Chapter 11 filing of Kmart Corporation. After the effect of the accounting change, the net loss for the first quarter of fiscal 2002 was $25.8 million, or $1.19 per diluted share. "The weak retail environment was apparent in our home fashions division for the first quarter," said Joseph L. Lanier, Chairman and Chief Executive Officer, "as sales for the division were $108.4 million, down $7.6 million or 6.5% from the first quarter of 2002. Despite this decrease in sales, operating income for the division was $11.5 million, up significantly from $5.3 million reported for the first quarter of fiscal 2002. The better operating results were due to the sales of a better product mix, lower raw material prices, and the benefits of the plant consolidation efforts that were put into place last year. "The overall economic weakness was also evident in our apparel fabrics division," Mr. Lanier continued. "For the first quarter of 2003, sales were $29.1 million, down $2.9 million or 9.0% from the first quarter of fiscal 2002. However, operating performance improved compared to the same quarter a year ago, from a loss of $1.6 million to a loss of $0.6 million, reflecting lower raw material prices and better manufacturing performance due to the plant consolidation. This was offset somewhat by consulting expenses related to an initiative to increase manufacturing efficiencies and to reduce manufacturing lead times. "Our engineered products division is also experiencing the impact of the slowing economy," Mr. Lanier stated, "as sales of $9.9 million for the first quarter of fiscal 2003 were down $0.6 million, or 5.5%, from the first quarter of 2002. The combination of lower sales volume, a less profitable sales mix and poor manufacturing performance led to a $0.9 million operating loss for the quarter, compared to a $0.3 million loss in the same period last year. Manufacturing performance was hampered during the quarter by start up issues related to the installation of a new shop floor, cost and inventory control system." In the second quarter of fiscal 2003, the Company completed the refinancing of its $120 million senior subordinated notes and its credit facility, which were both due in 2003. This refinancing included the sale of $157 million aggregate principal amount of 12-3/4% senior notes due 2009, at 95.035% of par, in a private offering pursuant to Rule 144A and Regulation S under the Securities Act of 1933. The Company also entered into a new senior secured credit facility, which consists of a five-year $160 million revolving credit facility and a five-year $40 million term loan. Availability under the revolving credit facility is based upon a borrowing base determined by reference to the Company's eligible accounts receivable and inventory. Amounts outstanding under the senior credit facility will bear interest at either prime rate or LIBOR plus, in each case, a spread based on the Company's leverage ratio. The net proceeds from the notes offering, together with borrowings under the new senior credit facility, were used (i) to repay all borrowings outstanding under the existing credit agreement; (ii) to provide for the redemption, on May 15, 2003, of all of the outstanding 10-1/8% senior subordinated notes due 2003 for an aggregate redemption price of $120 million (100% of the principal amount thereof) plus accrued interest of approximately $5.1 million; and (iii) to pay related fees and expenses. "While the Company's earnings for the first quarter came in better than expected," Mr. Lanier stated, "the immediate outlook is very hazy. The uncertainties imposed by the soft economy, high unemployment, and the war in Iraq have depressed consumer spending. This is reflected in the negative same stores sales comparisons reported by most retailers. In reaction, our customers are very skittish about placing new business and are very conservative in their order quantities. We expect this difficult retail environment to have a negative impact on our second quarter operating results. Also, due to our recent refinancing, the second quarter will be burdened with the write off of deferred financing fees associated with our 1993 subordinated notes and our 1997 bank credit facility ($1.3 million pre-tax). There will also be a one month period in the second quarter during which our recently issued 12-3/4% senior notes and our 10-1/8% subordinated notes will both be outstanding, resulting in increased interest expense for the overlapping period ($1.0 million pre-tax). The combination of these items along with higher interest expense under the refinancing will cause us to report a loss in the range of $0.05 per share in the second quarter. "Looking beyond the second quarter," Mr. Lanier concluded, "due to many uncertainties we are not comfortable with our ability to predict our operating results for the back half of the year. Accordingly, we are not giving guidance for our full year results. Hopefully the recent victory in Iraq will bring an end to the current economic malaise. Under any circumstances, we believe we are maintaining our market share in our key product areas, and we remain well-positioned in those areas to take advantage of the upturn when it occurs." As reported in Troubled Company Reporter's Monday Edition, Standard & Poor's Ratings Services raised its long-term corporate credit rating on home furnishings manufacturer Dan River Inc. to 'B+' from 'B-'. The ratings are removed from CreditWatch, where they were placed on March 17, 2003. At the same time, Standard & Poor's assigned its 'B-' senior unsecured debt rating to the Danville, Virginia-based company's new 12.75% senior notes due 2009. The notes are rated two notches below the corporate credit rating, reflecting their junior position relative to the significant amount of secured bank debt. Standard & Poor's also withdrew its existing rating on the $120 million subordinated notes due 2003. The outlook is stable. The above facilities replaced the company's existing $125 million revolving credit facility due September 2003 and its $120 million 10.125% notes due December 2003. Dan River's total debt outstanding at Dec. 28, 2002, was about $252 million. DELTA AIR LINES: CEO Mullin Bullish about Company's Viability ------------------------------------------------------------- Delta Air Lines (NYSE: DAL) CEO Leo F. Mullin reported at the company's annual shareowners meeting that, referencing the current turmoil embracing the airline industry, he believes "Delta can survive and can remain solvent throughout this incredibly challenging period." In remarks Friday in New York City, Mullin declared that Delta is faced with "a task that would have seemed unimaginable just two years ago, which is to restructure our company, remain solvent, and form the basis for sustained success for the future" in the midst of significant macro-economic and competitive challenges. In recalling the business challenges faced in the past year, Mullin expects many of these to remain constant. This includes the need to significantly realign Delta's cost structure to meet the competitive pressures in the industry, which are driven by low-cost competition and the restructuring of the hub-and-spoke carriers within or outside of bankruptcy. "The unfortunate reality is that we do not yet have an appropriate revenue-to- cost relationship, despite the sacrifice and hard work that have occurred already," said Mullin. He also pointed to the current geo-political environment, a bleak revenue outlook, continuing decreases in demand, and the volatility of the airline industry in general. Mullin said that, going forward, he believes "despite the current difficult circumstances, Delta can emerge from this crisis capable of achieving the long-term sustainable success which will benefit us all." Delta is, he said, "putting the underpinnings for this success in place -- but success is anything but assured. Huge challenges must be met if we are to achieve safe passage to, first, sustained solvency and then sustained profitability." Mullin pointed to Delta's profit improvement initiatives, which are intended to transform the company and provide cash savings of $1.5 to 2.0 billion by 2005, as a cornerstone of the company's strategic plan. "Our commitment to customer service remains strong and is being further revitalized," Mullin said. The recent approval of Delta's codeshare alliance with Northwest Airlines and Continental Airlines is just one of many initiatives designed to provide customers with a full range of benefits. Mullin noted that Delta will "continue to invest in improving the customer experience, despite current financial difficulties." Mullin stressed that Delta not only survived its most difficult year to date, but also posted a considerable number of achievements. While workforce reductions became an unfortunate necessity, Delta was able to minimize the number of involuntary employee furloughs in part due to its relatively strong financial position. Mullin pointed to the company's strong balance sheet and success in reaching its 2002 liquidity and cash burn targets. He noted Delta's performance was consistently referred to as the best of the network carriers by independent measures, including some Wall Street analysts. Additionally Delta launched its new low-cost operation, Song; gained antitrust immunity with transatlantic and transpacific SkyTeam alliance members; added $2.0 billion to its annual revenue base by expanding its role as the world leader in use of regional jets; and took steps to strengthen its presence in the Southeast and Northeast with the start of construction projects for a fifth runway in Atlanta and a new terminal in Boston. "The Delta team is, at every level, experienced, committed, and focused," said Mullin. "At this point, the battle is ours to lose -- or to win." Mullin remains confident that the outcome will be "a battle won." Delta Air Lines, the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,382 flights each day to 423 destinations in 77 countries on Delta, Song, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, go to http://www.delta.com DIRECTV: Court OKs Bankruptcy Services as Claims & Notice Agent --------------------------------------------------------------- DirecTV Latin America, LLC obtained 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. 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 obtained the Court's permission to pay Bankruptcy Services a $15,000 retainer to be applied against the final invoice. (DirecTV Latin America Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) DIVERSIFIED CORPORATE: Annual Shareholders' Meeting on May 30 ------------------------------------------------------------- The Annual Meeting of Shareholders of Diversified Corporate Resources, Inc., a Texas corporation, will be held at 9:30 local time on Friday, May 30, 2003, at Hyatt Regency Scottsdale at Gainey Ranch, 7500 E. Doubletree Ranch Road, Scottsdale, Arizona 85258 for the following purposes: To elect five members of the Board of Directors to hold office until the next annual meeting of shareholders or until their respective successors are duly elected and qualified. To approve, pursuant to the rules of the American Stock Exchange, the issuance of warrants to purchase 2,700,000 shares of common stock of the Company to the Chairman, J. Michael Moore. To transact such other business as may properly come before the meeting and any postponement or adjournment thereof. Holders of record of Company common stock at the close of business on April 17, 2003 will be entitled to vote at the Annual Meeting. * * * Going Concern Uncertainty In its SEC Form 10-Q dated November 14, 2002, the Company reported: "As of September 30, 2002, we were not in compliance with the amended financial covenant under our three-year revolving line of credit agreement with General Electric Capital Corporation. "The Company failed to make the required acquisition agreement payments of approximately $1,178,000 and $884,000 (to the former owners of Mountain, LTD., which were due on October 1, 2001 and October 1, 2002, respectively, and we failed to make the payment of approximately $867,000 to the former owners of Texcel, Inc. which was due on October 8, 2001. Effective as of October, 2001, we entered into forbearance agreements with the former owners of both Mountain and Texcel that involved (among other things) the extension of the debt payment dates under both obligations, and our commitment to pay interest on the amount owed to the holders of both the Mountain and Texcel debt. We were able to make partial debt payments to the former owners of Texcel, but in September, 2002, we failed to pay the installment payments then owed to the former owners of both Mountain and Texcel, and the entire amount payable to these individuals is now due and payable. As of September 30, 2002, we owed approximately $2,062,000 to the former owners of Mountain, and approximately $747,000, to the former owners of Texcel. We are unable to pay any of such amounts at this time, and our ability to cure such defaults in connection with these debt obligations is contingent upon the outcome of our efforts to refinance the GE facility. We are currently in negotiations with respect to these debt obligations. "These factors, among others, indicate that the Company may be unable to continue as a going concern. "We are continuing to evaluate various financing and restructuring strategies to maximize shareholder value and to provide assistance to us in pursuing alternative financing options in connection with our capital requirements and acquisition debt obligations. We can provide no assurance that we will be successful in implementing the changes necessary to accomplish these objectives, or if we are successful, that the changes will improve our cash flow and liquidity." DOMAN INDUSTRIES: Canadian Court Extends CCAA Stay Until July 23 ---------------------------------------------------------------- Doman Industries Limited said the Supreme Court of British Columbia issued an order Friday, in connection with proceedings under the Companies Creditors Arrangement Act, extending the stay of proceedings to July 23, 2003. A copy of the order may be obtained by accessing the Company's Web site at http://www.domans.com The Company sought the extension on the basis that further negotiations with representatives of its principal unsecured creditors, the holders of unsecured Notes, are necessary before a revised plan of arrangement can be presented to the Court. In the circumstances, the Company does not expect to be in a position to file a revised plan of arrangement before June. Implementation of a revised plan is, in any event, dependent on the new forest reform package, recently introduced by the Government of British Columbia, becoming effective. The timing of this is uncertain but the Government has indicated that passage of the new legislation is planned for the current session of the Legislature scheduled to end on May 29, 2003. Doman is an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value-added remanufacturing and producing dissolving sulphite pulp and NBSK pulp. All the Company's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. DOW CORNING: Reports Growth in Sales and Profits for Q1 2003 ------------------------------------------------------------ Dow Corning Corp., reported consolidated net income of $35.9 million for the first quarter of 2003, a 57 percent increase from net income of $22.9 million reported in same quarter of 2002, excluding $31.4 million of after tax restructuring expenses in the 2002 period. First quarter 2003 sales were $658.7 million, 13 percent higher than sales in last year's first quarter. "First-quarter sales compared favorably to weak sales reported in the same period last year," said Dow Corning's vice president and chief financial officer J. Donald Sheets. "Dow Corning continued to grow revenues by offering customers innovative solutions to meet their exact needs," said Mr. Sheets. Dow Corning -- http://www.dowcorning.com-- develops, manufactures and markets diverse silicon-based products and services, and currently offers more than 7,000 products to customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. ENCOMPASS SERV.: Lease Decision Time Extension Hearing Tomorrow --------------------------------------------------------------- Lydia T. Protopapas, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, reports that despite diligent efforts to reduce the number of Leases, Encompass Services Corporation and debtor- affiliates are still lessees to many Leases and are continuing to review and analyze the remaining Leases regarding determinations as to their value and use to the Debtors and their estates going forward. In light of the extensive number of Debtor companies, the variety of locations of businesses, and the remaining number of Leases to review and analyze, the Debtors ask the Court to extend their lease decision period until plan confirmation. The Confirmation Hearing is scheduled for May 21, 2003. Ms. Protopapas maintains that the Leases may constitute valuable assets of the Debtors' estates. The Debtors have reviewed many but not all their Leases and thus have not determined conclusively which of the remaining Leases they will assume and which they will reject. The Debtors are also in the process of reducing their staff as they prepare to sell their residential business unit and wind down any other remaining operations pursuant to the Plan. Thus, Ms. Protopapas contends, cause exists to extend the time for the Debtors to assume or reject unexpired leases of non-residential real property under which the Debtors are lessees. The Debtors assure the Court that consistent with Section 365(d)(3) of the Bankruptcy Code, they will timely perform all of their undisputed postpetition obligations under the Leases in the same manner as they have performed the obligations before the Petition Date. Hence, the lessors will suffer no harm if the extension is granted. * * * The Court will convene a hearing on April 30, 2003 to consider the Debtors' request. Accordingly, Judge Greendyke extends the Debtors' lease decision period until the conclusion of that hearing. (Encompass Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Selling Interests in CGAS Inc. to Enervest for $30MM ---------------------------------------------------------------- Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, Enron Corp. asks the Court to authorize and approve its consent to sell all of the outstanding shares of CGAS, Inc.'s common stock to EnerVest Acquisitions, LLC. The Sale will be in accordance with the terms and conditions of the Purchase and Sale Agreement dated as of March 13, 2003 by and between McGarret XI, LLC and EnerVest. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that CGAS, a non-debtor, is a privately held Ohio corporation principally engaged in the business of oil and natural gas acqu