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/raid1/www/Hosts/bankrupt/TCR_Public/030509.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 9, 2003, Vol. 7, No. 91 Headlines ACE LIMITED: Caps Price of $500-Million Preferred Share Offering AIR CANADA: Wants Approval to Access C$350-Million CIBC Facility AIR CANADA: Intends to Terminate Leases from Int'l Aviation AIRGAS INC: Reports Performance Improvement for March Quarter ALTERNATIVE FUEL: Reducing Staff & Limiting Inventories Purchase ALTERRA HEALTHCARE: Gets OK to Appoint BSI as Court Claims Agent ANC RENTAL CORP: Court Clears $1.2-Million Purchase Agreement ARMSTRONG: Outlines Treatment of Claims Under 3rd Amended Plan AVADO BRANDS: Reaffirms Shift in Focus Under Turnaround Plan BAYOU STEEL: Asks Court to Stretch Exclusivity through Nov. 30 BCE INC: Simplifies Operations with New Business Structure CABLE SATISFACTION: Bankers Extend Debt Waivers until May 28 CANNON EXPRESS: AMEX Accepts Company's Proposed Compliance Plan CENTERPOINT ENERGY: Elects Derrill Cody to Board of Directors COEUR D'ALENE MINES: Preparing Prospectus for 7MM-Share Offering COMVERSE TECH: Closes $350-Million Puttable Securities Offering CORNERSTONE PROPANE: Mulls Sale as Company Explores Alternatives CORRECTIONS CORP: Closes Shares and 7-1/2% Sr. Notes Offerings DAISYTEK INCORPORATED: Voluntary Chapter 11 Case Summary DENNY'S CORP: Net Capital Deficit Slides-Up to $288 Million DOANE PET CARE: Commences Exchange Offer for 10-3/4% Sr. Notes DT INDUSTRIES: Narrows March Quarter Net Loss to $4.6 Million ENCOMPASS SERVICES: Committee Wants Chapter 11 Trustee Appointed ENRON CORP: Judge Gonzalez Approves Four Settlement Agreements EXIDE TECHNOLOGIES: Plan Filing Exclusivity Extended to August 7 FLEMING COMPANIES: Hires Baker Botts LLP as Special Counsel GBC BANCORP: Fitch Puts BB+ L-T Debt Rating on Watch Evolving GE CAPITAL MORTGAGE: Fitch Rates Several Home Equity Issues GENERAL DATACOMM: UK Unit Completes Asset Sale for $2 Mill. Net GENUITY INC: Intends to Fund Wind-Down of Foreign Subsidiaries GLIMCHER REALTY: Names Janette Bobot Director of Internal Audit GLOBAL CROSSING: IDT Seeks Thorough Review of Sale to SingTel GLOBAL CROSSING: Reports Positive EBITDA for March 2003 HARVEST NATURAL: First-Quarter 2003 Net Loss Tops $15.5 Million HAYES LEMMERZ: Plan Confirmation Hearing to Continue on Monday HIGHWOOD PROPERTIES: Fitch Affirms BB+ Preferred Shares Rating INTERBANK FUNDING: Claims Bar Date Set for May 30, 2003 INTERPUBLIC: Names Christopher Coughlin Chief Operating Officer INTRAWEST: Brings-In Moneris Solutions for Payment Processing KAISER: New Debtors Get Open-Ended Lease Decision Time Extension KASPER A.S.L.: Grypon Master Fund Discloses 5.6% Equity Stake KMART CORP: Wants Approval to Sell Store No. 4228 to Wheeling LEXAM EXPLORATIONS: Ability to Continue Operations Uncertain LEAP WIRELESS: Court Allows Release of Funds from Pledge Account LOUDEYE CORP: Will Publish First-Quarter Results on Wednesday MCSI INC: Takes Restructuring Steps as Part of Long-Term Plan MERRILL LYNCH: Fitch Takes Rating Actions on Ser. 1999-C1 Notes MERRILL LYNCH: Fitch Upgrades Class B-2 Rating to BB+ from B MILITARY RESALE: Cash Resources Insufficient to Fund Operations MIRANT: Continues to Pursue Successful Financial Restructuring MRS. FIELDS: Appoints Stephen Russo as New President and CEO NEPTUNE SOCIETY: Reports Weaker Operating Results for 2002 NORSKE SKOG: Intends to Raise $100MM from Senior Notes Offering OGLEBAY NORTON: S&P Hatchets Low-B Rating on Liquidity Concerns OMNOVA SOLUTIONS: Fitch Changes BB+ Rating's Outlook to Negative PCD INC: Completes Wells-CTI Div. Asset Sale to UMD Technology PEABODY ENERGY: Directors Re-Elected at Shareholders' Meeting PICCADILLY CAFETERIAS: Red Ink Flows in Third Fiscal Quarter PLAYBOY ENTERPRISES: Reports Substantially Improved Q1 Results PRIMEDIA INC: $300 Million Senior Notes Get S&P's B Rating PROMAX ENERGY: Commences Restructuring Under CCAA in Canada REGUS BUSINESS: Committee Signs-Up Kaye Scholer as Attorneys ROSE HILLS: S&P Revises Outlook to Developing over Reduced Debt ROUNDY'S: Outlook Stable Given Aggressive Acquisition Strategy SALOMON BROS: Fitch Raises Ser. 2002-UST1 Cl. B-5 Rating to BB+ SERVICE MERCHANDISE: Challenging Filed Work Compensation Claims SIERRA PACIFIC: Registers $300-Mill. of 7.25% Convertible Notes STANSBURY HOLDINGS: Taps Sellers and Andersen as Accountants TEMBEC INC: Unit Completes Exchange Offer for 8.625% Sr. Notes TIMES SQUARE HOTEL: S&P Lowers & Removes BB+ Rating from Watch TITANIUM METALS: Valhi Begins Tender Offer for Preferred Shares TREND HOLDINGS: Taps Atlas Partners and Grubb & Ellis as Agents TRITON PCS: March 31 Net Capital Deficit Widens to $192 Million UNITED AIRLINES: Revenue Passenger Miles Tumble 13.4% in April US STEEL: Increased Fin'l Risk Prompts S&P to Cut Rating to BB- U.S. UNWIRED: Will Publish First-Quarter 2003 Results on Thurs. VISUAL DATA CORP: Completes Three-Part Financing Transaction WESTAR ENERGY: Board Declares Quarterly Preferred Share Dividend WHEREHOUSE: Wants to Stretch Plan Exclusivity through August 19 WORLDCOM INC: Wants Nod for Proposed Solicitation Procedures XM SATELLITE: Red Ink Continues to Flow in First Quarter 2003 XML GLOBAL TECH.: Completes Corporate Reorganization Program *BOOK REVIEW: The First Junk Bond: A Story of Corporate Boom and Bust ********* ACE LIMITED: Caps Price of $500-Million Preferred Share Offering ---------------------------------------------------------------- ACE Limited (NYSE:ACE) has agreed to sell in a public offering 20 million 7.80% Cumulative Redeemable Preferred Shares, Series C, in the form of depositary shares, for $25.00 per depositary share. ACE also granted the underwriters of the offering an option to purchase an additional 3 million shares at the same price to cover over allotments. ACE intends to use the net proceeds of the offering to make additional capital contributions to some of its subsidiaries and for general corporate purposes. This completes ACE's previously announced financing plans. No further capital raising activities are anticipated at this time. The shares, which will trade on the New York Stock Exchange under the symbol "ACE PrC", will have an annual dividend rate of 7.80%. The first quarterly dividend will be payable on September 1, 2003. The shares will not be convertible into or exchangeable for ACE's ordinary shares. ACE may redeem these shares at any time after May 30, 2008 at a redemption value of $25.00 per depositary share. ACE may also redeem the shares at any time under certain limited circumstances. Citigroup Global Markets Inc. and Merrill Lynch are acting as joint book-running managers for the offering. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients. The ACE Group conducts its business on a global basis with operating subsidiaries in nearly 50 countries. Additional information can be found at: http://www.acelimited.com As reported in Troubled Company Reporter's April 25, 2003 edition, Fitch downgraded the debt ratings of ACE and its subsidiary ACE INA Holdings, Inc. by one notch, including the senior debt ratings to 'A-' from 'A' and commercial paper ratings to 'F2' from 'F1'. Fitch also downgraded the insurer financial strength ratings of the insurance subsidiaries of Brandywine Holdings by four notches to 'B+' from 'BBB-'. Fitch assigned a 'BBB+' rating to the preferred securities issue planned under ACE's recent shelf registration, while downgrading the rating on existing preferred securities to 'BBB+' from 'A-'. The Rating Outlook on all of the above noted ratings is Stable. AIR CANADA: Wants Approval to Access C$350-Million CIBC Facility ---------------------------------------------------------------- As part of its overall discussion regarding the New Aerogold Agreement, Air Canada was able to negotiate a C$350,000,000 non- revolving term loan commitment with Canadian Imperial Bank of Commerce as lender. Air Canada intends to use the additional liquidity to fund ordinary course operations and expenses during the CCAA proceedings. Together with the New Aerogold Agreement, Air Canada Executive Vice-President and Chief Financial Officer Robert M. Patterson tells Mr. Justice Farley that the CIBC Credit Facility is designed to assist Air Canada in its restructuring efforts and to ensure the continuation of the valuable mutual relationship CIBC and Air Canada have developed. For these reasons, the Applicants seek the Court's permission to enter into the CCAA Credit Financing Agreement with CIBC. C$350,000,000 CIBC Credit Facility Pursuant to the terms of a commitment letter CIBC sent to Air Canada on April 16, 2003, the CIBC Credit Facility will be available via a one drawdown of a Canadian dollar loan bearing interest at a Prime Rate plus 4% per annum from the date of the drawdown until the date certain lending conditions are satisfied. After that date, the loan will bear interest at the Prime Rate per annum. The interest will be paid in cash monthly in arrears. The interest rate will increase by 2% per annum on the occurrence and during the continuance of an Event of Default. The Prime Rate is the annual interest rate from time to time declared by CIBC as its prime interest rate for Canadian dollar commercial loans made in Canada as adjusted from time to time. The CIBC Facility will mature on the earliest of: (i) the repayment of all amounts outstanding under the Credit Facility; (ii) such earlier date upon which the repayment of the Facility is required due to the occurrence of an Event of Default; or (iii) October 1, 2004. An Event of Default includes, but is not limited to: (1) the appointment of a receiver, interim receiver, receiver and manager or trustee in bankruptcy with powers to operate or manage Air Canada's affairs; (2) the dismissal or conversion of the CCAA Proceeding or the U.S. Bankruptcy Court Proceeding, or granting relief from the stays imposed in the proceedings, in favor of third parties in a manner that has a material adverse effect; (3) expiry of the stay provisions under the CCAA Initial Order or any U.S. Bankruptcy Court order; (4) a post-CCAA Proceeding judgment liability or event that will, in CIBC's judgment have a Material Adverse Effect; (5) any violation or breach of any representation or warranty or covenant contained in the CIBC Facility definitive documentation in any material respect; (6) any material default by Air Canada of any CCAA Court or U.S. Bankruptcy Court order; (7) any termination of the New Aerogold Agreement; (8) the occurrence of an event of default and the resulting acceleration of amounts owing under any CCAA Financing that has been provided to, and drawn down by, Air Canada; or (9) the granting of any court order in the CCAA Proceeding or U.S. Bankruptcy Court proceeding that has a Material Adverse Effect or materially and adversely affects CIBC's rights without CIBC's prior consent. On the occurrence of an Event of Default, CIBC may declare Air Canada's obligations under the CIBC Facility to be immediately due and payable in cash. CIBC will also assist in exploring financing opportunities when Air Canada emerges from the CCAA proceedings. Once effective, CIBC's commitment to provide financing will cease if the Credit Facility is not funded for any reason on or before May 15, 2003. In this case, neither CIBC nor any of its affiliates will be have liability to any person in connection with its refusal to fund the Credit Facility after that date. C$7,000,000 Commitment Fee As part of the transaction, Air Canada will pay to CIBC a C$7,000,000 commitment fee on the date the Credit Facility is fully available for drawing by Air Canada. CIBC will refund one half of the Commitment Fee if a financier is not able to confirm to CIBC by July 15, 2003 that at least C$337,500,000 of the Credit Facility is fully available for Air Canada to draw (the DIP Condition). The Commitment Fee will also be reduced to C$3,500,000. In all cases, the Commitment Fee will be fully earned and non-refundable when due and payable. Air Canada will also pay for all out-of-pocket expenses CIBC incurred from April 1, 2003 in connection with the Commitment Letter, the prior communications, the execution of definitive agreements and the evaluation and documentation of the Credit Facility. Security and Priority To secure its existing and future obligations under the CIBC Facility and any liabilities pursuant to cash management services provided by CIBC, Air Canada will give CIBC a fully perfected first priority security interest in, and first ranking charge on all of its present and after-acquired claims, debts and accounts receivable under the New Aerogold Agreement and on all of the present and after-acquired licenses and trademarks that it owns or owned by Aeroplan LP and used by CIBC in connection with the Aerogold program, including, without limitation, the "Aerogold", "Aero Or", "Aerocorporate" and "Aeromortgage" trademarks. The CIBC Collateral will only be subject to the C$10,000,000 Administrative Charges provided under the Initial CCAA Order. The Collateral will be free and clear of all other liens, encumbrances and claims of any kind. CIBC will also receive a first floating charge, subject only to the Administrative Charge, over the Applicants' entire undertaking and on all of their property and assets. At Air Canada's request, CIBC will, without any further consideration and regardless of whether there are any amounts outstanding under the CIBC Facility, release the Floating Charge. But the release of the Floating Charge will not occur until the DIP Condition is satisfied. Financial And Other Reporting Air Canada will provide CIBC a rolling 13-week cash flow budget on a weekly basis. The cash flow budgets will be prepared on a consolidated and consolidating basis. Ernst & Young, as the Applicants' Monitor, will prepare the report. Air Canada will also furnish CIBC with copies of all pleadings, motions, applications, judicial information, financial information and other documents filed with the CCAA Court or the U.S. Bankruptcy Court as well as other reports and information with respect to its business, financial condition or prospects. (Air Canada Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) AIR CANADA: Intends to Terminate Leases from Int'l Aviation ----------------------------------------------------------- International Aviation Terminals Inc., has been advised by Air Canada and its subsidiary, Jazz Air Inc., that they intend to terminate certain of their leases from IAT. As a result, IAT is proposing to reduce payments to IAT Air Cargo Facilities Income Fund ny reducing interest payments to the Fund on the subordinated debt held by the Fund and eliminating dividend payments while occupancy levels are below normal. As described in the press release issued by the Fund on April 10, 2003, Air Canada obtained a stay of proceedings under the Companies' Creditors Arrangement Act for itself and its subsidiaries. This order prohibits enforcement of normal creditors' and landlords' remedies. Air Canada has now indicated to IAT that it intends to terminate leases for a total of approximately 85,000 square feet (net of space sublet to other tenants). The lease revenues and cost recoveries associated with this space represent approximately 9.5% of IAT's current monthly lease revenues and cost recoveries. In addition, as previously advised, Air Canada will not continue to lease 121,000 square feet of building and ramp area in IAT's Airside Facilities at the South Airport in Vancouver. Revenues and cost recoveries from the lease of this space (net of revenues from a replacement lease of a portion of the space) represent approximately 4.5% of IAT's current monthly lease revenues and cost recoveries. Management of IAT had expected that Air Canada would not continue to lease this space after May 2003. The terms of Air Canada's CCAA order require that the consent of a court- appointed monitor be obtained for any termination of a lease with IAT and, unless otherwise agreed by IAT, Air Canada must deal with the consequences of such termination in its plan of arrangement to be filed with the court. IAT will take all appropriate steps to deal with the actions of Air Canada, including seeking to mitigate the consequences of any vacating of the space leased to them by re leasing it to other tenants. The effects of the steps being taken by Air Canada cannot be fully determined at this time. In the current business conditions, demand for space is weak and management does not expect to fill the vacated space rapidly. The airline and air cargo industries have suffered from a combination of the effects of terrorist activities, war, disease and a worldwide economic slowdown. These factors have persisted since 2001, lowering air cargo volumes and significantly reducing demand for additional leased space. As a result of this combination of factors, IAT's occupancy rate had declined to just under 90% at the end of 2002. The additional vacancy resulting from Air Canada's actions will lengthen the time required to be able to bring the occupancy levels back to normal. In addition, investment of additional funds by IAT is likely to be necessary to make improvements for new tenants requirements. In order to conserve cash resources and maintain the long term strength of the company, the directors of IAT have determined that it is necessary and prudent to reduce payments to the Fund in the circumstances. Management of IAT currently expects that, in order to maintain a sufficient cash reserve for requirements of the business and pay distributions at a sustainable level until a return to normal levels of occupancy, current dividend payments to the Fund ($0.11 per unit per year) must be eliminated and interest payments on the subordinated notes held by the Fund will be required to be reduced to an annual level equivalent to approximately $0.70 per unit (from the current level of approximately $1.00 per unit). IAT leases approximately 1,246,000 square feet of air cargo and related facilities to 140 tenants at five airports in western Canada. IAT had combined lease revenues and cost recoveries of approximately $17.8 million for 2002. Air Canada accounted for approximately 19% of IAT's lease revenue in 2002. The unitholders of the Fund will be asked to approve an amendment to the terms of the subordinated notes to provide for a reduced rate of interest based on cash available for distribution in the circumstances. It is expected that the annual general meeting of unitholders called for June 2, 2003 will be postponed to a later date in order to deal with this approval. Further information, including notice of a unitholders' meeting for this purpose, will be sent to unitholders in the near future. AIRGAS INC: Reports Performance Improvement for March Quarter ------------------------------------------------------------- Airgas, Inc., (NYSE:ARG) reported earnings for its fourth quarter and fiscal year ended March 31, 2003. Net earnings for the quarter were $18.2 million compared to $8.7 million in the same period a year ago. The prior-year fourth quarter included a charge related to a litigation settlement of $8.5 million ($5.7 million after tax). The reported net earnings before the cumulative effect of a change in accounting principle for the year ended March 31, 2003 were $68.1 million, compared to $48.6 million for the prior year. Fiscal 2003 earnings reflect a first quarter restructuring charge of $2.7 million ($1.7 million after tax) related to the integration of the Air Products acquisition. "The weak industrial economy created a very tough sales environment in fiscal 2003. However, we remained focused on executing our strategic initiatives, pursuing growth in niches like medical and specialty gas, and integrating acquired assets," said Airgas Chairman and Chief Executive Officer Peter McCausland. "I am very proud of the drive and determination displayed by all Airgas associates during the year." While fourth quarter sales increased 6% to $443 million, total same-store sales declined 1% compared to the same quarter a year ago, reflecting continued weakness in manufacturing and other industrial segments. Same-store sales in the Distribution segment were down 2%, reflecting a 4% decline in hardgoods while gas and rent was flat. Same-store sales for the Gas Operations segment increased 6%. The Company continued to generate strong free cash flow during fiscal 2003, enabling it to reduce adjusted debt by $96 million. In line with the new guidance from the Securities and Exchange Commission on the use of non-GAAP financial measures, the Company has revised the calculation of its liquidity measure "Free Cash Flow", making this useful measure more transparent and traceable to the Statement of Cash Flows. The new definition of Free Cash Flow and a reconciliation to the attached Consolidated Statement of Cash Flows, as well as the definition of adjusted debt and reconciliation to the balance sheet are attached. Free Cash Flow for the year ended March 31, 2003 was $104 million versus $133 million in the prior year. The fiscal 2003 decline in free cash flow reflects an investment in the new liquid CO2 plant in Hopewell, VA; a cash disbursement related to a prior year litigation settlement; and higher cash interest payments on the prior year's subordinated debt issuance resulting from a long first coupon period. McCausland continued, "The year ahead looks like it may not be an easy one as we could face as many challenges as opportunities, but I believe we are a strong organization with the ability to execute in any environment. We expect to continue growing our earnings and project to earn between $1.05 and $1.12 per diluted share in fiscal 2004. The low end of the range reflects a continuation of the current environment and the high end assumes improvement." Airgas, Inc. is the largest U.S. distributor of industrial, medical and specialty gases, welding, safety and related products. Its integrated network of nearly 800 locations includes branches, retail stores, gas fill plants, specialty gas labs, production facilities and distribution centers. Airgas also distributes its products and services through eBusiness, catalog and telesales channels. Its national scale and strong local presence offer a competitive edge to its diversified customer base. For more information, please visit http://www.airgas.com As reported in Troubled Company Reporter's February 3, 2003 edition, Standard & Poor's Rating Services revised its outlook on packaged gas distributor Airgas Inc., to positive from stable based on expectations that the company's financial profile will continue to strengthen as economic conditions improve. Standard & Poor's said affirmed its 'BB' corporate credit rating on the Radnor, Pennsylvania-based company. "Meaningful debt reduction has occurred at Airgas, demonstrating the resilience of its cash flows despite challenging economic times", said Standard & Poor's credit analyst Wesley E. Chinn. "Accordingly," he continued, "it is possible that the ongoing pursuit of strategic acquisitions will not hamper the strengthening of debt leverage measures to levels appropriate for a higher rating". ALTERNATIVE FUEL: Reducing Staff & Limiting Inventories Purchase ---------------------------------------------------------------- Alternative Fuel Systems Inc. (TSX:ATF) announced an update on its corporate restructuring activities and a recent order from its major European customer. Update on Corporate Restructuring As announced on April 9, 2003, AFS applied for creditor protection on that date under the Companies' Creditors Arrangement Act to facilitate a corporate reorganization. The Company believes this process provides the best opportunity to continue to operate in light of the previously reported dramatic reduction in sales to AFS' significant European customer. As part of the restructuring, and in continuation of the Company's cost cutting measures to reduce overhead, the Company has undertaken the following: - Over the next week, the Company will be moving out of its 51,000 square foot leased facility in northeast Calgary and into a smaller nearby facility. The monthly rental payments (net of sublease revenue) of the current facility are $46,000. The new facility contains 5,000 square feet, has monthly rental payments of $2,800 and will be subleased on a month-to-month basis. The annual savings in rent will be approximately $500,000 with additional savings in utilities, business taxes and other related costs. - By the middle of May, AFS will have reduced its staff from 40 employees to 17. Approximately half of this reduction relates to production staff working on the assembly of the Company's natural gas pressure regulator. The reduced staff level has not compromised AFS' ability to continue servicing its existing clients and proceed with the completion of its major product development programs. - The Company is limiting its purchase of inventories to only essential items. The prior buildup of inventory, in response to the high sales levels experienced in the fourth quarter of 2002, should be sufficient to meet current sales levels for a considerable period. - During the restructuring period, AFS has continued to ship products to customers in Mexico, Europe and the U.S. Ecomex of Mexico City recently took delivery of an initial order of 50 of AFS' newly developed Sparrow "C" engine management systems. These systems will be used by Ecomex to convert Chevy Monza vehicles to natural gas operation. The Monza is a small passenger vehicle commonly used for taxi applications in Mexico. Update on Orders from Major European Customer AFS' significant European customer had suspended orders of the Company's "Falcon" natural gas pressure regulators commencing in March of this year. Regulator sales to this client amounted to $2.4 million from October 2002 to February 2003. On May 5, 2003, AFS received an order from this customer for regulator deliveries in June and July with sales value of $170,000 Canadian in each of these two months. This client has not yet provided clarification as to their longer-term order requirements. AFS has been informed that the orders for June and July will be sufficient to meet the vehicle production requirements of this customer until the end of August of this year. In September, a new model of the natural gas vehicle is scheduled to be introduced. AFS has not been notified if this vehicle will utilize the Company's regulator. The Company will continue to provide updates on material developments related to sales to this customer. AFS is a Canadian environmental technology company providing innovative and cost-effective solutions to the growing global problem of harmful exhaust emissions from internal combustion engines. AFS has commercialized electronic engine management systems enabling diesel and gasoline engines to operate on cleaner burning natural gas. AFS' natural gas systems and components are installed worldwide in new vehicles manufactured by Original Equipment Manufacturers, or retrofitted in existing fleets. AFS is headquartered in Calgary, Canada and trades on the Toronto Stock Exchange under the trading symbol ATF. ALTERRA HEALTHCARE: Gets OK to Appoint BSI as Court Claims Agent ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to Alterra Healthcare Corporation's application to appoint Bankruptcy Services, LLC as the official claims and noticing agent for the Court Clerk. The Debtor anticipates that there will be over 15,500 creditor entities that will be required to be served with the various notices, motions and other documents filed in this case. The size and magnitude of the Debtor's creditor body makes it impracticable for the office of the Clerk of the United States Bankruptcy Court for the District of Delaware to serve notice efficiently and effectively on such a large number of creditors from and after the commencement of this chapter 11 case without creating an administrative burden. The Debtor submits that the most effective and efficient manner by which to accomplish the process is to employ BSI to: a. relieve the Clerk's Office of all noticing under any applicable rule of bankruptcy procedure; b. file with the Clerk's Office a certificate of service, within 5 days after each service, which includes a copy of the notice, a list of persons to whom it was mailed (in alphabetical order), and the date mailed; c. maintain an up-to-date mailing list for all entities that have requested service of pleadings in this case, which list shall be available upon request of the Clerk's Office; d. comply with applicable state, municipal and local laws and rules, orders, regulations and requirements of Federal Government Departments and Bureaus; e. relieve the Clerk's Office of all noticing under any applicable rule of bankruptcy procedure relating to the institution of a claims bar date and processing of claims; f. at any time, upon request, satisfy the Court that the Claims Agent has the capability to efficiently and effectively notice, docket and maintain proofs of claim; g. furnish a notice of the bar date approved by the Court for the filing of a proof of claim (including the coordination of publication, if necessary) and a form for filing a proof of claim to each creditor notified of the filing; h. maintain all proofs of claim filed; i. maintain an official claims register, by docketing all proof's of claim on a register containing certain information, including: - a the name and address of claimant and agent, if agent filed proof of claim; - the date received; - the claim number assigned; - the amount and classification asserted; - the comparative, scheduled amount of the creditor's claim; and - pertinent comments concerning disposition of claims; j. maintain the original proofs of claim in correct claim number order, in an environmentally secure area, and protecting the integrity of these original documents from theft or alteration; k. transmit to the Clerk's Office an official copy of the claims register on a monthly basis, unless requested in writing by the Clerk's Office on a more/less frequent basis; l. maintain an up-to-date mailing list for all entities that have filed a proof of claim, which list shall be available upon request of a party in interest or the Clerk's Office; m. be open to the public for examination of the original proofs of claim without charge during regular business hours; n. record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfer as required by Bankruptcy Rule 3001(e); o. record court orders concerning claims resolution; p. assisting with voting and balloting, including the printing and mailing of ballots; q. make all original documents available to the Clerk's Office on an expedited, immediate basis; and r. promptly comply with such further conditions and requirements as the Clerk's Office may hereafter prescribe. BSI's professional hourly rates are: Kathy Gerber $195 per hour Senior Consultants $175 per hour Programmer $125 to $150 per hour Data Entry/Clerical $40 to $60 per hour Alterra Healthcare Corporation, one of the nation's largest and most experienced healthcare providers operating assisted living residences, filed for chapter 11 protection on January 22, 2003, (Bankr. Del. Case No. 03-10254). James L. Patton, Esq., Edmon L. Morton, Esq.. Joseph A. Malfitano, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $735,788,000 in assets and $1,173,346,000 in total debts. ANC RENTAL CORP: Court Clears $1.2-Million Purchase Agreement ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates obtained the Court's authorization to enter into a Purchase Agreement with Sherer Car Rental Inc., and assume the Alamo Agreement, and assign it to Sherer, on the condition that the Purchase Agreement closes. These are the salient terms of the Purchase Agreement: A. Purchase Price: As the purchase price for the Acquired Assets, Sherer will pay to the Debtors an amount equal to $1,200,000. Taxes, equipment, real estate rentals, utilities and other customarily pro-ratable items will be pro-rated as of the Closing Date. B. Acquired Assets: The assets to be sold to Sherer consist of certain personal property, fixtures and equipment identified on Schedule 1.1 of the Purchase Agreement. At the Closing, the Purchase Price will be increased by the amounts on Schedule 1.1. C. License Agreements: Sherer agrees to execute and deliver to National Car Rental Licensing Inc. the New License Agreement, and all related agreements and releases, for the Facility and either enter into the New License Agreement or voluntarily terminate all existing license agreements, whether active or inactive. In accordance with the New License Agreement, Sherer will engage in car rental operations at the Facility under both the name and mark "National Car Rental" and "Alamo Rent-A-Car" either by "dual branding" from a single facility or through the operation of two separate facilities. If within six months of the Closing Date, Sherer has not commenced dual branding operations, National Licensing has certain rights and remedies under the Purchase Agreement including the right to terminate the New License Agreement. D. Vehicles: Specific provisions of the Purchase Agreement address both leasing and the return of the Debtors' vehicles located at the Providence Airport. E. Closing: The Closing will occur on a date mutually agreeable to the parties. F. Transfer Taxes: The Purchase Agreement provides that the sale is in contemplation of the Debtors' plan of reorganization and is to be exempt from transfer taxes under Section 1146(c) of the Bankruptcy Code. Sherer will escrow the estimated transfer taxes, if any, until the Debtors' plan of reorganization is approved by final order or until further order of the Bankruptcy Court. G. Bonding and Insurance: Sherer will meet all applicable bonding and insurance requirements with respect to the Facility on or before the Closing Date. (ANC Rental Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG: Outlines Treatment of Claims Under 3rd Amended Plan -------------------------------------------------------------- Armstrong World Industries and its debtor-affiliates remind Armstrong Holdings, Inc. shareholders that, due to concessions made in negotiations, they are not allowed to vote on the Plan, although they will be receiving copies of the Disclosure Statement and Plan. However, the Holdings shareholders do have standing to object to the confirmation of the Plan since it requires the dissolution of Holdings, with a resulting distribution of warrants to purchase shares of the new common stock of Reorganized AWI to the former shareholders of Holdings. The resolution of the many objections to the Disclosure Statement previously filed by AWI have led to significant, although not radical, changes in the distribution to claimholders under the Plan. The definitions of the various classes of Claims remain the same, and all Classes receiving 100% distribution are unimpaired and not entitled to vote. The single biggest change is in the alternative treatment of the Class 4 Asbestos PD Claims and the enhanced possible distribution to the Asbestos PI Claimants. The Third Amended Plan classifies Claims against and Equity Interestsin AWI for all purposes, including voting, confirmation and distribution, as: Estimated Class Treatment Recovery ----- --------- --------- Administrative Claims Paid in full, in cash when due 100% Class 1: Priority Paid in full, in cash on the 100% Claims later of the Effective Date or as soon as practicable after the Priority Claim becomes Allowed. Class 2: Secured Reinstated -- any defaults 100% Claims related to Secured Claims will be cured. Class 3: Convenience Paid 75% of Allowed Amount of 75% Claims Convenience Claims in cash on later of the Effective Date or as soon as practicable after the Convenience Claim becomes Allowed. Class 4: Asbestos All Asbestos Property Damage Unknown Property Claims will be channeled to Damage the Asbestos PD Trust, which Claims will be funded exclusively with the Asbestos PD Trust Funding Obligation. However, in a departure from its previous Plan and Amended Plans, AWI now states in its 3rd Amended Plan that, if fewer than 25 Disputed Asbestos PD Claims remain outstanding as of the Effective Date of the Plan, AWI may elect, in its sole discretion, not to channel Asbestos PD Claims to the Asbestos PD Trust, but to litigate the merits of each Disputed Asbestos PD Claim before the Bankruptcy Court, and pay the Allowed Amount of each such Claim in full in cash from the proceeds of insurance. Class 5: COLI Reinstated. Any defaults 100% Claims related to COLI Claims will be cured. Class 6: Unsecured Each holder of an Allowed 66.5% Claims Unsecured Claim will receive Other Than its Pro Rata Share of: Convenience Claims 1) 34.43% of the New Common Stock, 2) 34.43% of the first $1.05 billion of: (x) up to $300,000,000 of Available Cash, and (y) the Plan Notes and/or 144A Offering Proceeds, 3) 60% of the next $50,000,000 of the remaining Available Cash, 4) 60% of the remaining amount of Plan Notes and/or 144A Offering Proceeds to the extent that Available Cash in item (3) is less than $50,000,000, and 5) 34.43% of the remaining Available Cash and Plan Notes and/or 144A Offering Proceeds. Class 7: Asbestos All Asbestos PI Claims will be Unknown Personal channeled to the Asbestos PI Injury Trust. Claims Class 8: Environmental Each Environmental Claim will 66.5% Claims be treated as an Allowed Unsecured Claim to the extent it becomes Allowed before any Distribution Date. Other treatment is determined by the terms of the relevant settlement agreement. Class 9: Affiliate Reinstated. 100% Claims Class 10: Subsidiary Reinstated. 100% Debt Guarantee Claims Class 11: Employee Reinstated. 100% Benefit Claims Class 12: AWWD's The holder of the Equity Interests N/A Equity will receive the New Warrants to Interests be distributed in accordance with In AWI the Holdings Plan of Liquidation if approved. (Armstrong Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVADO BRANDS: Reaffirms Shift in Focus Under Turnaround Plan ------------------------------------------------------------ Addressing shareholders, Avado Brands, Inc. (OTC Bulletin Board: AVDO) Chairman and Chief Executive Officer Tom E. DuPree, Jr. reaffirmed that a change in the Company's focus has occurred to more aggressively drive same-stores sales and to ultimately increase profitability. The success of the Company's debt reduction initiatives allowed this vital shift to take place. While reducing debt remains an objective, a much greater emphasis will be placed on marketing and on the operations of the Company's Don Pablo's and Hops brands. The Company believes this shift in focus will improve sales, profitability and ultimately stakeholder value. "A new day began at Avado Brands on March 13, 2003," said Mr. DuPree. "The Company's Don Pablo's brand continues to perform at a consistent level and the Hops brand, under new leadership, is showing marked improvement in quantifiable areas such as Guest Satisfaction Index scores and customer traffic." Mr. DuPree added, "While there is still much work to be done, the positive changes we are seeing at Hops coupled with the consistency of our Don Pablo's brand, which consumers have ranked the No. 1 Mexican Restaurant Chain in the United States for two of the last three years in an independent national survey, gives us reason to be enthusiastic about the opportunities that lie before us." Mr. DuPree also expressed the Company's appreciation for the support it continues to receive from shareholders. Avado Brands' shareholders today re-elected, by a 96% affirmative vote, six directors to serve one-year terms, including, Emilio Alvarez-Recio, Vice President of Worldwide Advertising for Colgate-Palmolive; Jerome A. Atkinson, Executive Vice President, General Counsel and Chief Compliance Officer of Assurant Group, the largest subsidiary of Fortis, Inc.; retired Ernst & Young partner, William (Bill) V. Lapham; former J.P. Morgan Managing Director of Investment Banking and Managing Partner of Lighthouse Partners, Robert Sroka; Avado Brands Chief Administrative Officer, Margaret (Beth) E. Waldrep; and Avado Brands Chairman and Chief Executive Officer, Tom E. DuPree, Jr. Additionally, shareholders approved an amendment to the Company's 1995 Stock Incentive Plan, which increased the number of shares issuable under the plan by 500,000 shares. Also approved by shareholders was the appointment of KPMG LLP to serve as independent auditors of the Company for the fiscal year ending December 28, 2003. Avado Brands, whose March 30, 2003 balance sheet shows a total shareholders' equity deficit of about $17 million, owns and operates two proprietary brands, comprised of 111 Don Pablo's Mexican Kitchens and 65 Hops Restaurant * Bar * Breweries. Additionally, the Company operates two Canyon Cafe restaurants, which are held for sale. BAYOU STEEL: Asks Court to Stretch Exclusivity through Nov. 30 -------------------------------------------------------------- Bayou Steel Corporation, and its debtor-affiliates, ask the U.S. Bankruptcy Court for the Northern District of Texas to further extend their exclusive periods to file a plan of reorganization and to solicit acceptances of that plan. The Debtors tell the Court that the size and complexity of the their businesses, their employee relationships, corporate structure, and financing arrangement place heavy demands on management and personnel even in an ideal environment. The chapter 11 cases have exacerbated these demands, complicating operational issues and adding a layer of complexity to everything. The value of the Debtors' estates and businesses are being maintained by highly qualified management. The Debtors continue to pay their bills as they become due and are enjoying normal relations with many of their suppliers, customers and vendors. The Debtors assert that they possess the management expertise and financial stability to operate as viable companies within the chapter 11 framework. Immediately after the Petition Date, the Debtors began implementing their short-term business goals. The Debtors have been working diligently to achieve these goals through various means, including: i) the implementation of various forms of relief granted by the Court to allow the Debtors to maintain business as usual to the fullest extent possible; ii) the procurement of Court approval, over objections, of post-petition financing; iii) the retention of professionals, over objections, necessary to the Debtors' reorganization efforts; iv) the analysis of various issues relating to executory contracts, critical vendors, and the sale of certain assets; v) the stabilization of cash flow; vi) the continuance of delivery of services and supplies necessary to continue the Debtors' operations post- petition; and vii) the timely preparation of the Debtors' schedules and statements of financial affairs. The Debtors have devoted significant time and resources to analyzing the financial health of, and prospects for, each of the Debtors' facilities. Over the course of the next month, the Debtors anticipate seeking comments from their primary secured creditors and the Creditors Committee and will work to finalize a business plan. At the present time, the communications with the primary secured creditors and the Creditors Committee, while substantive and constructive, have not progressed to a level where the Debtors feel comfortable opining as to what the eventual business plan will look like. The Debtors have made significant progress on their long-term goals. However, given the scope and complexity of the attendant issues, the Debtors believe it is premature to submit a plan of reorganization. Consequently, the Debtors want their plan filing exclusivity period to be extended through November 30, 2003 and an extension of time to solicit votes in favor of that plan to run through January 28, 2004. Bayou Steel Corp., a producer of light structural shapes and merchant bar steel products, filed for chapter 11 protection on January 22, 2003. Patrick J. Neligan, Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $176,113,143 in total assets and $163,402,260 in total debts. BCE INC: Simplifies Operations with New Business Structure ---------------------------------------------------------- Michael Sabia, Chief Executive Officer of Bell Canada and BCE Inc., announced a new business structure that simplifies Bell's operations by creating business divisions that reflect the three major customer segments it serves and integrates the corporate functions of BCE and Bell. "Our goals are clear - to differentiate ourselves in the market place by building a Bell Canada that is a powerhouse of performance, product and service innovation, is simple to deal with, and has the highest productivity in the industry," said Mr. Sabia. "That's how we're going to win in a highly competitive market. That's how we're going to bring value to our customers and earn the right to be their communications supplier of choice." Effective June 1st, Bell Canada will create three customer segments to replace its current structure: - The Consumer Markets Group will include Bell's residential wireline service, its Mobility services, its ExpressVu satellite T.V. service, its Sympatico Internet services and its retail operations. - The Small and Medium Business Division creates a unit which is totally dedicated to this customer segment. - The Enterprise Division will focus on large business customers, governments and institutions. The Consumer Markets Group will be led by Pierre Blouin, Group President. The Business Markets Group will be led by John Sheridan, Group President and will include Karen Sheriff, President, Small and Medium Business and Isabelle Courville, President, Enterprise. "Our customers want sophisticated, integrated solutions from a company that has leading-edge products and services, is reliable and is simple to deal with," said Mr. Sabia. "Our new structure moves us in this direction. It will facilitate our ability to provide customers a full range of communications services through a single point of contact." The company will carefully transition to this new structure in the coming weeks in order to ensure there is no impact on customers or service levels. Business customers will, for the most part, continue to be served by their regular sales representatives. Mr. Sabia went on to say that Bell will move towards taking a more integrated approach to managing its IS/IT, Technology, Network Operations and Productivity Initiatives. "We must continue to raise the bar on our customer services levels and our productivity accomplishments. We will achieve better performance in these areas by aligning all of our technological resources around a clear business purpose." The integration of functions between BCE and Bell will move BCE closer to the operations and challenges of its core asset. It will also serve to simplify BCE's structure, helping investors better understand the company's focus going forward. "A year ago we embarked on a plan to bring greater focus to the organization and simplify Bell. We addressed the uncertainties BCE was facing. We regained full control of Bell Canada. We strengthened the balance sheet. We implemented financial discipline. We are now implementing our plans to simplify Bell Canada to build stronger relationships with our 25 million customer connections. Our attention is on our core operations at Bell Canada and our intent is nothing short of making a strong, Canadian Bell Canada the best communications company in North America," concluded Mr. Sabia. BCE is Canada's largest communications company. It has 25 million customer connections through the wireline, wireless, data/Internet and satellite services it provides, largely under the Bell brand. BCE's media interests are held by Bell Globemedia, including CTV and The Globe and Mail. As well, BCE has e-commerce capabilities provided under the BCE Emergis brand. BCE shares are listed in Canada, the United States and Europe. Bell Canada, Canada's national leader in communications, provides connectivity to residential and business customers through wired and wireless voice and data communications, local and long distance phone services, high speed and wireless Internet access, IP-broadband services, e-business solutions and direct-to-home satellite service. Bell Canada is wholly owned by BCE Inc. For more information please visit http://www.bell.ca Executive profiles Pierre J. Blouin will become Group President, Consumer Markets, Bell Canada effective June 1, 2003. He is currently the Chief Executive Officer of BCE Emergis Inc. where he led the company to profitability through an exhaustive review of its operations and strategy. He has also served as President and CEO of Bell Mobility. Prior to joining Bell Mobility, he held several executive positions within the BCE family, including Executive Vice-President of BCE. He holds a degree from Ecole des Hautes Etudes Commerciales (affiliated with the Universit, de Montr,al) and is a Fellow of the Canadian Bankers Institute. Mr. Blouin was recognized as one of the Top 40 Canadians under 40 by the Financial Post Magazine in 1998 and also earned the "relSve de l'excellence" award from Ecole des Hautes Etudes Commerciales' in 1989. Isabelle Courville will become President, Enterprise, Bell Canada effective June 1, 2003. She is currently President and Chief Executive Officer of Bell Nordiq Group Inc., administrator of the Bell Nordiq Income Fund. She also leads the business and affairs of T,l,bec, LP and NorthernTel, LP. She has held various positions at Bell Canada including Senior Vice-President, Supply Chain and Capital Management, where she administered Bell's capital program and its procurement and supply chain activities. She is a graduate from the Ecole Polytechnique de Montr,al and from McGill University. Ms. Courville is a member of the Ordre des ing,nieurs du Qu,bec, the Barreau du Qu,bec and the Canadian Bar Association. Karen H. Sheriff will become President, Small and Medium Business, Bell Canada effective June 1, 2003. She is currently Chief Marketing Officer for Bell Canada where she has successfully refocused Bell's marketing to prepare for the future growth of key customer segments. Ms. Sheriff joined Bell Canada in May 1999 as Senior Vice President of Product Management/Development. Previously, Ms. Sheriff was responsible for corporate marketing and branding at Ameritech Inc. Ms. Sheriff holds a bachelor's degree in psychology, economics and mathematics from Washington University in St. Louis. and has a master's degree in business administration from the University of Chicago. At Dec. 31, 2002, BCE Inc. reported a total working capital deficit of about CDN$2.3 billion. CABLE SATISFACTION: Bankers Extend Debt Waivers until May 28 ------------------------------------------------------------ Cable Satisfaction International Inc.'s bankers have extended the waivers pertaining to the maturity date of the credit facility of its subsidiary Cabovisao - Televisao por Cabo, S.A. until May 28, 2003, subject to certain conditions. The Company is pursuing constructive discussions with secured lenders, noteholders, suppliers and potential investors to reach a consensual agreement on a long-term solution to its financial requirements and those of Cabovisao. There can be no assurance as to the outcome of these discussions. Csii builds and operates large bandwidth (750 Mhz) hybrid fibre coaxial networks and, through its subsidiary Cabovisao - Televisao por Cabo, S.A. provides cable television services, high-speed Internet access, telephony and high-speed data transmission services to homes and businesses in Portugal through a single network connection. The subordinate voting shares of Csii are listed on the Toronto Stock Exchange under the trading symbol "CSQ.A". CANNON EXPRESS: AMEX Accepts Company's Proposed Compliance Plan --------------------------------------------------------------- On November 15, 2002 Cannon Express, Inc., received notice from the American Stock Exchange Staff indicating that the Company is below certain of the Exchange's continued listing standards in Section 1003(a)(i) due to losses in two out of its three most recent fiscal years, equity below $4 million and losses from continuing operations and/or net losses in three out its four most recent fiscal years; and Section 1003(a)(iv) in that it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether the Company will be able to continue operations and/or meet its obligations as they mature. Additionally, the Company has fallen below Section 1003(d) Failure to Comply with Listing Agreements, in that the Company's Audit Committee has not been in compliance with the AMEX Company Guide since November 2001. Further, the Company's failure to disclose the change in its Board of Directors in November 2001 may have resulted in a violation of Sections 403 and 921 of the Amex Company guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange and on December 16, 2002 presented its plan to the Exchange. The Company submitted revisions to the plan during the period of February through April of 2003. On April 30, 2003, the Company received notice that the Exchange had accepted the Company's plan of compliance and granted the Company an extension of time until May 30, 2004 to regain compliance with the continued listing standards. The Company will be subject to periodic review by Exchange Staff during the extension period. Failure to make progress consistent with the milestones of the plan or to regain compliance with the continued listing standards by the end of the plan period, could result in the Company being delisted from the American Stock Exchange. The Company anticipates gaining compliance with its Audit Committee Charter by appointing an independent member to its Board of Directors who will also serve on the Audit Committee. As reported in Troubled Company Reporter's February 18, 2003 edition, the Company began implementation of a plan to decrease its fleet size by approximately 204 tractors and 324 trailers. 54 trucks and 174 trailers were sold in the quarter with proceeds going toward equipment debt. The Company expects to sell an additional 160 trucks and 150 trailers in the third quarter of fiscal 2003 with proceeds going to reduce debt. The second quarter results were adversely affected by the one time costs associated with the implementation of the equipment changes. During December 2002 and January 2003 the Company presented to and discussed with its key lenders a new operational plan. As a result of these discussions, the Company has negotiated the restructuring of its long-term debt payments in order to provide the anticipated time needed to implement the changes necessary for improving fundamental operating results. Additionally, the Company has identified certain unencumbered assets for disposition. These assets include real estate, an airplane, and other miscellaneous assets. The Company has also been successful in attracting several key executives that should provide needed leadership and industry expertise to its management team. The Company is attempting to find a stable base of profitable business from which it can reestablish itself as one of the quality truckload carriers in the industry. CENTERPOINT ENERGY: Elects Derrill Cody to Board of Directors ------------------------------------------------------------- CenterPoint Energy, Inc. (NYSE: CNP) announced that Derrill Cody has been elected to the company's board of directors effective May 7, 2003. Also re-elected to the board were Thomas F. Madison and David M. McClanahan. The company's board of directors also declared a regular quarterly cash dividend of $0.10 per share of common stock payable on June 10, 2003, to holders of record as of the close of business on May 19, 2003. This equates to an annual dividend of $.40 per share of common stock. Cody, 64, has not previously served as a director of CenterPoint Energy and is presently of counsel to the law firm of McKinney & Stringer, P.C. in Oklahoma City, Okla. He also serves as a director of Texas Eastern ProductsPipeline Company, LLC, the general partner of TEPPCO Partners, L.P. Codypreviously served as executive vice president of Texas Eastern Corporation and as chief executive officer of Texas Eastern Gas Pipeline Company from 1987 to 1990. Cody joins the current CenterPoint Energy board members, John T. Cater, O. Holcombe Crosswell, Michael E. Shannon, Madison, McClanahan and board Chairman Milton Carroll. Robert J. Cruikshank and T. Milton Honea retired Wednesday as directors. CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, and Texas. Assets total more than $19 billion. CenterPoint Energy became the new holding company for the regulated operations of the former Reliant Energy, Incorporated in August 2002. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at http://www.CenterPointEnergy.com * * * As reported in Troubled Company Reporter's March 5, 2003 edition, Fitch Ratings affirmed the outstanding credit ratings of CenterPoint Energy, Inc., and its subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp. The Rating Outlook for all three companies remains Negative. The following ratings were affirmed by Fitch: CenterPoint Energy, Inc. -- Senior unsecured debt 'BBB-'; -- Unsecured pollution control bonds 'BBB-'; -- Trust originated preferred securities 'BB+'; -- Zero premium exchange notes 'BB+'. CenterPoint Energy Houston Electric, LLC -- First mortgage bonds 'BBB+'; -- $1.3 billion secured term loan 'BBB'. CenterPoint Energy Resources Corp. -- Senior unsecured notes and debentures 'BBB'; -- Convertible preferred securities 'BBB-'. COEUR D'ALENE MINES: Preparing Prospectus for 7MM-Share Offering ---------------------------------------------------------------- Couer d'Alene Mines Corporation has prepared a prospectus, dated May 1, 2003, relating to 7,125,000 shares of common stock of the Company which are being offered for sale, from time to time, by one of its current stockholders who acquired the shares in a private transaction with the Company in 1999. The selling stockholder will receive all of the proceeds from any sales, the Company will not receive any of the proceeds. The selling stockholder may sell the shares of common stock at various times and in various types of transactions, including sales in the open market, sales in negotiated transactions and sales by a combination of these methods. Shares may be sold at the market price of the common stock at the time of a sale, at prices relating to the market price over a period of time, or at prices negotiated with the buyers of shares. The selling stockholder will pay all brokerage fees and commissions and similar sales-related expenses and all fees and expenses of its counsel. The Company paid all other costs, fees and expenses relating to the registration of the shares with the Securities and Exchange Commission and the sale of those shares. Coeur d'Alene's common stock is listed on the New York Stock Exchange under the symbol "CDE". On May 1, 2003, the last reported sale price for the common stock on the New York Stock Exchange was $1.45 per share. * * * Going Concern Uncertainty In the Company's 2002 Annual Report filed on SEC Form 10-K, the Company's independent auditors, KPMG LLP, issue the following statement, dated February 28, 2003: "We have audited the 2002 financial statements of Coeur d'Alene Mines Corporation (an Idaho Corporation) and subsidiaries (the Company) as listed in the accompanying index. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The 2001 and 2000 financial statements of Coeur d'Alene Mines Corporation, as listed in the accompanying index, were audited by other auditors who have ceased operations and whose report, dated February 15, 2002, expressed an unqualified opinion on those financial statements and included an explanatory paragraph that stated that the Company had suffered recurring losses from operations, had a significant portion of its convertible debentures that needed to be repaid or refinanced in June 2002 and had declining amounts of cash and cash equivalents and unrestricted short-term investments, all of which raised substantial doubt about its ability to continue as a going concern." COMVERSE TECH: Closes $350-Million Puttable Securities Offering --------------------------------------------------------------- Comverse Technology, Inc. (NASDAQ: CMVT) announced the closing of its offering of $350 million principal amount of zero yield puttable securities (ZYPS) due 2023. The ZYPS are convertible, contingent upon the occurrence of certain events, into shares of Comverse Technology common stock at a conversion price of $17.97 per share. The ability of the holders to convert the ZYPS into common stock is subject to certain conditions including, among others, the closing price of the common stock exceeding 120% of the conversion price over certain periods and other specified events. The Company has the right to redeem the ZYPS for cash at any time on or after May 15, 2008, at their principal amount. The holders have a series of put options, pursuant to which they may require the Company to repurchase all or a portion of the ZYPS on each of May 15 of 2008, 2013, and 2018 and upon the occurrence of certain events. The Company intends to use the net proceeds of the offering for working capital and other corporate purposes, including possible investments in, or acquisitions of, other companies, businesses, technologies or product lines and the potential repurchase of outstanding convertible debt. The Company also announced that it privately negotiated the repurchase of an additional $161.9 million principal amount of its 1.5% Convertible Senior Debentures due 2005, leaving approximately $184.4 million principal amount of these debentures outstanding. Within the past year, the Company repurchased a total of approximately $415.6 million principal amount of these debentures. The ZYPS, and the common stock issuable upon conversion of the ZYPS, have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and may not be offered or sold in the U.S., absent registration or an applicable exemption from registration requirements. As reported in Troubled Company Reporter's May 6, 2003 edition, Standard & Poor's Ratings Services assigned its 'BB-' rating to Comverse Technology Inc.'s private placement of $350 million of zero-yield puttable securities due 2023 and affirmed its 'BB-' corporate credit and senior unsecured ratings on the company. CORNERSTONE PROPANE: Mulls Sale as Company Explores Alternatives ---------------------------------------------------------------- CornerStone Propane Partners, L.P. (OTC: CNPP), one of the nation's largest retail propane marketers, has broadened the mandate of its financial advisor, Greenhill & Co., LLC, to assist CornerStone in evaluating a wide range of options regarding its future, including a possible sale of the company. "After a strong performance with improved operations, we have begun a process of looking at all alternatives to maximize value, including a possible sale of the company," said CornerStone's Chief Executive Officer Curt Solsvig. "We expect this process may last several months." He added, "Improved results during the winter and the sale of the final portion of our wholesale operations in November significantly strengthened CornerStone's liquidity. Improvements achieved over the past several months have better positioned CornerStone for the future although the company still faces significant long-term liquidity issues." Since last summer, CornerStone has implemented several strategic initiatives that have reduced costs, capital expenditures and working capital needs under the guidance of a management team from the turnaround firm of Everett & Solsvig, Inc. CornerStone, a master limited partnership, is one of the nation's largest retail propane marketers. It has approximately 1,700 employees, serves approximately 422,000 customers in more than 30 states in the East, South, Central and West Coast regions. For more information, visit http://www.cornerstonepropane.com CORRECTIONS CORP: Closes Shares and 7-1/2% Sr. Notes Offerings -------------------------------------------------------------- Corrections Corporation of America (NYSE: CXW) announced the closing of a public offering of 7,600,000 shares of its common stock, plus an additional 1,140,000 shares pursuant to the exercise in full of the underwriters' over-allotment option, at a price of $19.50 per share. Of the 8,740,000 total shares sold, 6,400,000 shares were sold by the Company and 2,340,000 shares were sold by a selling stockholder. The Company did not receive any proceeds from the sale of shares by the selling stockholder. In addition, Corrections Corporation of America announced the closing of the issuance of $250 million aggregate principal amount of its 7-1/2% Senior Notes due 2011. As a result of the closing of the common stock offering and notes offering, the Company has announced that the financing condition to its tender offer to purchase for cash up to 4,204,947 shares of its Series B Cumulative Convertible Preferred Stock (CUSIP Nos. 22025Y 30 8 and 74264N 30 3) at a fixed price of $26.00 per share has been satisfied. The tender offer will expire at 12:00 midnight, New York City time, on Tuesday, May 13, 2003, unless extended. Copies of the prospectus supplement and accompanying prospectus relating to the common stock offering and notes offering may be obtained by contacting Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services, 1155 Long Island, Edgewood, New York 11717, or by calling 631-254-7106. The dealer manager for the tender offer is Lehman Brothers Inc. The information agent is D. F. King & Co., Inc. As reported in Troubled Company Reporter's April 7, 2003 edition, Standard & Poor's Ratings Services assigned its preliminary 'B'/'B-' senior unsecured/subordinated debt ratings to prison and correctional services company Corrections Corp. of America's $700 million universal shelf registration. In addition, Standard & Poor's assigned its 'B' senior unsecured debt rating to Nashville, Tennessee-based CCA's proposed $200 million senior unsecured notes due 2011, which will be issued under the company's $700 million shelf registration. At the same time, Standard & Poor's raised CCA's senior secured debt rating to 'BB-' from 'B+' and senior unsecured debt rating to 'B' from 'B-'. CCA's 'B+' corporate credit rating has been affirmed and its outlook remains positive. DAISYTEK INCORPORATED: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Lead Debtor: Daisytek, Incorporated 1025 Central Expwy., S. Suite 200 Allen, Texas 75013 Bankruptcy Case No.: 03-34762 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Arlington Industries, Inc. 03-34765 B. A. Pargh Company 03-34766 Digital Storage, Inc. 03-34767 Daisytek Latin America, Inc. 03-34768 Tapebargains.com, Inc. 03-34769 Tape Company 03-34770 Type of Business: The Debtor and its affiliates are leading global distributors of computer and office supplies and professional products. Chapter 11 Petition Date: May 7, 2003 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtors' Counsel: Daniel C. Stewart, Esq. Paul E. Heath, Esq. Richard H. London, Esq. Vinson & Elkins LLP 3700 Trammell Crow Center 2001 Ross Avenue Suite 3700 Dallas, TX 75201 Tel: 214-220-7700 Total Assets: $622,888,416 Total Debts: $450,489,417 DENNY'S CORP: Net Capital Deficit Slides-Up to $288 Million ----------------------------------------------------------- Denny's Corporation (OTCBB: DNYY) reported results for its first quarter ended March 26, 2003. Highlights included: -- Systemwide sales for the Denny's concept were $526.0 million for the quarter, a 2.8% decrease from last year's first quarter, reflecting 55 fewer restaurants systemwide. -- Systemwide same-store sales for the quarter declined 1.1% with company units down 0.4% and franchised units down 1.6%. -- Denny's ended the quarter with 1,669 restaurants systemwide (563 company and 1,106 franchised and licensed units). -- Total operating revenue declined 5.8% to $220.8 million for the quarter. -- Operating income of $10.4 million and EBITDA of $24.7 million declined $1.8 million and $8.2 million, respectively, for the quarter. -- Operating income fell from 5.2% of revenue to 4.7%, while EBITDA decreased from 14.0% of revenue to 11.2%. -- Net loss for the quarter was $9.1 million, or $0.22 per common share, compared with last year's net loss of $4.7 million, or $0.12 per common share. -- At quarter end, Denny's had $60.2 million drawn under its credit facility and $48.4 million in letters of credit, leaving net availability of $16.4 million. Denny's March 26, 2003 balance sheet shows a working capital deficit of about $103 million, and a total shareholders' equity deficit of about $288 million. Commenting on Denny's results for the first quarter of 2003, Nelson J. Marchioli, president and chief executive officer, said, "The first quarter was particularly challenging for the restaurant industry as economic concerns, the war with Iraq and harsh weather conditions resulted in lower guest traffic at Denny's and many other restaurant chains. While we were disappointed in our sales performance, we believe that our new national media campaign may have helped mitigate the impact of the difficult industry environment. "In addition, the quarter was impacted by lower operating margins, in particular, higher payroll and benefits expenses attributable to a combination of increased restaurant labor costs as well as rising health insurance costs. We continue to invest significantly in restaurant staffing to improve our hospitality and customer service and to ensure we have sufficient staff to handle our peak traffic periods. This investment is being validated as our consumer research for service and overall dining experience has shown continued improvement. "We partially compensated for soft guest counts during the first quarter with a higher average check as our lunch promotions led customers to trade from lower-priced breakfast items. We have successfully maintained positive guest count increases year- over-year for our lunch daypart; however, dinner and late-night continue to be a challenge. We believe in a four-daypart advertising message, and we have an opportunity to bolster our dinner and late-night business during the balance of the year with targeted promotions and new product introductions. In fact, last week we introduced an exciting new lineup of menu items inspired by traditional spring and summer BBQ, which we expect to drive both lunch and dinner business. These new items will include St. Louis style ribs, grilled chicken, a BBQ beef sandwich and a great new apple crisp dessert. "Although we cannot control external events like war and weather, we are optimistic that our exciting new menu introductions, coupled with a national media message, will have a positive impact on customer traffic in the all-important summer months," Marchioli concluded. First Quarter Results Denny's reported total operating revenue of $220.8 million for the first quarter, down $13.6 million from the prior year quarter, largely due to 55 fewer restaurants systemwide. EBITDA decreased to $24.7 million this quarter from $32.9 million in last year's first quarter, reflecting the lower revenue and reduced operating margins. Operating income for the quarter decreased $1.8 million to $10.4 million compared with $12.2 million last year. Operating income this quarter benefited from a $6.4 million reduction in depreciation and amortization expense. In January 1998, certain assets were revalued and assigned a five-year life as a result of the predecessor company's reorganization. Those assets became fully amortized in January 2003, resulting in lower depreciation and amortization expense in the first quarter this year. During the first quarter, company restaurant operating margin decreased by 3.9 percentage points to 10.5% of company sales compared with 14.4% of sales last year. Payroll and benefits costs accounted for 2.8 percentage points of the margin decline, resulting from higher restaurant labor costs as well as increased health insurance costs. In addition, company restaurant margins were affected by modest increases in utilities, occupancy and repairs and maintenance costs, partially offset by lower marketing expense. EBITDA benefited from a $1.0 million reduction in general and administrative expenses compared with last year's first quarter. Franchise operating income was essentially flat compared with last year, as a $0.8 million reduction in franchise and licensing revenue was offset by a similar reduction in franchise costs. We calculate EBITDA as operating income before depreciation and amortization. We believe that, in addition to other financial measures, EBITDA is an appropriate indicator to assist in the evaluation of our operating and liquidity performance, and it provides additional information with respect to our ability to meet future debt service, capital expenditures and working capital requirements. However, EBITDA should be considered as a supplement to, not a substitute for, operating income, cash flows, or other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States of America. Revolving Credit Facility On March 26, 2003, our $125 million credit facility had outstanding revolver advances of $60.2 million compared with $46.7 million outstanding on December 25, 2002. Our outstanding letters of credit were $48.4 million, leaving a net availability of $16.4 million at quarter end. Contributing to the increase in revolver advances was the $21.3 million semiannual interest payment made in January on our 11.25% senior notes. As of May 7, 2003, after making the $7.7 million semiannual interest payment on our new 12.75% senior notes on March 31 (subsequent to quarter end), revolver advances have decreased slightly to $59.8 million while letters of credit remain at $48.4 million, leaving a net availability of $16.8 million. Denny's is America's largest full-service family restaurant chain, operating directly and through franchisees 1,669 Denny's restaurants in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. DOANE PET CARE: Commences Exchange Offer for 10-3/4% Sr. Notes -------------------------------------------------------------- Doane Pet Care Company announced that the Securities and Exchange Commission declared effective the registration statement for the Company's offer to exchange up to $213,000,000 of its outstanding 10-3/4% senior notes due 2010 for a like principal amount of 10-3/4% senior notes due 2010 with materially identical terms that have been registered under the Securities Act of 1933, as amended. The Company expects to commence the exchange offer immediately. The exchange offer will expire at 5:00 p.m. Eastern Time on June 10, 2003, unless the exchange offer is extended by the Company. Questions and requests for assistance and requests for copies of the prospectus relating to the exchange offer may be directed to Wilmington Trust Company, the exchange agent for the exchange offer, as follows: 1100 North Market Street, Rodney Square North, Wilmington, Delaware 19890-1615, Attention: Corporate Trust Operations. Eligible institutions may makerequests by facsimile at (302) 636-4145. Beneficial owners of notes held in street name may also contact their broker, dealer, commercial bank, trust company, or other nominee in whose name the notes are registered for assistance concerning this exchange offer. Doane Pet Care Company, based in Brentwood, Tennessee, is the largest manufacturer of private label pet food and the second largest manufacturer of dry pet food overall in the United States. The Company sells to over 600 customers around the world and serves many of the top pet food retailers in the United States, Europe and Japan. The Company offers its customers a full range of pet food products for both dogs and cats, including dry, semi-moist, wet, treats and dog biscuits. As reported in Troubled Company Reporter's April 2, 2003 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and senior secured debt ratings on pet food manufacturer Doane Pet Care Co. The 'B-' subordinated debt rating on the company was also affirmed. These ratings have been removed from CreditWatch, where they were placed on April 3, 2002. At the same time, Standard & Poor's affirmed Doane's 'B-' senior unsecured debt rating, which was not on CreditWatch. The outlook is negative. The affirmation reflects Doane's improved liquidity position after the company's partial debt refinancing, which reduced near-term annual bank debt amortization requirements and provided relief under tight bank covenants. The affirmation also reflects expectations that Doane's improved financial performance will be sustainable. DT INDUSTRIES: Narrows March Quarter Net Loss to $4.6 Million ------------------------------------------------------------- DT Industries, Inc. (Nasdaq: DTII), an engineering-driven designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, reported a net loss of $4.6 million for the three months ended March 30, 2003 compared to a net loss of $12.9 million in the corresponding prior year period. The financial results for the third quarter of fiscal year 2002 included an after-tax restructuring charge of $6.3 million, related to the closure of four manufacturing facilities. Net sales for the quarter ended March 30, 2003 were $55.6 million compared to $60.0 million for the third quarter of fiscal year 2002. Gross margins were 17.0% in the third quarter of fiscal year 2003 compared to 17.1% in the third quarter of fiscal year 2002. During the third quarter of fiscal year 2003, the Company incurred $0.8 million of additional costs associated with the process and equipment development for the initial line of EarthShell's biodegradable foam laminate packaging equipment, which reduced gross margins by 1.4 percentage points. The Company expects to deliver the first machine during the fourth quarter of fiscal year 2003 or early in the first quarter of fiscal year 2004. The operating loss was $4.4 million for the third quarter of fiscal year 2003 compared to $12.3 million in the third quarter of fiscal year 2002. New order inflow for the third quarter of fiscal 2003 was $57.2 million, down from $65.3 million in the prior year quarter. Backlog at the end of the third quarter of fiscal year 2003 was $116.3 million compared to $147.2 million a year earlier and $142.8 million at the end of fiscal 2002. For the nine months ended March 30, 2003, DTII reported a net loss of $10.8 million compared to a net loss of $13.2 million, for the same period a year earlier. The financial results for the nine months ended March 30, 2003 included an after- tax restructuring charge of $1.2 million, or $0.05 per diluted share, related to the closure of the Erie manufacturing facility. Net sales for the nine months ended March 30, 2003 were $187.3 million compared to $249.1 million for the same prior year period, a decrease of 25%. Gross margins were 17.3% for the nine months ended March 30, 2003 compared to 19.6% in the corresponding prior year period. The operating loss was $9.9 million for the nine months ended March 30, 2003 compared to an operating loss of $3.5 million for the same prior year period. Segment Highlights The Material Processing Segment experienced an increase in sales of $2.2 million, or 14%, to $17.5 million for the third quarter of fiscal 2003 while the operating income on those sales was $524,000 compared to $736,000 in the same period last year. Backlog at the end of the third quarter of fiscal 2003 was $55.0 million compared to $50.6 million at the end of the third quarter last year and $54.7 million at the end of fiscal year 2002. The Assembly and Test Segment, which primarily serves the auto, truck and heavy equipment industries, saw its sales for the third quarter of fiscal 2003 increase 9% to $23.9 million from $21.9 million in the same period a year earlier. The segment posted an operating profit in the third quarter of fiscal 2003 of $227,000 compared to an operating loss of $5.7 million in the year earlier period. Backlog at the end of the third quarter of fiscal 2003 was $44.2 million compared to $50.2 million at the end of the third quarter last year and $48.2 million at the end of fiscal year 2002. The Precision Assembly Segment sales were $4.6 million for the third quarter of fiscal 2003 compared to $13.9 million in the same period last year reflecting reduced spending by a large electronics customer and the cancellation of an order. The segment incurred an operating loss of $3.8 million compared to an operating loss of $2.2 million in last year's quarter. Backlog at the end of the third quarter of fiscal 2003 stood at $7.9 million compared to $28.2 million at the end of the third quarter last year and $24.8 million at the end of fiscal year 2002. The Packaging Segment sales for the third quarter of fiscal 2003 were $9.5 million compared to last year's third quarter level of $8.8 million. The segment earned an operating profit of $1.0 million compared to an operating loss of $4.1 million recorded in the year earlier period. Backlog in this segment stands at $9.2 million at the end of the third quarter of fiscal 2003 compared to $18.3 million in the same quarter last year and $15.0 million at the end of fiscal year 2002. The increase in operating profit is a result of the cost savings generated by a combination and consolidation of five locations into two locations. Sale of Manufacturing Facilities During the third quarter of fiscal year 2003, the company completed the sale of its Leominster, Massachusetts and Erie, Pennsylvania manufacturing facilities. Net proceeds of $2.1 million were used to reduce senior debt. Senior Credit Facility As previously announced, the Company finalized an amendment to its senior credit facility that provides a permanent waiver of financial covenant defaults in the second and third quarters of fiscal year 2003. The amendment also established new financial covenant levels for the remainder of the term of the facility and reduced the senior credit facility to $61.0 million. Outlook for Remainder of 2003 Steve Perkins, CEO, said, "In March and April of 2003, we experienced a pick-up in order pace. While we are encouraged that we expect our fourth quarter orders to exceed the $55.0 to $60.0 million in orders we have experienced the past three quarters, it is still too soon to tell if this upward trend in orders will continue." Perkins continued, "We have taken actions to reduce the company's indirect costs by $1.0 million per month. We believe we will see the full effect of these reductions in the fourth quarter of fiscal year 2003. If net sales are at the expected level in the fourth quarter of fiscal 2003, we expect to break even on a pre-tax basis for the quarter." DTI's subsidiary, Detroit Tool and Engineering, will be showcasing its recently introduced PortaSep Centrifugal Immissible Fluid Separator at the upcoming 2003 NDIA - U.S. Coast Guard Innovative Expo on May 14-16, 2003. DTE continues to have productive discussions with both the U.S. Navy and Coast Guard regarding the potential use of this product. As environmental concerns continue to increase, the Company believes there is a definitive need for our product, which provides greater throughput at a lower cost in markets such as the military, industrial, petrochemical and environmental clean- up. ENCOMPASS SERVICES: Committee Wants Chapter 11 Trustee Appointed ---------------------------------------------------------------- In accordance with Section 1104(a) of the Bankruptcy Code and Rules 2007.1 and 2009 of the Federal Rules Of Bankruptcy Procedure, the Official Committee of Unsecured Creditors asks the Court to appoint a Chapter 11 Trustee for Encompass Services Corporation and its debtor-affiliates' cases. That Chapter 11 trustee will have the authority to: (i) sell the Debtors' remaining assets, including the assets of the Residential Services Group, to Wellspring Capital Management LLC or its designee; (ii) propose a plan of liquidation; and (iii) otherwise manage the Debtors' affairs. The Creditors' Committee is authorized by the Court to investigate and pursue avoidance actions and other claims and causes of action against the Debtors' Bank Group on the Estates' behalf. Jennifer M. Gore, Esq., at Andrews & Kurth LLP, in Houston, Texas, relates that the Creditors' Committee has been investigating the potential Bank Group Claims for some time. The Committee intends to bring various claims and causes of action -- including avoidance actions, surcharge claims, and requests for determinations that certain assets claimed by the Bank Group as their collateral were unencumbered -- by June 30, 2003. Ms. Gore tells the Court that the Debtors have indicated to the Committee that they will reorganize around their "core" business units and leave the resolution of the Bank Group Claims to the Committee and the Bank Group. But now, the Debtors are merely liquidating all of their assets. The Debtors are also attempting to undermine the Committee's authority to pursue the Bank Group Claims by requiring that the Committee be dissolved on the effective date of the Plan and by otherwise releasing the Bank Group. Ms. Gore clarifies that the Committee does not oppose the Debtors' sale of their assets. However, the Committee does not want the Debtors to condition the sale on the Plan confirmation that impermissibly: -- releases all of the Debtors' claims against their directors, officers, and employees for no consideration; -- releases third-party claimants' and creditors' claims against the same officers and directors, and the Bank Group, in violation of Section 524(e) of the Bankruptcy Code; -- transfers the responsibility for recovery of the Debtors' remaining litigation claims and other assets, including unsecured assets, to a disbursing agent to be selected by the secured Bank Group; and -- undermines the Committee's ability to pursue the Bank Group Claims. The Second Amended Plan further provides for the assumption of the Debtors' indemnification agreements with their present and former officers, directors, and employees despite the fact that most of the individuals are not or will not be employed by the Debtors after the consummation of the asset sales or Plan. Rather than proceed under the Plan, which is prima facie non- confirmable, the Committee has suggested that the Debtors maximize the value of their estates by selling the remaining assets in accordance with Section 363 of the Bankruptcy Code. Ms. Gore explains that the Section 363 sales will generate the same proceeds contemplated under the Plan, but without requiring releases or otherwise preventing the Committee from pursuing the Bank Group Claims. But the Debtors have refused. The Debtors alleged that they could not sell the remaining assets, particularly the Residential Debtors, because the sales would constitute an impermissible sub rosa plan. But the Committee believes that the Debtors' position has no merit, untenable and unnecessarily jeopardizes the $40,000,000 pending sale for the Residential Debtors' assets as much as the Plan will be opposed by the Committee and may not be confirmed. Thus, Ms. Gore asserts that the immediate appointment of a Chapter 11 Trustee is justified. Ms. Gore points out that the relationship between the Debtors and the creditors is acrimonious. The Committee has lost all confidence in the Debtors' management. "It is no secret that the Committee is opposing the Plan," Ms. Gore says. "Specifically, the Plan provides for no recovery on claims by subordinated noteholders and equity interest holders and for an undetermined amount of recovery on claims by unsecured creditors, but requires all parties to allow releases of the Debtors' current and former officers, directors, and managers and the Bank Group." Ms. Gore contends that the appointment of a Chapter 11 trustee may be the only effective way to protect creditor interests and maximize the estates' value by ensuring that the pending sale of the Residential Debtors' assets is not lost, the releases are not granted, and the Committee remains able to pursue the Bank Group Claims. The Residential Debtors include AA Jarl, Inc.; A-ABC Appliance Inc.; A-ABC Services Inc.; Airtron of Central Florida Inc.; Airtron Inc.; Encompass Residential Services of Houston Inc.; Evans Services, Inc.; Hallmark Air Conditioning, Inc.; K&N Plumbing, Heating and Air Conditioning Inc.; Masters Inc.; Paul E. Smith Co. Inc.; Van's Comfortemp Air Conditioning, Inc.; Wade's Heating & Cooling Inc.; Wiegold & Sons Inc.; and Willis Refrigeration, Air Conditioning & Heating Inc. The Residential Services Group installs and maintains HVAC and plumbing in residences and small commercial buildings. The Residential Services Group markets its services to local, regional, and national homebuilders. Objections (1) Bank of America R. Michael Farquhar, Esq., at Winstead Sechrest & Minick PC, in Dallas, Texas, argues that the Creditors' Committee did not demonstrate by clear and convincing evidence that a Chapter 11 Trustee should be appointed. The Creditors' Committee also could not demonstrate a legitimate reason why it cannot wait, as the Court has suggested, until the Confirmation Hearing to raise objections relating to the Debtors' Plan. Mr. Farquhar tells the Court that the Committee's motivation in seeking to appoint a Chapter 11 Trustee is transparent -- the Committee attempts to assert leverage over the Debtors and the Bank Lenders Group on the eve of confirmation. But Mr. Farquhar contends that there is no practical reason or legal grounds to appoint a Chapter 11 Trustee. The Debtors' current management has not engaged in fraud, dishonesty, incompetence, gross mismanagement, or other serious misconduct of the kind specifically enumerated in Bankruptcy Code Section 1104(a)(1). The Committee fails to show how a Chapter 11 Trustee's appointment would be in the creditors' best interest. Mr. Farquhar notes that the Committee has not performed a realistic cost-benefit analysis of the appointment. An analysis would clearly show that appointing a trustee two weeks before the Confirmation Hearing would only result in substantial costs to the Debtors' estates without any corresponding benefit. Other than being untimely, Mr. Farquhar asserts that the Committee's proposal would only result in an impermissible duplication of services resulting to greater costs to the Debtors' estates. A Chapter 11 Trustee's appointment is an extraordinary remedy -- a remedy that is not readily available to parties who are simply dissatisfied with the realities of bankruptcy. (2) Debtors Alfredo Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, observes that the Committee's bases for its request consist entirely of Plan confirmation objections. Therefore, the appropriate course of action is for the Committee to file a Plan objection, not to seek the appointment of a Chapter 11 Trustee. Mr. Perez explains that the Committee's allegations do not constitute "cause" within the meaning of Section 1104 of the Bankruptcy Code. As evidenced by the request itself, there has been no fraud, dishonesty, incompetence, or gross mismanagement of the Debtors' affairs. Rather, the Debtors have worked tirelessly to conclude their Chapter 11 cases in an extraordinarily rapid time period to maximize the value of their service-related businesses. (Encompass Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Judge Gonzalez Approves Four Settlement Agreements -------------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Enron Corporation and its debtor-affiliates ask the Court to approve four settlement agreements they entered into separately with Petrocom Energy Group Ltd., Helsingen Energia, Kinder Morgan Tejas Pipeline LP and the WeBco Entities. Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, relates that ENA and Petrocom were parties to a prepetition Enfolio Master Firm Purchase/Sale Agreement dated as of February 1, 2000. Although the Contract was terminated on the Petition Date, there remain certain amounts outstanding. On the other hand, Enron Capital Trade Resources International Corp. and Helsingen were parties to a prepetition Financial Power Swap Agreement. ENA is also a party to prepetition agreements under which, inter alia, KMTP, as successor-in-interest of Tejas Gas Marketing LLC, purchased from ENA physical gas. In November and December 2001, ENA delivered certain quantities of physical gas to KMTP. However, to date, the Invoices for those deliveries remain unpaid. Moreover, ENA is also a party to several prepetition agreements regarding the purchase and sale of steel with WeBco International LLC, Weirton Steel Corporation and Balli Steel PLC -- the WeBco Entities. These Contracts have expired: (i) ISDA Master Agreement (Multicurrency-Cross Border), dated as of February 6, 2001, including all schedules, exhibits and annexes between ENA and WeBco; (ii) ENA Steel Produces and Services Purchase and Sale Transaction, dated as of September 5, 2001, including ENA's General Terms and Conditions for Steel Products and Service Transactions dated August 15, 2001, between ENA and WeBco; and (iii) Slab Purchase Agreement dated as of February 16, 2001 between ENA and Balli. However, these contracts remain active: (i) Hot Rolled Steel Sales Agreement dated February 16, 2001, between ENA and Weirton; (ii) Pledge and Security Agreement dated February 16, 2001, between ENA and WeBco; (iii) Master Cross-Product Netting, Setoff and Security Agreement dated February 16, 2001, among ENA, WeBco and Weirton; and (iv) Put Agreement, dated as of February 16, 2001, between Balli and ENA. After discussions between the Parties, they have agreed to enter into separate Settlement Agreements wherein: (a) Petrocom will pay $626,108 to ENA; (b) Helsingen will pay 214,987 Euros to ECTRIC; (c) KMTP will pay $1,750,000 to ENA in full satisfaction of the Invoices; (d) WeBco Entities will pay $2,300,000 to ENA; (e) the Live Contracts will be terminated; and (f) the Parties will exchange a mutual release of claims related to the Contracts. Mr. Smith contends that the Settlement Agreements are warranted because: (a) they will result in a substantial payment to the estate; and (b) they will avoid future disputes and litigations concerning the Contract as the parties will release one another from claims relating to the Contract. * * * After due consideration, Judge Gonzalez approves the Settlement Agreements in their entirety. (Enron Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 18 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. EXIDE TECHNOLOGIES: Plan Filing Exclusivity Extended to August 7 ---------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained the Court's permission to extend their Exclusive Periods. The Court gave the Debtors the exclusive right to propose and file a plan of reorganization until August 7, 2003, and the exclusive right to solicit acceptances of that plan from creditors until October 7, 2003. (Exide Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING COMPANIES: Hires Baker Botts LLP as Special Counsel ----------------------------------------------------------- Fleming Companies, Inc. and its debtor-affiliates ask the Bankruptcy Court for permission to employ Baker Botts L.L.P. as special counsel for corporate and securities matters. Baker Botts is the oldest law firm in Texas and has represented the Debtors since the 1980s in connection with a wide variety of general corporate, tax, securities, antitrust, litigation and other matters. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, in Wilmington, Delaware, informs the Court that Baker Botts currently represents the Debtors on an ongoing investigation by the United States Securities and Exchange Commission. For much of the past year, Baker Botts also has represented the Debtors as corporate counsel in connection with their efforts to sell retail stores mid in connection with various general corporate, business, and securities matters. Because of the importance of this work to the Debtors' reorganization efforts and because of the importance of having access to experienced corporate counsel, the Debtors now desire to employ the law firm of Baker Botts as Special Corporate and Securities Counsel. Ms. Jones points out that the Debtors' financial affairs are complex and their business operations are of a nature that frequently requires highly specialized corporate and securities legal advice. Baker Botts possesses this expertise and, as a result of its previous representation, has developed considerable familiarity with the Debtors' businesses and finances and insights into the unique corporate issues that will be involved in the Debtors' reorganization process and beyond. Baker Botts has indicated that it is willing to serve as Special Corporate and Securities Counsel for the Debtors and to represent their interests in connection with these matters, including, providing general corporate, business, and securities representation and advising the Debtors with regard to the SEC investigation. Baker Botts will not represent the Debtors generally in connection with their Chapter 11 cases. Instead, Baker Botts will represent the Debtors only in matters related to their specialized corporate, business, and securities needs. The Debtors have requested that Baker Botts render these services in connection with their corporate and securities needs: A. to advise the Debtors and their directors, officers and employees in connection with general corporate, business and securities matters; B. to assist the Debtors in matters pertaining to Fleming Companies, Inc.'s compliance with reporting and other obligations under federal and state securities laws; C. to represent the Debtors in matters pertaining to the listing of the companies securities on various securities exchanges; D. to assist the Debtors in exploring strategies for the disposition of their non-com retail operations, assets and subsidiaries; E. to provide advise on matters pertaining to the SEC's pending investigation of Fleming Companies, Inc.'s accounting and disclosure practices; and F. to assist the Debtors on matters pertaining to their interface with various third party insurers, including their director and officer liability insurer. Ms. Jones relates that compensation will be payable to Baker Botts on an hourly basis, plus reimbursement of actual, necessary expenses incurred by Baker Botts. Baker Botts will employ attorneys and legal assistants with varying degrees of legal experience in the corporate and securities areas, as each matter may require. The current standard hourly rates charged by Baker Botts currently range from: Partners and Counsel $315-650 Associates $160-310 Legal Assistants $110 Baker Botts Partner Neel Lemon assures the Court that the Firm does not represent any party that holds or represents any interest adverse to the Debtors or their respective estates in the matters for which Baker Botts is proposed to be retained. However, he admits that Baker Botts currently represents or in the past has represented these officers and directors in unrelated matters: Herbert Baum, Kenneth Duberstein, Archie Dykes, Carol Hallet, Robert Hamada, Edward Joullian III, Alice Peterson, Guy Osborn, Carlos Hernandez, Neal Rider, Mark Shapiro. While Baker Botts has in the past and continues to represent certain officers and directors of Fleming Companies, Inc. in connection with pending shareholder litigation as well as in connection with the SEC investigation, the Debtors do not believe that this representation represents a conflict at the present time or prevents Baker Botts from serving as special counsel in connection with the matters for which it is to be retained. Baker Botts has advised the Debtors that it will withdraw from representation of these individuals in the event that a conflict arises. (Fleming Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) GBC BANCORP: Fitch Puts BB+ L-T Debt Rating on Watch Evolving ------------------------------------------------------------- Fitch Ratings has placed the 'BB+' long-term debt rating for GBC Bancorp and its subsidiary General Bank on Watch Evolving following this morning's announced sale to Los Angeles based Cathay Bancorp. Fitch does not rate Cathay Bancorp. Apart from any merger implications, Fitch downgraded the individual rating for GBC and General Bank to 'C' from 'B/C'. Cathay's financial performance has been considerably stronger than that of GBC. In addition, the combination will allow Cathay to achieve material cost saves because of the overlap in the two franchises. That said, the structure of the transaction places additional pressure on Cathay's capital and holding company liquidity over the near term, as Cathay is paying approximately $450 million for GBC, in cash and stock. Cathay has indicated that it intends to raise additional Tier I capital in the form of trust preferred securities to augment its capital position. As with all transactions of this relative size, significant integration risks exist as Cathay's infrastructure will be challenged by a nearly 100% increase in assets. Further, the uncertainty surrounding asset quality and the potential need for additional provisioning to bring GBC in line with Cathay's reserving policies could have an unexpected negative impact on the combined company's performance. On a stand alone basis, GBC has been striving to address key deficiencies in asset quality. The 'C' individual rating is more indicative of the company's performance strength as it struggles to put past problems behind it. Ratings Downgraded: GBC Bancorp General Bank -- Individual Rating downgraded to 'C' from 'B/C'. Ratings Affirmed & Placed on Rating Watch Evolving: GBC Bancorp -- Short-term debt, 'B'; -- Long-term debt, 'BB+'; -- Subordinated debt, 'BB'. General Bank -- Short-term deposits, 'B'; -- Short-term debt, 'B'; -- Long-term deposits, 'BBB-'; -- Long-term debt, 'BB+'. GE CAPITAL MORTGAGE: Fitch Rates Several Home Equity Issues ----------------------------------------------------------- Fitch Ratings has taken rating action on the following GE Capital Mortgage Services, Inc. home equity issues: GE home equity 1997-HE 3: -- Class A5-A6 affirmed at 'AAA'; -- Class M, rated 'AA', placed on Rating Watch Negative; -- Class B-1 downgraded to 'BBB-' from 'A-'; -- Class B-2 downgraded to 'CC' from 'B'. GE home equity 1997-HE 4: -- Class A6-A7 affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1, rated 'BBB', placed on Rating Watch Negative -- Class B-2 downgraded to 'CCC' from 'B'. GE home equity 1999-HE1: -- Class A5-A7 affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 downgraded to 'BB' from 'BBB-'; -- Class B-3 downgraded to 'CC' from 'B-'. GE home equity 1999-HE3: -- Class A4-A6 affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 downgraded to 'B' from 'BB'; -- Class B-4 downgraded to 'D' from 'CCC'. The negative rating actions are taken due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the April 2003 distribution date. GENERAL DATACOMM: UK Unit Completes Asset Sale for $2 Mill. Net --------------------------------------------------------------- On April 24, 2003, General DataComm Industries, Inc.'s wholly owned subsidiary, General DataComm Limited (England), completed the sale of its property (land and building) and expects to realize net proceeds of approximately $1.9 million after commissions and applicable taxes. Such proceeds will be used to reduce the outstanding debt owed to the Company's secured lenders. As previously reported, General DataComm Industries, Inc., and its debtor-affiliates filed a Disclosure Statement to explain their Joint Plan of Reorganization with the U.S. Bankruptcy Court for the District of Delaware. The Debtors maintained that the reorganization of the Debtors' business under the Plan rather that a liquidation under chapter 7 of the Bankruptcy Code is preferable because it will ensure a greater return to unsecured creditors and equity holders that they would receive if the Debtors were liquidated. Additionally, preservation of the Debtors' businesses as going concern will preserve many ongoing beneficial business relationships between the Debtors and their creditors and enhance the value of the Debtors' assets. General DataComm Industries, Inc., a worldwide provider of wide area networking and telecommunications products and services, filed for Chapter 11 protection on November 2, 2001 (Bankr. Del. Case No. 01-11101). James L. Patton, Esq., Joel A. Walte, Esq. and Michael R. Nestor, Esq., represent the Debtors in their restructuring efforts. In their July 2002 monthly report on form 8-K filed with SEC, the Debtors account $19,996,000 in assets and $77,445,000 in liabilities. GENUITY INC: Intends to Fund Wind-Down of Foreign Subsidiaries -------------------------------------------------------------- Don S. DeAmicis, Esq., at Ropes & Gray, in Boston, Massachusetts, relates that Genuity Inc., and its debtor- affiliates have been engaged in the orderly liquidation of their remaining assets and the wind-down of their businesses and the businesses of their subsidiaries and branches. In addition to the Debtors, the Wind-Down encompasses the assets and businesses of the 14 foreign non-debtor subsidiaries of Debtor Genuity Solutions Inc. and the eight international branches of Debtors Genuity International Inc. and Genuity International Networks LLC. The Debtors have analyzed the funding required from their estates to accomplish the solvent Wind-Down of each Genuity International Entity, and have prepared estimates of required funding for each Genuity International Entity. The Debtors' projections indicate that the Genuity International Entities will require funding from their Estates in an aggregate amount not to exceed $2,000,000. By this motion, the Debtors seek the Court's authority to execute those actions necessary to bring about a timely, efficient and equitable Wind-Down of the Genuity International Entities, including: A. The ability to use assets of the Debtors' Estates to fund the solvent wind-down of the Genuity International Entities in accordance with the wind-down Budget, on an as-needed basis, without a notice or a hearing, up to $2,000,000 in aggregate net funding amount, provided that both of these conditions are satisfied: -- The funding of any Genuity International Entity will not materially exceed the estimate specified in the wind-down budget. A funding materially exceeds an estimate when the aggregate amount of funds advanced to the Genuity International Entity exceeds the relevant Wind-Down Estimate by the greater of $50,000 or 10% of the Wind-Down estimate. -- The aggregate amount of funds advanced by the Debtors to the Genuity International Entities will not exceed $2,000,000 as a result of the funding. B. The ability to settle intercompany obligations between the Genuity International Entities and the Debtors to the extent necessary to effectuate timely, efficient and equitable Wind-Down of these entities, including the power to: -- execute, deliver, implement and perform fully under any and all instruments and documents; and -- take any and all other actions necessary to implement and effectuate the Wind-Down, including: a. the deregistration, dissolution and liquidation of the Genuity International Entities, and b. the execution of mutual releases between the Debtors and the Genuity International Entities, to the extent the Debtors deem these actions to be in the best interests of their estates. In the event the conditions have not been satisfied and the Debtors propose to make an international funding exceeding the specified limitations, the Debtors will provide to the Creditors' Committee a written notice of their intent to make a Supplemental International Funding. This notice will contain information reasonably necessary to the making of an informed decision regarding funding by the Creditors' Committee. After receipt of an SIF Notice, the Creditors' Committee will have 10 business days to object to the Supplemental International Funding. If the Debtors reasonably require expedited approval of the Supplemental International Funding, the Debtors may request that the Creditors' Committee consent to render a decision on the Supplemental International Funding in a period shorter than ten days, which consent will not be unreasonably withheld. The Debtors will notify the Creditors' Committee of any Shortened Notice Period as soon as reasonably practicable after the occurrence of the events, which give rise to the necessity of the Shortened Notice Period. If, at the end of the relevant Notice Period, the Creditors' Committee has failed to notify in writing the Debtors and their counsel of their objection to the proposed Supplemental International Funding, the Supplemental International Funding will be deemed authorized and no further notice or authorization will be required. If the Creditors' Committee timely objects to a proposed Supplemental International Funding, the Debtors: (i) will consult with the Creditors' Committee and, to the extent consented to by the Creditors' Committee, may fund all or a portion of such proposed Supplemental International Funding, and (ii) may file a motion with the Court seeking approval of the proposed Supplemental International Funding. The Debtors will be authorized to schedule a hearing to consider the request on shortened notice as early as five business days following the filing of the motion, unless an emergency requires an earlier hearing. The only party entitled to object to the Supplemental International Funding will be the Creditors' Committee. The Debtors will provide written status updates of the Wind-Down to the Creditors' Committee at the parties' regularly scheduled meetings. Prior to the Petition Date, Mr. DeAmicis reports that the Debtors conducted extensive international operations through the Genuity International Entities throughout the Americas, Europe, Asia, and Australia. Since only a small portion of the Genuity International Entities' assets were transferred to Level 3 in connection with the Sale, certain assets of the Branches and all of the equity interests in the Subsidiaries remain in the Debtors' bankruptcy estates. As a consequence of the Sale and the Wind-Down, Mr. DeAmicis admits that the Debtors are no longer in a position to support the Genuity International Entities as ongoing businesses. The Debtors, together with their professionals, have devoted considerable time to analyzing the legal issues and procedures necessary to consummate an orderly wind-down of these businesses in accordance with the laws of the countries in which the Genuity International Entities operate. In particular, the Debtors have considered the prospects of selling any remaining assets and businesses and have weighed the relative costs and benefits of both solvent and insolvent liquidations. The Debtors have concluded that there is no likelihood of selling the businesses of any of the Genuity International Entities as a going concern. These businesses were integrally related to the Debtors' businesses, which have been sold to Level 3. Mr. DeAmicis believes that a solvent liquidation of each of the Subsidiaries and an orderly wind-down of each of the Branches will generally afford the greatest benefit to the Debtors, their creditors and all other parties-in-interest. Although a solvent liquidation and orderly wind-down of the Genuity International Entities will require the Debtors to advance funds to certain Genuity International Entities and may require the settlement of intercompany obligations, the costs of forcing the Subsidiaries into insolvent liquidations could be far greater. For example, the failure of the Genuity International Entities to pay certain foreign obligations would force many of the Genuity International Entities into insolvency, which might give rise to litigation in the Debtors' bankruptcy cases and in foreign proceedings, at a potentially significant cost of money and delay in distributions to creditors of the Debtors. Furthermore, in view of the fact that significant mutual obligations exist between certain Debtors and the Genuity International Entities, including accounts payable and accounts receivable, the liquidators in foreign insolvency proceedings of any of the Genuity International Entities might also assert claims against the Debtors. Finally, the Debtors believe that the directors and officers of the Genuity International Entities, many of whom are current and former directors, officers, and employees of the Debtors, could be exposed to personal, and possibly criminal, liability in the event of an insolvent liquidation of certain of the Genuity International Entities, which in turn would give rise to indemnification claims against the Debtors' bankruptcy estates. The Debtors submit that conducting the Wind-Down of the Genuity International Entities will prove the most cost-effective means of liquidating the international businesses and will therefore inure to the benefit of all their creditors. (Genuity Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLIMCHER REALTY: Names Janette Bobot Director of Internal Audit --------------------------------------------------------------- Glimcher Realty Trust (NYSE: GRT), has named Janette P. Bobot as Director of Internal Audit. She will be responsible for evaluating financial and operational internal controls and corporate governance in keeping with recent federal regulations regarding publicly owned companies. Bobot, 41, a 10-year veteran of internal audit management, most recently served as Director - Internal Audit for Greif Bros. Corporation of Delaware, Ohio, where she was responsible for establishing processes and procedures that addressed the company's financial and operational risks. Prior to joining Greif Bros. in 1997, she served as senior auditor at Borden, Inc. Bobot began her career as an external auditor with PricewaterhouseCoopers, LLP. Bobot is a member of the Institute of Internal Auditors and is also a Certified Public Accountant. She received her bachelor of Business Administration from the University of Cincinnati. Glimcher Realty Trust -- a real estate investment trust whose corporate credit and preferred stock ratings are rated by Standard & Poor's at BB and B, respectively -- is a recognized leader in the ownership, management, acquisition and development of enclosed regional and super-regional malls, and community shopping centers. Glimcher Realty Trust's common shares are listed on the New York Stock Exchange under the symbol "GRT." Glimcher Realty Trust is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. Visit Glimcher at: http://www.glimcher.com GLOBAL CROSSING: IDT Seeks Thorough Review of Sale to SingTel ------------------------------------------------------------- IDT Corporation (NYSE: IDT, IDT.C), a multinational carrier, telephone and technology company, asked the Federal Communications Commission to thoroughly review the proposed restructuring of the agreement to sell Global Crossing to Singapore Technologies Telemedia following the withdrawal of Hutchinson Telecommunications from the deal. In its letter to the Commission, IDT points out that, "Rather than seeking approval for one private entity (Hutchinson) and one government-backed entity (Singapore) to each acquire a 30.75% stake in Global Crossing, the parties now plan to seek approval for a single entity, Singapore -- an affiliate of a foreign government -- to acquire a controlling 61.5% interest in Global Crossing's critical infrastructure assets." Because of the danger that granting control of Global Crossing to a company owned by a foreign government would put American telecommunications companies at a distinct competitive disadvantage, IDT's CEO Jim Courter called upon the FCC and the Congress to give heightened scrutiny to the restructured transaction, in light of the serious public policy and national security issues it raises. "We are simply asking the Federal Communications Commission, as guardians and trustees of America's telecommunications infrastructure, to insure that these assets are used to further competition and to put the interests of our nation before those of a foreign governmental entity," Courter said. IDT Corporation, through its IDT Telecom subsidiary, is a facilities-based, multinational carrier that provides a broad range of telecommunications services to its retail and wholesale customers worldwide. IDT Telecom, by means of its own national telecommunications backbone and fiber optic network infrastructure, provides its customers with integrated and competitively priced international and domestic long distance telephony and prepaid calling cards. IDT and Liberty Media own 95% and 5% of IDT Telecom, respectively. IDT Media is the IDT subsidiary principally responsible for the Company's initiatives in media, new video technologies and print media. IDT Corporation common shares trade on the New York Stock Exchange under the ticker symbols IDT and IDT.C. GLOBAL CROSSING: Reports Positive EBITDA for March 2003 ------------------------------------------------------- Global Crossing filed a Monthly Operating Report with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. Unaudited results reported in the March 2003 MOR include the following: For continuing operations in March 2003, Global Crossing reported consolidated revenue of approximately $231 million. Consolidated access and maintenance costs were reported as $164 million, while other operating expenses were $63 million. "March results showed improvement in several areas compared to February. Our revenues increased by $9 million, while access and maintenance costs were reduced by $4 million. In addition, we posted a positive EBITDA of$4 million, an improvement of $13 million over February," said John Legere, Global Crossing's chief executive officer. "These results are clear evidence that the company's restructuring is having a positive impact as we move closer towards our goal of profitability." Global Crossing reported a consolidated cash balance of approximately $662 million as of March 31, 2003. The cash balance is comprised of approximately $257 million in unrestricted cash, $332 million in restricted cash and $73 million of cash held by Global Marine. Global Crossing posted a consolidated net loss of $89 million for March 2003. Consolidated EBITDA was positive in March, reported at $4 million. Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 26, 2002, does not include a capital structure in which existing common or preferred equity will retain any value. On November 18, 2002, Asia Global Crossing Ltd., a majority- owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda, both of which are separate from the cases of Global Crossing. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. Asia Netcom, a company organized by China Netcom Corporation (Hong Kong) on behalf of a consortium of investors, has acquired substantially all of Asia Global Crossing's operating subsidiaries except Pacific Crossing Ltd., a majority-owned subsidiary of Asia Global Crossing that filed separate bankruptcy proceedings on July 19, 2002. Global Crossing no longer has control of or effective ownership in any of the assets formerly operated by Asia Global Crossing. Please visit http://www.globalcrossing.comfor more information about Global Crossing. Global Crossing Ltd.'s 9.125% bonds due 2006 (GBLX06USR1) are trading at about 3 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1 for real-time bond pricing. HARVEST NATURAL: First-Quarter 2003 Net Loss Tops $15.5 Million --------------------------------------------------------------- Harvest Natural Resources, Inc. (NYSE: HNR) reported a net loss of $15.5 million, or $0.44 per diluted share, including the effects of $16.6 million non-cash equity losses which reduced the carrying value of its Russian affiliate that resulted from lower Russian domestic oil prices. These results compare with the $1.5 million, or $0.04 per diluted share, for the same period last year. Net income from consolidated companies was $1.1 million for the 2003 first quarter compared with $1.4 million for the quarter ended March 31, 2002. Net cash provided by operating activities increased to $11.2 million compared with $8.5 million for the quarter ended March 31, 2002. Oil production and sales for the 2003 first quarter was 1.2 million barrels, approximately half of the 2.5 million barrels produced and sold during the same period last year. Production was completely shut in during all of January and part of February 2003 due to national civil work stoppage in Venezuela. The Company restarted oil production on February 8, 2003. Harvest President and Chief Executive Officer, Dr. Peter J. Hill, said, "We are pleased net income from consolidated companies was positive and net cash provided by operating activities increased considering the substantial reduction of production in Venezuela. Results reflect higher oil prices received in this quarter compared with last year and lower costs of operations. The efficiency of our shut-down and the subsequent start-up of our production mitigated the impact of the civil work stoppage in Venezuela to the extent possible. Current oil production, in the 23,000 to 25,000 barrels of oil per day (Bopd) range, is in line with our previous guidance." Dr. Hill added that, "While oil prices realized by Geoilbent were generally higher quarter over quarter, prices in the domestic Russian market have deteriorated since year end which required Geoilbent to write down the carrying value of their reserves in compliance with full cost accounting rules." The Company received an average of $15.34 per barrel for 2003 first quarter sales, an increase of $4.61 per barrel, compared with the $10.73 per barrel average for the same period last year. Harvest's Venezuelan company has a West Texas Intermediate oil put with a strike price of $30 per barrel for 10,000 Bopd from March 1, 2003 through December 31, 2003. The put has the economic effect of hedging approximately 80 percent of projected production through year end. Hill said, "The Venezuelan natural gas sales pipeline and infrastructure projects are on schedule with first gas production expected in the fourth quarter this year. Initial production is expected to be in the 40 million cubic feet per day range, gradually increasing to 70 million cubic feet per day in 12 to 18 months. We intend to drill three oil wells in the East Bombal Field this year to produce a portion of the oil before developing the field's natural gas potential in late 2004 and 2005. The first East Bombal oil development well was spud, as planned, on April 28, 2003." Hill continued, "2003 is a transition year to long-term growth. The gas project should enable us to increase oil production in our Uracoa Field during 2004 by eliminating the current natural gas handling volume restrictions at the processing plant and enabling us to drill future oil wells into an area just below the gas cap. Production this year is projected to average 22,000 to 25,000 barrels of oil equivalent per day (Boepd). Average production for 2004 is projected to increase to 31,000 to 36,000 Boepd. This is a significant production increase that we expect to achieve over the next 18 months or so as our gas project is completed and our production mix changes." The Company owns 34 percent of LLC Geoilbent, a Russian limited liability company which produces and sells oil from the Western Siberian Basin. Geoilbent's production for the quarter ended December 2002 was 1.5 million barrels of which 1.0 million barrels were sold into the domestic market at an average price of $10.09 per barrel and 0.5 million barrels were sold into the export market at an average price of $22.79 per barrel. This compares with production for the same period of the previous year of 1.9 million barrels of which 1.2 million barrels were sold into the domestic market at an average price of $8.92 per barrel and 0.7 million barrels were sold into the export market at an average price of $21.43 per barrel. Geoilbent suspended drilling in mid-2002 to conduct various studies to improve drilling and completion procedures and reservoir management. The Company includes Geoilbent results in its financial statements as an equity investment with a one quarter lag. Due to low domestic oil prices in Russia, Geoilbent was required to take a $50 million non-cash full cost ceiling test charge. As a result of Harvest's 34 percent ownership interest in Geoilbent, it has recorded a non-cash $16.6 million equity loss including its $17 million proportionate interest in the ceiling test charge. Currently, domestic oil prices are approximately $4.00 to $5.00 per barrel, well below recent historic averages during the spring and early summer months. Geoilbent is required to sell about two-thirds of its production into the domestic market. Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. For more information visit the Company's Web site at http://www.harvestnr.com As reported in Troubled Company Reporter's April 28, 2003 edition, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Harvest Natural Resources Inc. and revised its outlook on the company to stable from negative. Houston, Texas-based Harvest has about $100 million in outstanding debt. "The outlook revision follows a similar change to our outlook for the ratings on the Bolivarian Republic of Venezuela (CCC+/Stable/--) and Harvest's resumption of production and sales to Petroleos de Venezuela S.A. (PDVSA; CCC+/Stable/--), Venezuela's national oil company. As a result, we believe there is less uncertainty surrounding future production sales--hence, cash flow--from Harvest's Venezuela operations," said Standard & Poor's credit analyst Daniel Volpi. HAYES LEMMERZ: Plan Confirmation Hearing to Continue on Monday -------------------------------------------------------------- Hayes Lemmerz International, Inc. (OTC: HLMMQ) announced that the United States Bankruptcy Court for the District of Delaware has continued the hearing on confirmation of the Company's modified Plan of Reorganization under Chapter 11 of the Bankruptcy Code until Monday, May 12, 2003. Due to limited time available on the Court's schedule today, the Court was unable to complete all of the procedural requirements necessary to confirm the Plan. The Company filed with the Court certain information supporting its modified Plan, including a summary of the voting results. On a consolidated basis, all creditor classes voted in favor of the modified Plan. Continuation of the hearing should not affect the Company's plans to emerge from Chapter 11 during the first half of 2003. Hayes Lemmerz, its U.S. subsidiaries and one subsidiary organized in Mexico filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on December 5, 2001. Hayes Lemmerz International, Inc. is one of the world's leading global suppliers of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 44 plants, 3 joint venture facilities and 11,400 employees worldwide. HIGHWOOD PROPERTIES: Fitch Affirms BB+ Preferred Shares Rating -------------------------------------------------------------- Fitch Ratings affirms the senior unsecured rating of 'BBB-' on Highwoods Properties' $806.5 million of outstanding senior unsecured notes due 2003 through 2018, and 'BB+' rating on $377 million of preferred stock. The Rating Outlook is revised to Negative from Stable. The ratings reflect HIW's defensive portfolio features, including a good quality asset base of primarily suburban office properties, a well diversified tenant base (post WorldCom and US Air) with its largest tenants being the US Government (2.9% of annual revenues) and AT&T (2.7%) as of first quarter 2003 (1Q'03), and a shut down of its development activity which currently represents less than 1% of undepreciated book. In addition, rating support is garnered from its solid unencumbered asset base of 329 properties that cover unsecured debt at a 2.3 times coverage ratio as of 1Q'03. Although, it was not done from a position of strength, Fitch views HIW's recent dividend reduction as prudent in enhancing its short-term liquidity position and preserving its un-encumbered asset base. Rating concerns include HIW's geographic exposure to southeastern US markets, which are characterized as low barrier to entry markets, including its largest geographic exposure, North Carolina, representing 33% of its total revenue. HIW also has a sizeable exposure to suburban office properties representing 81% of total revenue, and is viewed as having a higher volatility profile than other real estate segments. In addition, the economic environment has contributed to weakened market fundamentals that have eroded HIW's top-line growth and continue to pressure operating results leading to its recent common share dividend reduction. The revision to a Negative Rating Outlook reflects constrained economic conditions that have contributed to waning tenant demand, as reflected in HIW's negative same store net operating income growth of -11% as of 1Q'03, which includes the loss in occupancy from WorldCom's bankruptcy. Occupancies are 83.2% as of 1Q'03, down from 88% over the comparable period last year. Fitch anticipates that a competitive leasing environment, combined with an aggressive lease maturity schedule of 27% of total revenues maturing over the next 24 months, may place further pressure on Highwoods' property fundamentals. In addition, near-term unsecured debt maturities, if refinanced with secured debt, may erode Highwoods' financial flexibility. Fitch continues to monitor the progress on its near-term lease maturity schedule, the re-casting of its bank credit facility and ability to refinance year-end unsecured debt maturities. Fitch will remain focused on the credit support of the unencumbered pool and whether it is significantly eroded through asset sales or encumbering of assets with mortgage debt to warrant a ratings downgrade. Highwoods leverage ratio is 42% of undepreciated book, and incorporating HIW's preferred stock, its debt plus preferred over undepreciated book is 52%, as of 1Q'03. Both ratios are considered adequate for its rating level. However, coverage ratios remain constrained with interest and fixed charge coverage (adjusted for capitalized interest and capital expenditures) at 2.0x and 1.7x, respectively, as of 1Q'03, although these ratios reflect the reduction of revenue from WorldCom's bankruptcy. Highwoods Properties (NYSE: HIW) is a $3.2 billion (total market capitalization at March 31, 2003) equity real estate investment trust focused on the acquisition, ownership, management, development and redevelopment of suburban office and industrial properties. Headquartered in Raleigh, North Carolina, Highwoods' portfolio exhibits a southeastern US geographic presence consisting of 572 in-service properties encompassing 45 million square feet, and a land bank of 1,341 acres. Portfolio by product-type: Office (81% of annual revenue), Industrial (10%), and Retail (9%). INTERBANK FUNDING: Claims Bar Date Set for May 30, 2003 ------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York fixes May 30, 2003, as the deadline for creditors of Interbank Funding Corp., and its debtor-affiliates, to file their Proofs of Claim against the Debtors or be forever barred from asserting their claims. Proof of claim forms must be received by the Clerk of the Bankruptcy Court before 5:00 p.m. on May 30. If sent by courier or hand delivery, proofs of claim must be addressed to: US Bankruptcy Court for the Southern District of New York Re: Interbank Funding Corp. Claims Processing One Bowling Green, Room 534 New York, NY 10004-1408 if by US Mail, to: US Bankruptcy Court for the Southern District of New York Re: Interbank Funding Corp. Claims Processing Bowling Green Station PO Box 5079 New York, NY 10274-5079 The Claims agent can be contacted at 1-800-627-3875. Claims need not be filed if they are on account of: 1. Claims already properly filed with the Clerk of the Bankruptcy Court; 2. Claims not listed as contingent, unliquidated or disputed; 3. Claims previously allowed by Order of the Court; 4. Claims already paid in full by the Debtors; 5. Claims for which specific deadlines have been provided by the Debtors; 6. Claims for administrative expenses; and 7. the SEC. InterBank Funding Corp. is a Holding Company for companies which invest and manage operating real estate and other businesses through equity and debt investments including asset securitizations. The company and its debtor-affiliates filed for Chapter 11 protection on June 7, 2002, (Bankr. S.D.N.Y. Case No. 02-41590). Neil P. Forrest, Esq., Roger Frankel, Esq., and Debra Kramer, Esq., at Swidler Berlin Shereff Friedman, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed total assets of $1.6 million and total debts of total debts of $1.4 million. INTERPUBLIC: Names Christopher Coughlin Chief Operating Officer --------------------------------------------------------------- The Interpublic Group (NYSE:IPG) has named Christopher J. Coughlin as its Chief Operating Officer. Coughlin will join Interpublic, effective June 16, from the Pharmacia Corporation, where he is currently Executive Vice President and Chief Financial Officer. Previously, Coughlin held the same position at Nabisco Holdings, where he also served as President of Nabisco International. In his new role, Coughlin, 50, will team with Interpublic Chairman and CEO David Bell in managing the advertising and marketing services holding company and will serve on the Board of Directors. Sean Orr remains Interpublic's CFO and a member of the Board of Directors and will report directly to Coughlin. In addition he will work with Bell and Coughlin on balance sheet matters. Coughlin will work with the heads of the company's major operating units to improve margins and to ensure financial reliability and accountability. "I am extremely pleased and excited to have found a partner with such a unique combination of operational strength and financial skills," said Bell. "Chris is an exceptional executive, who has enjoyed very successful tenures as the CFO of three major multinationals. At each of those leading firms, he demonstrated the ability to make significant impact on strategic and operational issues well beyond his areas of responsibility. Chris has significant experience managing large organizations undergoing transition and he also brings direct operational and international marketing experience to the table. The Board of Directors and I saw a number of great candidates, but none had as impressive a combination of superior intellect and breadth of perspective." "I am looking forward to working with David and his senior management in leading the turnaround at Interpublic," added Coughlin. "I am familiar and comfortable with many of the challenges the company is facing, from successfully integrating operations to improving business planning and interacting with the financial community. Interpublic has vital agency brands -- I want to play a role in seeing them consistently generate equally strong financial results." Coughlin began his career at Arthur Young, now Ernst & Young. In 1981, he moved to Sterling Winthrop, where he rose through the financial ranks, serving as Vice President, Finance, first for the Pacific Rim region, then for International operations and in 1991 for the company's Consumer Products Group. He was named Chief Financial Officer and a member of the Board of Directors in 1993, with functional responsibility for all corporate finance. During this time, he successfully led the company through a global re-organization, the re-engineering of its worldwide information services and the divestiture of its pharmaceutical business. In 1996, Coughlin joined Nabisco Holdings as Executive Vice President and Chief Financial Officer, where he was credited with significantly enhancing the business planning process. Eight months after his arrival, he was promoted to President of Nabisco International. There, he oversaw the growth of the company's Asian, European and Latin American consumer packaged goods businesses through both acquisitions and increases in market share. The following year, Coughlin was recruited to serve as Executive Vice President and Chief Financial Officer of Pharmacia, as the company sought to integrate operations and relocate its corporate headquarters in the wake of its merger with Upjohn. He also led the company's outreach to shareholders and the financial community. Most recently, he has been a key player in the planning and implementation of the company's 2000 merger with Monsanto and the subsequent spin-off of Monsanto's agricultural business, as well as the 2003 merger with Pfizer. Interpublic is one of the world's leading organizations of advertising agencies and marketing services companies. Its five global operating groups are McCann-Erickson WorldGroup, The Partnership, FCB Group, Interpublic Sports and Entertainment Group, and Advanced Marketing Services. Major global brands include Draft Worldwide, Foote, Cone & Belding Worldwide, Golin/Harris International, Initiative Media, Lowe Worldwide, McCann-Erickson, Octagon, Universal McCann and Weber Shandwick Worldwide. As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'BB+' rating to The Interpublic Group of Cos. Inc.'s $700 million 4.5% convertible senior note issue due 2023. At the same time, Standard & Poor's affirmed its 'BB+' long-term corporate credit rating, and withdrew its 'B' short-term corporate credit rating. All ratings were removed from CreditWatch where they were placed on Aug. 6, 2002. The outlook is negative. INTRAWEST: Brings-In Moneris Solutions for Payment Processing ------------------------------------------------------------- Intrawest Corporation, the world's leading operator and developer of village-centred resorts, has selected Moneris Solutions Corporation, Canada's largest processor of credit and debit card payments, to handle payment processing at all of its Canadian properties. Moneris will process all VISA, MasterCard and debit payments throughout Intrawest's Canadian operations in addition to providing service support and expertise. "Our payment processing picture is complex," said Dave Creasy, Vice President Finance, Resort Operations, Intrawest. "We have multiple points of payment processing -- hotels, restaurants, stores, equipment rental, lift ticket and green fees payments, among others. Intrawest needed a processor that could handle the scale and complexity of our business while providing an efficient, integrated solution. Moneris Solutions was the answer." Intrawest's criteria for selecting a processor included: ability to provide a total, end-to-end card processing solution; system ease of use for front line staff; support for e-commerce transactions; capability to service all Intrawest's sites and lines of business; capacity to handle volume during peak periods; rapid authorization turnarounds; loyalty program expertise; and a cost-effective pricing structure. "We were particularly impressed with Moneris' Merchant Direct online transaction reporting system because it provides our back office with a user-friendly way to access transaction information quickly," said Mr. Creasy. "We're very pleased to be able to provide an enterprise-wide solution to Intrawest," said David Ades, Vice President, Sales, Moneris Solutions. "It's a great demonstration of the depth of Moneris' offering and our ability to handle the needs of large, multi-faceted businesses like Intrawest." Intrawest Corporation (IDR:NYSE; ITW:TSX) is the world's leading developer of village-centred resorts. The company owns or controls 10 mountain resorts, including Whistler Blackcomb, North America's most popular mountain resort. Intrawest also owns Sandestin Golf and Beach Resort in Florida and has a premier vacation ownership business, Club Intrawest. The Company is developing additional resort villages at six resorts in North America and Europe. The Company has a 45 per cent interest in Alpine Helicopters Ltd., owner of Canadian Mountain Holidays, the largest heli-skiing operation in the world. Intrawest is headquartered in Vancouver, British Columbia and is located on the World Wide Web at http://www.intrawest.com Moneris Solutions Corporation is Canada's largest provider of payment processing solutions for merchants. Moneris offers unique card transaction and payment services for virtually every industry segment that accepts credit and/or debit card payments from its customers. More than 350,000 merchant locations rely on Moneris Solutions - 24 hours a day, 7 days a week - to process and streamline their card payment processing. In addition, Moneris Solutions works with a range of business partners to provide Canadian merchants with hardware, software and systems to improve business efficiency, and manage point-of- sale information. Moneris Solutions has a staff of over 1,100 employees at its head office in Toronto, Ontario, and offices in Chicago, Illinois, Montr,al, Quebec, Vancouver, British Columbia and Sackville, New Brunswick. Moneris Solutions was formed in December 2000 as a result of a 50:50 joint investment between the RBC Financial Group and BMO Financial Group. * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on resort developer and operator Intrawest Corp., to positive from stable on the company's intention to separate the real estate construction activity of its business into a new entity called Leisura Development Partnerships. At the same time, the ratings on Intrawest, including the 'BB-' long-term corporate credit rating, were affirmed. KAISER: New Debtors Get Open-Ended Lease Decision Time Extension ---------------------------------------------------------------- The New Kaiser Aluminum Debtors obtained an extension of the Lease Decision Period. The New Debtors's deadline to assume, assume and assign, or reject their unexpired leases has been extended until the confirmation of a reorganization plan. (Kaiser Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1) are trading at abtou 3 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1 for real-time bond pricing. KASPER A.S.L.: Grypon Master Fund Discloses 5.6% Equity Stake ------------------------------------------------------------- Gryphon Master Fund, L.P. beneficially owns 379,400 shares of the common stock of Kasper A.S.L., Ltd., representing 5.6% of the outstanding common stock of the Company. This percentage is based upon 6,800,000 shares of common stock outstanding as of April 8, 2003, as reported by Kasper A.S.L. in its Annual Report on Form 10-K for the year ended December 28, 2002. Gryphon Master Fund, L.P., holds sole voting and dispositive powers over the stock. As reported in Troubled Company Reporter's Wednesday Edition, the Special Committee of the Board of Directors of Kasper A.S.L., Ltd. (OTC Bulletin Board: KASPQ.OB) engaged Peter J. Solomon Company to assist in the consideration of strategic alternatives, which might include a sale of the Company. The Special Committee, with the support and cooperation of the Creditors Committee, is continuing to develop and review various alternatives and, through its advisors, has been and is in discussions with several potential purchasers of the Company. However, given recent trading activity in its common stock, the Company points out that there can be no assurance that any sale, which is subject to, among other things, bankruptcy court approval, will be consummated. Moreover, if such sale is consummated, there is no assurance whatsoever that any such sale would result in a distribution to equity holders under any revised plan of reorganization submitted to the bankruptcy court. Kasper A.S.L., Ltd. is a leading marketer and manufacturer of women's suits and sportswear. The Company's brands include Albert Nipon, Anne Klein, Kasper and Le Suit. These brands are sold in over 3,900 retail locations throughout the United States, Europe, the Middle East, Southeast Asia and Canada. The Company also licenses its Albert Nipon, Anne Klein, and Kasper brands for various men's and women's products. KMART CORP: Wants Approval to Sell Store No. 4228 to Wheeling ------------------------------------------------------------- Kmart Corporation and its debtor-affiliates want to assume and assign another unexpired non-residential real property lease subject to the Designation Rights Agreement with KIMART LP. They intend assign the lease for Store No. 4228 located in Wheeling, Illinois to KIMART's designee, the Village of Wheeling. The Debtors lease the Wheeling Store Premises pursuant to a September 27, 1967 agreement with LaSalle National Bank NA, as trustee to Donald Gellar. The Debtors will also assign to the Village of Wheeling a sublease letter agreement dated October 27, 1998 with Wise Recycling LLC. The Village of Wheeling is an Illinois municipality. It plans to sublet the Store Premises or otherwise use the Property consistent with the Lease. The Village of Wheeling has a net worth in excess of $175,000,000 as of April 30, 2002. Therefore, the Debtors believe that there is adequate assurance that the Village of Wheeling will continue to perform under the terms of the Lease consistent with Section 365(b)(1)(C) of the Bankruptcy Code. KIMART is the successor to the joint venture comprised of Kimco Realty Corporation, Schottenstein Stores Corporation and Klaff Realty LP. KIMART purchased the Debtors' designation rights with respect to the Wheeling Store, together with 53 other store leases. As part of the Lease Assignment, the Debtors will receive $43,000,000 pursuant to the Designation Rights Agreement in part for agreeing with KIMART. The Debtors will also receive additional future benefits since the aggregate consideration that KIMART gets for the Lease is subject to profit sharing, as provided under the Designation Rights Agreement. Furthermore, the Debtors will benefit from the actual assignment itself. The Debtors will walk away from continuing obligations at a lease location where they have no operations as well as significant rejection claims against their estates. The Debtors estimate that the amount necessary to cure claims with respect to the Lease is $0. (Kmart Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEXAM EXPLORATIONS: Ability to Continue Operations Uncertain ------------------------------------------------------------ Lexam Explorations Inc. recorded earnings of $202,875 in the three months ended March 31, 2003, compared to a loss of $20,771 during the corresponding period in 2002. The earnings in the first quarter of 2003 were the result of a gain on the sale of marketable securities of $219,718. During the quarter the investment in Miramar Mining Corp. was sold for total proceeds of $339,418. During the corresponding period in 2002, the Company realized a gain on the sale of marketable securities of $11,427. Administrative expenses in the first quarter of 2003 were $17,783, reduced from $27,447 during the same period in 2002. Exploration expense was $599, down from $4,954 during the corresponding period in 2002. Greenland Outstanding Work Commitments In 2000, Lexam recorded a charge of $750,000 related to unfulfilled work commitments in Greenland. Between 1996 and 1999, the Company held exploration licences in Greenland. The exploration licences required certain expenditures, which Lexam was unable to meet. As a result, pursuant to the laws governing mineral exploration in Greenland, the Company forfeited the licences and was required to pay 50% of the unfulfilled work commitments, which was estimated to be approximately $750,000. Discussions were held between the Company and the government in an attempt to extend the term of, or reach a settlement with respect to, the unfulfilled work commitment. An agreement was reached between the parties whereby, in exchange for $75,000, Lexam would be given a full and final release from the outstanding work commitments. As a result, in the fourth quarter of 2002, the Company recorded a $675,000 non-cash decrease in the provision for outstanding work commitments in Greenland, reducing the liability from $750,000 to $75,000. The payment to the government of Greenland was made in April 2003. Financial Condition Lexam is currently not able to continue its exploration efforts and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. The Company is pursuing several alternatives to address these issues, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. Lexam's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about C$300,000. Going Concern Uncertainty The consolidated financial statements are prepared in accordance with generally accepted accounting principles and on the assumption that Lexam Explorations Inc. will be able to realize the carrying value of its assets and discharge its liabilities in the normal course of business. The Company has a significant working capital deficiency and is not currently able to continue its exploration programs and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. There can be no assurance that the Company will be able to raise sufficient additional financing to fulfill its expenditure commitments or complete its exploration programs. During 2001, subsequent to receiving shareholder and regulatory approval, the Company issued 16,164,970 shares at $0.10 per share as part of a plan to settle outstanding payables and other liabilities. Various creditors accepted a total of 12,450,911 shares, reducing the Company's liabilities by $1,245,090, with a corresponding increase in share capital of the same amount. Goldcorp Inc., received 11,734,264 shares of Lexam in exchange for settlement of $1,173,426 in payables, which included an outstanding demand loan due to Goldcorp, along with accrued interest, totaling $1,070,337. Goldcorp's equity interest in Lexam, upon receiving shares for debt, increased from 30.8% to 47.0%. At March 31, 2003, Goldcorp had a 49.8% equity interest in the Company. Of the 16,164,970 shares issued, 3,782,678 were issued to Lexam as custodian for further distribution to additional creditors that had not yet accepted shares in exchange for payables. In 2002, the remaining undistributed shares that were being held by Lexam as custodian, totaling 3,714,059 shares, were cancelled. The Company is pursuing several alternatives to improve its financial position, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. LEAP WIRELESS: Court Allows Release of Funds from Pledge Account ---------------------------------------------------------------- Leap Wireless International Inc., and its debtor-affiliates sought and obtained the Court's authority to release certain funds held in escrow in the Pledge Account to U.S. Bank National Association, as Trustee, on the Senior Noteholders' behalf. Robert A. Klyman, Esq., at Latham & Watkins, in Los Angeles, California, recounts that in February 2000, the Debtors completed an offering of 225,000 senior units, each senior unit consisting of one 12.5% senior note due 2010. Leap's obligations under the Senior Notes are governed by that certain Indenture, dated as of February 23, 2000, by and among Leap, as Issuer, Cricket Communications Holdings, Inc., a wholly owned subsidiary of Leap, as Guarantor, and U.S. Bank National Association, as Trustee, as supplemented. The total gross proceeds from the sale of the Senior Notes was $225,000,000. The outstanding principal balance of the Senior Notes was $225,000,000 as of February 28, 2003. According to Mr. Klyman, interest on the Senior Notes is payable semi-annually on April 15 and October 15 and accrues at 12.5% per annum. Pursuant to the terms of the Indenture, certain of the proceeds from the issuance of the Senior Notes were escrowed in an account to fund the first seven interest payments due to the holders of Senior Notes. At present, the Pledge Account contains $14,300,000, an amount sufficient to pay one further interest payment. In connection with the Indenture, Mr. Klyman relates that Leap granted in the Trustee's favor, on the Senior Noteholders' behalf, valid and enforceable first priority lien in the Pledge Account superior to and prior to the rights of third persons and subject to no other liens pursuant to that certain Collateral Pledge and Security Agreement, dated as of February 23, 2000, made by Leap in the Trustee's favor. The Trustee may, on the Senior Noteholders' behalf, take all actions it deems necessary or appropriate in order to enforce any of the terms of the Pledge Agreement and collect and receive any and all amounts payable in respect of Leap's obligations. No other creditor has a right to the Funds. Because the Trustee, on the Senior Noteholders' behalf, was granted a first priority security interest in the Funds under the Indenture, Mr. Klyman asserts that the Senior Noteholders would likely receive the Funds under any scenario. Therefore, the Court's order will benefit the Senior Noteholders without any detriment to Leap's other creditors. (Leap Wireless Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOUDEYE CORP: Will Publish First-Quarter Results on Wednesday ------------------------------------------------------------- Loudeye Corp. (Nasdaq: LOUD), a leader in managing, promoting and distributing digital media, will release first quarter 2003 financial results after the market closes on Wednesday, May 14, 2003. Loudeye will host an earnings conference call to discuss these results at 2:00 p.m. PDT / 5:00 p.m. EDT with Jeff Cavins, president and chief executive officer, and Jerry Goade, chief financial officer, followed by a live question and answer session. The call will be accessible by dialing 800-305-1078. Loudeye will Webcast the conference call live over the Internet at http://www.loudeye.com A replay of the call will be available through May 15, 2003, beginning two hours after the call by dialing 888-836-6076 and entering access code 132479. The Webcast replay will be available for 30 days at http://www.loudeye.com Loudeye provides the business infrastructure and services for managing, promoting and distributing digital media for the entertainment and corporate markets. For more information, visit http://www.loudeye.com As reported in Troubled Company Reporter's April 16, 2003 edition, the company's independent auditors issued in connection with the company's audited financial statements for the year ended December 31, 2002 contains a statement expressing substantial doubt regarding the company's ability to continue as a going concern. While the company took a number of steps in 2002 to reduce its operating expenditures and conserve cash, the company has suffered recurring losses and negative cash flows, and has an accumulated deficit. The company is currently pursuing efforts to increase revenue, reduce expenses and conserve cash in the near future, however can provide no assurances that these efforts will be successful. MCSI INC: Takes Restructuring Steps as Part of Long-Term Plan ------------------------------------------------------------- MCSi, Inc. announced a number of steps that it is implementing as part of its long-term restructuring plan. These steps include: -- the refocusing of the Company on its core business of audio- visual and broadcast systems integration, with product resale and service offerings in support; -- the consolidation of its operations into three regions, with regional headquarters located in Chicago, Atlanta and San Francisco and a streamlined organizational structure; -- the relocation of its corporate headquarters from Dayton, Ohio to Atlanta, Georgia, with a substantial reduction in corporate staff; -- the consolidation of other MCSi locations; -- the exiting of noncore businesses, including its e-commerce, managed services and computer product resale businesses; -- the reduction of other corporate expenses and overhead and the implementation of improved financial controls; and -- the sale or other disposal of its Canadian and European operations. The Company expects that these restructuring steps will be completed by late August and will result in an approximate 25% reduction in workforce. Gordon Strickland, MCSi's President and Chief Executive Officer, stated: "These are painful but necessary steps that we need to take to effectively restructure our business and return to profitability." Mr. Strickland continued, "By focusing on our core business of providing sophisticated audio-visual presentation and broadcast systems, we expect to quickly rebuild the confidence of our customers and suppliers. We remain optimistic that our restructuring initiatives will be successful, as we continue to make progress with our lenders in developing a long-term restructuring plan." As previously announced, the lenders under MCSi's secured credit facility have agreed to extend their forbearance agreement until May 30, 2003 to permit the Company to further refine its long- term restructuring plan. If the Company and the lenders are unable to agree on an acceptable restructuring plan, following expiration of the forbearance period, the lenders will be entitled to exercise certain remedies, including an acceleration of all amounts due under the credit facility. MCSi is a leading provider of state-of-the-art presentation, broadcast and supporting network technologies for businesses, churches, government agencies and educational institutions. From offices located throughout the United States, MCSi draws on its strategic partnerships with top manufacturers to deliver a comprehensive array of audio, display and professional video innovations. MCSi also offers proprietary systems pre-engineered to meet the need for turnkey integrated solutions. As a full service provider of enterprise wide technology solutions, MCSi complements its product offerings with a design/build approach that includes consultation, design engineering, product procurement, systems integration, end-user training and post sales support. MCSi's value-added service approach, made seamless by the ongoing exchange between customers and representatives from its strategic support teams, ensures that customers receive dedicated attention and long-term commitment to support their investment. Additional information regarding MCSi can be obtained by visiting http://www.mcsinet.com MERRILL LYNCH: Fitch Takes Rating Actions on Ser. 1999-C1 Notes --------------------------------------------------------------- Fitch Ratings downgrades Merrill Lynch Mortgage Investors, Inc.'s mortgage pass-through certificates, series 1999-C1, $7.4 million class F to 'BB+' from 'BBB-' and removes it from Rating Watch Negative, $23.7 million class G to 'B' from 'B+' and $20.7 million class H to 'CC' from 'CCC'. In addition, the following classes are affirmed: $66.1 million class A-1, $337.8 million class A-2 and interest only class IO at 'AAA', $32.6 million class B at 'AA', $26.7 million class C at 'A', $8.9 million class D at 'A-' and $20.7 million class E at 'BBB', and $3 million class J at 'C'. Fitch does not rate the $13.3 million class K. The rating actions follow Fitch's review of the transaction, which closed in November 1999. The downgrades are primarily due to Fitch's revaluation of specially serviced loans which resulted in additional expected losses since Fitch's prior annual review. The expected losses total approximately $25 million, which would affect classes H, J and K. In addition, Fitch is concerned with the increasing amount of specially serviced loans and the interest shortfalls. The highest amount of anticipated losses is expected after the disposition of the two largest loans in special servicing. Both loans have had appraisal subordinate entitlement reductions due to appraisal reductions which are causing full interest shortfalls to classes J and K and a partial shortfall to class H. The largest loan in special servicing is collateralized by an office property in Salt Lake City, UT and comprises 3.2% of the pool. The property lost a major tenant in 2001 leaving the property 61% occupied. Another tenant left has the property, but continues to pay rent; however, the lease expires in July 2003. The property will have 10% physical and economic occupancies unless space is leased prior to this date. An appraisal reduction was performed in 2001. Fitch expects losses of approximately $7 million, based on the total exposure of the loan; which includes advances and cumulative ASER amounts, and a 20% reduction on to the current value estimation. The second largest loan in special servicing is collateralized by two multifamily properties located in Virginia, currently comprising 2.6% of the pool. The original loan was collateralized by four properties; however, two of the four were sold after the loan became real estate-owned. Proceeds of the two sold properties were used to pay down the outstanding loan debt. The special servicer is marketing one of the remaining properties and will list the other soon. An appraisal reduction was performed on this loan in July 2001. Fitch assumed a loss of approximately $11.4 million, based on expected sale prices less 10% and the total exposure of the loan, which includes advances and ASER amounts. Fitch has concerns with other loans in special servicing which comprise an additional 4.8% of the transaction. These include two multifamily properties, one located in Dallas, Texas and the other in Harvey, Louisiana; one office in Smithtown, New York and one industrial property in Queens Maspeth, New York. Losses attributed to these loans totaled $6.4 million. Fitch also attributed higher than expected loss probability and severity to several loans on the master servicer's, ORIX Capital Markets, LLC, watchlist, totaling 5.8% of the pool. ORIX is pursuing a Representation and Warranty claim against one of the loan sellers for the entire transaction balance due to several matters, including pre-securitization issues such as loan default, property condition and fraud. While this lawsuit may lessen or eliminate losses to the trust, Fitch will assume losses based on property valuations until the lawsuit's outcome is known. The expected losses and the resulting subordination levels after remodeling the entire pool based on current performance necessitated the downgrades. Fitch will continue to monitor the performance of the pool, including expected loses, loans of concern and interest shortfalls. MERRILL LYNCH: Fitch Upgrades Class B-2 Rating to BB+ from B ------------------------------------------------------------ Fitch Ratings has taken rating actions on the following Merrill Lynch Mortgage Loans, Inc. mortgage pass-through certificate: Merrill Lynch Mortgage Loans, Inc., Mortgage Pass-Through Certificate, Series 2001-A1 -- Class M-1 Affirmed at 'AAA'; -- Class M-2 Affirmed at 'AAA'; -- Class M-3 to 'AAA' from 'AA+'; -- Class B-1 to 'AA' from at 'BB'; -- Class B-2 to 'BB+' from 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. MILITARY RESALE: Cash Resources Insufficient to Fund Operations --------------------------------------------------------------- Military Resale Group Inc. is a regional distributor of grocery and household items specializing in distribution to the military market. It distributes a wide variety of items, including fresh and frozen meat and poultry, seafood, frozen foods, canned and dry goods, beverages, dairy products, paper goods and cleaning and other supplies. Its operations are currently directed to servicing the commissary at each of six military installations located in Colorado, Wyoming and South Dakota, including the Air Force Academy located in Colorado Springs, Colorado. The Company is approved by the Department of Defense to contract with military commissaries and exchanges. Military commissaries are large supermarket-type stores operated by the United States Defense Commissary Agency ("DeCA") to provide grocery items for sale to authorized patrons at the lowest practicable prices in facilities designed and operated under standards similar to those in commercial food stores. As of February 2003, there were 276 commissaries worldwide, of which 173 were located in the continental United States and 103 were located overseas. Commissaries are authorized by law to sell goods only to authorized patrons, which include the approximately 1.4 million active duty U.S. military personnel, their dependents and certain authorized reservists and retirees. As of June 2002, these authorized patrons totaled approximately 12.4 million individuals. Annual worldwide commissary sales totaled approximately $5 billion in the year ended December 31, 2002. The Company's total revenue for the year ended December 31, 2002 of $6,359,803 reflected an increase of $1,508,370, or approximately 31.1%, compared to total revenue of $4,851,433 for the year ended December 31, 2001. Revenues are derived in either one of two ways: In the majority of instances, the Company purchases products from manufacturers and suppliers for resale to the commissaries Military Resale Group services. In such cases, the Company resells the manufacturer's or supplier's products to the commissaries at generally the same prices the Company pays for such products, which prices generally are negotiated between the manufacturer or supplier and the Defense Commissary Agency. Revenue is recognized as the gross sales amount received by Military Resale Group from such sales, which includes (i) the purchase price paid by the commissary plus (ii) a negotiated storage and delivery fee paid by the manufacturer or supplier. In the remaining instances, Military Resale Group acts as an agent for the manufacturer or supplier of the products sold, and earns a commission paid by the manufacturer or supplier, generally in an amount equal to a percentage of the manufacturer's or supplier's gross sales amount. In such cases, revenue is recognized as the commission received on the gross sales amount. Resale revenue for the year ended December 31, 2002 of $6,015,406 reflected an increase of $1,455,059, or approximately 32.0%, compared to resale revenue of $4,560,347 for the year ended December 31, 2001. For the year ended December 31, 2002, approximately 61.2% of gross profit was derived from sales involving resale revenue compared to approximately 49.1% for the year ended December 31, 2001. These increases were attributable primarily to the addition of the new products the Company began supplying to commissaries during the fourth quarter of fiscal 2001, including Slimfast, L'eggs, Bush Beans and Rayovac Batteries, and during fiscal 2002, including a line of feminine hygiene products and a line of infant feeding products supplied by Playtex Products, Inc. that the Company sells on a resale basis. In addition, during the year ended December 31, 2002, Military Resale Group implemented its long-term strategy to increase the ratio of its sales of products sold on a resale basis, rather than a commission basis, due to the payment discounts often received from the manufacturers and suppliers of the goods the Company purchases for resale. Commission revenues for the year ended December 31, 2002 of $344,397 reflected an increase of $53,311, or approximately 18.3%, compared to commission revenues of $291,086 for the year ended December 31, 2001. For the year ended December 31, 2002, approximately 38.8% of the gross profit was derived from sales involving commission revenues as compared to approximately 50.9% for the year ended December 31, 2001. These decreases were attributable primarily to the implementation of the Company's long-term strategy to increase the ratio of its sales of products sold on a resale basis, rather than a commission basis. The Company cannot be certain as to whether or not these trends will continue; however, in the long term it is seeking to increase the ratio of its sales of products sold on a resale basis, rather than a commission basis, because it believes it can increase profitability on such sales by taking advantage of payment discounts frequently offered by the manufacturers and suppliers of such products. To do so, the Company intends to continue to seek to add new products that can be offered to commissaries on a resale basis from the Company's existing manufactures and suppliers and from others with whom Military Resale Group does not currently have a working relationship. Management of Military Resale Group Inc. believes the Company's long-term success will be dependent in large part on the ability to add additional product offerings to enable it to increase sales and revenues. However, it's believed that the Company's ability to add additional product offerings is dependent on the Company's ability to obtain additional capital to fund new business development and increased sales and marketing efforts. The Company is currently in discussions with a number of other manufacturers and suppliers in an effort to reach an agreement under which it can distribute their products to the military market. While there can be no assurance that it will do so, management believes it will be successful in negotiating agreements with a number of such suppliers and manufacturers. To date, all Company sales revenue has been generated from customers located in the United States. Primarily as a result of increased operating and interest expenses, the Company incurred a net loss of $2,319,221 for the year ended December 31, 2002 as compared to a net loss of $745,994 for the year ended December 31, 2001. Liquidity and Capital Resources At December 31, 2002, the Company had a cash balance of approximately $2,100. Its principal source of liquidity has been borrowings. Since November 2001, it has funded operations primarily from borrowings of approximately $475,000. In the fourth quarter of 2001 and the first half of 2002, the Company issued $240,000 aggregate principal amount of convertible promissory notes (the "9% convertible notes") that mature, in nearly all instances, on June 30, 2003 and bear interest at the rate of 8% per annum prior to June 30, 2002 and 9% per annum thereafter. In April 2002, $150,000 aggregate principal amount of 9% convertible notes (and $2,380 accrued interest thereon) was converted by the holders into an aggregate of 1,793,573 shares of Military Resale Group's common stock. The remaining 9% convertible notes are convertible at any time and from time to time by the noteholders into a maximum of 1,350,000 shares of Company common stock (subject to certain anti-dilution adjustments) if the 9% convertible notes are not in default, or a maximum of 2,700,000 shares of Company common stock (subject to certain anti-dilution adjustments) if an event of default has occurred in respect of such notes. The terms of the 9% convertible notes require the Company to register under the Securities Act of 1933 the shares of common stock issuable upon conversion of the 9% convertible notes not later than June 30, 2003. In July 2002, the holders of $20,000 aggregate principal amount of convertible notes maturing on June 30, 2002 denied the Company's request to extend the maturity until July 30, 2003. The outstanding principal and interest on such convertible notes have not yet been paid and, thus, such convertible notes are currently in default. The Company's current cash levels, together with the cash flows it generates from operating activities, are not sufficient to enable it to execute its business strategy. As a result, it intends to seek additional capital through the sale of up to 5,000,000 shares of its common stock. In December 2001, the Company filed with the Securities and Exchange Commission a registration statement relating to such shares. Such registration statement has not yet been declared effective, and there can be no assurance that the Securities and Exchange Commission will declare such registration statement effective in the near future, if at all. In the interim, the Company intends to fund operations based on its cash position and the near term cash flow generated from operations, as well as additional borrowings. In the event it is able to generate sales proceeds of at least $500,000 in its proposed offering, it is believed that the net proceeds of such sale, together with anticipated revenues from sales of products, will satisfy the Company's capital requirements for at least the next 12 months. However, it would require additional capital to realize its strategic plan to expand distribution capabilities and product offerings. These conditions raise substantial doubt about Military Resale Group's ability to continue as a going concern. MIRANT: Continues to Pursue Successful Financial Restructuring -------------------------------------------------------------- In remarks made during its analyst call Wednesday morning, Mirant (NYSE: MIR) provides an update on key elements of its financial restructuring and operational outlook. "Over the past year-and-a-half, we've refocused our business on markets where we have critical mass of assets, people and customers," said Marce Fuller, president and chief executive officer, Mirant. "Now, we are implementing a plan to restructure Mirant's finances and enable the business to successfully compete in growing energy markets over the long term." Update on Financial Restructuring Mirant is currently in discussions with its agent banks and advisors for its bondholders to restructure approximately $5.3 billion of debt at Mirant and its subsidiaries. Mirant's proposal asks certain groups of its creditors to defer repayment of principal. To reassure these creditors who will be asked to extend maturities, the company is offering security in substantially all of its unencumbered assets, as well as more favorable terms. In addition, Mirant does not see the need to borrow any additional funds as part of its refinancing. Mirant has established a refinancing plan with the following objectives: * repay in full all obligations with interest; * maintain sufficient liquidity and flexibility to execute its business plan; * minimize financial risk until an expected industry recovery; and, * reduce the company's overall leverage over time "I am optimistic about our refinancing efforts. We are committed to repaying, in full, all of our obligations with interest, and to producing value for all of our stakeholders," said Fuller. Mirant noted that there are substantial risks if it is unable to successfully refinance its debt obligations. These risks are described in the company's 2002 Form 10-K. Total Cash and Available Credit Update * As of April 25, total cash and available lines of credit at Mirant and its subsidiaries was $1.4 billion, compared with $2 billion in total cash and available credit at year-end 2002. * As of April 25, Mirant had $869 million in collateral posted to support its North American assets, marketing and risk management business. * The company expects to reduce collateral to approximately $500 million by the end of the year. -- The recent sale of the majority of Mirant's Canadian natural gas aggregator, transport and storage business is expected to return approximately $200 million in collateral to Mirant. Operational Outlook for 2003 and Beyond "We expect the value of Mirant to grow in the future. We have the right assets in the right markets, a product that is essential to a growing economy, the right focus and expertise and, most importantly, the right people," said Fuller. Projected earnings before interest, tax, depreciation and amortization (EBITDA) * Mirant forecasts $800 million in adjusted EBITDA for 2003. * Mirant's North America operations are expected to contribute approximately 40 percent of the company's 2003 adjusted EBITDA. -- Of its North American gross margin, 92 percent is attributed to its assets and asset-related risk management and marketing activities. * Mirant's stable International operations are expected to contribute approximately 60 percent of the company's 2003 adjusted EBITDA. -- The Philippine and Caribbean assets are expected to grow, on average, approximately five percent per year and provide stable financial returns through the next five years due to the contract or franchise nature of these businesses. * The company expects approximately $100 million of improvements in adjusted EBITDA from 2003 to 2004 due primarily to cost reduction initiatives. * Beyond 2004 the company forecasts improvements in EBITDA as markets begin to recover. Capital Expenditures * Mirant expects capital expenditures for 2003 to be approximately $325 million; including construction, maintenance, and environmental controls. * Mirant expects capital expenditures for 2004 and 2005 to drop to $175 and $230 million respectively. * Mirant's capital expenditures are projected to rise between 2006 to 2007 to just under $300 million each year due to forecasted environmental expenditures planned at some of the company's power plants. Mirant is preparing revised quarterly financial information for 2002 and 2001. The company expects to provide the prior years' quarterly results, and file results for the first quarter 2003, as soon as possible. The 2003 Annual Meeting of Stockholders of Mirant Corp. will be held on Thursday, May 22 at 9 a.m. at the Atlanta Marriott Alpharetta, 5750 Windward Parkway, Alpharetta, GA. Ms. Fuller will discuss earnings results for 2002 and provide a general business outlook. The meeting will be webcast from a link at www.mirant.com . Participants can also choose to dial 1-800-288-8968. Both methods are listen-only. The meeting will be available for replay until June 5 at http://www.mirant.com MRS. FIELDS: Appoints Stephen Russo as New President and CEO ------------------------------------------------------------ Mrs. Fields Famous Brands, Inc. announced the appointment of Stephen Russo as President and Chief Executive Officer, and his election to the Board of Directors, to succeed Larry Hodges who has resigned, effective May 15, 2003. Mr. Russo joins the company from Allied Domecq QSR, where he was Retail Brands Operations Officer, with operations responsibility for over 10,700 units and total system-wide sales of 4.2 billion dollars. Mr. Russo has more than 35 years of retail experience, including roles as President of Mister Donuts of America and Senior Vice President of Development and Operations for Dunkin' Donuts, Baskin Robbins, and Togo's restaurants. "Steve brings tremendous experience and a great track record of success in retail operations," said Mrs. Fields Famous Brands' Board Chair, Herbert S. Winokur, Jr. "We are thrilled to have his leadership to take Mrs. Fields Famous Brands to the next level of growth and profitability." "I'm excited at the opportunity to work with this management team and these franchisees to lead a great collection of brands," said Mr. Russo. "There is significant room for growth given the quality of the products and their strong brand recognition." Mr. Hodges started with the Mrs. Fields organization in 1994 and is widely credited with the turnaround of the brand. During his tenure, Hodges assembled a world-class group of brands, including Mrs. Fields Cookies, Great American Cookies, Pretzel Time, Pretzelmaker, and the company's largest acquisition, TCBY, in June 2000. Mr. Winokur praised Hodges for his tenure. "Larry has been a guiding force in developing the company and has been a pioneer in the area of retail co-branding." At the onset of Mr. Hodges' tenure with the company, Mrs. Fields consisted of approximately 400 company-owned stores. Today the company is predominantly franchised, with over 3,000 locations worldwide, and operates highly successful brand licensing and mail order/internet businesses. Based in Salt Lake City, Utah, Mrs. Fields Famous Brands, Inc. currently owns or franchises more than 3000 retail food outlets. The brands include Mrs. Fields Cookies, Great American Cookies, The Original Cookie Company, TCBY Yogurt, Pretzel Time, Pretzelmaker, Hot Sam Pretzels. For more information, please visit the company's Web site at http://www.mrsfields.com As previously reported, Standard & Poor's Ratings Services lowered its corporate credit rating on specialty food retailer Mrs. Fields Original Cookies Inc. to triple-'C' from triple-'C'- plus based on the company's very constrained liquidity position and payment default risk. The outlook is negative. Salt Lake City, Utah-based Mrs. Fields had $152 million total debt outstanding as of June 29, 2002. NEPTUNE SOCIETY: Reports Weaker Operating Results for 2002 ---------------------------------------------------------- The Neptune Society, Inc., is the holding company for the Neptune Society of America, Inc., a California corporation. Neptune Society of America, Inc. is the holding company for Neptune Management Corp., Heritage Alternatives, Inc. and Trident Society, Inc., which are engaged in marketing and administering Pre-Need and At-Need cremation services in Arizona, California, Colorado, Florida, Illinois, Iowa, New York, Oregon and Washington. It also operates three crematories and licensed holding facilities in Los Angeles, California; one licensed holding facility in Ventura, California; one crematory and licensed holding facility in Ankeny, Iowa; and one crematory and a licensed holding facility in Spokane, Washington. The Company provides cremation services in the areas in which it owns crematories. It uses the services of qualified and licensed third-party crematories and holding facilities in locations where it does not own crematories. Overall, the Company's services and merchandise revenue decreased from $11,775,109 in 2001 to $10,899,026 in 2002, a decrease of $876,000, or 7.5%. Services and merchandise revenue consists of cremation service, at-need merchandise revenue, pre-need merchandise revenue recognized, and travel plan revenue. The decrease in services and merchandise revenue resulted from an increase of $1,244,000 in Travel Plan revenue offset by a decrease of $844,000 in cremation services and at need merchandise revenue, largely due to the sale of the Company's Portland cremation business at the end of 2001, and a decrease of $1,276,000 in pre-need merchandise revenue recognized because of the Company's decision to change its inventory management procedures in the third quarter of 2001. Cremation services revenue and at-need merchandise sales from the two new locations opened in 2002 did not have a material impact on consolidated revenue. Travel plan revenue increased by $1,244,000 (65%) from $1,904,000 in 2001 to $3,149,000 in 2002. Travel plan contracts are sold in combination with pre-need cremation plans, however all revenue from travel contracts is recognized at the point of sale, as the Company concurrently arranges with a third party to provide the service on an individual contract basis. This was the first year that this popular feature was sold company wide for the full 12 months, accordingly travel plan growth as an annual percentage is expected to more closely track the rate of pre-need cremation plan sales in future years. Pre-Need merchandise revenue recognized decreased from $2,407,000 in 2001 to $1,390,000 in 2002, a decrease of $1,017,000, or 42%. Neptune's revenue recognition policy requires it to specifically identify and physically segregate each individual's merchandise until the time of death to allow the Company to recognize revenue. From June through September 2001, the Company specifically identified and segregated for each individual sold a pre-need plan allowing the Company to recognize $1,804,000 in revenue in accordance with its revenue recognition policy. In October 2001, Neptune changed its inventory management policy to discontinue our practice of individually identifying merchandise in an effort to reduce operating costs. As a consequence, with the exception of $514,000, all receipts for merchandise sold in 2002 under pre- need plans, which were still active at year end, were deferred and not included in the revenue that was recognized. Neptune currently maintains only a general inventory sufficient to meet the requirements in the normal course of business, except where required by State law to segregate purchased merchandise for past or new sales. Pre-need contracts funded and deferred in the accounts in 2002 were 25% higher than in 2001, however except for the small number of those contracts which were also fulfilled in 2002, substantially all of the contract proceeds relating to merchandise revenue has been deferred to future years. Management and finance fees decreased from $1,255,187 in 2001 to $867,583 in 2002, a decrease of $387,604, or 31%. The management fees earned for administering pre-need trusts declined from $756,769 in 2001 to $608,708 in 2002, as a result of reduced yields on investments being reinvested at current lower market rates of interest. Finance fees declined from $498,418 in 2001 to $258,875 in 2002, a decline of $239,503, or 48%, due in part to the transitional adjustment in 2001 when the Company began recognizing finance income on pre-need contracts over the life of the contract. Previously this income was recognized only on fulfillment of the contract. Neptune Society's net loss for 2002 was $6,705,000 compared with $10,151,000 for 2001. At December 31, 2002, the Company had current assets of $2,700,000, offset by accounts payable and accrued liabilities of approximately $2,689,000, resulting in substantially no excess working capital in reserve. In February 2003, Neptune raised $200,000 in a private placement of units, consisting of one share of common stock and one stock purchase warrant. The Company's only internal sources of liquid assets are cash flows from operations. It has no standby line of credit, nor has it been able to make arrangements for such line of credit. It has no external sources of liquid assets. The principal amount of $2,357,000 in debt payments fall due in the upcoming 12 months is relatively evenly distributed throughout the year with the exception of $1,780,000 that is due July 31, 2003 under the terms of a promissory note issued in connection with the Company's acquisition of the Neptune Group. Repayment of the promissory note is secured by the Company's assets. Management projects that Neptune will have working capital in the amount of $1,000,000 at July 31, 2003, and that it will be required to raise $800,000 in additional financing to make the final payment under the promissory note due July 31, 2003. It is in the process of attempting to secure financing to meet this obligation and may seek a restructuring of the remaining balance of the promissory note. There can be no assurance that management will be able to raise the financing required to satisfy the obligations under the promissory note or to negotiate a restructuring of the remaining balance of the promissory note on acceptable terms, if at all. While the Auditors Report of KPMG LLP, dated March 15, 2001, covering the Company's financial condition for the year ended December 31, 2000, contained a "going concern" statement, no such statement was included in Stonefield Josephson, Inc.'s Auditors Report, dated March 21, 2003, covering the years ended December 31, 2001 and 2002. NORSKE SKOG: Intends to Raise $100MM from Senior Notes Offering --------------------------------------------------------------- Norske Skog Canada Limited intends, subject to market conditions, to raise US$100 million through an offering of Senior Notes due June 15, 2011. The notes will be guaranteed by all of the Company's material wholly-owned subsidiaries. The net proceeds of this issuance are expected to be used to repay outstanding indebtedness under the Company's secured credit facility. The notes have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from such registration requirements. In February 2003, Standard & Poor's lowered its credit rating of our long-term corporate and senior unsecured debt by one level, from BB+ to BB, and affirmed its existing debt on our senior secured debt as BB+. S&P's outlook for our business is stable. OGLEBAY NORTON: S&P Hatchets Low-B Rating on Liquidity Concerns --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Oglebay Norton Co. to 'B-' from 'B' due to the continued weakness in the company's end markets and concerns regarding its deteriorating liquidity. The Cleveland, Ohio-based company has about $427 million in debt outstanding. The current outlook is negative. "The ratings could be further lowered if Oglebay's strategic alternatives are delayed or if the actions do not adequately enhance the company's tight liquidity," said Standard & Poor's credit analyst Dominick D'Ascoli. Cleveland, Ohio-based Oglebay supplies minerals and aggregates to a variety of highly cyclical and competitive markets, including building materials, construction, environmental, energy, and metallurgical markets. Oglebay's operations include three reportable business units: Great Lakes Minerals, Global Stone, and Performance Minerals. OMNOVA SOLUTIONS: Fitch Changes BB+ Rating's Outlook to Negative ---------------------------------------------------------------- Fitch Ratings has changed the Outlook on OMNOVA Solutions Inc.'s ratings to Negative from Stable. The current rating on the company's senior secured debt is 'BB+'. Omnova's ratings are based on the company's strong market positions, its size, liquidity and financial performance. The company is a leader in areas such as commercial vinyl wallcovering, vinyl and urethane fabrics, and styrene-butadiene latex. In addition, OMNOVA has been able to remain cash flow positive at the trough of the business cycle. However, the company's cash flows are relatively small and EBITDA has weakened. Moreover, the February 2003 amendment to the existing credit facility has reduced facility commitments to $180 million in May and increased interest rates. For the trailing twelve months ended Feb. 28, 2003, EBITDA-to-interest incurred was 4.0x and total debt (including the A/R program balance)-to-EBITDA was 5.4x. The Negative Rating Outlook reflects the uncertainty of demand improvement in the near-term and the potential for higher average raw material costs for 2003. Omnova has been negatively affected by price increases in styrene, butadiene, and polyvinyl chloride; higher average raw material costs may continue to pressure operating margin. In addition, the company awaits an improvement in refurbishment activity, but the pace and strength of improving demand in the near-term remains unclear. OMNOVA Solutions is a specialty chemical company with nearly $37 million in EBITDA on sales of $681 million in 2002. The company produces commercial wallcovering, coated fabrics, commercial roofing membrane systems, adhesives, and paper and paperboard chemicals. End-use markets for Omnova's products include construction and home furnishings, textiles, and paper. PCD INC: Completes Wells-CTI Div. Asset Sale to UMD Technology -------------------------------------------------------------- PCD Inc. (OTC Bulletin Board: PCDIQ.OB), a manufacturer of electronic connectors, announced that UMD Technology, Inc. has completed the acquisition of PCD's Wells-CTI Division for $2.050 million in cash, plus assumed liabilities. The acquisition covers substantially all the assets and operating liabilities of the Well-CTI U.S. operations, headquartered in Phoenix, AZ; plus the equity of Wells-CTI KK, the Company's Yokohama, Japan subsidiary. UMD, based in Portland, OR, provides engineering services and products to the electronics industry. The Division, which continues to operate from its Phoenix and Yokohama locations, and supplies advanced design burn-in sockets to the semiconductor testing industry, is now a subsidiary of UMD, and has been renamed Kabushiki Wells-CTI, LLC. UMD emphasized that all of the Division's operations are conducting business as usual, and the Company will continue to accept customer orders and service its customers with existing facilities and personnel. Following the closing of the transaction, and as part of the Chapter 11 process, Wells-CTI will continue to finalize its distributions to creditors. As announced on March 21, 2003, to facilitate the sales of PCD's two business divisions: the Industrial/Avionics Division, headquartered in Peabody, MA, and Wells-CTI Division, headquartered in Phoenix, AZ, PCD Inc. and its domestic subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. The Company's Japanese subsidiary, Wells-CTI KK, was not included in the bankruptcy filings, although its shares are included in the sale of Wells- CTI. The U.S. Bankruptcy Court for the District of Massachusetts approved the sale of the Wells-CTI Division to UMD on May 1, 2003. PEABODY ENERGY: Directors Re-Elected at Shareholders' Meeting ------------------------------------------------------------- Peabody Energy (NYSE: BTU) has announced the re-election of four members of its board of directors, for three-year terms expiring in 2006, at the company's annual meeting of shareholders held in St. Louis. Re-elected directors include William E. James, founding partner of RockPort Capital Partners LLC; Robert B. Karn III, a consultant and former managing partner in financial and economic consulting with Arthur Andersen in St. Louis; Henry E. Lentz, a consultant and former managing director of Lehman Brothers; and Dr. Blanche M. Touhill, chancellor emeritus and professor emeritus at the University of Missouri - St. Louis. Peabody Energy (NYSE: BTU) is the world's largest private-sector coal company, with 2002 sales of 198 million tons of coal and $2.7 billion in revenues. Its coal products fuel more than 9 percent of all U.S. electricity generation and more than 2 percent of worldwide electricity generation. * * * As previously reported in Troubled Company Reporter, Fitch Ratings assigned a 'BB+' to Peabody Energy's proposed $600 million revolving credit facility and a new $600 million bank term loan and a 'BB' to its issuance of $500 million of senior unsecured notes due 2013. The Rating Outlook remains Positive. At the completion of Peabody's refinancing the rating on its senior subordinated notes, currently rated 'B+', will be withdrawn. PICCADILLY CAFETERIAS: Red Ink Flows in Third Fiscal Quarter ------------------------------------------------------------ Piccadilly Cafeterias, Inc. (AMEX:PIC) announced its operating results for the third quarter and three quarters ended April 1, 2003. The Company incurred a net loss for the quarter ended April 1, 2003, of $2.4 million compared with net income of $3.1 million for the quarter ended March 31, 2002. For the three quarters ended April 1, 2003, the Company incurred a net loss of $9.1 million, compared with net income of $3.5 million for the three quarters ended March 31, 2002. The Company's net sales for the quarter ended April 1, 2003, were $82.4 million compared with $89.7 million for the quarter ended March 31, 2002, a net decline of $7.3 million, or 8.1%. Net sales from the third quarter of last year include $2.0 million for cafeterias that are now closed. This year's third quarter was one day longer than the third quarter of last year, increasing comparable net sales by $0.8 million. Same-store sales for the third quarter were down $6.1 million, or 7.0%, from last year's third quarter. For the four-week periods ended January 28, 2003, and February 25, 2003, and the five-week period ended April 1, 2003, same-store sales were down 7.5%, 8.0%, and 6.8%, respectively. The Company's net sales for the three quarters ended April 1, 2003, were $255.5 million compared with $276.6 million for the three quarters ended March 31, 2002, a decline of $21.1 million, or 7.6%. Net sales from the first three quarters of last year include $6.6 million for cafeterias that are now closed. This year's first three-quarter period was one day shorter than the same three-quarter period of last year, lowering comparable net sales by $1.3 million. Same-store sales for the three-quarter period ended March 31, 2003, were down 4.9% compared with the same period last year. The Company believes that a sluggish economy and international events had a negative impact on the mid-scale dining segment in which the Company operates, thereby reducing the dining frequency of the Company's guest base. The impact was more noticeable in cafeterias located in regional shopping malls. These cafeterias comprise approximately one-half of all of the Company's cafeterias. Same-store sales for mall cafeterias were down 9.7% for the third quarter while the Company's non-mall cafeterias were down 5.4%. Several items had an impact on the comparability of operating results year over year: Asset impairment charges. During the quarter ended April 1, 2003, the Company recorded asset impairment charges of $0.9 million related to one cafeteria with recent sales trends that indicate that future cash flows will not be sufficient to recover its net carrying value. During the quarter ended December 31, 2002, the Company recorded asset impairment charges of $5.8 million relating to 48 cafeterias with low sales volumes that were operating at the end of the quarter, including 40 cafeterias located in regional shopping malls. In total, these cafeterias generated, before allocation of corporate overhead, net losses of $2.4 million and $1.0 on net sales of $36.2 million and $39.7 million for the first three quarters of fiscal 2003 and 2002, respectively. During the third quarter of fiscal 2002, the Company recorded $0.2 million of asset impairment charges. Loss on early retirement of debt. Net income (losses) from continuing operations for the three quarters ended April 1, 2003 and March 31, 2002, also include losses from the early retirement of debt of $1.3 million and $1.9 million, respectively. During fiscal 2003, the Company repaid $8.7 million of its long-term debt pursuant to excess cash flow offers required by its debt agreements. During fiscal 2002, the Company repaid $9.4 million of its long-term debt with the net proceeds from a sale-leaseback transaction, repaid $3.7 million of its long-term debt using available cash, and refinanced its working capital credit facility. Losses from the early retirement of debt include the prorata portion of unamortized financing costs and prepayment premiums. Team member benefits. The Company made changes to its team member benefit plans during fiscal 2002, significantly reducing the Company's costs for these plans. Additionally, the Company utilized the remaining assets of an over-funded benefit trust fund to reduce its ongoing expenditures for team member benefits. In total, team member benefit expense was $3.8 million lower for the three quarters ended April 1, 2003, compared with last year. Most of the benefit plan changes were effective January 1, 2002. Discontinued operations. Sixteen cafeterias were closed during the three quarters ended April 1, 2003 and are accounted for as discontinued operations. Net loss from discontinued operations for the quarters ended April 1, 2003 and March 31, 2002, was $0.4 million and $0.1 million, respectively. Net loss from discontinued operations for the three quarters ended April 1, 2003 and March 31, 2002, was $0.4 million and $0.5 million, respectively. Results of discontinued operations for the second quarter of fiscal 2003 include a gain of $0.8 million from the sale of a closed cafeteria. The Company expects to close 17 cafeterias during the fourth quarter ending July 1, 2003 of which 11 had closed as of May 7, 2003, and expects to record a closing charge in the fourth quarter for closing costs of approximately $4.6 million. For the quarters ended April 1, 2003 and March 31, 2002, these cafeterias generated net losses of $0.6 million and $0.5 million, respectively, on net sales of $4.2 million and $4.9 million, respectively. For the three quarters ended April 1, 2003 and March 31, 2002, these cafeterias generated net losses of $2.1 million and $1.3 million, respectively, on net sales of $13.4 million and $15.1 million, respectively. Income tax benefit. During the quarter ended April 1, 2003, the Company applied to the Internal Revenue Service for certain tax accounting method changes. As a result of these changes, the Company also filed a refund claim to carry back the tax net operating loss generated in its 2002 tax year to prior years, which were previously outside the permitted carry back period until the enactment of the Job Creation and Work Assistance Act of 2002. At December 31, 2002, the Company estimated that the amount of the refund would be approximately $2.0 million. As a result of finalizing the return in the quarter ended April 1, 2003, the actual refund claim was $2.5 million. Likewise, in fiscal 2002 the Company filed a $2.0 million refund claim with the Internal Revenue Service to carry back net operating losses recognized in its 2001 tax year to its 1996 tax year. Because a full valuation allowance had previously been established for the Company's net deferred tax assets, including net operating losses, these refunds resulted in adjustments to the valuation allowance and tax benefits of approximately $2.5 million for fiscal 2003, $2.0 million of which was recognized in the quarter ended December 31, 2002, and $0.5 million of which was recognized in the quarter ended April 1, 2003, and $2.0 for fiscal 2002. Marketing. The Company remains focused on improving cafeteria guest traffic. To that end, the Company launched two new marketing initiatives during its third quarter ended April 1, 2003. On Tuesday, Piccadilly guests may enjoy "Chef's Carving Day," which includes hand-carved turkey, ham, corned beef or roast beef with three side items of salads and desserts, priced at $5.99. On Thursday, "Kid's Day", kids can enjoy new kid- friendly menu items like popcorn chicken, popcorn shrimp, potato smiles and pudding with gummy worms. The meal includes an entree, two sides, a choice of Jell-O, pudding or cupcake, and a drink for just $0.99. The Company will continue its "Delicious Desserts Wednesdays," where Piccadilly guests may enjoy one of Piccadilly's made-from-scratch desserts for only $0.79. These campaigns did not generate a sustained sales increase and the related broadcast media was cancelled in the latter part of the third quarter. Marketing expenses as a percent of net sales were 3.2% and 2.3% for the quarters ended April 1, 2003 and March 31, 2002, respectively. Marketing expenses as a percent of net sales were 3.0% and 1.9% for the three quarters ended April 1, 2003 and March 31, 2002, respectively. Management Change. The Company announced on May 5, 2003, that its Board of Directors had accepted the resignation of Ronald A. LaBorde as the Company's chief executive officer and as member of its Board of Directors. The Board of Directors also announced that it had entered into an agreement with PMCM, LLC., an affiliate of Phoenix Management Services, Inc., of Chadd's Ford, Pennsylvania. Phoenix is an operationally-focused turnaround management firm. Under the agreement, PMCM agreed to provide to the Company the services of Mr. Vincent Colistra, who will be in charge of the engagement and serve as the chief restructuring adviser to the Company, and Mr. John G. "Jack" McGregor, who will serve as the interim chief executive officer of the Company. PMCM has been engaged to provide financial advisory, management and restructuring services to the Company. The Company expects that PMCM will perform these services for the foreseeable future. Azam Malik, President and Chief Operating Officer, commented, "Our current operating environment is challenging. Not only has the mid-scale segment of the restaurant industry experienced negative traffic in recent periods, but the cafeteria/buffet segment in particular has also suffered from significant sales declines. We remain focused on stabilizing sales trends and are committed to improving the operating performance at existing sales levels through improvements in operating efficiencies." Piccadilly is a leader in the family-dining segment of the restaurant industry and operates 179 cafeterias in the Southeastern and Mid-Atlantic states. For more information about the Company visit the Company's Web site at http://www.piccadilly.com At April 1, 2003, Piccadilly Cafeterias' balance sheet shows that total current liabilities exceeded total current assets by about $13 million. The Company's total shareholders' equity has dwindled to about $15 million, from about $24 million recorded at July 2, 2002. As reported in Troubled Company Reporter's February 20, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Piccadilly Cafeterias Inc. to 'B-' from 'B' based on the company's weak operating performance. Baton Rouge, La.-based Piccadilly had $36.5 million of debt outstanding at Dec. 31, 2002. The outlook is negative. PLAYBOY ENTERPRISES: Reports Substantially Improved Q1 Results -------------------------------------------------------------- Playboy Enterprises, Inc. (PEI) (NYSE: PLA, PLAA) announced net income for the first quarter ended March 31, 2003, of $0.6 million, compared to a net loss in the prior year quarter of $9.4 million. The 2002 quarter included a $5.8 million non-cash income tax charge related to the adoption of FAS 142. The results reflected the Online Group's swing from an operating loss to an operating profit, improved Licensing and Publishing results, and continued solid Entertainment Group performance. Operating income for the 2003 first quarter rose more than fourfold to $9.5 million from $2.2 million in the first quarter of last year. Revenues totaled $74.3 million in this year's quarter, up 12% from $66.1 million in the same quarter last year. Christie Hefner, chairman and chief executive officer, said: "Results for the quarter exceeded expectations as each of our business groups reported operating income. We are particularly pleased with the $4 million improvement in online results over last year's first quarter as it underscores our expectations that the business will report an operating profit for the full year compared to an $8.9 million operating loss in 2002. "We are also excited about the editorial evolution now evident in Playboy magazine and are in the process of introducing those changes to the advertising community. The Playboy brand remains a powerful marketing vehicle, as is evidenced by the continued consumer enthusiasm for our licensed products as well as our television networks both here and overseas. "Given our strong first quarter performance and the outlook for continued positive results, particularly in our traditionally strong fourth quarter, we now believe that our 2003 operating profit will be approximately $22 million or 30% better than the projection that we made at the end of 2002 of doubling operating income," Hefner said. Entertainment First quarter operating income for the Entertainment Group was $8.0 million in 2003 compared to $9.0 million last year. Revenues increased 8% to $33.2 million, due to the restructuring of our international TV operations in late 2002, which increased to 100% PEI's ownership of 13 international networks and resulted in the consolidation of those operations into the Entertainment Group's existing infrastructure. That increase was partially offset by a $1.4 million decline in worldwide home video revenues and an expected modest decline in domestic TV revenues, which were down 5% to $23.4 million in the 2003 first quarter compared to last year. Overall Entertainment Group operating margins declined principally as a result of the change in international TV from a licensing to an owner-operator business model. Publishing Lower manufacturing and editorial costs were primarily responsible for the improvement in Publishing Group results to an operating profit of $0.5 million in the 2003 first quarter compared to last year's loss of $0.4 million. First quarter 2003 revenues were essentially flat at $26.6 million with Playboy magazine posting slightly lower advertising revenues. The company said that it also expects ad revenues to be down slightly in the second quarter, but up for the full year. Online The Online Group reported an operating profit of $0.3 million in the 2003 first quarter versus a $3.6 million operating loss in the prior year. The swing was due both to a 45% improvement in first quarter revenues to $9.2 million as well as expense reductions implemented last year. The Group's largest revenue stream, subscriptions, more than doubled in the quarter to $4.1 million as the company benefited from a price increase for Playboy Cyber Club in the fourth quarter of 2002, as well as the introduction of new clubs, which contributed to a 35% growth in total subscribers. E-commerce revenues grew 33% in the 2003 first quarter compared to last year's quarter primarily due to the timing of catalog mailings, while revenues from other sources were basically flat. Licensing For the first quarter, Licensing Group operating income rose to $3.6 million in 2003 from $0.8 million in the prior year quarter on revenues of $5.2 million, more than double last year's $2.5 million. The quarter's results included the sale of a Salvador Dali painting for $1.9 million. Revenues from the company's international licensing program also increased significantly in this year's first quarter. Corporate Administration and Other First quarter Corporate Administration and Promotion expenses declined 19% to $2.9 million in 2003 from $3.6 million last year in part reflecting the company's continued focus on cost control measures. As a result of the March 2003 debt refinancing, the company recorded a charge of $3.3 million related to capitalized debt issuance expense, of which $2.9 million was non-cash. Playboy Enterprises is a brand-driven, international multimedia entertainment company that publishes editions of Playboy magazine around the world; operates Playboy and Spice television networks and distributes programming via home video and DVD globally; licenses the Playboy and Spice trademarks internationally for a range of consumer products and services; and operates Playboy.com, a leading men's lifestyle and entertainment Web site. As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Service assigned its 'B' corporate credit rating to Playboy Enterprises, Inc. At the same time, Standard & Poor's assigned its 'B' rating to the proposed $110 million senior secured notes due 2010, issued by PEI Holdings. PEI Holdings is the holding company through which Playboy owns all of its operating subsidiaries. Net proceeds will be used to repay the existing credit facility and acquisition liabilities. Chicago, Illinois-based Playboy had total debt outstanding of $144.2 million, including $43.1 million in acquisition liabilities, on September 30, 2002. The outlook is stable. "The ratings on Playboy reflect the company's significant presence in the non-cyclical adult entertainment industry, strong brand recognition, and good direct-to-home satellite TV coverage," said Standard & Poor's credit analyst Andy Liu. He added, "These factors are balanced by the proliferation of free adult materials online, declining newsstand sales of the magazine, weak cable TV distribution due to the narrow audience for paid adult content, and high financial risk." PRIMEDIA INC: $300 Million Senior Notes Get S&P's B Rating ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on publisher PRIMEDIA Inc. to stable from negative. At the same time, Standard & Poor's assigned its 'B' rating to PRIMEDIA's $300 million, privately placed, Rule 144A senior notes due 2013. In addition, Standard & Poor's affirmed its 'B' corporate credit and other outstanding ratings on New York City- based PRIMEDIA. Total debt and preferred stock as of March 31, 2003, totaled about $2.4 billion. "The outlook revision reflects improving debt service measures resulting from recently good EBITDA growth and progress with asset sales," said Standard & Poor's credit analyst Hal Diamond. "In addition, management has taken appropriate measures to assure immediate term liquidity," added Mr. Diamond. EBITDA from continuing businesses increased more than 30% in the last 12 months ended March 31, 2003, largely due to cost reductions, a sharp decrease in Internet losses, and modest revenue growth. The company has also provided guidance of roughly 8% EBITDA growth for the full 2003, which assumes a modest recovery of the consumer advertising market and stabilization of business-to-business advertising. PRIMEDIA recently announced an agreement to sell Seventeen magazine for $182 million, which is expected to close in the second quarter of 2003. Since 2001, aggregate proceeds of roughly $530 million (including the pending Seventeen transaction) have been realized from asset sales at relatively high EBITDA multiples and used to reduce debt. Debt had been elevated due to negative discretionary cash flow in 2000-2001 and the 2001 EMAP specialty magazine acquisition. Also, PRIMEDIA's recent refinancing of its 10.25% senior notes due 2004 with bank debt, the pending refinancing of its 8.50% senior notes due 2006 with issue proceeds, and exchange of $75.4 million of preferred stock for common shares will reduce the company's fixed charge burden in 2003. PROMAX ENERGY: Commences Restructuring Under CCAA in Canada ----------------------------------------------------------- Promax Energy Inc. (TSE:PMY) announces that an Order of the Court of Queen's Bench of Alberta was issued under the Companies' Creditors Arrangement Act that grants Promax protection from proceedings by its creditors for the purposes of facilitating an orderly restructuring of its business, property and financial affairs. This Order was sought by Promax without opposition from its principal lender. Unless extended by further Order of the Court, the protection provided in the Order expires on May 28, 2003. KPMG Inc. has been appointed as an officer of the Court of Queen's Bench of Alberta to monitor the business and affairs of Promax while it remains under CCAA protection. Promax will continue to investigate and pursue means through which it may maximize its value for its stakeholders. Promax also announces that it has suspended the making of interest payments to its principal lender, with the interest payment due May 5, 2003 not being paid. Promax Energy Inc. is a junior oil and gas company listed and trading on the Toronto Stock Exchange under the symbol "PMY". It has a high working interest in over 285,000 acres in a gas prone area of southeastern Alberta with multiple producing horizons including long life Medicine Hat/Milk River and Coal Bed Methane. REGUS BUSINESS: Committee Signs-Up Kaye Scholer as Attorneys ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Regus Business Centre Corp. and its debtor-affiliates' chapter 11 cases seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Kaye Scholer LLP as its Counsel. The Committee tells the Court that it needs to employ and retain Kaye Scholer to: a) advise the Committee with respect to its rights, duties and powers in these bankruptcy cases; b) assist and advise the Committee in its consultations with the Debtors relative to the administration of these cases; c) assist the Committee in analyzing the claims of the Debtors' creditors and the Debtors' capital structure and in evaluating the Debtors' negotiations with holders of claims and equity interests; d) assist the Committee in its investigation of the assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; e) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters relates to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing and other transactions and the terms of a plan of reorganization for the Debtors and accompanying disclosure statement and related plan documents; f) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in these cases; g) represent the Committee at all hearings and other proceedings; h) review and analyze applications, orders, statements of operations and schedules filed with the Court and advise the Committee as to their property; i) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committees' interests and objectives; and j) perform such other legal services as may be required or are otherwise deemed to be in the interests of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code, Bankruptcy Ruled or other applicable law. Kaye Scholer will charge for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates: Partner $455 to $725 per hour Counsel $430 to $525 per hour Associates $205 to $465 per hour Paraprofessionals $ 95 to $185 per hour The professionals who will be responsible in this engagement and their current hourly rates are: Richard G. Smolev $635 per hour Giulherme Brafman $625 per hour Benjamin Mintz $455 per hour Steven R. Wirth $420 per hour Jonathan Offenkrantz $420 per hour Regus Business Centre Corp., filed for chapter 11 protection on January 14, 2003 (Bankr. S.D.N.Y. Case No. 03-20026). Karen Dine, Esq., at Pillsbury Winthrop LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed debts and assets of: Total Assets: Total Debts: ------------- ------------ Regus Business Centre Corp. $161,619,000 $277,559,000 Regus Business Centre BV $157,292,000 $160,193,000 Regus PLC $568,383,000 $27,961,000 Stratis Business Centers Inc. $245,000 $2,327,000 ROSE HILLS: S&P Revises Outlook to Developing over Reduced Debt --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Rose Hills Co. to developing from negative. At the same time, Standard & Poor's affirmed the 'CCC+' corporate credit and 'CCC-' subordinated ratings on the company. The low speculative-grade ratings reflect Standard & Poor's concern about the company's ability to generate sufficient cash flow and/or obtain external funding to refinance its subordinated debt due in 2004. Rose Hills received an equity investment of $45 million from Alderwoods, used toward retiring the company's $52 million of outstanding bank debt that was to mature in 2003. "This transaction eliminated the refinancing risk for 2003, and increased the likelihood of a successful refinancing of its $80 million of subordinated debt due in 2004; however, the still- significant magnitude of debt due in 2004, and weak liquidity because of its reliance on cash reserves and no in-place borrowing facilities, remain significant. ROUNDY'S: Outlook Stable Given Aggressive Acquisition Strategy -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on food services company Roundy's Inc. to stable from positive, based on its more aggressive acquisition strategy to expand its retail food operations. Standard & Poor's also affirmed its 'BB-' corporate credit rating on the Peewaukee, Wisconsin-based company. Approximately $563 million of debt is affected by this action. "Although Roundy's continues to improve operations as it expands its store base through acquisitions, we view the risks associated with the company's growth strategy as limiting the potential for the rating to be raised in the near term," said credit analyst Patrick Jeffrey. "However, Roundy's leading retail market position in Milwaukee and its stable food wholesale operations provide support for the ratings," Mr. Jeffrey added. The food wholesale and retail sectors are highly competitive, as consolidation trends in recent years have resulted in large, regionally diverse players leading both segments. Roundy's total sales of about $3.6 billion in 2002 were much smaller than those of food wholesalers such as SuperValu Inc. ($20 billion) and those of retailers Kroger Co. and Albertson's Inc. (each with more than $30 billion). Standard & Poor's believes Roundy's ability to compete on price, maintain a competitive cost structure, and expand its customer base will be challenged. However, Roundy's has a stable operating history in its food wholesale segment, in which it has longstanding contracts with food retailers. These contracts help ensure significant purchasing requirements from existing customers and help mitigate some of the risk of lost customers resulting from the change in ownership. Standard & Poor's expects the company may continue to make acquisitions to fill-in markets in its primary markets of Wisconsin and Minnesota. SALOMON BROS: Fitch Raises Ser. 2002-UST1 Cl. B-5 Rating to BB+ --------------------------------------------------------------- Fitch Ratings has upgraded 5 classes of Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates, Series 2002-UST1, as follows: Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass- Through Certificates, Series 2002-UST1 -- Class B-1 to 'AAA' from 'AA'; -- Class B-2 to 'AA+' from 'A'; -- Class B-3 to 'AA-' from 'BBB'; -- Class B-4 to 'BBB+' from 'BB'; -- Class B-5 to 'BB+' from 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. SERVICE MERCHANDISE: Challenging Filed Work Compensation Claims --------------------------------------------------------------- Service Merchandise Company, Inc., and its debtor-affiliates object to 70 compensation claims filed against them. Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, tells the Court that these claims have already been paid or, to the extent actually owed, are expected to be fully paid by a third party that has assumed full liability for the Claims. In the ordinary course of business and in compliance with applicable non-bankruptcy law, Mr. Jennings recounts that the Debtors maintain certain insurance policies and programs with certain insurers to insure their liability for individual workers' compensation claims. Under these Insurance Programs, the Debtors may remain liable for certain deductible or retained self-insured liability amounts, losses and allocated lost adjustment expenses with respect to the claims. The Debtors' potential liability under the Programs is generally secured by property of the Debtors' estates, including letters of credit and surety bonds issued in the Insurers' favor. As is standard under industry practice, the Debtors have formally transferred much of their Retained Liabilities as authorized by the Worker's Compensation Liability Transfer Order. Additionally, Mr. Jennings says, each of the applicable and relevant carriers or estates have taken action to assume responsibility for administering and assume these Retained Liabilities: Liabilities Covered under Insurers Policy years Providing Coverage Exceptions ----------- ------------------ ---------- 7/1/95-4/05/02 Pacific Employers States of TN,OH, NY Ins. Co (ACE) (7/95012/01) 7/1/92-6/30/95 Nat'l. Union Fire States of TN,OH, NY Ins. Co. (7/94-6/95) States of TN,OH (7/93-6/94) States of TN (7/92-6/93) 7/1/91-6/30/92 Planet Ins. Co. States of TN (Reliance) 7/1/88-6/30/91 Agronaut Ins. Co. None 7/1/91-12/31/02 State of Tennessee Tennessee claims only 7/1/93-4/05/02 State of Ohio Ohio claims only 7/1/94-4/05/02 State of New York New York claims only These transfers and acceptances of responsibility have allowed the Debtors to relieve themselves of the burden of administering any workers' compensation claims under the Insurance Programs, while ensuring availability of the same level of coverage to which the Debtors have historically been entitled under the Programs or any agreements entered into by the Debtors and the Insurers to transfer Retained Liabilities. The Debtors rightfully believe that Insurers have assumed full liability for the Retained Liabilities, including the Debtors' liability, if any, with respect to the Claims. Thus, Mr. Jennings asserts that the Claimants are not unfairly prejudiced with the Debtors' request to have the claims disallowed because the Insurers have assumed full liability for the Claims, to the extent enforceable under applicable non- bankruptcy law, at the same level that existed under the Debtors' Insurance Programs. The claims include: Claim No. Claimant Amount --------- -------- ------ 2600 Acevedo-Bonilla, Victor $500,000 1807 Edward Adam Czapla 60,000 4566 Fleming, Shawn W. 95,000 472 Garcia, Rose Marie 25,000 3207 Gibson, Melissa 5,000,000 2747 Jackson, Rosa N. 200,000 713 Jaynes, David A. 28,788 2915 McClendon, Freida 100,000 2192 Medina, Alfredo 250,000 4756 Woodson, Robert L. 60,000 (Service Merchandise Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) SIERRA PACIFIC: Registers $300-Mill. of 7.25% Convertible Notes --------------------------------------------------------------- Sierra Pacific Resources (NYSE: SRP) has filed an initial shelf registration statement with the Securities and Exchange Commission to register $300 million of its previously-issued 7.25% Convertible Notes due 2010 that were sold in a private placement on February 14, 2003. The shelf registration statement, when declared effective by the SEC, will cover resales of the Notes by the existing noteholders and the common stock and related rights that are issuable upon conversion of the Notes. The filing of this registration statement does not reflect a new issuance of securities by Sierra Pacific Resources. Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns a 50 percent interest in an interstate natural gas transmission partnership, Sierra Pacific Communications, a telecommunications company, and Sierra Pacific Energy (e-three), an energy conservation services company. As reported yesterday in Troubled Company Reporter, Standard & Poor's Ratings Services raised its rating on Sierra Pacific Power Co.'s (SPP; B+/Neg/--) $80 million Washoe County water facilities refunding revenue bonds to 'BB' from 'B-'. The Company's 'B+' corporate credit rating reflects the consolidated credit profile of Sierra Pacific Resources and its utility subsidiaries, Nevada Power and SPP, and factors in the adverse regulatory environment in Nevada; operating risk arising from Nevada Power's dependence on wholesale markets for over 50% of its energy requirements; and the substantially weakened financial profile resulting from the disallowance in 2002 by the Public Utility Commission of Nevada of $434 million in deferred power costs for Nevada Power and $56 million for SPP. The recent federal court decision denying Nevada Power's request to recover the $437 million disallowed by the PUCN did not affect ratings, since Standard & Poor's had not factored into the current ratings any positive outcome from the litigation. STANSBURY HOLDINGS: Taps Sellers and Andersen as Accountants ------------------------------------------------------------ New management of Stansbury Holdings Corporation (OTC Pink Sheets: STBY) announced that the Company has been reinstated and is in good standing with its State of Domicile. President Michael J. Healey said, "Becoming compliant with the past filings required to be reinstated by the State of Utah is moving the Company in the right direction. With these matters accomplished, we can focus additional energy on reopening the operations at our Sweetwater Garnet milling facility. The Company owns a state-of-the-art Garnet milling facility in Montana. There is significant demand for the type of product our facility can produce. I am committed to establishing the Company's facility as a respected producer in the industry. This is also the most certain way we can establish shareholder value, to which I am totally committed." Although the Company still has outstanding SEC filings to be completed, the accounting firm of Sellers and Andersen, LLC, Certified Public Accountants and Business Consultants of Salt Lake City, Utah, has recently been engaged to prepare the audited financial statements of the Company for the periods ending June 30, 2002 and 2003. The Company also announced that due to other obligations, Jeff Wertz had resigned from the Board of Directors, effective March 31, 2003. Mr. Wertz resigned with regret, but has agreed to continue to support the Company by providing services needed for internal accounting. Mr. Healey is in the process of selecting a replacement for Mr. Wertz on the Board of Directors. Stansbury Holdings Corporation was incorporated in 1969 under the name Stansbury Mining Corporation. In 1985, Stansbury changed its name to Stansbury Holdings Corporation. Stansbury, and its wholly owned subsidiaries, are: Elk Creek Vermiculite, Inc., Dillon Vermiculite Limited LLC, International Vermiculite (Montana), Inc., International Vermiculite (California), Inc., and Sweetwater Garnet, Inc., The Company's business is the acquisition, exploration, development and operations of industrial mineral properties, particularly vermiculite and garnet mineral projects. The Company emerged from Chapter 11 bankruptcy proceedings during 1985, and was non-operating until June, 2000. At March 31, 2002, it's negative working capital was approximately $8.4 million, and accumulated deficit was approximately $17.1 million. There can be no assurances that the Company will be successful in obtaining the financing necessary to develop its mineral reserves. Nor can there be any assurances that other sources of funds can be obtained to cover general and administrative costs. As previously reported, the Company's previous independent public accountants included a "going concern" emphasis paragraph in their audit report accompanying the June 30, 2001, consolidated financial statements reported in the Company's 10K- SB for that reporting period. The paragraph stated that the Company's recurring losses and negative working capital raised substantial doubt about the Company's ability to continue as a going concern. TEMBEC INC: Unit Completes Exchange Offer for 8.625% Sr. Notes -------------------------------------------------------------- Tembec Industries Inc., a wholly-owned subsidiary of Tembec Inc., completed its offer to exchange its 8.625% Senior Notes due June 30, 2009, which were registered under U.S. securities laws, for its 8.625% Senior Notes due June 30, 2009 that were issued on March 14, 2003. * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on diversified paper and forest products producer Tembec Inc., to negative from stable. At the same time, the ratings outstanding on the Temsicaming, Quebec-based company, including the double-'B'-plus long-term corporate credit rating, were affirmed. The outlook revision stemmed from protracted weakness in Tembec's credit measures that is unlikely to subside in the near term due to weakened market conditions across all paper and forest products grades. TIMES SQUARE HOTEL: S&P Lowers & Removes BB+ Rating from Watch -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Times Square Hotel Trust's mortgage and lease amortizing certificates to 'BB+' from 'BBB-' and removed it from CreditWatch with negative implications, where it was placed Dec. 20, 2002. The outlook is stable. The rating action follows the lowering of Starwood Hotels & Resorts Worldwide Inc.'s credit rating to 'BB+' from 'BBB-' on May 6, 2003. The transaction's rating is based on the payments and obligations of Starwood pursuant to a triple net lease of the W New York-Times Square Hotel. The Times Square Hotel Trust rating is dependent upon the credit rating of Starwood. TITANIUM METALS: Valhi Begins Tender Offer for Preferred Shares --------------------------------------------------------------- Titanium Metals Corporation (NYSE: TIE) announced that on May 5, 2003, Valhi, Inc. (NYSE: VHI) commenced a tender offer to purchase up to 1,000,000 of the 6-5/8% Convertible Preferred Securities, Beneficial Unsecured Convertible Securities (trading symbol: "TMCXP") issued by TIMET Capital Trust I. The tender offer is at a net price of $10 per security. The securities include the associated guarantee by TIMET. There are currently 4,024,820 securities outstanding. Each security is convertible into 0.1339 shares of TIMET common stock, par value $.01 per share. The tender offer expires at 12:00 midnight New York time on June 2, 2003, unless extended by Valhi. The terms and conditions of the tender offer appear in Valhi's Offer to Purchase dated May 5, 2003, and the related Letter of Transmittal. Copies of these documents are being mailed to holders of the securities and are also available on the website of the Securities and Exchange Commission at http://www.sec.gov Completion of the tender offer is conditioned upon certain terms and conditions described in the Offer to Purchase. Subject to applicable law, Valhi may waive any condition applicable to the tender offer, and Valhi may extend or otherwise amend the tender offer. Based on a review by TIMET's non-employee directors not related to Valhi, TIMET has determined that neither TIMET, its board of directors nor any of its officers will express an opinion or make any recommendation to any holder of the securities, and TIMET and all of such persons will remain neutral toward the tender offer. TIMET believes that a holder's decision on whether or not to tender such holder's securities and, if so, how many securities to tender, is a personal investment decision for each holder, based on such holder's personal investment objectives. TIMET believes that each holder should discuss this investment decision with such holder's financial and tax advisors. TIMET recommends that holders of the securities read the TIMET board's solicitation/recommendation statement regarding the proposed Valhi tender offer, which has been filed by TIMET with the Securities and Exchange Commission and is being mailed to all holders of the securities. Holders may obtain, without charge, a copy of the solicitation/recommendation statement filed with the SEC on the SEC's internet site at http://www.sec.gov Holders may also obtain, without charge, a copy of the solicitation/recommendation statement by calling TIMET's investor relations department at (303) 296-5600 or by calling Innisfree M&A Incorporated, toll-free at (888) 750-5834. TIMET, headquartered in Denver, Colorado, is a leading worldwide producer of titanium metal products. Information on TIMET is available on the Internet at http://www.timet.com * * * As reported in Troubled Company Reporter's October 31, 2002 edition, Standard & Poor's lowered its preferred stock rating on Titanium Metals Corp., to single-'C' from triple-'C'- minus. Standard & Poor's also affirmed its single-'B'-minus corporate credit rating on the company. The outlook remains negative. TREND HOLDINGS: Taps Atlas Partners and Grubb & Ellis as Agents --------------------------------------------------------------- Gruppo Antico, Inc. (f/k/a Trend Holdings, Inc.) has retained Atlas Partners and Grubb & Ellis/Lewinger Hamilton, Inc. of Albuquerque, New Mexico as its exclusive agents for the disposition of its remaining major asset -- a 52,565 square foot, industrial building situated on 6 acres in Albuquerque, New Mexico. Trend Holdings, Inc., processes plastics, stamps metal and performs electromechanical assembly of electronic enclosures in facilities around the world. The company and its affiliates filed for Chapter 11 protection on November 7, 2002, (Bankr. Del. Case No. 02-13283). Laura Davis Jones, Esq., Christopher James Lhulier, Esq., Brad R. Godshall, Esq., Jeffrey Dulberg, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtors in their restructuring efforts. TRITON PCS: March 31 Net Capital Deficit Widens to $192 Million --------------------------------------------------------------- Triton PCS Holdings, Inc. (NYSE: TPC) reported strong first- quarter results with a 26% increase in Adjusted EBITDA from a year earlier to $45.3 million, a 20% rise in revenue to $188.5 million and a churn rate of 2.1%. Gross new customer additions rose to a first-quarter record of 85,300. The results reflect a continued focus on attracting and retaining quality post-pay subscribers, combined with diligence in controlling costs. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $192 million. "With our solid first-quarter results, we are delivering on our commitment to grow Adjusted EBITDA while providing leading-edge performance across a range of key metrics," said Michael E. Kalogris, Triton PCS chairman and chief executive officer. "We achieved Adjusted EBITDA of $45.3 million, after a $2.2 million one-time charge related to a first quarter workforce reduction. Churn declined to 2.1%, bringing us back to pre-billing conversion levels, and we experienced an increase of nearly $1 in our average revenue per user to $53.52 in the first quarter as compared with the fourth quarter of 2002." Kalogris said, "We continue to attract unprecedented levels of customers to our enormously popular SunCom UnPlan, which should benefit our ARPU and churn throughout the year. We believe we are gaining a solid share of high-value switchers because of UnPlan's exceptional value proposition, supported by the superior performance of our network." Kalogris said the company's focus on cost control also contributed to the strong first-quarter results. "Our general and administrative expense per user declined 17% from a year earlier, largely from improved bad debt, improved leverage of fixed costs and cost savings from the workforce reduction. Our cost per gross addition declined by 9% from the same period last year as we continue to emphasize sales through company-owned channels," he said. "In addition, our capital and liquidity position remains sound with $425.9 million of cash and available borrowings at quarter end." Separately, the company announced the retirement of Triton PCS President and Chief Operating Officer Steve Skinner, effective June 30. Skinner's responsibilities will be assumed by Kalogris while a search for his replacement is conducted. "Steve Skinner, my partner in three successful companies including the founding of Triton PCS, has played a key role in the vision, development and growth of one of the finest, best- managed wireless companies in the United States," Kalogris said. "With his leadership, Triton PCS today boasts the highest- quality network in the Southeast, the finest customer service, innovative service offerings and a broad distribution network. He leaves an enviable legacy - a strong company, built on a solid foundation and well-positioned for continued growth and success." Skinner said, "Working with Mike to create and build Triton PCS - in an industry I love and have worked in for nearly 20 years - has been an extraordinary, once-in-a-lifetime experience. I believe our core strategy to provide superior quality and service has been validated consistently and will continue to drive success." Skinner noted that the company this month began offering commercial service on its GSM/GPRS network in its Richmond, Norfolk and Fredericksburg, Virginia, markets. He said the company plans to expand commercial service to all of its remaining markets in Virginia in June and has already begun carrying GSM roaming traffic on the company's network. "The GSM/GPRS network overlay performed extremely well in our trials in Richmond, Norfolk and Fredericksburg, and we are pleased to formally begin offering commercial service, which will offer a range of advanced features and further enhance the value of our wireless service for our customers," Skinner said. Recent Events NEXCOM Contract Award. The company was once again awarded a two-year contract by the Navy Exchange Service Command and the Marine Corps Community Services to be the provider of digital wireless services in 12 Southeast military exchanges serving the Navy and Marine Corps. The company was first selected in 2000 by NEXCOM to provide kiosks at exchange locations where members of the armed services can shop for wireless equipment and service at the same time they purchase other goods and services. "SunCom's partnership with NEXCOM and MCCS in the Southeast is a natural fit because we have such a large military presence in our markets," Skinner said. "We are proud to be able to continue to deliver our superior network coverage, expert customer care and overall flexibility to meet the unique needs of our nation's military." Senior Credit Facility Amendment. Triton PCS announced that it recently amended its senior credit facility. As part of the transaction, Triton PCS reduced its facility to approximately $300 million, and amended certain restrictive covenants to provide greater flexibility. David Clark, Triton PCS executive vice president and chief financial officer, said, "This amendment accomplishes a number of important objectives. First, it allows us to avoid the cost of borrowing the additional $115 million that is required in June. It also amends restrictive covenants - financial and other - to balance the banks' control to the level of risk they have in the capital structure, and finally, it ensures continued strong liquidity of approximately $300 million after giving effect to the changes." Financial Highlights First-quarter 2003 total revenue increased 20.3% year-over-year to $188.5 million, driven by continued growth in service revenues and roaming revenues of 15.6% and 21.8%, respectively. Cash costs per user declined 7.0% sequentially and 4.6% year- over-year to $37 in the quarter. The 18% and 17%, respective sequential and year-over-year decline in general and administrative expense per user was the key contributor to the decline in total cash costs per user. General and administrative expense per user declined as a result of an improved bad debt expense ratio, cost savings from workforce reductions and better leveraging of fixed costs. The company's bad debt as a percent of service revenue, which included recovery of previously written-off receivables, dropped to 1.9% from 6.2% in the fourth quarter. Cost per gross addition of $406 showed an improvement of 9% from $446 a year ago due to emphasis of sales through company-owned channels. Adjusted EBITDA of $45.3 million, after a $2.2 million restructuring charge, increased 33.5% sequentially and increased 25.8% compared with the first quarter of 2002. The company's Adjusted EBITDA margin improved 5.7% from the fourth quarter and 1.8% year-over-year. Gross subscriber additions totaled 85,300, the company's best first quarter ever, representing a 16.5% increase compared with the first quarter of last year. The company added 31,495 net subscriber additions in the quarter, ending the quarter with 861,654 subscribers, a 19.8% increase from the first quarter of 2002. The company reported churn of 2.12%, its lowest level since the second quarter of 2002. Churn decreased from 2.45% in the fourth quarter of 2002. The company expects churn to remain in the low 2% range for the full year of 2003. ARPU increased nearly $1 from the fourth quarter to $53.52. The increase in ARPU reflects a partial quarter benefit from price increases initiated in February. The company expects further improvements in ARPU throughout the year. Roaming minutes totaled 239 million minutes for the quarter, representing an increase of 38% from 173 million minutes from the first quarter of 2002. Capital expenditures were $18.9 million in the first quarter related to both the expansion of the company's GSM/GPRS network migration as well as for capacity expansion of its TDMA network. The company's full-year expectation for capital expenditures remains between $120 million and $140 million. The company ended the quarter with $425.9 million of available liquidity, comprised of $210.9 million in cash and $215.0 million of undrawn borrowings under its senior credit facility. Triton PCS, based in Berwyn, Pennsylvania, is an award-winning wireless carrier providing service in the Southeast. The company markets its service under the brand SunCom, a member of the AT&T Wireless Network. Triton PCS is licensed to operate a digital wireless network in a contiguous area covering 13.6 million people in Virginia, North Carolina, South Carolina, northern Georgia, northeastern Tennessee and southeastern Kentucky. For more information on Triton PCS and its products and services, visit the company's websites at: http://www.tritonpcs.com and http://www.suncom.com UNITED AIRLINES: Revenue Passenger Miles Tumble 13.4% in April -------------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) reported its traffic results for April 2003. Total scheduled revenue passenger miles declined in April by 13.4 percent vs. the comparable month in 2002, while the passenger load factor dropped by 0.6 points to 71.4 percent vs. 72.0 percent last year. Available seat miles were down by 12.6 percent. April traffic results were negatively impacted by the Iraq war and concerns over SARS (Severe Acute Respiratory Syndrome). United operates more than 1,500 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company's Web site at http://www.united.com United Airlines' 10.670% bonds due 2004 (UAL04USR1) are trading at about 7 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. US STEEL: Increased Fin'l Risk Prompts S&P to Cut Rating to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on integrated steel producer United States Steel Corp. to 'BB-' from 'BB' based on concerns about the firm's increased financial risk. Standard & Poor's said that it has removed its ratings on Pittsburgh, Pennsylvania-based United States Steel from CreditWatch, where they were placed with negative implications on Jan. 9, 2003. The current outlook is negative. The company had about $1.7 billion in lease-adjusted debt at March 31, 2003. At the same time, Standard & Poor's said it has assigned its 'BB-' rating to United States Steel Corp.'s proposed $350 million senior notes due 2010. "The rating actions reflect U.S. Steel's heightened financial risk resulting from increases in its debt levels and substantial legacy liabilities as well as continued weakness in the steel industry" said Standard & Poor's credit analyst Paul Vastola. Standard & Poor's said that its ratings on United States Steel reflect the company's aggressive financial leverage--including its underfunded postretirement benefit obligations--and challenging market conditions, which overshadow its fair liquidity and its improved market share and cost position. The company also benefits from a product mix that is more 7diverse than that of its competitors. U.S. UNWIRED: Will Publish First-Quarter 2003 Results on Thurs. --------------------------------------------------------------- US Unwired Inc. (OTC Bulletin Board:UNWR) will report its and IWO Holding's first quarter 2003 results on Thursday, May 15, 2003, after the close of the Nasdaq Stock Market. US Unwired will provide an online Web simulcast of its first quarter of 2003 earnings conference call on Friday, May 16, 2003. During this call, management will review US Unwired's financial and operational results for the first quarter ended March 31, 2003. The live broadcast of US Unwired's conference call will begin at 11:00 a.m. Eastern Time on May 16, 2003. An online replay will be available approximately one hour following the conclusion of the live broadcast and will continue through May 31, 2003. Links to these events can be found at the Company's Web site at http://www.usunwired.com If Internet access is unavailable, investors and other interested parties may listen to the teleconference by calling 888-694-4502. The teleconference will be available for replay until May 23, 2003, by calling 973-341- 3080, and entering 3895707 when prompted for the pin number. US Unwired Inc., headquartered in Lake Charles, La., holds direct or indirect ownership interests in five PCS affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 67 markets, currently serving over 500,000 PCS customers. US Unwired's PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New York, Pennsylvania, and Vermont. In addition, US Unwired provides cellular and paging service in southwest Louisiana. For more information on US Unwired and its products and services, visit the company's Web site at http://www.usunwired.com US Unwired is traded on the OTC Bulletin Board under the symbol "UNWR". As reported in Troubled Company Reporter's April 17, 2003 edition, Standard & Poor's Ratings Services placed its 'CCC' corporate credit rating and other ratings on Sprint PCS affiliate US Unwired Inc., on CreditWatch with negative implications. At the same time, the ratings on US Unwired subsidiary IWO Holdings Inc. were lowered and also placed on CreditWatch with negative implications. The rating actions were based on the companies' dwindling liquidity and bank covenant compliance problems. The auditors for US Unwired and IWO have also expressed substantial doubt about the companies' abilities to continue as going concerns. Standard & Poor's is concerned about the rising likelihood of balance sheet restructurings that result in bond holders receiving less than accreted par value, or bankruptcy filings. Both US Unwired and IWO expect to be in violation of covenants on their bank credit facilities in 2003 and could lose access to these sources of liquidity. Without additional bank borrowing, IWO will have insufficient cash to continue the network buildout required under its agreement with Sprint PCS and could be declared in default on the agreement. In an attempt to maintain liquidity, IWO is discussing a financial restructuring plan with its bank lenders and noteholders. VISUAL DATA CORP: Completes Three-Part Financing Transaction ------------------------------------------------------------ Visual Data Corporation (Nasdaq: VDAT) has completed a three part financing transaction with a private investor that will result in additional funding to the Company of $1,950,000, of which $950,000 is available immediately and $1,000,000 will be restricted. In addition, the Company restructured $1,050,000 of short-term debt. As part of the transaction, the Company restructured a presently outstanding promissory note of $1,050,000 held by Frederick DeLuca, which amount will be included in a new three-year $3,000,000 promissory note, payable in interest only, on a quarterly basis at a rate of 5.25%. Visual Data will immediately receive a total of $950,000 in new funding from the transaction of which $600,000 has already been received. The remaining $1,000,000 from the new note issued will be deposited into an escrow account and will be available to the Company at the discretion of Mr. DeLuca. In addition, 140,000 shares of Series A-8 Company Preferred Stock are to be issued to Mr. DeLuca in accordance with the transaction. Moreover, an additional 110,000 shares of Series A- 8 Company Preferred Stock are to be issued in exchange for approximately 2.2 million shares of common stock presently held by Mr. DeLuca. The Series A-8 Preferred Stock has a conversion ratio of 20 shares of common for each share of preferred and bears no interest or dividend. Approximately $450,000 of the $600,000 advance payment has been used to settle over $1.3 million in obligations of the Company, which includes leases, notes and other payables. Additionally, the new financing transaction will effectively convert the $1,050,000 outstanding on the prior promissory note from short- term debt to long-term debt. The net effect of the financing transaction and the settlement of the debts and other obligations will have a positive effect on the Company's balance sheet and substantially reduce the Company's monthly debt service. Visual Data Corporation -- http://www.vdat.com-- is a business services provider, specializing in meeting the webcasting needs of corporations, government agencies and a wide range of organizations, as well as providing audio and video transport and collaboration services for the entertainment, advertising and public relations industries. WESTAR ENERGY: Board Declares Quarterly Preferred Share Dividend ---------------------------------------------------------------- The Westar Energy, Inc. (NYSE:WR) Board of Directors declared a second-quarter dividend of 19 cents per share payable July 1, 2003, on the company's common stock. The board also declared regular quarterly dividends on the company's 4.25 percent, 4.5 percent and 5 percent series preferred stocks payable July 1, 2003. The dividends are payable to shareholders of record as of June 9, 2003. Westar Energy, Inc. (NYSE:WR) is the largest electric utility in Kansas and owns interests in monitored security and other investments. Westar Energy provides electric service to about 647,000 customers in the state. Westar Energy has nearly 6,000 megawatts of electric generation capacity and operates and coordinates more than 36,600 miles of electric distribution and transmission lines. The company has total assets of approximately $6.4 billion, including security company holdings through ownership of Protection One, Inc. (NYSE:POI) and Protection One Europe, which have approximately 1.1 million security customers. Through its ownership in ONEOK, Inc. (NYSE:OKE), a Tulsa, Okla.-based natural gas company, Westar Energy has a 27.4 percent interest in one of the largest natural gas distribution companies in the nation, serving more than 1.4 million customers. For more information about Westar Energy, visit http://www.wr.com * * * As reported in Troubled Company Reporter's April 2, 2003 edition, Standard & Poor's Ratings Services said that its ratings on Westar Energy Inc. (BB+/Developing/--) and subsidiary Kansas Gas & Electric Co. (BB+/Developing/--) would not be affected by the company's announcement of an annual loss of $793.4 million in 2002. The bulk of this charge had already been recorded in the first quarter of 2002 and relates to valuation adjustments for the impairment of goodwill and other intangible assets associated with 88%-owned Protection One Alarm Monitoring Inc., Westar Energy's monitored security business. The credit outlook is developing, indicating that ratings may be raised, lowered, or affirmed. Upward ratings potential is solely related to the Kansas Corporation Commission's approval of Westar Energy's plan to reduce its onerous debt burden and become a pure-play utility, as well as successful implementation of Westar Energy's proposed transactions. Downside ratings momentum recognizes the company's frail financial condition coupled with execution risk of the plan, including possible KCC rejection of the plan. WHEREHOUSE: Wants to Stretch Plan Exclusivity through August 19 --------------------------------------------------------------- Wherehouse Entertainment, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware to give them more time to prepare and file a chapter 11 plan. The Debtors tell the Court that they need until August 19, 2003 to file their plan of reorganization and until October 28, 2003 to solicit acceptances of that plan from their creditors. The company wants to maintain its exclusive right to do so under 11 U.S.C. Sec. 1121(d). The Debtors assert that their progress in these cases warrants an extension of the exclusive periods. Since the commencement of these cases, the majority of the Debtors' time and efforts have been devoted to a massive operational restructure and the creation of a business plan for the restructured enterprise - substantial tasks in cases of this size and complexity. To accomplish these tasks, the Debtors have devoted substantial time to an in-depth analysis of the Debtors' operations, including the historical and projected productivity of individual stores Based on the results of this analysis and the Debtors' evaluation of market and industry trends, the Debtors developed a business plan projecting cash flow requirements through fiscal year end, which formed the basis for the budgets on which the Debtors' post petition financing facility is based. The Debtors add that they are well underway in their efforts to implement key components of this plan. In addition, the Debtors have made significant progress in stabilizing their business operations and transitioning to operations in chapter 11 through: a) the implementation of the various forms of relief granted by this Court on the Petition Date to allow the Debtors to maintain business as usual to the fullest extent possible; b) the retention of professionals and consultants necessary to the Debtors' reorganization efforts in addition to counsel; c) the negotiation and documentation of the DIP Facility, which is being submitted for approval concurrently with this motion; d) the negotiation and approval of a key employee retention program to stabilize the Debtors' workforce; and e) the completion of the complex and time-consuming process of preparing and filing the Debtors' Schedules. Wherehouse Entertainment, Inc., sells prerecorded music, videocassettes, DVDs, video games, personal electronics, blank audio cassettes and videocassettes, and accessories. The Company filed for chapter 11 protection on January 20, 2003, (Bankr. Del. Case No. 03-10224). Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $227,957,000 in total assets and $222,530,000 in total debts. WORLDCOM INC: Wants Nod for Proposed Solicitation Procedures ------------------------------------------------------------ Pursuant to Sections 105, 502, 1125, 1126, and 1128 of the Bankruptcy Code and Rules 2002, 3017, 3018, and 3020 of the Federal Rules of Bankruptcy Procedure, Worldcom Inc., and its debtor-affiliates seek a Court order: (i) fixing a record date; (ii) approving the Solicitation Packages and procedures for distribution; (iii) approving the forms of ballots and establishing procedures for voting on the Plan; and (iv) scheduling a hearing and establishing notice and objection procedures in respect of confirmation of the Plan. Fixing A Record Date Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, informs the Court that the record date is typically the date an order approving the disclosure statement is entered. Nevertheless, to set a record date, the record holders of the Debtors' securities need advance notice to enable those responsible for assembling ownership lists of the Debtors' public securities to compile a list of holders as of a certain date. Accurate lists often cannot be prepared retroactively as to ownership on a prior date. Accordingly, the Debtors ask the Court to exercise its power under Section 105(a) of the Bankruptcy Code to establish the 4th business day after entry of the proposed order granting this request as the record date for purposes of determining the creditors that are entitled to vote on the Plan or, in the case of non-voting classes, for purposes of determining the creditors and interest holders to receive certain non-voting materials. Solicitation Packages and Distribution Procedures After the Court has approved the Proposed Disclosure Statement as containing adequate information required by Section 1125 of the Bankruptcy Code, the Debtors will distribute solicitation packages containing copies of: (i) the Proposed Order; (ii) the Confirmation Hearing Notice; (iii) either a Ballot and Master Ballot together with a return envelope and the Disclosure Statement, or a Notice of Non-Voting Status, as applicable; and (iv) any other materials as the Court may direct. The Debtors expect that they will be able to complete distribution of the Solicitation Packages no later than the date that is 15 days after the entry of the Proposed Order to: (i) all persons or entities identified in the Debtors' schedules of liabilities filed, and all amendments and modifications thereto, through and including the Record Date as holding liquidated, non-contingent, and undisputed claims, in an amount greater than zero; (ii) all parties having filed proofs of claims in an amount greater than zero or notices of transfer of claims in the Debtors' Chapter 11 cases; (iii) the registered holders of the Debtors' debt and equity securities as of the Record Date; and (iv) any other known holders of claims against or equity interests in the Debtors as of the Record Date. In addition, the Debtors will distribute by the Solicitation Date the Proposed Order, the Confirmation Hearing Notice, the Disclosure Statement and any other materials as the Court may direct to: (i) the U.S. Trustee; (ii) the attorneys for the Committee; (iii) attorneys for the Debtors' postpetition lenders; (iv) the Securities and Exchange Commission; (v) the Internal Revenue Service; and (vi) all parties that the Debtors are required to serve pursuant to this Court's Order, dated December 23, 2002, establishing notice procedures in these Chapter 11 cases. Consistent with Sections 1126(f) and (g) of the Bankruptcy Code and Bankruptcy Rule 3017(d), Ms. Goldstein relates that Solicitation Packages for holders of claims against or equity interests in the Debtors within a class under the Plan that is deemed to accept or reject the Plan will not include a Ballot. In addition, the Debtors ask the Court to determine that they are not required to distribute copies of the Plan or Disclosure Statement to any holder of a claim against or equity interest in the Debtors within a class under the Plan that is deemed to accept or reject the Plan, unless this party makes a specific request in writing. The Debtors also propose that Solicitation Packages not be sent to creditors who have timely filed proofs of claim for amounts less than or equal to the amounts scheduled for these claims by the Debtors if the claims have already been paid in the full scheduled amount; provided, however, if, and to the extent that, any creditor would be entitled to receive a Solicitation Package for any reason other than by virtue of the fact that its claim had been scheduled by the Debtors, the creditor will be sent a Solicitation Package in accordance with these procedures. The Debtors anticipate that some notices of the Disclosure Statement Hearing may be returned by the United States Postal Service as undeliverable. The Debtors believe that it would be costly and wasteful to distribute Solicitation Packages to the same addresses to which undeliverable Disclosure Statement Hearing Notices were distributed. Therefore, the Debtors seek the Court's approval for a departure from the strict notice rule, excusing the Debtors from distributing Solicitation Packages to those entities listed at these addresses unless they are provided with accurate addresses for these entities before the Solicitation Date. Forms of Ballots and Master Ballots Ms. Goldstein relates that the Debtors will distribute to certain creditors one or more Ballots based on Official Form No. 14, but have been modified to address the particular aspects of these Chapter 11 cases and to include certain additional information that are relevant and appropriate for each class of claims that is entitled to vote to accept or reject the Plan. The appropriate Ballot forms will be distributed to holders of claims in Class 2 Secured Tax Claims, Class 4 Convenience Claims, Class 5 WorldCom Senior Debt Claims, Class 6 WorldCom General Unsecured Claims, Class 9 MCIC Senior Debt Claims, Class 11 Intermedia Senior Debt Claims, Class 12 Intermedia General Unsecured Claims, and Class 13 Intermedia Subordinated Debt Claims. All other classes are either unimpaired and conclusively presumed to have accepted the Plan, or will receive no distribution and are deemed to have rejected the plan. Specifically, with respect to the Ballots that will be sent to holders of claims in Classes 5, 9, 11, and 13, the Debtors will deliver Ballots to record holders of such claims, including, without limitation, brokers, banks, dealers, or other agents or nominees. Each Voting Nominee would be entitled to receive reasonably sufficient numbers of Solicitation Packages to distribute to the beneficial owners of the claims for whom the Voting Nominee acts, and the Debtors will be responsible for each Voting Nominee's reasonable, actual, and necessary out-of- pocket expenses associated with the distribution of the Solicitation Packages to the beneficial owners of these claims and tabulation of the Ballots. According to Ms. Goldstein, a Voting Nominee has two options with respect to voting. Under the first option, the Voting Nominee will forward the Solicitation Package to each beneficial owner of the debt securities entitled to vote on the Plan for voting and include a return envelope provided by and addressed to the Voting Nominee so that the beneficial owner may return the completed beneficial owner ballot to the Voting Nominee. The Voting Nominee will then summarize the individual votes of its beneficial owners from their beneficial owner Ballots on the appropriate master ballot and then return the Master Ballot to the Debtors' solicitation and tabulation agent. Under the second option, if the Voting Nominee elects to "pre- validate" Ballots: A. the Voting Nominee will forward the Solicitation Package or copies thereof to the beneficial owner within five business days of the receipt by the Voting Nominee of the Solicitation Package; B. to "pre-validate" a ballot, the Voting Nominee should complete and execute the Ballot and indicate on the Ballot the name of the registered holder, the amount of securities held by the Voting Nominee for the beneficial owner and the account number(s) for the account(s) in which the securities are held by the Voting Nominee; and C. the beneficial owner will return the pre-validated Ballot to the Debtors' solicitation and tabulation agent by the Voting Deadline. These procedures adequately recognize the complex structure of the securities industry, enable the Debtors to transmit materials to the holders of their publicly traded securities, and afford beneficial owners of the Voting Securities a fair and reasonable opportunity to vote. The Debtors anticipate commencing the solicitation period within 15 days after the entry of the Proposed Order. Based on this schedule, the Debtors propose that in order to be counted as a vote to accept or reject the Plan, each Ballot must be properly executed, completed, and delivered to the Debtors' solicitation and tabulation agent so as to be received by the Debtors' solicitation and tabulation agent no later than 4:00 p.m. (Eastern Time) on the date that is 12 days prior to the date of the Confirmation Hearing, which is 60 days after the Solicitation Date. The Debtors submit that the solicitation period is a sufficient period within which creditors can make an informed decision to accept or reject the Plan. The Debtors propose that each holder of a claim within a class of claims entitled to vote to accept or reject the Plan be entitled to vote the amount of the claim as set forth in the Schedules unless the holder has timely filed a proof of claim, in which event the holder would be entitled to vote the amount of claim as set forth in this proof of claim. This general procedure will be subject to these exceptions: A. If a claim is deemed allowed under the Plan, the claim is allowed for voting purposes in the deemed allowed amount set forth in the Plan; B. If a claim for which a proof of claim has been timely filed is, by its terms, contingent, unliquidated, or disputed, the Debtors propose that such claim be temporarily allowed for voting purposes only, and not for purposes of allowance or distribution, at $1; C. If a claim has been estimated or otherwise allowed for voting purposes by Court order, the claim is temporarily allowed in the amount so estimated or allowed by the Court for voting purposes only, and not for purposes of allowance or distribution; D. If a claim is listed in the Schedules as contingent, unliquidated, or disputed and a proof of claim was not: (i) filed by the applicable bar date for the filing of proofs of claim established by the Court, or (ii) deemed timely filed by a Court order prior to the Voting Deadline, unless the Debtors have consented in writing, the Debtors propose that the claim be disallowed for voting purposes and for purposes of allowance and distribution; and E. If the Debtors have served an objection to a claim at least 20 days before the Voting Deadline, the Debtors propose that the claim be temporarily disallowed for voting purposes only and not for purposes of allowance or distribution, except to the extent and in the manner as may be set forth in the objection. Ms. Goldstein believes that these procedures provide for a fair and equitable voting process. If any creditor seeks to challenge the allowance of its claim for voting purposes in accordance with these procedures, the Debtors ask the Court to direct the creditor to serve on the Debtors and file with the Court a motion for an order pursuant to Bankruptcy Rule 3018(a) temporarily allowing the claim in a different amount for purposes of voting to accept or reject the Plan on or before the 10th day after the later of the date of service of the Confirmation Hearing Notice and the date of service of notice of an objection, if any, to the claim. The Debtors further propose that as to any creditor filing this motion, the creditor's Ballot should not be counted unless temporarily allowed by the Court for voting purposes, after notice and a hearing. The Debtors also request that: (i) whenever a creditor casts more than one Ballot or Master Ballot voting the same claim(s) before the Voting Deadline, the last Ballot or Master Ballot received before the Voting Deadline be deemed to reflect the voter's intent and, thus, to supersede any prior Ballots or Master Ballots; and (ii) creditors must vote all of their claims within a particular class under the Plan, whether or not these claims are asserted against the same or multiple Debtors, either to accept or reject the Plan and may not split their votes, and thus a Ballot that partially rejects and partially accepts the Plan will not be counted. The Debtors further propose that these Ballots not be counted or considered for any purpose in determining whether the Plan has been accepted or rejected: (i) any Ballot that is properly completed, executed, and timely returned to the solicitation and tabulation agent, but does not indicate an acceptance or rejection of the Plan, or that indicates both an acceptance and rejection of the Plan; (ii) any Ballot received after the Voting Deadline unless the Debtors will have granted in writing an extension of the Voting Deadline with respect to the Ballot; (iii) any Ballot that is illegible or contains insufficient information to permit the identification of the claimant; (iv) any Ballot cast by a person or entity that does not hold a claim in a class that is entitled to vote to accept or reject the Plan; (v) any Ballot cast for a claim scheduled as unliquidated, contingent, or disputed for which no proof of claim was timely filed; (vi) any unsigned Ballot; and (vii) any Ballot transmitted to the Debtors' solicitation and tabulation agent by facsimile or other electronic means. With respect to the tabulation of Master Ballots and Ballots cast by Voting Nominees and beneficial owners, for purposes of voting, Ms. Goldstein states that the amount that will be used to tabulate acceptance or rejection of the Plan will be the principal amount held as of the Record Date. These additional rules will apply to the tabulation of Master Ballots and Ballots cast by Voting Nominees and beneficial owners: A. Votes cast by beneficial owners through a Voting Nominee will be applied against the positions held by these entities in the applicable security as of the Record Date, as evidenced by the record and depository listings. Votes submitted by a Voting Nominee, whether pursuant to a Master Ballot or pre-validated Ballots, will not be counted in excess of the Record Amount of such securities held by the Voting Nominee. B. To the extent that conflicting votes or "overvotes" are submitted by a Voting Nominee, whether pursuant to a Master Ballot or pre-validated Ballots, the Debtors' solicitation and tabulation agent will attempt to reconcile discrepancies with the Voting Nominees. C. To the extent that overvotes on a Master Ballot or pre- validated Ballots are not reconcilable prior to the preparation of the vote certification, the Debtors' solicitation and tabulation agent will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or pre-validated Ballots that contained the overvote, but only to the extent of the Voting Nominee's position in the applicable security. E. For purposes of tabulating votes, each Voting Nominee or beneficial owner will be deemed to have voted the principal amount of its Claim relating to this security. Notice and Objection Procedures In accordance with Bankruptcy Rule 3017(c) and in view of the Debtors' proposed solicitation schedule, the Debtors request that a hearing on confirmation of the Plan be scheduled, subject to the Court's calendar, on a date that is not less than 85 days from the date of entry of the Proposed Order. The Confirmation Hearing may be continued from time to time by the Court or the Debtors without further notice other than adjournments announced in open court. The proposed timing for the Confirmation Hearing is in compliance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules, and will enable the Debtors to pursue confirmation of the Plan in a timely fashion. In accordance with Bankruptcy Rules 2002 and 3017(d), the Debtors propose to provide to all creditors and equity security holders a Confirmation Hearing Notice, setting forth: (i) the date of approval of the Proposed Disclosure Statement; (ii) the Record Date; (iii) the deadline for the submission of Ballots to accept or reject the Plan; (iv) the time fixed for filing objections to confirmation of the Plan; and (v) the time, date, and place for the Confirmation Hearing. In addition to mailing the Confirmation Hearing Notice, the Debtors will publish the Confirmation Hearing Notice, not less than 25 days before the deadline to file objections to confirmation of the Plan, in The Wall Street Journal (National Edition), The New York Times (National Edition), The Washington Post (National Edition), and The Clarion-Ledger. Additionally, the Debtors will publish the Confirmation Hearing Notice electronically on the independent website authorized by the Case Management Order, http://www.elawforWorldCom.com The Debtors believe that publication of the Confirmation Hearing Notice will provide sufficient notice of the approval of the Proposed Disclosure Statement, the Record Date, the Voting Deadline, the time fixed for filing objections to confirmation of the Plan, and the time, date, and place of the Confirmation Hearing to persons who do not otherwise receive notice by mail as provided for in the Proposed Order. The Confirmation Hearing Notice provides, and the Debtors ask the Court to direct that, objections to confirmation of the Plan or proposed modifications to the Plan, if any, must: (i) be in writing, (ii) state the name and address of the objecting party and the amount and nature of the claim or interest of the party, (iii) state with particularity the basis and nature of any objection to the Plan, and (iv) be filed, together with proof of service, with the Court and served so that they are received no later than 4:00 p.m. (Eastern Time), on the date that is 10 days prior to the date of the Confirmation Hearing. Ms. Goldstein contends that the timing for filing and service of objections and proposed modifications, if any, will afford the Court, the Debtors, and other parties-in-interest sufficient time to consider the objections and proposed modifications prior to the Confirmation Hearing. (Worldcom Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) Worldcom Inc.'s 8.000% bonds due 2006 (WCOE06USR2) are trading at about 28 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE06USR2 for real-time bond pricing. XM SATELLITE: Red Ink Continues to Flow in First Quarter 2003 ------------------------------------------------------------- XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) reported financial and operating results for the first quarter ended March 31, 2003. XM reports 483,075 subscribers as of March 31, 2003. This represented a net subscriber addition of 135,916 for the first quarter; a 39 percent increase from the fourth quarter 2002 and six times the subscribers from the first quarter of 2002. In April 2003, XM surpassed the half-million subscriber mark, commencing the Company's March To A Million subscribers campaign. First Quarter Financial and Operating Results For the first quarter of 2003, XM recognized revenue of $13.1 million, an increase of $11.3 million when compared to $1.8 million of revenue in the first quarter of 2002. EBITDA loss for the quarter was $63.3 million, an improvement of $12.1 million as compared with $75.4 million in the first quarter of 2002. For the first quarter 2003, the consolidated net loss available to common shareholders was $124 million, or $1.26 per share (on weighted average shares of 98.7 million), as compared to $117.7 million, or $1.56 per share (on weighted average shares of 75.2 million), for the first quarter of 2002. XM continues to make progress towards cash flow breakeven while ramping subscribers, reducing costs and achieving operational milestones. Cost Per Gross Addition for the first quarter 2003 was $156 per subscriber, driven in part by seasonally lower marketing expenses. CPGA for the first and fourth quarters of 2002 was $875 and $240, respectively. During the first quarter 2003, XM incurred an average subscriber acquisition cost of $74. This compares to an average SAC of $127 for first quarter 2002 and $96 in the fourth quarter 2002. At the end of the first quarter 2003, the Company had cash on hand of approximately $194 million, excluding restricted cash, and approximately $122 million of undrawn credit and equity funding facilities from General Motors, resulting in an aggregate liquidity position of $316 million. XM Eliminates $137 Million of Debt and Preferred Stock and Raises Additional $50 Million in Equity Proceeds Since the first of the year, the Company completed several privately negotiated de-leveraging transactions reducing XM's debt and preferred stock by approximately $137 million in principal amount at maturity (the accreted value of the liabilities eliminated is approximately $108 million). These debt and preferred stock transactions eliminate approximately $212 million in total future principal, interest, dividends and liquidation preference amounts due over the life of the securities. In addition, warrants to purchase 3.7 million shares of XM stock at $3.18 per share were eliminated in similar transactions. During the first quarter and in April 2003, XM also raised approximately $50 million in cash proceeds under its Direct Stock Purchase Plan (DSPP), and used approximately $17 million in connection with these de-leveraging transactions. As a result of the various transactions described above, the Company increased its net cash on hand by an additional $33 million in cash, eliminated $137 million face amount at maturity of its debt, preferred stock, and warrants, some portion of which were convertible into approximately 5.9 million shares, and increased the Company's total outstanding common stock to approximately 120 million shares. XM Expands OEM Distribution Channel The Company achieved another significant subscriber milestone in the quarter when, working collaboratively with GM, XM surpassed the 100,000 GM subscriber mark where XM radios are factory installed in the new car. The XM OEM distribution channel continues to grow beyond GM to include manufacturers such as Honda, Acura, Audi, Toyota and Infiniti. Across the 2003 and 2004 model years, XM will be available in 15 automobile brands spanning over 70 vehicle models. Acura, a division of American Honda Motor Co. -- a strategic investor in XM, announced that both the 2004 Acura TL and RL would include XM Radio as a factory-installed standard feature. The 2004 Acura RL debuted recently as the first luxury sedan to feature XM as standard equipment. Toyota announced that XM Radio would be offered as a dealer- installed option on Toyota's all-new 2004 Camry Solara coupe, which will begin arriving in U.S. showrooms during the summer. Toyota has previously announced it will offer XM in its new youth oriented Scion brand. The Camry Solara coupe represents the first mainstream Toyota-branded model to move forward with XM. Finally, Audi also announced that, beginning in the summer, it would offer XM as an option on a wide range of 2004 models, including the A4, S4, A6, the A8L and the allroad quattro. This XM product offering by Audi is particularly significant in that these award winning cars will arrive at the dealer with a factory-installed satellite-ready "head unit" and satellite radio antenna; the dealer will then "snap-in" the XM receiver on-site. Wal-Mart Roll-out End of May XM continues to expand its aftermarket distribution network to include 2,100 Wal-Mart stores across the country that will sell the complete line of Delphi XM SKYFi radios. This roll-out is expected to be completed by the end of May, as Wal-Mart outfits its automotive sales and home electronics departments with XM displays and stocks XM products across the nation. XM product availability at the world's largest retailer significantly expands the Company's existing national retail network of Best Buy, Circuit City and other regional and independent electronics outlets. XM Family Plan XM's Family Plan has already generated positive results from both current and new subscribers. To date, approximately 5,000 new radios have been activated under the XM Family Plan at a monthly rate of $6.99. A recent survey conducted on XM's behalf by Greystone Communications reported that 58 percent of XM subscribers are likely to purchase an additional XM subscription under the Family Plan. XM Introduces New Product for the PC Market In pursuit of the Company's "XM Everywhere" goal, XM has just introduced XM PCR, the first satellite radio product allowing any personal computer or laptop to be transformed into an XM radio receiver. XM PCR, with a suggested retail price of $69.95, is the perfect "music and news companion" for the PC user in the home or at the office. With its unique features and advanced functionality, XM PCR listeners can experience our rich programming content in digital quality sound without the buffering delays, reduced PC processing speed and heavy bandwidth requirements which characterize the Internet- delivered radio and music marketplace. XM PCR is available for direct purchase from the online retailer PC Connection through XM's Web site at http://xmpcr.xmradio.com XM is transforming radio with a programming lineup featuring 101 coast-to-coast digital channels: 70 music channels, more than 35 of them commercial-free, from hip hop to opera, classical to country, bluegrass to blues; and 31 channels of sports, talk, children's and other entertainment programming. XM's strategic investors include America's leading car, radio and satellite TV companies -- General Motors, American Honda Motor Co. Inc., Clear Channel Communications and DIRECTV. For more information, please visit XM's Web site: http://www.xmradio.com As reported in Troubled Company Reporter's February 3, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit ratings on satellite radio provider XM Satellite Radio Inc., and its parent company XM Satellite Radio Holdings Inc. (which are analyzed on a consolidated basis) to 'SD' from 'CCC-'. At the same time, Standard & Poor's lowered its rating on the company's $325 million 14% senior secured notes due 2010 to 'D' from 'CCC-'. These actions follow XM's completion of its exchange offer on the senior secured notes, at par, for new 14% senior secured notes due 2009. All ratings were removed from CreditWatch with negative implications where they were placed on Nov. 18, 2002. XML GLOBAL TECH.: Completes Corporate Reorganization Program ------------------------------------------------------------ XML Global Technologies, Inc. (OTC BB: XMLG), a developer of XML middleware, has completed its reorganization. XML Global is focusing on marketing its GoXML Transform product, which has enjoyed the broadest market acceptance to date. The clear focus on GoXML Transform has allowed XML Global to significantly reduce its overhead. Following the reorganization, the number of staff has decreased by over 75% from 38 to eight employees, with a commensurate decline in operating expenses. Key employees include Garry Kupecz who, as Chief Operating Officer, will manage day-to-day operations of the Company and relationships with our sales agents in the UK, US and Asia. Garry's previous position at XML Global was as Director of Sales Engineering. The team also includes the development and quality assurance team who were instrumental in building the current release of GoXML Transform. All of the development and product efforts will be focused on completing an updated version of GoXML Transform, with a beta release expected by June 1, 2003. XML Global plans to license rights to GoXML Registry and GoXML Messaging to third parties. Sheldon Drobny, Chairman of the Paradigm Group, which continues to support XML Global financially, expressed his enthusiasm and his continued commitment to the Company's future. "This focus on GoXML Transform is necessary for XML Global to turn the corner, achieve profitability and assure its financial success." The Paradigm Group II, LLC is a private investment firm, which originates, structures and acts as an equity investor in growth capital financing, priding itself on its value-added investment strategies, frequently facilitating strategic relationships for its portfolio companies. These financings include, but are not limited to, private or venture financing, bridge loans, and public equity financing. The Paradigm Group has invested over 100 million dollars of equity in approximately 70 corporate transactions. This fund will invest primarily in the public equity markets and Paradigm will utilize its vast resources to aid in helping portfolio companies achieve their personal financial goals. Paradigm conducts its investment activities through strategic investors as well as its relationships. For more information visit http://www.paradigmventure.com XML Global Technologies, Inc. is an XML middleware company focused on providing a methodical approach to the adoption of XML-based solutions. The Company's GoXML(TM) Transform product line provides an intuitive, modular solution for integration of structured data. Its powerful transformation engine links XML to traditional data formats, like relational and EDI. It also transforms data between various XML dialects. Transformation solutions developed with the XML Integration Workbench can be deployed to GoXML Transform Enterprise Edition for centralized management and connectivity to integration platforms, message queues, and workflow engines. Interfaces for Web Services and ebXML allow it to plug into popular e business infrastructures. To find out more about XML Global Technologies (OTCBB: XMLG), visit http://www.xmlglobal.com As previously reported, XML Global's independent auditor's report stated that XML's consolidated financial statements for the year ending June 30, 2002 have been prepared assuming that the Company will continue as a going concern. However, the Company has incurred losses since inception and has an accumulated deficit. These conditions raise substantial doubt about its ability to continue as a going concern. It has incurred costs to design, develop and implement search engine and electronic commerce applications and to grow its business. As a result, it has incurred operating losses and negative cash flows from operations in each quarter since commencing operations. As of September 30, 2002 the Company had an accumulated deficit of $12,860,900. At September 30, 2002 XML's cash funds are insufficient to fund operations through the end of fiscal 2003 based on historical operating performance. In order for the Company to maintain its operations it will have to seek additional funding, generate additional sales or reduce its operating expenses, or some combination of these. At current and planned expenditure rates, taking into consideration cash received from the first part of the Paradigm financing, current reserves are sufficient to fund operations only through December 2002. *BOOK REVIEW: The First Junk Bond: A Story of Corporate Boom and Bust ---------------------------------------------------------------- Author: Harlan D. Platt Publisher: Beard Books Softcover: 236 pages List Price: $34.95 Review by Gail Owens Hoelscher Order your personal copy today and one for a colleague at http://www.amazon.com/exec/obidos/ASIN/1563242753/internetbankrupt Only one in ten failed businesses is equal to the task of reorganizing itself and satisfying its prior debts in some fashion. This engrossing book follows the extraordinary journey of Texas International, Inc (known by its New York Stock Exchange stock symbol, TEI), through its corporate growth and decline, debt exchange offers, and corporate renaissance as Phoenix Resource Companies, Inc. As Harlan Platt puts it, TEI "flourished for a brief luminous moment but then crashed to earth and was consumed." TEI's story features attention-grabbing characters, petroleum exploration innovations, financial innovations, and lots of risk taking. The First Junk Bond was originally published in 1994 and received solidly favorable reviews. The then-managing director of High Yield Securities Research and Economics for Merrill Lynch said that the book "is a richly detailed case study. Platt integrates corporate history, industry fundamentals, financial analysis and bankruptcy law on a scale that has rarely, if ever, been attempted." A retired U.S. Bankruptcy Court judge noted, "(i)t should appeal as supplementary reading to students in both business schools and law schools. Even those who practice.in the areas of business law, accounting and investments can obtain a greater understanding and perspective of their professional expertise." "TEI's saga is noteworthy because of the company's resilience and ingenuity in coping with the changing environment of the 1980s, its execution of innovative corporate strategies that were widely imitated and its extraordinary trading history," says the author. TEI issued the first junk bond. In 1986 it achieved the largest percentage gain on the NYSE, and in 1987 suffered the largest percentage loss. It issued one of the first bonds secured by a physical commodity and then later issued one of the first PIK (payment in kind) bonds. It was one of the first vulture investors, to be targeted by vulture investors later on. Its president was involved in an insider trading scandal. It innovated strip financing. It engaged in several workouts to sell off operations and raise cash to reduce debt. It completed three exchange offers that converted debt in to equity. In 1977, TEI, primarily an oil production outfit, had had a reprieve from bankruptcy through Michael Milken's first ever junk bond. The fresh capital had allowed TEI to acquire a controlling interest of Phoenix Resources Company, a part of King Resources Company. TEI purchased creditors' claims against King that were subsequently converted into stock under the terms of King's reorganization plan. Only two years later, cash deficiencies forced Phoenix to sell off its nonenergy businesses. Vulture investors tried to buy up outstanding TEI stock. TEI sold off its own nonenergy businesses, and focused on oil and gas exploration. An enormous oil discovery in Egypt made the future look grand. The value of TEI stock soared. Somehow, however, less than two years later, TEI was in bankruptcy. What a ride! All told, the book has 63 tables and 32 figures on all aspects of TEI's rise, fall, and renaissance. Businesspeople will find especially absorbing the details of how the company's bankruptcy filing affected various stakeholders, the bankruptcy negotiation process, and the alternative post-bankruptcy financial structures that were considered. Those interested in the oil and gas industry will find the book a primer on the subject, with an appendix devoted to exploration and drilling, and another on oil and gas accounting. Harlan Platt is professor of Finance at Northeastern University. He is president of 911RISK, Inc., which specializes in developing analytical models to predict corporate distress. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***