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/raid1/www/Hosts/bankrupt/TCR_Public/030603.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 3, 2003, Vol. 7, No. 108 Headlines 3DO COMPANY: Nasdaq Will Knock-Off Shares Effective June 9, 2003 AIR CANADA: Reaches Tentative Labor Cost Agreement with Pilots AIR CANADA: Achieves Overall Labor Cost Realignment of $1.1 Bil. AIR CANADA: Protocol for Exchange of Confidential Info Fixed ALADDIN GAMING: Files Proposed Plan and Disclosure Statement ALLIANCE TOBACCO: UST to Convene Sec. 341(a) Meeting on July 7 ALLIED HOLDINGS: Reaches Tentative Agreement With U.S. Teamsters AVAYA INC: Reaches Three-Year Pact with Communications Workers AVCORP INDUSTRIES: Mar. 31 Working Capital Deficit Tops C$27MM BEA CBO 1998-2: S&P Places CCC- Class A-3 Rating on Watch Neg. BEA CBO 1998-1: S&P Puts B Note Class Ratings on Watch Negative BIOSECURE CORP: McKennon Wilson Resigns as Independent Auditors CABLE SATISFACTION: First Quarter Net Loss Slides-Up to C$21MM CAPCO AMERICA: Fitch Junks Class B-5 Series 1998-D7 Notes at CCC CAN FIN'L: Will Record Q2 Charge Relating to 1995 Property Loss CARR PHARMACEUTICALS: Has Until Month-End to File Schedules COMDISCO INC: Board Declares Dividend to Common Shareholders COOPERATIVE COMPUTING: Commences Tender Offer for 9% Notes CWMBS INC: Fitch Rates Class B-3, B-4 Ser. 2003-24 Notes at BB/B CWMBS INC: Fitch Rates Class B-3, B-4 Ser. 2003-18 Notes at BB/B DE LOACH VINEYARDS: UST Sets First Creditors Meeting for June 20 DEVINE ENTERTAINMENT: Delays Filing of First Quarter Financials DIMON INC: Successfully Completes Long-Term Debt Restructuring ENCOMPASS SERVS.: Wants to Continue Wright Furlford's Engagement ENRON CORP: Wind Debtors Wants Waldron Appointed as Wind Trustee ENRON: EFS I's Voluntary Chapter 11 Case Summary ENRON: EFS II's Voluntary Chapter 11 Case Summary ENRON: EFS III's Voluntary Chapter 11 Case Summary ENRON: EFS V's Voluntary Chapter 11 Case Summary ENRON: EFS VI's Voluntary Chapter 11 Case Summary ENRON: EFS VII's Voluntary Chapter 11 Case Summary ENRON: EFS IX's Voluntary Chapter 11 Case Summary ENRON: EFS X's Voluntary Chapter 11 Case Summary ENRON: EFS XI's Voluntary Chapter 11 Case Summary ENRON: EFS XII's Voluntary Chapter 11 Case Summary ENRON: EFS XV's Voluntary Chapter 11 Case Summary ENRON: EFS XVII's Voluntary Chapter 11 Case Summary ENRON: EFS Holdings' Voluntary Chapter 11 Case Summary ENRON: Enron Operations' Voluntary Chapter 11 Case Summary ENRON: Jovinole Associates' Voluntary Chapter 11 Case Summary ENRON: Omicron Enterprises' Voluntary Chapter Case Summary FLEMING COS.: Wins Nod to Hire Kirkland Ellis as Lead Counsel FOSTER WHEELER: S&P Takes Action over Going Concern Uncertainty GASEL TRANSPORTATION: Files Chapter 11 Petition in Columbus, Oh. GASEL TRANSPORTATION: Chapter 11 Case Summary GENSCI REGENERATION: Resolves All Legal Disputes with Osteotech GENUITY: Court OKs LeBoeuf Lamb's Engagement as Special Counsel GLOBAL CROSSING: XO Comms. Offers to Acquire Assets for $700MM GLOBAL CROSSING: April 2003 Consolidated Net Loss Tops $74 Mill. GOLDRAY INC: Continuing Review of Various Strategic Alternatives HARKEN ENERGY: Taps Petrie Parkman to Evaluate Strategic Options HAWAIIAN AIRLINES: John Monahan Appointed as Chapter 11 Trustee HAWKER RESOURCES: Generating Cash from Liquidation of Assets HAYES LEMMERZ: Court Approves Miguel Romo as Mexican Counsel HORIZON GROUP: Completes Restructuring of Three Defaulted Loans IMX PHARMA.: Substantial Losses Raise Going Concern Doubt INT'L DATASHARE: Needs Additional Funds to Continue Operations J.B. POINDEXTER: Extends Exchange Offer for $12.50% Senior Notes KAISER ALUMINUM: Inks New Century Aluminum Supply Contract KCS ENERGY: Medallion Unit Resolves Legal Dispute over RSF Lease KMART CORP: Asks Court to Deem Reclamation Claim as Admin. Claim LAMAR MEDIA: Prices $125 Million of Senior Subordinated Notes LD BRINKMAN: US Trustee to Convene Sec. 341(a) Meeting on June 4 LUCENT: Fitch Says $1.5-Billion Convertible Senior Debt is Junk MAGELLAN HEALTH: Gets Open-Ended Lease Decision Period Extension MERRILL LYNCH: Fitch Rates Class B-1 & B-2 Notes at Low-B Level NATIONAL CENTURY: Motion to Appoint NPF XII SubPanel Draws Fire NRG ENERGY: Enters into $752 Million Xcel Settlement Agreement NTELOS INC: Files Disclosure Statement for Joint Plan of Reorg. OWENS CORNING: Intends to Divest Brazil Unit's $42M Excess Funds PANAVISION INC: S&P Affirms CCC Corporate Credit Rating PAPER WAREHOUSE: Files for Chapter 11 Reorganization in Minn. PAPER WAREHOUSE: Case Summary & 20 Largest Unsecured Creditors PEM ELECTRICAL: Wants Nod to Hire Silverman Perlstein as Counsel PENNEXX FOODS: Smithfield Foods Agree to Forbear Until June 18 PETALS INC: Look for Schedules and Statements by July 5, 2003 PREMCOR INC: Provides Update on Second Quarter Earnings Guidance RESIDENTIAL ASSET: Fitch Rates 2 Note Classes at Low-BV Level RESIDENTIAL ASSET: Fitch Rates 2 Ser. 2003-QS9 Classes at BB/B SEITEL: Terminates Standstill Pact & Hires Jefferies as Advisor SMARTSERV: Continues Efforts to Maintain Nasdaq SmallCap Listing SMTC CORP: Fails to Maintain Nasdaq Minimum Listing Requirements SPECTRASITE: Names Andy Christian to Lead Wireless Tower Project SPIEGEL GROUP: Court Approves Pachulski Stang as Special Counsel SURGILIGHT INC: GEM Converts $2MM of Conv. Debenture into Shares TELEGLOBE INC: Completes Sale of Core Business for $125 Million TENNECO AUTOMOTIVE: S&P Rates Proposed Senior Sec. Notes at CCC+ TRITON PCS: Amends Tender Offer for 11% Sr. Sub. Discount Notes TRITON PCS: Prices $725 Million Senior Unsecured Notes Offering UNITED AIRLINES: BofA Wants Payment for 1995-B Jets Admin. Costs US AGGREGATES: Files Joint Plan & Disclosure Statement in Nevada U.S. STEEL CORP: Appoints Karlos E. Abel as Director for Audit VICWEST CORP: Canadian Court Extends CCAA Protection to June 13 VIRAGEN: Says Company Continues to Meet AMEX Listing Criteria WEG ACQUISITIONS: S&P Assigns BB+ Rating to Planned $200M Loan WEIRTON STEEL: Honoring Prepetition Workers' Compensation WILLIAMS COS.: Completes Three Asset Sale Transactions for $663M WILLIAMS: Closes $500 Million Exploration-and-Production Loan WIRELESS NETWORKS: Terminates Operations Due to Lack of Funds WORLDCOM INC: E. Stanley Kroenke to Acquire Douglas Lake Ranch WORLDCOM INC: Pushing for Approval of SunTrust Bank Stipulation WORTH MEDIA: Case Summary & 20 Largest Unsecured Creditors W.R. GRACE: Wants Nod to Modify & Amend DIP Financing Agreement XOMA LTD: Will Present Update at Needham & Co. Conference Friday * Deloitte & Touche Taps New Leaders in Carolinas Practice * Fitch Says Major US Airlines Face Heavy Debt Through 2006 * Kirkpatrick & Lockhart/Dallas Brings-In Gerrit M. Pronske * Large Companies with Insolvent Balance Sheets ********* 3DO COMPANY: Nasdaq Will Knock-Off Shares Effective June 9, 2003 ---------------------------------------------------------------- The 3DO Company (Nasdaq: THDO), a Delaware corporation, announced that Nasdaq will delist the Company's common stock from The Nasdaq Stock Market at the opening of trading on June 9, 2003. The delisting is related to the Company's filing of a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of California on May 28, 2003. Nasdaq notified the Company that the securities will be delisted pursuant to Nasdaq Marketplace Rules 4300 and 4450(f), which generally provide that Nasdaq may exercise its discretionary authority to delist securities if an issuer files for bankruptcy protection. Nasdaq also cited concerns about the Company's ability to maintain the continued listing requirements under Nasdaq Marketplace Rule 4450. Additionally, the determination was based upon Nasdaq Marketplace Rule 4310 for failure of the Company to pay annual fees. Commencing on June 2, 2003, the trading symbol for the Company's securities will be changed from THDO to THDOQ. The 3DO Company is in the process of evaluating trading of its common stock on the OTC Bulletin Board or in the pink sheets. The 3DO Company, headquartered in Redwood City, Calif., develops, publishes and distributes interactive entertainment software for personal computers, the Internet, and advanced entertainment systems such as the PlayStation(R)2 computer entertainment system, the Xbox(TM) video game system from Microsoft, and the Nintendo GameCube(TM) and Game Boy(R) Advance systems. More information about The 3DO Company and 3DO products can be found on the Internet at http://www.3do.com AIR CANADA: Reaches Tentative Labor Cost Agreement with Pilots -------------------------------------------------------------- The Air Canada Pilots Association have come to a tentative agreement with Air Canada on new contract provisions. The six- year agreement has been pursued as part of Air Canada's restructuring under the Companies' Creditors Arrangement Act. The agreement, reached after a week of intense negotiations, provides Air Canada with a significant contribution to the 770 million dollars in labor savings that the company had been seeking. "From day one, we have always said that Air Canada's pilots were committed to see our company emerge from the restructuring process as a stronger, more efficient airline, poised to be competitive in an increasingly difficult market," said Captain Don Johnson, President of the Air Canada Pilots Association. "This agreement demonstrates that commitment." No further information on the tentative agreement will be released by ACPA until they have been able to inform the pilot membership of the details of the contract. The agreement remains subject to a ratification vote by ACPA's membership expected to get underway in the near future. Captain Don Johnson said: "It has been a long and arduous process. No one is happy with a situation where salaries will be cut, and jobs lost. However, our pilots realize the gravity of the situation and are willing to do what it takes to help build a new future for Air Canada. That is why ACPA is submitting this agreement to our membership for ratification." The Air Canada Pilots Association is Canada's largest professional pilots group, representing the 3300 pilots flying for Air Canada. AIR CANADA: Achieves Overall Labor Cost Realignment of $1.1 Bil. ---------------------------------------------------------------- Air Canada confirmed it had reached a tentative agreement on labor cost realignment with the Air Canada Pilots Association representing its 3,150 mainline pilots. With this agreement Air Canada will achieve an overall labor cost saving of $1.1 billion annually on a consolidated basis. "ACPA faced unique and complex issues and while the sacrifices agreed to in the tentative labor agreement are painful, they are unavoidable to secure Air Canada's future," said Robert Milton, President and Chief Executive Officer. Tentative agreements were reached earlier last week with the International Association of Machinists and Aeropace Workers representing 11,000 technical operations and airport ground service personnel, CUPE representing 6,700 flight attendants, the CAW Airline Division, representing 6,000 customer sales and service agents and crew schedulers and CALDA, representing the airline's 100 flight dispatchers. Tentative agreements were also reached with all unions representing Air Canada Jazz employees - the Airline Pilots Association, CALDA, CUPE and Teamsters Canada. "I salute Air Canada's union leadership for doing the right thing under trying circumstances to ensure the survival of this great airline," said Mr. Milton. "I recognize what a difficult and unsettling time this has been for all of Air Canada's employees. A successful ratification of all the tentative agreements will establish the foundation to move forward with lessors, lenders, key suppliers and other stakeholders. "Mr. Justice Warren Winkler conducted an extremely disciplined and focused mediation process which took account of the urgency of reducing our costs immediately within CCAA. This successful outcome could not have been achieved within the necessary timeframe without his tireless efforts in addition to those of Murray MacDonald of Ernst & Young, the Court-appointed Monitor. "With this significant hurdle in our restructuring behind us, I wish to reassure Air Canada's customers that it is business as usual and I encourage them to continue booking Air Canada with confidence," said Mr. Milton. With the tentative agreements, the company will achieve $766 million (including benefits) in labor cost realignment at the mainline carrier in addition to $120 million to be realized from the non-unionized and management ranks. Additional cost savings resulting from the realignment of the airline to a smaller network are expected to generate $110 million. With the tentative agreements in place, Air Canada Jazz will reduce labor costs by $110 million for a total consolidated labor cost saving of $1.1 billion. The labor cost reductions will be achieved primarily through productivity improvements including job reductions and wage rollbacks. Details of the agreements reached by the individual unions will be provided separately by the unions to their membership. The agreements are subject to ratification. Air Canada will initiate discussions in the coming days with its unions outside of Canada with the objective of achieving appropriate cost savings. AIR CANADA: Protocol for Exchange of Confidential Info Fixed ------------------------------------------------------------ The Court-appointed Monitor has been working and continues to work with Air Canada, the unions and other stakeholders to balance the need for immediate access to information by the stakeholders with the practical difficulties of gathering and generating information and protecting that which is confidential and proprietary to a public company of Air Canada's size. In this regard, Ernst & Young President Murray A. McDonald reports that the Monitor has reached an agreement with virtually all of the principal stakeholders who did not sign Air Canada's required confidentiality agreement on a workable definition of confidential information and also to a structure for the efficient controlled distribution of information and data. This process is continuing to evolve to meet the reasonable requirements of the stakeholders and Air Canada's ability to produce Confidential Information in the requested formats. Air Canada has established, with the Monitor's assistance, a data room in Montreal in which relevant forward-looking and historical data has been deposited for a review by the stakeholders. The possibility of a virtual data room or a second data room located in Toronto is being reviewed. According to Mr. McDonald, confidentiality agreements have been and continue to be executed by those parties wishing access to the data room. Those individuals who review Confidential Information on the stakeholders' behalf -- principally their representatives and advisors -- are required to acknowledge in writing their acceptance of the terms of the confidentiality agreement and their undertaking to abide by those terms. (Air Canada Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALADDIN GAMING: Files Proposed Plan and Disclosure Statement ------------------------------------------------------------ Aladdin Gaming, LLC filed its proposed Plan of Reorganization and accompanying Disclosure Statement with the Bankruptcy Court in Las Vegas, Nevada. The papers were filed in accordance with the sales process order issued by the Court on May 7, 2003. The Plan and Disclosure Statement may be modified based on the results of the sales process and to reflect the ultimate buyer of the Aladdin Hotel & Casino. Aladdin Gaming commenced its bankruptcy case on September 28, 2001, and announced shortly thereafter that it would sell the Aladdin Hotel & Casino as a going concern. All offers to purchase the Hotel/Casino must be made in accordance with the sales process order and received by Aladdin Gaming no later than June 17, 2003, at 3:00 pm (PDT). Parties interested in acquiring the Hotel/Casino should contact Jeff Truitt, KPMG, LLP, 213-630-2200. ALLIANCE TOBACCO: UST to Convene Sec. 341(a) Meeting on July 7 -------------------------------------------------------------- The United States Trustee will convene a meeting of Alliance Tobacco Corporation and its debtor-affiliates' creditors at 9:30 a.m. on July 7, 2003, in Hearing Room 1, 4th Floor, 1001 Center Street, Bowling Green, Kentucky 42101. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Alliance Tobacco Corporation, leading seller of cheap cigarettes, sells discount brands such as DTC, Durant, GT One, and Palace. The Company filed for chapter 11 protection on May 13, 2003 (Bankr. W.D. Ky. Case No. 03-11030). Cathy S. Pike, Esq., at Weber & Rose, PSC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and estimated debts of over $10 million. ALLIED HOLDINGS: Reaches Tentative Agreement With U.S. Teamsters ---------------------------------------------------------------- Allied Holdings, Inc. (Amex: AHI) announced that subsidiaries of its Allied Automotive Group have reached a tentative agreement on a five-year contract with their employees represented by the Teamsters Union in the United States. Terms of the new agreement are subject to ratification by the Company's U.S. employees who are represented by the Teamsters. A ratification vote is expected within the next few weeks. The new contract will cover approximately 4,300 drivers, mechanics and yard personnel in the United States. These employees represent approximately 70 percent of Allied Holdings employees. Economic provisions of the new agreement include a wage freeze for the first two years of the agreement and also include wage increases of approximately 2 percent on June 1, 2005, 2 percent on June 1, 2006, and an additional 2.5 percent on June 1, 2007. The agreement provides for increases in health, welfare and pension contributions during each year of the agreement. The economic provisions of the contract will increase the Company's U.S. Teamster labor costs approximately 1.1 percent in year one of the agreement, 1.3 percent in year two, 2.5 percent in year three, 2.5 percent in year four, and 3.0 percent in year five of the agreement. In addition to the economic provisions, the agreement contains key changes in work-rule provisions that provide increased flexibility in the Company's operations in order to meet evolving client expectations and potentially improve the Company's ability to compete for new business. The remaining carhaul companies operating in the U.S. with employees represented by the Teamsters are signatories to the new agreement and will operate under the same contractual provisions as Allied Automotive Group. In a related matter, the contract the Company's subsidiary, Allied Systems (Canada) Company, negotiated with the Teamsters Union in Eastern Canada earlier this year provided that wages in the first two years of the Eastern Canada agreement would be increased by an amount equivalent to the negotiated percentage increases in the first two years of the U.S. Teamsters agreement. Since wages were frozen for the first two years of the U.S. Teamster agreement, wages will remain frozen for the first two years of the Teamster agreement in Eastern Canada. The agreement in Eastern Canada is for a three year term ending October 31, 2005. Commenting on the announcement, Hugh E. Sawyer, Allied's President and Chief Executive Officer said, "We are pleased to have concluded negotiations with our U.S. Teamsters without a labor disruption and are guardedly optimistic that our agreement with the Teamster negotiating committee will be ratified by the rank and file members." Mr. Sawyer added, "Allied's agreement to provide increased health, welfare and pension contributions will allow our employees the security of outstanding medical and pension benefits for the next five years. Moreover, employee benefits are a key component of Allied's strategy to attract and retain the highly experienced carhaul drivers, mechanics and yard personnel who work tirelessly to serve our clients. Allied's U.S. Teamster labor costs will increase over the term of the agreement. However, the average yearly increase is substantially less than the average yearly cost increases of approximately 3 percent previously negotiated by the industry. Further, the five year contract term stabilizes Allied's U.S. Teamster labor agreement during a critical phase of the Company's turnaround." Mr. Sawyer concluded, "We have established two years of wage freezes and key elements of work-rule flexibility that should ultimately enhance our ability to remain the industry leader. Allied will continue to face significant challenges as we strive to complete a difficult turnaround. However, this agreement is an important step in the Company's ongoing revitalization effort." Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle distribution continuum, and include car- hauling, intramodal transport, inspection, accessorization, and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles. * * * As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its 'B' corporate credit rating on automobile transporter Allied Holdings Inc., and at the same time, removed the ratings from CreditWatch. The action reflected Allied Holdings' announcement that it had refinanced an unrated $230 million revolving credit facility and $40 million in unrated subordinated debt. Allied Holdings, based in Decatur, Ga., is the largest North American motor carrier of new and used automobiles and light trucks. The company has about $370 million in debt and operating leases. AVAYA INC: Reaches Three-Year Pact with Communications Workers -------------------------------------------------------------- The Communications Workers of America has reached a tentative three-year agreement with Avaya that provides wage and pension improvements, protects retiree health care and enhances employment security, among other gains. The agreement covers about 5,000 workers at the company. The contract expired May 31, but the parties continued to negotiate past expiration to reach the tentative agreement. Workers had voted overwhelmingly to authorize a strike if a fair contract could not be reached. CWA Vice President Ralph Maly, who heads CWA's communications and technologies sector and who led the union's bargaining team, said the agreement achieves what CWA set out to accomplish. He commended the bargaining committee for bringing in an agreement that addresses workers' key concerns. The settlement retains the variable workforce agreement and includes other gains in employment security. It provides for a three percent wage increase in each year of the three-year contract, a three-percent yearly increase in pension bands and safeguards for retiree health coverage. In return, CWA agreed to some sharing of health care costs, but there is no shifting of any premium costs to workers or retirees. Maly said the mobilization effort by CWA members was a major factor in bringing the negotiations to a successful conclusion. CWA will hold contract explanation meetings to answer questions about the proposed settlement; the membership ratification vote will take place within the next four to six weeks. Avaya Inc., whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $25 million, designs, builds and managers communications networks for more than one million businesses around the world, including 90 percent of the Fortune 500(R). A world leader in secure and reliable Internet Protocol telephony systems, communications software applications and services, Avaya is driving the convergence of voice and data application across IT networks, enabling businesses large and small to leverage existing and new networks to enhance value, improve productivity and gain competitive advantage. For more information visit the Avaya Web site: http://www.Avaya.com DebtTraders reports that Avaya Inc.'s 11.125% bonds due 2009 (AV09USR1) are trading slightly above par at 108. Go to http://www.debttraders.com/price.cfm?dt_sec_ticker=AV09USR1for real-time bond pricing. AVCORP INDUSTRIES: Mar. 31 Working Capital Deficit Tops C$27MM -------------------------------------------------------------- Avcorp Industries Inc. (AVP on the Toronto Stock Exchange) announced results for the quarter and three months ended March 31, 2003. (All amounts are expressed in Canadian dollars, unless specified otherwise). Management Discussion and Analysis First quarter results for 2003 are presented on an interim, unaudited basis. Financial Overview Revenues for the quarter were $13.2 million, representing a decrease of 14.5% or $2.2 million from the same quarter in 2002, as customers rescheduled orders in line with changing aircraft delivery schedules. Bombardier Aerospace and the Boeing Commercial Airplane Group are the Company's two principal customers which accounted for 87.3% of the quarter's revenues. Cost of goods sold for the quarter was 94.3% of revenue, compared to 83.8% in the same period last year, reflecting fixed overhead and product mix changes as orders were rescheduled at different rates by customers. Administrative and general expenses for the quarter were 14.5% of revenue compared to 9.7% in the same period last year, primarily due to financing fees and legal costs. EBITDA was a loss of $1.2 million; a $2.2 million reduction in EBITDA from the same quarter in fiscal 2002. This was the direct result of customers rescheduling deliveries to reflect current economic conditions. The Company ended the quarter with a bank balance of $421,000 compared to the bank facility of $6.0 million at December 31, 2002. Cash utilization from operating activities was $644,000 for the quarter compared to cash provided of $378,000 for the same quarter last year. This cash utilization arose primarily from operating losses although continued focus on working capital provided more cash than from working capital in the same quarter last year. Cash flows from financing activities provided $925,000 as compared to a use of $1.3 million during the same quarter last year. In February 2003, the Company paid its former bank approximately $12.5 million, repaying its indebtedness in full. Concurrently, the Company obtained short-term financing from a chartered bank in the amount of $12.0 million along with $1.1 million in short-term loans from major shareholders. The Company continues to progress towards finalization of its financial restructuring plan. At March 31, 2003, the Company's balance sheet shows that its total current liabilities outweighed its total current assets by about $27 million. Operations Overview In the first quarter, the Company continued to meet delivery and quality performance requirements, and improved productivity and supply chain management. As at March 31, 2003, order backlog is $474 million. Avcorp Industries Inc. is a Canadian aerospace industry manufacturer. The company is a single-source supplier for engineering design, manufacture and assembly of subassemblies and complex major structures for aircraft manufacturers. BEA CBO 1998-2: S&P Places CCC- Class A-3 Rating on Watch Neg. -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC-' rating on the class A-3 notes issued by BEA CBO 1998-2 Ltd., co-issued by BEA CBO 1998-2 (Delaware) Corp., and managed by Credit Suisse Asset Management, on CreditWatch with negative implications. At the same time, the 'AAA' ratings on the class A-1L, A-1, and A-2 notes are affirmed, based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The CreditWatch placement of the class A-3 notes reflects factors that have negatively affected the credit enhancement available to support the notes since the last rating action was taken in September 2002. These factors include continuing par erosion of the collateral pool securing the rated notes, a decline in the credit quality of the performing assets in the collateral pool, and a decline in the interest from the collateral pool available for hedge and interest payments on the liabilities. According to the May 2, 2003 trustee report, the transaction is carrying an aggregate of $60.95 million in defaults. As a result of asset defaults, the overcollateralization ratios for the transaction have deteriorated. According to the May report, the class A overcollaterization ratio was at 88.24%, compared to the required ratio of 115%, and compared to its ratio of 98.05% at the time of the September 2002 rating action. The transaction is currently failing three out of four categories in Standard & Poor's issuer rating distribution test. Standard & Poor's will be reviewing the results of current cash flow runs generated for BEA CBO 1998-2 Ltd. to determine the level of future defaults the class A-3 notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected future default performance of the performing assets in the collateral pool to determine whether the rating currently assigned to the class A-3 notes remains consistent with the amount of credit enhancement available to support the notes. ON CREDITWATCH NEGATIVE Rating Class To From Balance ($ mil.) A-3 CCC-/Watch Neg CCC- 20.0 RATINGS AFFIRMED Class Rating Balance ($ mil.) A-1L AAA 10.5 A-1 AAA 71.0 A-2 AAA 100.0 BEA CBO 1998-1: S&P Puts B Note Class Ratings on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class A-2A and A-2B notes issued by BEA CBO 1998-1 Ltd., co- issued by BEA CBO 1998-1 (Delaware) Corp. and managed by Prudential Investment Management Inc., on CreditWatch with negative implications. Prudential Investment Management Inc. assumed management of this transaction in September 2002. The rating on the class A-3 notes was previously lowered in September 2002. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the last rating action was taken in September 2002. These factors include continuing par erosion of the collateral pool securing the rated notes and a decline in the credit quality of the performing assets in the collateral pool. According to the May 2, 2003, trustee report, the deal is carrying an aggregate of $59.36 million in defaults. As a result of asset defaults, the overcollateralization ratios for the transaction have deteriorated. According to the May report, the class A overcollaterization ratio was at 85.96%, versus the required ratio of 121%, and compared to its ratio of 95.59% at the time of the last rating action. The transaction is currently failing three out of four categories in Standard & Poor's issuer rating distribution test. The deal has paid down all of the class A-1 notes during the December 2002 payment date. Standard & Poor's will be reviewing the results of current cash flow runs generated for BEA CBO 1998-1 Ltd. to determine the level of future defaults the class A-2A and A-2B notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected future default performance of the performing assets in the collateral pool to determine whether the rating currently assigned to the class A-2A and A-2B notes remains consistent with the amount of credit enhancement available to support the notes. RATINGS PLACED ON CREDITWATCH NEGATIVE Rating Balance Class To From ($ mil.) A-2A B/Watch Neg B 178.74 A-2B B/Watch Neg B 31.24 OTHER OUTSTANDING RATING Class Rating Balance ($ mil.) A-3 CC 26.00 BIOSECURE CORP: McKennon Wilson Resigns as Independent Auditors --------------------------------------------------------------- On or about October 17, 2002, the firm of McKennon, Wilson & Morgan LLP notified BioSecure Corp. of their intentions to resign as independent auditors. Effective April 21, 2003, the firm of McKennon, Wilson & Morgan LLP was released as independent auditors of BioSecure Corp. The accounting firm of Davis Accounting Group P.C. was engaged by the Company to serve as the principal accountants to audit the Company's financial statements. The audit reports of McKennon, Wilson & Morgan LLP for the years ended March 31, 2000 and 2001 were modified as to uncertainty as follows: "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern...[T]he Company has incurred operating losses, and it has excess current liabilities over current assets, as well as a shareholders' deficit. These conditions raise substantial doubt about its ability to continue as a going concern...The financial statements do not include any adjustments that might result from the outcome of this uncertainty." CABLE SATISFACTION: First Quarter Net Loss Slides-Up to C$21MM -------------------------------------------------------------- Cable Satisfaction International Inc. (TSX: CSQ.A), a provider of fixed alternative direct broadband communications services in Portugal through its subsidiary Cabovisao, announced its financial and operating results for the first quarter ended March 31, 2003. All amounts are presented in Canadian dollars unless indicated otherwise. HIGHLIGHTS - Total revenue generating units increased 39% to 512,430 compared to 368,901 as of March 31, 2002. - Blended average revenue per subscriber connection for residential services was (euro)34.22 ($55.46) for the quarter ended March 31, 2003 compared to (euro)26.77 ($42.68) for the quarter ended March 31, 2002. ARPU for business services was (euro)55.54 ($90.01) for the quarter ended March 31, 2003 compared to (euro)44.49 ($62.21) for the quarter ended March 31, 2002. - Operating revenue increased 90% to $40.0 million compared to $21.0 million in the first quarter of 2002. - Net loss was $20.9 million ($0.23 per share) compared to $18.5 million ($0.22 per share) in 2002. MANAGEMENT'S DISCUSSION AND ANALYSIS All of the Company's operating revenue and the major portion of its operating expenses originate in Portugal and are recorded in euros. The Company's financial statements are presented in Canadian dollars. As of March 31, 2003 and 2002, the exchange rates for the Canadian dollar and euro were (euro)1.00 equals $1.6018 and (euro)1.00 equals $1.3820, respectively. As of December 31, 2002 and 2001, the exchange rates for the Canadian dollar and euro were (euro)1.00 equals $1.6564 and (euro)1.00 equals $1.4184, respectively. SIGNIFICANT EVENTS As of December 31, 2002, Cabovisao was in default of certain financial and operational covenants under its credit facility. The credit facility consisted of a fully drawn Secured Term Loan of (euro)100 million ($160.2 million as of March 31, 2003) that matured on December 31, 2002 and undrawn Secured Revolving Advances of (euro)260 million ($416.5 million as of March 31, 2003). On the maturity date, the credit facility allowed the Secured Term Loan to be converted into Secured Revolving Advances, the availability of which was subject to certain financial covenants and conditions. The Secured Revolving Advances were cancelled on December 19, 2002 and such conversion did not occur. On December 31, 2002, the Company obtained waivers with respect to Cabovisao's non-compliance with certain financial and operational covenants of the Secured Term Loan and an extension of the maturity date until January 31, 2003. Further extensions were subsequently granted until June 11, 2003, all subject to certain conditions. On January 24, 2003, the Company amended its credit facility providing Cabovisao with immediate access to a (euro)14 million ($22.5 million as of March 31, 2003) liquidity line, subject to certain conditions. Such financing has allowed Cabovisao to fund operations and maintain customer acquisition activities on a limited basis in 2003. On March 1, 2003, the Company did not make the semi-annual interest payment on its US$155 million ($228 million as of March 31, 2003) Senior Notes. The grace period with respect to such payment expired on March 31, 2003 without such payment having been made, constituting an event of default. Given this context, there is significant uncertainty regarding the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments to the amounts and classifications of the assets and liabilities that might be necessary should the Company be unable to continue as a going concern. RESULTS OF OPERATIONS RGUs and operating revenue were significantly higher in the first quarter of 2003 compared to the same period last year. Operating Revenue Total operating revenue in the first quarter of 2003 increased 90% to $40.0 million compared to $21.0 million in the same period last year. The higher operating revenue reflects mainly subscriber growth for all services and increased blended ARPU. Total RGUs rose 39% to 512,430 compared to 368,901 at the end of the first quarter in 2002. RGUs represent the number of services purchased by subscribers. The blended ARPU was (euro)34.22 ($55.46) for the quarter ended March 31, 2003 compared to (euro)26.77 ($42.68) for the quarter ended March 31, 2002. This increase reflects mainly an increase in the number of services per subscriber to more than 2.0 for the first quarter of 2003 compared to approximately 1.88 for the first quarter last year. Operating revenue from cable television services, including pay TV, was up 66% to $18.8 million compared to $11.4 million for the first quarter of 2002. High-speed Internet revenue rose 158% to $9.4 million compared to $3.6 million. Telephony revenue increased 95% to $11.7 million compared to $6.0 million. Business services totaled 18,519 RGUs compared to 6,990 in the first quarter of 2002. ARPU per business customer was (euro)55.54 ($90.01) for the quarter ended March 31, 2003 compared to (euro)44.49 ($62.21) for the quarter ended March 31, 2002. On a sequential basis compared to the fourth quarter of 2002, operating revenue was up 4% and RGUs increased slightly, reflecting the disconnection of customers in arrears prior to the first billing cycle in 2003, representing a reduction of 12,572 RGUs. As a result, the Company began the 2003 fiscal year with 492,750 RGUs. Direct Costs Direct costs totaled $18.0 million compared to $11.9 million in the first quarter of 2002. The increase in dollar amount reflects subscriber growth in all services. Direct costs include mainly programming costs for basic cable television and pay TV services, as well as interconnection costs related to high-speed Internet and telephony services. As a percentage of operating revenue, direct costs declined to 45% compared to 57% in the first quarter last year. This reflects lower programming costs for cable television services, reduced interconnection costs and a more favourable call termination pattern. Gross Margin Gross margin increased to $22 million compared to $9.1 million in the first quarter of 2002. The gross margin percentage improved to 55% compared to 43% in the year-ago period, reflecting the factors mentioned above. Operating and Administrative Expenses Operating and administrative expenses were $12.3 million compared to $10.2 million in the first quarter of 2002. The modest increase relative to the greater scale of operations reflects cost control efforts. As a percentage of operating revenue, operating and administrative expenses declined to 31% compared to 49% in 2002. Operating and administrative expenses for both years reflect a new accounting policy for development costs adopted retroactively in the third quarter of 2002. Under this new policy, the Company is expensing a higher proportion of sales and marketing expenses as incurred, thereby reducing the proportion of such expenses that were capitalized under the previous accounting policy. EBITDA Earnings before interest, taxes, amortization and depreciation (EBITDA) were $9.1 million compared to negative EBITDA of $2.2 million in the same quarter last year. EBITDA is a key measure used by management to evaluate the Company's financial performance. EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. It should not be used in isolation or as an alternative to net income (loss) cash flows from operations, investing and financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because EBITDA is not a GAAP measurement, EBITDA as presented may not be comparable to other similar titled measures of other companies. Depreciation and Amortization Reflecting mainly the significant investment in network build- out during the past three years, depreciation and amortization increased to $20.3 million compared to $8.4 million in the first quarter of 2002. Other Revenue (Expenses) Financial expenses totaled $16.0 million compared to $7.6 million in the same period in 2002. The increase reflects mainly interest on the Secured Term Loan. As well, the Company recorded restructuring and other related expenses of $2.3 million in the first quarter of 2003, mainly for professional fees related to its financial restructuring. These increases were partially offset by a foreign exchange gain of $8.4 million in the latest quarter, reflecting mainly the impact of the appreciation of the euro against the U.S. dollar on the Senior Notes. As a result, other expenses totaled $9.7 million compared to $7.8 million in the first quarter last year. Net Loss and Net Loss per Share Net loss in the first quarter of 2003 was $20.9 million, compared to a net loss of $18.5 million in the same quarter last year. The weighted average number of outstanding multiple voting shares and subordinate voting shares increased to 91,367,967 compared to 85,310,600 in the year-ago period. BALANCE SHEETS Total assets decreased to $578.1 million as of March 31, 2003 compared to $607.0 million as of December 31, 2002. This reflected mainly a decrease in capital assets to $496.9 million compared to $521.3 million at the end of 2002, as depreciation during the quarter was higher than acquisitions of capital assets. LIQUIDITY AND CAPITAL RESOURCES The Company used net cash of $11.2 million in investing activities compared to $62.6 million in the first quarter of 2002. This decline reflects a lower level of network construction due to reduced cash availability. Financing activities generated $22.8 million compared to $88.6 million in the first quarter last year. The Company obtained a (euro)14 million (22.5 million as of March 31, 2003) liquidity line from its bankers in January 2003 through an amendment to its Secured Term Loan. In the first quarter of 2002, the Company raised net proceeds of $45.3 million at the corporate level through the issuance of subordinate voting shares and Cabovisao drew $43.2 million under its credit facility. FUTURE OUTLOOK The Company held cash and cash equivalents of $11.2 million as of March 31, 2003. The Company requires additional capital to fund network expansion and acquire new customers. Its ability to continue as a going concern is dependent upon its ability to generate positive net income and positive cash flow in the future, and on the continued availability of financing. The Company has formed a Special Committee of its Board of Directors to review and evaluate the alternatives of the Company with a view to reduce its financing costs and improve its liquidity. These may take the form of a debt restructuring, recapitalization, potential capital infusion, or other types of transactions, including court supervised reorganization. The Company has retained the services of a financial advisor to assist the Board of Directors in this mandate. The Company is currently in discussions with its existing secured bank lenders, suppliers, potential investors, as well as an ad hoc committee of noteholders. There can be no assurance as to the outcome of such discussions. Financial Statements The Company's financial statements and accompanying notes for the quarter ended March 31, 2003 are available in PDF format on SEDAR and on its Web site. 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 (TSX) under the trading symbol "CSQ.A". CAPCO AMERICA: Fitch Junks Class B-5 Series 1998-D7 Notes at CCC ---------------------------------------------------------------- Fitch Ratings upgrades CAPCO America Securitization Corp.'s commercial mortgage pass-through certificates, series 1998-D7 $62.3 million class A-2 certificates to 'AA+' from 'AA' and $68.5 million class A-3 to 'A+' from 'A'. At the same time, Fitch downgrades $15.6 million class B-5 to 'CCC' from 'B-'. The following certificates are affirmed by Fitch: $154.4 million class A-1A, $632.3 million class A-1B, and interest-only class PS-1 at 'AAA'; $59.2 million class A-4 at 'BBB'; $21.8 million class A-5 at 'BBB-'; $31.1 million class B-1 at 'BB+'; $28 million class B-2 at 'BB'; $15.6 million class B-3 at 'BB-'; and $24.9 million class B-4 at 'B'. The $15.6 million class B-6 and $714 class B-6H certificates are not rated by Fitch. The rating actions follow Fitch's annual review of the transaction, which closed in September 1998. The upgrades to classes A-2 and A-3 reflect increases in subordination levels due to loan amortization, payoffs, and defeasance. The downgrade to class B-5 is attributed to the anticipated losses on several specially serviced loans. Five loans (1.7%) are currently being specially serviced by Lennar Partners, Inc., four (1.4%) of which Fitch expects to result in approximately $10 million of losses to the certificates leaving minimal credit support to the B-5 class. Three of the loans (1.1%) are secured by multi tenant retail properties previously occupied by Kmart or Heilig Meyers. Another loan (0.3%) expecting losses is secured by a health care property with the borrower in Chapter 7. As of the May 2003 distribution date, the pool's aggregate certificate balance has been reduced by 9.3% to $1.13 billion from $1.25 billion at issuance. Five loans (4% of pool) have been defeased, including The Banyan Pool I loan (3%). CapMark Services, L.P., the master servicer, collected year-end 2002 financials for 87% of the non-defeased, non-credit tenant leases loans. The CTL and the defeased loans are not required to report financials. The YE 2002 weighted average debt service coverage ratio for those loans with financials remains strong at 1.59 times compared to 1.65x as of YE 2001 and up from 1.42x at issuance. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Under these stress scenarios required subordination levels justify the upgrades to the senior classes and the downgrade to the junior class. Fitch will continue to monitor this transaction, as surveillance is ongoing. CAN FIN'L: Will Record Q2 Charge Relating to 1995 Property Loss --------------------------------------------------------------- CNA Financial Corporation (NYSE:CNA) announced that its Specialty Lines segment expects to record an after-tax charge of approximately $49 million in the second quarter of 2003 in connection with a recent adverse arbitration decision involving a single large property and business interruption loss. The decision was rendered against an insurance pool in which CNA was a former participant. The loss was caused by a fire which occurred in 1995. Further details will be provided when they are publicly available. "We are disappointed and surprised by the arbitration decision," said Stephen W. Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies. "In our experience it is highly unusual for a property loss of this nature to have such adverse development so long after the loss event." CNA is the country's fourth largest commercial insurance writer, the 11th largest property and casualty company and the 51st largest life insurance company. CNA's insurance products include standard commercial lines, specialty lines, surety, reinsurance, marine and other property and casualty coverages; life and accident insurance; group long term care, disability and life insurance; and pension products. CNA services include risk management, information services, underwriting, risk control and claims administration. For more information, visit CNA at http://www.cna.com CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. * * * As reported in Troubled Company Reporter's November 25, 2002 edition, A.M. Best Co., affirmed the financial strength ratings of the wholly-owned insurance subsidiaries of CNA Financial Corporation (Chicago, IL). Additionally, A.M. Best has affirmed the "bbb" debt rating on CNA Financial Corporation's existing debt securities, a rating of AMB-2 to the commercial paper program and indicative ratings to corporate securities under a $600 million shelf registration filed in 1999. These indicative ratings include "bbb" on senior unsecured debt, "bbb-" on subordinated debt, "bb+" on trust preferred securities and "bb+" on preferred stock. CARR PHARMACEUTICALS: Has Until Month-End to File Schedules ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Carr Pharmaceuticals, Inc., and its debtor-affiliates an extension of time to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors have until June 30, 2003 to file these documents. Carr Pharmaceuticals, Inc., an affiliate of Miza Pharmaceuticals, Inc., a pharmaceutical contract manufacturing company, filed for chapter 11 protection on May 23, 2003 (Bankr. N.J. Case No. 03-27366). Michael G. Menkowitz, Esq., and Magdalena Schardt, Esq., at Fox Rothschild LLP, represent the Debtors in their restructuring efforts. COMDISCO INC: Board Declares Dividend to Common Shareholders ------------------------------------------------------------ Comdisco Holding Company, Inc.'s (OTC:CDCO) Board of Directors has declared a cash dividend of $14.30 per share on the outstanding shares of its common stock, payable on June 19, 2003 to common stockholders of record on June 9, 2003. Comdisco Holding Company has approximately 4.2 million shares of common stock outstanding. Mellon Investor Services will serve as paying agent for the dividend to common stockholders. Comdisco intends to treat this distribution for income tax purposes as one in a series of liquidating distributions in complete liquidation of the company. Comdisco's First Amended Joint Plan of Reorganization, which became effective on August 12, 2002, requires that holders of Comdisco's contingent distribution rights (OTC: CDCOR) be entitled to share in proceeds realized from the company's assets once certain minimum recovery thresholds are achieved. After giving effect to the dividend announced today and to the distribution from the company's disputed claims reserve made on May 15, 2003, the recovery to Comdisco's general unsecured creditors will be approximately 89 percent. As a result, the company also announced today that it will make a cash payment of $.01621 per right on the contingent distribution rights, payable on June 19, 2003 to contingent distribution rights holders of record on June 9, 2003. Comdisco Holding Company has approximately 152.8 million contingent distribution rights outstanding. Mellon Investor Services will serve as paying agent for the payment to holders of contingent distribution rights. The aggregate cash payment to a particular holder of record of contingent distribution rights will be rounded to the nearest $0.01 (up or down), with $0.005 being rounded down. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money the remaining assets of the corporation in an orderly manner. Rosemont, IL-based Comdisco -- http://www.comdisco.com-- provided equipment leasing and technology services to help its customers maximize technology functionality and predictability, while freeing them from the complexity of managing their technology. Through its former Ventures division, Comdisco provided equipment leasing and other financing and services to venture capital backed companies. COOPERATIVE COMPUTING: Commences Tender Offer for 9% Notes ---------------------------------------------------------- Cooperative Computing, Inc. (CCITRIAD) has commenced a tender offer for any and all of its $100 million aggregate principal amount of 9% Senior Subordinated Notes due 2008. In conjunction with the tender offer, noteholder consents are being solicited to effect certain amendments to the indenture governing the notes. The purchase price of 100% of the principal amount of the notes will be paid for notes validly tendered and accepted for purchase, as well as accrued and unpaid interest up to, but not including, the payment date. The tender offer is scheduled to expire at 11:59 p.m., New York City time on June 26, 2003, unless extended. Noteholders who provide consents to the proposed amendments will receive a consent payment of $22.50 per $1,000 principal amount of notes tendered and accepted for purchase pursuant to the offer if they provide their consents on or prior to 5:00 p.m., New York City time, on June 12, 2003, unless such date is extended. The total consideration for notes tendered with consents and not withdrawn prior to the expiration of the consent period will be $1,022.50 per $1,000 principal amount of notes tendered. The obligations to accept for purchase and to pay for notes in the tender offer is conditioned on, among other things, the following: -- there being validly tendered and not validly withdrawn a majority in aggregate principal amount of the outstanding notes, -- the execution of a supplemental indenture to the indenture governing the notes, following receipt of consents to the proposed amendments from the holders of not less than a majority in aggregate principal amount of outstanding notes, and -- there being available from the anticipated offering of senior notes by CCITRIAD, all of the financing necessary to fund the payment of the aggregate consideration payable for the notes and for the consents duly delivered. CCITRIAD has retained JPMorgan to serve as the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Wells Fargo Bank Minnesota, N.A. is acting as the depositary in the tender offer and consent solicitation. CCITRIAD is an industry leader in enterprise systems and information services for the automotive aftermarket, and hardlines and lumber industries. Headquartered in Austin, TX, the company has operations in Livermore, CA, Denver, CO, Canada, France, Ireland and the UK. Cooperative Computing's March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $5 million. CWMBS INC: Fitch Rates Class B-3, B-4 Ser. 2003-24 Notes at BB/B ---------------------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2003-24 classes A-1 through A-17, PO and A-R (senior certificates, $485,999,999) are rated 'AAA' by Fitch Ratings. In addition, Fitch rates class M ($6,500,000) 'AA', class B-1 ($3,000,000) 'A', class B-2 ($1,750,000) 'BBB', class B-3 ($1,000,000) 'BB' and class B-4 ($750,000) 'B'. The 'AAA' rating on the senior certificates reflects the 2.80% subordination provided by the 1.30% class M, 0.60% class B-1, 0.35% class B-2, 0.20% privately offered class B-3, 0.15% privately offered class B-4 and 0.20% privately offered class B- 5 (not rated by Fitch). Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a pool of conventional, fully amortizing, 20- to 30-year fixed-rate mortgage loans, secured by first liens on one- to four-family residential properties. As of the closing date (May 30, 2003), the mortgage pool demonstrates an approximate weighted-average original loan-to-value ratio of 69.98%. Approximately 62.62% of the loans were originated under a reduced documentation program. Cash-out refinance loans represent 13.68% of the mortgage pool and second homes 3.94%. The average loan balance is $473,901. The weighted average FICO credit score is approximately 745. The three states that represent the largest portion of mortgage loans are California (66.17%), Illinois (5.12%) and New Jersey (3.04%). The collateral characteristics provided are based off the mortgage loans as of the closing date. Fitch ensures that the deposits of subsequent loans conform to representations made by CHL. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Approximately 95.45% and 4.55% of the mortgage loans were originated under CHL's standard underwriting guidelines and expanded underwriting guidelines, respectively. Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the standard underwriting guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. CWMBS INC: Fitch Rates Class B-3, B-4 Ser. 2003-18 Notes at BB/B ---------------------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2003-18 classes A-1 through A-12, PO and A-R (senior certificates, $485,999,999) are rated 'AAA' by Fitch Ratings. In addition, Fitch rates class M ($6,500,000) 'AA', class B-1 ($3,000,000) 'A', class B-2 ($1,750,000) 'BBB', class B-3 ($1,000,000) 'BB' and class B-4 ($750,000) 'B'. The 'AAA' rating on the senior certificates reflects the 2.80% subordination provided by the 1.30% class M, 0.60% class B-1, 0.35% class B-2, 0.20% privately offered class B-3, 0.15% privately offered class B-4 and 0.20% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a pool of conventional, fully amortizing, 20- to 30-year fixed-rate mortgage loans, secured by first liens on one- to four-family residential properties. As of the closing date (May 30, 2003), the mortgage pool demonstrates an approximate weighted-average original loan-to-value ratio of 68.82%. Approximately 61.58% of the loans were originated under a reduced documentation program. Cash-out refinance loans represent 15.48% of the mortgage pool and second homes 2.63%. The average loan balance is $482,149. The weighted average FICO credit score is approximately 743. The three states that represent the largest portion of mortgage loans are California (66.22%), New Jersey (4.91%) and New York (3.22%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Approximately 95.50% and 4.50% of the mortgage loans as of the closing date were originated under CHL's standard underwriting guidelines and expanded underwriting guidelines, respectively. Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. DE LOACH VINEYARDS: UST Sets First Creditors Meeting for June 20 ---------------------------------------------------------------- The United States Trustee will convene a meeting of De Loach Vineyards, Inc.'s creditors on June 20, 2003, 1:30 p.m., at Office of the U.S. Trustee, 777 Sonoma Ave., Suite 116, Santa Rosa, California 95404. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. De Loach Vineyards, Inc., a family-owned winery, filed for chapter 11 protection on May 20, 2003 (Bankr. N.D. Calif. Case No. 03-11242). Paul M. Jamond, Esq., at Law Offices of Paul M. Jamond, represents the Debtor in its restructuring efforts. DEVINE ENTERTAINMENT: Delays Filing of First Quarter Financials --------------------------------------------------------------- Devine Entertainment (TSX:DVN) announced a delay in the filing of its financial statements as of the first quarter 2003. This filing delay follows the Company's announcement on May 15, 2003 of a delay in filing its year-end audited financial statements. Devine is actively negotiating a series of corporate and production related financings that, if completed successfully in the near future, will put the Company on a stronger fiscal footing and enable it to complete its filings and schedule a shareholders meeting within the next 45-75 days. The Company has been pursuing new financing for some time and acknowledges that, if a financing is not completed in the near future, it may not be able to meet all of its ongoing obligations which could necessitate a reorganization of the Company and a change in the status of its TSX listing. Devine's management continues to pursue new corporate financing, new production and the maximizing of revenues and the value of its proprietary film library. Management remains committed to its shareholders and creditors in a very difficult time for Toronto-based film production companies and the Canadian entertainment sector in general. In response to the Company's late filing the Ontario Securities Commission issued a temporary cease trade order on May 22, 2003 to Devine Entertainment's directors and officers for fifteen days or until two days after completing all up to date filings. A hearing will be held on June 4, 2003 in order to consider extending the order. Five-time Emmy Award-winning Devine Entertainment Corporation is a developer and producer of high-quality children's and family films designed for worldwide television and cable markets and international home video markets. DIMON INC: Successfully Completes Long-Term Debt Restructuring -------------------------------------------------------------- DIMON Incorporated (NYSE: DMN) announced the successful issuance of $125 million of 7-3/4% Senior Notes due 2013. The Company has also issued a redemption notice for all $125 million of its outstanding 8-7/8% Senior Notes due 2006, which will be retired with the proceeds from the new Notes. Simultaneous with the completion of the Senior Note issuance, DIMON entered into an agreement to swap the entire $125 million notional amount to a floating interest rate based on LIBOR plus 3.69%, to be set six months in arrears. Brian J. Harker, Chairman and Chief Executive Officer, stated, "In addition to providing substantial ongoing interest expense savings, this very successful refinancing enhances our long-term financial flexibility by extending the average maturity of DIMON's debt portfolio from 5.9 to 8.0 years." The Company noted that although the redemption premium and other charges associated with the refinancing will reduce its expected fiscal year 2003 earnings by about $0.02 per basic share, the refinancing is expected to add $0.03 per basic share to its earnings for each of the fiscal years 2004 through 2006. The Company's previously stated earnings guidance for fiscal year 2003 remains otherwise unchanged. The Senior Notes sold have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. DIMON Incorporated is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. For more information on DIMON, visit the Company's Web site at http://www.dimon.com As reported in Troubled Company Reporter's May 30, 2003 edition, Standard & Poor's Ratings Services assigned its 'BB' senior unsecured debt rating to the second-largest independent leaf tobacco processor DIMON Inc.'s $125 million senior notes due 2013. Proceeds from this issue will be used to redeem the company's existing $125 million 8.875% senior notes due June 1, 2006. At the same time, the outlook is revised to positive from stable. In addition, Standard & Poor's affirmed its 'BB' corporate credit rating on the company. Danville, Virginia-based DIMON has about $490 million of rated debt. ENCOMPASS SERVS.: Wants to Continue Wright Furlford's Engagement ---------------------------------------------------------------- Encompass Services Corporation and its debtor-affiliates have employed the law firm of Wright, Fulford, Moorhead & Brown, PA as an ordinary course professional to serves as counsel in connection with an on-going dispute regarding aproject that Debtor EDG Power Group, Inc. performed for Valero Refining Company-California. However, recently, a new fee arrangement has been executed between Wright Fulford and the Debtors that made the fees payable to Wright Fulford ultimately exceed the ordinary course professional fee limitations averaged over six months. For this reason, the Debtors ask the Court to approve the continued employment of Wright Fulford as their special counsel pursuant to Section 327(e) of the Bankruptcy Code, so that Wright Fulford can carry on the services related to the Valero dispute. Wright Fulford is based in Orlando, Florida and specializes in construction law issues. Mr. Visage tells Judge Greendyke that the Debtors have utilized Wright Fulford's services since June 1995 with regard to a number of difference construction law matters. With Wright Fulford's background, expertise, and past representation of the Debtors with respect to numerous issues, in particular its prepetition representation of the Debtors in relation to their dispute with Valero, Mr. Visage asserts that the firm is both well qualified and uniquely able to provide services to the Debtors in their Chapter 11 cases in a most efficient and timely manner. Pursuant to an engagement agreement in April 2003, the Debtors have agreed to compensate Wright Fulford on a contingent fee basis. The percentage of the recovery paid to Wright Fulford is dependent on the ultimate settlement amount the Debtors can fetch from Valero. The Engagement Agreement provides that for any settlement resulting in gross recovery of up to $750,000, Wright Fulford will be entitled to 15% of the recovery. For any settlement over $750,000 and up to and including $1,500,000, Wright Fulford is entitled to 15% of the first $750,000 and 25% of any amount over $750,000, up to and including $1,500,000. If the Debtors' gross recovery were over $1,500,000, Wright Fulford would be entitled to 25% of the recovery. The Debtors are currently discussing a potential settlement with Valero whereby, among other things, Valero would pay them $1,500,000. In this case, Mr. Visage says, Wright Fulford would be entitled to $300,000 of the settlement funds pursuant to the Engagement Agreement. The Debtors maintains that the proposed fee structure properly incentivizes Wright Fulford to the maximize recovery they'd get while simultaneously preventing them from incurring on-going legal fees and expenses associated with the Valero dispute. Donald F. Wright, a member at Wright Fulford, assures the Court that the firm has no connection with, and holds no interest adverse to, the Debtors, their estates, their creditors, or any other party-in-interest. Wright Fulford is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and as required under Section 327(a). (Encompass Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Wind Debtors Wants Waldron Appointed as Wind Trustee ---------------------------------------------------------------- Enron Wind Systems, LLC, Enron Wind Development LLC and Enron Wind LLC ask the Court to appoint Robbye R. Waldron as the Managing Trustee of the Wind Systems Trust and Wind Development Trust. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, recalls that the Court approved the Wind Trust Motion on February 27, 2003. The Trusts were established to liquidate the Trust Assets and utilizing the liquidation proceeds, together with all of the income of the Trusts, to discharge the Wind Debtors' legal obligations to their non-electric utility creditors. Mr. Sosland informs the Court that Cloyses Partners LLC was appointed as the managing trustee of the Trusts. Pursuant to the Trust Agreement, the Managing Trustee may be removed without cause by the Non-Utility Representative upon written notice to the Court, the Managing Trustee and the Wind Debtors. On April 21, 2003, the Non-Utility Representative provided notice that it was removing the Managing Trustee. Pursuant to the Trust Agreement, the Court will appoint a successor upon the recommendation of a successor by Enron Wind Systems and Enron Wind Development. With the Wind Debtors' recommendation, Mr. Sosland contends that Mr. Waldron is qualified to become the Managing Trustee because he, a shareholder of Waldron & Schneider LLP, currently serves as a Chapter 7 panel trustee in the Southern District of Texas - Houston Division. Moreover, Mr. Waldron has experience as a receiver and trustee in liquidation proceedings. (Enron Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 17 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. ENRON: EFS I's Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: EFS I, Inc. 1400 Smith Street Houston, TX 77002 aka Limbach Facility Services, Inc. aka Jovinole Associates Bankruptcy Case No.: 03-13447 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: More than $100 Million Estimated Debts: $50 Million to $100 Million ENRON: EFS II's Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: EFS II, Inc. 1400 Smith Street Houston, Texas 77002 aka EFS Construction and Services Company Bankruptcy Case No.: 03-13451 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $0 to $50,000 Estimated Debts: $0 to $50,000 ENRON: EFS III's Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: EFS III, Inc. 1400 Smith Street Houston, TX 77002 aka EFG Holdings, Inc. Bankruptcy Case No.: 03-13453 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $50 Million to $100 Million Estimated Debts: $0 to $50,000 ENRON: EFS V's Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: EFS V, Inc. 1400 Smith Street Houston, TX 77002 aka Williard, Inc. Investment Company Bankruptcy Case No.: 03-13454 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $10 Million to $50 Million Estimated Debts: $0 to $50,000 ENRON: EFS VI's Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: EFS VI, L.P. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-13457 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $0 to $50,000 Estimated Debts: $0 to $50,000 ENRON: EFS VII's Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: EFS VII, Inc. 1400 Smith Street Houston, Texas 77002 aka Limbach Company Holding Company Bankruptcy Case No.: 03-13459 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $10 Million to $50 Million Estimated Debts: $0 to $50,000 ENRON: EFS IX's Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: EFS IX, Inc. 1400 Smith Street Houston, TX 77002 aka Limbach Company Investment Company Bankruptcy Case No.: 03-13460 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million ENRON: EFS X's Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: EFS X, Inc. 1400 Smith Street Houston, TX 77002 aka Marlin Electric, Inc. aka The PMB-Limbach Group Electrical Bankruptcy Case No.: 03-13461 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million ENRON: EFS XI's Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: EFS XI, Inc. 1400 Smith Street Houston, TX 77002 aka PBM Mechanical, Inc. aka The PBM-Limbach Group-Mechanical Bankruptcy Case No.: 03-13462 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million ENRON: EFS XII's Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: EFS XII, Inc. 1400 Smith Street Houston, Texas 77002 aka MEP Services, Inc. aka The PBM-Limbach Group-Service Bankruptcy Case No.: 03-13463 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million ENRON: EFS XV's Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: EFS XV, Inc. 1400 Smith Street Houston, Texas 77002 aka Mechanical Processional Services, Inc. Bankruptcy Case No.: 03-13465 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $0 to $50,000 Estimated Debts: $50,000 to $1 Million ENRON: EFS XVII's Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: EFS XVII, Inc. 1400 Smith Street Houston, Texas 77002 aka Harper Mechanical Corporation Investment Bankruptcy Case No.: 03-13467 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million ENRON: EFS Holdings' Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: EFS Holdings, Inc. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-13469 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million ENRON: Enron Operations' Voluntary Chapter 11 Case Summary ---------------------------------------------------------- Debtor: Enron Operations Services Corp. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-13489 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 30, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million ENRON: Jovinole Associates' Voluntary Chapter 11 Case Summary ------------------------------------------------------------- Debtor: Jovinole Associates 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-13468 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $0 to $50,000 Estimated Debts: $0 to $50,000 ENRON: Omicron Enterprises' Voluntary Chapter Case Summary ---------------------------------------------------------- Debtor: Omicron Enterprises, Inc. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-13446 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: More than $100 Million Estimated Debts: $50 Million to $100 Million FLEMING COS.: Wins Nod to Hire Kirkland Ellis as Lead Counsel ------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates obtained permission from the Bankruptcy Court to employ Kirkland & Ellis as their lead counsel, nunc pro tunc to the Petition Date. With the Court's approval of its engagement, K&E is expected to: A. advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; B. attend meetings and negotiate with representatives of creditors and other parties-in-interest; C. take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in negotiations concerning all litigation in which the Debtors are involved, including, but not limited to, objections to claims filed against the estates; D. prepare on Debtors' behalf all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; E. take any necessary action on behalf of the Debtors to obtain confirmation of the Debtors' plan of reorganization; F. represent the Debtors in connection with obtaining postpetition loans; G. advise the Debtors in connection with any potential sale of assets; H. appear before this Court, any appellate courts and the United States Trustee and protect the interests of the Debtors' estates before those Courts and the United States Trustee; I. consult with the Debtors regarding tax matters; and j. perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with the Chapter 11 Cases. Kirkland intends to apply for compensation for professional services rendered in connection with the Chapter 11 Cases, subject to this Court's approval and in compliance with applicable provisions of the Bankruptcy Code, the Local Rules and Orders of this Court, on an hourly basis plus reimbursement of actual, necessary expenses and other charges that it incurs. Kirkland will charge the Debtors hourly rates consistent with the rates it charges in bankruptcy and non-bankruptcy matters of this type. K&E does not disclose its current hourly rate structure. (Fleming Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) FOSTER WHEELER: S&P Takes Action over Going Concern Uncertainty --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating and its other ratings on Foster Wheeler Ltd., on CreditWatch with negative implications. The CreditWatch listing reflects Standard & Poor's heightened concerns that, short of a material asset sale, or noncoercive financial restructuring within the next few quarters, the viability of Perryville, New Jersey-based Foster Wheeler would be questionable. These concerns stem from Foster Wheeler's limited financial flexibility, its expected usage of working capital during 2003 as construction projects are completed, and its onerous capital structure, including its underfunded pension plan. "If the company is unable to provide specific plans of action that will adequately address these concerns, a ratings downgrade of several notches is possible," said Standard & Poor's credit analyst Joel Levington. Foster Wheeler, which had about $1.2 billion in total debt outstanding at March 31, 2003, provides a wide range of engineering and construction services, mainly to the oil and gas, pharmaceutical, chemical processing, and power generation markets. Orders for energy equipment can be large, making cash flow and earnings "lumpy" in that segment. Because of very weak demand for those products, it is likely that the firm will be a cash user in that segment as it works off advanced payments from prior orders. Standard & Poor's will meet with management to discuss its near- term financial strategies to obtain needed liquidity, their impact on business risk, the degree of success the firm has had in implementing more stringent risk management initiatives, and the near- and intermediate-term outlook in its key end-markets, before taking a further ratings action. Foster Wheeler Corp.'s 6.750% bonds due 2005 (FWC05USR1) are trading at about 67 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FWC05USR1for real-time bond pricing. GASEL TRANSPORTATION: Files Chapter 11 Petition in Columbus, Oh. ---------------------------------------------------------------- Gasel Transportation Lines, Inc., (OTCBB:GSEL), a national long- distance and regional truckload common carrier, filed for protection under Chapter 11 on May 19, 2003, with the United States Bankruptcy Court, Columbus, Ohio to seek asset protection from recent demands from some of its equipment-based lenders and to enable it to continue to execute its aggressive growth strategy to restore economic viability. The trucking industry has experienced extremely adverse conditions since the beginning of the general economic downturn in 2000. This period has been fraught with some of the highest fuel prices in history, sharp declines in overall freight shipment tonnage, productivity-sapping winter storms and industry-wide business failures. Gasel has survived the attrition, but has been operating at a deficit during the past three years. The accumulated losses strained the Company's ability to meet some of its long-term equipment loan obligations. Although the Company was continuing to work with the majority of its lenders to rectify the situation, a few equipment lenders recently issued loan defaults to the Company. The defaults plus a significant lump sum payment demanded by one particular lender precipitated the need to seek protection under Chapter 11 to retain the use of revenue generating equipment and reorganize the Company's current debt structure to facilitate growth and profitability. Gasel President, Michael Post, commented: "Due to circumstances we believe were beyond our control, we have taken appropriate action to protect the operations of the Company, our employees, shareholders, and customers. The reorganization is expected to give us the time and financial advantages needed to realize the full effect of the corrective actions taken internally to generate positive earnings, workout new financial arrangements with existing lenders, continue to pursue additional equity funding to properly re-capitalize the company, and ultimately improve shareholder value." Mr. Post further stated, "I want to stress that this is merely a temporary setback for Gasel, its employees and loyal shareholders. We have effectively established a new credit facility with Systran Financial Services that increases our available cash flow by $1.5 MM and are pressing ahead with all of the growth initiatives, both internal and external, that have been previously identified. We are confident that we will emerge from judicial reorganization in a timely manner with a healthier balance sheet, increased liquidity and streamlined operations that will foster greater levels of flexibility and growth than ever before." Management has secured the required financing and insurance necessary to operate under the reorganization and does not anticipate any interruption in its normal course of business. The parent company, Gasel Transportation Lines, Inc. has two subsidiaries, GTL Logistics, Inc. and Gasel Driver Training Schools, Inc., that will not be a part of the reorganization as they have independent self-sustaining operations. Gasel Transportation Lines, Inc., based in Marietta, Ohio, with a terminal and sales offices in Columbus, Ohio, is a national long and regional haul truckload common and contract carrier, and provides logistic services throughout the continental United States and Canada. For more information about Gasel, visit the company's Web site at http://www.gasel.net GASEL TRANSPORTATION: Chapter 11 Case Summary --------------------------------------------- Debtor: Gasel Transportation Lines Inc PO Box 1199 Marietta, OH 45750 Type of Business: The Debtor is a national long and regional haul truckload common and contract carrier and provides logistic services throughout the continental United States and Canada. Bankruptcy Case No.: 03-bk-57447 Chapter 11 Petition Date: May 19, 2003 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtor's Counsel: Grady L Pettigrew, Jr., Esq. 400 East Town Street Suite G 30 Columbus, OH 43215 (614) 224-1113 GENSCI REGENERATION: Resolves All Legal Disputes with Osteotech --------------------------------------------------------------- GenSci Regeneration Sciences Inc. (TSX: GNS), The OrthoBiologics Technology Company(TM), announced that GenSci and Osteotech have signed a settlement agreement as per the terms previously announced in GenSci's press release dated April 21, 2003. GenSci has received a covenant from Osteotech not to sue GenSci in connection with its newly introduced products, including DynaGraft(R) II, OrthoBlast(R) II and Accell(R) DBM100. Terms of the settlement will be incorporated into an Amended Plan of Reorganization and an Amended Disclosure Statement, which must be filed with and confirmed by the bankruptcy court. The settlement is contingent upon bankruptcy court approval. Terms of settlement include payment of $7.5 million by GenSci to Osteotech. Payments to Osteotech include $1 million to be paid after the effective date of GenSci's plan of reorganization followed by payments of $325,000 per quarter for twenty quarters with interest payable at the federal judgment rate, currently 1.3%, capped for purposes of future interest payments at 3% per annum. To secure the amounts to be paid to Osteotech, GenSci will provide to Osteotech an irrevocable letter of credit, or an escrow agreement acceptable to Osteotech, in the amount of $5 million and a security interest in its assets to secure the remaining balance of $1.5 million. Osteotech and GenSci have agreed to dismiss all litigation that is currently pending between them. For additional information please visit GenSci's new Web site: http://www.gensciinc.com GENUITY: Court OKs LeBoeuf Lamb's Engagement as Special Counsel --------------------------------------------------------------- Genuity Inc., and its debtor-affiliates obtained the Court's authority to employ the law firm of LeBoeuf, Lamb, Greene & MacRae, L.L.P. as their special counsel. As previously reported, the Debtors asked LeBoeuf to consult with them as special counsel for the purpose of assisting them in investigating and prosecuting certain customer and vendor disputes. In particular, LeBoeuf has been retained to pursue litigation against numerous large customers of the Debtors for non-payment of services rendered. These claims have a cumulative face value in excess of $100,000,000. It is also anticipated that many defendants will assert defenses and counterclaims based on the Debtors' performance under the contracts in question. To pursue the anticipated litigation, the Debtors required the particular services of Paul R. Gupta, a member of LeBoeuf. Mr. Gupta has personally performed a substantial amount of work for the Debtors and for the predecessor of Genuity Inc., and is familiar both with the businesses of the Debtors and with the contractual issues in the customer and vendor disputes. LeBoeuf will charge the Debtors its standard hourly rates plus expenses for services rendered. The customary and current standard hourly rates charged by LeBoeuf for the services to be rendered to the Sebtors are: Partners and Counsel $420 - 625 Associates 190 - 435 Paralegals and Clerks 105 - 195 These hourly charges may be increased in the ordinary course from time to time during the pendency of these cases. (Genuity Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: XO Comms. Offers to Acquire Assets for $700MM -------------------------------------------------------------- XO Communications, Inc., has made an offer to acquire all of the assets of Global Crossing LTD., and Global Crossing Holdings LTD, for consideration of over $700 million, thereby increasing the proceeds available to Global Crossing creditors by over $100 million versus the current bid by Singapore Technologies Telemedia PTE LTD. The offer was made directly to advisors for the Bondholders, Banks and the Company. XO's offer is comprised of $250 million of cash, $200 million of new 11% secured notes secured by all of the assets of Global Crossing, $200 million junior preferred stock in New Global Crossing, a 100% owned subsidiary of XO, and 15 million 5 year warrants to acquire stock in XO at $10.00 per share. "It is our intent to provide each of Global Crossing's Banks and Bond claim holders with the same amount of cash and new notes as in the current plan, and to increase the equity consideration received by each by over $50 million," stated Carl C. Icahn, Chairman of the Board of XO. "In addition, our proposal can close without regulatory headaches or financing contingencies and provides tremendous synergies between the two organizations that can benefit both Global Crossing's creditors and XO shareholders." XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking, Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in more than 60 markets throughout the United States. GLOBAL CROSSING: April 2003 Consolidated Net Loss Tops $74 Mill. ---------------------------------------------------------------- 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 April 2003 MOR include the following: For continuing operations in April 2003, Global Crossing reported consolidated revenue of approximately $228 million. Consolidated access and maintenance costs were reported as $173 million, while other operating expenses were $66 million. "Our critical focus during this reorganization period is to work even more closely with our customers to meet their needs for communication services and earn their on-going business," said John Legere, Global Crossing's chief executive officer. "The relative stability of our revenue results during April, and realized to date, reflects the success of these efforts and the value of the customer relationships which we have built. Notwithstanding the variability of expenses from month to month, we continue to manage our operating expenses and cash requirements very tightly and closed the month with a consolidated cash balance of $584 million." Global Crossing's consolidated cash balance of approximately $584 million as of April 30, 2003 was comprised of approximately $180 million in unrestricted cash, $333 million in restricted cash and $71 million of cash held by Global Marine. Consolidated EBITDA was reported at a loss of $11 million. The consolidated net loss for April 2003 was $75 million. As discussed below, the reported depreciation and amortization of $87 million for the month of April 2003, and therefore both the April operating loss and net loss, would have been reduced substantially if the financial statements in the April MOR had reflected the tangible asset impairment anticipated by the company. On October 21, 2002, Global Crossing announced that it would restate certain financial statements previously filed with the SEC. These restatements, which are more fully described in footnote one to the financial statements contained in the April MOR, will record exchanges between carriers of leases of telecommunications capacity at historical carryover basis, resulting in no recognition of revenue. Reflecting this accounting treatment, the April MOR excludes amounts previously recognized as revenue over the lives of the lease contracts governing these capacity exchanges. The restatements have no impact on cash flow. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001, which has not yet been reported pending the completion of the audit of financial statements for 2001, is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, as previously disclosed, Global Crossing has determined that it will write down its tangible assets in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, and the bankruptcy filings of Asia Global Crossing and its subsidiary, Pacific Crossing Ltd. Global Crossing is in the process of evaluating its cash flow forecasts and other pertinent data to determine the amount of the impairment of its long-lived tangible assets. The impairment is anticipated to be at least $7 billion, an estimate that excludes any amounts attributable to the restatement of exchanges of capacity leases described above and excludes any impairment attributable to the assets of Asia Global Crossing and its subsidiaries, which Global Crossing deconsolidated effective November 18, 2002. The financial information included within this press release and the April MOR reflects the restatement of exchanges of capacity leases as described above and the $8 billion write-off of all of the goodwill and other identifiable intangible assets, but does not reflect any write- down of tangible asset value. Accordingly, the net loss of $75 million for the month of April 2003 would have been reduced substantially if the financial statements in the April MOR had reflected the reduction in depreciation and amortization expense resulting from this tangible asset write-down. The write- off of the intangible assets and the write-downs of tangible assets are described more fully in the April MOR. 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. GOLDRAY INC: Continuing Review of Various Strategic Alternatives ---------------------------------------------------------------- As part of an ongoing corporate strategy and the board of directors' and management's efforts to stabilize Goldray's financial and cash-flow position, Goldray continues to review various strategic alternatives with a review to enhancing and protecting underlying shareholder value. These strategic alternatives include pursuing a number of initiatives, including: - surveying the market for potential buyers for Goldray, either in whole or in part; - pursuing secured debt financing opportunities subordinated to Goldray's senior lender; - attempting to establish with another lender a current line of credit secured against accounts receivable and inventory; and - working with its landlord and other creditors and suppliers to extend credit and to ensure a continued flow of supplies and services. In addition to the foregoing, the board of directors is contemplating retaining the advisory services of a financial advisor to review and survey the market for potential buyers for all or part of Goldray. If Goldray receives an offer that is acceptable to the board of directors, Goldray will disclose the matter on a timely basis. Goldray also announces that Claudio A. Ghersinich has resigned as a director of Goldray in order to pursue other business interests. In addition, Dean P. Geddes has resigned as an officer of Goldray, but continues to act as a director. Accordingly, the current members of the board of directors include: M. Gregory Saroka, Michael J.W. Newson, Everett Koeller, and Dean P. Geddes. At this time, the outcome of the strategic alternative initiatives is uncertain. However, while Goldray faces significant challenges, the board of directors and management are committed in their endeavors to turn around Goldray's performance in the second half of 2003. HARKEN ENERGY: Taps Petrie Parkman to Evaluate Strategic Options ---------------------------------------------------------------- Harken Energy Corporation (Amex: HEC) has retained Petrie Parkman & Co., Inc., to evaluate its domestic oil and gas assets and to make recommendations to maximize their value. Harken's domestic assets currently consist of its productive properties and prospects along the Gulf Coast of Texas and Louisiana, as well as the Panhandle region of Texas. Alan G. Quasha, Harken's Chairman, stated, "Harken's management has spent the last few months actively restructuring the liability side of our balance sheet and examining and taking action on our cost structure. While Harken is still burdened with significant long-term debt, we have effectively dealt with most of our short-term debt without causing excessive dilution. While we are mindful that much work on the liability side needs to be accomplished, we are now also turning our attention to our asset side to properly assess its value, particularly our domestic asset base. We have thus asked Petrie Parkman to help us take a fresh look at these assets." Based in Houston, Texas, Harken is an oil and gas production company whose corporate strategy calls for concentrating its resources on the development of domestic and international upstream energy projects. HAWAIIAN AIRLINES: John Monahan Appointed as Chapter 11 Trustee --------------------------------------------------------------- Hawaiian Airlines, Inc., subsidiary of Hawaiian Holdings, Inc. (Amex: HA; PCX), has been advised that the U.S. Trustee's Office with approval of the Bankruptcy Court, has selected John Monahan, former president and chief executive officer of Liberty House, to serve as Chapter 11 Trustee to oversee the airline's operations in its bankruptcy case. "I recognize that the Bankruptcy Court, the United States Trustee, and the major creditors have given me a tremendous responsibility to ensure that Hawaiian Airlines is successfully reorganized," said Monahan. "Hawaiian has a long and distinguished tradition of serving the needs of Hawaii and its people, and I look forward to working with employees and management to create a company that will be successful and competitive for many years to come." "Having been through a major Chapter 11 case only a few years ago, I know the employees have been through trying times. They are one of the strengths of the airline and I will be communicating with them continuously throughout the restructuring process," he said. Mark Dunkerley, Hawaiian's president and chief operating officer, emphasized that the management team will work closely with Monahan and the creditors' committee to achieve a timely and successful restructuring for the airline. "We welcome John Monahan's appointment and pledge our full participation to working together so that Hawaiian Airlines can emerge from the bankruptcy process stronger than ever." Monahan began work yesterday to study Hawaiian Airlines' business, financial and legal affairs and as promptly as possible thereafter will meet with representatives of all the affected parties to obtain their perspectives on Hawaiian's strengths and problems and their views on how they can be most effectively addressed. Monahan's name was included on the three-person lists submitted by both Boeing Capital Corporation and the Official Committee of Unsecured Creditors. He is credited with successfully guiding Liberty House through a three-year bankruptcy filing that ended March 1, 2001, when the company emerged with 18 department stores and retail outlets, and 3,000 employees. Under his leadership, Liberty House refocused its product line and customer service on the Hawaii market with good success. Monahan left Liberty House after it was sold in mid-2001 to Federated Department Stores, Inc., which converted the store chain into Macy's. Monahan joined Liberty House in 1990 as a vice president and director, and was promoted to chief operating officer in 1994, before being elevated to president and chief executive officer in 1997. Hawaiian Airlines filed its voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code on March 21, 2003. On May 16, 2003, Judge Robert Faris granted the motion of Boeing Capital Corporation seeking to appoint a trustee to oversee the Company's Chapter 11 case. Additional information on Hawaiian Airlines, including previously issued company news releases, is available on the airline's Web site at http://www.HawaiianAir.com HAWKER RESOURCES: Generating Cash from Liquidation of Assets ------------------------------------------------------------ Hawker Resources Inc. (formerly SYNSORB Biotech Inc.) (HKR-TSE) announces its financial results for the first quarter 2003. Management's Discussion and Analysis Prior to 2002, SYNSORB Biotech Inc.. conducted pharmaceutical drug development with respect to SYNSORB Cd(R) for the prevention of recurrent C.difficile associated diarrhea. On December 10, 2001 SYNSORB terminated development of SYNSORB Cd(R) including its phase III clinical trials. Subsequent to December 10, 2001 SYNSORB had no drug in active development. At the Annual and Special Meeting of SYNSORB shareholders held April 3, 2003, shareholders approved the planned conversion of the company into an oil and gas enterprise and changed the company's name to Hawker Resources Inc. Revenue For the three months ended March 31, 2003, the Company recorded total revenue of $378,000 compared to $132,000 for the three months ended March 31, 2002. Interest income for the first quarter of 2003 was $3,000 as compared with $25,000 for the first quarter of 2002. This decrease was a result of the lower average cash on hand balances in the first quarter of 2003 compared to the same period in 2002. Other revenue received by the Company during the first quarter of 2003 related to an exclusive license agreement of certain of its patents regarding toxin binding sugars. Pursuant to this license agreement, the Company received net proceeds of $375,000. Other revenue received during the first quarter of 2002 of $107,000 related to a milestone payment received by the Company with respect to the previous sale of its INH Technologies Inc. subsidiary. No milestone payments were received in the first quarter of 2003. Operating Expenses Operating expenses totaled $476,000 for the three months ended March 31, 2003 as compared with $191,000 for the three months ended March 31, 2002. The increase in operating expenses for the first quarter of 2003 was due to increased insurance costs for the Company and professional fees related to the conversion of the Company into an oil and gas enterprise. Interest Expense There was no interest paid on long-term debt for the quarter ended March 31, 2003 as compared with $71,000 for the quarter ended March 31, 2002. The decrease in interest expense reflects the repayment in early 2002 of the Company's outstanding debt. Maintenance of Patents Costs incurred to maintain existing patents of the Company are expensed as incurred. For the three months ended March 31, 2003, $11,000 was incurred for maintenance of patents, a decrease of 88% from the $95,000 incurred for the three months ended March 31, 2002. This decrease was due to a reduction in the number of patents maintained by the Company. Amortization Amortization for the quarter ended March 31, 2003 was $2,000 as compared with $20,000 for the same period in 2002. This decrease is a result of the reduced carrying value of the depreciable capital assets due to the asset disposals that occurred during the year ended December 31, 2002. Capital Expenditures and Capital Asset Disposals There were no capital expenditures in the either the first quarter of 2003 or the first quarter of 2002. During the three months ended March 31, 2003, the Company sold most of its manufacturing equipment for net proceeds of $939,000. During the three months ended March 31, 2002, the Company sold minor capital assets for net proceeds of $4,000. The lack of capital expenditures and the sale of capital assets in both 2003 and 2002 reflects the wind-down of the biotech operations of the Company. Liquidity and Capital Resources As at March 31, 2003, the Company's cash position was $1,430,000 and its working capital position was $1,365,000 compared to December 31, 2002 balances of $289,000 and $412,000, respectively. As at March 31, 2003 and December 31, 2002, the Company had no long-term or short-term debt. The Company's primary source of liquidity during the first quarter of 2003 was the liquidation of its assets and the license of certain of its patents. The Company continues to market its building and related land as commercial premises. The Company also holds miscellaneous intellectual property rights with respect to certain drug technologies, which it may license, dispose of or abandon. No assurance can be given as to whether any additional assets can be disposed of or what, if any, proceeds can or will be received with respect thereto. On April 3, 2003, the Company closed financing agreements entered into effective March 7, 2003 with unrelated parties. Under the agreements, the Company issued by way of private placement the following: 75,000 common shares for $45,364; 430,493 Series A Debentures for $3,616,141; 430,493 Series A Warrants for $11,873; 2,152,465 voting preferred shares for $6,196; 3,874,437 non-voting preferred shares for $11,153. Each Series A Warrant will entitle the holder thereof to purchase five common shares and nine Class A shares on the concurrent surrender of the warrant, five voting preferred shares, nine non-voting preferred shares and one Series A Debenture. The proceeds of the debentures along with an additional $460,000 of the Company's cash have been pledged as security for repayment of the debentures. Accordingly, the private placement will not be a source of additional capital resources and liquidity to the Company until the warrants issued in the private placement are exercised and the proceeds received as additional equity capital. Also on April 3, 2003, the board of directors of the Company ratified the acquisition of all of the shares of 1022971 Alberta Ltd. ("1022971") for a nominal amount and the Company was assigned an option to purchase up to 49% of certain oil and gas properties for $67.1 million. On April 30, 2003, 1022971 obtained a bank loan for $120,000,000 to acquire all of the shares of Southward Energy Ltd. Immediately thereafter on April 30, 2003, Southward sold its oil and gas properties, excluding a 1% undivided interest in certain properties and a 100% interest in related seismic, to an independent third party for gross proceeds of $164,631,000. The gross proceeds were used to repay the bank loan obtained to acquire the shares and bank indebtedness of Southward. On May 28, 2003, the Company obtained an extendable revolving term credit facility amounting to $28,000,000 that bears interest at rates varying from Canadian prime rate or U.S. base rate of such bank to the Canadian prime rate or U.S. base rate plus 30 basis points, payable monthly in arrears. Pursuant to an underwriting agreement dated May 29, 2003, the Company proposes to raise net proceeds of $41.9 million through the issue and sale of 14,286,000 common shares. It is expected that the closing of the share offering will take place on or about June 12, 2003, and in any event not later than July 10, 2003. The Company will use $39.1 million of the net proceeds from the offering, together with up to $28 million of debt financing, to exercise the purchase option described above. The remainder of the net proceeds will be added to working capital and used for general corporate purposes. Immediately after the issuance of a receipt for the prospectus offering the Company's common shares for sale and issue, the warrants described above are to be exercised and the holder will be issued five common shares and nine Class A shares upon the surrender of five voting preferred shares, nine non- voting preferred shares and one Series A Debenture. Upon such an event $4,105,362 currently held as security on the Series A Debentures will be released and available for general corporate purposes. The oil and gas industry is capital intensive and the Company is likely to require significant additional capital resources in order to succeed in the oil and gas sector. At present, the Company has not identified any source of these additional capital resources and it is unlikely that such resources would be available to it unless particular oil and gas assets are identified to be acquired. The Company's ability to raise additional capital will depend upon a number of factors, such as general economic conditions and conditions in the oil and gas industry, that are beyond its control. If additional capital is required and is not available to the Company on acceptable terms, the Company's financial condition and prospects may be impaired. HAYES LEMMERZ: Court Approves Miguel Romo as Mexican Counsel ------------------------------------------------------------ Hayes Lemmerz International, Inc., and its debtor-affiliates obtained the Court's permission to employ and retain Miguel Angel Hernandez Romo Sr. and his law firm as Mexican special counsel, nunc pro tunc to April 23, 2003. Backgrounder In connection with the litigation initiated by Hayes Wheels de Mexico, S.A. de C.V., Hayes Wheels Aluminio, S.A. de C.V., and DESC Automotriz, S.A. de C.V., the Debtors hired Mexican counsel to assist with respect to certain proceedings before the Court involving the Notice of Cure Demand of the Hayes Mexico Entities and, in the Alternative, Motion for Allowance and Payment of Administrative Claim. Litigation on the Hayes Mexico Motion will entail highly contested complex legal and factual issues between the Debtors and the Hayes Mexico Entities, many of which implicate Mexican law. The Debtors' application to hire Romo related to three separate agreements between or among the parties, two of which are governed by Mexican law (i.e., a Shareholders Agreement with DESC and a Marketing Agreement and Support Services Agreement with Hayes Mexico). Miguel Angel Hernandez Romo Sr. and his law firm will assist the Debtors with these matters: (a) issues that may arise in connection with the Agreements that are governed by Mexican law; (b) political, governmental and public relations issues; (c) representation in a potential Mexican arbitration proceeding; (d) depositions and witness examinations concerning the above matters; and (e) other issues assigned by the Debtors. Miguel Angel Hernandez Romo Sr. and his law firm will seek compensation for the services of each attorney and paraprofessional acting on behalf of the Debtors in these chapter 11 cases at the current rate charged for such person's services other than in a case under Chapter 11. Miguel Angel Hernandez Romo Sr. and his law firm's current customary hourly rates are $350 per hour for senior attorneys and $250 per hour for junior attorneys. The rates may change from time to time in accordance with Miguel Angel Hernandez Romo Sr. and his law firm's established billing practices and procedures. (Hayes Lemmerz Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) Hayes Lemmerz Intl's 11.875% bonds due 2006 (HLMM06USS1) are trading at about 52 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1 for real-time bond pricing. HORIZON GROUP: Completes Restructuring of Three Defaulted Loans --------------------------------------------------------------- Horizon Group Properties, Inc. (HGP) (Nasdaq: HGPI), an owner, operator and developer of factory outlet and power centers, has restructured three loans which had been in default since October 2001. The restructuring included the acquisition of the loans secured by its outlet centers in Daleville, Indiana and Somerset, Pennsylvania and the reinstatement of the loan secured by its center in Tulare, California for a total payment by HGPI of $1.98 million. The loans that HGPI purchased had an aggregate principal balance of $13.2 million, excluding accrued interest and penalties, at the time of acquisition. The restructuring of the loan secured by HGPI's center in Tulare, California resulted in the immediate forgiveness of $798,000 of accrued penalties and default interest. An additional $448,000 of accrued interest will be forgiven after HGPI makes the scheduled debt service payments through September 2003. The Tulare loan has a current principal balance of $8.96 million, bears interest at the rate of 8.46%, amortizes over a 25 years and matures in August 2009. HGPI will report a gain in the second quarter of 2003 of approximately $11.0 million as a result of the restructuring of the loans. The funds used to accomplish the restructuring were loaned to HGPI by an affiliate of Howard M. Amster, a director and significant shareholder of HGPI. HGPI is also in negotiations to sell the centers in Daleville and Somerset. "The restructuring allows us to continue to focus our efforts on our center in Tulare, California," said Gary J. Skoien, Chairman, President and Chief Executive Officer of Horizon Group Properties. "Tulare continues to produce increasing sales and retailer interest. We are currently expanding this center with Nike as the anchor tenant. Acquiring the loans on Daleville and Somerset also allows us to explore other opportunities for these two centers." Based in Chicago, Illinois, Horizon Group Properties, Inc., has 11 factory outlet centers and one power center in 9 states totaling more than 2.6 million square feet. IMX PHARMA.: Substantial Losses Raise Going Concern Doubt --------------------------------------------------------- IMX Pharmaceuticals, Inc. has incurred substantial losses resulting in an accumulated deficit of $3,160,425 as of March 31, 2003. These conditions raise substantial doubt as to the ability of the Company to continue as a going concern. Dialog Group, Inc. (formerly IMX Pharmaceuticals, Inc.) is a publicly traded corporation (OTCBB:DLGG) with headquarters in New York City and offices in Burbank, California; Sunrise, Florida; Houston, Texas and Cambridge, United Kingdom. The Company has completed its acquisition of Healthcare Dialog, Inc. and IP2M, Inc. At the beginning of the second quarter, DGI completed the acquisition of Healthcare Horizons, Inc. and the assets of Azimuth Target Marketing, Inc. As a result, DGI can conceive and implement a comprehensive program for its health care and other clients and execute it with DGI's specialized data bases and services and unique channel of communication. The new, united company combines depth of healthcare knowledge and broad strategic and creative services with the information and channels to quickly achieve their clients' objectives. Through its four operating divisions, DGI provides its clients a suite of products that are available as either a turnkey solution or as a component for their marketing plan. DGI provides proprietary online and offline support for the healthcare, small business, telephone service bureau, financial services and direct marketing industries in the United States, and software in the United Kingdom. Current and past healthcare clients include Novartis AG, Schering-Plough, GlaxoSmithKline, Johnson and Johnson, Boehringer-Ingelheim and Forest Laboratories. Partners and strategic relationships include the United States Post Office, Clear Channel Communications, ABC Radio, McGraw-Hill Television, Acxiom, Claritas, National Association of Insurance and Financial Advisors, and Microsoft. DGI had a consolidated working capital deficit of approximately $3,940,000 on March 31, 2003 as compared to a deficit of approximately $3,121,000 at December 31, 2002. The year end deficit did not include the December 31, 2002 working capital deficits of the two acquired companies, HCD and IP2M. Their working capital deficits as year end were approximately $908,000 and $1,379,000, respectively. During the quarter ended March 31 2003, the Company raised over $870,000 through the sale of its stock. INT'L DATASHARE: Needs Additional Funds to Continue Operations -------------------------------------------------------------- During the first quarter of 2003, International Datashare Corp began to realize the benefits of the continued the integration, rationalization and restructuring of its business. These activities all represent the realization of synergies and benefits associated with the Riley, EDM, EDS and Seistrac acquisitions made in 2002. With the bulk of these activities nearing completion, iDc remains poised to capitalize on additional cost savings and increasing revenues. On April 14, 2003, iDc announced an Agreement to a merger between iDc and Divestco.com, which will enable both companies to join together to offer clients industry leading geological, geophysical data, and software offerings that will significantly grow revenues. Additional cost savings are also expected to be realized. Revenue for the quarter was $2,039,600 an increase of 8% over the fourth quarter of 2002. EBITDA improved by $789,000 or 64% over the fourth quarter 2002 and the net loss decreased by $1,516,500 or 58%. Sales of GEOcarta continued to increase throughout the period as GEOcarta gained acceptance in the marketplace. With the ESRI platform gaining momentum in oil and gas companies within Canada, both GEOcarta and the GEOcarta Tools for ARCGIS are seeing increased interest by companies with operations in both the US and Canada. During the period, the Riley Electric's log inventory was also added to iDc's e- commerce site -- http://www.energisite.com-- and the results were immediate. Revenues associated with the electronic versions of the Riley logs surpassed hardcopy sales for the first time in Riley's history in April 2003. iDc fully expects this trend to continue as customers begin to see the incomparable quality and coverage of the Riley log inventory in the US. Further planned enhancements to the delivery system and the introduction of a transactional ordering system will also accelerate the growth of these revenues. iDc is an oil and gas service company. Its primary areas of operation are Calgary, Alberta, Houston, Texas and Oklahoma City, Oklahoma. The integration of the recent acquisitions, gives iDc the capability to provide seismic data management, transcription, storage and delivery of oil and gas exploration geophysical data. Riley Electric Log Inc. positions iDc as the leader in North America for log data and Request Integrated Solutions offers state-of-the-art seismic archiving technology. These divisions complement our industry leading open system desktop mapping engine and analytical tool, GEOcarta. Discussion of Results for 3 Months ended March 31, 2002 Revenue increased 80% from the previous year. This increase is due primarily from the Riley Electric Log, Inc., acquisition completed at the end of the first quarter 2002. Direct costs increased 120% from the prior year. This is primarily attributable to the three acquisitions completed in 2002. There were research and development costs in the quarter as iDc is no longer deferring those costs. Sales and marketing costs remained the same from the previous year. General and administrative expenses increased 73% compared to the previous year. This is due to legal costs to settle several outstanding issues, restructuring costs and the three acquisitions completed in 2002. EBITDA was a deficit of $437,500 compared to a deficit of $184,800 from the previous year. International Datashare Corporation (iDc) is a Calgary based company that markets data and software to companies operating within the energy industry around the world. International Datashare's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets of about $4 million. Total accumulated deficit reached $17 million, while its total shareholders' equity dwindled to about $4 million. Future Operations International Datashare Corporation is a Calgary based company that provides data, data management and software solutions to companies operating in the energy industry around the world. iDc's shares are listed on the Toronto Stock Exchange under the symbol IED. These consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern" entity, which assumes that the Corporation will continue operations in the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Corporation's ability to continue as a going concern is dependent upon its ability to raise additional funds either through issuance of debt or equity or to achieve positive cash flow. At March 31, 2003 the Corporation has indebtedness under its bank credit facility of $273,900. The credit facility is currently limited to the lesser of 75% of accounts receivable or $350,000. Although the Corporation has completed equity financings as outlined in the 2002 year-end results, its future viability is dependant on the ability to achieve positive cash flow from operations. Although there is no assurance the Corporation will be successful in its endeavors, management is confident that it will be able to secure additional financing until such time as positive cash flow has been achieved. These consolidated financial statements do not give effect to any adjustments that may be necessary should the Corporation be unable to continue as a going concern. J.B. POINDEXTER: Extends Exchange Offer for $12.50% Senior Notes ---------------------------------------------------------------- J.B. Poindexter & Co., Inc. announced the extension of the previously announced offering period in connection with the exchange offer and consent solicitation of all outstanding Poindexter 12.50% Senior Notes due 2004 for 12.50% Senior Secured Notes due 2007 of Poindexter or Poindexter Holdings, Inc., a newly formed wholly owned subsidiary of Poindexter that will own all of Poindexter's other subsidiaries. The offering period for the Exchange Offer and Consent Solicitation is extended to now expire at 12:00 midnight, New York City time, on Thursday, June 5, 2003. Old Notes that were properly tendered and not withdrawn will remain tendered unless withdrawn prior to 12:00 midnight, New York City time, on the Expiration Date. Holders of Old Notes that have properly tendered Old Notes may still tender such Old Notes prior to the Expiration Date. At this time, $84,860,000 aggregate principal amount or 99.84% of the outstanding Old Notes have been tendered. As reported in Troubled Company Reporter's March 20, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on commercial van body manufacturer J.B. Poindexter Co. Inc., to 'CC' from 'B' following the company's announcement that it has initiated discussions with its bondholders on restructuring its 12.5% senior unsecured notes due May 2004. At the same time, Standard & Poor's lowered the Houston, Texas-based company's senior unsecured debt rating to 'C' from 'B-'. In addition, all ratings were placed on CreditWatch with negative implications. At Sept. 30, 2002, the company had about $104 million of debt outstanding. If the transaction is completed, Standard & Poor's will lower the rating on the company's current 12.5% senior unsecured notes to 'D', and the company's corporate credit rating would be lowered to 'SD'. Subsequently, the ratings would be reassessed, taking account of the benefits realized through the transaction. KAISER ALUMINUM: Inks New Century Aluminum Supply Contract ---------------------------------------------------------- Century Aluminum Company (Nasdaq:CENX) and Kaiser Aluminum and Chemical Corporation have entered into a new supply contract covering all of the alumina requirements of Century's Hawesville (KY) Operations for the period from January 1, 2006 through December 31, 2008. The price of alumina purchased under this contract will be indexed to the price of primary aluminum on the London Metal Exchange. An existing alumina supply contract between Century and Kaiser covering the requirements of the Hawesville facility is priced at a similar market-based formula and expires December 31, 2005. The Hawesville reduction plant has capacity to produce 244,000 metric tons of primary aluminum a year. Approximately two units of alumina are required to produce one unit of aluminum. Alumina, the feedstock for producing primary alumina, is chemically refined from bauxite ores. Century owns 525,000 mtpy of primary aluminum capacity. In addition to the Hawesville plant, it owns and operates a 170,000-mtpy plant at Ravenswood, WV and a 49.67 percent interest in the 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa, Inc. owns the remainder and is the operating partner. Century's headquarters are in Monterey, CA. KCS ENERGY: Medallion Unit Resolves Legal Dispute over RSF Lease ---------------------------------------------------------------- KCS Energy, Inc. (NYSE: KCS) announced that its wholly owned subsidiary, Medallion California Properties Company, had reached a tentative settlement agreement to resolve pending litigation on its RSF oil and gas lease in California. The litigation was initiated by Newhall Land and Farming Company, the lessor, in 2001 and relates to claims resulting from oil and gas operations conducted by Oryx Energy Company and Medallion California Properties Company. "We are pleased to reach this settlement agreement which removes the uncertainty of litigation, while delineating the respective future obligations of the parties," stated William N. Hahne, President and Chief Operating Officer of KCS Energy. KCS' obligations under the settlement agreement will not have any material impact on the financial condition or results of operations of the Company. KCS is an independent energy company engaged in the acquisition, exploration, development and production of natural gas and crude oil with operations in the Mid-Continent and Gulf Coast regions. For more information on KCS Energy, Inc., please visit the Company's Web site at http://www.kcsenergy.com KCS Energy's March 31, 2003 balance sheet shows a working capital deficit of about $13 million, and a total shareholders' equity deficit of about $24 million. KMART CORP: Asks Court to Deem Reclamation Claim as Admin. Claim ---------------------------------------------------------------- Kmart Corporation and its debtor-affiliates ask the Court to deem all reclamation claims that have been asserted in their cases pursuant to the reclamation procedures previously approved by the Court as timely administrative claims pursuant to their confirmed reorganization plan without the need for the claimants to file further administrative expense claims. Since the reclamation claimants were already required by the Reclamation Procedures Order to submit detailed reclamation claims and the Debtors have already reconciled almost all of the reclamation claims, they believe that the filing of Administrative Claim Requests is no longer necessary. The Debtors believe that the proposal obviates the need for parties to prepare duplicate copies of reclamation claims, many of which were very voluminous. The proposal will also resolve a number of inquiries being raised by the reclamation claims about the appropriate procedure for filing their claims. Under the Confirmed Plan, reclamation claims are considered as "Administrative Claims" and are entitled to treatment described in the Plan. A condition precedent to payment of an Administrative Claim under the Plan is the claimant's filing of an Administrative Claim Request Form no later than 45 days after the June 20, 2003 effective date of the Plan. The Reclamation Procedures Order authorized the Debtors to resolve reclamation claims without the need of further Court order. Specifically, the Debtors were authorized to negotiate with the reclamation claimants, and in an event an agreement was reached concerning the reclamation claim amount, that claim will be deemed an allowed reclamation claim. In September 2002, the Debtors also obtained permission to pay Allowed Reclamation Claims in cash equal to 75% of the actual Claims if a claimant elected to be paid before the plan confirmation. The Payment Order alternatively allows the payment of 100% of the Allowed Reclamation Claims pursuant to a confirmed Plan. The Debtors report that 2,523 reclamation claims asserting $1,069,000,000 were filed, although $795,000,000 of the Claims were duplicates of one another. After the elimination of the duplicate claims, the Debtors identified 693 reclamation claims asserting $274,700,000. To date, the Debtors have resolved 690 of the reclamation claims for $124,000,000. The holders of 164 reclamation claims opted for the 75% payment pursuant to the Payment Order, giving the Debtors $5,100,000 in savings. (Kmart Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAMAR MEDIA: Prices $125 Million of Senior Subordinated Notes ------------------------------------------------------------- Lamar Media Corp., a wholly-owned subsidiary of Lamar Advertising Company (NASDAQ: LAMR), has agreed to sell an aggregate principal amount of $125 million of 7-1/4% senior subordinated notes due 2013 in an institutional private placement, as previously announced. The issue price is 103.661% to yield 6-5/8%, resulting in net proceeds of approximately $127.7 million. The notes will have the same terms and conditions as the 7-1/4% senior subordinated notes due 2013 issued by Lamar Media in December 2002. The net proceeds of the offering will be used to redeem $100 million of the outstanding $199 million principal amount of Lamar Media's 8 5/8% senior subordinated notes due 2007 and to prepay a portion of outstanding loans under the Company's credit facility. The closing of the offering is expected in mid June and is subject to customary terms and conditions. On May 29, 2003, Lamar Media called for redemption on June 28, 2003 $100 million principal amount of the outstanding 8-5/8% notes at the mandatory call price of 104.313% of the principal amount plus accrued and unpaid interest. The notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and are being offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside of the United States in accordance with Regulation S under the Securities Act. Unless so registered, the notes may not be sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. As reported in Troubled Company Reporter's January 30, 2003 edition, Standard & Poor's Ratings Services assigned its 'BB-' rating to Lamar Media Corp.'s $1.25 billion senior secured credit facilities. These new facilities replaced the company's existing $1.315 billion senior secured credit facilities. Standard & Poor's also affirmed its 'BB-' corporate credit ratings on Lamar Media and its holding company parent, Lamar Advertising Co. The outlook is stable for the Baton Rouge, La.- headquartered outdoor advertising company. About $1.8 billion of total debt is outstanding. LD BRINKMAN: US Trustee to Convene Sec. 341(a) Meeting on June 4 ---------------------------------------------------------------- The United States Trustee will convene a meeting of L.D. Brinkman Holdings, Inc., and its debtor-affiliates' creditors on June 4, 2003, 2:30 p.m., at the Office of the U.S. Trustee, 1100 Commerce Street, Room 976, Dallas, Texas 75242. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. L.D. Brinkman Holdings, Inc., and L.D. Brinkman Corporation, filed for chapter 11 protection on April 29, 2003 (Bankr. Tex. Case No. 03-34243). Marci Romick Weissenborn, Esq., at Arter and Hadden, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of over $10 million each. LUCENT: Fitch Says $1.5-Billion Convertible Senior Debt is Junk --------------------------------------------------------------- Fitch Ratings has assigned a 'CCC+' rating to Lucent's recently issued $1.5 billion convertible debentures. The debentures were sold in two series, A and B, maturing in 2023 and 2025, respectively and are pari passu with Lucent's other senior unsecured debt. Series A totaled $750 million, has an interest rate of 2.75% and is convertible to common stock at a conversion price of $3.34 (representing a 48% premium over the price of the common stock on May 29, 2003). In addition, bondholders have the option of redeeming the securities in 2010, 2015, and 2020. Series B totaled $775 million, carries the same interest rate, has a conversion price of $3.12 (representing a 38% premium over the price of the common stock on May 29, 2003), and may be redeemed by the bondholders in 2013 and 2019. Fitch expects Lucent to use the proceeds from the offering to repay or repurchase higher cost debt. The Rating Outlook remains Negative. The ratings continue to reflect the company's weak credit protection measures, limited financial flexibility (which was further evidenced by the restriction on its $595 million of new senior secured bank facilities to be used exclusively for letters of credit and not operating purposes), execution risks surrounding the company's restructuring programs, uncertainty surrounding the prospects for the company's success in implementing its network integration strategy and the continued difficult environment for Lucent's end markets. The Negative Rating Outlook reflects the uncertain capital expenditure patterns of the company's customer base and the lack of visibility into the timing of a recovery in the telecommunications equipment market. While Lucent has strengthened its balance sheet through the execution of preferred stock and debt exchanges, credit protection measures remain weak, mainly from lack of positive EBITDA generation. Since June 2002, the company has repurchased $942 million of its 8% convertible preferred stock, $598 million of its 7.75% convertible trust preferred securities, and $87 million of other senior debt obligations in exchange for approximately 621 million shares of common stock. As of the quarter ended March 31, 2003, total debt was approximately $5.6 billion versus $6.2 billion for the quarter ended December 31, 2002. While Lucent has no significant long-term debt maturities until 2006 (when approximately $1.1 billion of notes are due), the 8% convertible preferred stock is redeemable at the option of the holders on various dates, the earliest of which is August 2, 2004. As of May 13, 2003, the liquidation value of these securities was $943 million. Despite the availability of the new senior secured facilities, Fitch continues to believe that Lucent's financial flexibility remains limited. Cash and marketable securities were approximately $3.4 billion as of March 31, 2003 and the company expects to end the fiscal year (ending September 30, 2003) with at least $2.5 billion, after funding operations, satisfying restructuring needs and meeting debt service obligations. While Fitch acknowledges that the substantial cash balance is more than adequate to meet the company's near-term obligations, there is concern that the cash burn may continue at a higher than expected rate as the company's operations continue to struggle in the difficult economic environment and it is unlikely that the company will continue to benefit from working capital reduction. Net cash used for operations, excluding the approximate $400 million in cash costs for restructuring, totaled $1 billion in the first half of fiscal 2003 and is forecasted to be $400 million in the second half of the year, while remaining cash costs for restructuring are expected to be $300 million. Lucent's revenue continues to be negatively affected by the current weak demand in its markets. The company recently revised its revenue guidance for fiscal year 2003 to a decline of 20%- 25% from an original forecast of a 20% decrease, further demonstrating the continued lack of visibility in its end markets. The continued restructuring efforts of the company have enabled the company to reduce quarterly earnings per share break-even revenue to $2.4 billion from the previously announced $2.5 billion. Although Lucent anticipates returning to profitability by the end of fiscal year 2003, Fitch believes it is questionable as to whether or not this goal can be attained, given the continued top-line pressure the company is facing. While Lucent is revising its strategy to incorporate a network integrator model into its business plan, it is uncertain as to how successful the company may be in this area. In addition, capital spending by carriers is still under pressure and there is no evidence of a turnaround in spending on the horizon. Lucent Technologies' 7.70% bonds due 2010 (LU10USR1) are trading at about 75 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for real-time bond pricing. MAGELLAN HEALTH: Gets Open-Ended Lease Decision Period Extension ---------------------------------------------------------------- Bankruptcy Court Judge Beatty orders that the time within which Magellan Health Services, Inc., and its debtor-affiliates may assume or reject their unexpired nonresidential real property Leases pursuant to Section 365(d)(4) of the Bankruptcy Code is extended to the date of confirmation of a plan of reorganization in the Debtors' Chapter 11 cases. (Magellan Bankruptcy News, Issue No. 8: Bankruptcy Creditors' Service, Inc., 609/392-0900) Magellan Health Services' 9.375% bonds due 2007 (MGL07USA1) are trading at about 96 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=MGL07USA1for real-time bond pricing. MERRILL LYNCH: Fitch Rates Class B-1 & B-2 Notes at Low-B Level --------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc.'s $344.2 million mortgage pass-through certificates, series 2003-A3 classes I-A and I-A-IO (senior certificates), are rated 'AAA' by Fitch Ratings. In addition, Fitch rates the $4.8 million class M-1 certificates 'AA', $2.1 million class M-2 certificates 'A', $885,000 class M- 3 certificates 'BBB', $708,000 class B-1 certificates 'BB' and $531,000 class B-2 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 2.75% subordination provided by the 1.35% class M-1, 0.60% class M-2, 0.25% class M-3, 0.20% privately offered class B-1, 0.15% privately offered class B-2 and 0.20% privately offered class B- 3 (not rated by Fitch). Classes M-1, M-2, M-3, B-1, and B-2 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank Minnesota, rated 'RMS1' by Fitch. The collateral consists of conventional, first lien, one- to four-family, 30-year adjustable-rate residential mortgage loans. Each of the mortgage loans has an initial fixed interest rate for a period of five years, after which the interest rate adjusts on a semiannual or annual basis. The mortgage loans have a weighted average loan-to-value ratio of 68.58%. The average balance of the mortgage loans is approximately $435,303 and the weighted average coupon of the loans is 5.408%. The weighted average FICO is 726. The three states that represent the largest portion of mortgage loans are California (23.80%), New Jersey (8.62%) and Florida (8.24%). Approximately 89.84%, 8.94% and 1.23% of the mortgage loans were originated or acquired in accordance with the underwriting guidelines of Merrill Lynch Credit Corporation, National City Mortgage Co. and GMAC, respectively. Approximately 89.84%, 8.94% and 1.23% of the mortgage loans are serviced by Cendant Mortgage Corporation, National City Mortgage Co. and GMAC, respectively. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. MLMI, a special purpose corporation, deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust as one or more real estate mortgage investment conduits. Bank One, N.A. will act as trustee. NATIONAL CENTURY: Motion to Appoint NPF XII SubPanel Draws Fire --------------------------------------------------------------- Leon Friedberg, Esq., at Carlile, Patchen & Murphy, in Columbus, Ohio, recounts that by a January 2003 letter to U.S. Trustee Saul Eisen, Bank One requested appointment to the NPF XII Subcommittee as an ex-officio member. The U.S. Trustee has not acted on this request. While the Creditors' Committee of Unsecured Creditors of National Century Financial Enterprises, Inc., does not object per se to Bank One's proposed service on the NPF XII Subcommittee, the Creditors' Committee believes that the inclusion or refusal to include an ex officio member is a matter of internal committee governance, and not a matter for the Court or the U.S. Trustee. Mr. Friedberg asserts that decision to include or exclude certain entities as ex-officio members of a committee is a matter best left to the committee itself. Bank One should direct its request to the NPF XII Subcommittee. If the NPF XII Subcommittee has refused to include Bank One, the Court should not disturb the combined judgment of the NPF XII Subcommittee and the U.S. Trustee. Section 1102(a)(2) of the Bankruptcy Code provides a Bankruptcy Court power to direct the U.S. Trustee to appoint additional committees. However, the composition of committees appears to rest in the sole discretion of the U.S. Trustee. Moreover, Bank One's request does not plead that the NPF XII Noteholders are not adequately represented on the Subcommittee. Mr. Friedberg points out that this pleading, if ever, would be senseless since the NPF XII Subcommittee was formed specifically to provide NPF XII Noteholders with adequate representation. In addition, the NPF XII Noteholders and other similarly situated Noteholders comprise a majority of the Official Committee of Unsecured Creditors. "It is difficult to imagine how the Noteholders represented by Bank One could be more thoroughly represented in this bankruptcy case," Mr. Friedberg comments. Accordingly, the Creditors' Committee asks the Court to deny the Bank One's request to appoint itself to the Official NPF XII Subcommittee. NPF XII Subcommittee Doesn't Like It Either Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy, in Los Angeles, California, tells the Court that Bank One has cited no statutory authority in support of its request and has provided the Court with no real reason to grant its request. The current six official and ex officio members of the NPF XII Subcommittee hold over $1,000,000 of notes issued by NPF XII. Obviously, the current composition of the NPF Subcommittee is representative of the interests of the holders of NPF XII notes. Moreover, Bank One does not need to sit on the NPF XII Subcommittee in order to communicate with the Subcommittee's members or counsel. The U.S. Trustee opposes Bank One's request on the grounds that it intrudes on the statutory authority of the U.S. Trustee to appoint the members of official creditor committees. The NPF XII Subcommittee joins in the U.S. Trustee's opposition. Mr. Moore argues that the decision to grant ex officio membership on an official committee to any particular creditor has historically been at the committee's discretion. If the Official NPF XII Subcommittee believed that it needed Bank One at the table to participate in the Subcommittee's deliberations, it would already have extended that offer of ex officio status. Mr. Moore tells that Court that the principal reason Bank One should not, and cannot be provided a seat in the deliberations of the NPF XII Subcommittee is that, to a considerable extent, the NPF XII Subcommittee is currently focused on maximizing litigation recoveries, including through forensic accounting analyses regarding: -- NPF XII's business relations with the principal health care providers that sold receivables to NPF XII, and -- transfers of funds in and out of NPF XII bank accounts at Bank One. Bank One already is a defendant in one major lawsuit brought by a large holder of NPF XII notes regarding these issues, and it is widely anticipated that more lawsuits will be brought against Bank One by individual NPF XII noteholders and by official representatives of the estate of NPF XII. Thus, Bank One would be recused from most deliberations of the NPF XII Subcommittee just as soon as it appeared for its first meeting of the Subcommittee. Moreover, current discussions in the NPF XII Subcommittee revolves around the proper mechanism for achieving, liquidating and distributing litigation recoveries. Since Bank One could not participate in any discussions where its interests could be adverse to the interests of the NPF XII holders, Bank One could not participate in virtually all NPF XII Subcommittee meetings. Bank One and the NPF XII Subcommittee have worked together in these Chapter 11 cases wherever possible, even knowing that the NPF XII estate and individual NPF XII noteholders, on the one hand, and Bank One, on the other hand, would become adversaries in litigation. Those common endeavors were done through counsel, and at arm's length. However, NPF XII subcommittee maintains that there simply is no room for Bank One to participate in the close quarters discussions that take place on a creditors' committee, if that committee is to play a meaningful role in these Chapter 11 cases. Accordingly, the NPF XII Subcommittee asks the Court to deny Bank One's request. (National Century Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) NRG ENERGY: Enters into $752 Million Xcel Settlement Agreement -------------------------------------------------------------- On March 26, 2003, Xcel Energy announced that its board of directors had approved a tentative settlement agreement with holders of most of NRG Energy's long-term notes and the steering committee representing NRG Energy's bank lenders. The settlement is subject to certain conditions, including the approval of at least a majority in dollar amount of the NRG Energy bank lenders and long-term noteholders and definitive documentation. The terms of the settlement call for Xcel Energy to make payments to NRG Energy over the next 13 months totaling up to $752,000,000 for the benefit of NRG Energy's creditors in consideration for their waiver of any existing and potential claims against Xcel Energy. Under the settlement, Xcel Energy will make these payments: (a) $350,000,000 at or shortly after the consummation of a restructuring of NRG Energy's debt. It is expected this payment would be made prior to year-end 2003; (b) $50,000,000 on January 1, 2004. At Xcel Energy's option, it may fill this requirement with either cash or Xcel Energy common stock or any combination, and (c) $352,000,000 in April 2004. Since the announcement on March 26, representatives of NRG Energy, Xcel Energy, the bank lenders and noteholders have continued to meet to draft the definitive documentation necessary to fully implement the terms and conditions of the tentative settlement agreement. The overriding goal of the settlement was to minimize the disruption to NRG Energy and its affiliates resulting from the Commencement of the Chapter 11 Cases, by seeking to conclude the Chapter 11 Cases as quickly as possible. The Plan Support Agreement NRG Energy's negotiations with its creditors and Xcel resulted in the execution of a Plan Support Agreement dated as of May 13, 2003, between NRG Energy, and certain of its Debtor Subsidiaries, Xcel, the Supporting Noteholders, and the Supporting Lenders. The key terms of the Plan Support Agreement are summarized as: (a) support by NRG Energy to commence the Chapter 11 Cases, seek expeditious approval of a disclosure statement consistent with both the terms of Term Sheet and Plan Support Agreement, propose a plan of reorganization and solicit votes in favor of the Plan and effectuate the Plan as quickly as possible; (b) support by Xcel to implement the terms of the Term Sheet and otherwise cooperate in the consummation of the Term Sheet and restructuring of NRG Energy; (c) support by the Supporting Noteholders and the Supporting Lenders to support the Plan and use their commercially reasonable efforts to facilitate the filing and confirmation of the Plan at the earliest practicable date, and release certain causes of action; (d) termination provisions which provide that the Plan Support Agreement may terminate upon the happening of certain Termination Events, as defined in the Plan Agreement, which include, but may not be limited to: (1) conversion of the Chapter 11 Cases to a proceeding under Chapter 7 of the Bankruptcy Code; (2) failure of Xcel to fulfill any of its obligations under the Plan Support Agreement; (3) the failure to comply with any conditions to the obligations of any party; (4) any declaration by any court that the Plan Support Agreement is unenforceable; (5) the failure to file material documents relating to the Chapter 11 Cases within specified timeframes; (6) the failure to determine or resolve certain Claims; and (7) the failure to achieve an Effective Date by December 31, 2003. The key provisions of the Term Sheet incorporated into the Plan Support Agreement are summarized as: (a) agreement by Xcel to make the Xcel Contribution, up to $640,000,000, as: (1) $238,000,000 on the later of 90 days after the entry of a confirmation order by the Bankruptcy Court, or one business day after the Effective Date; (2) $50,000,000 in Cash or XEL Stock on the later of January 1, 2004; 90 days after the entry of a confirmation order by the Bankruptcy Court; or one business day after the Effective Date; and (3) up to $352,000,000 on the later of April 30, 2004; 90 days after the entry of a confirmation order by the Bankruptcy Count, or one business day after the Effective Date. (b) agreement by Xcel to contribute to NRG Energy $112,000,000 of cash to be funded on the later of 90 days after the entry of a confirmation order by the Bankruptcy Court, or one business day after the Effective Date to a Separate Bank Settlement Group to settle separate book Group Claims held by the Separate Bank Settlement Group, provided that 100% of the Separate Bank Settlement Group signs the Separate Bank Settlement Release; (c) agreement by the parties that the Xcel Contribution will be allocated as these: (1) $250,000,000 in exchange for the release of certain NRG Energy causes of action; and (2) up to $390,000,000, plus certain Xcel causes of action, which will be exchanged for certain other claims of NRG Energy, the Supporting Lenders and the Supporting Noteholders. (d) agreement that Xcel could elect to pay up to $150,000,000 of the Initial Contribution in Xcel Stock upon the occurrence of a downgrade of Xcel's corporate credit rating and certain events; (e) agreements relating to the Plan to be filed by NRG Energy and the Confirmation Order which NRG Energy will seek as a part of the Chapter 11 Cases; (f) agreements relating to tax issues, injunctions, certain intercompany claims and agreements, transitional services, employee mutters, and certain other agreements between Xcel and NRG Energy, (g) agreements relating to the timing and distribution of Cash, New NRG Common Stock and New NRG Senior Notes to the holders of Allowed Claims entitled to receive the distributions; (h) miscellaneous agreements relating to intercompany claims, fiduciary duties, the post-petition board of directors of NRG Energy, the post-reorganization board of directors of NRG Energy, the charter and bylaws of post-reorganization NRG Energy, other releases, other injunctions, indemnification, provisions relating to the reallocation of Cash, New NRG Common Stock and New NRG Senior Notes among holders of Allowed Claims entitled to receive the distributions, settlements with holders of project-level secured debt, a management incentive plan, and disputed Claims. (NRG Energy Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) NRG Energy Inc.'s 8.700% bonds due 2005 (XEL05USA1) are trading at about 44 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL05USA1for real-time bond pricing. NTELOS INC: Files Disclosure Statement for Joint Plan of Reorg. --------------------------------------------------------------- NTELOS Inc., has filed our Disclosure Statement in connection with its Chapter 11 case, which is pending in the United States Bankruptcy Court for the Eastern District of Virginia. The Court must approve the Disclosure Statement, which provides details regarding the Joint Plan of Reorganization, before the company can solicit votes on its Plan. Following Court approval of the Disclosure Statement, the Plan -- which has the support of the company's creditors' committee -- would become effective only after receiving the required vote under bankruptcy law and confirmation by the Court. The company believes that the Plan is consistent with the Plan Support Agreement the company entered into with a majority of its bank lenders on April 10, 2003. NTELOS and certain of its subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on March 4, 2003 in order to complete development and implementation of a comprehensive financial restructuring plan that would significantly reduce the company's debt. James Quarforth, Chief Executive Officer of NTELOS, said, "The filing of our Disclosure Statement is a major step towards our emergence from the Chapter 11 process. Equally important, working closely with our principal creditors, we have developed a plan that meets our primary objective of positioning ourselves for long-term success through a meaningful level of debt reduction." Under the Disclosure Statement and Plan, as proposed and subject to approval by the Court: -- The reorganized company would sell $75 million aggregate principal amount of new 9% convertible notes, consistent with the terms of the Subscription Agreement dated April 10, 2003. For more information regarding the Subscription Agreement, Including conditions to the consummation of such agreement, please refer to the company's Form 8-K dated April 10, 2003. -- As contemplated by the Plan Support Agreement, the reorganized company and its subsidiaries would enter into a new credit agreement with the Supporting Lenders on substantially the terms set forth in the Exit Financing Term Sheet, which has been filed with the Securities and Exchange Commission. For more information regarding the Plan Support Agreement, which attaches the Exit Financing Term Sheet, including conditions to the consummation of such agreements, please refer to the company's Form 8-K dated April 10, 2003. -- The reorganized company would issue substantially all of the new common stock to holders of the company's senior notes, as detailed in the Plan. Holders of subordinated notes would also receive new common stock under the Plan. -- Holders of preferred stock would receive warrants to purchase new common stock of the reorganized company, as detailed in the Plan. Holders of common stock would have no recovery. Under the Plan, the reorganized company would pay holders of allowed claims in cash, as detailed therein. The Disclosure Statement filed in connection with the Plan also includes financial projections regarding the company's reorganized business enterprise value, including support for the "best interests" requirements for the Plan under the Bankruptcy Code, and events leading up to and during the company's Chapter 11 case. The company anticipates a July 1, 2003 date for a required Court hearing on the Disclosure Statement. The company is filing the Disclosure Statement and Plan on Form 8-K with the SEC. NTELOS Inc. (OTC Bulletin Board: NTLOQ) is an integrated communications provider with headquarters in Waynesboro, Virginia. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Tennessee and North Carolina, including wireless digital PCS, dial-up Internet access, high- speed DSL (high-speed Internet access), and local and long distance telephone services. Detailed information about NTELOS is available online at http://www.ntelos.com OWENS CORNING: Intends to Divest Brazil Unit's $42M Excess Funds ---------------------------------------------------------------- IPM, Inc. is a direct, wholly owned, non-Debtor subsidiary of Owens Corning, which serves primarily as a holding company for many of the Company's foreign subsidiaries. IPM currently owns 99% of the shares of Owens Corning Fiberglas A.S. Limitada or OC Brazil, a Brazilian corporation. IPM also owns all of the stock of Owens Corning NRO, Inc., a Canadian corporation and another non-Debtor. NRO, in turn, owns all of the stock of Owens Corning Canada, Inc., a Canadian corporation and another non- Debtor. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, informs the Court that OC Brazil currently holds $42,000,000 in excess funds. Although the Excess Funds currently are invested in U.S. denominated investments, and therefore are protected against a devaluation of Brazil's currency -- real, the Debtors are concerned that any devaluation would still have severe tax consequences to OC Brazil. To the extent the real devaluates as against the dollar, the Excess Funds will convert to more reals, which are taxable as income under Brazilian law and require the payment of additional tax. For example, because of currency devaluations experienced in 2002, OC Brazil's effective tax rate in 2002 exceeded 70%. Due to this potential tax cost, and in order to utilize the Excess Funds for Owens' benefit, OC Brazil believes it is prudent to divest itself of the Excess Funds by way of a dividend to its shareholder. Because OC Brazil's parent, IPM, is a U.S. corporation, OC Brazil cannot pay dividends to IPM without incurring a U.S. tax. This U.S. tax would eventually turn into a cash cost as Owens Corning would need to utilize valuable "net operating loss carryovers" to offset this dividend income. Owens Corning has determined that the most favorable method to divest the Excess Funds is by directing OC Brazil to divest the funds to a Canadian company, OC Canada, rather than to a U.S. company, IPM. Under current Canadian tax law, dividends from subsidiaries of Canadian companies are not taxable. To achieve this result, these steps are required: 1. IPM must transfer its ownership interest in OC Brazil to NRO as a capital contribution; 2. NRO, as OC Canada's parent, must transfer its ownership interest in OC Brazil to OC Canada, its direct subsidiary, as a capital contribution. OC Brazil then will be able to divest the Excess Funds to its new parent corporation, OC Canada, without the adverse tax consequences; and 3. Although IPM, NRO, OC Brazil and OC Canada are non- debtors, certain of their actions are governed by the Final Cash Management Order on the transfers of funds to debtor and non-debtor affiliates. While the Debtors believe that the capital contributions and other actions contemplated in this transaction do not implicate the terms of the Final Cash Management Order, the Debtors seek the Court's authority to consummate the transaction out of an abundance of caution. Furthermore, the Debtors believe that payment of a dividend by OC Brazil involves a transfer that may not specifically be permitted by the Final Cash Management Order. Accordingly, although the property of IPM, NRO, OC Brazil and OC Canada is not property of the Debtors' estates governed by Section 363 of the Bankruptcy Code, in an abundance of caution, the Debtors ask Judge Fitzgerald to approve the dividend payment under Sections 363 and 105 of the Bankruptcy Code. By this motion, and in an abundance of caution, the Debtors seek the Court's authority and approval of: 1. IPM's capital contribution of its stock in OC Brazil to NRO; 2. NRO's subsequent capital contribution of its stock in OC Brazil to OC Canada; and 3. OC Brazil's payment of a dividend of the Excess Funds to OC Canada. Mr. Pernick believes that the transactions for which approval is sought are supported by sound business reasons, in that they permit the utilization by the Debtors of the Excess Funds while at the same time: 1. allowing OC Brazil to avoid what could be a significant tax obligation under Brazilian law; and 2. avoiding the adverse tax consequences that would apply if the Excess Funds were paid to IPM or another United States corporation as a dividend, rather than to OC Canada. The transactions provide for significant overall benefit to the Debtors, as well as to creditors and parties-in-interest. (Owens Corning Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 609/392-0900) PANAVISION INC: S&P Affirms CCC Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC' corporate credit rating on entertainment industry camera systems company Panavision Inc. and removed it from CreditWatch due to Standard & Poor's view that Panavision's risk of immediate default has been reduced by amendments to its bank loan agreement and repayment schedule, and the capital support provided by its parent company. The outlook is negative. Woodland Hills, California-based Panavision is the leading designer and manufacturer of high-quality camera systems that are rented to the motion picture and television industries. The company also rents lighting equipment and sells lighting filters in certain markets and has a digital post-production laboratory business. The firm has approximately $343 million in debt. "Panavision's latest bank amendment on March 27, 2003, provides near-term relief by loosening bank financial covenants and deferring $20 million in 2003 debt maturities to March 31, 2004," according to Standard & Poor's credit analyst Steve Wilkinson. He continued, "In addition, Panavision's debt was reduced because its parent company, Mafco Holdings Inc., converted $90.9 million of Panavision's subordinated bonds that it owned into 10% perpetual, pay-in-kind preferred stock as part of the agreement. Mafco also contributed $10 million in cash and extended the undrawn $4 million line of credit it provides to Panavision by one year to March 31, 2004." Wilkinson noted, "While these actions are positive, Panavision's maturity schedule and limited liquidity remain significant concerns, and the company will need to further amend its capital structure by March 31, 2004, to avoid a default." PAPER WAREHOUSE: Files for Chapter 11 Reorganization in Minn. ------------------------------------------------------------- Paper Warehouse, Inc. (OTCBB:PWHS), has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company filed the petition in U.S. Bankruptcy Court for the District of Minnesota in Minneapolis, Minnesota. Neither of the company's wholly-owned subsidiaries, Paper Warehouse Franchising, Inc., or PartySmart.com, Inc., was included in the filing, allowing normal sales operations to continue at the 51 franchise stores. The company also announced that 24 corporately owned stores will close, effective June 2, 2003, as part of the overall reorganization. The stores, located in 7 states, were underperforming The reorganization allows for normal operations and customer service to continue without disruption to sales, order processing and shipments at 113 store locations. In connection with its Chapter 11 filing, the company also announced that it has secured a $6.5 million debtor-in- possession (DIP) financing from Wells Fargo Retail Finance. The company anticipates that this financing, together with its ongoing revenue stream, will be more than adequate to fund its operations, including payment of employee wages and benefits, during the reorganization process. "This voluntary reorganization is being taken to position us for the strongest future of the business, the staff and our vendors." said Yale T. Dolginow, President and CEO. "We are moving decisively to execute a plan which can insure a future." The events following September 11, the weak economy and the war with Iraq all contributed to the economic challenges faced by Paper Warehouse. This restructuring allows the company the opportunity to address the financial issues presented by its considerable debt obligations. The company's debt was incurred primarily during a five-year period of growth since its initial public offering. The restructuring will allow the company to reduce its debt levels, improve its balance sheet and align its business strategy and operational structure with the current economic climate and market conditions. "We appreciate the ongoing loyalty and support of our employees. Their dedication and hard work is critical to our success. We remain committed to leading Paper Warehouse toward a strong and profitable future with the help of our employees, our customer base, our franchise network and our vendor community. Paper Warehouse remains a viable business that is deeply committed to our employees and the major markets in which we operate," Dolginow commented. Shares of the company's stock (PWHS) continue to trade on the Nasdaq Over the Counter Bulletin Board. The company has not set a target date for emergence from Chapter 11, but Dolginow stressed that the company's strategy is to move quickly. Paper Warehouse specializes in party supplies and paper goods and operates under the names Paper Warehouse, Party Universe, and www.PartySmart.com. PartySmart.com can be accessed at http://www.PartySmart.com Paper Warehouse stores offer an extensive assortment of special occasion, seasonal and everyday party and entertainment supplies, including paper supplies, gift wrap, greeting cards and catering supplies at everyday low prices. As of May 2, 2003, the company had 137 retail locations (86 company-owned stores and 51 franchise stores) conveniently located in major retail trade areas to provide customers with easy access to its stores. The company's headquarters is in Minneapolis. PAPER WAREHOUSE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Paper Warehouse, Inc. 7630 Excelsior Boulevard Minneapolis, MN 55426-4504 Type of Business: Retail stores specializing in party supplies and paper goods Bankruptcy Case No.: 03-44030 Chapter 11 Petition Date: June 2, 2003 Court: District of Minnesota (Minneapolis) Judge: Robert J. Kressel Debtor's Counsel: Michael L. Meyer, Esq. Ravich Meyer Kirkman McGrath & Nauman 80 S 8th St., Suite 4545 Minneapolis, MN 55402 612-332-8511 Total Assets: $20,763,924 (as of May 2, 2003) Total Debts: $26,546,615 (as of May 2, 2003) List of Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Amscan Inc. Goods & Services $4,124,552 80 Grassland Road Elmsford, NY 10523 Contact: JIM HARRISON 800-284-4333 Hallmark Marketing Corp. Goods & Services $2,541,565 2501 McGEE #485 Kansas City, MO 64141-6580 Contact: CAROLYN DAVIS 816-274-3383 Mayflower Distributing Co. Goods & Services $681,784 1155 Medallion Drive Mendota Heights, MN 55120 Contact: MARTY ABELOVITZ 651-452-4892 Converting Inc. Goods & Services $619,112 255 Spring Street Clintonville, WI 54929 Contact: PATRICK BUCKLEY 800-826-0418 Alexander, Jeffrey Bondholder $400,000 5102 Pflaum Road Madison, WI 53704 608-222-8684 Beistle Company Goods & Services $349,523 1 Beistle Plaza Shippensburg, PA 17257 Contact: TRICIA LACY 717-532-2131 Unique Industries Inc. Goods & Services $291,609 2400 S WECCACOE AVE Philadelphia, PA 19148-4298 Contact: CRAIG NOVAK 800-888-1705 World Source Inc. Goods & Services $261,917 9220 James Ave. So. Minneapolis, MN 55431-2315 Contact: DWIGHT LUCHT 952-703-8880 American Greetings Goods & Services $238,669 One American Road Cleveland, OH 44144 Contact: NICK CLEMENTI 800-321-3040 Cleo, Inc. Goods & Services $173,124 National Latex Goods & Services $167,434 Rubies Costume Co. Goods & Services $150,123 RGIS Inventory Specialists Goods & Services $149,148 Denver Newspaper Agency Goods & Services $108,165 Duni Corporation Goods & Services $83,846 Labelle & Associates Goods & Services $81,657 Turn Up the Music Goods & Services $70,952 Cindus Corporation Goods & Services $69,552 YA Otta Pinata Goods & Services $63,676 Sterling, Inc. Goods & Services $58,531 PEM ELECTRICAL: Wants Nod to Hire Silverman Perlstein as Counsel ---------------------------------------------------------------- PEM Electrical Corp., asks for permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Silverman Perlstein & Acampora LLP as counsel. The Debtor tells the Court that it needs to retain Silverman Perlstein to: a) provide legal advice with respect to the Debtor's powers and duties as a Debtor-in-possession in accordance with the provisions of the Bankruptcy Code in the continued management of the Debtor's property and affairs; b) prepare, on behalf of the Debtor, all necessary applications, motions, answers, orders, reports and other legal documents required by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure; c) perform all other legal services for the Debtor, which may be necessary in connection with the Debtor's attempt to reorganize the Debtor's affairs under the Bankruptcy Code; and d) assist the Debtor in the development and implementation of a plan of reorganization. Gerard R. Luckman, Esq., a member of Silverman Perlstein discloses that the firm will bill the Debtors at its current hourly rates, ranging from $60 to $425 per hour. Mr. Luckman adds that the Debtor has paid the firm the sum of $50,000 as a retainer to act as counsel to the Debtor and to represent it in this proceeding. PEM Electrical Corp., filed for chapter 11 protection on May 23, 2003 (Bankr. S.D.N.Y. Case No. 03-13358). Gerard R. Luckman, Esq., at Silverman Perlstein & Acampora, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and debts of over $10 million. PENNEXX FOODS: Smithfield Foods Agree to Forbear Until June 18 -------------------------------------------------------------- Pennexx Foods, Inc. (OTC: PNNX), a leading provider of case- ready meat to retail supermarkets in the Northeast, has entered into a Forbearance and Peaceful Possession Agreement with Smithfield Foods, Inc. which has been approved by the United States District Court for the Eastern District of Pennsylvania. The principal terms of the Forbearance Agreement are as follows: (1) Smithfield will forebear from exercising any of its rights or remedies until June 18, 2003 (2) The Company is required to pay Smithfield $13.0 million on or before June 9, 2003 plus a per diem interest charge from and after May 30, 2003 to retire all amounts owed to Smithfield. (3) The Company is required to provide Smithfield with a release of its Guaranty of the Company's Operating Lease obligations on or before June 18, 2003. (4) The Company has, for itself and its shareholders and affiliates, released Smithfield from all obligations and liabilities other than those set forth in the Forbearance Agreement. If the Company performs its obligations under the Forbearance Agreement, Smithfield will dismiss all actions against the Company, release all mortgages and liens on Company property, and provide the Company with a general release. If the Company defaults under the Forbearance Agreement, it is required to grant Smithfield immediate peaceable possession of all of the collateral which would, in effect, terminate the Company's business. To obtain the funds necessary to repay the Smithfield obligations, the Company is continuing discussions with a group of investors to raise at least approximately $13 million in debt and equity financing. Although the Company believes that it can close on these transactions in time to meet the deadlines of the Forbearance Agreement, there is no assurance that it will be able to do so. Moreover, even if it is able to do so, the terms on which such funds might be made available to the Company are likely to be dilutive to existing shareholders. Established in 1999, Pennexx Foods, Inc. is a leading provider of case-ready meat to retail supermarkets in the northeastern U.S. The company currently provides case-ready meat within a 300-mile radius of its plants to customers in the Northeast in order to assure delivery of product with an extended shelf life. The company cuts, packages, processes and delivers case-ready beef, pork, lamb and veal in compliance with the United States Department of Agriculture regulations. Pennexx customers include many significant supermarket retailers. PETALS INC: Look for Schedules and Statements by July 5, 2003 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Petals, Inc., an extension of time to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor has until July 5, 2003 or 45 days from the Petition Date, to file these documents. Petals, Inc., sells artificial flowers to customers through mail order, catalogue sales, retail store outlets and the internet. The Company filed for chapter 11 protection on May 21, 2003 (Bankr. S.D.N.Y. Case No. 03-13285). Mark Nelson Parry, Esq., at Moses & Singer LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,000,000 in total assets and $40,000,000 in total debts. PREMCOR INC: Provides Update on Second Quarter Earnings Guidance ---------------------------------------------------------------- Premcor Inc. (NYSE: PCO) announced that, based on industry refining margins and hydrocarbon prices for the quarter to date and assuming seasonal market conditions through the end of the quarter, it would expect its second quarter 2003 earnings to range between $.50 and $.75 per share. Thomas D. O'Malley, Premcor's Chairman and Chief Executive Officer, said, "Second quarter refining margins and the light- heavy spread got off to a solid start this quarter but have weakened during the month of May. In addition, natural gas prices have strengthened significantly this month, moving from roughly $5.00 to roughly $6.00 per mmbtu. We believe that industry conditions remain very favorable for refiners, with gasoline demand at all-time highs, good trends in distillate demand, and U.S. refined product inventories at extremely tight levels. It would not be unreasonable to expect refining margins to improve from current levels as we move into the summer driving season. It should be noted, however, that industry conditions remain equally favorable for natural gas, which we purchase as a refinery fuel. All of Premcor's facilities are running well this quarter, and planned maintenance is light during the remaining weeks." Premcor Inc. is one of the largest independent petroleum refiners and marketers of unbranded transportation fuels and heating oil in the United States. As reported in Troubled Company Reporter's December 4, 2002 edition, Fitch Ratings affirmed the ratings of Premcor USA, Premcor Refining Group and Port Arthur Finance Corp., in the low-B ranges. Fitch said the Rating Outlook for the debt of PUSA, PRG and PAFC remained Positive. RESIDENTIAL ASSET: Fitch Rates 2 Note Classes at Low-BV Level ------------------------------------------------------------- Fitch rates Residential Asset Mortgage Products, Inc. $472.2 million mortgage pass-through certificates, series 2003-RM2 classes A-I-1 through A-I-10, A-II, A-III, AP-I, AP-II, AP-II, AV-I, AV-II, AV-III and R-I through and R-IV certificates (senior certificates) 'AAA'. In addition, Fitch rates classes M- 1 and M-III-1 ($8.4 million) 'AA', classes M-2 and M-III-2 ($3.6 million) 'A', classes M-3 and M-III-3 ($2.3 million) 'BBB', the privately offered classes B-1 and B-III-1 ($1 million) 'BB' and privately offered classes B-2 and B-III-2 ($1.1 million) 'B'. The 'AAA' ratings on the Group I and II senior certificates reflect the 2.80% subordination provided by the 1.35% class M-1, 0.55% class M-2, 0.35% class M-3, 0.15% privately offered class B-1, 0.20% privately offered class B-2 and 0.20% privately offered class B-3 (not rated by Fitch). The 'AAA' ratings on the Group III senior certificates reflect the 5.50% subordination provided by the 2.50% class M-III-1, 1.15% class M-III-2, 0.75% class M-III-3, 0.35% privately offered class B-III-1, 0.25% privately offered class B-III-2, and 0.50% privately offered class B-III-3 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. The mortgage loans have been divided into three pools of mortgage loans, and as of the cut-off date, May 1, 2003, the Group I mortgage pool consists of 616 conventional, fully amortizing, 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $255,332,471. The mortgage pool has a weighted average original loan-to-value ratio of 66.98%. Approximately 55.48% and 6.83% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 26.21% of the pool, equity refinance loans account for 30.86%, and second homes account for 0.52%. The average loan balance of the loans in the pool is $414,501. The three states that represent the largest portion of the loans in the pool are California (49.33%), Massachusetts (5.64%) and Washington (5.23%). Approximately 95.6% of the Group I loans were purchased from Greenpoint Mortgage Funding. No other non-affiliate of Residential Funding sold more than 3.7% of the Group I loans to Residential Funding. After completion of a servicing transfer on or about June 1, 2003, primary servicing with respect to approximately 96.0% of the Group I loans will be provided by GMAC Mortgage Corporation (rated 'RPS1' by Fitch) as primary servicer. As of the cut-off date, the Group II mortgage pool consists of 200 conventional, fully amortizing, 15-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $77,700,012. The mortgage pool has a weighted average OLTV of 57.30%. Approximately 54.74% and 3.53% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 28.12% of the pool, equity refinance loans account for 36.61%, and second homes account for 1.47%. The average loan balance of the loans in the pool is $388,500. The three states that represent the largest portion of the loans in the pool are California (39.65%), Illinois (9.70%) and New Jersey (6.76%). Approximately 71.0%, 12.3% and 10.3% of the Group II loans were purchased from Greenpoint Mortgage Funding, Virtual Bank and Santa Barbara Bank & Trust, respectively. No other non-affiliate of Residential Funding sold more than 6.4% of the Group II loans to Residential Funding. After completion of a servicing transfer on or about June 1, 2003, primary servicing with respect to approximately 89.7% of the Group II loans will be provided by GMAC Mortgage Corporation. As of the cut-off date, the Group III mortgage pool consists of 377 conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $157,102,977. The mortgage pool has a weighted average OLTV of 75.05%. Approximately 59.19% and 12.23% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 0.47% of the pool, equity refinance loans account for 23.26%, and second homes account for 0.71%. The average loan balance of the loans in the pool is $416,719. The two states that represent the largest portion of the loans in the pool are Ohio (81.39%) and Florida (17.31%). All of the Group III loans were purchased from Third Federal Savings and Loan Association. Primary servicing will be provided by Third Federal Savings and Loan Association (not rated by Fitch as primary servicer) with respect to all of the Group III loans. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Deutsche Bank Trust Company Americas will serve as trustee. RAMP, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as four real estate mortgage investment conduits. RESIDENTIAL ASSET: Fitch Rates 2 Ser. 2003-QS9 Classes at BB/B -------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc., $203.7 million mortgage pass-through certificates, series 2003-QS9 classes A-1 through A-3, A-P, A-V, R-I and R-II certificates (senior certificates) 'AAA'. In addition, Fitch rates class M-1 ($3.6 million) 'AA', class M-2 ($400,000) 'A', class M-3 ($600,000) 'BBB', privately offered class B-1 ($300,000) 'BB' and privately offered class B-2 ($200,000) 'B'. The 'AAA' ratings on senior certificates reflect the 2.60% subordination provided by the 1.70% class M-1, 0.20% class M-2, 0.30% class M-3, 0.15% privately offered class B-1, 0.10% privately offered class B-2 and 0.15% privately offered class B-3 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. As of the cut-off date, May 1, 2003 the mortgage pool consists of 1,243 conventional, fully amortizing, 15-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $209,131,220. The mortgage pool has a weighted average original loan-to-value ratio of 65.55%. Approximately 60.33% and 2.37% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 68.85% of the pool, equity refinance loans account for 46.13%, and second homes account for 1.97%. The average loan balance of the loans in the pool is $168,247. The three states that represent the largest portion of the loans in the pool are California (33.03%), Texas (10.50%) and Florida (6.41%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers except in the case of 38.4% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly-owned subsidiary of the master servicer. No other unaffiliated seller sold more than approximately 10.5% of the mortgage loans to Residential Funding. Approximately 90.3% of the mortgage loans are being subserviced by HomeComings Financial Network, Inc. (rated 'RPS1' by Fitch). The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits. SEITEL: Terminates Standstill Pact & Hires Jefferies as Advisor --------------------------------------------------------------- Seitel, Inc. (OTC Bulletin Board: SEIE) has elected not to continue the standstill agreement among the Company and the holders of its senior, unsecured notes. The Standstill expires on June 2, 2003, and its termination will trigger a default under the Notes. Following the occurrence and during the continuance of any default the Notes are subject to acceleration by the holders. As previously reported, the Company and the holders of the Notes have engaged in extended negotiations since mid 2002. Despite these discussions, no agreement has emerged on the terms for a restructuring of the Notes. The Company also said that during the last two weeks $96 million in principal amount (or 37.6%) of the Notes have been acquired by a single purchaser. This purchaser has not heretofore been a holder of any Notes. The purchaser has approached the Company and has expressed interest in pursuing alternative approaches to a long-term restructuring of the Company's debt and capital position, including a restructuring of the Notes. The Company expects to begin discussions with the purchaser promptly; however there can be no assurance that an agreement will be reached. In addition, Seitel announced that it has retained Jefferies & Company to act as its financial advisor in connection with a possible restructuring. The Company will continue to pursue all alternatives available to implement a restructuring in the best interests of all constituencies, including customers, creditors, employees and shareholders. These alternatives may include negotiated agreements or transactions, court supervised reorganization, accessing public or private debt or equity markets or any combination of the foregoing. Seitel markets its proprietary seismic information/technology to more than 400 petroleum companies, licensing data from its library and creating new seismic surveys under multi-client projects. SMARTSERV: Continues Efforts to Maintain Nasdaq SmallCap Listing ---------------------------------------------------------------- SmartServ Online, Inc. (Nasdaq: SSOL) received a Nasdaq Staff Determination on May 23, 2003, indicating that as a result of its delay in filing Form 10-QSB with the Securities and Exchange Commission, SmartServ is not in compliance with the requirements for continued listing as set forth in Marketplace Rule 4310(C)(14). As a result, SmartServ's common stock is subject to delisting from the Nasdaq SmallCap Market. SmartServ expects to satisfy the listing requirements set forth in Marketplace Rule 4310(C)(14) by filing its Form 10-QSB with the Securities and Exchange Commission by June 4, 2003. The delay in filing Form 10-QSB was addressed along with other continued listing requirements at a hearing held before a Nasdaq Listing Qualifications Panel on May 29, 2003. SmartServ provided the Nasdaq Listing Qualifications Panel with a plan to achieve compliance with all of Nasdaq's listing requirements, and is awaiting the Panel's decision. There can be no assurance, however, that the Panel will grant SmartServ's request to stay the delisting pending the execution of its compliance plan. SmartServ's compliance plan includes a combination of the completion of its current round of financing and potential acquisitions along with additional financing. SmartServ has retained a New York investment firm to advise the Company on the execution of its plan. There can be no assurance, however, that SmartServ will be able to execute this plan or that such execution will result in the continued listing of its common stock. SmartServ (Nasdaq: SSOL) is a wireless applications service provider offering applications, development and hosting services. SmartServ's customer and distribution relationships exist across a network of wireless carriers, strategic partners, and a major financial institution. SmartServ offers mobile data solutions that can generate additional revenue, increase operating efficiency, and extend brand awareness for wireless carriers, enterprises and content providers. We offer standard and custom-built applications designed for a vast array of wireless platforms and devices. Our applications can be delivered via Java(TM) 2 Platform, Micro Edition (J2ME(TM)), QUALCOMM's Binary Runtime Environment for Wireless(TM) (BREW(TM)) solution, WAP and SMS, as well as RIM Blackberry and Pocket PC devices. For more information, please visit http://www.SmartServ.com SmartServ's December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $173,000. In its 2002 Annual Report on Form 10-KSB, the Company reported: "Due to the substantial expenses and negative cash flows from operations that we have incurred, our auditors, in their report contained in our December 31, 2002 financial statements, have indicated that there is substantial doubt about our ability to continue as a going concern. The Company has earned limited revenues and has incurred net losses of $8,037,173 and $14,819,860 for the years ended December 31, 2002 and 2001, respectively, and net losses of $30,993,559 and $7,124,126 for the years ended June 30, 2000 and 1999, respectively. Additionally, the Company had an accumulated deficit of $72,859,006 at December 31, 2002. Although the Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business, unless we are able to increase revenue and raise additional capital from investors, we will not be able to support our operations." SMTC CORP: Fails to Maintain Nasdaq Minimum Listing Requirements ---------------------------------------------------------------- SMTC Corporation (Nasdaq: SMTX), (TSE: SMX), a global provider of electronics manufacturing services to the technology industry, has received a notification from Nasdaq Listing Qualifications that its common stock has failed to maintain the minimum bid price of US$1.00 per share over a period of 30 consecutive trading days, as required by Nasdaq's Marketplace Rules. Nasdaq has provided SMTC with a grace period of 180 calendar days, or until November 17, 2003, to regain compliance with this requirement or be delisted from trading on The Nasdaq National Market. To regain compliance, SMTC's common stock must achieve a minimum closing bid price of at least US $1.00 for at least ten consecutive trading days unless the NASDAQ staff requires the stock to satisfy this requirement for a longer period (which would generally not be more than 20 consecutive trading days). SMTC intends to monitor the bid price for its common stock between now and November 17, 2003. If the stock does not trade at a level that is likely to regain compliance, SMTC's Board of Directors will consider other options available to the Company to achieve compliance. If SMTC is unable to come into compliance with the bid price requirement by November 17, 2003, Nasdaq Listing Qualifications will provide written notification that SMTC's common stock will be delisted, which the Company may appeal to a Listing Qualifications Panel. SMTC Corporation, whose corporate credit and senior secured bank loan are rated by Standard & Poor's at B, is a global provider of advanced electronics manufacturing services to the technology industry. The Company's electronics manufacturing and technology centers are located in Appleton-Wisconsin, Austin-Texas, Boston- Massachusetts, Charlotte-North Carolina, San Jose-California, Toronto-Canada, Ireland and Mexico. SMTC offers technology companies and electronics OEMs a full range of value-added services including product design, procurement, prototyping, printed circuit assembly, advanced cable and harness interconnect, high precision enclosures, system integration and test, comprehensive supply chain management, packaging, global distribution and after-sales support. SMTC supports the needs of a growing, diversified OEM customer base primarily within the industrial, networking and communications markets. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's Web site, http://www.smtc.comfor more information about the Company SMTC Corporation's March 30, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $7 million. SPECTRASITE: Names Andy Christian to Lead Wireless Tower Project ---------------------------------------------------------------- SpectraSite Communications announced that Andy Christian has been named as the new Project Manager responsible for leading SpectraSite's agreement with Florida Department of Transportation. In April 2000, SpectraSite acquired Lodestar Towers, which had a 30-year agreement in place with FDOT to develop tower sites along 2,200 miles of FDOT rights of way. As part of that agreement, SpectraSite currently owns or manages more than 80 FDOT wireless communications towers, located along major highways and corridors throughout the state of Florida. Christian will serve as the main point of contact, and will manage all wireless carrier collocation activity on FDOT sites. He will also project manage the development of any new tower sites along FDOT corridors. Christian has been with SpectraSite for more than three years. He has an extensive background in the wireless industry, and has spent the last seven years working in wireless in Florida. He has strong relationships in place with all of the leading wireless carriers in the Florida market. He will continue to serve as SpectraSite's Account Executive for the state of Florida while managing the FDOT contract. "Andy will add tremendous value to both FDOT and wireless carriers throughout Florida," said Daniel C. Agresta III, Vice President of Collocation Sales for SpectraSite. "He is very familiar with the FDOT agreement and has strong relationships in place with FDOT personnel. The combination of his wireless background, industry contacts and experience in Florida make him the perfect choice for this position." Christian will work directly with FDOT to ensure that all carrier collocations are processed quickly and efficiently. This will allow the wireless carriers to have access to some of the most desirable site locations in the state of Florida. "We're seeing positive results already," Agresta added. "Since Andy became involved in the process, collocation activity on FDOT towers has increased significantly. I'm certain that the collocation activity will continue to grow as Andy works more directly with FDOT." Christian will be supported by Andrew Jewell, SpectraSite Field Support Services Manager, and Tina Pendergraph, SpectraSite Collocation Manager. The address for Andy Christian's office is 13117 South U.S. Highway 441, Micanopy, FL 32667. Phone-352/870-9633. E-fax- 919/468-8522. SpectraSite, Inc. -- http://www.spectrasite.com-- (Ticker symbol: SPCS) based in Cary, North Carolina, is one of the largest wireless tower operators in the United States. At March 31, 2003, SpectraSite owned or operated over 18,000 sites, including 7,488 towers primarily in the top 100 markets in the United States. SpectraSite's customers are leading wireless communications providers and broadcasters, including AT&T Wireless, ABC Television, Cingular, Nextel, Paxson Communications, Sprint PCS, Verizon Wireless and T-Mobile. As reported in Troubled Company Reporter's May 15, 2003 edition, Standard & Poor's Ratings Services assigned its 'CCC+' senior unsecured rating to Cary, North Carolina-based tower operator SpectraSite Inc.'s $150 million senior notes due 2010, to be issued under Rule 144A, with registration rights. Proceeds will be used to repay a portion of the company's secured bank debt. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on SpectraSite and its 'B+' secured bank loan rating on wholly owned operating subsidiary SpectraSite Communications Inc. As of March 31, 2003, the company had about $707 million of total debt outstanding. The outlook is stable. "The unsecured debt issue is two notches lower than the corporate credit rating, reflecting the significant concentration of secured bank debt in the capital structure, at approximately $560 million, pro forma for pay-down, with proceeds from this new unsecured debt issue," said credit analyst Catherine Cosentino. The 'B' corporate credit rating reflects the lower relative debt levels of SpectraSite compared with its rated peers after its emergence from bankruptcy. As a result, all of the other tower operators are rated 'B-' or lower. A favorable risk factor is that wireless companies may have few feasible alternatives to using SpectraSite's towers: existing tenants might choose to build their own towers (an expensive undertaking), or lease from another company, but both could involve major system reengineering. SPIEGEL GROUP: Court Approves Pachulski Stang as Special Counsel ---------------------------------------------------------------- The Spiegel Inc., and its debtor-affiliates relate that their lead bankruptcy counsel, Shearman & Sterling, has connections with certain parties-in-interest in their cases, including without limitation, Deutsche Bank AG, Bank of America, Credit Suisse First Boston and J.P. Morgan Chase Bank. These connections may give rise to potential conflicts. Accordingly, the Debtors sought and obtained the Court's authority to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., as special counsel, nunc pro tunc to March 24, 2003. Pachulski Stang handle matters in the Debtors' cases where their lead bankruptcy counsel cannot represent them under applicable standards of professional conduct and responsibility. Pachulski Stang will represent the Debtors in connection with the negotiation, documentation, and administration of the Debtors' postpetition credit facility, and any proposed amendments, waivers or modification. The firm will also handle other matters as the Debtors may request. The Debtors also need Pachulski Stang as special counsel because of the firm's: (a) extensive experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under chapter 11 of the Bankruptcy Code; (b) expertise, experience and knowledge practicing before the Court; and (c) familiarity with the potential legal issues that may arise in the context of the Debtors' Chapter 11 cases. The Debtors believe that Pachulski Stang is both well qualified and uniquely able to represent them in these Chapter 11 cases in a most efficient and timely manner. The Debtors will compensate Pachulski Stang on an hourly basis and reimburse the firm for the actual, necessary expenses it incurs. Pachulski Stang provides legal services at hourly rates ranging from: Partners and Counsel $350 - 650 Counsel and Associates 235 - 445 Paralegals and clerks 55 - 170 William P. Weintraub, Esq., a Partner at Pachulski Stang, ascertains that the firm does not represent creditors, equity security holders, or any other parties-in-interest, or their attorneys, in any matter relating to the Debtors or their estates. Pachulski Stang also does not hold or represent any interest adverse to the Debtors' estates. The firm is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. (Spiegel Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) SURGILIGHT INC: GEM Converts $2MM of Conv. Debenture into Shares ---------------------------------------------------------------- SurgiLight, Inc. (OTC Bulletin Board: SRGL), a leader in the development of ophthalmic laser systems, announced on May 22, 2003 that UK-based GEM GLOBAL YIELD FUND (GEM), a private equity fund, will convert the remaining $2 million of a $3 million convertible debenture to 21.5 million shares of SurgiLight stock and will receive a seat on the Company's Board of Directors. GEM has committed 2.15 million shares of the total to a new employee option plan; the Company is assigning another 2.15 million shares to that plan. If all of the 2.15 million shares are awarded under the option plan, GEM will hold 18,350,000 shares. Under the agreement, GEM will immediately convert 19.9% of the issued and outstanding stock or 7,851,730 shares. The Company and shareholders must authorize additional shares for GEM to complete their conversion. Until that time, GEM will hold a note for the balance owed. Once the conversion is complete and assuming full allocation of the new employee option plan, GEM will have twenty-seven (27%) percent of SurgiLight shares fully diluted shares. GEM has agreed to limit its voting on most corporate matters to 19.9 percent of outstanding shares. The full debenture was originally issued in the fall of 2000, under the Company's previous management and has created an overhang in the stock since that date. One-third has since been converted to common stock through December 2002. Under the agreement, Edward J. Tobin, 46, a GEM Director, will be elected to the Board. Tobin commented, "We made this investment decision based on our review of several key factors: OptiVision(TM)'s success in clinical trials of its role in reversing presbyopia; the significance of the worldwide market for presbyopia treatment; and the overall experience, expertise and dedication of the current senior management team as reflected in a clear-cut business plan." SurgiLight Chairwoman & CEO Colette Cozean, Ph.D., said that GEM's substantial stock acquisition "is a firm endorsement of our technology, the revised focus of the Company and management's ability to seize down the road the premier position in our target markets. "GEM's generous assignment of more than two million shares to an employee option plan not only provides added performance incentive, but also signals a firm commitment to growing this company to industry sector leadership," she said. SurgiLight, Inc. is a leader in the development and acquisition of new laser technologies for various ophthalmic applications, including not only presbyopia reversal and treatment, but also cataract removal and treatment of glaucoma. The Company holds 16 patents, with 23 patents pending. * * * Liquidity and Capital Resources In its most recent Form 10-Q filing, the SurgiLight reported: "As of March 31, 2003, we had a bank overdraft of negative $10,983 and a working capital deficit of $3,262,378 as compared to a cash overdraft of negative $3,678 and a working capital deficit of $3,604,111 at December 31, 2002. The decrease in our cash can be primarily attributed to the lower level of international sales than was expected and the delay in performing U.S. clinical trials which resulted in our inability to collect progress payments from our customers. It should be noted that the 2003 working capital deficit is primarily comprised of the $2,327,057 convertible debentures obligations, $2 million of which the Company has entered into an agreement to convert at April 11, 2003. "The Company's future capital requirements will depend on many factors, the scope and results of pre-clinical studies and pre- clinical trials, the cost and timing of regulatory approvals, research and development activities, establishment of manufacturing capacity, and the establishment of the marketing and sales organizations and other relationships, acquisitions or divestitures, which may either involve cash infusions or require additional cash. There is no guarantee that without additional revenue or financing, the Company will be able to meet its future working capital needs. "The Company has severe liquidity problems which compromises its ability to pay principal and interest on debt and other current operating expenses in a timely manner. The $500,000 line-of- credit held by Merrill Lynch has been declared in default. The Company is seeking additional sources of financing, which may include short-term debt, long-term debt or equity. There is no assurance that the Company will be successful in raising additional capital. In November 2002 the Company received a commitment letter for a $10 million line of credit secured by the Company's inventory and accounts receivable. The terms require obtaining a bank guarantee at a cost of $585,000, $92,500 of processing fees to be paid prior to closing, and an additional $153,000 to be paid at time of closing the transaction. The line of credit is for a term of ten years and accrues interest at a fixed rate of 4.75% for amounts utilized. The Company has been negotiating the final agreement with the lender. However, there is no guarantee that the debt financing will be received or if received will be according to these terms. "The Company's ability to meet its working capital needs will be dependent on the ability to sign additional distribution and licensing arrangements, achieve a positive cash flow from operations, achieve and sustain profitable operations, and obtain additional debt and/or equity capital. Lack Of Liquidity "Our ability to meet our working capital needs will be dependent on the ability to sign additional distribution and licensing arrangements, achieve a positive cash flow from operations, achieve sustainable profitable operations, and acquire additional capital. While we have produced several quarters of positive cash flow, the cash generated has been used to repay portions of our substantial indebtedness leaving few funds available to expand our clinical trials or sales and marketing efforts. "If we are unable to obtain additional funds from other financings we may have to significantly curtail the scope of our operations and alter our business model. We are seeking additional sources of financing, which may include short-term debt, long-term debt or equity. However there is no assurance that we will be successful in raising additional capital. If additional financing is not available when required or is not available on acceptable terms, then we may be unable to continue our operations at current levels or at all. "During the two last quarters of 2002, we had experienced a normal slowing of sales resulting from the foreign, particularly European, slowdown in business due to lengthy vacations and the overall economic downturn. In addition, due to litigation with AMLSI, we have been unable to utilize the existing escrowed cash assets to fund current operations. The result of these two events has created very tight cash flow for us. "Failure to raise additional financing or achieve and maintain profitable operations may result in the inability to successfully promote our brand name, develop or enhance the medical eye laser technology or other services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our financial condition and results of operations or existence as a going concern." TELEGLOBE INC: Completes Sale of Core Business for $125 Million --------------------------------------------------------------- Teleglobe Inc., has completed, for a purchase price of US$125 million, the sale of its core voice and data business to Teleglobe International Holdings pursuant to a Purchase Agreement with TLGB Acquisition LLC. The terms of the sale were previously approved by courts both in Canada and the United States. Teleglobe is a leader in the global roaming services between North America and the rest of the world. In addition to its comprehensive portfolio of wireless services for mobile telecommunication network operators worldwide, Teleglobe is expanding its portfolio of services to support specific wireless market needs. The new Premium Virtual Transit Service (VTS Premium) provides international voice terminations to a number of destinations. This service is especially designed for the mobile operators market in providing higher levels of service including the transmission and delivery of the CLI (Calling Line Identifier) with the voice call. Teleglobe is also a provider of international voice, data and Internet services. Today, Teleglobe owns and operates an extensive global telecommunications network built over a combination of wavelength IRUs, ownership or participation in 90 fiber optic submarine cable systems, satellite capacity, and leased transmission capacity. This provides Teleglobe with advanced voice, data and IP access capabilities from numerous points of presence on its network. Teleglobe has reach to more than 240 countries and territories with advanced data capabilities. Teleglobe currently has 275 direct and bilateral relations with large incumbent and alternative carriers. Teleglobe also provides data and IP access from numerous points of presence on its network and currently has private and public peering arrangements with 70 connections, including Tier 1 providers in North America, Europe and Asia. Teleglobe is the carrier of choice to many of the world's leading telecommunications companies, mobile operators and Internet service providers. Detailed information about Teleglobe is available on the company's Web site at http://www.teleglobe.com As previously reported, Ernst & Young Inc., has been appointed by the court as Monitor with respect to the proceedings relating to Teleglobe under the "Companies' Creditors Arrangement Act". Teleglobe Inc.'s U.S. subsidiaries have also filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in Delaware (Bankr. Case No. 02-11518). This step was taken in order to provide protection for the U.S. subsidiaries similar to that previously obtained for Teleglobe companies through their previous filings in Canada and the U.K. In addition, Teleglobe continues to evaluate whether a reorganization of its other foreign subsidiaries is appropriate. TENNECO AUTOMOTIVE: S&P Rates Proposed Senior Sec. Notes at CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Tenneco Automotive Inc. to stable from negative. At the same time, Standard & Poor's assigned its 'CCC+' rating to TEN's proposed offering of $300 million senior secured notes, with a second lien, due in 2013 (144A with registration rights). The outlook revision reflects Lake Forest, Illinois-based TEN's improved credit-protection measures achieved in the past year and enhanced liquidity stemming from the pending issuance of the $300 million senior secured notes. In addition, Standard & Poor's affirmed its 'B' corporate credit rating on TEN and its other ratings. TEN is a manufacturer of exhaust systems (65% of revenues) and ride control products (35%) for the automotive original equipment (72%) market and aftermarket (28%). Balance sheet debt (long-term and current maturities) totaled $1.4 billion as of March 31, 2003. "Despite difficult market conditions during the past two years, TEN has reduced total debt and maintained stable margins because of aggressive restructuring and efficiency-improvement efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect that TEN will continue to improve margins to offset expected weak market demand and pricing pressures, especially in Europe, and generate free cash flow to reduce total leverage. We also assume that TEN will successfully refinance its credit facility before year-end 2004." The proposed $300 million senior secured notes, when issued, will be senior to the company's existing and future subordinated notes and pari passu with TEN's senior debt, including the senior secured credit facility. Standard & Poor's rating on the senior secured notes incorporates the fact that the noteholders will have a second, silent, lien on the company's U.S. assets. Thus the noteholders would be subordinate, in a default situation, to the credit facility lenders. Standard & Poor's analysis determined that the claim of senior secured noteholders would be disadvantaged, in a default scenario, by the presence of priority obligations including liabilities of the non- guarantor subsidiaries. The proceeds from the notes offering will be used to reduce commitment levels under TEN's senior credit facilities. TRITON PCS: Amends Tender Offer for 11% Sr. Sub. Discount Notes --------------------------------------------------------------- Triton PCS, Inc., has amended its offer to purchase up to $315,000,000 aggregate principal amount of its 11% Senior Subordinated Discount Notes due 2008 (CUSIP No. 896778AB3) to an offer to purchase any or all outstanding 11% Notes ($511,989,000 aggregate principal amount outstanding). This offer is being made upon the terms and is subject to the conditions set forth in an Offer to Purchase dated May 22, 2003, as amended by the Supplement to the Offer to Purchase dated May 30, 2003. The offer has also been amended as follows: -- The Early Tender Date has been extended. The new Early Tender Date is 5:00 p.m., New York City time, on Thursday, June 12, 2003. Tenders of 11% Notes made prior to 5:00 p.m., New York City time, on the Early Tender Date may not be validly withdrawn, unless Triton PCS reduces the amount of the Tender Offer Consideration, the Early Tender Premium or the principal amount of 11% Notes subject to the offer or is otherwise required by law to permit withdrawal. 11% Notes validly tendered to date may not be withdrawn, but Holders that have validly tendered 11% Notes to date will receive the increased Total Consideration set forth below on the Early Tender Settlement Date, upon the terms and subject to the conditions of the Offer. -- The Early Tender Premium has been increased to 2.13% of the principal amount of the 11% Notes. As a result, the increased Total Consideration is 105.98% of the principal amount of the 11% Notes. -- A new Early Tender Settlement Date has been added. In respect of 11% Notes that are validly tendered prior to 5:00 p.m., New York City time, on the Early Tender Date, the Early Tender Settlement Date will be promptly after the satisfaction of the Financing Condition (but in no event prior to the Early Tender Date). In respect of 11% Notes that are validly tendered after 5:00 p.m., New York City time, on the Early Tender Date but prior to midnight, New York City time, on the Expiration Date, the final Settlement Date will be promptly after the Expiration Date, which is midnight, New York City time, on June 19, 2003, unless extended or earlier terminated. -- In the event that less than all of the outstanding 11% Notes are tendered pursuant to the Offer, Triton PCS currently intends to call for redemption, upon satisfaction of the Financing Condition, in accordance with the terms of the Indenture, any and all 11% Notes remaining outstanding. This statement of intent shall not constitute a notice of redemption under the Indenture governing the 11% Notes. Except as otherwise stated herein and in the Supplement to the Offer to Purchase, all other terms and conditions of the Offer set forth in the Offer to Purchase remain unchanged. Tendering Holders may continue to use the Letter of Transmittal previously distributed with the Offer to Purchase to tender 11% Notes. Capitalized terms used in this press release but not defined in this press release have the meaning ascribed to them in the Offer to Purchase, as amended. A more comprehensive description of the tender offer can be found in the Offer to Purchase and the Supplement. Triton PCS has retained Lehman Brothers to serve as the Dealer Manager and D.F. King & Co., Inc. to serve as the Information Agent for the tender offer. Requests for documents may be directed to D.F. King & Co., Inc., the Information Agent, by telephone at (800) 431-9643 (toll-free) or (212) 269-5550 or in writing at 48 Wall Street, 22nd Floor, New York, NY 10005. Questions regarding the tender offer may be directed to Lehman Brothers at (800) 438- 3242 (toll-free) or (212) 528-7581, Attention: Emily E. Shanks. Triton PCS, based in Berwyn, Pennsylvania and whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $192 million, 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 Web sites at: http://www.tritonpcs.comand http://www.suncom.com TRITON PCS: Prices $725 Million Senior Unsecured Notes Offering --------------------------------------------------------------- Triton PCS, Inc., whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $192 million, has priced $725 million of 8-1/2% senior unsecured notes due 2013 to be issued in a private placement. The notes were rated B+ by Standard and Poor's and B2 by Moody's. Triton PCS intends to use the net proceeds from this offering to retire its existing 11% Senior Subordinated Discount Notes due 2008, and to repay fully outstanding borrowings and terminate its existing senior credit facility. In addition, Triton PCS has received commitments to put into place a new $100 million revolving credit facility, arranged by Lehman Brothers. The company does not have any current plans to draw on this facility. The facility will enhance liquidity and is available for general corporate and working capital purposes. Both transactions are expected to close on June 13, 2003. Triton PCS, Inc. is a wholly owned subsidiary of Triton PCS Holdings, Inc. (NYSE: TPC). Based in Berwyn, Pennsylvania, the company 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 Web sites at: http://www.tritonpcs.comand http://www.suncom.com UNITED AIRLINES: BofA Wants Payment for 1995-B Jets Admin. Costs ---------------------------------------------------------------- According to Edward Zujkowski, Esq., at Emmet, Marvin & Martin, United Airlines has breached its obligations under a 1995-B JETS Transaction that it elected to perform under Section 1110(a). The 1995-B Jets Transaction financed one aircraft in United's fleet with Tail No. N186UA. A Trust, established on April 19, 1995, issued Notes that were purchased by investors. The Trust's assets consisted of loan certificates issued by United Obligation Trusts and U.S. Bank as Trustee. United entered into separate lease agreements with the owner trusts. The leases and rights to payment were assigned to the U.O. Trusts, which were further assigned to the JETS Trustee to provide funds to pay principal and interest due on the Notes. By this motion, The Bank of New York and U.S. Bank, pursuant to the Jet Equipment Trust Series 1995-B Class A, Class B and Class C Notes Indentures and the Collateral Agency Agreement, ask the Court to compel United to pay $5,750,000 in administrative expenses. Mr. Zujkowski explains that the Debtors were required by the Aircraft Financing Documents to make scheduled payments to the JETS Trustee by March 2, 2003, or be in default. The Debtors did not make this payment but continue to use the Aircraft. Mr. Zujkowski maintains that the Debtors entered into a Section 1110 Agreement with the Aircraft Financiers without any intention of making the attendant payments. (United Airlines Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AGGREGATES: Files Joint Plan & Disclosure Statement in Nevada ---------------------------------------------------------------- Bank of America, N.A., as administrative agent for the Senior Lenders and the Official Committee of Unsecured Creditors of U.S. Aggregates, Inc., together with the Debtors, filed their Joint Liquidating Chapter 11 Plan and Disclosure Statement with the U.S. Bankruptcy Court for the District of Nevada. The Disclosure Statement explaining the Joint Liquidating Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=030526223817 The Plan provides for the distribution of the proceeds of the liquidation of the Debtors' assets over time and the termination of the existence of the Debtors. The summary of the classification of all claims and interests under the Plan and the proposed treatment of each such class under the Plan are: Type of Claim or Interest Treatment ------------------------- --------- Administrative Expense Each Administrative Expense Claim Claims shall be paid in full, in cash, as soon as practical after the later of: x) the Initial Distribution Date, y) the date upon which there is a final order allowing such Administrative Expense Claim, or z) the date on which such Administrative Expense Claim becomes due in the ordinary course of business. Priority Tax Claims On, or as soon as reasonably practicable after, the later of: i) the Initial Distribution Date, or ii) the date on which such Priority Tax Claim becomes an Allowed Priority Tax Claim, each holder of an Allowed Priority Tax Claim shall receive in full satisfaction, settlement and release of and in exchange for such Allowed Priority Tax Claim Priority Claims (Class 1) unimpaired and thus, not entitled to vote on the Plan. On, or as soon as reasonably practicable after, the later of: i) the Initial Distribution Date, or ii) the date on which such Priority Claim becomes an Allowed Priority Claim, each holder shall receive in full satisfaction, settlement and release of and in exchange for such Allowed Priority Claim Senior Lender Claims impaired and entitled to (Class 2) vote on the Plan. On account of the Senior Lender Claims, the Senior Lenders shall retain all the rights granted to them pursuant to the terms of the Settlement Agreement approved by this Court on March 24, 2003. Other Secured Claims impaired and entitled to vote on (Class 3) the Plan. Each Other Secured Claim shall be paid, on the Initial Distribution Date, in full from a fund of $15,786.45 that is to be created by the Senior Lenders. Unsecured Claims impaired and entitled to vote on (Class 4) the Plan. Holders of allowed General Unsecured Claims shall be entitled to receive: i) exclusively share Pro Rata in the Net Proceeds of the Earmarked Assets distributed on account of unsecured claims up to the first $4,000,000 of such Net Proceeds; ii) shall share, other than Prudential, Pro Rata in all Net Proceeds of the Earmarked Assets distributed on account of such unsecured Claims in excess of $4,000,000, and iii) shall share, other than Prudential, Pro Rata in all Net Proceeds from the Non- Earmarked Assets distributed on account of such unsecured Claims. Interests (Class 5) impaired but deemed to reject the Plan and shall not be entitled to vote on the Plan. Holders of Interests shall not receive any distribution under the Plan. Upon the Effective Date of the Plan, all Interests shall be extinguished and cancelled without further action by the Debtors or notice to Holders of Interest being necessary. U.S. Aggregates, Inc., was engaged in the production of aggregate and aggregate related products. The Company, together with its debtor-affiliates, filed for chapter 11 protection on March 11, 2002 (Bankr. Nev. Case No. 02-50656). Brett A. Axelrod, Esq., at Beckley Singleton, PLC, represents the Debtors in their restructuring efforts. Bank of America is represented by Jennifer A. Smith, Esq., at Lionel Sawyer & Collins and Sylvia Harrison, Esq., at McDonald Carano Wilson McCune Bergin Frankovich & Hick, LLP assists the Official Unsecured Creditors Committee. U.S. STEEL CORP: Appoints Karlos E. Abel as Director for Audit -------------------------------------------------------------- United States Steel Corporation (NYSE: X) has named Karlos E. "Gus" Abel as director-audit effective June 1. Abel succeeds Fred Cohen, who will retire at the end of May after almost 39 years of loyal and effective service. In his new position, Abel, 54, will report to Gretchen Haggerty, chief financial officer, and to the Audit and Finance Committee of the U. S. Steel board of directors, which has endorsed his appointment. "Gus is an individual of integrity with proven leadership skills, and extensive accounting and finance experience," said Haggerty. "His background and abilities will prove invaluable in his new position." Abel worked as a financial analyst and manager of business planning in the airline industry prior to joining Marathon Oil Corporation as a financial analyst in 1977. He held increasingly responsible accounting and management positions with Marathon, and was named director-corporate staff at USX Corporation, then the parent company of Marathon and U. S. Steel, in 1996. Abel became assistant treasurer of USX in 2000 and later that year was appointed to his most recent position, senior vice president and chief financial officer of U. S. Steel Kosice (USSK) in Slovakia. Abel graduated from Grove City College with a bachelor's degree in accounting and earned a master's degree in finance and accounting from Northwestern University. Karl F. Csensich, currently vice president-accounting at USSK, will succeed Abel as senior vice president and chief financial officer of USSK. Csensich began his career with U. S. Steel in 1984 in accounting at the former Geneva-Pittsburg Works near Salt Lake City, Utah. He was promoted through a number of financial positions in the Pittsburgh area and was named comptroller of USX Engineers and Consultants, now UEC Technologies LLC, at headquarters in 1999. He served in that capacity until December 2000, when he was named vice president of accounting for USSK, a position he held until his recent promotion. Replacing Csensich as vice president of accounting at USSK is James F. Connor. Connor began his career with U. S. Steel as a staff assistant in commercial analysis at headquarters in 1981. He progressed through a series of increasingly responsible accounting positions at headquarters and Gary Works in Indiana. In 1999, he was named controller of Fairfield Works in Alabama, a position he has held until his recent assignment at USSK. * * * As reported in Troubled Company Reporter's May 9, 2003 edition, 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 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 assigned its 'BB-' rating to United States Steel Corp.'s proposed $350 million senior notes due 2010. VICWEST CORP: Canadian Court Extends CCAA Protection to June 13 --------------------------------------------------------------- As previously announced, Vicwest Corporation and certain of its Canadian subsidiaries obtained an order on May 12, 2003 to begin Vicwest's restructuring under the Companies' Creditors Arrangement Act. Vicwest has sought and obtained from the Ontario Superior Court of Justice an order granting it and the Subsidiaries an extension to June 13, 2003 of protection under the CCAA, and an extension to June 13, 2003 of the deadline for filing its restructuring plan. Vicwest also announced that pursuant to a Court order obtained on May 26, 2003 it repaid its outstanding secured bank indebtedness of approximately $30 million (all dollar amounts are in Canadian dollars) with the debtor-in-possession financing provided by Trilon Bancorp Inc. In addition to a term loan facility of $30 million, the DIP financing includes a revolving operating credit facility of $5 million which may be drawn upon in accordance with an approved cash flow budget. The DIP financing is guaranteed by the Subsidiaries and is secured by all of the assets of Vicwest and the Subsidiaries. All amounts borrowed under the DIP financing bear interest at the prime rate per annum plus 5%. A fee equal to 1.25% of the amount advanced has been paid with respect to the total amount of the committed DIP financing. There is a further standby fee equal to 0.75% of the unadvanced portion of the operating facility. The DIP facilities are repayable in full upon an enforcement event if there is a default or otherwise upon the earlier of September 26, 2003 and the implementation of the proposed plan of compromise or arrangement under the CCAA. Advances under the operating facility are available provided that various affirmative and negative covenants are complied with and there has been no material adverse change in the businesses, assets or financing condition of Vicwest or the Subsidiaries. The Court also accepted and approved the first report dated May 23, 2003 of Deloitte & Touche Inc. in its capacity as monitor of Vicwest. In that report, for the purpose of valuing the secured banks' security, the Monitor estimated the hypothetical liquidation value of certain assets of Vicwest and Westeel Limited. The Court also approved the second report of the Monitor dated May 29, 2003. The second report supported the extension to June 13, 2003 of protection under the CCAA and the date for filing the restructuring plan. The full text of both Monitor's reports should be reviewed and considered in their entirety as the contents of the reports are subject to qualifications and assumptions set out therein. Copies of both Monitor's reports will be filed by Vicwest with the Canadian securities regulators and will be available on their Web site at http://www.sedar.com Copies of the monitor's reports are also available on the Monitor's Web site at http://www.deloitte.ca As previously announced, the preparation and filing of Vicwest's consolidated financial statements for the year ended December 31, 2002 and the quarter ended March 31, 2003 have been delayed as a result of Vicwest's restructuring activities under the CCAA. Vicwest anticipates that it will be able to comply with its financial statement filing requirements after completion of its restructuring process. At this time it is anticipated that Vicwest will emerge from its restructuring process in the summer of 2003. Vicwest, with corporate offices in Oakville, Ontario, is Canada's leading manufacturer of metal roofing, siding and other metal building products. Westeel, based in Winnipeg, is Canada's foremost manufacturer of steel containment products for the storage of grain, fertilizer and petroleum products. Westeel exports to more than 30 countries. VIRAGEN: Says Company Continues to Meet AMEX Listing Criteria ------------------------------------------------------------- Viragen, Inc. (Amex: VRA) corrected erroneous information contained in a preliminary prospectus included in a Form S3 that the Company filed with the Securities and Exchange Commission Friday morning. The filing incorrectly states that, "We (Viragen) do not currently meet minimum bid price requirements of the American Stock Exchange, and if we are delisted from the American Stock Exchange, the trading market for our common stock could be eliminated." Viragen currently meets AMEX maintenance criteria and is considered in good standing. The Company has no reason to believe that it is a candidate for possible delisting. The Company will immediately amend its Form S3 and file the corrected document with the SEC. Viragen is a biotechnology company specializing in the research, development and commercialization of natural and recombinant protein-based drugs designed to treat a broad range of viral and malignant diseases. These protein-based drugs include natural human alpha interferon, monoclonal antibodies, peptide drugs and therapeutic vaccines. Viragen's strategy also includes the development of Avian Transgenic Technology for the large-scale, cost-effective manufacturing of its portfolio of protein-based drugs, as well as offering Contract Manufacturing for the entire biopharmaceutical industry. Viragen is publicly traded on the American Stock Exchange (VRA). Viragen's majority owned subsidiary, Viragen International, Inc., is publicly traded on the Over-The-Counter Bulletin Board (VGNI). Viragen's key partners and licensors include: Roslin Institute, Memorial Sloan-Kettering Cancer Center, National Institutes of Health, Cancer Research UK, University of Nottingham (U.K.), University of Miami, America's Blood Centers and the German Red Cross. For more information, visit http://www.Viragen.com * * * In its most recent Form 10-Q filing, the Company reported: "Viragen, Inc. and its subsidiaries are engaged in the research, development, manufacture and sale of a natural human alpha interferon product designed to treat a broad range of viral and malignant diseases. We are also researching and developing recombinant protein-based drugs designed to treat a broad range of cancers. Viragen's strategy also includes the development of avian transgenics technology for large-scale, cost-effective contract manufacturing of protein-based drugs. "The accompanying unaudited consolidated condensed financial statements include Viragen, Inc., Viragen International, Inc. and all subsidiaries, including those operating outside the United States of America. All significant transactions among our businesses have been eliminated. The consolidated condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. "As of March 31, 2003 and June 30, 2002 our ownership interest in Viragen International was approximately 72.8% and 70.2%, respectively. If ViraNative, a wholly-owned subsidiary of Viragen International acquired in September 2001, meets all of the milestones under the acquisition agreement, our ownership interest in Viragen International would be reduced to approximately 59.2% assuming additional Viragen International shares are not issued for any other purposes. "The accompanying unaudited interim consolidated condensed financial statements for Viragen have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. The balance sheet at June 30, 2002 has been derived from the audited financial statements at that date. Certain amounts in prior year's consolidated condensed financial statements have been reclassified to conform to the current year's presentation. The reclassifications had no effect on previously reported results of operations. "For the fiscal year ended June 30, 2002, the report of our independent auditors contains an explanatory paragraph indicating substantial doubt as to our ability to continue as a going concern, due to our financial condition. Our financial condition has not improved subsequent to our fiscal year end. If we are unable to raise additional debt or equity funding it will be necessary for us to significantly curtail or suspend a portion or all of our operations. No assurance can be given that additional funding will be available. During fiscal 2002, 2001 and 2000, we incurred significant losses of approximately $11,089,000, $11,008,000 and $12,311,000, respectively, and had an accumulated deficit of approximately $96,120,000 as of March 31, 2003. Additionally, we had a cash balance of approximately $69,000 and a working capital deficit of approximately $1,930,000 at March 31, 2003. Management anticipates additional future losses as it commercializes its natural human alpha interferon product and conducts additional research activities and clinical trials to obtain additional regulatory approvals. Accordingly we will require substantial additional funding. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of these uncertainties." WEG ACQUISITIONS: S&P Assigns BB+ Rating to Planned $200M Loan -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to WEG Acquisitions L.P.'s proposed $200 million senior secured term loan due 2008. WEG Acquisitions is an entity formed by Madison Dearborn Partners LLC and Carlyle/Riverstone Global Energy and Power Fund (the sponsors) to acquire certain interests in Tulsa, Oklahoma-based Williams Energy Partners L.P. WEG is a master limited partnership engaged in the transportation, storage, and distribution of refined petroleum products and ammonia. WEG has about $570 million of debt outstanding. The sponsors have contributed roughly $333 million of equity to WEG Acquisitions. "The loan proceeds will be used to partially fund WEG Acquisitions' $510 million purchase of The Williams Companies Inc.'s 54.6% interest in WEG," noted Standard & Poor's credit analyst Jeffrey Wolinsky. "The WEG Acquisitions term loan is nonrecourse to the sponsors and to WEG," he continued. The rating reflects WEG's average business position and moderate financial leverage. Although WEG is under no legal obligation to service WEG Acquisitions' debt burden, Standard & Poor's incorporates into its analysis WEG Acquisitions' control of WEG's general partner and significant ownership of WEG limited partnership units. As an MLP, WEG is required to distribute essentially all remaining cash after meeting debt service and maintenance capital requirements. Over the intermediate term, Standard & Poor's expects that EBITDA interest coverage will fall between 3.5x to 4x. Total debt to EBITDA is expected to remain below 4x. In addition, WEG is expected to finance its future growth initiatives in a conservative manner. Specifically, Standard & Poor's expects that future acquisitions will be funded with a 50% to 60% equity component. WEG's liquidity is adequate to fund the partnership's operations, maintenance capital expenditures, and existing distribution levels. Typical of an MLP, substantially all cash after operating expenses, debt service, and maintenance capital spending is distributed to unit holders on a quarterly basis. The company's nearest-term maturity is a $90 million term loan due February 2004. WEG maintains an $85 million senior unsecured revolving credit facility. The stable outlook reflects expectations of relatively stable cash flow generation levels at WEG and commensurate distributions to unit holders. In addition, WEG management is expected to finance future acquisitions with a significant equity component. WEIRTON STEEL: Honoring Prepetition Workers' Compensation --------------------------------------------------------- As the second largest private employer in the State of West Virginia, Weirton has elected, under Section 23-2-9 of the West Virginia Workers' Compensation statute, to self-insure its current and future statutory workers' compensation obligations. Arch W. Riley, Jr., Esq., at Bailey, Riley, Buch & Harman, L.C., in Wheeling, West Virginia, explains that Weirton, in accordance with applicable West Virginia statutes, is required to pay into the West Virginia Workers' Compensation Fund, a self-insured premium tax, which includes: 1. an amount sufficient to pay Weirton's portion of the expense of administration of the self-insurance program; 2. an amount sufficient to pay Weirton's portion of the expense claims for those employers who are in default in payment of premium taxes or other obligations; 3. an amount sufficient to pay Weirton's portion of the expenses of the disabled workers' relief fund; and 4. a sum sufficient to maintain as an advanced deposit an amount equal to the previous quarter's payments. On an average monthly basis, Mr. Riley estimates that Weirton pays $1,060,000 in self-insured workers' compensation administration fees to the State of West Virginia, catastrophic injury premium taxes and workers' compensation benefits. Under West Virginia law, premium tax assessments are special revenue taxes entitled to priority or administrative expense status subject to those applicable provisions under the Bankruptcy Code. Applicable West Virginia statutes require a participant under the self-insured workers' compensation program to provide collateral security or bonding for the benefit of the State of West Virginia and the Fund with respect to prospective and retrospective liability. The State of West Virginia has calculated, on an actuarial basis, that Weirton's security obligation to the Fund is about $7,109,144 for prospective liability and $40,470,515 for retrospective liability. Frontier Insurance Company has issued a surety bond amounting to $10,629,496 on Weirton's behalf for the benefit of the State of West Virginia and the Fund. Notwithstanding the security deficit, the State of West Virginia has determined that Weirton is eligible to participate in the State's workers' compensation self-insurance program. Mr. Riley adds that Weirton is also required by law to maintain surety with respect to any obligations arising under the Longshoremen's and Harbor Workers' Compensation Act. A letter of credit has been issued by Fleet Capital Corporation to the United States Department of Labor on Weirton's behalf amounting to $200,000 with respect to the Company's Longshoremen's and Harbor Workers' Compensation Act surety obligation. Currently, no claims under the Longshoremen's and Harbor Workers' Compensation Act are pending against the Company. Accordingly, Weirton sought and obtained the Court's authority to continue its existing workers' compensation program and to take the steps necessary to provide for prepetition claims arising under the self-insured program that become payable postpetition. In this regard, Weirton is authorized to pay any or all prepetition workers' compensation premium taxes and Prepetition Claims that become payable postpetition, insofar as the failure by Weirton to pay these amounts might result in the loss of workers' compensation coverage, and would pose a substantial, if not catastrophic financial burden on the Fund. Weirton will not be deemed to have consented to the validity of Prepetition Claims or have waived any defenses thereto. Mr. Riley deems it critical that Weirton continue its workers' compensation program and ensure that the Prepetition Claims continue to be processed and paid. If Weirton's current workers' compensation insurance program is not maintained, Weirton would be required to make alternative arrangements for workers' compensation coverage, almost certainly at a substantially higher cost, because the coverage is required under the laws of West Virginia, with severe remedies if any employer fails to comply with the laws. In fact, if workers' compensation coverage is not maintained, without interruption: 1. employees could bring lawsuits for potentially unlimited damages; 2. Weirton's ongoing business operations could be enjoined by the State of West Virginia; or 3. Weirton's officers could be subject to criminal prosecution. In addition, Judge Friend also authorizes Weirton to pay all costs incident to the workers' compensation program, including, but not limited to, processing costs and accrued but unpaid prepetition charges for the administration of the program charged by Acordia Employer Services. Weirton estimates that the aggregate amount of Prepetition Processing Costs accrued but unpaid as of the Petition Date is $24,000. Mr. Riley insists that the payment of the Prepetition Processing Costs is justified because the failure to pay any amounts might disrupt services of third-party providers with respect to the Workers' Compensation program. By paying the Prepetition Processing Costs, Weirton may avoid even temporary disruptions of the services and thereby ensure that: 1. its employees obtain all workers' compensation benefits without interruption; and 2. Weirton will remain in postpetition compliance with West Virginia's workers' compensation statutes at all times. Judge Friend further directs all applicable banks and other financial institutions to receive, process, honor and pay any and all checks drawn on Weirton's accounts to pay the Prepetition Processing Costs, whether the checks are presented prior to or after the Petition Date, provided that sufficient funds are available in the applicable accounts to make the payments. Weirton represents that each of these checks can be readily identified as relating directly to the authorized payment of the Prepetition Claims and Prepetition Processing Costs. Accordingly, Weirton believes that checks other than those relating to authorized payments will not be honored inadvertently. (Weirton Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) Weirton Steel Corp.'s 11.375% bonds due 2004 (WRTL04USR1) are trading at about 34 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WRTL04USR1 for real-time bond pricing. WILLIAMS COS.: Completes Three Asset Sale Transactions for $663M ---------------------------------------------------------------- Williams (NYSE: WMB) has closed three previously announced transactions involving sales of assets and a power contract for approximately $663 million in aggregate consideration. "These events show how we are executing on our business plan in a big way. Asset sales are shaping a new Williams that is financially healthier and commercially focused on selected businesses and markets where we can be a leader in the natural gas arena," said Steve Malcolm, chairman, president and chief executive officer. The completed sales involve: -- Certain exploration and production properties in Kansas, Colorado and New Mexico to XTO Energy (NYSE: XTO) for $381 million, of which $341 million cash was received Friday last week. Williams had already received $40 million as an initial deposit in April. An additional $19 million relates to cash being received by Williams for revenues and preferential right elections since the announcement of the transaction in early April. The total purchase price of the transaction is $400 million. -- A full-requirements power contract with Jackson Electric Membership Corporation to Progress Energy (NYSE: PGN) for $175 million cash, plus an additional $13 million as requirements related to the transitioning of operations are met by August 15. -- Williams' equity interest in Williams Bio-Energy L.L.C. to a new company formed by Morgan Stanley Capital Partners. Following adjustments to the $75 million purchase price pursuant to the purchase and sale agreement, Williams received $59 million in cash. The sale included ethanol production plants in Pekin, Ill., and Aurora, Neb. With these proceeds, Williams has received roughly $2.1 billion of the expected $2.75 billion cash from asset sales that have been closed or announced this year. The balance is scheduled to be received throughout the second quarter. "We are using these sources of cash to manage our company and its liquidity closely, carefully and thoughtfully," said Malcolm. "These proceeds help us reduce debt and improve our balance sheet to support our natural gas production, processing and pipeline assets." Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com As reported in Troubled Company Reporter's May 27, 2003 Edition, Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on energy company The Williams Cos. Inc. Ratings on Williams and its subsidiaries were removed from CreditWatch with negative implications, where they were placed July 23, 2002. The outlook is negative. In addition, Standard & Poor's raised its rating on Williams' senior unsecured debt to 'B+' from 'B' Standard & Poor's also assigned its 'B-' rating to $300 million junior subordinated convertible debentures at Williams. The rating on the junior debentures is two notches below the corporate credit rating to reflect structural subordination to the senior debt. Tulsa, Oklahoma-based Williams has about $13 billion in outstanding debt. WILLIAMS: Closes $500 Million Exploration-and-Production Loan ------------------------------------------------------------- Williams (NYSE: WMB) closed $500 million of secured, subsidiary- level financing at a floating interest rate of 3.75 percent over the London InterBank Offered Rate. The four-year, fully funded and prepayable term loan refinances a portion of a $1.17 billion secured obligation to a group of investors led by a subsidiary of Berkshire Hathaway Inc. that Williams retired with proceeds from recently closed asset sales and funds from the new loan. Williams' exploration-and-production interests in the U.S. Rocky Mountains had secured the now-retired obligation and will continue to serve as security on the new loan. As a result of the smaller size of the loan and improvement in Williams' liquidity position, the terms of the new exploration- and-production loan are more favorable than the previous loan. "Williams is in a better position today than it was last summer. Our finances have significantly improved and our commercial focus is much sharper. Retiring this loan early is an indication of our progress," said Steve Malcolm, chairman, president and chief executive officer. This repayment of the $1.17 billion loan along with the previously announced planned repurchase of preferred shares in June will bring to an end the investments in Williams by a subsidiary of MidAmerican Energy Holdings Company, a member of the Berkshire Hathaway Inc. family of companies. Williams last week announced that it had reached an agreement to repurchase for approximately $289 million all of the outstanding 9-7/8 percent cumulative-convertible preferred shares held by a wholly owned subsidiary of MidAmerican Energy Holdings Company. The repurchase is subject to standard closing conditions, including obtaining the necessary approvals from Williams' banks. Earlier this week, Williams closed the private placement of $300 million in 5.5 percent junior subordinated convertible debentures due 2033. The company plans to use the net proceeds from the debentures to fund the preferred stock repurchase this month. The new convertible debentures provide the company with more favorable terms, which on an annual basis result in approximately $17 million in lower after-tax carrying costs compared with the preferred convertible shares Williams plans to repurchase. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com WIRELESS NETWORKS: Terminates Operations Due to Lack of Funds ------------------------------------------------------------- Wireless Networks Inc., has effected a further round of layoffs implemented with a view to reducing overhead to the skeletal level. The Corporation has been unable to secure further financing from any source and, accordingly, is not able to proceed with its business plan. Delays in the delivery of commercial versions of the Corporation's product have exacerbated the problem as sales have been nominal. Additionally, the TSX Venture Exchange has advised the Corporation that it does not meet the minimum listing requirements, a risk that was disclosed in the Corporation's January 28, 2003 prospectus. The Corporation is working toward marshalling its remaining resources in an orderly fashion to address the claims of outstanding creditors. In that regard, the Corporation is seeking purchasers of its technology and associated products and looking for opportunities to combine with other companies who may wish to take advantage of its tax pools and shareholder base. WORLDCOM INC: E. Stanley Kroenke to Acquire Douglas Lake Ranch -------------------------------------------------------------- MCI (WCOEQ, MCWEQ) announced that E. Stanley Kroenke has signed an agreement to acquire the Douglas Lake Ranch, located in British Columbia, Canada. The signed agreement represents the culmination of a sales process undertaken by MCI following the company's exercise of control rights over certain collateral pledged by its former CEO Bernard Ebbers to secure his indebtedness to the company. This follows the successful sale by MCI of Ebbers' yacht manufacturing company. Douglas Lake Ranch is Canada's largest cattle ranch and is a diversified agribusiness with equipment dealerships and recreational facilities. More information about the ranch, its equipment dealerships and its recreational opportunities can be found at http://www.douglaslake.com Mr. Kroenke is a nationally known businessman with numerous real estate and ranching interests. He also owns Denver-based Kroenke Sports Enterprises, LLC, the Rocky Mountain Region's leading provider of live sports and entertainment events. Kroenke Sports Enterprises includes Pepsi Center, the Colorado Avalanche (NHL), Denver Nuggets (NBA), Colorado Mammoth (NLL) and the Universal Lending Pavillion, and has ownership interests in the Colorado Crush (AFL) and Denver's Paramount Theater. Mr. Kroenke is also the co-owner of the NFL's St. Louis Rams. Mr. Kroenke has indicated that he intends to continue to operate the ranch in a manner consistent with its more than 100 year history. The acquisition is subject to certain closing conditions, including various governmental and court approvals that are now being sought. MCI expects to receive gross proceeds from the sale of U.S. $68.5 million. WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone and wholly-owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com WORLDCOM INC: Pushing for Approval of SunTrust Bank Stipulation --------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates seek entry of the proposed stipulation and order between Intermedia Communications Inc. and SunTrust Bank approving the disposition of certain deposit accounts pledged by Intermedia and held by SunTrust as security for Intermedia's reimbursement obligations to SunTrust under certain letters of credit issued prior to the Petition Date by SunTrust to secure certain bonding obligations of Intermedia to third parties. Lori R. Fife, Esq., at Weil Gotshal & Manges LLP, in New York, relates that in the ordinary course of operating their businesses, the Debtors require the issuance of bonds for numerous facets of their businesses. As collateral for certain bonds required in the operation of Intermedia's businesses, SunTrust issued Letters of Credit for the benefit of various third parties totaling $11,500,000. As a condition to issuing such Letters of Credit, SunTrust required, and was granted, security for Intermedia's reimbursement obligations to SunTrust under the Letters of Credit in the form of cross-collateralized deposit accounts, pledged by Intermedia and held by SunTrust, each in an amount equal to or greater than the amount of each Letter of Credit. As of April 25, 2003, Ms. Fife reports that certain Letters of Credit totaling $11,000,000 have expired or were terminated. In addition, with respect to Letter of Credit #50193 issued amounting to $500,000, prior to the Petition Date the beneficiary drew on the Letter of Credit in full to satisfy a call on the underlying bond. SunTrust continues to hold the Collateral, aggregating $11,500,000, to secure its reimbursement obligations with respect to the draw made with respect to Letter of Credit #50193, for which the maximum liability is $500,000 together with certain interest, fees, and expenses. Intermedia and SunTrust wish to resolve all matters relating to the Letters of Credit pursuant to the terms set forth in the Stipulation and Order, the salient terms of which provide for, among other things: -- retention of Collateral by SunTrust equal in amount to the $500,000 draw made on Letter of Credit #50193, plus interest at the non-default contract rate and reasonable attorney's fees and expenses; -- return of the remaining Collateral to Intermedia; -- waiver by SunTrust of any early termination fees; and -- mutual releases by the Parties. According to Ms. Fife, SunTrust has agreed to return all of the Collateral, less an amount equal to Intermedia's matured reimbursement obligations arising from the $500,000 draw made on Letter of Credit #50193, plus non-default contract rate interest at 4.76% per annum and reasonable attorneys fees and expenses, which total $26,000. After accounting for SunTrust's application of Collateral with respect to the $500,000 draw, Intermedia can expect a return of Collateral amounting to $11,000,000. The Debtors submit that in the exercise of their business judgment, resolution of all issues with respect to the Letters of Credit, through the retention and application by SunTrust of Collateral totaling $500,000 and the return to the Debtors of the remaining Collateral totaling $11,000,000, is in the best interests of their estates. (Worldcom Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORTH MEDIA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Worth Media LLC 575 Lexington Avenue, 35th Fl. New York, New York 10022 fka Worth Media fka Capital Publishing LLC fka CP Acquisition LLC Bankruptcy Case No.: 03-13471 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Worth LLC 03-13472 Benefactor LLC 03-13473 Civilization LLC 03-13474 Type of Business: Magazine Publishing Chapter 11 Petition Date: May 29, 2003 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtors' Counsel: Larry Ivan Glick, Esq. Larry I. Glick, P.C. 1305 Franklin Avenue Suite 180 Garden City, NY 11530 Tel: (516) 739-1111 Fax : (516) 739-0896 Total Assets: $2,599,000 Total Debts: $9,710,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Tesla Capital, LLC Loans $2,060,000 19925 Stevens Creek Blvd, #124 Cupertino, CA 95014-2358 Ray J. Hernandez Tel: 408 973-7824 Brown Printing Trade $1,010,981 2300 Brown Ave. Waseca, MN 56093-0517 A. Buccholz Tel: 800 533-0475 EDS / Kable News Trade $687,795 335 Centennial Pkwy Louisville, CO 80027 Jan Mascarenas Tel: 303 604-7562 AT Clayton & Co. Inc. Trade $223,200 CustomerActivationProgram New Sub Magazine Svcs LLC Trade $210,616 Applied Graphics Tech. Trade $171,796 Tenth City LLC, Landlord $147,837 Free Biz Mag Trade $127,811 EbscoConsumerMagazineSvc Trade $96,836 American Broadcasting Co. Trade $95,783 Dow, Lohnes & Albertson Legal Services $82,529 PLLC Worth Sweepstakes Winner Sweepstakes Promotion $75,000 Circulation Specialists Trade $50,482 JD Power and Assoc Trade $18,438 Lexis-Nexis Trade $61,390 Schmidt Printing, Inc. Trade $32,632 Millennium Communications Trade Claim $24,693 Mail-Well Envelope Trade $16,237 Modular Systems Installat Trade $15,661 Publishing Experts Trade $18,134 W.R. GRACE: Wants Nod to Modify & Amend DIP Financing Agreement --------------------------------------------------------------- In a regulatory filing with the Securities & Exchange Commission, W.R. Grace & Co., and its debtor-affiliates provided information regarding modification of the financial covenants in the amended DIP Credit Agreement not previously included in their request filed with the Bankruptcy Court and previously approved. The Lenders joining in this amendment to the DIP Credit Agreement, in addition to Bank of America as Agent and as a Lender, are: (1) Transamerica Business Capital Corporation Rye, New York; (2) GMAC Commercial Credit LLC New York, New York; (3) The CIT Group/Business Credit New York, New York; (4) PNC Bank, National Association East Brunswick, New Jersey; (5) Bank of Scotland Chicago, Illinois; and (6) AmSouth Capital Corporation New York, New York. The Amended DIP Credit Agreement The Debtors entered into a debtor-in-possession postpetition loan and security agreement with Bank of America, N. A. in the aggregate amount of $250,000,000. The term of the DIP facility, originally set to expire April 1, 2003, has been extended for up to an additional three years through April 2006. In addition, the Debtors have agreed to modify certain other provisions of the Credit Agreement, which were not previously included in the Debtors' motion presented to the Court. These include a renewed warranty as to each Borrower's: (i) state of organization, organizational identification number where one is issued by such Borrower's state of organization, chief executive office, the location of its books and records, the locations of its Collateral, and the locations of all of each Borrower's other places of business; (ii) condition of all Inventory as held only for sale or lease, and maintained fit for these purposes by keeping all of the Inventory in good and marketable condition; (iii) equipment, which must be maintained in a condition fit for use in the Borrower's business; (iv) equipment, which the Borrower agrees will not be permitted to become a fixture; and (v) intellectual property, which must be maintained current, failing which the Borrower must notify the Agent. Furthermore, the Debtor Borrowers are prohibited from accepting any goods that would otherwise constitute inventory on consignment or approval, without the Lenders' written consent, if the goods have a fair market value over $7,500,000 in the aggregate at any one time. Each Borrower is required to conduct a physical inventory yearly. No Borrowings As Of March 31, 2003 Grace reports it had no outstanding borrowings under the DIP facility as of March 31, 2003; however, $13,500,000 of standby letters of credit were issued and outstanding under the facility. The letters of credit, which reduce available funds under the facility, were issued mainly for trade-related matters like performance bonds, as well as certain insurance and environmental matters. Power of Attorney In addition, each of the Borrowers appoints the Agent and the Agent's designee as each Borrower's attorney, with power to: (a) endorse any Borrower's name on any checks, notes, acceptances, money orders, or other forms of payment or security that come into the Agent's or any Lender's possession; (b) sign each Borrower's name on any invoice, bill of lading, warehouse receipt or other negotiable or non-negotiable Document constituting Collateral, on drafts against customers, on assignments of Accounts, on notices of assignment, financing statements and other public records and to file any such financing statements by electronic means with or without a signature as authorized or required by applicable law or filing procedure; (c) the extent not prohibited by the Bankruptcy Court, notify the post office authorities to change the address for delivery of any Borrower's mail to an address designated by the Agent and to receive, open and dispose of all mail addressed to each Borrower; (d) send requests for verification of Accounts to customers or Account Debtors; (e) complete in the Borrower's name or the Agent's name, any order, sale or transaction, obtain the necessary Documents in that connection, and collect the proceeds; (f) clear Inventory through customs in any Borrower's name, the Agent's name or the name of the Agent's designee, and to sign and deliver to customs officials powers of attorney in such Borrower's name for such purpose; and (g) do all things necessary to carry out this Credit Agreement. Each Borrower ratifies and approves all acts of such attorney in advance. None of the Lenders or the Agent nor their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact or law except for their gross negligence or willful misconduct. This power of attorney, being coupled with an interest, is irrevocable until this Credit Agreement has been terminated and the Obligations have been fully satisfied. Except with respect to the power granted to the Agent and the Agent's designees in clause (d) of the power of attorney, the Agent covenants, and the Lenders acknowledge and agree, that the Agent will not exercise the rights granted to it under the power of attorney unless an Event of Default exists and is continuing. (W.R. Grace Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) XOMA LTD: Will Present Update at Needham & Co. Conference Friday ---------------------------------------------------------------- XOMA Ltd. (Nasdaq:XOMA) has been invited to present a corporate update to the investment community at the Second Annual Needham and Company Biotechnology Conference in New York City on Friday, June 6, 2003 at 11:30 a.m. EDT. John L. Castello, XOMA's chairman, president and chief executive officer will provide an overview of the Company and an update on key business milestones. The audio portion of the presentation will be webcast and available for replay via the following link through Friday, June 20, 2003: http://www.twst.com/econf/mm/needham5/xoma.html The webcast can also be accessed via XOMA's Web site at http://www.xoma.com/ XOMA, whose December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $11 million, develops and manufactures antibody and other protein-based biopharmaceuticals for disease targets that include cancer, immunological and inflammatory disorders, and infectious diseases. XOMA's programs include collaborations: with Genentech, Inc. on the Raptiva(TM) antibody for psoriasis (BLA submission), rheumatoid arthritis (Phase II), psoriatic arthritis (Phase II) and other indications; with Baxter Healthcare Corporation to develop NEUPREX(R) (rBPI-21) for Crohn's disease (Phase II) and other indications; with Millennium Pharmaceuticals, Inc. on two biotherapeutic agents, CAB-2 and MLN01, for certain cardiovascular inflammation indications (preclinical); and with Onyx Pharmaceuticals, Inc. on its ONYX-015 product for various cancers (current activities suspended, pending partnership discussions). Earlier-stage development programs focus on antibodies and BPI-derived compounds developed at XOMA for the treatment of cancer, retinopathies, and acne. For more information about XOMA's pipeline and activities, visit XOMA's Web site at http://www.xoma.com/ * Deloitte & Touche Taps New Leaders in Carolinas Practice ---------------------------------------------------------- Deloitte & Touche LLP, one of the nation's leading professional services firms, recently announced the expansion of its Financial Advisory Services practice in the Carolinas with the addition of Tom Aleman, the national leader for the firm's Analytic & Forensic Technology Services Group, and Dave Wedding, leader of the Carolinas Financial Advisory Services practice. Transferring from the Chicago office, Aleman is the partner responsible for expanding the Southeast FAS practice. He also is the national leader for the firm's Analytic & Forensic Technology Services practice, which focuses on complex data issues for bankruptcy, litigation and investigation matters. Aleman has more than 20 years experience assisting clients with complex disputes and bankruptcies. Throughout his career, Aleman has worked with a number of companies facing mass tort issues, including asbestos and medical devices. He also has advised many companies on cost containment, claims and settlement strategy and process improvement. He specializes in fraud and forensic detection and risk assessment through the use of technology. Aleman has a bachelor's degree in Accounting and in Economics from the University of North Carolina at Charlotte. Effective June 1, Wedding will transition from the Audit practice to FAS. He has more than 20 years of audit experience and has provided financial advisory services to law firms and commercial enterprises. Wedding conducts forensic investigations for both large and middle market companies and is an expert in cost management and cost accounting systems. He has significant experience preparing insurance claims and lost profits analysis, testifying as an expert witness and serving as an arbitrator in purchase price disputes. Wedding is a certified public accountant with a bachelor's degree from the University of North Carolina at Charlotte and MBA from Virginia Tech. Deloitte & Touche's Financial Advisory Services practice provides comprehensive financial, economic and strategic advice for clients in five separate but integrated transaction-oriented service lines--Dispute Consulting & Forensic Investigations, Merger & Acquisition Services, Reorganization Services, Valuation, and Corporate Finance. The functional expertise, deep industry knowledge, and unique skill sets of our professionals, combined with the unparalleled resources of the Deloitte & Touche network, enable us to solve our clients' complex business problems. Deloitte & Touche, one of the nation's leading professional services firms, provides assurance and advisory, tax, and management consulting services through nearly 30,000 people in more than 100 U.S. cities. The firm is dedicated to helping our clients and our people excel. Known as an employer of choice for innovative human resources programs, Deloitte & Touche has been recognized as one of the "100 Best Companies to Work For in America" by Fortune magazine for six consecutive years. Deloitte & Touche refers to Deloitte & Touche LLP and its related entities. Deloitte & Touche is the U.S. national practice of Deloitte Touche Tohmatsu. Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity. For more information, please visit Deloitte & Touche's Web site at http://www.deloitte.com/us * Fitch Says Major US Airlines Face Heavy Debt Through 2006 ----------------------------------------------------------- Irrespective of improvements in business conditions that could fuel a return to profitability for some U.S. network airlines in 2004, Fitch Ratings reports that a better operating environment will not mark the end of the airline industry's liquidity concerns. Fitch expects that the top ten U.S. airlines will face total debt and capital lease maturities of $21.2 billion between 2003 and 2006. "Combined cash outflows related to debt repayment, pension funding requirements and planned aircraft capital spending may delay the arrival of healthier balance sheets until the second half of the decade, and may trigger future liquidity crises or bankruptcies," said William Warlick, Fitch Ratings. Among the major U.S. network carriers operating outside of bankruptcy, American, Northwest and Delta have the largest debt and capital lease maturities. Each of these airlines faces scheduled annual maturities in excess of $1 billion in 2005 alone. Beyond the industry's heavy debt burden, the major network carriers face an aggregate underfunded pension liability of more than $22 billion. United, which filed for Chapter 11 bankruptcy last December, faces the largest pension problem among the major carriers with an underfunded obligation of $6.3 billion as of year-end 2002. "Even with an improvement in operating fundamentals driven by stronger business travel demand and lower labor costs, it is important to bear in mind that significantly higher cash obligations related to debt, aircraft leases, pension funding and aircraft acquisitions will put heavy pressure on the airlines' liquidity through at least 2006," said Warlick. While it is true that some of this burden may ultimately be refinanced, extending maturities beyond the industry's critical stabilization period, the obligations nonetheless represent immense cash funding requirements at a time when operating cash flow may well remain weak. As some of this debt load begins to roll off airline balance sheets between now and 2006, the need to repay or refinance debt will put further stress on cash flow- even in an improved operating environment characterized by lower unit costs, healthier levels of demand and better passenger yields. Particularly in 2005 and 2006, when some large bank credit facilities mature, the cash burden associated with the repayment of debt may well erode the liquidity of even the better- positioned network carriers (e.g., Northwest and Delta) that currently have cash buffers large enough to see them through a persistently weak 2003 revenue environment. The ability of these carriers to avoid a cash squeeze during that period will be governed in large part by their continued access to the capital markets and the willingness of secured lenders to roll over existing debt. Fitch's new report titled 'Picking Up The Pieces: U.S. Airline Cash Flow Concerns Beyond 2003', outlining some of the cash flow challenges that the U.S. hub-and-spoke carriers will face over the next three years, is available on the Fitch Ratings Web site at http://www.fitchratings.com * Kirkpatrick & Lockhart/Dallas Brings-In Gerrit M. Pronske ----------------------------------------------------------- The national law firm of Kirkpatrick & Lockhart LLP announced that Gerrit M. Pronske, partner, has joined K&L's Dallas office. Mr. Pronske comes to K&L from the firm of Thompson, Coe, Cousins & Irons, where he concentrated his practice on reorganizations, bankruptcy litigation, insolvency law and workout of troubled loans. Mr. Pronske will continue to advise and counsel clients on bankruptcy and insolvency matters. He is a senior member of the Dallas bankruptcy bar and the author of two recognized treatises on Texas bankruptcy law, including Pronske's Texas Bankruptcy Annotated, Second Edition, published by Texas Lawyer Press. Mr. Pronske has also served as editor of the Texas Bankruptcy Decisions since 1995 and was the editor of the Texas Bankruptcy Court Reporter from 1986 to 1995. He is certified in Business Bankruptcy Law by the American Board of Certification/American Bankruptcy Institute and is a member of the American Bankruptcy Institute. Mr. Pronske is admitted to practice in Texas and New Mexico. Mr. Pronske views his transition to K&L as "an opportunity to greatly enhance the quality of services to clients faced with insolvency issues by bringing to the table all of the tremendous legal resources offered by K&L on a national level." Robert E. Wolin, Administrative Partner for K&L's Dallas office, notes that "Gerrit's arrival represents a major step forward to growing a national bankruptcy practice at K&L while adding another key practice discipline to our Dallas office." K&L's Dallas office has a dynamic national and international practice, involving representation of Fortune 500 companies, multinational holding companies and business entrepreneurs in courts and in transactions ranging from New York to California, to Florida, Canada to Mexico and Puerto Rico, Taiwan to France and many points in between. The office has an extensive litigation practice that is focused primarily on complex commercial and securities litigation in addition to a labor and employment practice that has both a strong local and national presence, as well as a comprehensive corporate and real estate practice. Kirkpatrick & Lockhart is a national law firm with approximately 700 lawyers in Boston, Dallas, Harrisburg, Los Angeles, Miami, Newark, New York, Pittsburgh, San Francisco, and Washington. K&L serves a dynamic and growing clientele in regional, national and international markets. K&L currently represents over half of the Fortune 100, as well as a full range of emerging and growth companies, and individuals. The firm's practice embraces three major areas -- litigation, corporate and regulatory -- and related fields. For more information, please visit http://www.kl.com * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Advisory Board ABCO (16) 48 (20) Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (115) 242 52 Actuant Corp ATU (44) 295 18 Acetex Corp ATX (11) 373 126 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Blount International BLT (369) 428 91 Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Echostar Comm DISH (1,206) 6,260 1,674 D&B Corp DNB (19) 1,528 (104) W.R. Grace & Co. GRA (222) 2,688 587 Graftech International GTI (351) 859 108 Hollywood Casino HWD (92) 553 89 Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (5) 474 295 Gartner Inc. IT (29) 827 1 Jostens JOSEA (512) 327 (71) Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 630 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) Petco Animal PETC (11) 555 113 Primedia Inc. PRM (559) 1,835 (248) Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp. RAD (93) 6,133 1,676 Ribapharm Inc. RNA (363) 199 92 Sepracor Inc. SEPR (392) 727 413 St. John Knits Int'l SJKI (76) 236 86 I-Stat Corporation STAT 0 64 33 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (36) 1,617 172 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Technology VLNC (16) 30 3 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* 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 ***