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/raid1/www/Hosts/bankrupt/TCR_Public/030609.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 9, 2003, Vol. 7, No. 112 Headlines ACTV INC: Fails to Comply with Nasdaq Min. Listing Requirements ALLIANCE TOBACCO: Securing OK to Tap Dean Dorton as Accountants ALTAIR NANOTECHNOLOGIES: Receives 90-Day Extension from NASDAQ AMERCO: Continues to Suspend Payment of Preferred Dividend AMERICAN SEAFOODS: S&P Places Ratings on CreditWatch Positive APPLIED DIGITAL: Inks Purchase Pacts for Additional 12.5M Shares ASIA GLOBAL CROSSING: Court Denies Unsecured Panel's Motion ATLANTIC COAST AIRLINES: Reports 17.7% Increase in May Traffic BANK OF AMERICA: Fitch Ups & Affirms 92 Securitization Ratings BASIS100: Debentureholders Okay CLS Business Sale to FiLogix BEACON HILL CBO: Fitch Cuts Class C-1 & C-2 Note Ratings to BB BEAR STEARNS: Fitch Takes Rating Actions on 12 Securitizations BETHLEHEM: Rejects Healthcare Services Pact with Corp. Health CADENCE RESOURCES: Williams & Webster Airs Going Concern Doubts CALL-NET ENTERPRISES: Names Roy Gordon as CFO Effective Today CALPINE: Power Contract Unit Selling $800-Mill. of Senior Notes CARECENTRIC INC: Inks Merger Agreement with Investor Group CAREMARK RX: S&P Ups Rating on $450MM 7.375% Senior Notes to BB+ CONSECO FIN.: Fitch Junks 4 Vehicle Securitization Classes CONSECO: US Bank Granted OK to File Consolidated Proof of Claim CONSOLIDATED FREIGHTWAYS: Auctioning Macon Distribution Facility CONSOLIDATED FREIGHTWAYS: Auctioning Ft. Lauderdale Facility CONSOLIDATED FREIGHTWAYS: Auctioning Fayetteville Property CONSOLIDATED FREIGHTWAYS: New Orleans Facility Goes to Auction CONSOLIDATED FREIGHTWAYS: Putting Roseburg Land on Auction Block CONSOLIDATED FREIGHTWAYS: Auctioning-Off Two Kentucky Facilities CONSOLIDATED FREIGHTWAYS: Selling Durham Distribution Facility CONSOLIDATED FREIGHTWAYS: Selling Boston Prop. at Jun 18 Auction CONSOLIDATED FREIGHTWAYS: Will Auction Joplin Assets on June 18 COVANTA: Court Fixes June 27, 2003 Bar Date for Debenture Claims CREDIT SUISSE: S&P Assigns Ratings to Series 2003-C3 Notes DAISYTEK INT'L: Nasdaq to Knock-Off Shares Effective Friday DELTA AIR LINES: Fitch Rates Convertible Senior Notes at B+ DVI INC: Accountant's Resignation Triggers S&P CreditWatch DYNEGY INC: CEO Williamson Reports on Restructuring Progress ENRON CORP: Seeks Approval for FBTC Leasing Settlement Agreement FLEMING COS: Taps Ernst & Young's Services as Internal Auditor FLEMING COMPANIES: Taps DoveBid to Conduct 4-Day Webcast Auction FLEMING: Court Approves Roundy's $44 Million Bid for 31 Stores GENTEK INC: Court Grants Second Exclusivity Period Extension GENZYME BIOSURGERY: Shareholders Move to Enjoin Forced Exchange GETTY IMAGES: Improved Cash Flow Spurs S&P to Up Rating to BB- GLOBAL CROSSING: Court Gives Nod to Emergia Settlement Agreement HIGH SPEED: Charter Dismissed as Defendant in IPO Litigation HORIZON NATURAL: Names John J. Delucca as New Board Chairman INVESCO CBO: Fitch Affirms Class B-2 Notes' Low-B Rating at BB- JAZZ PHOTO: Engages Cole Schotz as Bankruptcy Counsel J. CREW GROUP: Reports Slight Increase in May Revenue Results JC PENNEY: B-Level Ratings on Related Synthetic Deals Cut to BB+ LD BRINKMAN: Turns to Corporate Revitalization for Advice LEAP WIRELESS: First Amended Plan & Disclosure Statement MANUFACTURED HOUSING: S&P Drops Class IB-1 Notes Rating to CC MDC CORP: Reaches Pact to Acquire Minority Shares of Maxxcom Inc MORGAN STANLEY: S&P Rates Several 2003-IQ4 Mortgage Certificates NATIONSRENT INC: Seeks Go-Ahead for Three Financing Agreements NORTHWEST AIRLINES: Flies 5.34B Revenue Passenger Miles in May NORTHWEST PIPELINE: Completes Exchange Offer for 8.125% Sr Notes NRG ENERGY: US Trustee Appoints Official Unsecured Panel Members PACIFIC CROSSING: Court OKs $63 Million Sale to Pivotal Telecom PACIFIC GAS: Settles Negligence Dispute with Rombauer Cellars PENN TRAFFIC: Donlin Recano Appointed as Notice and Claims Agent PREMCOR INC: Prices PRG Unit's $300-Mill. Senior Debt Offering PREMCOR REFINING: S&P Rates New $250MM Senior Unsec. Debt at BB- PREMCOR REFINING: Fitch Assigns BB- to New $250M Senior Notes PRINCETON INSURANCE: Counterparty Credit Rating Dives to Bpi RIVIERA HOLDINGS: Has Until Sept. 24 to Meet Nasdaq Requirements SBARRO INC: Poor Performance Prompts S&P to Lower Ratings to B- SECURITY INTELLIGENCE: Requires Capital Infusion to Fund Ops. SORRENTO NETWORKS: Completes Capital & Corp. Restructuring Plan SPIEGEL GROUP: May 2003 Net Sales Slide-Down 11% to $151 Million SPX CORP: Prices Offering of $300 Million of 6.25% Senior Notes TECH LABS: Ability to Continue as Going Concern is in Doubt TENERA INC: Sells e-Learning Business to SkillSoft for $5 Mill. TIMCO AVIATION: March 31 Balance Sheet Upside-Down by $96.4 Mil. TIME WARNER: Lauds Appeals Court Decision on Tex. Phone Business TRICORD SYSTEMS: Successfully Emerges from Bankruptcy Proceeding TROLL COMMS: Graham Curtin Retained as General Corporate Counsel UNION ACCEPTANCE: Files Proposed Reorganization Plan in Indiana UNITED AIRLINES: Court OKs Bain & Co.'s Retention as Consultants UNITED AIRLINES: May 2003 Revenue Passenger Miles Tumble 13.8% UNIVERSAL ACCESS: Fails to Maintain Nasdaq Listing Requirements US AIRWAYS: Katz Tech Demands Administrative Expense Payment U.S. STEEL: Execs. Carson, Goettge & Foster Retiring this Month U.S. STEEL: Undertaking Major Senior Management Restructuring VENTAS INC: Appoints Thomas C. Theobald to Board of Directors VENTURE HOLDINGS: Joseph Day to Lead Board Committees WEIRTON STEEL: Wants to Honor A.I. Insurance Finance Agreements WESTERN WIRELESS: CCC Sub. Note Rating Remains on Watch Negative WESTPOINT STEVENS: A Look Inside the $300 Million DIP Facility WILLIAMS COMPANIES: Prices Senior Unsecured Note Public Offering WILLIAMS COS: Fitch Assigns B+ Rating to $800-Mill. Senior Notes WORLD AIRWAYS: Stephen Taylor Discloses 5.10% Equity Stake WORLDCOM: Capella Tells Court Fraud is Widespread and "Systemic" WORLDCOM INC: Coalition Urges Court to Trash SEC Settlement * Cadwalader Wickersham & Taft Names Gregory Ballard as Counsel * BOND PRICING: For the week of June 9 - 13, 2003 ********* ACTV INC: Fails to Comply with Nasdaq Min. Listing Requirements --------------------------------------------------------------- ACTV, Inc. (Nasdaq: IATV) received an additional deficiency notice from NASDAQ dated May 30, 2003, indicating that as of March 31, 2003 ACTV is no longer in compliance with the shareholders' equity requirement of $10,000,000, as set forth in NASDAQ Marketplace Rules 4450(a)(3) and 4450(b)(1). ACTV previously received notice of a NASDAQ Staff Determination on May 9, 2003, indicating that ACTV's common stock would be delisted from The NASDAQ National Market on May 20, 2003, absent an appeal by ACTV. The NASDAQ Staff cited as the reason for its decision the fact that ACTV's common stock price did not comply with NASDAQ'S $1.00 minimum bid price requirement. ACTV appealed the NASDAQ Staff Determination and is scheduled to attend a hearing before a NASDAQ Listing Qualifications Panel to review the determination of the NASDAQ Staff on June 19, 2003. The additional shareholders' equity deficiency will, in addition to the minimum bid price deficiency, be the subject of discussion at the hearing. Under applicable NASDAQ rules, pending a decision by the NASDAQ Listing Qualifications Panel, shares of ACTV common stock will continue to trade on The NASDAQ Stock Market. No assurance can be given that the Listing Qualifications Panel will grant ACTV's request for continued listing. ACTV, Inc. (Nasdaq: IATV) is a digital media company providing proprietary technologies, tools, and technical and creative services for interactive TV advertising, personalized programming applications and enhanced media. For more information, visit http://www.actv.com * * * LIQUIDITY AND CAPITAL RESOURCES In its most recent Form 10-Q filing, the Company reported: "Since our inception, we have not generated revenues sufficient to fund our operations and have incurred operating losses. Through March 31, 2003, we had an accumulated deficit of $312.0 million. Our cash position on March 31, 2003 (including short- term investments) was $43.8 million, compared with $47.8 million on December 31, 2002. Management believes we have sufficient cash and short-term investments to fund operations through the next twelve months. "Net Cash Used In Operating Activities. During the three-month period March 31, 2003, we used cash of $3.7 million for operations, compared with $5.7 million for the three months ended March 31, 2002. The decrease in net cash used in operating activities principally relates to changes in assets and liabilities: accounts receivable decreased and accounts payable increased during the three months ended March 31, 2003, while accounts receivable increased and accounts payable decreased during the corresponding quarter in 2002. "Net Cash Provided By (Used In) Investing Activities. For the three month-period ended March 31, 2003, investing activities provided cash of $2.6 million, compared with $9.3 million in cash uses from investing activities for the three months ended March 31, 2002. The change is the result of a decrease in short-term investments for the three months ended March 31, 2003, compared to an increase in short-term investments for the three months ended March 31, 2002. "Net Cash Provided By Financing Activities. We had no significant cash provided by financing activities for either the first three months of 2003 or 2002. We have funded, and continue to fund, our cash requirements from the net proceeds of a public, follow-on offering completed in February 2000. Through a group of underwriters, we sold a total of 4.6 million common shares, resulting in net proceeds of $129.4 million. In addition, in the year ended December 31, 2000, Liberty Digital, Inc. invested an additional $20 million in us by exercising a warrant granted in March 1999, and OpenTV and Motorola invested a total of $13.0 million in our Digital ADCO subsidiary. "In April 2002, ACTV Entertainment, Inc., a wholly-owned subsidiary of ours, signed a multi-year agreement with iN DEMAND, pursuant to which iN DEMAND has been using our digital video technology to offer digital cable customers Nascar In Car on iN DEMAND. ACTV Entertainment's agreement with iN DEMAND, which covers a total of approximately 90 Nascar races through 2004, obligates ACTV Entertainment to incur certain production costs, which it estimates will average $170,000 per race." ALLIANCE TOBACCO: Securing OK to Tap Dean Dorton as Accountants --------------------------------------------------------------- Alliance Tobacco Corporation asks the U.S. Bankruptcy Court for the Western District of Kentucky for permission to employ Dean, Dorton & Ford, PSC as its accountants in this proceeding. Specifically, Dean Dorton will: a) perform reviews of the financial statements of the Debtor; b) render accounting assistance in connection with reports requested by the Court of the Trustee, including statements and schedules of financial affairs, monthly operating reports and such other reports as may be requested by the Office of the United States Trustee or parties in interest; c) prepare annual federal and state income tax returns for the Debtor but provided that when and if the Debtor requests any additional services related to rendering a tax opinion, a separate written engagement letter in a mutually satisfactory form will be entered into between Dean Dorton and the Debtor; d) testify on financial matters, as necessary; e) assist Debtor and its attorney with preparation for Court or Trustee Hearings; f) assist with litigation; and g) as agreed to be Dean Dorton, assist with such other accounting and tax matters as the Debtor or its attorney may from time to time request. Elizabeth Zachem Woodward, a member of Dean Dorton, discloses that her Firm's hourly billing rates range from: Shareholder $180 to $275 per hour Manager $120 to $180 per hour Accounting Staff $ 80 to $110 per hour Clerical $ 45 to $ 60 per hour Alliance Tobacco Corporation is a leading seller of cheap cigarettes. The Company sells discount brands such as DTC, Durant, GT One, and Palace. Alliance 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. ALTAIR NANOTECHNOLOGIES: Receives 90-Day Extension from NASDAQ -------------------------------------------------------------- Altair Nanotechnologies Inc. (Nasdaq:ALTI) has received a letter from the NASDAQ Stock Market noting that the company meets the initial listing requirements for NASDAQ SmallCap Market Under Marketplace Rule 4310(c)(2)(A). Therefore, NASDAQ has provided the company with an additional 90 calendar days, or until September 2, 2003, to regain compliance with Marketplace Rule 4310(c)(8)(D), which requires the company securities to have a minimum bid price of $1.00. If at any time before September 2, 2003, the bid price of the company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive trading days (or such longer period as NASDAQ deems appropriate), NASDAQ has indicated that it will provide written notification that the company complies with the $1.00 minimum bid rule. If compliance with this Rule cannot be demonstrated by September 2, 2003, NASDAQ has indicated that it will provide written notification that the Company's securities will be delisted. At that time, Altair may appeal NASDAQ's determination to a Listing Qualifications Panel. Nanotechnology is rapidly emerging as a unique industry sector. Altair Nanotechnologies is positioning itself through product innovation within this emerging industry to become a leading supplier of nanomaterial technology and nanomaterials worldwide. Altair owns a proprietary technology for making nanocrystalline materials of unique quality both economically and in large quantities. The company is currently developing special nanomaterials with potential applications in pharmaceuticals, batteries, fuel cells, solar cells, advanced energy storage devices, thermal spray coatings, catalysts, cosmetics, paints and environmental remediation. For additional information on Altair and its nanoparticle materials, visit www.altairnano.com. Altair Nanotechnologies' March 31, 2003 balance sheet shows that its total current liabilities outweighed its total current assets by about $1.7 million. * * * Current and Expected Liquidity In its most recent Form 10-Q filing, the Company stated: "At March 31, 2003, we had cash and cash equivalents of $296,148, an amount that would be sufficient to fund our basic operations through April 30, 2003. Between April 1, 2003 and the filing date of this report, we sold 1,396,898 common shares and 698,449 warrants to purchase common shares for proceeds of $472,103. This additional cash will allow us to continue our operations through June 30, 2003. After that date, we will require additional financing to provide working capital to fund our day-to-day operations. We will also require additional financing to continue our development work on the titanium processing technology and the Tennessee mineral property. "In light of the decreasing price of, and limited market for, our common shares, our ability to continue to fund our operations primarily through sales of securities is limited, although we expect to generate some funds through offerings of our common stock and warrants to purchase our common stock, and additional exercises of outstanding warrants, during the remainder of 2003. We also expect to generate limited revenues from the sales of nanoparticle products and fees generated from development and testing services provided to potential licensors of our titanium processing technology. As of May 13, 2003, we have no commitments to provide additional financing for periods after May 2003, to purchase titanium dioxide nanoparticles or to license our titanium processing technology. "We also expect to generate revenues through the licensing of our titanium processing technology, specifically the pharmaceutical application of the technology (i.e. RenaZorb(TM)) and the application of our technology for large-scale titanium pigment production. With respect to large- scale titanium pigment production, Altair has completed initial testing for a materials company and has submitted a phase-two proposal for the economic evaluation of a demonstration titanium dioxide pigment plant that could be expanded to a full-scale plant with production capabilities of between 10-20 metric tons of titanium dioxide pigment per year. If the phase-two proposal is accepted in some form, Altair would expect to generate limited revenues in 2003 (but not sufficient to cover monthly operating expenses) in exchange for the testing and development work associated with the evaluation of a demonstration titanium dioxide plant. A licensing agreement associated with a full-scale plant would be expected to generate significant revenues in the long-term, but significant up-front revenues from such an agreement are unlikely. "With respect to RenaZorb(TM), testing of this product using animals was initiated in late 2002 and completed in April 2003, with test results indicating that RenaZorb(TM) has therapeutic potential in animal testing. We are in discussions with four pharmaceutical companies who may be interested in doing further testing and negotiating a license agreement. Altair is uncertain what the terms of such license agreement would be, but pharmaceutical license agreements often involve up front or staged payments, in addition to royalties once the drug is approved by the FDA and marketed. Based on our understanding of terms of license agreements under similar circumstances, we believe that up-front or early stage payments associated with such a license agreement may be large enough to provide liquidity for Altair throughout 2003, and even permit Altair to report one-time profitability during 2003. We can, however, provide no assurance that we will enter into such a license agreement or that such license agreement would involve any significant up-front payments. If we are unable to enter into a license agreement with respect to RenaZorb(TM) or another product during the first six months of 2003 (or otherwise consummate one or more significant licensing, sale or equity transactions), we will be forced to significantly curtail our operations and expenses, and our ability to continue as a going concern will be uncertain." AMERCO: Continues to Suspend Payment of Preferred Dividend ---------------------------------------------------------- AMERCO (Nasdaq: UHAL), announced that as part of its overall restructuring process it has continued suspension of the dividend payment on the Company's Series A, 8-1/2 percent preferred stock (NYSE: AO+A), due June 2, 2003. AMERCO is the parent company of U-Haul International, Inc., Republic Western Insurance Company, Oxford Life Insurance Company and Amerco Real Estate Company. U-Haul is the largest do-it-yourself moving and storage operator in North America. For more information about AMERCO, visit http://www.uhaul.com AMERICAN SEAFOODS: S&P Places Ratings on CreditWatch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on American Seafoods Group LLC and its wholly owned subsidiary American Seafoods Inc. on CreditWatch with positive implications. Positive implications means that the ratings could be affirmed or raised following completion of Standard & Poor's review. About $620 million of rated debt of Seattle, Washington-based American Seafoods Group is affected. The CreditWatch placement follows the recent announcement by American Seafoods Corp., an affiliate of American Seafoods Group, that it plans an initial public offering of $450 million income deposit securities in the U.S. and Canada representing shares of ASC's common stock and newly issued notes. In connection with this offering, American Seafoods Group expects to redeem 35% of the $175 million 10.125% senior subordinated notes due 2010 and commence a tender offer for the remainder. The completion of the redemption and tender is a condition of the IPO. "Despite the firm's below-average business risk profile, Standard & Poor's expects that if this transaction is completed there would be improvement in American Seafoods' financial profile, which could result in a one-notch upgrade," said Standard & Poor's credit analyst Jayne M. Ross. Standard & Poor's will monitor the situation and meet with management to discuss the company's business strategy and financial policies in the near term. American Seafoods Group is one of the largest integrated seafood companies in the U.S. The company harvests, processes, markets, and distributes seafood. The company harvests a variety of fish species and processes seafood into various finished products both on board its fleet of vessels and at its production facilities in Alabama and Massachusetts. American Seafoods Group provides a wide range of fillet, surimi, roe, and block-cut product offerings made from Alaska Pollock, Pacific cod, sea scallops, and U.S. farm-raised catfish. * * * On March 29, 2002, Standard & Poor's assigned a 'BB-' minus corporate credit rating to American Seafoods Group. The rating outlook is stable. Simultaneously, Standard & Poor's assigned a 'BB' rating to American Seafoods Group's planned $390 million senior secured credit facility. The secured facility is comprised of a $75 million revolving credit facility maturing on September 30, 2007, a $90 million term loan A facility maturing on September 30, 2007, and a $225 million term loan B facility maturing on March 31, 2009. APPLIED DIGITAL: Inks Purchase Pacts for Additional 12.5M Shares ---------------------------------------------------------------- Applied Digital Solutions, Inc., (Nasdaq:ADSX) an advanced technology development company, has signed Securities Purchase Agreements to sell an additional 12.5 million previously registered shares to the same investors who have already agreed to purchase 37.5 million shares as announced on May 9, 2003, and May 23, 2003. Placement agent, J. P. Carey Securities, made the arrangements for the sale subject to certain closing conditions. J. P. Carey is a registered broker-dealer and member of the NASD engaged by the Company to act as its placement agent under the terms of a placement agency agreement. The Company will use the proceeds from this sale towards the satisfaction of its debt obligation to its senior lender, IBM Credit LLC. Under the Forbearance Agreement with IBM Credit (announced on March 27, 2003), the Company has the right to purchase all of its debt of approximately $95 million (including accrued interest) with a payment of $30 million by June 30, 2003, subject to continued compliance with the terms of the Forbearance Agreement. If this payment is made on or before June 30, 2003, Applied Digital would satisfy its full obligation to IBM Credit. As of this date, the Company is in compliance with all terms of the Forbearance Agreement. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Technology Group, the Company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is the beneficial owner of a majority position in Digital Angel Corporation (AMEX: DOC). For more information, visit the Company's Web site at http://www.adsx.com ASIA GLOBAL CROSSING: Court Denies Unsecured Panel's Motion ----------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Asia Global Crossing Ltd. and its debtor-affiliates sought the immediate termination of the Debtors' exclusive periods, pursuant to Section 1121(d) of the Bankruptcy Code, so that competing plans may be considered. Alternatively, the Committee requested a modification of exclusivity to permit the Committee alone to file a plan of reorganization. The Court denied the Committee's motion. (Global Crossing Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USR1) are trading at 13 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USR1 for real-time bond pricing. ATLANTIC COAST AIRLINES: Reports 17.7% Increase in May Traffic -------------------------------------------------------------- Atlantic Coast Airlines (Nasdaq: ACAI) reported preliminary consolidated passenger traffic results for May 2003. Systemwide, the company generated 287.0 million revenue passenger miles, a 17.7 percent increase over the same month last year, while available seat miles rose to 382.0 million, a 5.1% increase. Load factor was 75.1 percent versus 67.1 percent in May 2002. For the month, 729,013 passengers were carried, a 20.4 percent increase over the same month last year. For the five months ended May 31, 2003, compared to the same period in 2002, RPMs grew to 1.3 billion, an increase of 20.4 percent, while ASMs were 1.9 billion, a 4.1 percent increase. The company carried 3,342,512 passengers during the five months ended May 31, 2003, compared to 2,633,745 in 2002, an increase of 26.9 percent on a year-over-year basis. ACA operates as United Express and Delta Connection in the Eastern and Midwestern United States as well as Canada. The company also operates charter flights as ACA Private Shuttle. ACA has a fleet of 148 aircraft-including 118 regional jets-and offers over 830 daily departures, serving 84 destinations. Atlantic Coast Airlines employs over 4,800 aviation professionals. The common stock of parent company Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq National Market under the symbol ACAI. For more information about ACA, visit http://www.atlanticcoast.com As reported in Troubled Company Reporter's December 11, 2002 edition, Atlantic Coast Airlines Holdings Inc.'s (B-/Negative/-) rating and outlook by Standard & Poor's were not affected by United Air Lines Inc.'s (D) filing for Chapter 11 bankruptcy protection on Dec. 9, 2002. BANK OF AMERICA: Fitch Ups & Affirms 92 Securitization Ratings -------------------------------------------------------------- Fitch Ratings took rating actions on the following Bank of America Mortgage Securities, Inc., mortgage pass-through certificates: Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-2 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'A'; -- Class B-3 upgraded to 'AA' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 upgraded to 'BB' from 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-3 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'A'; -- Class B-3 upgraded to 'AA' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-5 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'A'; -- Class B-3 upgraded to 'AA' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 upgraded to 'BB' from 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-6 Group 1 -- Class 1-A affirmed at 'AAA'; -- Class 1-B-1 upgraded to 'AAA' from 'AA'; -- Class 1-B-2 upgraded to 'AAA' from 'A'; -- Class 1-B-3 upgraded to 'AA' from 'BBB'; -- Class 1-B-4 upgraded to 'A' from 'BB'; -- Class 1-B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-6 Group 2 -- Class 2-A affirmed at 'AAA'; -- Class 2-B-1 upgraded to 'AAA' from 'AA'; -- Class 2-B-2 upgraded to 'AAA' from 'A'; -- Class 2-B-3 upgraded to 'AA' from 'BBB'; -- Class 2-B-4 upgraded to 'A' from 'BB'; -- Class 2-B-5 upgraded to 'BBB' from 'B'. Bank of America Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2001-7 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA+' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-9 Group 1 -- Class 1-A affirmed at 'AAA'; -- Class 1-B-1 upgraded to 'AAA' from 'AA'; -- Class 1-B-2 upgraded to 'AAA' from 'A'; -- Class 1-B-3 upgraded to 'AA' from 'BBB'; -- Class 1-B-4 upgraded to 'BBB' from 'BB'; -- Class 1-B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-9 Group 2 -- Class 2-A affirmed at 'AAA'; -- Class 2-B-1 upgraded to 'AAA' from 'AA'; -- Class 2-B-2 upgraded to 'AA' from 'A'; -- Class 2-B-3 upgraded to 'A' from 'BBB'; -- Class 2-B-4 upgraded to 'BBB' from 'BB'; -- Class 2-B-5 upgraded to 'BB' from 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-10 Group 1 -- Class 1-A affirmed at 'AAA'; -- Class 1-B-1 upgraded to 'AAA' from 'AA'; -- Class 1-B-2 upgraded to 'AA+' from 'A'; -- Class 1-B-3 upgraded to 'A' from 'BBB'; -- Class 1-B-4 affirmed at 'BB'; -- Class 1-B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-10 Group 2 -- Class 2-A affirmed at 'AAA'; -- Class 2-B-1 upgraded to 'AAA' from 'AA'; -- Class 2-B-2 upgraded to 'AA+' from 'A'; -- Class 2-B-3 upgraded to 'A+' from 'BBB'; -- Class 2-B-4 upgraded to 'BBB+' from 'BB'; -- Class 2-B-5 upgraded to 'BB+' from 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-12 Group 1 -- Class 1-A affirmed at 'AAA'; -- Class 1-B-1 upgraded to 'AAA' from 'AA'; -- Class 1-B-2 upgraded to 'AA' from 'A'; -- Class 1-B-3 upgraded to 'A' from 'BBB'; -- Class 1-B-4 upgraded to 'BBB' from 'BB'; -- Class 1-B-5 upgraded to 'BB' from 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-12 Group 2 -- Class 2-A affirmed at 'AAA'. Bank of America Mortgage Securities, Inc., mortgage pass-through Certificates, series 2001-A -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'BBB+' from 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-C -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-D -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-E -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 upgraded to 'BBB-' from 'BB'; -- Class B-5 affirmed at 'B'. Bank of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2001-H -- Class A affirmed at 'AAA'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. BASIS100: Debentureholders Okay CLS Business Sale to FiLogix ------------------------------------------------------------ Debentureholders for Basis100 (TSX: BAS.DB), a business service provider for the mortgage lending marketplace, approved the sale of the Company's Canadian Lending Solutions (CLS) business to FiLogix Inc. The sale was previously approved by the shareholders at Basis100's Annual and Special Meeting on May 15. Under the terms of the CLS purchase agreement, FiLogix will acquire all the assets of CLS including the rights to Basis100's mortgage technology, including MortgageBASE(TM), MortgageBASE Plus(TM), HomeBASE(TM), ConsumerBASE(TM), and LenderBASE(TM), for a purchase price of $16.1 million, subject to certain adjustments. The agreement also gives FiLogix exclusive usage rights to BasisXpress(TM) in the Canadian market. The sale is subject to customary conditions and the parties expect these conditions to be satisfied within the next two weeks. Basis100 (TSX: BAS) is a business solutions provider that fuses mortgage processing knowledge and experience with proprietary technology to deliver exceptional services. The company's delivery platform defines industry-class best execution strategies that streamline processes and creates new value in the mortgage lending markets. For more information about Basis100, visit http://www.Basis100.com. At March 31, 2003, the Company's balance sheet shows a working capital deficit of about CDN$5 million. BEACON HILL CBO: Fitch Cuts Class C-1 & C-2 Note Ratings to BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-1, A-2, B, C-1, and C-2 notes issued by Beacon Hill CBO II Ltd., a CDO of ABS and other structured securities managed by Beacon Hill Asset Management LLC. At the same time, the ratings on the class C-1 and C-2 notes are removed from CreditWatch negative, where they were placed March 20, 2003. The downgrades reflect factors that have negatively affected the credit enhancement available to support the notes. These factors include a negative migration in the credit quality of the performing assets in the pool. As a part of its analysis, Standard & Poor's reviewed the results of recent cash flow model runs. These runs stressed various parameters that are instrumental in the performance of this transaction and are used to determine its ability to withstand various levels of default. When the stressed performance of the transaction was compared with the projected default performance of the current collateral pool, Standard & Poor's found that the projected performance of the notes, given the current quality of the collateral pool, was not consistent with the prior ratings. Consequently, Standard & Poor's has lowered its ratings on these notes to their new levels. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned to the rated tranches continue to reflect the credit enhancement available to support the notes. RATINGS LOWERED Beacon Hill CBO II Ltd. Rating Current Class To From Balance (mil. $) ----- ---- ---- ---------------- A-1 AAA AA+ 160.5 A-2 AAA AA+ 147.5 B AA A+ 14.0 RATINGS LOWERED AND OFF CREDITWATCH Beacon Hill CBO II Ltd. Rating Current Class To From Balance (mil. $) ----- ---- ---- ---------------- C-1 BB BBB/Watch Neg 13.0 C-2 BB BBB/Watch Neg 12.0 BEAR STEARNS: Fitch Takes Rating Actions on 12 Securitizations -------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Bear Stearns ARM Trust mortgage-backed certificates: Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 1: -- Class A-1 affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 affirmed at 'B'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 2: -- Class A-2 affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 3: -- Class A-3 affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 4: -- Class A-4 affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 5: -- Class A-5 affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-1 Group 6: -- Class A-6 affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-4 Group 1: -- Class IA affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'CCC'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-4 Group 2: -- Class IIA affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-7 Group 1: -- Class IA affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-7 Group 2: -- Class IIA affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-7 Group 3: -- Class IIIA affirmed at 'AAA'. Bear Stearns ARM Trust, mortgage pass-through certificates, series 2001-7 Group 4: -- Class IVA affirmed at 'AAA'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. BETHLEHEM: Rejects Healthcare Services Pact with Corp. Health ------------------------------------------------------------- Corporate Health Dimensions Inc. managed and operated Bethlehem Steel Corporation and its debtor-affiliates' Family Medical Center located in Northampton County, Pennsylvania pursuant to a Healthcare Management Services Agreement. The Medical Center provided health care services to the Debtors' active and retired employees as well as their dependents that are eligible for coverage under any of the Debtors' health care plans. The Debtors obtained the Court's permission to cease the payment and provision of retiree medical and life insurance benefits to their retired employees and their beneficiaries and dependents effective March 31, 2003. As a result, the Debtors determined that Corporate Health's services are no longer required and should be terminated. Accordingly, the Debtors sought and obtained the Court's authority to reject the Healthcare Management Services Agreement with Corporate Health. The Debtors have payment obligations at $500,000 per month, totaling $6,000,000 per year. The Debtors relate that the elimination of ongoing administrative payment obligations with respect to the Agreement will benefit their estates. (Bethlehem Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) CADENCE RESOURCES: Williams & Webster Airs Going Concern Doubts --------------------------------------------------------------- Cadence Resources Corporation's "significant operating losses raise substantial doubt about its ability to continue as a going concern," the independent auditors Williams & Webster, P.S., of Spokane, Washington, say in their Audit Report dated May 16, 2003, concerning the Company's financial condition as of March 31, 2003. Cadence Resources Corporation (formerly Royal Silver Mines, Inc.) was incorporated in April of 1969 under the laws of the State of Utah primarily for the purpose of acquiring and developing mineral properties. The Company changed its name from Royal Silver Mines, Inc. to Cadence Resources Corporation on May 2, 2001 upon obtaining approval from its shareholders and filing an amendment to its Articles of Incorporation. The Company has elected a September 30 fiscal year-end. The Company had limited revenues, has incurred a net loss of $626,852 for the six months ended March 31, 2003, and has an accumulated deficit of $13,532,984. Although the Company is considered an operating entity since July 1, 2002 when one of it exploration properties began producing reasonable revenue, the current projected revenues are still substantially less then the Company's historical operating expenses. These factors indicate that the Company may be unable to continue in existence. The Company's management has strong beliefs that significant and imminent private placements will generate sufficient cash for the Company to operate for the next few years. The Company also believes that the occasional sale of its equity investments will provide cash as needed for operations. On April 30, 2003, the Company signed a joint venture agreement with Bridas EnergyUSA to develop its Louisiana property. Terms of the joint venture agreement call for Bridas to drill the first well on the property to a total depth not less than 10,000 feet with the Company carried for a 25% working interest. On subsequent wells within the 640-acre section containing the first well, the Company will earn a 25% working interest by funding 25% of the expenses. On other wells outside of the original 640-acre section, the Company will earn a 45% working interest by funding 45% of the expenses. On April 24, 2003, the Company sold its South Galena claim group to Caledonia Silver-Lead Group, an affiliated company, in exchange for 900,000 shares of its common stock valued at $90,000. On May 13, 2003, the Company sold 250,000 shares of its common stock to a non-affiliated investor for $1.00 per share. As noted, the Company will need additional capital to continue to drill its wells. The amount of capital required is dependant on the success it has on its upcoming wells because the Company anticipates funding some future drilling of wells from cash flow out of these next wells if they are commercially successful. The Company hopes to reduce its dependence on new finances by completing sufficient wells to fund new wells out of cash flow. Due to the declining nature of oil & gas production, the Company must continue to explore and drill new wells to maintain its sources of revenue. There is no assurance, however, the Company's wells will provide sufficient revenue to fund other future wells. If they do not prove successful, the Company will have to rely upon future new finances from outside sources in order to both continue exploring for new oil and gas deposits, and to continue its operations. The Company has sold portions of working interest in its wells to finance drilling. Selling a portion of the working interest enables the Company to raise some of the risk capital to drill wells from outside investors and thus the "dry hole risk" to the Company is reduced and may be totally eliminated. The major disadvantage is that the Company gives up a percentage of its future cash flow to the working interest investors which will reduce Company revenues and profits in the future from successful wells. The Company may also enter into joint ventures with Companies whereby another company provides capital for drilling in exchange for an ownership position in the well or wells. As noted, the Company has recently entered into such an agreement with Bridas USA on its De Soto Parish, Louisiana natural gas property. The Company management is proposing to spend in excess of several million dollars on drilling its projects in the next year. The Company has yet to raise this financing. In the event the Company is unsuccessful in raising these funds, management will have to scale back on the future business plans of the Company. This may have the effect of losing its rights, in some circumstances, to drill and development of some of the properties it now controls or has an interest in. As stated above, the Company's auditors have issued a going concern opinion. This means that the Company's auditors believe there is substantial doubt that the Company can continue as an on-going business for the next twelve months unless it obtains additional capital. This is because the Company has generated only minimal revenues and its operating costs far exceed its revenues. Further, the Company is indebted to several of its major shareholders. Accordingly, the Company must raise cash from sources other than from the sale of oil or gas found on its property. That cash must be raised from other outside sources. The Company's only other source for cash at this time are investments or loans by others to the Company. Cadence Resources has inadequate cash to maintain operations during the next twelve months. In order to meet its cash requirements the Company may have to raise additional capital through the sale of securities or loans. At this time, the Company has no firm commitments for loans or for purchases of additional securities and there is no assurance that it will be able to raise additional capital through loans or the sale of securities in the future. In the event that the Company is unable to raise additional capital, it may have to suspend or cease operations. CALL-NET ENTERPRISES: Names Roy Gordon as CFO Effective Today ------------------------------------------------------------- Call-Net Enterprises Inc., (TSX: FON, FON.B), a national provider of residential and business telecommunications services, announced the appointment of Roy T. Graydon as executive vice president and chief financial officer effective June 9, 2003. "Roy will play a key role in the continued drive toward improving enterprise value," said Bill Linton, president and chief executive officer, Call-Net Enterprises. "He brings a depth of investment knowledge and experience, and over the years, has helped a number of public companies develop growth strategies and improve their financial and operating performance. Roy will be a major contributor in the development of our own growth strategy." Mr. Graydon joins Call-Net from VGC Capital Partners where he was a managing partner. Prior to that he was with the Ontario Teachers' Pension Plan Board for six years where he held the position of vice president, relationship investing and responsible for managing a $1.5 billion portfolio of public companies in Canada, the United States, and Europe. He also managed the worldwide corporate governance and proxy voting activities of Ontario Teachers'. Before that, he held the position of portfolio manager, merchant banking where he was part of a team managing a $2.5 billion portfolio of private and publicly held companies. Prior to Ontario Teachers', Mr. Graydon spent seven years at TD Securities Inc. He was a vice president and director, investment banking and was responsible for mergers and acquisitions and corporate financing for a number of public and privately held companies. Mr. Graydon will report to Bill Linton, and be responsible for the finance, strategic planning, investor relations, treasury, internal audit and corporate development functions. He holds an MBA from the Richard Ivey School of Business and a Bachelor of Science (Honours, Geophysics) from the University of Western Ontario. While at Ontario Teachers', he was elected to the board of Call- Net, serving as a director from June 2000 to October 2001. He currently serves as the vice-chair of the board of trustees at The Ontario Science Centre. Call-Net Enterprises Inc. is a leading Canadian integrated communications solutions provider of local and long distance voice services as well as data, networking solutions and online services. The Company provides services to residential consumers and businesses primarily through its wholly owned subsidiary, Sprint Canada Inc. Call-Net Enterprises is headquartered in Toronto, owns and operates an extensive national fiber network and has over 134 co-locations in nine Canadian metropolitan markets. For more information, visit the Company's web sites at http://www.callnet.caand http://www.sprint.ca. * * * As previously reported, Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Call-Net Enterprises Inc., to 'B' from 'B+'. The outlook on the Toronto, Ontario-based telecommunications operator is now stable. "The downgrade reflects continuing competitive pressures in both the long-distance and data-service markets in general, resulting in lower gross margins and cash flows from operations as compared to 2001," said Standard & Poor's credit analyst Joe Morin. "Current available sources of liquidity are only sufficient to allow for marginal growth for the company." The ratings actions also take into account cost savings from the second-quarter implementation of workforce reductions, curtailment of the company's network expansion program, and the debt buyback by the company in September 2002. CALPINE: Power Contract Unit Selling $800-Mill. of Senior Notes ---------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, announced that Power Contract Financing, L.L.C., a wholly owned, stand-alone subsidiary of Calpine Energy Services, L.P., intends to sell approximately $800 million of Senior Secured Notes Due 2010. The Senior Secured Notes will be secured by fixed cash flows from one of CES' fixed-priced, long- term power sales agreements with the State of California Department of Water Resources and a new fixed-priced, long-term power purchase agreement with a third party. Proceeds and fees are subject to market conditions as of the closing date, including interest rates. Net proceeds, after funding of debt reserves and payment of transaction costs and fees, will be used to fund capital expenditures. The noteholders' recourse will be limited to the assets of PCF. Calpine will not provide a guarantee of the Senior Secured Notes Due 2010 or any other form of credit support. The Senior Secured Notes Due 2010 will be offered in a private placement under Rule 144A, have not been registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. * * * As previously reported in Troubled Company Reporter, Calpine Corp.'s senior unsecured debt rating was downgraded to 'B+' from 'BB' by Fitch Ratings. In addition, CPN's outstanding convertible trust preferred securities and High TIDES were lowered to 'B-' from 'B'. The Rating Outlook was Stable. Approximately $9.3 billion of securities were affected. Calpine Corporation's 10.500% bonds due 2006 (CPN06USR2) are trading at 85 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for real-time bond pricing. CARECENTRIC INC: Inks Merger Agreement with Investor Group ---------------------------------------------------------- CareCentric, Inc. (OTC Bulletin Board: CURA), a leading provider of management information systems to the home health care community, said that based on the recommendation of the Independent Committee of the Board and following the unanimous agreement of the full Board (with the interested Directors abstaining), it has signed a merger agreement with an investor group (Borden Associates, Inc.) led by its major stockholder, John Reed, and his son, Stewart Reed, that could have the effect of taking the company private. The Independent Committee made its recommendation after evaluating the original and subsequently amended proposal by Borden, engaging SunTrust Robinson Humphrey to render a fairness opinion on the amended proposal and renegotiating certain merger terms based on the results of the evaluation process. The merger agreement, negotiated by the Independent Special Committee of CareCentric's Board of Directors and representatives of the investor group led by John Reed, provides that each share of CareCentric common stock held beneficially by a person who holds fewer than 4,000 shares (other than any dissenting shares) will be converted into the right to receive $0.75. Each share of CareCentric common stock (other than any dissenting shares) held beneficially by a person who holds 4,000 or more shares will continue to represent one share of CareCentric common stock. The merger transaction could have the following potential effects: * The number of record holders could be reduced from approximately 5,500 to less than 150 record holders; * CareCentric would be eligible to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended; * If the termination of the registration of the common stock was completed, the common stock would no longer be quoted on the OTC Bulletin Board. The closing of the merger is subject to a number of conditions, including clearance by the Securities and Exchange Commission of the form of proxy statement to be sent to CareCentric's stockholders for their approval of the merger, obtaining required third party consents and having the total amount of cash consideration required to purchase the shares of those CareCentric stockholders owning fewer than 4,000 shares not exceed $600,000. CareCentric, whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $15 million, provides information technology systems and services to over 1,500 customers. CareCentric provides freestanding, hospital-based and multi-office home health care providers (including skilled nursing, private duty, home medical equipment and supplies, IV pharmacy and hospice) complete information solutions that enable these home care operations to generate and utilize comprehensive and integrated financial, operational and clinical information. With offices nationwide, CareCentric is headquartered in Atlanta, Georgia. CAREMARK RX: S&P Ups Rating on $450MM 7.375% Senior Notes to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior secured debt ratings on Caremark Rx Inc. to 'BBB-' from 'BB+'. At the same time, Standard & Poor's raised its senior secured debt rating on Caremark's $450 million 7.375% senior notes due 2006 to 'BB+' from 'BB'. The outlook is stable. The upgrades reflect Caremark's improving financial performance and increasing financial flexibility, due to its continued solid position in the growing pharmacy benefit management (PBM) industry and leading positions in the mail-order prescription and specialty pharmaceutical distribution segments. These positive factors are somewhat offset by the continued intense pricing competition in the industry and the potential for adverse developments to affect the business model. Birmingham, Alabama-based Caremark is one of the top five PBMs based on covered lives, drug spending dollars processed, and prescriptions processed. PBMs manage the drug benefit programs of clients such as corporations and managed-care organizations. Because they are large, PBMs can negotiate favorable drug discounts with pharmaceutical companies and share those savings with clients. "Though Caremark is the smallest of the five major PBMs, the company continues to successfully compete for new clients," said Standard & Poor's credit analyst Arthur Wong. "More importantly, Caremark has one of the largest and most efficient mail-order pharmacy services in the industry." Indeed, its mail-order penetration rate of 46% easily outpaces rivals Express Scripts (with 18%) and AdvancePCS (with 9%). Mail-order fulfillment has a higher margin than retail pharmaceutical networks. Mail-order is also a vehicle for the faster adoption of generic drugs, which yield a higher margin than branded pharmaceuticals. This is a benefit to Caremark because a record estimated $44 billion of drug sales are losing patent protection in the next five years. Mail-order also aids in formulary compliance, which enables Caremark to wield more influence on the market share of drugs and consequently increases the company's leverage in negotiating rebates with pharmaceutical manufacturers. PBMs are also benefiting from the increasing focus of clients on controlling drug costs. Indeed, PBMs process roughly 67% of all prescription drug spending in the U.S. Caremark also has one of the leading specialty pharmaceutical distribution operations in the U.S. Largely because of its leading mail-order prescription and specialty drug distribution operations, Caremark generates EBITDA operating margins of nearly 6%, which is significantly higher than those of its rivals. CONSECO FIN.: Fitch Junks 4 Vehicle Securitization Classes ---------------------------------------------------------- Fitch Ratings downgrades the notes issued by Conseco Finance Vehicle Trust 2000-B as follows: -- Class A-2 Notes to 'CC' from 'BB' Rating Watch Negative; -- Class A-3 Notes to 'CC' from 'BB' Rating Watch Negative; -- Class M-1 Notes to 'C' from 'CCC' Rating Watch Negative; -- Class M-2 Notes to 'C' from 'CC' Rating Watch Negative. The downgrades come in response to continued asset deterioration well outside of performance expectations as well as other recent negative developments. Conseco Finance Vehicle Trust is backed by receivables from Conseco Finance Corp.'s truck and trailer retail installment sales contracts and promissory notes. Fitch downgraded certain classes of the transaction on September 12, 2002 as a result of poor performance. Trust Undercollateralized by $42 Million The trucking industry remains entrenched in a prolonged downturn as the weakened U.S. economy has slowed freight traffic causing continued high delinquencies and defaults. A depressed truck wholesale market has magnified loss severity contributing to higher overall net losses. The trust is currently undercollateralized by over $42 million, roughly the aggregate outstanding amount of the class M-1 notes, class M-2 notes, and class B certificates. Furthermore CFC rejected servicing of the receivables on April 9, 2003 with US Bank Portfolio Services assuming servicing responsibilities. Fitch will continue to monitor the transaction and may take further action as warranted. CONSECO: US Bank Granted OK to File Consolidated Proof of Claim --------------------------------------------------------------- As Trustee for 137 Securitization Trusts that collectively own approximately $32,000,000,000 in home equity/home improvement, manufactured housing, recreational vehicles, consumer financing, credit card loans and clear facility notes, U.S. Bank wants to file a consolidated Proof of Claim in the Chapter 11 proceedings of Conseco Inc., and its debtor-affiliates. The Bar Date Order provides that creditors holding claims against one or more debtors must file a separate proof of claim in each particular case. James E. Spiotto, Esq., at Chapman & Cutler, explains that allowing the Trustee to file a Master Proof of Claim for the Securitization Trusts will facilitate claims processing, ease the burden upon the Court and reduce unnecessary expenses to the Debtors' estates. The Master Proof of Claim will be deemed to be filed on behalf of each of the 137 Securitization Trusts. The Master Proof of Claim will be deemed filed in each of the CFC Debtors' cases, as if each Securitization Trust had filed a separate proof of claim form individually against each CFC Debtor separately. * * * Accordingly, Judge Doyle grants U.S. Bank's request. (Conseco Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) Conseco Inc.'s 10.250% bonds due 2002 (CNC02USR1) are presently trading between 99 and 101 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC02USR1for real-time bond pricing. CONSOLIDATED FREIGHTWAYS: Auctioning Macon Distribution Facility ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Macon distribution facility located at 4390 Mead Rd., for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Macon property is a 10-door cross-dock distribution facility situated on 3 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 11 CF employees formerly worked at the Macon terminal. A contract price of $153,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Auctioning Ft. Lauderdale Facility ------------------------------------------------------------ As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Ft. Lauderdale distribution facility located at 1901 Blount Rd. for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Ft. Lauderdale property is a 30-door cross-dock distribution facility situated on 4.68 acres and has been closed to operations since September 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 70 CF employees formerly worked at the Ft. Lauderdale terminal. A contract price of $1,750,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Auctioning Fayetteville Property ---------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Fayetteville distribution facility located at 650 East Hwy 264 for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Fayetteville property is a 16-door cross-dock distribution facility situated on 5 acres and has been closed to operations since September 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Eleven CF employees formerly worked at the Fayetteville terminal. A contract price of $306,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: New Orleans Facility Goes to Auction -------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its New Orleans distribution facility located at 1525 Sams Ave., for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The New Orleans property is a 44-door cross-dock distribution facility situated on 6.09 acres and has been closed to operations since Sept. 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 42 CF employees formerly worked at the New Orleans terminal. A contract price of $1,890,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Putting Roseburg Land on Auction Block ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Roseburg land located at 3703 Old Highway 99 South for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Roseburg property is 3.45 acres and has been closed to operations since September 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. A contract price of $185,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Auctioning-Off Two Kentucky Facilities ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Lexington and Bowling Green distribution facilities individually for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Lexington property is a 44-door cross-dock distribution facility located at 460 Transport Ct., and is situated on 7.78 acres. A contract price of $1,100,000 has been established for the property. Thirty CF employees formerly worked at the Lexington terminal. The Bowling Green property is a 6-door terminal located at 274 Cypress Wood Way. It is situated on 1.5 acres and has a contract price of $145,000. Eight employees formerly worked there. Both facilities have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Durham Distribution Facility -------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Durham distribution facility located at 2425 Kis Dr. for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Durham property is a 16-door cross-dock distribution facility situated on 3.63 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. A contract price of $270,500 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Boston Prop. at Jun 18 Auction ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Boston distribution facility located at 295 Salem St. for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Boston property is a 61-door cross-dock distribution facility situated on 10.25 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 93 CF employees formerly worked at the Boston terminal. A contract price of $2,460,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Will Auction Joplin Assets on June 18 --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Joplin distribution facility located at 2425 West 20th for sale to the highest bidder, through an open auction process scheduled for June 18, 2003. The Joplin property is a 14-door cross-dock distribution facility situated on 2.3 acres and has been closed to operations since September 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 25 CF employees formerly worked at the Joplin terminal. A contract price of $136,000 has been established for the CF property. Interested parties who would like to participate in the June 18 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 87 CF properties throughout the U.S. have been sold for $206 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. COVANTA: Court Fixes June 27, 2003 Bar Date for Debenture Claims ---------------------------------------------------------------- As previously reported, Covanta Energy Corporation, and its debtor-affiliates ask the Court to: (a) establish June 14, 2003 as the Bar Date in respect of the 5-3/4% Convertible Subordinated Debentures Due 2002 and the 6% Convertible Subordinated Debentures Due 2002; (b) establish June 14, 2003 as the Bar Date for any and all proofs of claims against Covanta Concerts Holdings, Inc.; (c) provide that for any claim related to the rejection of an executory contract or unexpired lease by Covanta Concerts pursuant to a Court order granting the motion but not before plan confirmation, the applicable bar date will be the later of: -- the Covanta Concerts Bar Date, and -- 30 days after the entry of the order authorizing the rejection; (d) establish the Bar Date in respect of any amended schedules Covanta Concerts filed as 30 days after the Debtors send notice of an amended schedule identifying the claimant as the holder of a disputed, contingent or unliquidated claim against Covanta Concerts; and (e) approve the form, timing and manner of the Bar Date notice, the Covanta Concerts Rejection Bar Date and the Covanta Concerts Amended Schedules Bar Date. * * * Judge Blackshear rules that all Entities holding or asserting any prepetition claims in respect of the Convertible Debentures or against Covanta Concerts Holding, Inc. must file proofs of claim so that such proof of claim is received by the Court on or before 4:00 p.m. Prevailing Eastern Time on June 27, 2003. (Covanta Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) CREDIT SUISSE: S&P Assigns Ratings to Series 2003-C3 Notes ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Credit Suisse First Boston Mortgage Securities Corp.'s $1.76 billion commercial mortgage pass-through certificates series 2003-C3. The preliminary ratings are based on information as of June 5, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A- 1, A-2, A-3, A-4, A-5, B, C, D, and E are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage ratio of 2.66x, a beginning loan-to-value ratio of 75.1%, and an ending LTV of 64.6%. Unless otherwise indicated, all calculations in the presale report, including weighted averages, include only the A note of Northside Villas loan, the A note of the 100 East Pine Street loan, the A note of the Washington Center Portfolio, the pooled A note of the 622 Third Avenue loan, and the $59.8 million pari passu note of the Great Lakes Crossing loan. PRELIMINARY RATINGS ASSIGNED Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certs series 2003-C3 Class Rating Amount ($) ----- ------ ---------- A-1 AAA 127,000,000 A-2 AAA 214,000,000 A-3 AAA 212,000,000 A-4 AAA 55,000,000 A-5 AAA 862,414,000 B AA 47,432,000 C AA- 19,405,000 D A 38,808,000 E A- 19,405,000 F BBB+ 19,404,000 G BBB 12,936,000 H BBB- 19,404,000 J BB+ 19,405,000 K BB 12,936,000 L BB- 6,468,000 M B+ 10,780,000 N B 2,156,000 O B- 4,132,000 P N.R. 21,560,958 622 N.R. 40,000,000 A-X* AAA 1,724,825,958# A-SP* AAA 1,613,359,000# A-Y* AAA 171,206,187# *Interest-only class. #Notional amount. N.R.--Not rated. DAISYTEK INT'L: Nasdaq to Knock-Off Shares Effective Friday ----------------------------------------------------------- Daisytek International Corporation (Nasdaq:DZTK) has received written notification from NASDAQ that the company's common stock will be delisted from the NASDAQ Stock Market at the opening of business on June 13, 2003. The delisting notice follows the June 3, 2003 announcement that the company has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Daisytek is a global distributor of computer supplies, office products and accessories and professional tape media. Daisytek is a registered trademark of Daisytek, Incorporated. All rights reserved. DELTA AIR LINES: Fitch Rates Convertible Senior Notes at B+ ----------------------------------------------------------- Fitch Ratings assigned a rating of 'B+' to the $300 million in convertible senior unsecured notes issued by Delta Air Lines, Inc. The privately placed notes carry a coupon rate of 8% and mature in 2023. Additionally, the notes are callable by the company in five years and contain investor put options at years 5, 10, and 15. The Rating Outlook for Delta is Negative. The 'B+' rating reflects considerable uncertainty over Delta's ability to quickly realign its cost structure with a sharply diminished airline industry revenue base. While Delta has benefited from a relatively strong liquidity position and continued access to the capital markets during the U.S. airline industry's financial crisis, the carrier faces a need to reduce unit labor costs in line with the contractual changes already made at American, United and US Airways. With an uncompetitive pilot contract still in force, Delta's operating performance will remain relatively weak as the U.S. network carriers look for signs of a meaningful traffic and yield recovery. Delta's pilots, represented by the Air Line Pilots Association are scheduled to respond to management's request for cost concessions as early as next week. At this time there is no clear evidence that an agreement with ALPA can be reached quickly. The issuance of the $300 million in convertible notes reflects Delta's continuing capacity to bolster liquidity and financial flexibility at a time of turmoil in the industry. Coming on the heels of a series of new financing transactions completed since January, the convertible offering (a Rule 144a private placement with registration rights) should allow Delta to maintain a comfortable liquidity position through the remainder of 2003. Prior to completion of a series of secured debt transactions with GE Capital in April, Delta reported an unrestricted cash balance of $1.9 billion at the end of the first quarter. In addition to the proceeds from new debt issuance, Delta booked approximately $400 million in cash when the airline received its share of the $2.3 billion in government reimbursement for federal security mandates incurred since September 2001. In spite of ongoing weakness in operating performance and another loss expected in the second quarter, total liquidity on the balance sheet as of the June 30 quarter end will have improved significantly over the March 31 level. The restructuring of 2003 debt maturities accomplished through the GE Capital financings in April removes much of the carrier's near-term liquidity risk, even with the prospect of slow progress on the labor front and continuing losses. Still, Delta faces substantial cash commitments related to maturities of long-term debt and capital leases beyond 2003. Debt and capital lease maturities are estimated at $845 million in 2004 and $1.3 billion in 2005. Delta also faces a significantly underfunded defined benefit pension obligation ($4.9 billion underfunded on a projected benefit obligation basis as of December 31, 2002). Although Delta has taken steps to limit future pension-related cash outflows by converting its non-pilot defined benefit programs to cash balance plans, future required cash pension contributions are expected to be well above the $250 million in expected 2004 cash contributions. Delta also faces a need to take on new lease and debt obligations related to the acquisition of regional jets from Bombardier. Scheduled deliveries of new Boeing aircraft for mainline service have been deferred beyond 2004. While Delta's return to acceptable levels of operating cash flow generation is clearly dependent upon the success of its profit improvement initiatives and labor cost reduction initiatives (labor accounted for 44% of Delta's operating expenses in the first quarter of 2003), the timing of an industry revenue rebound is also critical. Delta has recently reported unit revenue numbers that are strong relative to the other major network carriers, though still very weak compared with pre-2001 performance. Passenger revenue per available seat mile in the first quarter rose 4% over the year-earlier period on a 4% reduction in mainline capacity. Industry capacity reduction and tentative signs of strengthening in air travel demand provide some hope that Delta's unit revenue results will improve through the remainder of 2003. One additional positive note on the revenue side is that Delta has very limited network exposure in Asia, where the SARS virus continues to depress demand. DVI INC: Accountant's Resignation Triggers S&P CreditWatch ---------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' counterparty credit and senior unsecured ratings on Jamison, Pennsylvania- based DVI Inc. on CreditWatch with negative implications. The CreditWatch listing follows DVI's announcement of the resignation of the company's independent public accounting firm. "Standard & Poor's will assess the consequences of the change in accounting firms and any impact this change may have on the company's financial performance," said credit analyst Steven Picarillo. Additionally, Standard & Poor's remains concerned about the company's ability to refinance its maturing debt. DVI has $155 million of senior notes due in February 2004. DYNEGY INC: CEO Williamson Reports on Restructuring Progress ------------------------------------------------------------ At Thursday's annual meeting of shareholders, Dynegy Inc. President and Chief Executive Officer Bruce A. Williamson provided an update on the company's business direction for 2003 and beyond. Williamson also documented Dynegy's self- restructuring progress during the last year, including such key achievements as the company's $1.66 billion bank refinancing, its exit from third-party marketing and trading, and the sale of its communications businesses. "I am extremely pleased with how our employees have addressed the issues of the past and, importantly, are now focusing on the future and delivering value to our stakeholders," said Williamson. "[Thurs]day, we're demonstrating to our stakeholders and the market that we're not only capable of strong results - we're achieving them." During the annual meeting, shareholders approved the election of 12 director nominees to serve Dynegy for the next 12 months. All of Dynegy's current directors were elected to serve for another year except for J. Otis Winters, retired chairman of PWS Group Inc., who declined to stand for re-election as a result of his retirement from the board. In addition, Raymond I. Wilcox, vice president of ChevronTexaco Corp., and president of ChevronTexaco Exploration & Production Company, replaces Darald W. Callahan, executive vice president of Power, Chemicals and Technology for ChevronTexaco, who stepped down from the board. Shareholders also approved the ratification of PricewaterhouseCoopers LLP as Dynegy's independent auditors for 2003. In addition, two shareholder proposals - one regarding auditor conflicts and the other relating to the indexing of stock options - did not pass. Williamson provided shareholders with an update on two key developments related to the company's generation business segment: -- Dynegy has completed scheduled maintenance on 14 power generation units at facilities in five U.S. states, preparing the company's 13,000-megawatt generation fleet for the summer cooling season. Included in the scheduled maintenance are six units deferred to the second quarter 2003 from the first quarter 2003. These power plants were kept on line during the first quarter 2003 to meet customer needs during colder-than- normal winter weather. -- The company has started commercial operation at the Rolling Hills Generation Project, an 838-megawatt natural gas-fired peaking facility in Vinton County, Ohio, 90 miles southeast of Columbus. Electricity generated by the power plant will be sold in the wholesale electricity market to investor-owned utilities, electric cooperatives and municipalities throughout the East Central Area Reliability Council region and other areas of the country during peak demand periods. The facility was completed on schedule and under budget. The audio web cast of the meeting and presentation slides will be available on the News & Financials section of http://www.dynegy.comthrough July 15, 2003. Dynegy Inc. (NYSE:DYN) provides electricity, natural gas, and natural gas liquids to wholesale customers in the United States and to retail customers in the state of Illinois. The company owns and operates a diverse portfolio of energy assets, including power plants totaling more than 13,000 megawatts of net generating capacity, gas processing plants that process more than 2 billion cubic feet of natural gas per day and approximately 40,000 miles of electric transmission and distribution lines. As previously reported in Troubled Company Reporter, ratings for Dynegy Holdings Inc., Dynegy Inc. and affiliated companies, Illinois Power and Illinova Corp. were affirmed and removed from Rating Watch Negative by Fitch Ratings. They were originally placed on Rating Watch Negative on Nov. 9, 2001. The Rating Outlook for DYN and its affiliates is Stable. In addition, Fitch assigned a 'B+' rating to DYNH's secured $1.1 billion revolving credit facility and $200 million term loan A, both maturing on Feb. 15, 2005. Fitch also assigned a 'B' rating to its $360 million term loan B, maturing on Dec. 15, 2005. The removal of the Negative Rating Watch status reflects the lessening of near-term default risk as a result of several favorable actions and events. On April 2, 2003, DYNH entered into its new $1.66 billion secured bank credit facility. The facility requires no scheduled amortization of principal and should be adequate to fund ongoing collateral and operating needs through 2004. In addition, the risk of a default and resulting debt acceleration triggered by certain financial covenants contained in the prior credit facilities and Polaris lease has been eliminated. Other favorable recent events were: the filing of audited financial statements for years 1999 through 2002 with material disclosures consistent with expectations, the sale of DYN's U.S. communications business, the reporting of stronger than anticipated operating results for the first quarter of 2003, and the closing of an agreement with Southern Co. to terminate three wholesale tolling arrangements eliminating $1.7 billion of future capacity payments. Current ratings at DYN reflect Fitch's latest assessment of the company's overall credit profile and recognize the structural subordination of unsecured lenders to its secured bank lenders and project debt. The revolver and term loan A are secured by a first priority interest in substantially all assets and stock of DYNH and a second priority interest in the assets and stock of DYN, including the stock of ILN. The term loan B is secured by a first priority interest in the assets and stock of DYN and a second priority interest in substantially all assets and stock of DYNH. The new facilities are secured on a subordinated basis to more than $1.8 billion of DYNH project debt. The one notch separation between the bank facilities recognizes the expected higher collateral coverage for the revolver and Term Loan A to that for the term loan B. Ratings Actions DYN -- Indicative senior unsecured debt 'CCC+'. DYNH -- Secured revolving credit facility and term loan A 'B+'; -- Secured term loan B 'B'; -- Senior unsecured debt 'CCC+'. Dynegy Capital Trust I -- Trust preferred stock 'CC'. Illinois Power Co. -- Senior secured debt and pollution control bonds 'B'; -- Indicative senior unsecured debt 'CCC+'; -- Preferred stock 'CC'. Illinova Corp. -- Senior unsecured debt 'CCC+'. Dynegy Holdings Inc.'s 8.750% bonds due 2012 (DYN12USR1) are presently trading at 88 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for real-time bond pricing. ENRON CORP: Seeks Approval for FBTC Leasing Settlement Agreement ---------------------------------------------------------------- In 1993, Enron Corporation, as lessee, Fujilease Corporation, as lessor, and The Fuji Bank, Limited, Houston Agency, as agent, entered into a Master Lease and Security Agreement dated as of June 25, 1993. By the Original Lease, Enron leased certain software and related rights from Fujilease. FBTC Leasing Corporation succeeded to Fujilease's interest on May 30, 1995, through Amendment Number 1 to the Original Lease. Subsequently, Enron and FBTC entered into an Amended and Restated Master Lease and Security Agreement dated as of July 31, 1998, as well as certain other ancillary agreements and amendments. Under the terms of the Security Agreement, Enron granted FBTC a security interest in certain software systems in eight categories -- the Collateral: -- engineering, -- environmental, -- finance and corporate systems, -- human resources, -- purchasing, -- tax, -- treasury, and -- gas services and pipeline and liquids. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that with Enron's bankruptcy case, FBTC filed numerous proofs of claim based on amounts it claimed to be due and owing under the Lease. In addition, FBTC filed various objections to asset sales where the sale included a software element. The sale orders this Court entered provided for the attachment of an FBTC lien, if any, on any proceeds Enron received from the approved transaction. On March 28, 2002, FBTC filed its Motion for Adequate Protection. Over the past year, Mr. Sosland informs the Court that there has been a significant amount of discovery related to the Adequate Protection Motion. The Parties do not agree on several issues, including the scope and value of the Collateral. After extensive negotiations, FBTC and Enron agreed to settle the FBTC Claims wherein, in exchange for $39,500,000 paid via wire transfer and an $8,000,000 allowed prepetition unsecured claim in FBTC's favor against Enron's estate, FBTC agrees to: (a) withdraw the Motion for Adequate Protection and expunge all Proofs of Claim, except for the $8,000,000 allowed prepetition unsecured claim granted pursuant to the Settlement; (b) not object to any future asset sales; and (c) consent to the Agreed Order Approving the Settlement. Accordingly, pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, Enron sought and obtained Court approval of the Settlement it entered into with FBTC. Mr. Sosland asserts that the Settlement is warranted because: (a) the Parties resolve the FBTC Claims consensually, without additional litigation, which is an unnecessary expense to Enron's estate; (b) the Settlement is a product of arm's-length bargaining between the Parties; (c) the Settlement enables Enron to resolve the Motion for Adequate Protection; and (d) the Settlement enables Enron to sell assets with a software component without FBTC's involvement or objection. (Enron Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING COS: Taps Ernst & Young's Services as Internal Auditor -------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates sought and obtained Court approval for their employment and retention of Ernst & Young as their inside auditor and tax accountants. Pursuant to the E&Y engagement letter, E&Y will provide tax and internal audit services as E&Y and the Debtors will deem appropriate and feasible in order to advise the Debtors in the ordinary course of performing the Debtor's tax function, and in the course of the Chapter 11 Case, including but not limited to: A. Federal, And State Income Tax Compliance, Consulting And Administration; B. Property Tax Services; C. Sales & Use Tax Services; D. Bankruptcy Tax Services; and E. Internal Auditing Services. E&Y, at the request of the Debtors, also may render additional general internal audit and tax accounting support deemed appropriate and necessary to the benefits of the Debtors' estates. E&Y currently serves as the Debtor's internal tax function, performing all services related to tax matters and filings on behalf of the Debtor. The tax and internal audit services enumerated above are necessary to enable the Debtors to maximize the value of their estates, to timely file all necessary tax returns on behalf of the Debtor, and to reorganize successfully. The Debtors believe that E&Y's tax and internal audit services will not duplicate the services that, subject to this Court entering or having entered appropriate orders, other Professionals may provide to the Debtors in the Chapter 11 Cases. E&Y will use reasonable efforts to coordinate with the Debtors' other retained Professionals to avoid unnecessary duplication of services. E&Y fees in connection with this engagement will be based upon the time that E&Y necessarily spent in providing its tax and audit services to the Debtors, multiplied by its hourly rates. E&Y normally charges these hourly rates charged by E&Y personnel: A. Audit Services Partners and Principals $425-663 Senior Manager $318-496 Manager $279-435 Senior Staff $150-234 Staff $107-167 B. Tax Advisory and Tax Outsourcing Advisory Fees Partners arid Principals $425-750 Senior Manager $370-540 Manager $250-490 Senior Staff $180-375 Staff $130-240 In addition to the fees, E&Y will bill the Debtors for reasonable expenses which are likely to include long distance telephone charges, hand delivery and other delivery charges, travel expenses, computerized research, transcription costs, and third-party photocopying charges. (Fleming Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING COMPANIES: Taps DoveBid to Conduct 4-Day Webcast Auction ---------------------------------------------------------------- DoveBid, Inc., a global provider of capital asset auction and valuation services, will conduct its first Webcast auction in a series of sales for Fleming Companies, Inc., a food distributor and retail grocer, who filed Chapter 11 bankruptcy protection in April 2003. The 4-Day Webcast auction will be held near the Dallas-Fort Worth Airport at the Embassy Suites Hotel at 2401 Bass Pro Drive in Grapevine, Texas, starting tomorrow through June 13, 2003 beginning at 9:00 a.m. Central Time each day. The auction will feature 1.5 million square feet of warehouse and distribution centers, racking and moving stock, over 400 vehicles including trucks, tractors, trailers, and grocery store assets from over 20 supermarkets including deli, bakery, meat dept, coolers, gondola racking, point-of-sale systems and more. Participants may attend in-person or bid online. Detailed preview information, asset catalog, and online bidding instructions are available at http://www.dovebid.com For further information, please contact Renee Jones, CAI at rjones@dovebid.com There are an additional 100+ upcoming auctions on DoveBid's auction calendar. For a complete list of our auctions, equipment asset catalogs, and brochures, please visit DoveBid's Web site at http://www.dovebid.com DoveBid, Inc. is a global provider of capital asset auction and valuation services to large corporations and financial institutions. DoveBid delivers an integrated set of services to its customers for the disposition, valuation and redeployment of their surplus capital assets. DoveBid offers an array of auction services to meet its customers' specific needs, including live Webcast auctions, on-site-only auctions, featured online auctions and privately negotiated sales. DoveBid Managed Services offers clients a hosted, Internet-based application to monitor surplus assets inside the corporation. DoveBid Valuation Services uses its database of transaction information to provide valuations of capital assets for financial institutions and large businesses. Headquartered in Foster City, California, DoveBid has over 65 years of auction experience in the capital asset industry with more than 40 locations throughout North America, Europe and the Asia-Pacific region. More information on DoveBid can be found at http://www.dovebid.comor by contacting company headquarters at (800) 665-1042 or (650) 571-7400. FLEMING: Court Approves Roundy's $44 Million Bid for 31 Stores -------------------------------------------------------------- Roundy's, Inc.'s auction bid to purchase 31 Rainbow Foods stores from Fleming Companies, Inc. has been approved by the U.S. Bankruptcy Court in Wilmington, Del. Roundy's agreed to pay $44 million in cash plus the cost of inventory and the assumption of certain capitalized leases. Roundy's will now own and operate 30 stores located in the Minneapolis-St. Paul metropolitan area and one near Schofield, Wis. Throughout the next week, Roundy's will stagger the three- day closings and the permanent reopenings of the 31 stores to ensure that each store is restocked and upgraded according to Roundy's standards. In addition, Roundy's will hire all of the employees currently employed at the 31 stores, and all stores will retain the Rainbow Foods name. "We couldn't be more pleased that our bid was successful and that we now have the opportunity to get to know and cater to Twin Cities consumers," said Robert A. Mariano, chairman and chief executive officer, Roundy's. "Rainbow Foods looks forward to becoming the supermarket of choice in the neighborhoods we serve." Roundy's, Inc. is one of the nation's oldest and largest food wholesale and retail companies. Founded in 1872, Roundy's, Inc. today is a company approaching $4 billion in annual sales, supplying over 800 supermarkets in fourteen states from eight distribution centers. In addition, Roundy's, Inc. is the leading retail supermarket chain in Wisconsin operating more than 80 stores as Pick 'n Save and Copps Food Centers. The company employs more than 14,000 associates throughout its entire network and is owned by investment funds controlled by Willis Stein & Partners, which is based in Chicago. GENTEK INC: Court Grants Second Exclusivity Period Extension ---------------------------------------------------------------- GenTek Inc., and its debtor-affiliates sought and obtained Court approval for more time for the development, negotiation and proposal of one or more reorganization plans. The Court moved the Exclusive Plan Proposal Period to and including June 30, 2003 and the Exclusive Solicitation Period to and including August 29, 2003. (GenTek Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENZYME BIOSURGERY: Shareholders Move to Enjoin Forced Exchange --------------------------------------------------------------- Two leading shareholders in Genzyme Biosurgery filed a motion in federal court to enjoin Genzyme Corp., from eliminating Biosurgery's publicly traded tracking stock, which was announced by Genzyme on May 8 and is planned for June 30, 2003. The elimination is set to occur through an exchange of Biosurgery stock for shares in Genzyme's General Division. "Our motion claims that officers and directors of Genzyme -- whose financial interests are directly adverse to those of Biosurgery shareholders -- manipulated the stock price of Biosurgery by intentionally withholding information from the public in order to acquire Biosurgery's valuable assets for pennies on the dollar," said Jonathan Sherman of Boies, Schiller & Flexner, counsel for the plaintiffs. "Unless the forced exchange is enjoined, the defendants will reap an unjustifiable windfall to the irreparable harm of Biosurgery shareholders." The motion for preliminary injunction states that if the forced share exchange proceeds, Biosurgery will be delisted from NASDAQ, Genzyme will take from Biosurgery shareholders a business worth at least $1.5-2 billion for a mere $72 million in Genzyme General stock, and that all Biosurgery shareholders, including the plaintiffs, will be irreparably harmed. By contrast, if the exchange is enjoined, at least until plaintiffs fully litigate their lawsuit, the defendants will suffer no injury because the operations of Genzyme will not be affected. If the defendants ultimately prevail at a trial, the motion continues, they will still be able to complete the forced exchange on the same financial terms currently set by Genzyme. The plaintiffs also asked the court to set an expedited discovery schedule in connection with the motion for a preliminary injunction. Messrs. Riggs and Lewis seek an order requiring Genzyme to provide documents by June 15 and for three senior Genzyme officials, including the Chairman of the Audit Committee of its Board, to appear for depositions before June 20. The documents requested in the filing include: -- Internal valuations of Biosurgery prepared by Genzyme or its Board, including what Genzyme described on May 8 as an independent opinion prepared by an outside firm stating that the exchange was "fair from a financial point of view"; -- internal Genzyme documents that discuss or analyze the decision to force the exchange of stock; and -- internal Genzyme documents explaining when Genzyme first learned of positive information about Biosurgery disclosed on and after the May 8 announcement of the forced exchange and why Genzyme waited until then to make it available to the market. In their complaint, the plaintiffs allege that Genzyme withheld from the market material information in order to maximize the advantage to the Genzyme Board and Genzyme General shareholders -- and minimize the value to Biosurgery shareholders - through the forced exchange. The information -- disclosed so late that the share price at which the exchange is valued could not reflect it -- includes the following: (a) that Synvisc sales for the first quarter of 2003 were up over 30% compared to the first quarter of 2002, doubling estimates of prior growth; (b) that Genzyme expected FDA approval for U.S. clinical trials of Synvisc in new applications and Synvisc's "best product" test results in such trials; (c) that Biosurgery's research and development expenses were likely to result in an advanced third-generation Synvisc product; (d) that the third-generation Synvisc product would exhibit "more enduring pain relief," a reduced injection schedule, and the ability to modify the disease of osteoarthritis; (e) that ongoing investments in Biosurgery's unprofitable cardiothoracic business would cease and the cardiothoracic business would be sold, resulting in millions of dollars of savings to the Division; (f) that Synvisc will be the product leader in an end-market presenting opportunities of more than $4 billion for knee treatment alone; and (g) that Genzyme expected the end-user market for Synvisc to double after approval of the product in Japan in 2004. Rory Riggs, former President of Biomatrix (a predecessor company to Biosurgery), and John Lewis, President of Gardner Lewis Asset Management, both shareholders of Biosurgery, filed a complaint against Genzyme and certain members of its management and board on June 2, charging the forced exchange of stock would result in the effective acquisition by Genzyme of Biosurgery assets at a tiny fraction of true fair market value. The plaintiffs own or control in the aggregate approximately 6.35 million shares of Biosurgery stock, or about 15.6% of the total shares outstanding. Mr. Riggs owns approximately 750,000 shares. Mr. Lewis owns approximately 1.1 million shares, and the firm of Gardner Lewis Asset Management holds an additional 4.5 million shares for its clients. Genzyme Biosurgery had $32.7 million in cash and equivalents at the end of 2002. The Company recorded in its December 31, 2002 balance sheet a working capital deficit of about $282 million, while its division equity plunged half down to $186 million. GETTY IMAGES: Improved Cash Flow Spurs S&P to Up Rating to BB- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Getty Images Inc. to 'BB-' from 'B+'. At the same time, Standard & Poor's assigned its 'B' rating to Getty's new Rule 144A $240 million 0.5% convertible subordinated bonds due 2023. The offering size may increase to $265 million, depending on demand. The outlook is stable. Getty intends to use the proceeds, and cash as needed, to redeem its $250 million 5.0% convertible subordinated notes due 2007. Getty is the leading global provider of non-commissioned visual content. On a pro forma basis, the Seattle, Washington-based firm has $240 million in debt. "The upgrade is based on Getty's steadily improving cash flow despite revenue pressure due to the weak operating conditions in its primary end markets," according to Standard & Poor's credit analyst Steve Wilkinson. "Getty has completed its operational restructuring, back office integration, and website development, which have significantly lowered operating costs and capital expenditures. As a result, Getty converted 15% of its revenue into discretionary cash flow in the 12 months ended March 31, 2003, compared with the large discretionary cash flow deficits incurred in 2001 and previous years. The bond refinancing will modestly boost cash flow because the new notes substantially reduce the interest rate on Getty's outstanding debt. Getty will have intermediate-term refinancing risk, however, because bondholders can force it to retire the bonds in 2008 (and every five years thereafter) if the stock price has not appreciated sufficiently," the analyst continued. Ratings stability incorporates the expectation that Getty will maintain prudent financial policies that enable it to generate significant free operating cash flow and maintain sufficient liquidity. Near-term upgrade potential is likely limited due to its minimal business diversity and the relatively small size of this market niche. In the longer term, the credit profile will depend on Getty's ability to expand the business and increase cash flow without elevating risk. GLOBAL CROSSING: Court Gives Nod to Emergia Settlement Agreement ---------------------------------------------------------------- The Global Crossing Ltd. Debtors and Emergia S.A. each operate its own high-speed fiber optic network, independently connecting certain cities within South America, the Caribbean, and North America. Because Emergia's network provides access to certain cities and countries that the GX Debtors' Network does not reach and visa versa, the Parties developed a relationship whereby they would purchase capacity on each other's networks. This relationship permitted the Parties to reach additional markets that otherwise would be unavailable due to the physical limitations of each Party's network. The Capacity Purchase Agreements allowed for discount pricing to be applied to capacity purchases on an "as needed" basis. In late 2002, due to decreased capacity requirements, the Parties commenced discussions regarding a restructuring of the Pre-Existing Agreements. After arms-length negotiations, the Parties agreed to the terms of the Settlement Agreement. Consequently, the Debtors sought and obtained the Court's approval of the Settlement Agreement and the assumption of the Pre-Existing Agreements, as amended and modified by the Settlement Agreement. Pursuant to the Settlement Agreement, the Parties will maintain their current levels of capacity and not draw any additional capacity against their respective Prepayments. Emergia and the Debtors agree that $35,000,000 and $51,000,000, represent their full utilization of capacity under the Capacity Purchase Agreement. Emergia also agrees to pay an annual O&M Charge for each unit of capacity that has been purchased by Emergia under the Capacity Purchase Agreements, for which the Debtors will provide a set level of operational and maintenance support. The failure of the Debtors to meet certain performance criteria per unit of capacity during a calendar month will result in a reduction in the O&M Charges related to the unit of capacity. The Settlement Agreement also provides Emergia the option, from January 1, 2003 through January 1, 2006, to exchange the capacity it purchased under the Capacity Purchase Agreements and utilize alternative capacity on different segments of the Debtors' network. Each time Emergia exercises the Portability Option, there will be a one-time fee. Pursuant to the Settlement Agreement, each Party waives, for the period from November 25, 2002 through September 30, 2003, any and all claims, causes of action, liabilities, obligations and indebtedness against the other Party, whether known or unknown, suspected or unsuspected, actual or potential, with respect to any actions, omissions, statements or negotiations taken or made in connection with the Pre-Existing Agreements prior to April 25, 2003. If the Effective Date has occurred on or before September 30, 2003, the waiver becomes a full and permanent waiver. If the Effective Date has not occurred by September 30, 2003, either party will have the right at any time after written notice to the other party to terminate the Settlement Agreement and waivers. Under the Settlement Agreement, the assumption of the Pre-existing Agreements will be effective as of the Effective Date. (Global Crossing Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) HIGH SPEED: Charter Dismissed as Defendant in IPO Litigation ------------------------------------------------------------ High Speed Access Corp., (OTC Bulletin Board: HSAC) announced that Charter Communications, Inc., was dismissed as a defendant in the IPO Litigation, is no longer asserting a potential claim for indemnity against the holdback in connection with the sale of substantially all of HSA's assets to Charter and has paid to HSA the remaining $1 million balance of the indemnity holdback plus accrued interest. As previously reported, High Speed Access' shareholders approved a proposed Plan of Liquidation and Dissolution on November 27, 2002. HORIZON NATURAL: Names John J. Delucca as New Board Chairman ------------------------------------------------------------ The Board of Directors of Horizon Natural Resources (Nasdaq: HZON.pk) has named John J. Delucca, a current director, as its chairman; appointed Ronald L. Rossetti a director, to replace the vacancy created by the retirement of B. R. Brown, and elevated Scott M. Tepper to acting chief executive officer, from his current position of chief restructuring officer. Tepper will keep the former position, as well as his current director position. Delucca said, "Scott has done an outstanding job assuming the role of acting chief executive in the months while Horizon was without a formal CEO. Under his focused leadership, Horizon has made significant progress on productivity improvements, including increasing the tons of coal mined per man hour while also reducing the costs per ton. With these improvements in place, Horizon is now well positioned to serve the energy needs of our customers. "At the same time," Delucca continued, "Scott has expanded Horizon's commitment to excellence by increasing safety performance in our mines. Considerable challenges remain, and we look forward to benefiting from Scott's continued leadership and business acumen." Delucca also welcomed Rossetti to the Horizon board. "Ron's broad talents as chief executive of companies in similar situations and his experience in turning them into successful operations will be valuable to our board, and our efforts to increase the value of Horizon's operations. We thank him for accepting this appointment." Rossetti is president of Riverside Capital Partners, a firm that invests in and leads companies in distressed situations. Currently he serves on the boards of Tier Technologies, Inc. and the Hamilton Companies. He is also a Trustee of Northeastern University, where he is chairman of the development committee, and a founding member of the Gorbachev Foundation of North America. He began his career with the Coopers and Lybrand accounting firm. For additional information, please see http://www.horizonnr.com Horizon Natural Resources Company (formerly known as AEI Resources Holding, Inc.) conducts mining operations in five states with a total in 2002 of 38 mines, including 25 surface mines and 13 underground mines: -- Central Appalachian operations include all of the company's mining operations in southern West Virginia and Kentucky, totaling 32 surface and underground mines, which produced approximately 24.1 million tons of coal (64 percent of total production) during 2002. -- Western operations include mining in Colorado, Illinois and Indiana, totaling six surface and underground mines, which produced approximately 13.5 million tons (36 percent of total production) during 2002. Horizon Natural Resources (formerly AEI Resources), one of the US's largest producers of steam (bituminous) coal filed for chapter 11 protection on November 13, 2002. This the Debtors' second chapter 11 filing. Ronald E. Gold, Esq., at Frost Brown Todd LLC represents that Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. INVESCO CBO: Fitch Affirms Class B-2 Notes' Low-B Rating at BB- --------------------------------------------------------------- Fitch Ratings reviewed five classes of notes issued by INVESCO CBO 2000-1 LTD. These affirmations are the result of Fitch's annual review process. The following rating actions are effective immediately: -- $59,000,000 class A-1L notes affirmed at 'AAA'; -- $78,000,000 class A-2L notes affirmed at 'AAA'; -- $26,000,000 class A-3 notes affirmed at 'AAA'; -- $19,500,000 class B-1L notes affirmed at 'BBB-'; -- $8,000,000 class B-2 notes affirmed at 'BB-'. INVESCO 2000 is a collateralized debt obligation consisting of high yield bonds and loans and managed by INVESCO Senior Secured Management, Inc. Fitch has reviewed in detail the performance of INVESCO 2000. In conjunction with this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since inception in October 2000, the INVESCO 2000 portfolio has been passing its overcollateralization tests on each payment date, but has experienced some deterioration. Notably, according to the most recent trustee report dated May 2, 2003, the class B-1L OC ratio experienced a reduction from its initial level of 114% to 109.7%. The portfolio has 4.8% in defaulted securities and 9.55% in securities rated 'CCC+' or lower (excluding defaults). The structure has several features that maintain value for all of the noteholders, one of which is the Additional Coverage Test. The ACT haircuts the value of 'CCC' assets capturing not only deterioration due to defaults, but also from rating migration. During the revolving period, when the ACT ratio falls below 107%, excess interest is diverted to purchase additional collateral. As of the May 2, 2003 trustee report the ACT ratio was 106.5%, and as a result approximately $2.3 million dollars was diverted to the purchase of new collateral. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the original ratings on the above referenced notes, still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. JAZZ PHOTO: Engages Cole Schotz as Bankruptcy Counsel ----------------------------------------------------- Jazz Photo Corp., wants to employ Cole, Schotz, Meisel, Forman & Leonard, P.A. as its bankruptcy counsel. Specifically, Jazz Photo tells the U.S. Bankruptcy Court for the District of New Jersey, Cole Schotz will: a) assist the Debtor, to the extent necessary, in preparing schedules of assets and liabilities and statement of financial affairs; b) provide legal advice to the Debtor with respect to its powers and duties as a debtor- in-possession in the continued operation of their business and management of their assets; c) prepare, on the Debtor's behalf, all necessary applications, answers, orders and other legal papers required in connection with the administration of the Chapter 11 estate; d) appear before the Bankruptcy Court (and any other court) to represent and protect the Debtor's interests and estate except as to matters assigned to other retained counsel; e) represent the Debtor in any adversary proceeding, either commenced by or against the Debtor; f) assist the Debtor in negotiating a plan or plans of reorganization with its creditors and perform all legal services necessary to obtain creditor approval, confirmation and implementation of such plan; and g) perform all other legal services for the Debtor, as a debtor-in-possession, which may be necessary. Jazz says it selected Cole Schotz because of the firm's considerable experience in business reorganizations and in other areas of law applicable to this Chapter 11 proceeding. The Debtor believes Cole Schotz is duly qualified to represent the Debtor as a debtor-in-possession in this proceeding. The professionals who will be responsible in this engagement and their current hourly rates are: Hugh M. Leonard Partner $450 per hour Michael D. Sirota Partner $425 per hour Gerald H. Gline Partner $425 per hour Stuart Komrower Partner $375 per hour Leo V. Leyva Partner $375 per hour Leonard M. Wolf Partner $350 per hour Ilana Volkov Partner $325 per hour Warren A. Usatine Partner $285 per hour Kenneth L. Baum Partner $275 per hour Franck D. Chantayan Associate $175 per hour Jarod M. Stern Associate $150 per hour Kristin S. Elliott Associate $125 per hour Alex R. Perez Associate $125 per hour Virginia M. Lane Paralegal $125 per hour Frances Pisano Paralegal $125 per hour Jazz Photo Corp., is engaged in the design, development, importation and wholesale distribution of cameras and other photographic products in North America, Europe and Asia. The Company filed for chapter 11 protection on May 20, 2003 (Bankr. N.J. Case No. 03-26565). Michael D. Sirota, Esq., and Warren A. Usatine, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million. J. CREW GROUP: Reports Slight Increase in May Revenue Results ------------------------------------------------------------- J.Crew Group, Inc., reported revenues for the four weeks ended May 31, 2003 of $57.4 million, compared to revenues of $56.6 million for the four weeks ended June 1, 2002, an increase of 1%. Comparable store sales for the Retail division decreased 8% for the four weeks ended May 31, 2003 compared to the same four week period last year. Net sales for the Direct division increased 9% for the comparable four week period. Revenues for the seventeen weeks ended May 31, 2003 were $218.9 million, compared to $223.7 million for the seventeen weeks ended June 1, 2002, a decrease of 2%. Comparable store sales for the Retail division decreased 10% for the seventeen week period in 2003, compared to the same period last year. Net sales for the Direct division were flat for the comparable seventeen week period. J.Crew Group, Inc., whose May 3, 2003 balance sheet shows a total shareholders' equity deficit of about $421 million, is a leading retailer of men's and women's apparel, shoes and accessories. As of May 31, 2003, the Company operated 154 retail stores, the J.Crew catalog business, jcrew.com, and 42 factory outlet stores. JC PENNEY: B-Level Ratings on Related Synthetic Deals Cut to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on CABCO Trust For J.C. Penney Debentures Series 1999-1 and CorTS Trust For J.C. Penney Debentures to 'BB+' from 'BBB-'. The lowered ratings follow the lowering of J.C. Penney Co. Inc.'s corporate credit and senior unsecured debt ratings May 29, 2003. Both synthetic issues are weak-linked to the underlying collateral, J.C. Penney Co. Inc.'s senior unsecured debt. The lowered ratings reflect the credit quality of the underlying securities issued by J.C. Penney Co. Inc. RATINGS LOWERED CABCO Trust For J.C. Penney Debentures Series 1999-1 $52.65 million trust certificates Rating Class To From Certs BB+ BBB- CorTS Trust For J.C. Penney Debentures $100 million corporate-backed trust securities (CorTs) certificates Rating Class To From Certs BB+ BBB- LD BRINKMAN: Turns to Corporate Revitalization for Advice --------------------------------------------------------- L.D. Brinkman Holdings, Inc., and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ Corporate Revitalization Partners, LLC as their Turnaround Managers and Consultants. Corporate Revitalization and its personnel represented Debtors prepetition and have considerable experience in advising corporate clients in business matters related to bankruptcy, corporate, tax, financing, transactional and contractual matters in the work-out and reorganization context. Mike Tinsley is the individual contemplated to primarily perform services on behalf of Corporate Revitalization. The Debtors agree to pay Corporate Revitalization for services rendered at the Firm's customary hourly rates, which are: Mike Tinsley Partner $240 per hour William Snyder Managing Partner $300 per hour Michael Manos Managing Partner $300 per hour The Debtors expect Corporate Revitalization to provide: a) assistance in the preparation of such budgets, cash flow management charts, and other financial reports as the Debtors shall be required to prepare for the orderly administration of these cases; b) consultation with and advice to the Debtors with respect to obtaining postpetition financing and/or use of cash collateral; c) consultation with and advice to the Debtors in connection with any plan of reorganization or liquidation that may be proposed in these cases; d) advice to the Debtors with respect to the myriad of other business and/or reorganization issues related to these cases, and to perform other services related thereto that are necessary and desirable; e) assistance in performing the Debtors' duties pursuant to Section 521 of the Code, assistance in filing the Debtors' cases and preparation of their schedules, completion of the Debtors' monthly operating reports and assisting the Debtors in operating their businesses under Chapter 11 of the Bankruptcy Code; and f) any and all other consulting services for the Debtors under its employment which are necessary and appropriate to faithfully discharge its duties to the debtor-in- possession. 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. LEAP WIRELESS: First Amended Plan & Disclosure Statement -------------------------------------------------------- Leap Wireless International Inc. presents the U.S. Bankruptcy Court for the Southern District of California with its First Amended Plan of Reorganization and Disclosure Statement. The material modifications to the Plan include: A. The global settlement of all Intercompany Claims and Litigation Claims provides that on the Effective Date, or as soon thereafter as practicable, the Holders of Old Vendor Debt Claims will receive from Cricket, on a Pro Rata basis, 96.5% of the New Leap Common Stock and New Senior Notes aggregating $350,000,000 in principal amount. B. On the Initial Distribution Date, and notwithstanding the occurrence of the Effective Date, Holders of Allowed Leap General Unsecured Claims, including the Holders of Old Leap Notes, will receive, on a Pro Rata basis, beneficial interests in the Leap Creditor Trust and the Leap General Unsecured Claim Cash Distribution. Leap will also transfer the 12-1/2% Senior Secured Claim Distribution of $200,000, on a Pro Rata basis, to the Holders of the 12- 1/2% Senior Secured Claims. C. On the later of the Effective Date and the Initial Distribution Date, Reorganized Leap will transfer to the Leap Creditor Trust the Leap Creditor Trust Assets and 3.5% of the New Leap Common Stock. D. After satisfaction of all Allowed Administrative Claims and Priority Claims against Leap, any remaining Cash held in reserve by Leap will be distributed to the Leap Creditor Trust. If any Leap Creditor Trust Assets are monetized on or after the Initial Distribution Date but prior to the Effective Date, these amounts will be transferred to the Leap Creditor Trust immediately after monetization. Holders of Old Leap Common Stock will receive nothing on account of their Interests. E. The Holders of Old Vendor Debt hold valid, perfected and duly enforceable security interests in all of the stock and assets of the License Holding Companies, the assets of CCH, the stock and assets of Cricket and the stock and assets of the Property Holding Companies. The only assets available to Holders of Old Leap Notes are the Leap General Unsecured Claim Cash Distribution and those assets that will be transferred to the Leap Creditor Trust for the benefit of these Holders pursuant to the Plan. There are no material assets available for any Holders of Unsecured Claims against Cricket, the License Holding Companies, the Property Holding Companies or the Other Subsidiaries. As a result, 96.5% of the New Leap Common Stock will be contributed by Leap to CCH and by CCH to Cricket, and then distributed to the Holders of Old Vendor Debt. All New Cricket Common Stock and New Other Subsidiary Common Stock will be held directly by Reorganized Leap for the benefit of the Holders of New Leap Common Stock. Leap also will contribute to CCH and CCH will contribute to Reorganized Cricket all of the New License Holding Company Common Stock. As a result, Reorganized Cricket will hold directly all New License Holding Company Common Stock and New Property Holding Company Common Stock. The issuance of all of the stock does not reflect any so-called "new value" plan; instead, the issuance reflects the economic realities of these Chapter 11 Cases. In other words, if the Holders of Old Vendor Debt foreclosed on their collateral, the Holders would own the Old License Holding Company Common Stock, the Old Cricket Common Stock and the Old Property Holding Company Common Stock. Moreover, the Intercompany Releases provided on account of Intercompany Claims do not take any value away from any Holder of a Claim against or Interest in Cricket, the License Holding Companies or the Property Holding Companies because any Intercompany Claims are pledged to the Holders of Old Vendor Debt and any recovery thereon would inure solely to the benefit of these Holders. F. On the Effective Date, or as soon as practicable thereafter, the Holder of Leap Class 1A GLH Claim will receive the GLH Collateral. G. On the Initial Distribution Date, or as soon as Practicable thereafter, each Holder of Leap Class 1B 12- 1/2% Senior Secured Claim will receive, in full satisfaction, settlement, release and discharge of and in exchange for its Claim, on a Pro Rata basis, the 12-1/2% Senior Secured Claim Distribution. H. On the Initial Distribution Date, or as soon as practicable thereafter, Leap will transfer the Collateral securing the Class 2A Other Secured Claim to the Holder of the Class 2 Claim. I. On the Initial Distribution Date, each Holder of an Allowed Leap Class 4 Claim will, in full satisfaction, settlement, release and discharge of and in exchange for the Claim, receive this treatment: a Pro Rata share of the beneficial interests in the Leap Creditor Trust and the Leap General Unsecured Claim Cash Distribution. On the Effective Date, Reorganized Leap will transfer to the Leap Creditor Trust the Leap General Unsecured Claim Equity Distribution and the Leap Creditor Trust Assets. After satisfaction of all Allowed Administrative Claims and Priority Claims, any remaining Cash held in reserve by Leap will be distributed to the Leap Creditor Trust. If any Leap Creditor Trust Assets are monetized on or after the Initial Distribution Date but prior to the Effective Date, these amounts will be transferred to the Leap Creditor Trust immediately after monetization. J. Each Other Subsidiaries Allowed Secured Claim in Class 1 Other Secured Claims will, in full satisfaction, settlement, release, discharge of and in exchange for such Claim, be treated as: The Other Subsidiary will transfer the Collateral securing the Class 1 Claim to the Holder of the Class 1 Claim. A free copy of the Debtors' First Amended Reorganization Plan is available at: http://bankrupt.com/misc/216_FirstAmendedPlan.pdf A free copy of the Debtors' First Amended Disclosure Statement is available at: http://bankrupt.com/misc/216_FirstAmendedDisclosureStatement.pdf (Leap Wireless Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Leap Wireless International Inc.'s 14.500% bonds due 2010 (LWIN10USR2) are trading at 7 cents-on- the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LWIN10USR2 for real-time bond pricing. MANUFACTURED HOUSING: S&P Drops Class IB-1 Notes Rating to CC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its 'CCC' rating on the class IB-1 certificates issued by Manufactured Housing Contract Trust, Series 2000-3 to 'CC'. This rating action reflects the reduced likelihood that the class IB-1 certificates will receive timely interest, as Standard & Poor's expects the class IB-1 certificates to experience a shortfall on the liquidation loss interest amount in the near future. On the May 20, 2003 remittance date, the class IB-1 certificates were written-down (referred to as the loss liquidation amount) to cover a portion of the class I-A principal shortfall experienced during that period. The priority of distributions is such that the class IB-1 certificates will likely receive interest on the adjusted balance. However, it is unlikely that the class IB-1 certificates will also receive full interest on the loss liquidation amount. On April 15, 2003, Standard & Poor's lowered its rating on the class IB-1 certificates to 'CCC' from 'BBB' and removed it from CreditWatch, reflecting a deterioration in the performance of the underlying collateral pool of manufactured housing loan contracts and the resulting deterioration in credit enhancement available to support the rated certificates. MDC CORP: Reaches Pact to Acquire Minority Shares of Maxxcom Inc ---------------------------------------------------------------- MDC Corporation Inc. of Toronto and Maxxcom Inc. have reached an agreement in principle under which MDC will acquire all of the outstanding common shares of Maxxcom not already owned by MDC in exchange for Class A subordinate voting shares of MDC. Currently, MDC owns approximately 36.1 million Maxxcom common shares or approximately 74% of the outstanding Maxxcom common shares. Maxxcom currently has approximately 49.1 million common shares outstanding, with minority shareholders owning approximately 13 million shares. The terms of the agreement in principle were negotiated between MDC and an Independent Committee of Maxxcom's Board of Directors established to consider and respond to a proposal made by MDC to take Maxxcom private. The agreement in principle is subject to negotiation of a definitive agreement between MDC and Maxxcom. Under the transaction, Maxxcom shareholders (other than MDC) will receive a number of Class A subordinate voting shares of MDC based on the "MDC Share Value", being the volume weighted average trading price of the outstanding MDC Class A subordinate voting shares on the Toronto Stock Exchange for the 20 trading days ending on the trading day preceding the date of a special meeting of Maxxcom shareholders to be held to consider the transaction, as follows: - if the MDC Share Value is above $10.18, Maxxcom shareholders will receive 1 MDC Class A subordinate voting share for every 5.5 Maxxcom shares they own - if the MDC Share Value is at or above $9.25 up to and including $10.18, Maxxcom shareholders will receive a number of MDC Class A subordinate voting shares representing $1.85 for every Maxxcom share they own - if the MDC Share Value is below $9.25, Maxxcom shareholders will receive 1 MDC Class A subordinate voting share for every 5 Maxxcom shares they own At $1.85 per share, the transaction represents a premium of 41% to the volume weighted average trading price of the common shares of Maxxcom on the Toronto Stock Exchange for the 20 trading days ended June 4, 2003 of $1.31. The transaction will proceed by way of a plan of arrangement that must be approved by court order and two-thirds of the votes cast at a special meeting of Maxxcom shareholders. Under applicable rules of the Ontario and Quebec securities commissions, the transaction must also be approved by a majority of votes cast by Maxxcom shareholders, other than MDC and certain shareholders related to MDC. Completion of the transaction will be conditional upon, among other things, obtaining the requisite court, shareholder and regulatory approvals. Upon completion of the transaction, Maxxcom will become a wholly-owned subsidiary of MDC. There can be no assurance that the transaction will be completed. "MDC's future lies with marketing services. We are going back to our roots but as a much larger and stronger entity with excellent assets and a strong financial position. The marketing services sector is beginning to show signs of renewed activity and we are excited about the tremendous opportunities presenting themselves. With the closing of the initial public offering of the Custom Direct Income Fund, MDC now has the financial resources necessary to support a growth strategy designed to capitalize on the significant opportunities in marketing services through accelerated internal growth and selective acquisitions," said Miles S. Nadal, Chairman, President and Chief Executive Officer of MDC. "Today, Maxxcom is the eighteenth largest marketing services firm in the world. We believe the company, with the benefit of direct involvement from MDC, is uniquely positioned to achieve our goal of being a top 10 firm globally within the next five years," added Nadal. "We believe that this proposal represents a significant opportunity for Maxxcom shareholders who will continue to participate in Maxxcom through MDC. This transaction will allow Maxxcom's management team to spend its time focussing on building the business and will free Maxxcom from the increasing costs of maintaining its public status. Maxxcom shareholders will also benefit from the increased liquidity of the MDC shares," said Nadal. The special meeting of Maxxcom shareholders will be held in Toronto, Ontario within 60 days. The transaction is expected to be completed no later than August 29, 2003. Further information concerning the transaction will be contained in the meeting materials to be mailed to Maxxcom shareholders. MDC is a publicly traded international business services organization with operating units in Canada, the United States, United Kingdom and Australia. MDC provides marketing communication services, through Maxxcom, and offers security sensitive transaction products and services in four primary areas: personalized transaction products such as personal and business cheques; electronic transaction products such as credit, debit, telephone & smart cards; secure ticketing products, such as airline, transit and event tickets, and stamps, both postal and excise. MDC Class A Subordinate Voting shares are traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ National Market under the symbol MDCA. Maxxcom, a subsidiary of MDC, is a multi-national business services company with operating units in Canada, the United States and the United Kingdom. Maxxcom is built around entrepreneurial partner firms that provide a comprehensive range of communications services to clients in North America and the United Kingdom. Services include advertising, direct marketing, database management, sales promotion, corporate communications, marketing research, corporate identity and branding, and interactive marketing. Maxxcom common shares are traded on the Toronto Stock Exchange under the symbol MXX. MDC, at March 31, 2003, disclosed a working capital deficit of about CDN$4.6 million. MORGAN STANLEY: S&P Rates Several 2003-IQ4 Mortgage Certificates ---------------------------------------------------------------- Morgan Stanley Capital I Trust 2003-IQ4, commercial mortgage pass-through certificates are rated by Fitch Ratings as follows: -- $178,879,000 class A-1 'AAA'; -- $449,730,000 class A-2 'AAA'; -- $18,194,000 class B 'AA'; -- $23,652,000 class C 'A'; -- $4,549,000 class D 'A-'; -- $727,767,609 class X-1 'AAA'; -- $667,249,000 class X-2 'AAA'; -- $7,278,000 class E 'BBB+'; -- $7,277,000 class F 'BBB'; -- $8,188,000 class G 'BBB-'; -- $8,187,000 class H 'BB+'; -- $3,639,000 class J 'BB'; -- $1,819,000 class K 'BB-'; -- $5,459,000 class L 'B+'; -- $1,819,000 class M 'B'; -- $1,819,000 class N 'B-'; -- $7,278,609 class O 'NR'; -- $10,000,000 class MM-A 'BB+'; -- $5,000,000 class MM-B 'BB+'. Classes A-1, A-2, B, C and D are offered publicly, while classes X-1, X-2, E, F, G, H, J, K, L, M, N, O, MM-A, and MM-B are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 109 fixed-rate loans having an aggregate principal balance of approximately $727,767,609, as of the cutoff date. NATIONSRENT INC: Seeks Go-Ahead for Three Financing Agreements -------------------------------------------------------------- NationsRent Inc., and its debtor-affiliates have identified a significant number of equipment agreements that were denominated as leases but are actually financing arrangements. In June and July 2002, the Debtors commenced adversary proceedings against certain of their equipment lessors seeking to recharacterize these equipment leases as financing agreements. In particular, the Debtors initiated separate adversary proceedings against Banc of America Leasing & Capital Inc., ICX Corporation and M Credit Inc., to recharacterize their prepetition agreements. The Debtors and the three lessors are parties to various leasing and financing arrangements within which the Debtors regularly obtain equipment for their rental fleet. Since that time, the Debtors and the lessors have actively been involved in arm's-length discussions regarding their obligations under the Prepetition Agreements. Consequently, the parties agree to enter into separate Master Inventory Financing, Security and Settlement Agreements. Under each Agreement, the lessors will sell the Debtors certain equipment that was subject to the Prepetition Agreements. The Debtors will finance the purchase of the inventory by borrowing these amounts: Lessor Amount ------ ------ Banc of America $2,862,232 ICX Corporation 2,995,000 M Credit 8,648,750 On the effective date of the sale, the lessors will make loans to the Debtors at 7% interest rate per annum. For each loan, the Debtors will issue to the lessors promissory notes, identifying the equipment subject to the loan. The Debtors will pay the interest quarterly in arrears starting July 1, 2003. To secure the Debtors' outstanding obligations under the Master Agreements and with respect to the Loans, the lessors will retain or acquire a security interest in the Inventory, including certain proceeds. The Master Agreements also contemplate the modification of the automatic stay to permit the lessors to: -- file necessary documents to perfect their interests and liens granted with respect to the Master Agreements; and -- on the occurrence of an event of default: (a) terminate the Master Agreements, each promissory note and any other documents and agreements in connection with the Loans; (b) declare the Debtors' outstanding obligations under the Master Agreements and each note immediately due and payable; (c) exercise the rights of a secured party under the Uniform Commercial Code to take possession and dispose of the collateral under the Master Agreement and the Loans; and (d) exercise any other rights and remedies under applicable law. The Master Agreements also contemplate the termination of the Debtors' Prepetition Agreements with the lessors on the effective date of the sale. As a consequence, each lessor will have an allowed unsecured non-priority claim on account of the deficiency claims and other general unsecured claims against the Debtors pursuant to the Prepetition Agreements: Lessor Amount ------ ------ Banc of America $1,127,904 ICX Corporation 3,021,199 M Credit 4,004,125 The lessors will have no further claims. On the Effective Date, each party will also fully release the other from any and all causes of action, liabilities and obligations under the Prepetition Agreements. The Debtors also release any avoidance claims against the lessors. They will also dismiss the adversary proceeding with prejudice. Michael J. Merchant, Esq., at Richards, Layton & Finger, P.A., tells the Court that the resolution of the adversary proceedings in accordance with the Master Agreements is important. If the litigation is not resolved consensually, the Debtors would be required to further prosecute the dispute, causing them to expend significant time and resources. In comparison, Mr. Merchant notes that the cost to the Debtors in complying with the Agreements' terms is reasonable. The purchase of the Inventory is at a reasonable price and on reasonable terms. In addition, the monthly payments due to the lessors under the Master Agreement will be significantly less than what the Debtors are currently paying the lessors under the Prepetition Agreements. Of equal importance, the Debtors will also be able to continue to own and utilize the purchased Inventory at the end of the Master Agreements' term. Mr. Merchant further states that the secured financing terms are necessary. The lessors are unwilling to provide financing on unsecured, administrative expense basis. The granting of the security interest was essential in obtaining the favorable terms for the purchase of the Inventory. Accordingly, the Debtors ask the Court to approve the Master Agreements and the transactions contemplated under them. (NationsRent Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) NORTHWEST AIRLINES: Flies 5.34B Revenue Passenger Miles in May -------------------------------------------------------------- Northwest Airlines (Nasdaq: NWAC) announced a systemwide May load factor of 75.4 percent, 3.4 points below May 2002. Systemwide, Northwest flew 5.34 billion revenue passenger miles and 7.08 billion available seat miles in May 2003, a traffic decrease of 12.8 percent on an 8.9 percent decrease in capacity versus May 2002. May traffic results continued to be negatively impacted by concerns over SARS (Severe Acute Respiratory Syndrome). Northwest Airlines is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,500 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents. In 2002, consumers from throughout the world recognized Northwest's efforts to make travel easier. A 2002 J.D. Power and Associates study ranked airports at Detroit and Minneapolis/St. Paul, home to Northwest's two largest hubs, tied for second place among large domestic airports in overall customer satisfaction. Business travelers who subscribe to OAG print and electronic flight guides rated nwa.com as the best airline Web site. Readers of TTG Asia and TTG China named Northwest "Best North American airline." For more information, visit the Company's Web site at http://www.nwa.com NORTHWEST PIPELINE: Completes Exchange Offer for 8.125% Sr Notes ---------------------------------------------------------------- Northwest Pipeline Corporation, a subsidiary of The Williams Companies, Inc. (NYSE: WMB), has successfully completed its offer to exchange its 8.125 percent Exchange Senior Notes due March 1, 2010, which are registered under the Securities Act of 1933, for outstanding 8.125 percent Series A Senior Notes due March 1, 2010, that were issued in a private offering on March 4, 2003. At the time of the issuance of the Series A Senior Notes in March, Northwest Pipeline agreed to exchange them for registered notes. At the close of business on June 3, 2003, $174.9 million, or approximately 99.9 percent, of the 8.125 percent Series A Senior Notes had been tendered for exchange for a like amount of the new 8.125 percent Exchange Senior Notes pursuant to Northwest's exchange offer. The exchange offer expired at 5 p.m. Eastern time on Wednesday, May 28, 2003. The terms of the new Exchange Senior Notes are substantially identical to the terms of the Series A Senior Notes issued in March 2003, except that the Exchange Senior Notes have been registered under the Securities Act of 1933, and the transfer restrictions, registration rights and liquidated damages provisions relating to the Series A Senior Notes do not apply to the Exchange Senior Notes. As previously reported in Troubled Company Reporter, Fitch Ratings expected to assign a 'BB-' rating to Northwest Pipeline Corp.'s proposed $150 million issuance of 144A senior notes, due 2010. The rating is currently on Rating Watch Evolving, as are the outstanding $360 million 'BB-' senior unsecured notes of NWP. NWP is one of three Federal Regulatory Energy Commission regulated interstate gas pipelines wholly owned by The Williams Companies, Inc., senior unsecured rated 'B-', Rating Watch Evolving. Proceeds from the proposed senior note issuance will be used for general corporate purposes at NWP, including the funding of expansion related capital expenditures. The ratings for NWP incorporate its strong individual operating and financial profile, offset by the structural and functional ties between NWP and its financially stressed parent WMB. NWP is a participant in WMB's daily cash management program under which NWP makes periodic advances to WMB. Under a pending Notice of Proposed Rule Making at FERC, restrictions would be placed on an interstate pipeline's ability to participate in cash management or money pool arrangements based on certain credit criteria. Fitch believes NWP would be able to adequately fund its operations if it were prohibited from participating in WMB's cash management program. In addition, NWP's debt agreements, including proposed terms for the pending note issuance, provide limited restrictions on NWP's ability to make upstream cash dividends and/or inter-company advances to NWP. NRG ENERGY: US Trustee Appoints Official Unsecured Panel Members ---------------------------------------------------------------- The United States Trustee for Region II, acting pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code, appointed a 9-member Official Committee of Unsecured Creditors in NRG Energy, Inc.'s chapter 11 cases. The nine Committee members who will represent all unsecured creditors are: Wilmington Trust Company, as Trustee 1100 North Market Street Wilmington, DE 19890 Attn: James D. Nesci Phone: (302) 651-1000 Fax: (302) 651-8937 Metropolitan Life Insurance Company 10 Park Avenue Morristown, NJ 07962-1902 Attn: Lisa Glass, Esq. Phone: (973) 355-4366 Fax: (212) 251-1563 New York Life Investment Management, LLC on behalf of New York Life Insurance Company and New York Life Insurance and Annuity Corporation 51 Madison Avenue Credit Administration, 2nd Floor New York, New York 10010 Attn: Ronald G. Brandon, Vice President Phone: (212) 576-7585 Fax: (212) 447-4166 PPM America, Inc. (As management for Jackson National Life Insurance) 225 West Wacker Drive Suite 1200 Chicago, IL 60606 Attn: James Schaeffer, Vice President Phone: (312) 634-2500 Fax: (312) 634-0728 Matlin Patterson Global Opportunities Partners L.P. 520 Madison Avenue New York, New York 10022 Attn: Frank S. Plimpton or Ramon Betolaza Phone: (212) 651-9550 Fax: (212) 651-4011 Credit Suisse First Boston 11 Madison Avenue New York, New York 10010 Attn: Carol Flaton, Managing Director Phone: (212) 325-9255 Fax: (917) 326-8081 ABN Amro Bank N.V. 350 Park Avenue 2nd Floor New York, New York 10022 Attn: Neil J. Bivona, Senior Vice President and/or Steven C. Wimpenny, Group Senior Vice President Phone: (212) 251-3675 Fax: (212) 251-3685 XL Capital Assurance Inc., as Controlling Party/attorney-in-fact 1221 Avenue of the Americas New York, New York 10020 Attn: Richard P. Heberton, Senior Managing Director Phone: (212) 478-3400 Fax: (212) 478-3587 Niagara Mohawk Power Corporation 1125 Broadway Albany, New York 12245 Attn: Gloria Kavanah Phone: (518) 433-5221 Fax: (518) 433-5220 Pamela J. Lustrin, Esq., is the attorney from the U.S. Trustee's Office assigned to NRG's chapter 11 case. (NRG Energy Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) PACIFIC CROSSING: Court OKs $63 Million Sale to Pivotal Telecom --------------------------------------------------------------- Pivotal Private Equity announced that the U.S. Bankruptcy Court has approved the sale of Pacific Crossing Ltd. and its subsidiaries to Pivotal Telecom LLC, for $63 million. Judge Peter J. Walsh, chief judge of the U.S. Bankruptcy Court for the District of Delaware, has signed the sale order that approves Pivotal Telecom as the buyer. The sale is expected to close by the end of the year. Pivotal Private Equity, based in Phoenix, formed Pivotal Telecom for the purpose of acquiring PCL. PCL, a former subsidiary of Global Crossing, operates the PC-1 fiber optic telecommunications network connecting Japan with the United States. The network, completed in 2000 at a cost of more than $1.35 billion, provides a variety of voice, Internet and data communications services, and includes two subsea fiber optic cable systems and four landing stations located in the United States and Japan. "This acquisition is key to our strategy of investing in undervalued telecom assets," said Jahm Najafi, chief executive officer of Pivotal Private Equity. "The network is currently underutilized, a condition that we will be working vigorously to change once the transaction has closed." PCL and its subsidiaries filed for Chapter 11 protection with the U.S. Bankruptcy Court for the district of Delaware on July 19, 2002. On April 21, 2003, Pivotal Telecom signed an Asset Purchase Agreement to acquire the assets of PCL in an open auction from Pacific Crossing Limited, PC Landing Corp., Pacific Crossing UK Ltd. and PCL Japan Ltd. "Enhancing access to both Asian and U.S. markets is key to our operating strategy," said Robert Woog, Pivotal Telecom's newly appointed chief executive officer. "We will be a participant in the tremendous growth of Asian markets, providing the infrastructure that will create a gateway to the U.S. and meet the demand for bandwidth." Prior to the closing of the transaction later this year, Pivotal Telecom will seek the transfer of Pacific Crossing's Federal Communications Commission network operating license and other permits. Woog is founder and managing director of Transcom International, a strategic technology services and consulting firm headquartered in South Orange, N.J. Prior to launching his own firm, he was senior vice president for strategic global development for Global Crossing Ltd., New York City, responsible for strategic business alliances with major carriers and consortiums. Woog also was senior vice president of network development for IXnet, a New York City-based provider of IP- based network services to the global financial industry, responsible for all international operations, including network expansion, regulatory issues and strategic alliances. His career in telecommunications includes positions with AT&T, Positron Industries Inc., and Communications Techniques Inc. Pivotal Private Equity also announced the appointment of Daniel E. Campbell as executive vice president of marketing and sales for the newly created entity. Campbell has more than 38 years of experience in the international telecommunications industry, spanning operations, engineering, finance, business development, product management and international facilities planning and contract negotiations. He served in many capacities at AT&T, from district manager for International Dedicated Services to product marketing manager of Global Data Services. He also held the position of director of International Cable Management for AT&T and most recently served as the chairman and co-chairman of the Management Committee/General Committee of a number of transpacific cable projects, including TPC-5, China-U.S. Cable Network and Japan-U.S. Cable Network. He is the founder of Global Fiber Consulting LLC, and co-founder of Dolphin Networks, a developer of fiber optic networks. Pacific Crossing Ltd. and its subsidiaries operate the PC-1 undersea fiber optic cable system. The PC-1 system, which represents the state-of-the-art in subsea cable installations, is a self-healing fiber optic telecommunications network with a bi-directional design capacity of 640 gigabytes per second and is approximately 20,900 kilometers or 13,000 miles in length. The system has landing stations in Grover Beach, Calif.; Harbour Pointe, Wash.; Ajigaura, Japan; and Shima, Japan, and currently operates at a capacity of 180 Gbps. Pivotal Private Equity is a provider of equity for middle market corporate acquisitions, recapitalizations of turnaround and under-performing companies, as well as growth capital financings primarily in telecommunications, energy, manufacturing, consumer products and leisure industries. The firm is a wholly owned subsidiary of Pivotal Group, an institutionally based diversified real estate investment and development firm widely recognized for its ability to create high-quality resort, residential and business environments. Major acquisitions by Pivotal Group include Ritz-Carlton, Phoenix; Century Plaza Hotel & Spa, Los Angeles; St. Regis Hotel, Los Angeles; and Red Mountain Spa, St. George, Utah. For more information about Pivotal Group and Pivotal Private Equity, visit http://www.pivotalgroup.com PACIFIC GAS: Settles Negligence Dispute with Rombauer Cellars ------------------------------------------------------------- In June 2001, Frank Rombauer Cellars, Federal Insurance Company and Vigilant Insurance Company filed a complaint for negligence against Pacific Gas and Electric Company and certain other parties before the Napa County Superior Court in California. The Claimants held the defendants responsible for a June 15, 2000 fire at the Rombauer winery in Napa County. With respect to PG&E, the Claimants alleged that the Debtor failed to inspect the gas appliances and, thus failed to detect that a gas pressure regulator serving a water heater was not vented to the outside of the building. Had it inspected the appliances, the Claimants argued that PG&E would have noted the lack of a vent pipe on the regulator. PG&E would have been able to advise that the regulator be vented to the outside. The regulator failed in a small fire, and its lack of outside venting set off the conflagration. Rombauer incurred $27,000,000 in damages to both the building and 90,000 cases of wine stored. In filing the civil action, the Claimants asked the Bankruptcy Court to lift the automatic stay imposed on PG&E's case, which request was granted. According to Kimberly A. Bliss, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, the issue in the Napa Action against PG&E is whether PG&E was required by statute, rule or its own standard practices to conduct an inspection of the Rombauer appliances when it increased the gas pressure to the winery. Although the applicable California Public Utilities Commission General Order provides that utilities have no duty to inspect or maintain their gas systems beyond the meter unless asked to do so by the customer, Ms. Bliss notes that other rules, appellate decisions and PG&E's own standard practices can be read to require inspection of a customer's delivery system and appliances for safe operation whenever there is a significant change in PG&E's service or the customer's equipment. Ms. Bliss points out that raising the pressure from a quarter to three pounds, as was done in the Rombauer's case, constituted a change in gas supply and thus, a "significant change in service" requiring inspection of Rombauer's delivery system and appliances pursuant to PG&E's own standard practices. If the Napa Action were to proceed through trial, PG&E anticipates that a jury could find it obligated to inspect the gas appliances. Accordingly, PG&E could be ordered by the jury to pay hefty fines. To avoid unnecessary litigation and additional costs and delay, PG&E and the Claimants decide to settle the action. As approved by the Court, PG&E and the Claimants agree that the Claimants will file a formal proof of claim in PG&E's bankruptcy case for the portion of the $1,500,000 settlement amount paid to them. The Claim will be treated and paid like other similar allowed, unsecured, non-priority tort claims. The parties also agree that the Napa Action and the Claimants' stay motion constitute an informal proof of claim. The Claimants will dismiss the Napa Action with prejudice in consideration of the allowance of the $1,500,000 Claim. (Pacific Gas Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 609/392-0900) PENN TRAFFIC: Donlin Recano Appointed as Notice and Claims Agent ---------------------------------------------------------------- The Penn Traffic Company, and its debtor-affiliates want the U.S. Bankruptcy Court for the Southern District of New York to appoint Donlin Recano & Company, Inc., as Notice and Claims Agent in these chapter 11 cases. Donlin Recano is a data processing firm that specializes in, among other things, acting as claims and noticing agent in chapter 11 cases. As Notice and Claims agent, Donlin Recano will render the services with respect to all noticing under any applicable rule or bankruptcy procedure: (i) notice of formation of creditors committee; (ii) any meeting of creditors under section 341 of title 11 of the United States Code; and (iii) other miscellaneous notices to any entities, not necessarily creditors, that the Bankruptcy Court, U.S. Trustee, or the Debtors may deem necessary for an orderly administration of these chapter 11 cases. The Debtors believe that such assistance is necessary, given the thousands of creditors they have in these cases. Carole G. Donlin discloses that Donlin Recano will bill the Debtors in their current hourly rates, which average at $120 per hour. Donlin & Recano professionals' hourly rates range from $65 per hour to $245 per hour for principals. The Penn Traffic Company, one of the leading food retailers in the Eastern United States, filed for chapter 11 protection on May 30, 2003, (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $736,532,614 in total assets and $736,532,610 in total debts. PREMCOR INC: Prices PRG Unit's $300-Mill. Senior Debt Offering -------------------------------------------------------------- Premcor Inc. (NYSE: PCO) that its wholly-owned subsidiary, The Premcor Refining Group Inc., has priced an offering of $300 million in aggregate principal amount of 7.5% senior notes due 2015 at par in an offering to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933 and outside the United States in compliance with Regulation S. Net proceeds to the company from the offering are expected to be approximately $295 million. The offering is expected to close on June 10, 2003, subject to customary conditions. PRG intends to use the net proceeds from the offering for capital expenditures, including the recently announced plans to expand its Port Arthur, Texas refinery, for acquisitions and for working capital and general corporate purposes. 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 says the Rating Outlook for the debt of PUSA, PRG and PAFC remains Positive. PREMCOR REFINING: S&P Rates New $250MM Senior Unsec. Debt at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to independent petroleum refiner Premcor Refining Group Inc.'s proposed $250 million senior unsecured notes due 2015. At the same time, Standard & Poor's affirmed its ratings on Premcor and parent Premcor USA Inc. The outlook has been revised to negative from stable. Old Greenwich, Connecticut-based Premcor has about $1.43 billion of debt outstanding, pro forma for the $250 million in notes. "The negative outlook on Premcor reflects Standard & Poor's concern that the company is increasing its debt leverage during a time when the company is facing significant capital outlays through 2005 that could further increase its debt leverage," said Standard & Poor's credit analyst Steven K. Nocar. "The proposed offering increases Premcor's debt leverage to about 56%, compared with 53% as of March 31, 2003," he continued. Premcor is increasing its debt leverage to invest between $200 million and $220 million to expand its Port Arthur refinery. Standard & Poor's believes that this expansion has attractive economics and ultimately could be beneficial to Premcor's credit quality. However, Standard & Poor's is concerned that debt leverage could increase further, if the industry experiences a cyclical downturn before it can complete its required spending for clean-fuels expenditures. Over the next three years, Premcor's capital expenditure budget contemplates about $1.4 billion in capital spending, which includes $528 million for clean-fuels spending and $220 million for the Port Arthur expansion project. In contrast, Premcor's trough operating cash flow is estimated to be less than $150 million. Standard & Poor's could lower Premcor's ratings if adverse industry conditions along with the company's capital spending plans increase debt leverage and materially reduce Premcor's available cash resources. The outlook could be revised to stable if the company proceeds with its spending plan while preserving its financial flexibility and debt leverage. If Premcor were to engage in a transaction that materially improves credit quality, Standard & Poor's will reevaluate Premcor's ratings. The negative outlook reflects the potential for a ratings downgrade, if Premcor materially increases debt leverage to fund its significant capital outlays through 2005 or other initiatives. Standard & Poor's believes that Premcor's management intends to improve its credit ratings, but positive ratings actions are unlikely without a deleveraging transaction. If Premcor announces a transaction that materially deleverages the company, Standard & Poor's will reevaluate the appropriateness of the ratings and outlook. PREMCOR REFINING: Fitch Assigns BB- to New $250M Senior Notes ------------------------------------------------------------- Fitch Ratings has assigned the senior unsecured debt rating of 'BB-' for Premcor Refining Group to the proposed $250 million offering of senior notes by the company. Proceeds from the offering will be used for ongoing capital expenditures including the recently announced expansion of the Port Arthur refinery, acquisitions and general corporate purposes. The new notes will rank equally with PRG's existing senior unsecured debt. The Rating Outlook for PRG's debt remains Positive. On May 20, 2003, Premcor Inc. announced plans to expand the crude capacity of the company's Port Arthur refinery from 250,000 barrels per day (bpd) to 325,000-bpd of heavy (80%) and medium (20%) sour crude. The project will also include an expansion of the refinery's coker capacity from 80,000 bpd to 105,000 bpd and hydrocracker from 35,000 bpd to 45,000 bpd. The refinery will also have the flexibility to process up to 300,000 bpd with 100% heavy sour crude. The project is estimated to cost between $200 million and $220 million and be completed by the end of 2005. Although the proposed debt offering will increase leverage, Fitch expects Premcor to continue to reduce leverage going forward as the company's credit profile continues to evolve. Management has publicly committed to conservatively financing its ongoing growth strategy in an effort to improve its credit ratings. Fitch expects that the company's next sizable acquisition will be financed with a significant component of equity. Fitch will continue to follow developments with the company over the next several months and take appropriate rating actions as necessary. The Port Arthur expansion announcement follows closely behind the company's acquisition of the Memphis refinery in March. To finance the Memphis acquisition, Premcor Inc. issued $306 million of common stock and $525 million of new unsecured senior notes at the PRG level. Proceeds from the offerings were also used to pay off the $240 million of floating rate term loans at PRG and the remaining $40 million of subordinated debentures at Premcor USA. At March 31, 2003, balance sheet debt under Premcor Inc. totaled approximately $1.18 billion. Fitch rates the debt of Premcor Refining Group (PRG) and Port Arthur Finance Corp. as follows: PRG -- $750 million secured credit facility 'BB'; -- Senior unsecured notes 'BB-'; -- Senior subordinated notes 'B'. PAFC -- Senior secured notes 'BB'. With this press release, Fitch is withdrawing the subordinated debt rating at Premcor USA. The Rating Outlook for the debt of PRG and PAFC remains Positive. Premcor is a large independent refiner of petroleum products in the United States. With the acquisition of the Memphis refinery, Premcor operates three refineries with a combined capacity to process 610,000-bpd of crude oil. PRINCETON INSURANCE: Counterparty Credit Rating Dives to Bpi ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Princeton Insurance Co. to 'Bpi' from 'BBBpi' because of adverse reserve development in 2002 and 2001, which significantly affected the company's operating performance and capitalization. "Standard & Poor's believes the company will continue to be challenged in the deteriorating medical malpractice market within its primary state of business, New Jersey," said Standard & Poor's credit analyst Tom E. Thun. The prior rating on the company reflected the benefits from implied group support from the Hum Group of Co. Inc. Because of Princeton's poor performance, the benefit of implied group support has been removed. "Reserve deficiencies in its medical malpractice and workers' compensation business weighed heavily on its year-end capitalization," Thun added, "and future underwriting profitability to regain those losses remains questionable in the medium term." Headquartered in Princeton, New Jersey, the company primarily underwrites medical malpractice (64% of direct premiums) and workers' compensation coverages (28%). New Jersey, Pennsylvania, and New York contribute more than 75% of total direct premium revenue. RIVIERA HOLDINGS: Has Until Sept. 24 to Meet Nasdaq Requirements ---------------------------------------------------------------- Riviera Holdings Corporation (Amex: RIV) announced that the American Stock Exchange has granted the Company an extension of time to September 24, 2004 to regain compliance with the Exchange's listing standards. Riviera previously reported in February 2003 that it had received notice from the Amex indicating that it was below certain of the Exchange's continued listing standards with regard to net worth and losses from operations, as set forth in Sections 1003(a)(i-iii) of the Amex Company Guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange and, in March 2003, presented its plan to the Exchange. On May 30, 2003, the Exchange notified the Company that it accepted the Company's plan of compliance and granted the Company an extension of time to September 24, 2004 to regain compliance with the continued listing standards. The Company will be subject to periodic review by Exchange Staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from The American Stock Exchange. Riviera Holdings Corporation -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $18 million -- owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera is traded on the American Stock Exchange under the symbol RIV. SBARRO INC: Poor Performance Prompts S&P to Lower Ratings to B- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Sbarro Inc. to 'B-' from 'B+'. The outlook is negative. Melville, New York-based Sbarro had $268 million of debt outstanding at April 20, 2003. "The downgrade is based on the company's continued poor operating performance that has weakened cash flow protection measures," said Standard & Poor's credit analyst Robert Lichtenstein. Same-store sales fell 7.1% in the first quarter of 2003, after declining 4.8% in all of 2002; EBITDA margins for the 12 months ended April 20, 2003, decreased to 14% from 17% the year before. As a result, EBITDA fell 64% to $5 million in the first quarter of 2003. Operating performance over the past two years has been negatively affected by a reduction in shopping mall traffic related to the general economic downturn. About 70% of the company's restaurants are located in shopping malls. Cash flow protection measures are very weak, with lease-adjusted EBITDA coverage of interest of only 1.3x for the 12 months ended April 20, 2003, compared with 1.5x the year before. Standard & Poor's is concerned that continued operating weakness could further pressure cash flow protection measures. In addition, covenants currently provide very limited cushion. The ratings on Sbarro reflect the risks associated with operating in the highly competitive restaurant industry, its vulnerability to a reduction in mall traffic, and its highly leveraged capital structure. These risks are partially offset by the company's established brand of Italian specialty foods. Liquidity is adequate with $39 million in cash and a $30 million revolving credit facility, of which $28.1 million was available as of April 20, 2003. Sbarro received a waiver on its credit agreement for the first quarter of 2003, as the company was not in compliance with its covenants. Covenants currently provide very limited cushion. The revolving credit facility matures in September 2004; the company's senior notes mature in 2009. Free operating cash flow was $21 million in 2002, as management reduced capital expenditures and investments in other concepts to $11 million, from $23 million the year before. Standard & Poor's expects that operating cash flow and cash balances will be adequate to service Sbarro's debt and fund its capital expenditures in 2003. The company has contingent liabilities relating to investments in other concepts of about $16 million. The negative outlook reflects Standard & Poor's concern that Sbarro will be challenged to stem its sales decline in the current economic environment. If credit measures continue to weaken or if its liquidity position deteriorates, the ratings could be lowered. Sbarro Inc.'s 11.000% bonds due 2009 (SBA09USR1), DebtTraders says, are trading between 84 and 88 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=SBA09USR1 for real-time bond pricing. SECURITY INTELLIGENCE: Requires Capital Infusion to Fund Ops. ------------------------------------------------------------- CCS International, Ltd. and its wholly owned subsidiaries are engaged in the design, manufacture and sale of security and surveillance products and systems. CCS is a Delaware corporation, organized in 1992. The Company purchases finished items for resale from independent manufacturers, and also assembles off-the-shelf electronic devices and other components into proprietary products and systems at its own facilities. The Company generally sells to businesses, distributors, government agencies and consumers through five retail outlets located in Miami, Florida; Beverly Hills, California; Washington, DC; New York City, and London, England and from its showroom in New Rochelle, New York. On April 17, 2002, CCS merged with Security Intelligence Technologies, Inc., a Florida corporation, and became a wholly owned subsidiary of SIT. The merger has been accounted for as a reverse acquisition, since the management and stockholder of CCS obtained control of the merged entity after the transaction was completed. Under reverse acquisition accounting, CCS is considered the accounting acquirer and SIT (then known as Hipstyle.com, Inc.) is considered the acquired company. Inasmuch as SIT had no substantive assets or operations at the date of the transaction, the merger has been recorded as an issuance of CCS stock to acquire SIT, accompanied by a recapitalization, rather than as a business combination. The Company incurred net losses of $2,138,632 for the nine months ended March 31, 2003 and $2,399,659 for the year ended June 30, 2002. In addition, at March 31, 2003, the Company had a working capital deficit of $4,146,490 and a deficiency in stockholders' equity of $3,920,341. The Company is also a defendant in material and costly litigation, which has significantly impacted liquidity. The Company requires additional financing which may not be readily available. The Company's bank facility has terminated, and the only source of funds other than operations has been loans from the Company's chief executive officer. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with respect to these matters include to settle vendor payables wherever possible, a reduction in operating expenses, and continued financing from the chief executive officer in the absence of other sources of funds. Management cannot provide any assurance that its plans will be successful in alleviating its liquidity concerns and bringing the Company to the point of profitability. Revenues for the nine months ended March 31, 2003 (the "2003 Period") were $3,069,443 a decrease of $1,052,221, or 25.5%, from revenues of $4,121,664 for the nine months ended March 31, 2002 (the "2002 Period"). The decrease is primarily a result of a decreased marketing effort caused by limited resources. In particular, the Company decreased its advertising and promotional expenditures and attended fewer international trade shows. As long as it does not have the resources to market its products effectively, the Company will have a difficult time increasing revenues. In addition, its financial condition and losses may have affected the willingness of customers to purchase products from the Company. Cost of sales decreased by $440,325, or 26.6%, to $1,212,461 in the 2003 Period from $1,652,786 in the 2002 Period. Cost of sales as a percentage of product sales decreased to 39.5% in the 2003 Period from 40.1% in the 2002 Period reflecting an improvement in product mix. Net loss increased by $977,714, or 84.2%, to $2,138,632 in the 2003 Period from $1,160,918, in the 2002 Period. Security Intelligence Technologies requires significant working capital to fund its operations. At March 31, 2003 the Company had cash of $70,751 and a working capital deficit of $4,146,490. Accounts payable and accrued expenses at March 31, 2003 was $2,883,430. As a result of continuing losses, the Company's working capital deficiency has increased. The Company funded its operations using vendor credit, including delays in paying accounts payable, and customer deposits. Because it has not been able to pay some of its trade creditors in a timely manner, many of its trade creditors require cash in advance or on delivery of goods. The Company has been subject to litigation and threats of litigation from its trade creditors and it has used common stock to satisfy some of its obligations to trade creditors. Certain shares issued by the Company to settle debt obligations contain a price guarantee that requires the Company to settle in cash any difference between the original face amount of the debt and proceeds from the creditor's subsequent sale of the shares. As a result, the Company has contingent obligations to some of these creditors. With respect to 577,000 shares of common stock issued during the nine months ended March 31, 2003 and the last quarter of the fiscal year ended June 30, 2002, the market value of the common stock on March 31, 2003 was approximately $326,243 less than the guaranteed price. The Company's accounts payable and accrued expenses increased from $2,030,866 at June 30, 2002 to $2,883,430 at March 31, 2003 reflecting the inability to pay creditors current. The Company also had customer deposits and deferred revenue of $2,016,660 at March 31, 2003 that relate to payments on orders which had not been filled at that date. The Company has used its advance payments to enable it to continue operations. If its vendors do not extend to the Company the necessary credit the Company may not be able to fill current or new orders, which may affect the willingness of clients to continue to place orders with the Company. Since the completion of the merger in April 2002 the Company has sought, and been unsuccessful, in its efforts to obtain funding. Because of its losses, it is not able to increase its borrowing. The bank facility terminated on November 1, 2002. To date, Security Intelligence Technologies does not have an agreement with respect to a renewal of a credit facility with this lender or any agreement with any replacement lender. The failure to obtain a credit facility could materially impair the Company's ability to continue in business, and management has indicated that there is no assurance that the Company will be able to obtain the necessary financing. The main source of funds other than the bank facility has been from vendor credit and loans from its chief executive officer. Because of both its low stock price and its losses, the Company has not been able to raise funds through the sale of equity securities. It may not be able to obtain any additional funding, and, if unable to raise funding, the Company may be unable to continue in business. Furthermore, if unable to raise funding in the equity markets, its stockholders will suffer significant dilution and the issuance of securities may result in a change of control. Management cannot provide any assurance that its plans will be successful in alleviating its liquidity concerns and bringing the Company to the point of profitability. Management has stated that if unsuccessful in these efforts it may be necessary for Security Intelligence Technologies to seek protection under the Bankruptcy Code. SORRENTO NETWORKS: Completes Capital & Corp. Restructuring Plan --------------------------------------------------------------- Sorrento Networks Corporation (Nasdaq:FIBR), a leading supplier of intelligent optical networking solutions for metro and regional applications, has completed the capital and corporate restructuring plan that was approved by shareholders on May 29, 2003. "This is an exciting day in the history of Sorrento," stated Phil Arneson, chairman and chief executive officer of Sorrento Networks. "This comprehensive restructuring gives us a new beginning. It dramatically improves our balance sheet, increases our sales opportunities with major customers and provides flexibility to raise the additional capital we need. In addition, the contemplated merger of our two operating subsidiaries will simplify our corporate structure. We can now focus all of our energy on growing the business and maximizing shareholder value." Arneson continued, "It has taken many months of tireless effort by a dedicated management team to make this restructuring plan a reality. We have overcome every obstacle, defied the odds against us, and have emerged from this process stronger than ever -- poised for growth. We have great technology, a sound product strategy, and a loyal customer base. We have the right people in place to accomplish wonderful things in the future. I want to thank Sorrento's loyal employees again for their dedication, and the Series A Preferred shareholders and debenture holders for their cooperation with and confidence in Sorrento." "We are dedicated to the future prosperity of Sorrento," concluded Arneson. Restructuring Plan Summary The Restructuring Plan in its entirety is described in the proxy statement that was mailed to shareholders on April 15, 2003. In brief, the Company's $81 million in debt obligations consisting of $32.2 million in convertible bonds and $48.8 million in an outstanding "put" from the Series A Preferred shareholders have been converted into common shares of the Company and into $12.5 million in new secured convertible debentures maturing in August 2007. The Senior Convertible Debenture Holders and Series A Preferred Shareholders have received common shares and new convertible debentures, which, in the aggregate, represent approximately 87.5% of the Company's common stock on a "diluted basis," a term that is also described in the proxy statement. Existing shareholders retained 7.5% of the common stock of the Company on the same diluted basis and will receive non- transferable warrants to purchase approximately 5% of the Company's common stock. In addition, the Company has reincorporated in the State of Delaware, and will soon merge its two operating subsidiaries, Sorrento Networks, Inc. and Meret Communications, Inc., into itself. PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (In Thousands) Historical Proforma Proforma April 30, April 30, 2003 Adjustments 2003 ---------- ----------- --------- TOTAL CURRENT ASSETS 26,370 - 26,370 TOTAL CURRENT LIABILITIES 64,040 (48,800) 15,240 TOTAL STOCKHOLDERS' EQUITY (39,587) 55,640 16,053 Nasdaq Listing Completion of the restructuring plan has satisfied the shareholder equity requirement for continued listing on the Nasdaq National Market. As noted above, as a result of the consummation of the restructuring transaction, the Company now has a positive shareholders' equity in excess of $10 million. Sorrento Networks, headquartered in San Diego, is a leading supplier of intelligent optical networking solutions for metro and regional applications worldwide. Sorrento Networks' products support a wide range of protocols and network traffic over linear, ring and mesh topologies. Sorrento Networks' existing customer base and market focus includes communications carriers and service providers in the telecommunications, cable TV and utilities markets. Recent news releases and additional information about Sorrento Networks can be found at http://www.sorrentonet.com SPIEGEL GROUP: May 2003 Net Sales Slide-Down 11% to $151 Million ---------------------------------------------------------------- The Spiegel Group (Spiegel, Inc.) reported net sales of $150.9 million for the four weeks ended May 24, 2003, an 11 percent decrease from net sales of $169.9 million for the four weeks ended May 25, 2002. For the 21 weeks ended May 24, 2003, net sales declined 22 percent to $680.0 million from $873.9 million in the same period last year. The company also reported that comparable-store sales for its Eddie Bauer division decreased 1 percent for the four-week period and 9 percent for the 21-week period ended May 24, 2003. Eddie Bauer retail sales reflect strong customer response to its women's apparel offer, offset by weakness in its men's apparel offer and the home division. Net sales for May include $25.5 million in liquidation sales resulting from the sale and transfer of inventory to an independent liquidator in conjunction with the closing of 81 stores. The liquidator is conducting store-closing inventory sales as part of the plan to close 60 Eddie Bauer retail and outlet stores, 16 Spiegel outlet and clearance stores and five Newport News outlet stores. Excluding the liquidation sales, the Group's net sales from retail and outlet stores fell 6 percent compared to last year, reflecting a decline in comparable-store sales and fewer stores compared to last year. Direct net sales (catalog and e-commerce) decreased 41 percent compared to last year, primarily due to lower customer demand and a planned reduction in catalog circulation. In addition, the company believes that direct sales, and to a lesser extent store sales, continue to be negatively impacted by the company's decision in early March to cease honoring the private-label credit cards issued by First Consumer National Bank to customers of its merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). In early May, the company launched new credit card programs using a third-party credit card provider. The company stated that it is very pleased to have the new credit card programs in place to strengthen their marketing efforts, however, it will take time to rebuild customer utilization of its private-label credit cards. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, specialty retail and outlet stores, and e- commerce sites, including eddiebauer.com, newport-news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SPX CORP: Prices Offering of $300 Million of 6.25% Senior Notes --------------------------------------------------------------- SPX Corporation (NYSE: SPW) has priced an offering of $300 million of 6.25% senior unsecured notes due 2011 under its existing base shelf prospectus. The size of the offering was increased to $300 million from the $200 million originally announced. SPX intends to use the net proceeds from the offering for general corporate purposes, including primarily the repayment of debt. The transaction is being managed by a group led by J.P. Morgan Securities Inc. and is expected to settle on or before Monday, June 16, 2003. The final prospectus relating to this offering, as well as SPX's Internet home page, contains updated financial and other information regarding SPX. A copy of the final written prospectus relating to this offering may be obtained from J.P. Morgan Securities Inc. at 34 Exchange Place, Plaza 2, 4th Floor, Jersey City, New Jersey 07311, Attention: Prospectus Department, Facsimile: (201) 524-8072. These documents will be filed with the Securities and Exchange Commission no later then Monday, June 9, 2003 and also will be available over the Internet from the SEC's Web site at http://www.sec.gov SPX Corporation (S&P/BB+/Positive) is a global provider of technical products and systems, industrial products and services, flow technology and service solutions. The Internet address for SPX Corporation's home page is http://www.spx.com TECH LABS: Ability to Continue as Going Concern is in Doubt ----------------------------------------------------------- As a result of operating losses and negative cash flows experienced during 2001 and 2002, Tech Labs has a tenuous liquidity position. If sales do not improve or alternate financing is not obtained, substantial doubt exists about Tech Labs' ability to continue as a going concern. The Company signed a promissory note in the principal amount of $12,000, dated April 8, 2003, which was due May 8, 2003 and is presently outstanding and in default. Sales were $94,327 for the first quarter of 2003 as compared to $122,830 for the similar period of 2002. This decrease was due to the continuing effects of the economic downturn. Cost of sales of $58,165 for the first quarter of 2003 has been decreased by $24,131 compared to the same period of 2002, primarily due to the sales decline. Selling, administrative, and general expenses decreased by $101,960 compared to the same period of 2002 due to reductions in marketing, sales, and administrative expense necessitated by sales reductions. Loss from operations of $26,540 improved $97,588 compared to a loss of $124,128 for the prior period as a direct result of cost reductions. During the first quarter of 2003, the Company is still suffering from the economic downturn. Cash Flow for the first quarter of 2003 was a positive $56,695 as a result of the reductions in current assets necessitated by the continuing economic downturn in the telecommunications industry. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities generated cash of $52,772 during the three months ended March 31, 2003, as compared to utilizing cash of $360,736 during the three months ended March 31, 2002. TENERA INC: Sells e-Learning Business to SkillSoft for $5 Mill. --------------------------------------------------------------- As previously announced, management of TENERA, Inc. (AMEX:TNR) has undertaken efforts to either sell or dispose of its operating segments as quickly as possible this year or permit its operating units to dispose of their assets. The Company then reported its transfer in March 2003 of the ownership and operations of TENERA Energy, LLC, part of the Professional and Technical Services segment, to the former employees of that subsidiary. Thursday last week, the Company closed the sale of all of the assets of the e-Learning business of its subsidiary, GoTrain Corp. SkillSoft Corporation., a Delaware subsidiary of SkillSoft PLC, (Nasdaq:SKIL) acquired the assets for approximately $5 million in cash. Management anticipates that the net cash proceeds from the sale will be used to fund acquisition escrow requirements, complete course work obligations to the acquirer, pay the transaction- related taxes, retire the indebtedness of approximately $1.6 million owed to GoTrain Debenture holders, meet the obligations of the Company's other creditors, and offset costs associated with the disposition plan underway. There is no assurance that any portion of the cash received from the sale of assets of GoTrain or any of the Company's other businesses will be available for distribution to TENERA's shareholders. The Company continues to operate its remaining subsidiary TENERA Rocky Flats, LLC. However, as previously announced the Company is reviewing various disposition alternatives for that subsidiary. Tenera Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $2.6 million, and a total shareholders' equity deficit of about $2 million. TIMCO AVIATION: March 31 Balance Sheet Upside-Down by $96.4 Mil. ---------------------------------------------------------------- TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS) announced its results of operations for the first quarter of 2003. Revenue for the three months ended March 31, 2003 was $51.3 million compared to revenue of $57.5 million for the comparable 2002 period. Net income for the first quarter of 2003 was $0.3 million, compared to a net income of $20.9 million for the first quarter of 2002. Net income for the first quarter of 2002 included three items that the Company believes are unusual items: (i) a $27.3 million extraordinary gain associated with the Company's restructuring, (ii) an $8.0 million non-cash charge relating to the Company's agreement to settle a then-outstanding class action lawsuit, and (iii) a $3.8 million tax benefit arising from a change in U.S. federal tax laws governing the carryback of net operating losses. Without the effects of these items, the Company would have reported a first quarter 2002 net loss of $2.2 million. Management believes that comparison of its first quarter 2003 net income to its first quarter 2002 net loss without the effect of the above-described unusual items provides a useful measure for investors to compare the Company's period-to-period results of operations. At March 31, 2003, the Company's balance sheet shows a working capital deficit of about $17 million, and a total shareholders' equity deficit of about $96.4 million. Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive Officer, stated: "Our business continues to be impacted by the dynamic forces that are affecting the airline industry, including such factors as the ongoing war on terrorism, the state of the economy, the decline in passenger travel and the price of jet fuel. Notwithstanding, we believe that we are beginning to see some positive momentum in the marketplace, with several of our existing customers recently increasing the amount of maintenance that they outsource to us and several new customers beginning to utilize our services to meet their maintenance requirements. We also continue to benefit from the ongoing support of our principal stockholder who has recently agreed to provide us with a $6 million, three-year loan." TIMCO Aviation Services, Inc. is among the largest providers of fully integrated aviation maintenance, repair and overhaul services for major commercial airlines, regional air carriers, and air cargo carriers in the world. The Company currently operates four MR&O businesses: TIMCO, which, with its four active locations (Greensboro, NC, Macon, GA, Lake City, FL and Goodyear, AZ), is one of the largest independent providers of heavy aircraft maintenance services in North America; Aircraft Interior Design and Brice Manufacturing, which specialize in the refurbishment of aircraft interior components and the manufacture and sale of PMA parts and new aircraft seats; TIMCO Engineered Systems, which provides engineering services to both our MR&O operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines. TIME WARNER: Lauds Appeals Court Decision on Tex. Phone Business ---------------------------------------------------------------- Time Warner Telecom, a leader in providing metro and regional optical broadband networks and services to business customers in Texas, supports the Texas Third District Court of Appeals ruling announced today that Texas Building Access Statutes are constitutional. The Travis County District Court ruled last year that the Texas Building Access Statutes were constitutional. The Texas Building Owners and Managers Association had opposed those rules as unconstitutional and filed an appeal with the Third District Appeals Court. "We are pleased that the Third District Appeals Court also upheld the legislature's intent that these statutes promote competition in Texas by ensuring that building tenants have the ability to chose their provider for local telecom services," said Kristie Flippo, Vice President - Regulatory Affairs for Time Warner Telecom in Texas. In its opinion, the Third District Court said, "Our holding today recognizes the important role that the Building Access Statutes play in achieving the state's policy objective to transition from traditional telecommunications regulation to a competitive marketplace." Furthermore, they said, "The Court has little doubt that the legislature intended that the policy of competition would impact the Building Owners' property rights in specific situations, however, the legislature designed the Statutes to balance the forces of competition and consumer choice with the rights of property owners to be compensated in the event of a taking." "We have always maintained that these statutes are proper because they allow tenants in Texas buildings to choose their own local telecom provider based on price, time to deliver, and the best technology available for their needs, rather than being constrained to the telephone service provider the building owner or property manager selects," said Nick Summitt, Time Warner Telecom's Southwest Area Vice President. The Texas legislature foresaw discriminatory practices related to building access as a potential problem that could inhibit phone competition when they enacted the law in 1995. Building owners and managers have fought the law on the erroneous basis that the nondiscrimination statute is unconstitutional. "The Texas Legislature, in PURA 95, passed a law that is well thought out and clearly draws a balance of both the interests of property owners and new telecom and data providers, like Time Warner Telecom," Flippo added. Time Warner Telecom of Texas L.P. is a subsidiary of Time Warner Telecom Inc., (Nasdaq: TWTC) headquartered in Littleton, Colo. Time Warner Telecom delivers "last-mile" broadband data, dedicated Internet access and voice services for businesses in Texas and 21 other states. One of the country's premier competitive telecom carriers, Time Warner Telecom delivers broadband services to large and medium customers in 44 U.S. metropolitan areas over its fast, powerful and flexible, fiber, facilities-based metro and regional optical networks. Visit http://www.twtelecom.comfor more information. As reported in Troubled Company Reporter's November 13, 2002 edition, Standard & Poor's affirmed its single-'B' corporate credit rating on competitive local exchange carrier Time Warner Telecom Inc., and removed the rating from CreditWatch with negative implications. The rating was originally placed on CreditWatch on September 24, 2002 due to concerns about the company's ability to meet bank loan covenants in 2003. At September 30, 2002, the Littleton, Colorado-based company had $1.1 billion of total debt outstanding. The outlook is negative. Time Warner Telecom Inc.'s 9.750% bonds due 2008 (TWTC08USR1) are trading below par at 90.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TWTC08USR1 for real-time bond pricing. TRICORD SYSTEMS: Successfully Emerges from Bankruptcy Proceeding ---------------------------------------------------------------- Tricord Systems, Inc. (Pink Sheets: TRCDQ) announced that the Company's Plan of Reorganization, which was confirmed by the United States Bankruptcy Court for the District of Minnesota on May 7, 2003, becomes effective June 5, 2003. As a result, the Company has discontinued all remaining operations. Payments to the Company's creditors and preferred shareholder will begin immediately as set forth in the Plan. As described in the Company's press release dated November 1, 2002, the Company sold substantially all of its assets to Adaptec. Pursuant to the Plan, effective June 5, 2003, each share of outstanding common stock is automatically cancelled, annulled and extinguished without affecting each common shareholder's right to receive a pro rata share of the liquidation of the Company's remaining assets after payment in full of all allowed senior claims and certain expenses. Therefore, the Company's outstanding shares of common stock can and should no longer be purchased or sold or otherwise transferred. TROLL COMMS: Graham Curtin Retained as General Corporate Counsel ---------------------------------------------------------------- Troll Communications LLC and its debtor-affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to hire Graham, Curtin & Sheridan as their General Corporate Counsel. The Debtors report that prior to the Petition Date, they retained the services of Graham Curtin for advice and representation in a variety of general corporate matters. Since its retention, Graham Curtin has advised the Debtors' Board of Directors with respect to certain corporate issues. The Debtors want to continue obtaining advice and counsel from Graham Curtin during these chapter 11 cases. The Debtors assure the Court that the services provided by Graham Curtin will not duplicate the services of other professionals retained in these cases. The attorneys who will be active in representing the Debtors and their current hourly rates are: Kenneth W. Vest Partner, Corporate $300 per hour Stephen V. Gimigliano Partner, Litigation $300 per hour Robert P. Regimbal Partner, Corporate $285 per hour Robert W. Mauriello Partner, Litigation $220 per hour Leslie A. Wiesner Legal Assistant $ 90 per hour Troll Communications L.L.C., Publishes and distributes books and other educational materials primarily aimed at the pre-K through 9th grade market. The Debtors filed for chapter 11 protection on May 16, 2003 (Bankr. Del. Case No. 03-11508). Raymond Howard Lemisch, Esq., at Adelman Lavine Gold and Levin, PC represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets and debts of over $100 million each. UNION ACCEPTANCE: Files Proposed Reorganization Plan in Indiana --------------------------------------------------------------- Union Acceptance Corporation filed its plan of reorganization in its Chapter 11 bankruptcy proceeding with the U.S. Bankruptcy Court and released its financial statements for calendar 2002. 2002 Results of Operations UAC reported a net loss for the year ended December 31, 2002 of $183.4 million. Operations were adversely affected by events giving rise to the Company's Chapter 11 bankruptcy filing and related developments, including the termination of receivable acquisition activities and significant administrative expenses associated with the bankruptcy case. The results were significantly adversely affected by the impairment of the Company's retained interest in securitized assets over the course of the year. Results for the year ended December 31, 2002 include a total of $173.0 million in charges for the impairment of retained interest. The charge for the impairment of the retained interest during the year ended December 31, 2002 was the result of several factors including, but not limited to, increasing loss trends, the impact of the Company's voluntary filing for reorganization under Chapter 11 of the United States Bankruptcy Code, continued recessionary trends in the U.S. economy, increases in consumer bankruptcy filings and a reduction in resale auction values of repossessed collateral. Specifically, the bankruptcy event has impacted the retained interest as a result of the capturing of additional cash flows within the securitization trusts. The bankruptcy event will extend the timing of the ultimate cash flows from the securitization trusts. The majority of the charge for the impairment of retained interest related to the estimated credit losses. The Company estimates gross credit losses and credit loss severity using available historical loss data for comparable receivables and the specific characteristics of the receivables purchased by the Company. During the year ended December 31, 2002, the Company implemented enhanced loss curves and further refined these curves which are based on the Company's relational risk management database which dates back to 1992, and incorporates approximately 670,000 consumers representing over $10.0 billion in acquired receivables. As a result of implementing these loss curves, during the year ended December 31, 2002, the Company determined it was necessary to adjust the expected loss rates on most pools to reflect the losses experienced which more fully incorporate the effects of current economic events and trends. Although the existing loss curves were the basis for the changes in the expected loss rates, the Company also considers its exposure to credit losses in light of current delinquency and loss rates, consumer bankruptcy trends, recessionary economic trends, and other events. At December 31, 2002, the weighted average net credit loss assumption as a percentage of the original principal balance over the life of the receivables to value retained interest was 8.95%. In addition, the Company adjusted its estimate of the discount rate on the expected cash flows released from the securitization trusts. The Company used a flat discount rate of 15% to value retained interest at December 31, 2002. The Company also further refined and adjusted its methods to value the other components of retained interest during the year ended December 31, 2002 to reflect the current economic conditions and the impact of the bankruptcy filing on the cash requirements of the securitizations as described above. Union Acceptance's December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $10.7 million. "Our retained interest is our most significant remaining asset," commented Lee Ervin, UAC's chief executive officer. "Obviously, our portfolio has continued to be severely affected by consumer credit trends witnessed in the broader economy and we have sought to fully reflect the impact of these trends as well as the impact of our bankruptcy on its value. We remain optimistic that our available cash resources will be sufficient to repay our creditors. What value will remain for equity after our creditors are repaid pursuant to a plan of reorganization is subject to a number of factors that are difficult to predict. Of course, our future net losses in the portfolio will be a significant factor and much will depend on the effectiveness over time of our new servicer, Systems & Services Technologies, Inc. Because we anticipate that any plan of reorganization will provide for repayment of our creditors over time, realization of remaining value, if any, by our equity holders from our remaining assets will be several years away." As previously announced, UAC transferred the servicing of its securitized portfolio to SST on April 18, 2003. Plan of Reorganization Filed UAC also announced that it has filed its proposed plan of reorganization with the U.S. Bankruptcy Court. The proposed plan is available from the Company's Web site at http://www.uaca.com Generally, the plan calls for the use of available cash resources and cash flows to be released over time from the retained interest to repay creditors in their order of priority. Holders of senior and senior subordinated notes would receive new notes reflecting these rights. Holders of smaller unsecured claims would be entitled to elect a discounted repayment in exchange for early payout for convenience. The plan is subject to a vote by creditors of the affected classes to accept or reject it and approval by the Bankruptcy Court. The plan may be modified as discussions with creditors continue. Union Acceptance Corporation is a specialized financial services company headquartered in Indianapolis, Indiana. Union Acceptance filed a petition for reorganization under Chapter 11 of the Bankruptcy Code in the Southern District of Indiana, Indianapolis Division of the U.S. Bankruptcy Court on October 31, 2002 to facilitate a financial restructuring. UNITED AIRLINES: Court OKs Bain & Co.'s Retention as Consultants ---------------------------------------------------------------- United Airlines Inc. and its debtor-affiliates sought and obtained Judge Wedoff's permission to employ Bain & Company as their strategic consultants. The Debtors needed Bain's services in connection with the future strategy and operations of their Express Carrier unit and as negotiating agent for the Express Carrier Agreements. United Express is operated by several regional airlines including Atlantic Coast Airlines, SkyWest Airlines and Air Wisconsin Airlines. Under the Express Contracts, prices are calculated on a fee-per-departure basis. The Debtors have determined that the prices currently being paid are higher than existing market rates. Therefore, United will seek to reduce costs through renegotiation or rejection of the agreements. In return for its services, Bain will be paid flat monthly fees: February 2003 $525,000 March 2003 525,000 April 2003 446,000 After April 2003 267,000 United has agreed to provide Bain with a $500,000 retainer. In addition, Bain will be entitled to reimbursement of reasonable fees and expenses connected with services rendered to the Debtors, subject to a $200,000 cap. Specifically, Bain will provide: 1) Consulting Services -- determining the optimal mix of mainline and express flying in United's post Chapter 11 structure, including the use of regional jets, designing a new express schedule, and developing a full set of potential negotiating tactics; and 2) Negotiating Services -- leading the negotiation team, engaging regional carriers in negotiating new contracts, managing negotiation logistics, and driving completion of the contract negotiation process to realize optimal savings. (United Airlines Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED AIRLINES: May 2003 Revenue Passenger Miles Tumble 13.8% -------------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) reported its traffic results for May 2003. United reported a passenger load factor of 77.2 percent, up 4.0 points from a year ago. Total scheduled revenue passenger miles declined in May by 13.8 percent on a capacity decrease of 18.3 percent. United operates more than 1,700 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company's Web site at http://www.united.com UNIVERSAL ACCESS: Fails to Maintain Nasdaq Listing Requirements --------------------------------------------------------------- Universal Access Global Holdings Inc. (Nasdaq: UAXS) received a Nasdaq Staff Determination on June 3, 2003 indicating that the Company fails to comply with the $1.00 per share minimum bid price requirement for continued listing set forth in Marketplace Rule 4310(C)(4) and that its securities are, therefore, subject to delisting from the Nasdaq SmallCap Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing. The Company anticipates that its common stock will continue to be quoted on the Nasdaq SmallCap Market pending the Panel's decision. At the Company's Annual Meeting of Stockholders, currently scheduled to be held on July 1, 2003, the Company expects to seek stockholder approval of an amendment to the Company's restated certificate of incorporation to effect a reverse stock split of the Company's issued and outstanding common stock. If the reverse stock split is approved by the Company's stockholders, the Company's board of directors may subsequently effect, in its sole discretion, the reverse stock split based upon any of the following three ratios: one-for-twenty, one-for- thirty or one-for-forty. Universal Access (Nasdaq: UAXS) specializes in telecommunications procurement services for carriers, service providers, cable companies, system integrators and government customers worldwide. Universal Access is headquartered in Chicago, IL. Additional information is available on the company's Web site at http://www.universalaccess.net At December 31, 2002, Universal Access' balance sheet shows a working capital deficit of about $12 million, while total shareholders' equity has further shrunk to about $9 million from about $100 million a year ago. US AIRWAYS: Katz Tech Demands Administrative Expense Payment ------------------------------------------------------------ Ronald A. Katz Technology Licensing, L.P., in Milford, Connecticut, a creditor in these cases, asks Judge Mitchell to compel US Airways Group Inc., and its debtor-affiliates to pay its administrative expense claim. RAKTL has a portfolio of 49 U.S. patents, 21 pending applications and several foreign equivalents, for a total of 3,000 issued and pending claims. The patents at issue represent pioneering work in the field of computer telephony. Bradford F. Englander, Esq., at Linowes & Blocher, alleges that from 1996 until the present, the Debtors have infringed upon various RAKTL patents. RAKTL has sent the Debtors several infringement notices but this infringement has continued. The Debtors used RAKTL's interactive communication services technology. This consists of providing automated customer call processing services, where customers are able to retrieve information from and transact business with the Debtors. RAKTL technology is so central to the Debtors' operations, that they could not cease its use without jeopardizing the estates. The Reorganized Debtors have accrued royalties to RAKTL from August 11, 2002 until the present. The Debtors have continued to utilize the technologies protected by RAKTL patents in their everyday business operations without permission. Use of the patented technologies constitutes an actual and necessary expense of the bankruptcy estates. RAKTL alleges that postpetition damages from infringement amount to $1,147,595. Mr. Englander notes that despite notices of infringement, the Debtors have failed to negotiate with RAKTL to secure a license to continue to use the technology and have never paid any royalties to RAKTL for use of the technology. Thus, RAKTL asks the Court to compel the Debtors to immediately pay $1,147,595 to RAKTL for administrative expenses and enter into good faith negotiations to secure a license for future use of the technology. (US Airways Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. STEEL: Execs. Carson, Goettge & Foster Retiring this Month --------------------------------------------------------------- United States Steel Corporation (NYSE: X) announced that Dr. Charles G. (Chuck) Carson, vice president-environmental affairs; Thomas W. Goettge, vice president-raw materials; and Donald L. Foster, vice president-international and president-UEC Technologies LLC, have elected to retire at the end of June. In an earlier release, U. S. Steel announced the retirement of Charles C. Gedeon, executive vice president-raw materials and transportation. The company will not fill the vacancies created by these retirements, but will reassign their responsibilities to other officers and managers. Carson, 61, joined U. S. Steel in 1970 as a research engineer at the company's Research Center in Monroeville, Pennsylvania, and progressed through a series of technical and management positions in both research and commercial operations. In 1993, Carson was appointed to his current position as vice president- environmental affairs with responsibility for overseeing U. S. Steel's environmental compliance and improvement activities, and coordinating the company's relationships with various environmental agencies and groups. "During his tenure as vice president of environmental affairs, Chuck has taken U. S. Steel beyond environmental compliance and established the company as a leader in environmental stewardship," said U. S. Steel Chairman and Chief Executive Officer Thomas J. Usher. "He is recognized as an innovative leader throughout the company and throughout the industry." Goettge, 59, began his career with U. S. Steel in 1965 as a process analyst at Clairton Works. He moved through a series of operating and management positions and in 1972 was part of a team that commissioned the Q-BOP steelmaking facility at Gary Works in Indiana. In 1984, Goettge oversaw installation of the slab caster at Fairfield Works in Birmingham, Alabama, and in 1990 became project manager for U. S. Steel's new joint venture, PRO-TEC, a hot dip galvanizing facility in Leipsic, Ohio. Under Goettge's leadership, Clairton Works, a cokemaking facility, became the first heavy industrial facility in the United States to achieve the ISO 14001 environmental management certification and became the environmental standard against which other coke facilities are measured. "U. S. Steel has long depended upon Tom's technological knowledge, operating experience and leadership skills to help keep us in the forefront of our industry," said Usher. "He has left an enduring legacy at U. S. Steel that few can match." Foster started his career with U. S. Steel in 1979 as a management trainee at Gary Works and moved into sales in 1980. He held a variety of sales and marketing positions with the company and in 1999 was elected president-United States Steel International, Inc. In 2002, he was named to his current post, vice president-international with responsibility for international business development and trade issues; and was also named president of UEC Technologies LLC, U. S. Steel's technology consulting business. Commenting on Foster's career at U. S. Steel, Usher said, "Don's commitment to customer service both in the United States and abroad have contributed significantly to the company's success in a highly competitive global steel market." For executive biographies and information about U. S. Steel, visit http://www.ussteel.com. * * * 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 said that it has removed its ratings on Pittsburgh, Pennsylvania-based United States Steel from CreditWatch, where they were placed with negative implications on Jan. 9, 2003. The current outlook is negative. The company had about $1.7 billion in lease-adjusted debt at March 31, 2003. At the same time, Standard & Poor's said it has assigned its 'BB-' rating to United States Steel Corp.'s proposed $350 million senior notes due 2010. U.S. STEEL: Undertaking Major Senior Management Restructuring ------------------------------------------------------------- Thomas J. Usher, chairman and chief executive officer of United States Steel Corporation (NYSE: X), announced a major restructuring of the senior management of the corporation effective June 1. This reorganization, coupled with several recently announced retirements, is part of the company's plan to streamline executive management and accomplish the dual goals of successfully integrating the National Steel assets into U. S. Steel and continuing the company's strategic growth initiatives, both domestically and internationally. "U. S. Steel made a commitment to our shareholders, the United Steelworkers of America and President Bush to reduce costs and become more globally competitive," said Usher. "This reorganization of senior management is one more step in the process and will set the stage for the further reorganization of management and non-represented workers." In the new organization, John P. Surma, Jr., who was elected president of U. S. Steel in February, has been named president and chief operating officer in keeping with his responsibility for the day-to-day operation of the company. Surma, who is also a member of the board of directors, will continue to report to Usher. Roy G. Dorrance, formerly vice chairman and chief operating officer, will remain as vice chairman, reporting to Usher. He will work directly with the chairman on domestic and international initiatives. Dorrance is a member of the board of directors. John H. Goodish has been named executive vice president- operations. Goodish served as president of U. S. Steel Kosice (USSK), the company's steelmaking operation in the Slovak Republic, before returning to the United States in February as executive vice president-international and diversified businesses. In his new position, Goodish will report to Surma and oversee the company's domestic and international operations. Reporting to Goodish are J. Paul Kadlic, who has been named executive vice president-commercial with responsibility for North American sales and marketing; David H. Lohr, who has been named vice president-plant operations with responsibility for the company's domestic steel and raw material operating facilities; James D. Garraux, who has been named vice president- labor relations and purchasing with responsibility for the company's domestic represented workforce and the purchasing function; Leonard H. Chuderewicz, who has been named vice president-diversified businesses including responsibility for USS Real Estate and Transtar, Inc.; and Christopher J. Navetta, who will continue as president-USSK and will oversee activities in Serbia. Thomas W. Sterling, formerly president-Transtar, Inc., has been named senior vice president-human resources. In his new position, Sterling will be responsible for human resources for non-represented employees. His immediate charge will be to oversee the administrative cost reduction process, currently under way. Sterling will report to Surma. Gretchen R. Haggerty will continue as executive vice president, treasurer and chief financial officer, and will continue to report to Surma. Dan D. Sandman will continue as vice chairman and chief legal and administrative officer, reporting to Surma. Sandman will have responsibility for law, environmental affairs, governmental relations, public affairs and executive compensation. Reporting to Sandman are Terrence D. Straub, senior vice president-public policy and governmental affairs, and Stephan K. Todd, who has been named vice president-law and environmental affairs. Sandman is a member of the board of directors. John J. Connelly, vice president-strategic planning and business development and John J. Quaid, manager-investor relations, will continue to report to Usher. For more information about U. S. Steel visit our web site at http://www.ussteel.com. VENTAS INC: Appoints Thomas C. Theobald to Board of Directors ------------------------------------------------------------- Ventas, Inc. (NYSE:VTR) has appointed Thomas C. Theobald, a Managing Director with William Blair Capital Partners and the former Chairman and CEO of Continental Bank Corp., to its Board of Directors, effective immediately. "With more than 30 years of experience in finance, Tom was instrumental in restoring Continental Bank's reputation and profitability. He is one of the country's most respected banking executives and he will be a great asset to Ventas," Chairman, President and CEO Debra A. Cafaro said. "The election of additional independent Directors like Tom Theobald underscores our commitment to sound corporate governance as an important component to building shareholder value." Theobald, 66, headed Continental Bank from 1987-1994, initially when it was controlled by the Federal Deposit Insurance Corporation following the bank's failure in 1984. Under his leadership, Continental's revenues and profits increased, producing a 15.6 percent return on equity in 1993. Theobald guided the bank's return to public ownership in 1991 and oversaw its sale to BankAmerica in 1994. Prior to that, Theobald worked at Citicorp/Citibank from 1960 to 1987, rising to the level of Vice Chairman. His experiences at Citibank included global corporate banking, international investment banking, and worldwide investment management. Theobald received a B.A. from Holy Cross College and an MBA from Harvard Graduate School of Business. Theobald commented, "Ventas's successes over the last several years have been exciting to watch, and I look forward to working with the other Ventas Board members as the Company implements its strategic diversification plan." Theobald is also a Director of The MONY Group (NYSE:MNY), Anixter International (NYSE:AXE), Jones Lang LaSalle Inc. (NYSE:JLL), and Columbia Funds. Previous directorships include Xerox Corp. (NYSE:XRX), Borg-Warner Corp. (NYSE:BWA), and LaSalle U.S. Realty Income and Growth Fund. He is also a Director of the MacArthur Foundation, a Life Trustee of Northwestern University and a Director of the Dean's Advisors at Harvard Business School. Theobald will sit on the Company's Nominating and Governance Committee and its Executive Compensation Committee. Ventas, Inc. is a healthcare real estate investment trust that owns 44 hospitals, 220 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 additional healthcare and senior housing facilities. More information about Ventas can be found on its Web site at http://www.ventasreit.com As previously reported, Standard & Poor's affirmed Ventas Inc.'s corporate credit ratings at BB-. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $43 million. VENTURE HOLDINGS: Joseph Day to Lead Board Committees ----------------------------------------------------- Larry Winget and the Board of Directors of Venture Holdings, L.L.C., announced the new executive team to oversee the company's operations and allow interim CEO/consultant Joseph C. Day to resume his service as a non-executive member of the Board of Directors. Since Day stepped into the interim role of CEO of Venture on Mar. 31, the company has made faster than expected progress on improving efficiency, reducing cost, eliminating waste and improving quality system-wide. "I remain encouraged about the progress that we have made and that I expect the company to continue to make," said Day. Venture has made changes resulting in annual savings of $12 million. Additionally, plant closings, workforce reductions and manufacturing efficiencies are expected to result in additional savings of $20 million to $30 million per year, based on actions installed in the business during the past 10 weeks. These savings are expected to be in place by the end of 2003 and should enhance the business performance in 2004 and beyond. The board decided that Mr. Day, due to his personal reasons and to utilize his limited availability, will now focus exclusively on his independent director role with the goal of leading the company out of Chapter 11 bankruptcy. Day has been named chairman of the Executive Committee of the Board of Directors and chairman of the Restructuring Committee of the Board of Directors. At the same time, the company's Board of Directors announced a new executive team to guide the company's day-to-day operations and maintain focus on the processes recently installed within the company. The team consists of: Don MacKenzie continues as chief restructuring officer reporting to the Board of Directors and its Restructuring Committee Dave Peash and Tom Eckhout are leading the customer activities. The "Customer is King" concept has taken hold. Our customers are responding favorably and are noticing our renewed commitment to them. Jim Butler, executive vice president and chief financial officer of the company, is leading the effort to install upgraded financial and IT systems to improve management reporting and to respond to the continuing needs of the restructuring project Joe Bione, the company's chief operating officer, is directing the effort to consolidate factories, expand manufacturing engineering, streamline operations, enhance standardized quality systems, and install lean processes and Six Sigma In Europe, Horst Geldmacher is the new chief executive officer. The European business is now operating with a new strategy that Geldmacher is implementing through teams in the United Kingdom, France and Bohemia. Venture is a global, full-service automotive supplier, systems integrator and manufacturer of plastic components, modules and systems, as well as an industry leader in applying new design and engineering technology to develop innovative products, create new applications and reduce product development time. Venture operates 63 facilities throughout the world. WEIRTON STEEL: Wants to Honor A.I. Insurance Finance Agreements --------------------------------------------------------------- Robert G. Sable, Esq., at McGuireWoods LLP, in Pittsburgh, Pennsylvania, relates that Weirton Steel Corporation maintains insurance programs through various carriers consisting of these coverages: (a) the casualty coverage, which includes directors' and officers' liability, workers' compensation, and general liability, and (b) the property coverage, which includes property damage to all material assets, business interruption resulting from property damage, and contingent business interruption due to the disruption of business from key vendors or customers. A substantial portion of the Casualty Insurance was renewed on March 1, 2003, with terms to expire on March 1, 2004. Seven Casualty Insurance policies expire before the end of 2003, with the earliest expiration on July 9, 2003. The Property Insurance policies were renewed on May 1, 2003, with expiration on May 1, 2004. Mr. Sable explains that Weirton must maintain the Casualty Insurance and Property Insurance to keep the business operations and assets of the estate insured in compliance with the operating guidelines established by the Office of the U.S. Trustee, various state and federal laws, corporate by-laws, and governing loan agreements. Weirton estimates that the combined premium payments for these policies, including taxes, fees and other charges, is approximately $9,016,497 for coverage through the end the current policy terms. Mr. Sable tells Judge Friend that Weirton's insurance carriers are unwilling to extend unsecured credit to Weirton allowable as an administrative expense for the purpose of paying part of the insurance premiums in installments. In this regard, A.I. Credit Corp. has agreed to finance the payment of certain of Weirton's insurance premiums pursuant to two Premium Finance Agreements and Disclosure Statements: -- the Casualty Finance Agreement, which provides for premium financing in connection with certain of Weirton's Casualty Insurance polices; and -- the Property Finance Agreement, which provides for premium financing in connection with certain of Weirton's Property Insurance policies. Weirton entered into the Casualty Finance Agreement on March 5, 2003. Under the Casualty Finance Agreement, Weirton will make a $402,280 cash down payment, and finance the $2,279,582 balance with eight consecutive monthly payments amounting to $290,748, commencing on April 1, 2003. These payments include an aggregate finance charge equal to $46,407. Weirton paid the cash down payment on March 3, 2003, as well as the first two finance installments. Weirton entered into the Property Finance Agreement on March 5, 2003. Under the Property Finance Agreement, Weirton will make a $1,631,164 cash down payment, and finance the $4,893,492 balance with seven consecutive monthly payments amounting to $710,888, commencing on June 1, 2003. These payments include an aggregate finance charge equal to $82,726. Weirton paid the cash down payment on May 9, 2003. Both of the Finance Agreements also provide, inter alia, that to secure payment of the amounts due to A.I. Credit, Weirton grants to A.I. Credit a perfected first priority security interest in unearned or returned premiums and other amounts due to Weirton under the policies resulting from cancellation of the policies. Pursuant to further terms of the Finance Agreements, Weirton grants to A.I. Credit a power of attorney to cancel the policies after giving notice required by Chapter 33 of the West Virginia Code and any other applicable law in the event Weirton defaults in its payments, and A.I. Credit may apply any unearned premium returned by any insurance carrier to any amount Weirton owes to A.I. Credit under the Finance Agreements. By this motion, Weirton seeks the Court's authority to honor its obligations under the two financing Agreements with A. I. Credit Corporation. (Weirton Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says that Weirton Steel Corporation's 11.375% bonds due 2004 (WRTL04USR1) are trading at 34.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WRTL04USR1 for real-time bond pricing. WESTERN WIRELESS: CCC Sub. Note Rating Remains on Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to Western Wireless Corp.'s $100 million convertible subordinated notes due June 15, 2023, issued under Rule 144A with registration rights. The rating has been placed on CreditWatch with negative implications. The company's 'B-' corporate credit and secured bank loan ratings, as well as its 'CCC' subordinated debt rating, remain on CreditWatch with negative implications. The CreditWatch listing is expected to be resolved within the next two months. In its review, Standard & Poor's will focus on industry fundamentals and Western Wireless' ability to meet debt maturities and financial covenants. Bellevue, Washington-based Western Wireless is one of the largest rural wireless carriers in the U.S., providing service to 1.2 million subscribers in 19 western states. As of March 31, 2003, total domestic debt outstanding was about $2.2 billion. Proceeds of the convertible subordinated note issue will be used for general corporate purposes. The company's ratings are based only on its domestic operations, as the company gives minimal financial support to unrestricted international subsidiary Western Wireless International Holding Co. In addition, WWI's credit facilities are non-recourse to Western Wireless. In 2002, Western Wireless invested about $80 million in WWI and is expected to invest $30 million to $40 million in 2003. "Western Wireless' rating reflects the impact of lower roaming yield and the uncertainty related to the anticipated GSM (Global System for Mobile Communications) network buildout by national carriers on the company's future roaming revenue growth," said Standard & Poor's credit analyst Rosemarie Kalinowski. The rating also reflects uncertainty related to the company's ability to meet increasing debt maturities commencing in 2003 and overall slower industry growth. Although the company announced a GSM buildout for 50% of its cell sites by mid-2004, and new GSM roaming agreements with Cingular Wireless and T-Mobile USA Inc., the level of incremental margin expected to cover the capital investment is uncertain in light of continued pressures on roaming yield and increased competition from national carriers. In the first quarter of 2003, total domestic revenue was essentially flat compared to the fourth quarter of 2002. Subscriber revenue increased about 5%, while roaming revenue declined 14% during the same time frame. The increase in subscriber revenue was due to net customer additions of about 18,300 and increased average monthly revenue per user (ARPU) resulting from new regional rate plans that offer more features and minutes at a higher average recurring access charge. In addition, the increased ARPU benefited from universal service fund payments and fees implemented to recover the cost of certain unfunded government mandates. Roaming revenue declined primarily due to lower roaming yield, offset somewhat by the increase in roaming minutes. Roaming revenue, which contributes about 22% of total domestic revenue, is expected to be relatively flat in 2003. Potential for new revenue growth, although minimal in the near term, is expected from universal service funding (USF) related to the company's Eligible Telecommunications Carrier (ETC) status in 14 of the 19 states it serves. The company received about $11 million in USF in 2002 and is expected to receive an incremental $30 million in 2003. WESTPOINT STEVENS: A Look Inside the $300 Million DIP Facility -------------------------------------------------------------- In the first 30 days of its chapter 11 restructuring, WestPoint Stevens Inc. projects that cash receipts will total $99,852,000, expenses will total $180,471,000. The Company's only way to bridge that $80,619,000 gap is to draw on a new debtor-in- possession credit facility. Bank of America, N.A., and Wachovia Bank, National Association, as widely reported, will fill the gap. Section 364(c) of the Bankruptcy Code provides, among other things, that if a debtor is unable to obtain unsecured credit allowable as an administrative expense under section 503(b)(1) of the Bankruptcy Code, then the court may authorize the debtor to obtain credit or incur debt (i) with priority over any and all administrative expenses as specified in sections 503(b) or 507(b) of the Bankruptcy Code, (ii) secured by a lien on property of the estate that is not otherwise subject to a lien, or (iii) secured by a junior lien on property of the estate that is subject to a lien. Lester D. Sears, Senior Vice President and Chief Financial Officer of WestPoint Stevens Inc., says new unsecured borrowings are impossible, the Debtors need a new $300 million source of working capital financing to obtain raw materials and finished goods from suppliers, obtain necessary services such as maintenance and shipping, pay their employees, and operate their businesses in an orderly and reasonable manner to preserve and enhance the value of their assets and enterprise for the benefit of all parties in interest. John J. Rapisardi, Esq., at Weil, Gotshal & Manges says "the DIP Loan Agreement will provide the Debtors' vendors and suppliers with the necessary confidence to resume or continue ongoing credit relationships with the Debtors." Moreover, "the implementation of the DIP Loan Agreement will be viewed favorably by the Debtors' employees and customers and thereby help promote the Debtors' successful reorganization," Mr. Rapisardi adds. Mr. Sears relates that over the last several weeks, the Debtors explored alternative financing arrangements in order to either replace or supplement the Prepetition Credit Facilities. The Debtors conducted extensive negotiations with their First Priority Prepetition Lenders and bondholders, requesting that they provide financing. The Debtors also contacted other lending institutions, including Deutsche Bank and General Electric Capital Corporation, in an effort to obtain alternative financing. Those institutions couldn't provide competitive financing packages. The First Priority Prepetition Lenders offer the Debtors the best possible deal and negotiations with the Lenders culminated in a $300 million Post-Petition Credit Agreement, dated June 2, 2003 on these terms: Borrowers: WestPoint Stevens, Inc., and all of its debtor-affiliates Lenders: 50% Bank of America, N.A. 50% Wachovia Bank, National Association Administrative Agent: Bank of America, N.A. Syndication Agent: Wachovia Bank, National Association Book Manager and Sole Lead Arranger: Banc of America Securities LLC Commitment: $300,000,000 with a $75,000,000 sublimit for standby and documentary letters of credit. Availability: Availability is subject to a Borrowing Base equal to: (1) the sum of 85% of Eligible Accounts plus the lesser of: (x) $200,000,000, (y) 65% of the book value of eligible inventory (subject to a $120,000,000 cap), or (z) 85% of net orderly liquidation value of eligible inventory, (2) minus the Carve-Out and any past due license fees. Eligible Accounts are subject to the Agents' discretion and exclude all accounts receivable owed by Wal-Mart and Target to the extent those accounts exceed 35% of the Debtors' Receivables Portfolio. Maturity Date: June 2, 2004, with two extensions of six months each, if the Borrowers give 30 days prior written notice to the DIP Agent Use of Proceeds: Proceeds of the DIP Facility must be used for working capital and other general corporate purposes, and may be used to repurchase all outstanding receivables accounts previously sold by WPSTV to WPS Receivables Corporation under the WPSTV Securitization Facility. Priority: All loans will be treated as superpriority administrative expense claims in each of the Debtors' chapter 11 bankruptcy cases, pursuant to section 364(c)(1) of the Bankruptcy Code, having priority over all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code. Collateral: The DIP Agent and the DIP Lenders receive perfected first priority liens on all unencumbered assets and priming liens on all other assets of the Estates, subject only to the Carve-Out. Interest: At the Debtors' option, LIBOR plus 2.75% or Prime plus 0.625%, with 2.25% to 3.00% adjustments based on Availability. Mandatory Prepayments: Loans outstanding under the DIP Facility will be required to be repaid upon Borrowers' receipt of proceeds of Collateral and on the Maturity Date. Draws under letters of credit are repayable on the first business day following the draw. EBITDA Covenant: On a consolidated basis, the Debtors covenant that EBITDA will be no less than: Testing Period Minimum EBITDA -------------- -------------- Four Months Ending September 2003 $58,000,000 Seven Months Ending December, 2003 $97,000,000 Ten Months Ending March, 2004 $130,000,000 Four Months Ending $145,000,000 Each period of four consecutive Fiscal Quarters ending on or after the last day of the Fiscal Month of September, 2004 $155,000,000 In the event Availability under the DIP Facility falls below $75,000,000, then the Debtors promise that EBITDA will be no lower than: Testing Period Minimum EBITDA -------------- -------------- Five Months Ending October, 2003 $74,000,000 Six Months Ending November, 2003 $85,000,000 Eight Months Ending January, 2004 $109,000,000 None Months Ending February, 2004 $116,000,000 Eleven Months Ending April, 2004 $135,000,000 Each period of twelve consecutive Fiscal Months ending on the last day of the Fiscal Months of May, June, July and August, 2004 $145,000,000 Each period of twelve consecutive Fiscal Months ending on or after the last day of the Fiscal Month of September, 2004 $155,000,000 CapEx Covenant: The Debtors agree to limit their Capital Expenditures to $50,000,000 during any Fiscal Year; provided, that up to $15,000,000 may be carried from one year to the next if unused. Reclamation Claim Covenant: The DIP Facility prohibits returns totaling more than $1,000,000 to satisfy creditors' reclamation claims. Plant Shutdown Cost Covenant: The DIP Facility imposes an $8,500,000 limit on the amount of Post-Petition Plant Shutdown Costs, in cash, the Debtors may incur in connection with the closing and consolidation of certain [unidentified] facilities for (i) direct inventory write-offs and/or related increases in inventory reserves; (ii) write-offs of fixed assets and non- capitalized relocation charges; (iii) write-offs of intangibles related to impaired assets; and (iv) without duplication, relocation, severance, unabsorbed overhead and other related costs. Fees: The Debtors agree to pay the Lenders a variety of Fees: -- a $4,500,000 Closing Fee -- a $750,000 Renewal Fee if the Debtors decide to renew the Facility beyond June 2, 2004 -- a 0.375% to 0.75% annual Unused Line Fee payable on every dollar not borrowed -- 0.5% letter of credit fees -- an annual $75,000 DIP Agent's Fee -- when required by the Agent, $850 daily field examination fees Carve Out: The DIP Lenders agree to a $5,000,000 carve-out from their liens to permit, in the event of a default, for unpaid professional fees and disbursements incurred by the Debtors and any statutory committees appointed in the Debtors' chapter 11 bankruptcy cases and for payment of fees owed to the United States Trustee or Court Clerk. $250,000 of the Carve-Out may be applied towards the reasonable fees and disbursements of a Chapter 7 trustee, pursuant to Section 726 of the Bankruptcy Code, in any liquidation of one or more Debtors in a Chapter 7 case or cases. C. Edward Dobbs, Esq., at Parker, Hudson, Rainer & Dobbs LLP in Atlanta and David I. Blejwas, Esq., at Hahn & Hessen LLP, in Manhattan represent the DIP Lenders in WestPoint's chapter 11 cases. * * * Judge Drain authorizes the Debtors, on an interim basis pending a Final DIP Financing Hearing, to draw up to $175,000,000 under the DIP Facility. Judge Drain will convene the Final DIP Financing Hearing at 10:00 a.m. on June 18, 2003. Objections to the DIP Financing arrangement, if any, must be filed and served by 4:00 p.m. on June 17, 2003. (WestPoint Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS COMPANIES: Prices Senior Unsecured Note Public Offering ---------------------------------------------------------------- Williams (NYSE: WMB) has priced its previously announced underwritten public offering of senior unsecured notes due 2010. The size of the offering was increased to $800 million from the previously announced $500 million. The notes, scheduled to be delivered on June 10, were priced at par to yield 8.625 percent. The notes will be issued under the company's $3 billion shelf registration statement on Form S-3. The company will use the net proceeds from the offering to improve corporate liquidity, for general corporate purposes, and for payment of maturing debt obligations, including the partial repayment of the company's senior unsecured 9.25 percent notes due March 2004. The prospectus may be obtained from Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services at 1155 Long Island, Edgewood, NY 11717, (631) 254-7106, or over the Internet from the Securities and Exchange Commission at http://www.sec.gov 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. 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 COS: Fitch Assigns B+ Rating to $800-Mill. Senior Notes ---------------------------------------------------------------- The Williams Companies, Inc.'s $800 million senior notes due 2010 are rated 'B+' by Fitch Ratings. The Rating Outlook is Stable. Proceeds from the new debt will be used for corporate liquidity purposes including the partial repayment of WMB's $1.4 billion 9.25% senior notes due March 2004. WMB's senior unsecured rating was upgraded by Fitch to 'B+' from 'B-' on May 2, 2003 reflecting the company's improved financial flexibility including its strengthened liquidity position and reduced ongoing debt refinancing risk. Since that time, WMB has taken further steps to lower its ongoing funding costs including the early retirement of a $900 million high cost reserve based financing at Williams Production RMT Co., refinancing of $275 million of convertible preferred stock, and completion of the sale of Texas Gas Transmission. The Stable Outlook incorporates Fitch's expectation that WMB will be able to complete the planned execution of a new $800 million two-year cash collateralized letter of credit facility that will replace WMB's existing secured credit facility. Although the new facility will reduce the level of cash available for general corporate purposes to the extent letters of credit are outstanding, the agreement will result in the release of WMB's gas midstream and liquid assets currently pledged as collateral under the existing credit facility. Fitch estimates that WMB's midstream assets will carry a net book value in excess of $3 billion at year-end 2003. The only secured debt remaining at WMB will be the recently executed $500 million secured term loan at RMT and $27 million of Transco Energy notes. WMB's ongoing corporate restructuring and asset sale program is narrowing the scale and scope of the company. By year-end 2003 WMB is expected to emerge as a smaller integrated natural gas company with core operations encompassing FERC regulated interstate pipelines (Transcontinental Gas Pipe Line and Northwest Pipeline), exploration and production (E&P), and midstream gas and liquids services. These businesses should generate a relatively predictable earnings and cash flow stream going forward with potential commodity prices volatility in the E&P segment offset by the cash flow stability of the pipeline segment and WMB's growing portfolio of fee based midstream gas gathering assets. Commodity price risk at E&P is further mitigated by WMB's hedging strategy and focus on developing lower risk Rocky Mountain based tight sands and coalbed methane gas reserves. However, consolidated debt levels are expected to remain high relative to cash flow levels even after factoring in the impact of completed and targeted asset divestitures. Excluding any potential cash flow contribution from energy marketing and trading (EM&T) activities, Fitch expects consolidated debt to EBITDA to remain in excess of 5.0 times through 2004. Given WMB's reduced capital spending program, consolidated credit measures should show gradual improvement over time. WMB's sizable EM&T portfolio continues to pressure the company's consolidated credit profile. In addition, to consuming more than $1 billion of permanent working capital during 2002, efforts to limit near-term performance risk of this business unit will be constrained by WMB's inability to hedge its long dated contractual exposures in the current market environment. Although WMB has been successful in winding down speculative trading positions and reducing ongoing operating expenses at EM&T, the company remains obligated to make fixed payments obligations under long-term tolling and other capacity arrangements in excess of $400 million annually of which 70% are contractually hedged with various offtake agreements through 2008. Critical to the future direction of WMB's ratings will be its ability to execute upon its ongoing efforts to sell, monetize or joint venture its energy marketing and risk management portfolio. In Fitch's view, any potential transaction or arrangement that would assume EM&T's long-term contractual obligations would reduce overall business risk and likely have further positive credit implications for WMB. WORLD AIRWAYS: Stephen Taylor Discloses 5.10% Equity Stake ---------------------------------------------------------- Stephen S. Taylor, Jr., Chicago, Illinois, has beneficial and legal ownership of 565,419 shares of the common stock of World Airways, Inc., of which 105,600 shares are held in an individual retirement account for his benefit. Accordingly, Mr. Taylor may be deemed to own beneficially a total of 565,419 shares of the Company, constituting 5.10% of its shares of common stock outstanding as of April 30, 2003. Stephen S. Taylor, Jr. has the sole power to vote and to dispose or direct the disposition of 565,419 shares of World Airways' common stock. Mr. Taylor made the purchases of the Company's common stock on the open market since March 16, 2003. Utilizing a well-maintained fleet of international range, widebody aircraft, World Airways has an enviable record of safety, reliability and customer service spanning more than 55 years. The Company is a U.S. certificated air carrier providing customized transportation services for major international passenger and cargo carriers, the United States military and international leisure tour operators. Recognized for its modern aircraft, flexibility and ability to provide superior service, World Airways meets the needs of businesses and governments around the globe. For more information, visit the Company's Web site at http://www.worldair.com World Airways Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $22 million, and a total shareholders' equity deficit of about $22 million. WORLDCOM: Capella Tells Court Fraud is Widespread and "Systemic" ---------------------------------------------------------------- In a direct contradiction of statements attributed Thursday to WorldCom CEO Michael Capellas, a 14-year WorldCom sales manager provided Hon. Judge Jed S. Rakoff of the United States District Court, Southern District of New York, with a sworn statement that the accounting abuses at the scandal-plagued telecommunications firm were systemic, not just the work of a handful of individuals. Mitch Marcus, now the founder of BoycottMCI.com, also revealed that the Securities and Exchange Commission failed to act on a May 15, 2002 report that he made about the widespread abuses, weeks before MCI/WorldCom's epic accounting swindle otherwise came to public attention. The Marcus statement is significant in that Judge Rakoff has specifically invited evidence from the public showing that the fraudulent activity at WorldCom was company wide, as opposed to only involving a small group of individuals. A finding of more deeply rooted and systemic abuses would provide Judge Rakoff with the grounds for rejecting the widely criticized settlement worked out between the SEC and MCI/WorldCom. Filed in the proceeding Securities and Exchange Commission v. WorldCom Inc., Case No. 02-CV-4963 (JSR), the Marcus statement relates how the author worked at WorldCom for 14 years, serving as a senior sales executive for 10 of those years and a key account manager for three years. At the time of his resignation on May 6, 2002, Marcus was an MCI/WorldCom account relations manager. In his statement, Marcus said: "Several weeks before MCI WorldCom's accounting fraud became known to the public -- I tendered my resignation from the company by letter dated May 6, 2002 ... In that letter, I identified in detail numerous instances of fraud in the sales and support departments. As I stated then, those incidents led me to 'regard WorldCom as a company corrupted beyond any measure of repair.' At that time, I 'concluded that corruption and greed are central to our [WorldCom's] corporate culture.' What I witnessed comports with the reports of others that MCI/WorldCom's fraud was not limited to the accounting department." Marcus continued: "On May 15, 2003, I forwarded my resignation letter to the ... Securities and Exchange Commission. To this day, I have yet to receive a response or inquiry from the SEC. In the resignation letter that I forwarded to the SEC, I identified, among other things, one specific instance when a WorldCom manager taught a sales team how to inflate revenue numbers. In particular, I stated: WorldCom employees deliberately manipulate customer accounts for the purpose of converting existing revenue/customers to new-billed revenue (NBR). ... '[Name of WorldCom Employee Omitted] provided instruction for this exercise to the Jacksonville sales team and acting Branch Manager' ... Revenue numbers were inflated to increase income to a number of WorldCom employees ..." The Marcus statement also includes the following passage: "[NBR] manipulation was not only common practice among many at MCI/WorldCom, revenue manipulation was condoned and training was provided by MCI/WorldCom executive management to field sales executives. New stand-alone or multiple accounts were established for existing customers, the existing products and revenue was transferred to the new account, the original account was closed, and a new commission payout window was opened. When an existing customer ordered additional service or circuits a new sub-account could be set up to roll to an established parent (group level) account, and a new commission payout window was opened. These were but a few methods typically used to falsify newly billed revenues in order to be paid duplicate commissions and bonuses, and validate the estimated revenues previously reported." "It was common business practice for MCI/WorldCom sales executives and particularly WorldCom sales managers to both inflate and/or invent whatever account revenue figures were required by senior management in order to consistently meet or exceed assigned sales quota values. MCI/WorldCom reported new monthly revenue sales through a system known as BUC$. The BUC$ reports identified the customer name, account number, product sold, quantity, and estimated monthly usage (EMU) revenue value. Reported monthly revenue values were often inflated by 100% or more of the actual net product value sold. Orders were submitted with a forged contract or none at all, new account numbers are fabricated or invalid, and duplicate accounts report the same revenue multiple times. These were but a few methods typically used to falsify estimated revenues in order to meet senior management quota requirements." Since its founding in May 2002, the Web site now known as http://www.BoycottMCI.comhas supported a variety of steps to highlight problems at the former WorldCom. Marcus has called for the debarment of the troubled telecommunications company from future federal contracts. BoycottMCI.com also has opposed efforts by the Securities and Exchange Commission to let WorldCom off the hook with no meaningful penalty. Earlier this year, Marcus highlighted financial issues that were buried in reports issued by the former WorldCom. BoycottMCI.com was established in May 2002 to: dissuade consumers, businesses, and governmental entities from purchasing internet/data/telecom services and equipment from WorldCom, Inc. or any of its owned companies or subsidiaries; encourage retail and institutional investors to divest of all WorldCom/MCI equities and initiate class action; and organize grassroots effort to encourage Federal and State investigations into WorldCom's business practices. BoycottMCI.com founder Mitch Marcus is a former WorldCom account relations manager, who resigned his position due to concerns about company operations. WORLDCOM INC: Coalition Urges Court to Trash SEC Settlement ----------------------------------------------------------- A broad-based coalition of 8 organizations representing elderly, labor, rural advocates, and urban public interests urged that the federal judge in the WorldCom bankruptcy proceeding reject the Securities and Exchange Commission/MCI-WorldCom settlement in favor of a bigger fine that would include money for the creation of an "independent watch dog agency." The letter to Judge Jed S. Rakoff of the United States District Court, for the Southern District of New York, was filed in response to the court's invitation of May 19, 2003 welcoming submissions by interested third parties. The 8 group coalition consists of: Gray Panthers, Alliance of Retired Americans, Labor Council of Latin American Achievement, Nation Council of Churches, National Hispanic Council on Aging, National Grange, Urban League, and the National Indian Council on Aging. The letter states: "A portion of the fine should be set aside to fund an endowment for an independent watchdog group. This group would monitor the telecommunications industry on behalf of the public and give the people a national voice in the affairs of the industry. It would also provide a focal point to prevent a debacle like the WorldCom collapse from ever happening again. A larger penalty will also help restore the trust of working men and women that part of a secure retirement is investments in well-managed US enterprises, as well as help pension fund managers keep the promise to their pensioners that the toil of those pensioners' working years will be rewarded in their golden years." In their submission, the 8 organizations noted: "[We] urge the court to reject the proposed settlement between MCI WorldCom and the Securities and Exchange Commission because the penalty fails to address the scope of the fraud, will not restore investor trust in the market, and is not sufficient to act as a deterrent for future fraudulent activity. The SEC's proposed penalty is a slap on the wrist for MCI WorldCom and a slap in the face for older Americans and shareholders. "MCI Worldcom's fraud has wiped out $175 billion of shareholder value and threatened the pensions and financial security of millions of hardworking Americans who trusted the integrity of the financial market. The SEC's proposed $500 million fine is just one week's revenue for MCI, and represents less than 5 percent of the admitted fraud of $11 billion dollars and less than 1 percent of the destroyed shareholder value." The letter concludes: "The proposed settlement should be rejected because it is inadequate to restore investor confidence in the market place. Restoring investor trust in the market will require a penalty that is appropriate for the crime. The penalty should compensate the people defrauded and serve as a deterrent to prevent this type of activity from occurring in the future ... The weakness of the SEC's proposed fine becomes apparent when compared with the actions not taken. For example, the company has never been indicted, despite admitting to the largest corporate fraud in American history. The CEO, Bernie Ebbers remains un-indicted. The Federal Communications Commission has done nothing to revoke any of MCI WorldCom's licenses, although it has readily done so in other instances of corporate wrongdoing. The General Services Administration has done nothing to debar or suspend MCI WorldCom from federal contracts, despite the fact that it had debarred both Enron and Arthur Anderson for much lesser crimes." In addition, the groups say: "Even more troubling than this lack of tough enforcement is the fact that the federal government is engineering a massive multi-level bailout of MCI WorldCom. The Internal Revenue Service has returned over $300 million in tax refunds for overstating its revenues to hide its fraud. Since the bankruptcy, the federal government has dramatically increased the amount of MCI WorldCom's contracting business from $122 million in 2000 to $770 million today. These contracts include a special no-bid contract to build a wireless network in Iraq- even though the company has no experience building or operating wireless networks." ABOUT THE GROUPS * The Gray Panthers is an inter-generational advocacy organization with over 40,000 activists working together for social and economic justice. * The Alliance for Retired Americans is a nationwide organization with three million union retirees and other older and retired Americans working together to make their voices heard in the laws, policies, politics and institutions that shape our lives. * Labor Council for Latin American Advancement works with Latino union members to advocate for the rights of all Latino workers and their families at all levels of the American trade union movement and the political process. * The National Grange is America's foremost volunteer & grassroots organization comprised of families and individuals who share a common interest in community involvement, agricultural and rural issues. * The National Council of Churches (NCC) is the leading ecumenical organization among Christians in the United States and represents the interests of 36 Protestant, Orthodox, and African-American denominations with more than 50 million adherents in 140,000 local congregations across the nation. * National Hispanic Council on Aging, is dedicated to improving the quality of life for Latino elderly, families, and communities. NHCoA participates in national and local coalitions, task forces, and committees that address issues and their impact on Latino seniors * The National Urban League, Inc. founded in 1910, is the premier social service and civil rights organization in America. The League is a nonprofit, community-based organization headquartered in New York City, with 115 affiliates in 34 states and the District of Columbia. The mission of the League is to assist African Americans in the achievement of social and economic equality. * The National Indian Council on Aging has served as the nation's foremost nonprofit advocate for the nation's (est.) 296,000 American Indian and Alaska Native elders. NICOA strives to better the lives of the nation's indigenous seniors through advocacy, employment training, dissemination of information, and data support. * Cadwalader Wickersham & Taft Names Gregory Ballard as Counsel --------------------------------------------------------------- Cadwalader, Wickersham & Taft LLP, one of the world's leading international law firms, has named Gregory Ballard as Counsel to the firm, resident in the New York office. Mr. Ballard was formerly in the Litigation Department at Davis Polk & Wardwell. Mr. Ballard will provide counseling and representation on securities, complex civil, criminal and commercial litigation and other securities administrative matters. "Gregory is an excellent addition to our litigation practice," said Robert O. Link, Jr., Cadwalader's Chairman. "His experience representing investment banks, commercial banks, and other publicly-held companies complements our highly regarded litigation practice." "Gregory's experience in securities related matters, including securities litigation and complex civil litigation, will allow him to immediately 'hit the ground running,' adding depth to our growing practice and value to our clients," said Gregory A. Markel, Chairman of Cadwalader's Litigation Department. Mr. Ballard joined Davis Polk & Wardwell as an associate in 1992, becoming Counsel in 2002. He received both his B.A. and J.D. from Columbia University where he was a Notes and Comments Editor of the Columbia Law Review. He was also a Harlan Fiske Stone Scholar and received the James A. Elkins Prize in Criminal Law. Cadwalader, Wickersham & Taft LLP, established in 1792, is one of the world's leading international law firms, with offices in New York, Charlotte, Washington and London. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in securitization, structured finance, mergers and acquisitions, corporate finance, real estate, environmental, insolvency, litigation, health care, banking, project finance, insurance and reinsurance, tax, and private client matters. More information about Cadwalader can be found at http://www.cadwalader.com * BOND PRICING: For the week of June 9 - 13, 2003 ------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 10.875% 10/01/10 59 Akamai Technologies 5.500% 07/01/07 70 American & Foreign Power 5.000% 03/01/30 74 AMR Corp. 9.000% 08/01/12 56 AMR Corp. 9.000% 09/15/16 57 AnnTaylor Stores 0.550% 06/18/19 66 Aurora Foods 8.750% 07/01/08 41 Best Buy Co. Inc. 0.684% 06/27/21 74 Burlington Northern 3.200% 01/01/45 60 Calpine Corp. 7.875% 04/01/08 68 Calpine Corp. 8.500% 02/15/11 69 Calpine Corp. 8.625% 08/15/10 67 Charter Communications, Inc. 4.750% 06/01/06 62 Charter Communications, Inc. 5.750% 01/15/05 65 Charter Communications Holdings 8.625% 04/01/09 72 Charter Communications Holdings 10.000% 04/01/09 73 Charter Communications Holdings 10.000% 05/15/11 72 Charter Communications Holdings 10.250% 01/15/10 73 Charter Communications Holdings 10.750% 10/01/09 74 Cincinnati Bell Telephone 6.300% 12/01/28 74 Collins & Aikman 11.500% 04/15/06 67 Comcast Corp. 2.000% 10/15/29 32 Conseco Inc. 8.750% 02/09/04 26 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 41 Cox Communications Inc. 3.000% 03/14/30 45 Crown Cork & Seal 7.375% 12/15/26 69 Crown Cork & Seal 8.000% 04/15/23 71 Cummins Engine 5.650% 03/01/98 69 Delta Air Lines 7.900% 12/15/09 75 Dynex Capital 9.500% 02/28/05 2 Elwood Energy 8.159% 07/05/26 69 Finova Group 7.500% 11/15/09 42 Fleming Companies Inc. 10.125% 04/01/08 19 Foamex L.P. 9.875% 06/15/07 35 Goodyear Tire 7.857% 08/15/11 73 Gulf Mobile Ohio 5.000% 12/01/56 67 Health Management Associates Inc. 0.250% 08/16/20 64 HealthSouth Corp. 7.625% 06/01/12 75 HealthSouth Corp. 10.750% 10/01/08 43 I2 Technologies 5.250% 12/15/06 71 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 67 Inland Steel Co. 7.900% 01/15/07 72 Internet Capital 5.500% 12/21/04 40 Lehman Brothers Holding 8.000% 11/13/03 71 Liberty Media 3.500% 01/15/31 74 Liberty Media 3.750% 02/15/30 65 Liberty Media 4.000% 11/15/29 70 Lucent Technologies 6.450% 03/15/29 68 Lucent Technologies 6.500% 01/15/28 68 Magellan Health 9.000% 02/15/08 36 Mirant Americas 7.200% 10/01/08 62 Mirant Americas 8.300% 05/01/11 62 Mirant Americas 8.500% 10/01/21 58 Mirant Corp. 5.750% 07/15/07 68 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 72 Missouri Pacific Railroad 5.000% 01/01/45 69 NTL Communications Corp. 7.000% 12/15/08 19 Northern Pacific Railway 3.000% 01/01/47 57 Revlon Consumer Products 8.625% 02/01/08 46 Solutia Inc. 6.720% 10/15/37 73 United Airlines 10.670% 05/01/04 8 United Health Services 0.426% 06/23/20 62 US Timberlands 9.625% 11/15/07 56 Westpoint Stevens 7.875% 06/15/05 25 Westpoint Stevens 7.875% 06/15/08 25 Worldcom Inc. 6.400% 08/15/05 31 Worldcom Inc. 6.950% 08/15/28 31 Worldcom Inc. 7.750% 04/01/07 31 Xerox Corp. 0.570% 04/21/18 65 ********* 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 ***