/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/030625.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 25, 2003, Vol. 7, No. 124 Headlines ACE LIMITED: Evan Greenberg Elected as New President and COO ACETEX CORP: Inks Definitive Pact to Merge with AT Plastics ACETEX CORP: S&P Concerned about Merger Pact with AT Plastics ACORN HOLDING: Will Shut Down Reticon Enterprises' Operations ADVANCED GLASSFIBER: Files Reorg. Plan and Disclosure Statement AEGIS ASSESSMENTS: Kelly & Co. Replaces Stonefield as Auditors AIR CANADA: Canadian Court Extends CCAA Stay Period to Sept. 30 AIR CANADA: Pilots Say Restructuring Deal At Peril in Vote AIRTRAN AIRWAYS: Flight Attendants Reach Tentative Contract Pact ALLEGHENY ENERGY: Needs SEC Approval to Obtain New Financing ALLEGIANCE TELECOM: Gets Court Okay to Retain Togut as Counsel ALPINE GROUP: Completes Private Placement of Ser. A Preferreds AMERCO: Final Cash Collateral Hearing to Convene on July 16 AMERICAN COMMERCIAL: Has Until Sep. 29 to File Chapter 11 Plan AMPHENOL CORP: Completes Senior Credit Facility Refinancing ASIA GLOBAL CROSSING: Hires Friedman Kaplan as Special Counsel CALPINE CORP: Banks Approve New $950-Million Revolving Facility CENTERSPAN COMMS: Nasdaq Yanks Shares from National Market CHESAPEAKE ENERGY: Will Publish 2nd Quarter Results on July 28 CHIQUITA BRANDS: Promotes Jeffrey Acker to Lead Quality Strategy CINCINNATI BELL: Amends CEO Kevin Mooney's Employment Agreement CLASSIC COMMS: Lease Decision Time Extended through July 7 COMBUSTION ENGINEERING: Judge Fitzgerald Slows ABB's Escape COMMSCOPE: S&P Equity Analyst Ups Stock Opinion to 'Accumulate' CONSECO FINANCE: Green Tree Credit Wants Nod to Obtain Financing CONSECO: Green Tree Residual's Voluntary Chapter 11 Case Summary CONSECO: Conseco Finance Credit's Voluntary Ch. 11 Case Summary CONSECO INC: Files Third Amended Plan of Reorganization COVANTA ENERGY: Urges Court to Clear David Hahn Settlement Pact DIRECTV LATIN AMERICA: Court Fixes August 30 as Claims Bar Date DOUBLECLICK.COM: Completes Zero Coupon Conv. Sub. Note Offering DTVN HOLDINGS: Court Confirms Joint Plan of Reorganization EDELNOR: Local & Foreign Corp. Credit Ratings Raised to B- ENERGY WEST: Has Until Tomorrow to Arrange Credit Pact Extension ENRON: Committee Asks Court to Nix Whitewing Sale Restrictions FLEMING: SEC Allows NYSE Application to Delist Fleming Equity FRUIT OF THE LOOM: Resolves American Casualty Claims Dispute GENESCO INC: S&P Assigns B Rating to $75 Million Sub. Debentures GENTEK: Asks Court to Approve Miscellaneous Asset Sale Protocol GENUITY INC: Wants Clearance for GTE/Telus Settlement Agreement GERDAU AMERISTEEL: Prices 10-3/8% Senior Unsecured Notes GLOBAL CROSSING: Settles Claims Dispute with SAP America HEARTLAND SECURITIES: Court Fixes June 30, 2003 Claims Bar Date HORIZON NATURAL: Princess Beverly Coal Mine is Closing IDEC PHARMACEUTICALS: S&P Places BB Ratings on Watch Positive IMC GLOBAL: Preparing $125 Million Preferred Stock Offering IMC GLOBAL: Commences Tender Offers for 6.55% and 7.625% Notes IMCLONE SYSTEMS: December 31 Net Capital Deficit Widens to $185M IMPAC: Fitch Downgrades Class B1 & B2 Certificates to B/CC INTEGRATED HEALTH: Signs-Up TriAlliance as Real Estate Brokers INT'L MULTIFOODS: Appoints KPMG LLC as New Independent Auditors KMART CORP: Court Ratifies May 6 Distribution Record Date KSAT SATELLITE: Shareholders Approve Voluntary Dissolution Plan LARRY'S STANDARD: Asks Court to Extend Lease Decision Period MAGELLAN HEALTH: Secures Clearance for Group Practice Settlement MANITOWOC: Teams-Up with Kvichak to Build Coast Guard Prototype MASTER FIN'L: Fitch Affirms Two BB Class B2 Note Ratings MEDISOLUTION LTD: Reports Improved Performance for March Quarter MICROSTRATEGY: Opts to Convert $53 Million of Debt into Equity MIRANT: S&P Revises Junk Debt Watch Implications to Negative MISSISSIPPI CHEMICAL: Case Summary & Largest Unsecured Creditors MISSISSIPPI CHEMICAL: UST Appoints Official Creditors' Committee MOSAIC GROUP: Court Stretches Lease Decision Time Until Oct. 15 NATIONAL CENTURY: Takes Action to Challenge DCHC $310-Mil. Claim NETBANK INC: Court OKs Claims Settlement Pact with Ch. 7 Trustee NEXTEL PARTNERS: Closes Private Placement of 8-1/8% Senior Notes NHC COMMS: May 2 Balance Sheet Upside-Down by CDN$4.5 Million NHC COMMUNICATIONS: Entering $150K Management Financing Pact NRG ENERGY: Court Establishes Interim Compensation Procedures NUEVO ENERGY: Redeems $157MM of 9-1/2% Senior Subordinated Notes OGLEBAY NORTON: Appoints John P. O'Brien to Board of Directors ONE PRICE CLOTHING: May 3 Balance Sheet Upside-Down by $1.2 Mil. ORBITAL SCIENCES: S&P Gives $135M Unsecured Notes B+ Rating ORGANOGENESIS: Files Amended Plan and Disclosure Statement PRIMUS KNOWLEDGE: Regains Compliance with Nasdaq Requirements PSC INC: S.D.N.Y. Court Confirms Plan of Reorganization PENTHOUSE INT'L: Eisner LLP Steps Down as Independent Auditors POLYPHALT: Grandwin Extends Loan Repayment Deadline Until Sat. RELIANCE GROUP: Committee Hires Crossroads for Financial Advice RIBAPHARM: ICN Airs Disappointment with Board's Recommendation SASKATCHEWAN WHEAT: Hosting Q3 Results Conference Call Today SCORES HOLDING: Anticipates Improved 2003 Financial Results SENTRY TECHNOLOGY: Clinches $1 Mill. Supplier Debt Restructuring SLATER STEEL: Wants Nod to Hire Jones Day as Bankruptcy Counsel SLI INC: Delaware Court Confirms Chapter 11 Reorganization Plan SPIEGEL: Wants Go-Signal to Sell Certain Accounts & Receivables SR TELECOM: Initiates Private Placement to Raise $6 Million TENET HEALTHCARE: Fitch Cuts Sr. Debt & Bank Loan Ratings to BB+ TRANSDIGM INC: Commences Tender Offer for 10.375% Sr. Sub. Notes TYCO: Appoints Charles Young as Senior V-P, Corp. Communications TYCO INT'L: Unit Wins Patent Suit against Universal Surveillance UNITED AIRLINES: US Bank Demands $20 Mill. Admin Expense Payment UNITED DEFENSE: S&P Keeps Watch on BB- Corporate Credit Rating US AIRWAYS: Strikes Claims Settlement Pact with General Electric US DATAWORKS: Brings-In Ham Langston as Independent Accountants WEIRTON STEEL: Court Approves Interim Compensation Procedures WESTPOINT STEVENS: Gets Interim Approval to Hire Rothschild Inc. WORLDCOM INC: Pushing for Approval of Valor Settlement Agreement * Meetings, Conferences and Seminars ********* ACE LIMITED: Evan Greenberg Elected as New President and COO ------------------------------------------------------------ ACE Limited (NYSE:ACE) announced a realignment of senior executive responsibilities. The Board of Directors has elected Evan Greenberg to the position of President and Chief Operating Officer of ACE Limited, effective June 23, 2003. Mr. Greenberg will continue to head ACE Global Reinsurance and ACE Overseas General, and will also take responsibility for day-to-day operations of ACE Limited, the parent company. His new duties include supervision of all ACE Limited administration functions and learning and development. The offices of the Chief Financial Officer and General Counsel will continue to report to ACE Chairman and Chief Executive Officer Brian Duperreault. Dominic Frederico will become Vice Chairman of ACE Limited, with continued responsibility for ACE's North American operations, which include ACE USA, ACE Westchester Specialty Group and ACE Bermuda, as well as for all of ACE's financial lines of business. "We are fortunate to have such a young and highly qualified team available to head up ACE," Mr. Duperreault commented. "This team has allowed us to sustain the amazing growth that ACE has achieved over its 18-year history, while responding to ever-changing industry conditions. "For a number of years, ACE achieved growth through acquisitions, assembling a global platform that would be difficult to replicate in today's business climate. For the last three years, however, ACE has outperformed its peers in achieving rapid growth through internal resources. For us to extend this track record, execution of business plans will be the key. "Evan has an exceptional background in this regard, with considerable operational experience gained as the former President and Chief Operating Officer of American International Group. Even more impressive is the record he has compiled since joining ACE in November 2001. Under Evan's management direction, ACE Tempest Re doubled in size, ACE Global Markets returned to underwriting profitability, and ACE Europe and our other international operations were set on a path of highly profitable growth. "I am also pleased that the Board has appointed Dominic Frederico, one of our most valuable and experienced executives, to the position of Vice Chairman. Dominic has presided over nearly all of ACE's important acquisitions, negotiating terms and conditions and implementing restructuring plans. He has brought ACE USA and ACE Westchester Specialty to unprecedented levels of profitability and will continue to devote his energy to leading ACE to exceptional performance." Both Dominic Frederico and Don Kramer, ACE's Vice Chairmen, will report directly to Evan Greenberg. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients. The ACE Group conducts its business on a global basis, with operating subsidiaries in nearly 50 countries. Additional information can be found at: http://www.acelimited.com As reported in Troubled Company Reporter's April 25, 2003 edition, Fitch downgraded the debt ratings of ACE and its subsidiary ACE INA Holdings, Inc. by one notch, including the senior debt ratings to 'A-' from 'A' and commercial paper ratings to 'F2' from 'F1'. Fitch also downgraded the insurer financial strength ratings of the insurance subsidiaries of Brandywine Holdings by four notches to 'B+' from 'BBB-'. Fitch assigned a 'BBB+' rating to the preferred securities issue planned under ACE's recent shelf registration, while downgrading the rating on existing preferred securities to 'BBB+' from 'A-'. The Rating Outlook on all of the above noted ratings is Stable. ACETEX CORP: Inks Definitive Pact to Merge with AT Plastics ----------------------------------------------------------- Acetex Corporation (TSX: ATX) and AT Plastics Inc. (TSX: ATP) have entered into a definitive agreement to merge to create an integrated chemical company focusing on specialty plastics and intermediate chemicals serving customers around the world. Under the agreement, AT Plastics will become a wholly-owned subsidiary of Acetex. The Board of Directors of AT Plastics will recommend the acceptance of the proposed transaction to AT Plastics' shareholders. Under the terms of the agreement, shareholders of AT Plastics will exchange each of their common shares for one-sixth of one Acetex common share. Based on the ten day average closing price of Acetex common shares on the Toronto Stock Exchange, the agreement values each AT Plastics common share at Cdn $1.06, a 56% premium over the Cdn $0.68 ten day average closing price of the AT Plastics common shares as of June 20, 2003. Following completion of the transaction, former AT Plastics' shareholders will own approximately 25% of the issued and outstanding common shares of Acetex. The total value of the transaction is approximately Cdn $200 million. Brooke N. Wade, Chairman and Chief Executive Officer of Acetex said, "I am delighted to announce this agreement. It marks an important step forward in our vision of creating a world-class chemical company through the careful acquisition of high-quality chemical businesses around the world. "The benefits of the transaction are both financial and operational. Substantial value will be created by re-financing AT Plastics heavy debt burden to remove the sizeable debt servicing costs that have been weighing on the financial performance of the company. The management of AT Plastics, who will continue to lead its business post-merger, have done an outstanding job of turning the business around and putting it on a track of strong value growth. "The businesses of the merged company will range from AT Plastic's specialty plastics to Acetex's chemical intermediates businesses. AT Plastics has built an excellent reputation as a manufacturer of high quality and highly specialized polymer resins, compounds, and films products. Vinyl acetate monomer, which is a primary product of Acetex, is a major feedstock of AT Plastics. Although there will be no physical integration, this product synergy will provide financial strength to the company. "Both companies' businesses enjoy a solid market position, competitive cost structure and a favorable exposure to the cyclicality of the chemical industry. We believe that we can generate significant shareholder value as we leverage the AT Plastics' manufacturing expertise and proprietary technologies with our own substantial chemical production and financial resources." "I strongly endorse the transaction, which I believe is very positive for AT Plastics' shareholders as well as our employees and customers", said Gary L. Connaughty, President and Chief Executive Officer of AT Plastics, adding that "Acetex, like AT Plastics, places high value on innovative technology, manufacturing excellence and the contribution of its people. Acetex will provide AT Plastics the necessary strength from which to effectively pursue future growth opportunities based on our market strength and advanced technologies." The agreement is subject to completion of customary transaction documents and closing conditions, approval of all applicable regulatory authorities, and Acetex obtaining satisfactory financing pertaining to the refinancing of AT Plastics' debt. The transaction will involve the amalgamation of AT Plastics with a wholly-owned subsidiary of Acetex under the Business Corporations Act (Ontario), which will require the approval of shareholders representing 66-2/3% of AT Plastics common shares voting at a special meeting of shareholders. AT Plastics' shareholders will receive information outlining the details of the transaction prior to the meeting, which is expected to be held in early August 2003. AT Plastics' largest shareholder, Perry Capital LLC, which holds or exercises control or direction over approximately 28% of the AT Plastics common shares, has agreed to vote in favour of the transaction. As part of the agreement, AT Plastics has agreed to pay to Acetex US $5 million, or common shares of AT Plastics in lieu, as a "break fee" if the directors of AT Plastics change their recommendation in favor of the transaction or AT Plastics consummates a transaction with another party. In addition, Acetex has agreed to pay to AT Plastics US $5 million, or common shares of Acetex in lieu, as a "break fee" in certain circumstances if Acetex fails to complete the transaction as a result of its inability to arrange financing. Each of AT Plastics and Acetex has agreed to pay to the other US $ 1 million or common shares in lieu, in the event the transaction is terminated by either AT Plastics or Acetex, as the case may be, as a result of non- fulfilment by the other party of certain conditions to the completion of the transaction. W.Y. Campbell & Company and Aird & Berlis LLP acted as advisors and counsel to AT Plastics while Griffiths McBurney & Partners, UBS Securities LLC, and Burnet, Duckworth & Palmer LLP acted as advisors and counsel to Acetex. Acetex Corporation is Europe's second largest producer of acetic acid and polyvinyl alcohol and third largest producer of vinyl acetate monomer. These chemicals and their derivatives are used in a wide range of applications in the automotive, construction, packaging, pharmaceutical and textile industries. Acetex directs its operations from its corporate head office in Vancouver, Canada and its European head office in Paris, France. Acetex has plants in France and Spain and sales offices throughout Europe. AT Plastics develops and manufactures specialty polymers and films products. Specialty polymers are used in the manufacture of a variety of plastics products, including packaging and laminating products, auto parts, adhesives and medical products. The films business focuses on products for the agricultural, horticultural and construction industries. The company operates in niche markets where its product development and process engineering have allowed it to develop proprietary and patented technologies to meet evolving customer requirements. Products are sold in the United States, Canada and throughout the world. AT Plastics manufacturing operations are located in Edmonton, Alberta. ACETEX CORP: S&P Concerned about Merger Pact with AT Plastics ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on acetyls producer Acetex Corp. on CreditWatch with negative implications following the company's announcement that it has entered into a definitive agreement to merge with specialty plastics manufacturer, AT Plastics Inc. "The CreditWatch placement highlights risks associated with the transaction including the assumption of AT Plastics' heavy debt burden and Acetex' need to refinance this debt during the near- term," said Standard & Poor's credit analyst Franco DiMartino. Standard & Poor's said that in resolving the CreditWatch, it will meet with Acetex's management to further understand the business profile of the merged entity, management's integration strategy, and plans for refinancing AT Plastics' debt. Mr. DiMartino said that the CreditWatch listing highlights the near-term risk of a downgrade given the information currently available, although Standard & Poor's could affirm the existing ratings subject to evaluation of the combined business profile, prospective business plans, and management's financial policies. Headquartered in Vancouver, Canada, Acetex, with sales of about $200 million, is a leading producer and distributor in Europe of acetic acid, vinyl acetate monomer, and polyvinyl alcohol, collectively known as acetyls. ACORN HOLDING: Will Shut Down Reticon Enterprises' Operations ------------------------------------------------------------- Acorn Holding Corp.'s sole operating subsidiary, Recticon Enterprises, Inc., which manufactures monocrystalline silicon wafers that are used in the semiconductor industry, will close down its operations upon fulfillment of its existing orders. Absent any special circumstance, neither Acorn nor Recticon expect to seek any protection under bankruptcy laws. Acorn is presently exploring all strategic alternatives. Stephen A. Ollendorff, Chairman and Chief Executive Officer of the Company, stated that "the closing of the operations of Recticon was necessitated by a sharp acceleration in the decline of sales and the erosion of pricing for its products." The Company's stock is traded on the OTC Bulletin Board under the symbol AVCC. ADVANCED GLASSFIBER: Files Reorg. Plan and Disclosure Statement --------------------------------------------------------------- Advanced Glassfiber Yarns LLC has filed a Plan of Reorganization and Disclosure Statement with the Bankruptcy Court overseeing its reorganization proceedings. The Plan has the support of the Company's secured Bank creditors and represents a significant step in the Company's efforts to complete its restructuring. The Company noted that while the Plan is not currently supported by the unsecured creditors committee appointed in the proceedings, it will endeavor to continue discussions with that committee to attempt to achieve a consensual restructuring. The Company believes that the Plan will ultimately be approved even if such agreement is not achieved. If confirmed, the Plan will, among other things, satisfy the more than $180 million in claims of the Company's secured lenders through a combination of $120 million in new secured notes and a distribution of new common stock representing a 100% ownership interest in of the reorganized company, prior to dilution. Up to 30% of such new common stock distributed to the secured lenders may be reallocated among other parties in certain circumstances specified in the Plan. With respect to general unsecured creditors and holders of the Company's 9-7/8% senior subordinated notes, the Plan provides that, if such creditor classes vote to accept the Plan, they will receive their pro rata share of (i) a reallocation from the new common stock distributed to the Company's secured lenders representing 15%, in the aggregate, of the ownership of the reorganized company, prior to dilution, plus (ii) a distribution of warrants that will entitle such holders to additional distributions in certain circumstances. If such general unsecured creditors and/or noteholders do not accept the Plan, they will not receive any distributions. No distributions will be made under the Plan to the Company's equity holders for their existing equity interests, and all such existing equity interests in the Company will be canceled. Chief Restructuring Officer, Marc L. Pfefferle, stated: "[Mon]day's filing is a major step that marks the commencement of the final phase of AGY's operational and financial restructuring." Pfefferle also stated: "We especially want to thank our customers, vendors and employees for their continued support as we move forward with our efforts to confirm the Plan and emerge from Chapter 11, which we believe should occur before year-end." The Disclosure Statement is subject to approval of the United States Bankruptcy Court in the District of Delaware before it can be mailed to creditors for solicitation of their votes on the Plan. The Bankruptcy Court has not yet set a hearing date for approval of the Disclosure Statement. Additionally, the Plan in its present form may be modified as permitted under the Bankruptcy Code. In connection with the Plan, the Company also has reached separate settlements in principle with Owens Corning and Group Porcher, its two equity holders, which, among other things, modifies the terms of certain current business relationships and establishes the terms of go forward business relationships and agreements with such parties, and resolves all claims arising from such relationships. The Company believes that such agreements, which are subject to Bankruptcy Court approval, will significantly aid their restructuring efforts. Advanced Glassfiber Yarns, headquarters in Aiken, South Carolina, is one of the largest global suppliers of glass yarns, which are a critical material used in a variety of electronic, industrial, construction and specialty applications. AEGIS ASSESSMENTS: Kelly & Co. Replaces Stonefield as Auditors -------------------------------------------------------------- On June 3, 2003, Aegis Assessments, Inc., a Delaware corporation, determined to dismiss its independent auditors, Stonefield Josephson, Inc., and to engage the services of Kelly & Company as its new independent auditors. The change in auditors was to become effective immediately. During the most recent fiscal year ending July 31, 2002, and the subsequent interim period through January 31, 2003, and through June 3, 2003, Stonefield Josephson's reports contained an explanatory paragraph discussing matters that raised substantial doubt as to the Company's ability to continue as a going concern. The decision to change accountants was approved by a quorum of the Board of Directors of the Company upon the recommendation of its officers. AIR CANADA: Canadian Court Extends CCAA Stay Period to Sept. 30 --------------------------------------------------------------- Air Canada provided the following update on the airline's restructuring under the Companies' Creditors Arrangement Act. Extension of the Stay Order Mr. Justice James Farley of the Ontario Superior Court of Justice approved an extension of the original stay period order granted to Air Canada on April 1, 2003 to September 30, 2003. The purpose of this extension is to complete the Company's post-restructuring business plan, renegotiate the terms of aircraft leases with lessors, complete the review and renegotiation of operating contracts and commence the process to raise approximately $1.35 billion of exit financing. AIR CANADA: Pilots Say Restructuring Deal At Peril in Vote ---------------------------------------------------------- Air Canada's flight from bankruptcy may not get off the ground because of an unjust arbitration decision, says the Air Canada Pilots Association. The decision, which deals with merging the seniority lists for Air Canada pilots and former Canadian pilots, came just as Air Canada pilots were to begin voting on the new collective agreement necessary to get the airline out of bankruptcy protection. "The decision puts the outcome of that vote - and the survival of the airline - in jeopardy," said Capt. Dave Coles, Chair of the ACPA Merger Committee. "The decision is so devastating for Air Canada pilots and their families that it is inevitable that it will affect the vote on the new agreement." "That's why we've asked our members to hold back their vote until after Thursday June 26th," says Coles. "That's the day we meet with Paul Lordon, Chair of the Canadian Industrial Relations Board. A previous decision on the seniority issue by Mr. Lordon laid out the basic principles of fairness and justice to guide the arbitration. This decision didn't just ignore those principles, it shredded them". "We're asking Mr. Lordon to apply his principles to this decision and overturn it quickly," said Coles. "Then our members can vote without the threat of the decision hanging over them." Pilots are able to vote on the new agreement between June 22 and June 30. The new agreement they are considering is an essential part of Air Canada's $770 million deal with employees that will help the airline emerge from bankruptcy protection. AIRTRAN AIRWAYS: Flight Attendants Reach Tentative Contract Pact ---------------------------------------------------------------- AirTran flight attendants, represented by the Association of Flight Attendants, AFL-CIO, have reached a tentative contract agreement with the airline. "The tentative agreement includes important improvements for our flight attendants and it enables AirTran to continue on its course of growth in the future," said AFA AirTran Master Executive Council President Jon Edenfield. "It's important in these turbulent times for our industry that we could work with the company to reach an agreement that's good for the flight attendants and good for the airline." The current flight attendant contract became amendable in October 2002. AirTran flight attendants will have a chance to review and vote on the tentative contract before details will be released. The information and voting process will take approximately one month. A simple majority of AirTran flight attendants must vote "yes" in order for the contract to ratify. More than 50,000 flight attendants at 26 airlines -- including more than 1,000 flight attendants at AirTran -- join together to form AFA, the world's largest flight attendant union. For more information, visit AFA's Web site at http://www.afanet.org As reported in Troubled Company Reporter's May 6, 2003 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to AirTran Holdings Inc.'s $100 million 7% convertible notes due 2023, offered under Rule 144A with registration rights. At the same time, the rating was placed on CreditWatch with negative implications. Existing ratings on AirTran Holdings and its major operating subsidiary, AirTran Airways Inc., including the 'B-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on March 18, 2003. The original CreditWatch placement reflected financial damage to the airline industry from the effects of the Sept. 11, 2001, attacks and their aftermath, and the Iraq war. ALLEGHENY ENERGY: Needs SEC Approval to Obtain New Financing ------------------------------------------------------------ Allegheny Energy, Inc.'s (NYSE:AYE) common equity ratio (common equity to total capitalization) has fallen below the level required under certain key Securities and Exchange Commission authorizations. As a result, the Company will be required to obtain further SEC authorizations to engage in financing and other activities that are critical to its near-term financial viability. The Company said that the change in the common equity ratio was the result of several factors. First, the Company recently determined in connection with the preparation of its 2002 financial statements that the value of certain trading positions should be reduced as of December 31, 2002. Second, the Company will be recognizing write-downs with respect to a number of previously announced project cancellations. Also, as previously announced, the Company's financial performance in early 2003 has been substantially weaker than earlier projections. Accordingly, the Company believes that its common equity ratio for purposes of compliance with the Public Utility Holding Company Act of 1935 (PUHCA) is now below 28 percent. A substantial number of the Company's authorizations under PUHCA, including financings by the Company and Allegheny Energy Supply Company, LLC, are conditioned on the Company's common equity ratio meeting 28 percent. Without these authorizations, the Company has very limited flexibility to meet expected liquidity requirements or to address contingencies. The Company is preparing applications for submission to the SEC requesting authorizations to engage in certain financings and other activities. There can be no assurance that supplemental authorizations will be obtained, or obtained in a time frame sufficient to meet requirements or contingencies. The Company is in discussions with its senior bank lenders with respect to these regulatory issues, its performance in general, and the sources or availability of additional liquidity and will pursue discussions regarding issues concerning covenant compliance. As previously announced, the Company has not yet completed its comprehensive financial review, and, therefore, is not able to report financial results for the full year 2002 or the first quarter of 2003. Difficult market conditions and the effect of the Company's weakened credit profile have had a substantial adverse effect on operations during these periods, and, as previously noted, the Company anticipates that its earnings and cash flow results, when reported, will be substantially below the levels set forth in the projections released in February 2003, following completion of the Company's bank refinancing. The Company is undertaking the efforts described above in response to these developments and continues to pursue a number of asset sales and financing alternatives. For example, the Company has reached a settlement with regard to its California Department of Water Resources contracts and is actively pursuing the sale of the West Book of its energy trading portfolio. There can be no assurance, however, that the Company will be successful in these efforts or will achieve timely asset sales or financing to assure its ongoing liquidity. If the Company were unable to secure its liquidity position through the steps it is currently pursuing, it would be required to review other alternatives, including the possibility of seeking protection under the bankruptcy laws. With headquarters in Hagerstown, Md., Allegheny Energy is an integrated energy company with a balanced portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities and supplies energy and energy- related commodities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. More information about the Company is available at http://www.alleghenyenergy.com ALLEGIANCE TELECOM: Gets Court Okay to Retain Togut as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave its stamp of approval to Allegiance Telecom, Inc., and its debtor-affiliates' request to employ Togut, Segal & Segal LLP as co-counsel in the Company's chapter 11 proceeding. Togut Segal is expected to: a. advise the Debtors regarding their powers and duties as debtors in possession in the continued management and operation of their businesses and properties; b. attend meetings and negotiate with representatives of creditors and other parties in interest; c. take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including, but not limited to, objections to claims filed against the estates; d. prepare on the Debtors' behalf all motions, applications, answers, orders, reports and papers necessary to the administration of the estates; e. negotiate and prepare on behalf of the Debtors a plan of reorganization and all related documents; f. represent the Debtors in obtaining postpetition loans; g. advise the Debtors in with any potential sale of assets; h. appear before this Court and any appellate courts and protect the interests of the Debtors' estates before these Courts; i. consult with the Debtors regarding tax matters; and j. perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these chapter 11 cases. Albert Togut, Esq., a senior member of Togut Segal will lead the team in this engagement. Mr. Togut discloses that his firm will bill the Debtors at current hourly rates: partners $550 to $675 per hour paralegals and associates $100 to $470 per hour Allegiance Telecom, Inc., is a holding company with subsidiaries operating in 36 major metropolitan areas in the U.S. who provide a package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services and customer premise communications equipment sales and maintenance services. The Debtors filed for chapter 11 protection on May 14, 2003 (Bankr. S.D.N.Y. Case No. 03-13057). Jonathan S. Henes, Esq., and Matthew Allen Cantor, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,441,218,000 in total assets and $1,397,494,000 in total debts. ALPINE GROUP: Completes Private Placement of Ser. A Preferreds -------------------------------------------------------------- The Alpine Group, Inc. (OTC Bulletin Board: ALPG.OB) has completed a private placement of shares of a new issue of Series A Convertible Preferred Stock to its directors and certain of its officers for $380 per share, or an aggregate of $3.1 million. The proceeds of this offering will be used to repay indebtedness and for general corporate purposes. The Series A Convertible Preferred Stock will bear an annual dividend of $30.40, will be convertible into 691 shares of Alpine Common Stock beginning on the earlier of the date of completion of the rights offering referred to below and March 31, 2004 and, unless converted, will be redeemed by Alpine during the three-year period commencing on December 31, 2009. Alpine also has commenced an exchange offer whereby the holders of its Common Stock may exchange their shares for a new issue of Alpine's 6% Subordinated Notes. Alpine's stockholders will be offered the opportunity to exchange 40 shares of Common Stock for $50 principal amount of these notes. Alpine further announced that, after the completion of this exchange offer, it intends to offer to holders of its Common Stock the right to subscribe for shares of Series A Convertible Preferred Stock in proportion to their ownership of Common Stock. Pursuant to this proposed offer holders of Common Stock, for each 500 shares, will be offered a right to purchase one share of Series A Convertible Preferred Stock. Also, pursuant to the offer the purchase price per share and other terms of the preferred stock issue will be the same as that purchased by the directors and officers in the private placement referred to above. This rights offering will only be made pursuant to an effective registration statement to be filed with the SEC by Alpine, covering the shares of Series A Preferred Stock to be offered upon exercise of rights. Steven S. Elbaum, Chairman of the Board and Chief Executive Officer of Alpine, stated that "since its December 2002 acquisition of Essex Electric Inc., Alpine has repositioned that company's strategy and initiated a restructuring and consolidation of its operations with the objectives of achieving profitability and reducing debt. As announced today, Alpine has supplemented its capital base with the completion of a private placement of convertible preferred stock. At this juncture in its investment cycle and given the 2002 delisting of Alpine from the New York Stock Exchange, we believe it is appropriate to provide stockholders with the choice of (i) exiting their investment in Alpine Common Stock by exchanging shares of Common Stock for a 6% Subordinated Note, (ii) purchasing additional equity by subscribing to a rights offering of convertible preferred stock on the same terms as the private placement or (iii) doing neither (i) nor (ii). This range of alternatives is designed to provide our stockholders with investment choices that can be evaluated in the light of market conditions and their respective goals." The Alpine Group, Inc., headquartered in New Jersey and whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $831 million, is a holding company which owns 100% of Essex Electric Inc. and DNE Systems, Inc. Essex Electric Inc. is a leading manufacturer of a broad range of copper electrical wire for residential, commercial and industrial buildings for sale to electrical distributors and retailers. DNE Systems Inc. is a designer and manufacturer of communications equipment, integrated access devices and other electronic equipment for defense, government and commercial applications. AMERCO: Final Cash Collateral Hearing to Convene on July 16 ----------------------------------------------------------- AMERCO owes $205,000,000 under a 3-Year Credit Agreement dated June 28, 2002 -- according to information obtained from http://www.LoanDataSource.com-- to a Ten-Lender Syndicate: JP Morgan Chase Bank $25,000,000 12.195% Bank of America, N.A. 25,000,000 12.195% Bank One, NA 25,000,000 12.195% Citicorp USA, Inc. 20,000,000 9.756% Wells Fargo Bank, N.A. 20,000,000 9.756% Fleet National Bank 20,000,000 9.756% U.S. Bank National Association 20,000,000 9.756% Washington Mutual Bank 20,000,000 9.756% LaSalle Bank Natioanl Association 20,000,000 9.756% KBC Bank N.V. 10,000,000 4.878% ------------ ------- Total $205,000,000 100.000% ============ ======= All of AMERCO's obligations are guaranteed by 76 subsidiaries and secured by a first-priority security interest in existing and future intercompany receivables, proceeds thereof and any instruments evidencing those intercompany receivables. At June 28, 2002, Intercompany Receivables totaled $517,200,000; the Debtor can't compute the total today, but they're confident the Lenders are oversecured by a wide margin. The Debtor does not dispute the validity of the Lenders' liens and does not believe any portion of the debt is avoidable or subject to subordination. The Debtor believes all cash coming in the door constitutes the Lenders' Cash Collateral. Section 363 of the Bankruptcy Code prohibits AMERCO's continued use of the Lenders' Cash Collateral without bankruptcy court approval. AMERCO needs continued access to the Lenders' Cash Collateral to fund on-going operations until a DIP Financing Facility can be put in place to pay-off this $205 million prepetition debt. To protect the Lenders from any diminution in the value of the Collateral, the Debtor asks Judge Zive to approve a consensual Cash Collateral Stipulation granting the Lenders' post-petition replacement liens, approving continued interest payments, and authorizing continued payment of the Lenders' Professionals' Fees. The Debtor also asks Judge Zive, subject to a 60 to 90-day review period by any official committee, to ratify the Company's waiver of all potential claims, causes of action and subordination rights against the Lenders. The Debtor agrees to provide the Lenders with a variety of reports and keep them informed at each step in the restructuring process. Additionally, in no event will the Lenders' collateral be subject to any surcharge under 11 U.S.C. Sec. 506. Considering the Debtor's request at an Emergency First Day Hearing, Judge Zive approves the Debtor's request. Judge Zive will convene a Final Cash Collateral Hearing on July 16 at 2:00 p.m. in Reno to consider any objections to entry of a Final Cash Collateral Order allowing AMERCO access to the Lenders' cash collateral throughout the chapter 11 restructuring process. Richard Levin, Esq., and Seth Goldman, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Los Angeles, and John Murtha, Esq., at Woodburn and Wedge in Reno, represent the Lenders in AMERCO's chapter 11 proceeding. (AMERCO Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMERICAN COMMERCIAL: Has Until Sep. 29 to File Chapter 11 Plan -------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Southern District of Indiana, American Commercial Lines, LLC and its debtor-affiliates obtained an extension of their exclusive plan filing period. The Honorable Judge Basil H. Lorch, III gives the Debtors, until September 29, 2003, the exclusive right to file their plan of reorganization. American Commercial Lines LLC, an integrated marine transportation and service company transporting more than 70 million tons of freight annually using 5,000 barges and 200 towboats in North and South American inland waterways, filed for chapter 11 protection on January 31, 2003 (Bankr. S.D. Ind. Case No. 03-90305). American Commercial is a wholly owned subsidiary of Danielson Holding Corporation (Amex: DHC). Suzette E. Bewley, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. As of September 27, 2002, the Debtors listed total assets of $838,878,000 and total debts of $770,217,000. AMPHENOL CORP: Completes Senior Credit Facility Refinancing ----------------------------------------------------------- On May 6, 2003, Amphenol Corporation entered into a Credit Agreement, dated May 6, 2003, that completed the refinancing of its senior credit facilities and called for redemption of all of its outstanding Senior Subordinated Notes. The new $750 million credit facility consists of: (1) a $125 million five year revolving credit facility, (2) a $125 million Tranche A loan which will amortize over a five year period through May 2008, and (3) a $500 million Tranche B loan with $5 million per year amortization through 2009 and final maturity in 2010. The net proceeds from the refinancing are being used to repay all amounts outstanding under the Company's previous senior credit agreement totaling approximately $440 million, to redeem all outstanding Notes totaling $144 million and for working capital purposes. The Company incurred one-time expenses relating to the refinancing of approximately $10.5 million ($0.16 per share), representing the call premium on the Notes, write off of unamortized deferred debt issuance costs and other related costs. As reported in Troubled Company Reporter's April 11, 2003 edition, Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Amphenol Corp. and assigned a 'BB+' rating to Amphenol's $750 million senior secured bank credit facility. The outlook is stable. Wallingford, Connecticut-based Amphenol manufactures connectors, cable and interconnect systems for the electronics, cable television, telecommunications, military/aerospace, transportation and industrial applications. As of Dec. 31, 2002, the company had $644 million of debt outstanding. ASIA GLOBAL CROSSING: Hires Friedman Kaplan as Special Counsel -------------------------------------------------------------- The Asia Global Crossing Debtors sought and obtained the Court's authority to employ Friedman Kaplan Seiler & Adelman LLP, as its special corporate counsel nunc pro tunc to November 17, 2002. Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman LLP, in New York, informs the Court that the AGX Debtors have utilized Friedman Kaplan since April 11, 2002 for legal advice in connection with various matters relating to drafting and negotiating agreements with Global Marine Systems Limited, Alcatel Submarine Networks SA, Lucent Technologies, Inc., KDDI Submarine Cable Systems Inc. and Global Crossing. Friedman Kaplan was retained by the AGX Debtors pursuant to this Court's Ordinary Course Professionals Order dated November 18, 2002, under which the Firm's retention was effective as of the Petition Date. The Ordinary Course Order states that the AGX Debtors are authorized to pay compensation and reimburse professionals retained in the ordinary course in the customary manner in the full amount billed up to the lesser of: a) $25,000 per month per Ordinary Course Professional; or b) $250,000 in the aggregate for the duration of these Chapter 11 cases. The AGX Debtors' need for Friedman Kaplan's services has increased since the Petition Date. As a result, Friedman Kaplan's fees for the months of January 2003 and February 2003 exceeded the Ordinary Course Professional Fee Cap and are likely to exceed the Ordinary Course Professional Fee Cap in March 2003 and, possibly, subsequent months. Therefore, pursuant to the Ordinary Course Order, Mr. Casher relates that Friedman Kaplan is required to file a fee application for the full amount of its fees and disbursements in accordance with Sections 330 and 331 of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules for the Southern District of New York and any other orders of the Court and fee guidelines promulgated by the U.S. Trustee. Although not specifically required by the Ordinary Course Order, because Friedman Kaplan's fees are likely to exceed the Ordinary Course Professional Fee Cap on a regular basis, the AGX Debtors want to retain Friedman Kaplan pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code as special corporate counsel. According to Mr. Casher, the professional services that Friedman Kaplan will render to the Debtors are anticipated to include legal advice in connection with various matters relating to drafting and negotiating corporate agreements with Global Marine Systems Limited, Alcatel Submarine Networks SA, Lucent Technologies, Inc., KDDI Submarine Cable Systems Inc. and Global Crossing. The particular services that Friedman Kaplan rendered in recent months on the AGX Debtors' behalf involved the negotiation and documentation of the settlement agreement between the AGX Debtors and Global Crossing Ltd., which is the subject of separate motions recently filed by AGX and Global Crossing Ltd. in their bankruptcy courts. Friedman Kaplan Counsel Marc N. Epstein, Esq., assures the Court that the Firm: -- does not represent or hold any interest adverse to the Debtors and their estates with respect to the matters on which it is to be employed; and -- has no connection to the Debtors, their creditors or its related parties. However, Mr. Epstein discloses that Friedman Kaplan currently represents, or has recently represented, these parties-in- interest in matters unrelated to the Firm's representation of the AGX Debtors -- Pacific Crossing Ltd. (Bermuda); Microsoft Corporation; Yahoo Inc.; Lazard Freres Co. LLC; The Monitor Company; NEC Corporation; Bank of New York; United States Trust Company; Chase Securities Inc.; Goldman Sachs Co.; Solomon Smith Barney; Barclays Capital; Merrill Lynch Co.; CIBC World Markets; Credit Suisse First Boston; Deutsche Bank Alex Brown; Lehman Brothers; AT&T Corp.; and ABN Amro Incorporated. Although the Ordinary Course Affidavit stated that Friedman Kaplan was owed $14,000 for prepetition services, Mr. Epstein states that this assertion was based on the Firm's October billing records, the most recent billing records available at the time that the Ordinary Course Affidavit was created. Friedman Kaplan was paid the entire $14,000 in November, prior to the Petition Date. As a result, Friedman Kaplan is not a creditor of the AGX Debtors' estate. Compensation will be payable to Friedman Kaplan on an hourly basis, plus reimbursement of actual, necessary expenses and other charges incurred. The attorneys and paraprofessionals primarily involved in providing services and their current standard hourly rates are: Attorneys $225 - 600 Legal Assistants 115 - 175 (Global Crossing Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALPINE CORP: Banks Approve New $950-Million Revolving Facility --------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, has reached agreement with its bank group on a term sheet for a new, two-year, $950 million secured working capital revolver. As previously announced, this agreement provides the company with an automatic extension of the current maturity date for its existing $950 million revolving credit facilities to July 16, 2003. This extension will allow Calpine and its banks sufficient time to complete definitive documentation. "We greatly appreciate the efforts of our bank group in structuring this new, two-year, secured working capital revolver," stated Calpine Chief Financial Officer Bob Kelly. "This refinancing is a significant advancement in Calpine's program to enhance our liquidity and financial strength. Calpine continues to make progress towards the completion of other refinancing opportunities, and we are advancing our $2.3 billion liquidity program through several additional liquidity-enhancing transactions." Calpine Corporation is a leading North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit http://www.calpine.com * * * 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 about 85 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for real-time bond pricing. CENTERSPAN COMMS: Nasdaq Yanks Shares from National Market ---------------------------------------------------------- CenterSpan Communications Corporation's (Nasdaq: CSCC) stock was delisted from The Nasdaq National Market at the opening of business on June 23, 2003. The Company has filed a Form 15 with the Securities and Exchange Commission to terminate the registration of its stock. The Company will no longer file periodic or other reports with the Securities and Exchange Commission. * * * Liquidity and Going Concern Uncertainty The Company said in its SEC Form 10-K for the year ended December 31, 2002: "CenterSpan continued to experience operating losses during the year ended December 31, 2002, and in the first three months of 2003, and we have never generated sufficient revenues from our software-based content delivery operations to offset expenses. We expect to continue to incur losses through 2003. CenterSpan expects to incur approximately $1.0 million per quarter of operating expenses and expects that significant ongoing expenditures will be necessary to successfully implement our business plan and develop and market our products. "There is substantial doubt about our ability to continue as a going concern. Execution of our plans and our ability to continue as a going concern depend upon our acquiring substantial additional financing, which we may be unable to do. Management's plans include efforts to obtain additional capital, through bridge loans and the sale of equity securities. We cannot predict on what terms any such financing might be available, but any such financing could involve issuance of equity below current market prices and could result in significant dilution to existing shareholders. "CenterSpan has raised operating funds in the past by selling our shares of our common stock. We may not be able to raise additional funding. If we are unable to obtain adequate additional financing or generate sufficient cash flow from operations, management will likely be required to further curtail our operations, and we will likely cease operations. "In February 2002, we entered into an agreement with Sony Music. Under the terms of the agreement, Sony makes recordings available from its catalog of music performances for us to distribute digitally via C-StarOne(TM) to various C-StarOne(TM) service provider customers and their subscribers in the United States and Canada. In exchange, we paid cash and issued stock and warrants to Sony. The total value of the common stock, warrants and cash was $3.7 million and is being amortized over the three-year term of the agreement. We paid an initial content fee of $500,000 in February 2002 upon execution of the agreement. Under the terms of the agreement, a second content fee payment of $500,000 was due September 1, 2002. In addition, quarterly advance royalty payments of $250,000 each are payable for four quarters beginning September 1, 2002. The second content fee and the first three quarterly advance royalty payments are due and payable to Sony. These payments, totaling $1.25 million, have not been made as we are currently in negotiations with Sony seeking to restructure or modify this agreement. If we are unable to successfully restructure or modify this agreement and these payment obligations, our financial condition and business may be materially harmed and we may be forced to cease operations. "We use a direct sales group and marketing partnerships to sell C-StarOne(TM) content delivery network services. Although we have signed several customer service agreements, obtaining delivery contracts with major providers of digital media is crucial to our success." CHESAPEAKE ENERGY: Will Publish 2nd Quarter Results on July 28 -------------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) has scheduled its second quarter earnings release to be issued after the close of trading on the New York Stock Exchange on Monday, July 28, 2003. A conference call is scheduled for Tuesday morning, July 29, 2003 at 9:00 am EDT to discuss the release. The telephone number to access the conference call is 913.981.5533. We encourage those who would like to participate in the call to place your calls between 8:50 and 9:00 am EDT. For those unable to participate in the conference call, a replay will be available for audio playback at 12:00 pm EDT on Tuesday, July 29, 2003 and will run through midnight Monday, August 11, 2003. The number to access the conference call replay is 719.457.0820; passcode for the replay is 448860. The conference call will also be simulcast live on the Internet and can be accessed by going directly to the Chesapeake Web site at http://www.chkenergy.comand selecting "Conference Calls" under the "Investor Relations" section. The webcast of the conference call will be available on the Company's Web site indefinitely. Chesapeake Energy Corporation is the 8th largest independent natural gas producer in the U.S. Headquartered in Oklahoma City, the company's operations are focused on 3-D seismic delineated exploratory drilling combined with developmental drilling and producing property acquisitions in the Mid-Continent region of the United States. The company's Internet address is http://www.chkenergy.com As reported in Troubled Company Reporter's March 4, 2003 edition, Standard & Poor's assigned its 'B+' rating to independent oil and gas exploration and production company Chesapeake Energy Corp.'s $300 million senior unsecured notes due 2013. At the same time, Standard & Poor's assigned its 'CCC+' rating to Chesapeake's $200 million convertible preferred stock. All of Chesapeake's ratings remain on CreditWatch with positive implications where they were placed on Feb. 25, 2003 following Chesapeake's announcement that it has signed agreements to purchase oil and gas exploration and production assets from El Paso Corp. and Vintage Petroleum Inc. for a total consideration of $530 million. The CreditWatch with positive implications reflect that: -- Chesapeake is acquiring properties with low cost structures in its core Mid-Continent operating area that have a high degree of overlap with Chesapeake's operations, which should provide cost-reduction opportunities. -- Chesapeake intends to fund the transactions with a high percentage of equity; Chesapeake has announced an offering of eight million common shares (about $160 million of net proceeds are expected) and $200 million of convertible preferred securities with the balance funded with debt. CHIQUITA BRANDS: Promotes Jeffrey Acker to Lead Quality Strategy ---------------------------------------------------------------- Chiquita Brands International, Inc. (NYSE: CQB) has promoted Jeffrey C. Acker, 45, to vice president of global quality and food safety. Acker most recently served as vice president of technology and innovation at Chiquita Processed Foods. In his new role, he will be responsible for Chiquita's overall quality strategy based on total process control from source to market. He will also ensure that the company continues to achieve leading standards of food safety and security. "One of the hallmarks of the Chiquita brand is our commitment to high standards of quality and food safety," said Bob Kistinger, president and chief operating officer of Chiquita Fresh. "We must consistently deliver the best quality products and services that meet or exceed customer and consumer demands. Jeff's extensive experience will be critical as we enhance quality and maintain the safety of our products throughout the supply chain." Acker has more than 20 years experience in the food industry with leading companies, including Pillsbury, Kraft and General Foods. He has held leadership positions in quality, research and development, food and environmental law, supply chain management and environmental engineering. Acker earned his MBA from Wilmington College and his bachelor of science degree in food science from Michigan State University. He is a certified quality engineer with the American Society for Quality. Chiquita Brands International is a leading international marketer, producer and distributor of high-quality fresh and processed foods. The company's Chiquita Fresh division is one of the largest banana producers in the world and a major supplier of bananas in North America and Europe. Sold primarily under the premium Chiquita(R) brand, the company also distributes and markets a variety of other fresh fruits and vegetables. For more information, visit the company's Web site at http://www.chiquita.com As reported in the Troubled Company Reporter's April 22, 2003 edition, Standard & Poor's Ratings Services assigned its 'B-' rating to Chiquita Brands' $250 million senior unsecured notes due 2009. Standard & Poor's also assigned its 'B' corporate credit rating to Chiquita. The outlook is positive. The senior unsecured notes were rated one notch below the corporate credit rating, reflecting their junior position to the large amount of secured debt and priority debt at the operating subsidiaries. CINCINNATI BELL: Amends CEO Kevin Mooney's Employment Agreement --------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) -- whose latest balance sheet shows about a $2 billion shareholders' equity deficit -- amended its employment agreement with Chief Executive Officer, Kevin Mooney. On February 3, 2003, the Company amended the employment contracts of CEO, Kevin Mooney, and three other senior executives to establish incentives for their retention through the period of the Company's restructuring, particularly the sale of the broadband business of Broadwing Communications Inc., and amendment of the Company's credit facilities. A provision of Mr. Mooney's agreement provided for a 7-day period, commencing with the closing of the sale of the broadband business, under which he could elect to terminate his employment agreement. With the closing of the sale of the broadband business effective June 13, 2003, the Company and Mr. Mooney have agreed to extend the termination provision of his contract until August 31, 2003. With the majority of the elements of the Company's restructuring successfully completed, the Board of Directors will turn its attention to the corporate structure and management necessary to operate the company going forward. Cincinnati Bell Inc. (NYSE:CBB) is parent to one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. The company was recently ranked number one in customer satisfaction, for the second year in a row, by J.D. Power and Associates for local residential telephone service and residential long distance among mainstream users. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio. For more information, visit http://www.cincinnatibell.com CLASSIC COMMS: Lease Decision Time Extended through July 7 ---------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, Classic Communications, Inc., and its debtor-affiliates obtained an extension of their lease decision period pursuant to 11 U.S.C. Sec. 265(d)(4). The Court gives the Debtors until July 7, 2003, to decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. Classic Communications, Inc., a cable operator focused on non- metropolitan markets in the United States, filed for Chapter 11 petition on November 13, 2001 (Bankr. Del. Case No. 01-11257). Brendan Linehan Shannon, Esq. at Young, Conaway, Stargatt & Taylor, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $711,346,000 in total assets and $641,869,000 in total debts. COMBUSTION ENGINEERING: Judge Fitzgerald Slows ABB's Escape ----------------------------------------------------------- Judge Judith K. Fitzgerald slowed Combustion Engineering, Inc.'s emergence from chapter 11 under a plan of reorganization designed to simultaneously extinguish ABB Ltd. asbestos-related liabilities. Judge Fitzgerald approved Combustion Engineering's Disclosure Statement this week and recommends confirmation of the Company's Plan if the Company can demonstrate that direct creditors of Basic, Incorporated and ABB Lummus Global, Inc., received more notice about the proceedings and plan-related injunctions and releases than by general publication. Judge Fitzgerald sees that the list of Lummus and Basic creditors was prepared from Combustion's records rather than those companies' records. If notice by publication was all that was given to those creditor constituencies, then the fourth factor of the analysis in In re Dow Corning Corporation, 208 F.2d 648 (6th Cir. 2002) fails and that's a stumbling block to plan confirmation. If notice was adequate, then the plan has Judge Fitzgerald's blessing and she recommends confirmation. Because the Plan compromises asbestos-related personal injury claims, U.S. District Court Judge Alfred Wolin is also required to put his stamp of approval on the Plan before it can be confirmed. Full-text copies of Judge Fitzgerald's Opinion and Order are available at no charge at: http://www.deb.uscourts.gov/Opinions/2003/Combustion.pdf and http://www.deb.uscourts.gov/Opinions/2003/Combustion_order.PDF ABB Ltd.'s U.S. subsidiary Combustion Engineering, Inc., delivered a Chapter 11 petition to the U.S. Bankruptcy Court for the District of Delaware on Monday, February 17, 2003, to halt and resolve the tide of asbestos-related personal injury suits brought against the companies. Over the past dozen years -- according to information obtained from http://www.LitigationDataSource.com -- the number of claims against Combustion Engineering, its affiliates, ABB and former joint venture partners, has skyrocketed: Year Asbestos Claims Asserted Against CE ---- ----------------------------------- 1990 18,891 . 1991 19,000 . 1992 20,000 + 1993 21,000 + 1994 22,000 ++ 1995 23,842 +++ 1996 27,577 ++++++ 1997 28,976 +++++++ 1998 28,264 ++++++ 1999 33,961 ++++++++++ 2000 39,138 +++++++++++++ 2001 54,569 ++++++++++++++++++++++++ 2002 79,204 ++++++++++++++++++++++++++++++++++++++++ CE is named as a defendant in cases pending in multiple jurisdictions, with plaintiffs alleging injury as a result of exposure to asbestos in products manufactured or sold by CE or that was contained in materials used in CE's construction or maintenance projects. CE proposed a prenegotiated reorganization plan and disclosure statement similar to the model described by Todd R. Snyder and Deanne C. Siemer in "The Patronus Technique: A Practical Proposal for Asbestos-Driven Bankruptcies," 11 Journal of Bankruptcy Law and Practice 357. Combustion Engineering's History Combustion Engineering was incorporated in Delaware in 1912 as The Locomotive Superheater Co. and manufactured and sold superheaters for steam locomotives. From the 1930s forward, CE's core business is designing, selling and erecting power- generating facilities, including major steam generators. CE also services large steam boilers and related electrical power generating equipment. From the 1930s through the 1960s, asbestos insulation was used on many CE boilers. Development of the Plan Faced with escalating asbestos litigation costs and decreasing insurance coverage, an economic decline in its business, and ABB's financial woes, CE began exploring its options in late 2002. After considering several options, CE concluded that the best avenue for maximizing payments to both current and future claimants and enhancing the value of CE's estate was through a consensual restructuring. CE recognized that it could not propose a plan to effectively reorganize without the cooperation of ABB, Asea Brown Boveri and representatives of current and future asbestos claimants. Over a three-month period, CE, ABB and asbestos claimant representatives engaged in extensive negotiations to develop a strategy for permanently addressing CE-related asbestos claims. The negotiations culminated in the Prepackaged Chapter 11 Plan. Establishment of a 524(g) Trust The pre-packaged plan was negotiated with certain asbestos claimants' lawyers and approved by David T. Austern, Esq. (who serves as General Counsel for Claims Resolution Management Corporation in Fairfax, Virginia), the proposed representative for future claimants. The Plan contemplates establishment of a trust under 11 U.S.C. Sec. 524(g), entry of a channeling order directing present and future asbestos claimants to that trust for payment, and entry of an injunction prohibiting present and future claimants from seeking compensation from any source other than the trust. Valuation & Plan Funding Under the Prenegotiated Plan, all of CE's value -- at the end of September 2002, CE's value was US$812,000,000 -- is delivered to the Sec. 524(g) Trust for the benefit of present and future claimants. In addition: (1) ABB contributes: (a) 30,298,913 shares of its stock, initially valued at $50,000,000, but with a current market value exceeding $120,000,000; (b) a financial commitment to pay $250,000,000 to the Trust in pre-agreed installments from 2004 to 2009 (guaranteed by certain ABB affiliates); (c) up to $100,000,000 more from 2006 through 2011 if certain performance benchmarks are achieved; and (d) the release of all claims and interest of the ABB group in insurance covering CE's asbestos personal injury claims; (2) Asea Brown Boveri contributes: (a) an indemnification of all of CE's environmental liabilities, which has a value of around $100,000,000; (b) a release of its indemnification rights against CE for asbestos claims asserted against Asea Brown Boveri after June 30, 1999; (c) a note evidencing Asea Brown Boveri's agreement to contribute almost $38,000,000 on account of the asbestos claims attributable to: -- Basic, Incorporated (CE acquired this acoustical plaster manufacturer in 1979) and -- ABB Lummus Global, Inc. (CE acquired this manufacturer of feed water heaters that used asbestos-containing gaskets in transactions stretching from 1930 to 1970); and (d) if Lummus is sold within 18 months of the Plan's Effective Date, an additional $5,000,000; and (3) Lummus and Basic will release and assign all of their interests in insurance covering asbestos personal injury claims, including certain CE-shared policies. Accordingly, the total value of these contributions to the Trust exceed $1 billion, excluding any value attributable to the insurance policies, and is subject to wide swings as the value of CE increases or decreases over time. Bankruptcy Professionals Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent Combustion Engineering. The Blackstone Group, L.P., provides CE with financial advisory services. David M. Bernick, Esq., at Kirkland & Ellis, provides legal advice to ABB. The CE Settlement Trust, holding the largest unsecured claim against CE's estate, is represented by Hasbrouck Haynes, Jr. CPA, at Haynes Downard Andra & Jones LLP. COMMSCOPE: S&P Equity Analyst Ups Stock Opinion to 'Accumulate' --------------------------------------------------------------- Standard & Poor's equity analysts have increased the equity STARS ranking on the shares of CommScope, Inc. (NYSE: CTV) from a three- STARS "Hold" to a four-STARS "Accumulate" at $9.82 per share. A leading provider of independent research, indices and ratings, Standard & Poor's made this announcement through Standard & Poor's MarketScope, its real-time market intelligence service. "While overall cable spending remains weak, we see several potential positive catalysts going forward," says Ari Bensinger, Telecommunications Equipment Equity Analyst, Standard & Poor's. "First, major bankrupt customer Adelphia recently announced $1.5 billion in financing, which could fuel incremental equipment sales for CommScope as early as the September-quarter of 2003. Also, the Bell carriers recently announced intentions for fiber to the home equipment orders during 2004, which should help improve the results at OFS BrightWave, in which CommScope has an equity interest. Given these catalysts, we view the shares as attractive at 1.2 times book value, well below the peer average," concludes Bensinger. Standard & Poor's Stock Appreciation Ranking System (STARS), which was first introduced on December 31, 1986, reflects the opinions of Standard & Poor's equity analysts on the price appreciation potential of 1,200 U.S. stocks for the next 6-12 month period. Rankings range from five-STARS (strong buy) to one-STARS (sell). Standard & Poor's analytic services are performed as entirely separate activities in order to preserve the independence of each analytic process. In this regard, STARS, which are published by Standard & Poor's Equity Research Department, operates independently from, and has no access to information obtained by Standard & Poor's Credit Market Services, which may in the course of its operations obtain access to confidential information. Standard & Poor's has the largest U.S. equity coverage count among equity research firms that are not affiliated with a Wall Street investment bank, analyzing 1,200 U.S. stocks. Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is a leader in providing widely recognized financial data, analytical research and investment and credit opinions to the global capital markets. With 5,000 employees located in 19 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at http://www.standardandpoors.com CommScope is the world's largest manufacturer of broadband coaxial cable for Hybrid Fiber Coaxial applications and a leading supplier of high- performance fiber optic and twisted pair cables for LAN, wireless and other communications applications. Through its relationship with OFS, CommScope has an ownership interest in one of the world's largest producers of optical fiber and cable and has access to a broad array of connectivity components as well as technologically advanced optical fibers, including the zero water peak optical fibers used in the production of the LightScope ZWP(M) family of products. As reported in Troubled Company Reporter's May 1, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on CommScope Inc., to 'BB' from 'BB+' and its subordinated debt rating to 'B+' from 'BB-'. At the same time, the ratings were removed from CreditWatch, where they had been placed on March 14, 2003. The downgrade reflected the expectation that profitability would remain at depressed levels over the midterm because of lower forecasts of cable television industry capital expenditures, among other factors. The outlook is stable. CONSECO FINANCE: Green Tree Credit Wants Nod to Obtain Financing ---------------------------------------------------------------- The Conseco Finance Debtors ask Judge Doyle to authorize Green Tree Credit LLC, formerly known as Conseco Finance Credit Corporation, to obtain postpetition financing pursuant to the terms of a Revolving Line of Credit and Security Agreement between GTC and U.S. Bank. On May 31, 2003, upon expiration of the FPS DIP Facility, the CFC Debtors paid the facility off, which meant that the $1,000,000 revolving credit facility provided under the FPS DIP was no longer available to GTC. Subsequently, GTC will enter into the RLCA. The material terms of the RCLA are: Borrower: GTC Lender: U.S. Bank Commitment: $1,000,000 revolver available immediately Term: 364 days from June 9, 2003 to June 8, 2004, or the earlier termination in accordance with the RLCA Promissory Note: GTC will deliver to U.S Bank a Promissory Note for $1,000,000 Deposit Account: GTC will maintain a deposit account at U.S. Bank with $1,100,000 at all times Security Interest: GTC will grant U.S. Bank a first priority interest in the Deposit Account to secure payment of all liabilities Mr. Sprayregen explains that the Postpetition Financing is necessary for the CFC Debtors to operate their businesses in Chapter 11 and facilitate the closing of the CFN and GE Transactions. (Conseco Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO: Green Tree Residual's Voluntary Chapter 11 Case Summary ---------------------------------------------------------------- Lead Debtor: Green Tree Residual Finance Corp 350 Landmark Towers Saint Paul, Minnesota 55102 Bankruptcy Case No.: 03-23655 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Green Tree Finance Corp Five 03-23658 Type of Business: The Debtors are affiliates of Conseco, Inc. Chapter 11 Petition Date: June 2, 2003 Court: Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtors' Counsel: James Sprayregen, Esq. Kirkland & Ellis 200 East Randolph Street Chicago, IL 60601 Tel: 312-861-2000 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million CONSECO: Conseco Finance Credit's Voluntary Ch. 11 Case Summary --------------------------------------------------------------- Debtor: Conseco Finance Credit Card Funding Corp 1100 Landmark Towers 345 St Peter Street St Paul, Minnesota 55102 Bankruptcy Case No.: 03-27043 Type of Business: The Debtor is an affiliate of Conseco, Inc. Chapter 11 Petition Date: June 24, 2003 Court: Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtors' Counsel: James Sprayregen, Esq. Kirkland & Ellis 200 East Randolph Street Chicago, IL 60601 Tel: 312-861-2000 CONSECO INC: Files Third Amended Plan of Reorganization ------------------------------------------------------- The Conseco Inc. Debtors delivered their Third Amended Plan of Reorganization to the Court on June 16, 2003. A free copy of that amended plan is available at: http://bankrupt.com/misc/3rd_Amended_Reorg_Plan.pdf On June 17, 2003, the Finance Company Debtors handed Judge Doyle a copy of their Third Amended Joint Liquidating Plan. A free full-text copy of that document is available at: http://bankrupt.com/misc/3rd_Amended_Liquidating_Plan.pdf (Conseco Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVANTA ENERGY: Urges Court to Clear David Hahn Settlement Pact --------------------------------------------------------------- Prior to the Petition Date, David L. Hahn was employed as Senior Vice President, Aviation and Chief Operating Officer of Covanta's worldwide aviation operations. In this capacity, Mr. Hahn assisted in the operations and management of various aviation enterprises located throughout the globe. Since December 1999, Mr. Hahn also assisted Covanta in the disposition and sale of substantially all of its aviation assets, including the sale of Covanta's cargo and ground-handling businesses, fixed-based operations, private air businesses, and aviation-fueling businesses. In September 1995, Covanta and Mr. Hahn entered into a certain employment agreement, as amended and including a certain letter agreement dated as of September 1998. Under the Employment Agreement, among other things, Covanta agreed to pay Mr. Hahn a $300,000 annual base salary. In addition, the Employment Agreement provided that in the event of termination for reasons other than for cause, Covanta would pay to Mr. Hahn a termination payment equal to five times the sum of his base salary and his highest annual bonus received at any time prior to his termination. According to James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, in December 1998, Covanta lent Mr. Hahn $300,000, as evidenced by and pursuant to the terms of a promissory note, dated as of December 16, 1998. The Note provides, among other things, for repayment of the principal amount, together with interest accrued thereon at an annual rate of 7%, for the principal amount and accrued interest outstanding from time to time -- the Loan Balance -- after any termination of Mr. Hahn's employment with Covanta. On May 7, 2002, the Court authorized Covanta to honor and pay in full accrued and unpaid vacation pay as the obligations become due in the ordinary course during these Chapter 11 proceedings. On August 5, 2002, Mr. Hahn filed Proof of Claim No. 2060 alleging an unsecured non-priority claim against the Debtors for $3,500,000, without prejudice to his right to assert an administrative claim in the same amount. On September 20, 2002, the Court authorized the establishment and implementation of the Covanta Energy Corporation Key Employee Severance Plan as part of the Key Employee Retention Plan. Pursuant to the KERP Order, Covanta designated certain key employees as participants in the KESP. Each participant was categorized as either a Tier I, Tier II, Tier III or Tier IV participant, with the lower-numbered Tiers generally receiving larger severance payments than the higher-numbered Tiers. Tier III participants are generally entitled to a lump sum severance payment equal to 100% of base salary. In addition, Tier III participants are generally entitled to receive continued medical and dental coverage, provided that the participants pay the regular employee co-payments, for a one-year period. Mr. Hahn was designated as a Tier III participant under the KESP. On December 19, 2002, the Court authorized Covanta to pay certain employees a retention bonus in connection with the closing of the Court-approved sale of Covanta's aviation fueling business to Allied Aviation Holdings, Inc. Mr. Hahn was designated as one of the employees eligible for payment of the Closing Bonus. In addition, the Aviation Bonus Order authorized Covanta to pay certain 2002 performance bonuses to eligible employees like Mr. Hahn. On December 31, 2002, pursuant to this Court's order, Covanta's last remaining aviation fueling businesses were sold to a third party, Allied Aviation Holdings, Inc. Mr. Hahn's employment was terminated, effective as of January 17, 2003. Accordingly, Mr. Bromley informs Judge Blackshear that Covanta has entered into a Settlement Agreement with Mr. Hahn, in order to: (a) retain Mr. Hahn as a consultant during the winding down and claims resolution process of the Aviation Business; and (b) resolve all disputes between Covanta and Hahn with respect to the Employment Agreement, the Note and the Proof of Claim. Among other things, the Settlement Agreement provides: A. Consultancy Mr. Hahn would be retained as a consultant to provide services related to the Aviation Business, including assisting Covanta with any transition issues relating to the sales by Covanta of its Aviation Business, Covanta's recovery of any claims against any purchaser of any portion of the Aviation Business and other services relating to the business of the Company as Covanta may request from time to time. Mr. Hahn agrees to provide the services for the period commencing on April 28, 2003 and ending on October 27, 2003. Subject to certain conditions, Covanta may elect to extend the period of Mr. Hahn's consultancy on the same terms and conditions as the initial consultancy. B. Retainer Fee Mr. Hahn would be entitled to a fee at a $30,000 monthly rate for his services during the Consulting Period and subject to: (a) offset in respect of the Note pursuant to Section 4 of the Settlement Agreement, (b) the Court's approval of the payment of the Fee, and (c) Mr. Hahn's refraining from revoking the Hahn Release. In addition, Mr. Hahn would be entitled to reimbursement of reasonable expenses incurred by him in connection with the proper performance of his consulting services. C. Accrued Vacation In accordance with the Vacation Pay Order, Covanta would pay to Mr. Hahn a $28,436 lump sum as earned but unpaid vacation pay, reduced by all applicable withholding taxes. Pursuant to the Settlement Agreement, the Vacation Pay would not be subject to offset in respect of the Note. D. Accrued Employee Benefits Mr. Hahn would be entitled to all benefits accrued under the 401(k) Plan and under the employee welfare benefit plans in which he was a participant during his employment, except that he would not be entitled to any compensation or benefits pursuant to any severance or termination plan, policy or arrangement other than as set forth in the Settlement Agreement. E. Termination Benefits Subject to the provisions of the Settlement Agreement, Mr. Hahn would be entitled to these compensation and benefits -- Termination Benefits: (a) Lump sum cash payment equal to $310,518 in accordance with the KERP Order -- Severance Payment; provided that 100% of the After-Tax Portion of the lump sum payment will be subject to offset as provided in the Settlement Agreement; (b) Lump sum cash payment equal to the excess of $50,000, which amount is equal to the amount of Mr. Hahn's 2002 annual bonus -- Performance Bonus -- over the Deferral Amount with respect to the Performance Bonus; provided that: (i) 100% of the After-Tax Portion of the lump sum payment will be subject to offset as provided in Section 4 of the Settlement Agreement; (ii) Covanta will transfer the Deferral Amount with respect to the bonus amount to the 401(k) Plan, on Mr. Hahn's behalf, in lieu of payment directly to him; and (iii) Mr. Hahn would be eligible for an employer matching contribution under the 401(k) Plan with respect to the Deferral Amount in accordance with the generally applicable terms of the 401(k) Plan; (c) Lump sum cash payment equal to $150,000 in accordance with the Aviation Bonus Order -- Closing Bonus; provided that 100% of the After-Tax Portion of the lump sum payment will be subject to offset as provided in the Settlement Agreement; (d) For the period commencing on May 18, 2003 and ending on the earlier of January 17, 2004 and the effective date of any early termination of coverage pursuant to Section 3 of the Settlement Agreement -- Continuation Period, Mr. Hahn would be entitled to continue his coverage and the coverage of his eligible dependents under the Health Plans, in accordance with the generally applicable provisions of the plans applicable to active employee participants; provided that Mr. Hahn promptly satisfies all deductible and co-payment requirements under those Health Plans; (e) After expiration of the Continuation Period, Mr. Hahn would be entitled to continue his and his then eligible dependents' coverage under the Health Plans to the extent provided under and in accordance with COBRA, subject to Section 3 of the Settlement Agreement; and (f) Covanta will execute and deliver to Mr. Hahn a general release of claims, provided that the Covanta Release will not be valid, enforceable or effective unless the Court approves the terms of the Settlement Agreement. F. Loan Repayment Covanta's obligations under the Settlement Agreement are subject to full repayment by Mr. Hahn of the Loan Balance. To ensure repayment, Section 4 of the Settlement Agreement authorizes and directs Covanta to retain and offset against the Loan Balance: (a) the After Tax Portion of any and all payments to which Mr. Hahn becomes entitled under Settlement Agreement; and (b) two-thirds of the gross amount of each installment of Fees that becomes payable to Mr. Hahn if any. All amounts Covanta retains will be applied to offset the Loan Balance and will reduce the outstanding Loan Balance, on a dollar-for-dollar basis, until the outstanding balance is reduced to zero. Mr. Hahn will promptly repay to Covanta any portion of the Loan Balance that remains outstanding after expiration of the Consulting Period and set-off by the After- Tax Portion of the amounts payable under Sections 3(c)(i), (ii) and (iii) of the Settlement Agreement. Pursuant to Section 105(a) of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve the Settlement Agreement with Mr. Hahn, including the general releases of claims dated as of April 28, 2003. Mr. Bromley argues that the Court should approve the Settlement Agreement because: (a) in the absence of the Settlement Agreement, Mr. Hahn would continue to assert a claim against Covanta for $3,500,000 as stated in the Proof of Claim, which is payable as an administrative expense under Section 503 of the Bankruptcy Code; (b) the Settlement Agreement permits Covanta to ensure prompt repayments of the Loan Balance through set-off; (c) in the absence of the Settlement Agreement, Mr. Hahn would vigorously prosecute his claim for severance under the Employment Agreement; (d) the Settlement Agreement provides mutual releases of the Parties and represents a settlement of all outstanding claims or potential claims that exist between the Parties; (e) the Debtors believe that Mr. Hahn's continued services would provide a valuable benefit to the Debtors' estates by ensuring an orderly transition and wind-down of the Aviation Business, as well as collection of amounts due to Covanta and its subsidiaries in connection with the Aviation Business; and (f) the Settlement Agreement is the product of vigorous arm's-length bargaining between the Parties over the course of more than nine months. (Covanta Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) DIRECTV LATIN AMERICA: Court Fixes August 30 as Claims Bar Date --------------------------------------------------------------- DirecTV Latin America, LLC obtained a Court order establishing: (a) August 30, 2003 at 4:00 p.m. EDT as the last date and time by which proofs of claim based on prepetition liability against DirecTV must be filed by creditors other than governmental units; and (b) September 18, 2003 at 4:00 p.m. EDT as the last date and time by which proofs of claim based on prepetition liabilities against DirecTV must be filed by governmental units. (DirecTV Latin America Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) DOUBLECLICK.COM: Completes Zero Coupon Conv. Sub. Note Offering --------------------------------------------------------------- DoubleClick Inc. (Nasdaq: DCLK) has closed its sale of $135 million aggregate principal amount of Zero Coupon Convertible Subordinated Notes due 2023. The initial purchaser has the option to purchase up to an additional $20.25 million in aggregate principal amount of the Notes. The Notes do not bear interest and have a zero yield to maturity. The Notes are convertible under certain circumstances into DoubleClick Inc. common stock at a conversion price of approximately $13.12 per share, subject to adjustment. The Notes will be DoubleClick's general unsecured obligations and will be subordinated in right of payment to all of its existing and future senior debt. DoubleClick may not redeem the Notes prior to July 15, 2008. DoubleClick also initiated a call for redemption of all of its $154.8 million outstanding aggregate principal amount of 4.75% Convertible Subordinated Notes due 2006. The redemption date has been set at July 24, 2003. Notices of redemption will be mailed to holders of the 4.75% Convertible Subordinated Notes on June 24, 2003. The proceeds from the sale of the Notes, together with existing cash, will be used towards this redemption. The Notes have been offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, and outside the United States pursuant to Regulation S of the Securities Act. The Notes and the shares of common stock of DoubleClick Inc. issuable upon the conversion of the Notes have not been registered under the Securities Act and may not be offered or sold in the United States or to a U.S. person absent registration or an applicable exemption from registration requirements. DoubleClick Inc. has global headquarters in New York City and maintains 21 offices around the world. As reported in Troubled Company Reporter's Tuesday Edition, Standard & Poor's Ratings Services assigned its 'B-' rating to DoubleClick Inc.'s $135 million convertible subordinated notes due 2023. "The convertible subordinated notes were rated one notch below the corporate credit rating given its ample cash balances, moderate levels of obligations that rank ahead of the subordinated debt, and Standard & Poor's expectation that the company is unlikely to increase its priority obligations in the intermediate term," said credit analyst Andy Liu. Net proceeds will be used to repay existing debt. New York, New York-based DoubleClick had $154.8 million of debt outstanding on March 31, 2003. At the same time, Standard & Poor's revised its outlook on the ratings to stable from negative. The outlook revision reflects the company's improvement in profitability and discretionary cash flow. All existing ratings are affirmed. DTVN HOLDINGS: Court Confirms Joint Plan of Reorganization ---------------------------------------------------------- On May 30, 2003, DataVoN, Inc., DTVN Holdings, Inc., Zydeco Exploration, Inc. and Video Intelligence, Inc., sold substantially all of Debtors' assets to Transcom Communications, Inc. in exchange for (i) cash consideration of $2,460,914.81, (ii) a secured offsetting note for $1.28 million, (iii) a secured promissory note for $1.5 million, (iv) an unsecured promissory note for $200,000.00, (v) payment of employee stay-put bonuses of $341,000.00, (vi) assumption of ordinary course trade debt, and (vii) the assumption of contract liabilities of $2.1 million. The sale of the Assets occurred in connection with the Joint Plan of Reorganization of the Debtors. The purchase price was determined by an auction conducted pursuant to procedures approved by the Court by an Order dated February 21, 2003. At the conclusion of the auction, Transcom Communications, Inc. was declared the highest and best offer, and on May 28, 2003, the Court entered an order authorizing the sale of substantially all of the Debtor's assets to Transcom. The consideration for the purchase of the Assets was determined by arms-length negotiations between representatives of Transcom and the Debtors. In addition to being a vendor and a customer of the Debtors, Transcom held a 53% interest in DTVN Holdings, Inc. which it acquired in July of 2002. The Assets include contractual rights, accounts receivable, goodwill, equipment, intellectual property, fixtures and other tangible and intangible assets. The sale was consummated pursuant to an Asset Purchase Agreement, dated April 25, 2003, betweem Transcom and the Debtors. By order of the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, Judge Steven A. Felsenthal presiding dated May 28, 2003, in the bankruptcy case of In re DataVoN, Inc., et. al., Jointly Administered, Case No. 02-38600- SAF-11, substantially all of the Debtors' assets were sold to Transcom Communications, Inc. in exchange for the consideration noted above. On June 6, 2003, the Bankruptcy Court entered an order confirming the Debtors Joint Plan of Reorganization, providing formation of a Creditors' Trust to distribute the proceeds of the Sale and to liquidate all remaining assets of the Debtors. Dan Lain and the firm of Lain, Faulkner & Co., is named in the Plan as the Liquidating Trustee. Pursuant to the confirmed Plan, the current equity of DTVN Holdings, Inc. and the other debtors will be cancelled as of the effective date of the Plan, June 13, 2003. EDELNOR: Local & Foreign Corp. Credit Ratings Raised to B- ---------------------------------------------------------- Standard & Poor's Ratings Services raised its local and foreign corporate credit ratings on Chilean electric generator Empresa El,ctrica del Norte Grande S.A. to 'B-' from 'CC', reflecting a more favorable maturity schedule after the company completed its Chapter 11 reorganization and strategic plan. At the same time, Edelnor's rating was removed from CreditWatch with positive implications. Standard & Poor's also assigned its 'B-' rating to Edelnor's US$217 million debt certificates. The outlook is stable. Edelnor completed a Chapter 11 reorganization on Nov. 5, 2002, which replaced US$340 million in bank debt with US$217 million 15- year debt certificates and a US$46 million subordinated shareholder loan. The new debt certificates carry a 4% coupon (with step up rates after 2005) and amortize in 20 semi-annual installments starting in May 5, 2008. "Although this reorganization improved Edelnor's debt and maturity profile, financial performance remains fairly weak as a result of the significant oversupply in the SING, which is Edelnor's area of operation," said Standard & Poor's credit analyst Sergio Fuentes. "Although we expect Edelnor's funds from operations interest coverage, including cash inflows from its 21% owned Norandino Natural Gas Pipeline, to improve to levels of about 2.5x-3x times from 1.8x in 2002, financial flexibility is expected to remain significantly restricted," continued Mr. Fuentes. Edelnor's rating reflects its still weak financial performance, a very limited financial flexibility, and the uncertainties regarding the maturity of a great portion of its sale contracts between 2005 and 2008. These weaknesses are mitigated by Edelnor's equity stake in Gasoducto Norandino, which is projected to provide a stable cash flow stream, and by the ownership of transmission assets, a competitive advantage to face the high competitive pressures in the SING. The stable outlook incorporates Standard & Poor's expectations that Edelnor will be able to sign new sale contracts and/or renew a great portion of the contracts that are due between 2005 and 2008, although at lower prices than the current ones. If the company fails to reach this goal, the ratings could be revised. In addition, Standard & Poor's anticipates that the company will continue to show weak debt coverage ratios of 5%-6% in the next three to four years. However, this risk is mitigated by a very low interest rate and by the fact that there are no maturities until 2008. Edelnor is a partially integrated utility, mainly engaged in power generation and, to a lesser extent, transmission in northern Chile. The company owns and operates generating facilities with a capacity of 687MW, leases another 29MW of diesel units, and owns about 1,056km of transmission lines. Edelnor is 82.34% owned by Inversiones Mejillones S.A, a holding company that is owned by Belgium's Tractebel S.A. (not rated) and Chilean copper producer Corporacion Nacional del Cobre de Chile (LCR: 'A+'/Stable; FCR: 'A-'/Positive). ENERGY WEST: Has Until Tomorrow to Arrange Credit Pact Extension ---------------------------------------------------------------- Energy West Incorporated (Nasdaq: EWST), a natural gas, propane and energy marketing company serving the Rocky Mountain states, announced that Wells Fargo Bank Montana, N.A., has extended the maturity date of Energy West's credit facility through June 26, 2003 to provide the parties additional time to negotiate a further extension. The Wells Fargo credit facility was originally scheduled to expire on May 1, 2003 and previously was extended through June 23, 2003. The terms and conditions of the credit agreement, as previously extended, other than the maturity date, remain unchanged. For additional information or clarification, please contact: JoAnn S. Hogan, Financial Communications, 1-406-791-7555, jshogan@ewst.com, or John C. Allen, Corporate Counsel and Vice- President, 1-406-791-7503, jcallen@ewst.com, both of Energy West Incorporated. The Company's toll-free number is 1-800-570-5688 and its Web address is http://www.energywest.com As reported in Troubled Company Reporter's Friday Edition, Energy West retained D.A. Davidson & Co. and DAMG Capital as financial advisers to advise the Company in connection with the Company's financing needs and capital structure. Among other things, D.A. Davidson and DAMG Capital are assisting the Company in negotiations with its bank lender, Wells Fargo Bank Montana, N.A., concerning a restructuring and extension of the Company's credit facility for a longer period. The Company's advisers are also assisting the Company in its efforts to secure a replacement credit facility and establish a capital structure to meet the Company's long-term needs. Energy West also announced the settlement of the lawsuit between its subsidiary, Energy West Resources, Inc. and PPL Montana, LLC, for a total of $3.2 million. After allowing for reserves previously charged to income, and reversal and forfeiture of accrued but previously deferred management bonuses, for financial reporting purposes the impact of the settlement will be a reduction of the Company's consolidated pre-tax income of approximately $170,000 for Fiscal Year 2003. Energy West's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $2.4 million. ENRON: Committee Asks Court to Nix Whitewing Sale Restrictions -------------------------------------------------------------- Pursuant to Sections 105 and 363 of the Bankruptcy Code, the Official Committee of Unsecured Creditors of the Enron Debtors asks the Court to waive these restrictions with respect to the sale of Whitewing Assets: (a) the "Adjusted Asset Value" restriction in the Amended and Restated Limited Liability Company Agreement of Whitewing Management LLC-- the Whitewing LLC Agreement; and (b) consent rights Whitewing Associates LP and its subsidiaries hold to the sale of underlying assets where Whitewing derivative assets are based. Stephen D. Lerner, Esq., at Squire Sanders & Dempsey LLP, in Cincinnati, Ohio, relates that Enron and The Osprey created a complex financing structure, consisting of many business entities and interests -- the Whitewing Structure. Within the Whitewing Structure, Enron, some of the other Debtors, and certain Enron non-debtor affiliates raised approximately $2,600,000,000 through Osprey's issuance of approximately $2,400,000,000 in debt and $220,000,000 in equity. As a result of the Whitewing Structure, Enron is the indirect sole member of Egret I LLC, a Delaware limited liability company. Egret is the sole managing member of Whitewing LLC. Osprey is the only other member of Whitewing LLC. Third-party certificate holders own the equity certificates Osprey issued. Whitewing LLC is the general partner of Whitewing LP. Osprey invested the proceeds from the sale of the Osprey debt -- the Osprey Notes -- and the Osprey Certificates into Whitewing LP in exchange for a limited partnership interest in Whitewing LP. Whitewing LP then directly or indirectly invested those proceeds, along with other monies invested by certain Enron Entities in Whitewing LP, in the Whitewing Subsidiaries, which, in turn, used those proceeds to fund direct and indirect debt and equity investments -- the Whitewing Assets. Some of the Whitewing Assets are interests in joint ownership of assets owned directly or indirectly by Enron Entities. In addition, Enron maintains indirectly 100% of the management rights, duties, and obligations with respect to the Whitewing Structure, the Whitewing Subsidiaries, and the Whitewing Assets. According to Mr. Lerner, Enron's bankruptcy filing triggered a default under the Second Supplemental Indenture, dated as of October 5, 2000 among Osprey, Osprey I, Inc. and United States Trust Company of New York, which governs the Osprey Notes. The Whitewing LLC Agreement provides that upon the occurrence of a default, Whitewing LLC, as the general partner of Whitewing LP, may not "permit" Whitewing LP to "dispose" of assets for less than an asset's "Adjusted Asset Value." In addition to the restriction contained in the Whitewing LLC Agreement, certain of the Whitewing Subsidiaries are holders of certain LP Consent rights that comprise some of the Sale Restrictions. These rights arise from provisions in management agreements or other documents which give a Whitewing subsidiary, as the holder of a derivative interest, a right of consent to the sale of certain underlying assets. An example of this type of restriction is the agreement relating to certain derivative assets Anhinga LP held, one of the Whitewing subsidiaries. Because the current market values of most of the Whitewing Assets are below a level that may trigger a Sale Restriction, Mr. Lerner notes, a disposition of any asset at the Whitewing LP level, without the contractual consents, is arbitrarily precluded to the extent that the Whitewing Asset is subject to a Sale Restriction, irrespective of any business justification for that disposition, and regardless of whether the disposition would be in the best interests of Whitewing, Osprey, the Debtors, the Debtors' creditors, or any of the other Enron Entities. While the Committee believes that a sale of most of the Whitewing Assets is feasible without this Court's Order waiving the Sale Restrictions, with respect to the other Whitewing Assets, Mr. Lerner points out that Whitewing LLC could only cause Whitewing LP to effect their sale below a price that would make the Sale Restrictions applicable through either: (i) an amendment to the Whitewing LLC Agreement, or (ii) a written waiver of the Sale Restrictions. Each of Whitewing LLC's members -- Egret and Osprey -- would have to execute an amendment of the Whitewing LLC Agreement. Certain other non-Enron entities may also have to execute waivers of the LP Consents. Whitewing LLC's members and the applicable non- Enron entities have not executed any amendment or waiver. Therefore, absent this Court's Order waiving any Sale Restrictions, Enron is reluctant to cause the sale of the Whitewing Assets. Egret acts at the direction of Enron, and Enron could cause Egret to elect to waive or amend certain of the Sale Restrictions. However, Mr. Lerner states, Osprey generally acts at the direction of the Osprey Certificate Holders who hold a majority of the outstanding principal amount of the Osprey Certificates. Under the Indenture, Osprey covenanted, among other things, that it would not agree or consent to any amendment, modification, or waiver of any provision of the Whitewing LLC Agreement without the consent of United States Trust Company of New York, the Indenture Trustee. The Indenture provides that the Indenture Trustee is authorized to act: (i) at the written direction of Osprey Noteholders holding, collectively, at least a majority of the aggregate outstanding principal amount of the Osprey Notes, or (ii) if it receives a legal opinion to the effect that an amendment will not materially, adversely affect the Osprey Noteholders. Furthermore, the Indenture does not permit the Whitewing LLC Agreement to be amended unless the Indenture Trustee receives a legal opinion to the effect that such amendment will not result in the lien created by the Indenture being materially, adversely affected. Since the inception of this case, Enron has either not attempted or has been unable to secure the consents, opinions, and approvals that are necessary in order to remove the Sale Restrictions. On information and belief, upon waiver of the Sale Restrictions, no other restrictions would need to be waived or revised to enable Enron to sell the Whitewing Assets at their current market values. Mr. Lerner fears that if the Court does not grant the Committee's request, the Debtors and the Enron Entities will not liquidate certain assets -- whose market value is dissipating with the passage of time -- that could increase the cash value of the Debtors' estates by hundred of millions of dollars. Moreover, Mr. Lerner asserts, the waiver of the Sale Restrictions will conserve the Debtors' resources as: -- Enron will not have to expend resources in the management and administration of the Whitewing Structure; and -- the Debtors will be able to avoid the necessity of litigating the applicability of the Sale Restrictions to each of the assets in the Whitewing Structure; In order to preserve the rights and remedies of the Debtors, the Committee, Osprey and all other parties-in-interests, the Committee proposes that all proceeds from the sale of Whitewing Assets be placed in escrow, net of transaction costs incurred in the sales, including but not limited to fees and expenses incurred by appraisers, brokers, attorneys and investment advisors. Pending this Court's determination on the appropriate distribution of the net sale proceeds, the Committee further proposes that the net proceeds from the Whitewing Asset sale be escrowed in accordance with escrow agreements, the principal terms of which will provide for the proceeds to be paid by the buyers to an escrow agent who will be instructed to deduct and pay from the proceeds the applicable Transaction Costs with respect to each sale. The net proceeds will be deposited into an escrow account with the escrow agent until this Court enters an order directing the distribution of the sale proceeds. The escrow agent will disburse the net sale proceeds only in accordance with the terms of the Court's final order directing disbursement. (Enron Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING: SEC Allows NYSE Application to Delist Fleming Equity ------------------------------------------------------------- The Securities and Exchange Commission approved the New York Stock Exchange's application to strike from listing and registration Fleming Companies' common stock, $2.50 par value, effective at the opening of business on May 15, 2003. The SEC considered the facts stated in the NYSE's application as well as public interest and investor protection. In its opinion, the NYSE believes that the Fleming Security is no longer suitable for continued listing and trading. The NYSE noted that the Security traded down to $0.50 on March 31, 2003. Fleming filed a bankruptcy petition the next day. The NYSE immediately suspended the Fleming Security from trading on April 1 and proceeded to file the delisting application. The Exchange also notified Fleming of the delisting that same day. Fleming did not file a request for review of the determination to delist its Security within the required time period. Pursuant to Section 12(d) of the Securities Exchange Act of 1934, any security registered on a national securities exchange may be withdrawn or stricken from listing and registration in accordance with the rules of the exchange and on the exchange's application with the SEC. NYSE Rule 499 states that securities admitted to the list may be suspended from dealings or removed from the list at any time. Under Section 802.01D of the NYSE's Listed Company Manual, the Exchange would normally give considerations to delisting the security of a company when an intent to file under any of the sections of the bankruptcy law has been announced or a filing has been made or liquidation has been authorized and the company is committed to proceed. Fleming shares are now trading in the over the counter markets -- see http://www.pinksheets.com-- under the FLMIQ ticker symbol. (Fleming Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRUIT OF THE LOOM: Resolves American Casualty Claims Dispute ------------------------------------------------------------ In Fruit of the Loom's First Schedule of Assets and Liabilities and Summary of Financial Affairs, American Casualty is listed holding a secured claim for $1,200,000 based on surety Bond No. 991201006 for contingent liability to Customs, which has been designated Claim No. 53885. Pro Player listed American Casualty holding a secured claim for $1,000,000 based on surety Bond No. 990623006 for contingent liability to Customs, which has been designated as Claim No. 53894. Finally, Union Underwear listed American Casualty's Claim at $9,200,000 based on surety Bond No. 990623008 for contingent liability to Customs, which has been designated as Claim No. 53893. The money set forth in the Bonds is the maximum liability that would accrue to American Casualty if Fruit of the Loom failed to pay its obligations and American Casualty was called in to pay. One of the Bonds is collateralized by a letter of credit issued to American Casualty for $2,850,000. On May 30, 2002, the United States Customs Service filed three Proofs of Claim asserting liquidated damages and unliquidated/contingent duties, fees and other charges. The U.S. Customs Service further asserted that each Claim was entitled to priority as an administrative expense. Specifically, Customs filed: a) Claim No. 8991 for $7,602 in liquidated damages; b) Claim No. 8992 for $2,472,440 in liquidated damages and unliquidated/contingent duties, fees and other charges in an amount to be determined; and c) Claim No. 8993 for $2,472,440 in liquidated damages and unliquidated/contingent duties, fees, and other charges in an amount to be determined. American Casualty Company, based in Reading, Pennsylvania, is the surety for Fruit of the Loom's customs obligations. American Casualty agreed to pay any liability that might arise from Fruit of the Loom's failure to pay its customs duties when liquidated. On April 29, 2002, the Trust asked the Court to reclassify the American Casualty Claims as general unsecured claims. Later, the Trust ask the Court to expunge Claim No. 8993 as duplicative of Claim No. 8992. On August 30, 2002, the Trust asked Judge Walsh to expunge the remaining Claims as having been assumed by Reorganized Fruit of the Loom. On April 22, 2003, the Trust further asked the Court to estimate the remaining Claims at $0 and disallow them because they are not entitled to administrative status. Accordingly, Judge Walsh granted the Trust's request and expunged the Customs Claims. The Parties agree that the American Casualty Claims will be reclassified as Class 4A Claims. Fruit of the Loom assumes any postpetition obligations, which are the basis for American Casualty Claims Nos. 53885 and 53893, arising from the Union Underwear Bond and the Fruit of the Loom Bonds, each in an amount to be determined. (Fruit of the Loom Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENESCO INC: S&P Assigns B Rating to $75 Million Sub. Debentures ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' subordinated debt rating to Genesco Inc.'s $75 million 4.125% convertible subordinated debentures due 2023. Genesco plans to use the net proceeds from the offering, combined with additional cash on hand, to redeem all of the outstanding $103.2 million 5.5% convertible subordinated notes due 2005. Standard & Poor's also affirmed its 'BB-' corporate credit rating on the specialty footwear retailer and wholesaler. The outlook is stable. Pro forma for the transaction, Genesco will have about $75 million in debt outstanding. "The speculative-grade ratings on Genesco Inc. reflect high business risk stemming from its participation in the competitive footwear retailing industry, aggressive growth strategy, and high debt leverage," said Standard & Poor's credit analyst Ana Lai. "These risks are partially offset by Genesco's good operating and financial performance in recent years," the analyst continued. Competition in the footwear retailing industry is intense. Genesco's retail operation, which accounts for over 80% of total revenues, faces numerous competitors, including department stores, discount stores, other specialty chains, and small independents. Competition at wholesale is equally high, with hundreds of participants ranging from small, specialized manufacturers to large, diversified companies. Nevertheless, Genesco has managed to increase sales and operating income at a healthy pace over the past few years, mainly because of the good performance of its Journeys concept. Recent sales trends at Journeys have softened, however, with same-store sales declining 3% in the first quarter of 2003 due to weak mall traffic and unfavorable weather. Genesco has aggressively expanded the Journeys concept, increasing its store base to 631 as of May 31, 2003, from 258 at the end of fiscal 1999. The Journeys concept currently accounts for over 50% of consolidated sales and 49% of operating income (before corporate allocations). Although Genesco is slowing growth plans for this concept, the expansion continues to be significant and is an important rating concern. Standard & Poor's Ratings Services considers the Journeys concept to have a higher-than-average business risk for a footwear retailer because it caters primarily to teenagers, a notoriously fickle segment of the population. Genesco's operating performance weakened in the first quarter of 2003 due to worse than expected performance at Journeys and Johnston & Murphy. Consolidated same-store sales declined 3% in first-quarter 2003 following mostly positive sales in 2002. Operating margins contracted to 16.2% for the 12 months ended May 3, 2003, from 17.2% a year ago due to weaker sales and increased promotions. Weak sales trends are expected to continue in the second quarter as a result of increased promotions to clear excess seasonal inventory. Moreover, the footwear retail environment remains highly promotional. As such, operating margins are expected to remain under pressure over the next few quarters. Despite the current challenging retail environment, Genesco's operating performance is expected to be adequate, supporting its credit protection measures. The company's high business risk limits upgrade potential. GENTEK: Asks Court to Approve Miscellaneous Asset Sale Protocol --------------------------------------------------------------- Prior to the Petition Date, GenTek Inc., and its debtor-affiliates regularly disposed of surplus miscellaneous assets that were no longer needed or wanted. The Miscellaneous Assets consist primarily of personal property previously used in the operation of the Debtors' businesses, including surplus process and maintenance equipment, office furniture, supplies, computers, warehouse materials and equipment, other excess or obsolete inventory, miscellaneous small machinery and other similar items. In the context of their restructuring, the Debtors believe that non-ordinary course dispositions of Miscellaneous Assets may be necessary or desirable during the course of their Chapter 11 cases to complete their restructuring initiatives. However, the Debtors believe that it will be impractical, and will result in unnecessary delay and costs, to seek the Court's approval of each particular Miscellaneous Asset Sale. Accordingly, at the Debtors' request, the Court established uniform procedures for prospective sales of certain miscellaneous assets or unused assets. Miscellaneous Asset Sales will be structured pursuant to these steps: (1) Level 1 Sales With respect to any single or group of Miscellaneous Assets with a sale price of less than or equal to $125,000, the Debtors will accept and consummate any reasonable offer. The Debtors will provide notice of all Level 1 Sales to the Creditors' Committee, the counsel to the secured lenders' agent, the U.S. Trustee, and any interested entity not later than the 10th business day after the date on which any of the sales are actually consummated. (2) Level 2 Sales With respect to any single or group of Miscellaneous Assets with a sale price greater than $125,000 but less than or equal to $1,000,000: -- As soon as practicable after the Debtors' negotiation of a definitive agreement for a Level 2 Sale, the Debtors will provide the Notice Parties, and other parties who filed requests for notices, with a written description of the sale. This Sale Summary will identify or describe the: (i) purchaser, (ii) description of the assets to be sold, (iii) the purchase price, and (iv) the book value of the Asset. -- The Level 2 Notice Parties will be permitted 10 business days from the date of the Debtors' submission to review the Sale Summary. If all Notice Parties (i) affirmatively assent to the Sale pursuant to the terms and conditions described in the Sale Summary, or (ii) fail to notify the Debtors in writing of their objection to the Sale before the expiration of the review period, the Debtors will be authorized to consummate the Sale without notice and a hearing or entry of a Court order. The notice of objection will only be served on the Debtors and will not be filed with the Court. -- If a Level 2 Notice Party timely objects to the Sale described in a Sale Summary, but withdraws for any reason its objection to the Sale, the Debtors will be authorized to consummate the sale without notice, hearing or order from the Court. -- If a Level 2 Notice Party timely objects to the Sale described in the Sale Summary and does not withdraw the objection, the Debtors will have the option of: (i) foregoing the consummation of the Sale; (ii) modifying the terms of the Sale in a way that results to the withdrawal of the objection; or (iii) upon notice and a hearing, seeking an order from the Court authorizing them to consummate the Sale over the objection. In the event that the Debtors opt to seek a Court order, any objecting party will be permitted to file papers in support of its objection with the Court. All Miscellaneous Asset Sales the Debtors consummate will be made free and clear of any liens, claims, interests or encumbrances of any entity in the Miscellaneous Assets. (GenTek Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Wants Clearance for GTE/Telus Settlement Agreement --------------------------------------------------------------- Genuity Inc., and its debtor-affiliates ask Judge Beatty to approve a release and settlement agreement dated May 2, 2003 between the Debtors, GTE Corporation, TELUS Corporation, Level 3 Communications, Inc., Level 3 Communications, LLC and Genuity Managed Services, LLC. Don S. DeAmicis, Esq., at Ropes & Gray, in Boston, Massachusetts, reminds the Court that the Debtors' Asset Purchase Agreement with Level 3 obliged the Debtors to make available for assumption and assignment to Level 3 all its executory contracts, including: -- a certain Brand, Technology and Co-Marketing Agreement dated June 30, 2000, between TELUS Corporation and Genuity Inc., and -- a certain letter agreement between GTE Corporation and Genuity Solutions Inc. dated November 3, 2000. Any failure by the Debtors to assume and assign an executory contract at Level 3's instruction subjects the Debtors to potential liability for damages under the Asset Purchase Agreement. Mr. DeAmicis relates that GTE Corporation and Contel Federal Systems, Inc. advised the Debtors that they had sold all of the Class A common shares of Genuity Inc. held by each of them on December 18, 2002. GTE alleges that the Divestment resulted in the termination of the GTE Agreement by its terms on December 18, 2002, an allegation that Genuity disputes. GTE has satisfied all its obligations to the Debtors under the GTE Agreement through December 31, 2002. By its terms, the TELUS Agreement terminates on the date that the GTE Agreement terminates. Thus, the alleged termination of the GTE Agreement on December 18, 2002 would entail the simultaneous termination of the TELUS Agreement. On January 15, 2003, TELUS objected to the Level 3 Sale on the grounds, among others, that the TELUS Agreement is a contract for personal services that could not be assumed and assigned to Level 3 without TELUS' consent. By a stipulation and order dated January 24, 2003, TELUS provisionally withdrew the Objection until TELUS received notice of the Debtors' intention to reject or to assume and assign the TELUS Agreement to Level 3, at which time TELUS retained the right to reassert the Objection with respect to the TELUS Agreement. On January 24, 2003, Mr. DeAmicis recounts that the Court approved the Asset Purchase Agreement. The Sale to Level 3 closed on February 4, 2003. Among other things, the Sale Order and the Asset Purchase Agreement provide that, up until the date that is three months after the Closing, Level 3 would have the right to instruct the Debtors to assume and assign Service Agreements and Undesignated Agreements or to inform the Debtors of the date on which Undesignated Agreements might be rejected. Pursuant to the Transition Services Agreement dated February 4, 2003 between the Debtors and Level 3, the Debtors have provided and continue to provide the benefits of the Undesignated Agreements to Level 3 on a pass-through basis in exchange for certain contract administration services and the payment by Level 3 of the costs of maintaining the Undesignated Agreements. With the purpose of resolving and settling the dispute between the Debtors and GTE over the GTE Agreement, forestalling the reassertion of TELUS' Objection to the Sale Motion after the Election Date, and resolving and settling any potential claims for damages under the Asset Purchase Agreement and the Transition Services Agreement, the Debtors entered into the Settlement Agreement on May 2, 2003. As a result of the Settlement Agreement, Level 3, GTE and TELUS were able to reach separate agreements among themselves that provide for the continuance of the GTE Agreement and the TELUS Agreement with Level 3 Communications, LLC substituted in all respects for Genuity. On May 4, 2003, Mr. DeAmicis relates that Level 3 instructed Genuity to assume and assign the GTE Agreement and the TELUS Agreement to Level 3 Communications, LLC. This instruction and the subsequent Notice of Assumption and Assignment of Contracts issued by Genuity pursuant to this instruction were provided simply as a precautionary measure and will be rescinded and of no force or effect on the effective date of the Settlement Agreement. The salient terms of the Settlement Agreement are: A. On the Effective Date, the GTE Agreement and the TELUS Agreement will be deemed terminated as of the Closing and any notices with respect to the assumption of the GTE Agreement and the TELUS Agreement under the Asset Purchase Agreement or the Sale Order will be rescinded and of no force or effect; B. As of the Effective Date, Genuity releases GTE, Level 3 and TELUS and each of their Affiliates from all Claims in any way arising under the GTE Agreement or the TELUS Agreement. Furthermore, with respect to Level 3, Genuity releases Level 3 from any and all Claims arising under the GTE Agreement or the TELUS Agreement that arise under or relate to the Asset Purchase Agreement and the Transition Services Agreement; C. As of the Effective Date, Level 3 releases Genuity and its Affiliates from any and all Claims arising under or relating to the GTE Agreement and the TELUS Agreement, including any claims for damages for breach of the Asset Purchase Agreement or the Transition Services Agreement; D. As of the Effective Date, TELUS releases Genuity and its Affiliates from any and all Claims arising under the TELUS Agreement and the GTE Agreement and further irrevocably withdraws its Objection to the Sale Motion, with its rights to object on certain limited grounds preserved with respect to any agreements between TELUS and the Debtors other than the TELUS Agreement; E. As of the Effective Date, GTE releases Genuity and its Affiliates from all Claims arising under or relating to the GTE Agreement or the TELUS Agreement; F. GTE will pay Genuity Solutions, without set-off, $931,500, which GTE and Genuity agree is an amount equal to the amount Genuity would otherwise have been entitled to receive from GTE under the terms of the GTE Agreement between January 1, 2003 and the Closing; and G. In the event the Settlement Agreement expires, GTE will have the right to object to any Assumption Notice with respect to the GTE Agreement within five business days of the Expiration Date and TELUS will have the right to object to any Assumption Notice with respect to the TELUS Agreement within five business days of the Expiration Date. The Settlement Agreement offers a reasonable compromise of the dispute between the Debtors and GTE over the alleged termination of the GTE Agreement, providing the Debtors with an additional payment that they may not otherwise have received. Mr. DeAmicis points out that the Settlement Agreement also resolves the ancillary question of the termination of the TELUS Agreement, and fully and finally resolves TELUS' Objection to the Level 3 Sale as it relates to the TELUS Agreement. In addition, the Settlement Agreement relieves the Debtors of any potential liability resulting from possible breaches of the Asset Purchase Agreement and the Transition Services Agreement in connection with the GTE Agreement and the TELUS Agreement. The Debtors submit that the releases granted to non-debtor parties in the Settlement Agreement is a fair consideration for the reciprocal releases and the payment from GTE. The parties executed the Settlement Agreement after extensive good-faith negotiations in efforts to resolve all matters without litigation and to accomplish the transfer of certain agreements to Level 3. Mr. DeAmicis believes that that litigation of these matters would likely be complex and expensive, and take a significant amount of time to resolve. Accordingly, the Debtors believe that the costs that would be incurred in litigating these matters could exceed the benefit, if any, that may be realized as a result of litigation. In contrast, approval of the Settlement Agreement, which represents the parties' consensual resolution of all issues relating to the GTE Agreement and the TELUS Agreement, will enable the Debtors to avoid litigation for the benefit of their bankruptcy estates. (Genuity Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) GERDAU AMERISTEEL: Prices 10-3/8% Senior Unsecured Notes -------------------------------------------------------- Gerdau Ameristeel Corporation (TSX:GNA.TO) has priced a private offering of $405 million of 10-3/8% Senior Unsecured Notes due 2011. The Company has also entered into a senior secured credit facility providing commitments of $350 million. The closing of the offering and the initial draw-down under the senior secured credit facility are expected to take place on June 27, 2003. Gerdau Ameristeel will use the proceeds of the offering of Senior Notes and the initial draw-down under the senior secured credit facility to repay debt under its existing credit facilities. The refinancing will significantly extend the Company's debt maturities and provide a more permanent capital base. In addition, the refinancing will benefit the Company's liquidity and operating flexibility, and allow the full and seamless integration of the companies that were merged on October 25, 2002 to form Gerdau Ameristeel. The Senior Notes have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent such registration or an applicable exemption from registration requirements. The issuance will be offered to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States in compliance with Regulation S under the Securities Act. Gerdau Ameristeel is the second largest minimill steel producer in North America with annual manufacturing capacity of over 6.8 million tons of mill finished steel products. Through its vertically integrated network of 11 minimills (including one 50%- owned minimill), 13 scrap recycling facilities and 26 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern half of North America. The company's products are generally sold to steel service centers, fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining and equipment manufacturing. Gerdau Ameristeel's common shares are traded on the Toronto Stock Exchange under the symbol GNA.TO * * * As previously reported, Standard & Poor's Ratings Services assigned its 'BB' bank loan rating to Gerdau Ameristeel Corp.'s proposed $350 million senior secured revolving bank credit facility due 2008. Standard & Poor's also assigned its 'B+' rating to the company's proposed $400 million senior unsecured notes due 2011. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. The outlook remains stable. GLOBAL CROSSING: Settles Claims Dispute with SAP America -------------------------------------------------------- Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New York, recounts that on October 8, 1998, the Global Crossing Debtors entered into a Software End-User License Agreement with SAP America, Inc., an enterprise software provider that maintains and licenses certain proprietary software. Pursuant to the Agreement, SAP licensed to the GX Debtors and certain of its affiliates the right to use certain SAP software. The GX Debtors use the Software to, among other things, track the location of funds in their cash management system, categorize data regarding investments, organize information relating to sales and distribution of the Debtors' products and services, produce financial statements, monitor purchasing of products and services, conduct billing transactions, and pay employees. All of the GX Debtors' critical records are maintained and accessed through the Software. Essentially, the Software is the basis for the GX Debtors' information reserve. As a result, continued access to the Software is integral to the GX Debtors' efficient operations on a going forward basis. Pursuant to the Agreement, SAP also provides maintenance services in connection with the Software and the Licenses costing $1,500,000 per year. As of December 31, 2002, the GX Debtors owe SAP under the Agreement $2,466,663.01, including $1,057,314.13 in prepetition and $1,409,348.88 in postpetition arrearages. Mr. Walsh relates that the downturn in the telecommunications sector, the Debtors' restructuring, and the resultant decrease in their workforce, have reduced the number of Licenses required by the Debtors. In late 2002, the Debtors and SAP started discussions to restructure the Agreement to reflect the current and anticipated future requirements. Following extensive arm's- length negotiations, the Parties executed a settlement agreement. Pursuant to the Settlement Agreement, the Debtors will: (i) assume the Agreement pursuant to Section 365 of the Bankruptcy Code; (ii) reduce the cure amount otherwise due under the Agreement by $1,500,000; (iii) eliminate certain of the Debtors' outstanding obligations to SAP; and (iv) negotiate in good faith with SAP to reduce maintenance costs associated with the Licenses for the year 2003. The salient terms of the Settlement Agreement are: A. Parties: GX and all of its subsidiaries and affiliates, excluding Asia Global Crossing Ltd. and its direct and indirect subsidiaries and SAP and all of its direct and indirect subsidiaries and other affiliates. B. Payment to SAP: The Debtors will pay to SAP $950,000, which will be inclusive of and in full and final settlement of all amounts due and owing as of December 31, 2002, except for any claims resulting from any breach by the GX Entities involving the unauthorized use or disclosure of Proprietary Information. To the extent the Total Cash Consideration is not paid when the amount is due, SAP will have an allowed administrative expense claim against the Debtors for the deficiency. C. Maintenance Fees: Promptly after the execution of the Settlement Agreement, the parties agree to negotiate in good faith to reduce the maintenance fees paid by the GX Entities under the Agreement. D. Warranty of Work, Services or Material Provided by SAP: SAP covenants that any work, services or material will be promptly and adequately provided in accordance with the terms of the Agreement or, in the absence of these terms, customary industry practices. E. Assumption of the Agreement: The Debtors will assume the Agreement, as amended by the Settlement Agreement, effective after the occurrence of the effective date of a plan of reorganization for substantially all of the Debtors that preserves or transfers substantially all of the core network on a going concern basis. F. Assignment of the Agreement: The GX Entities will be permitted to assign the Agreement, subject to the terms and conditions of the Agreement, pursuant to a confirmed Plan or other Court order, to the Investor or any entity created in connection with the transactions contemplated by the Purchase Agreement, provided that the assignment is solely for the purpose of providing continued use of the Software to operate the GX Entities' business. G. Releases: Both parties agree to mutual releases providing that the parties and their officers, employees, shareholders, agents, representatives, attorneys, successors and assigns are discharged and released from any and all claims, demands, obligations, causes of action, rights or damages, through and including December 31, 2002, other than claims arising under the warranties contained in the Agreement, claims for unauthorized use or disclosure of Proprietary Information, and claims relating to obligations expressly preserved in the Settlement Agreement. By this motion, the Debtors ask the Court to approve the Settlement Agreement, and authorize the assumption of the License Agreement. Mr. Walsh insists that the Settlement Agreement is fair and equitable because under the Settlement Agreement, the Debtors, among other things: (i) maintain the right to continued use of the Software; (ii) obtain a substantial reduction in cure costs compared to the amounts actually due to SAP under the original Agreement; (iii) obtain a release from any and all claims by SAP against the Debtors in connection with the Agreement which SAP may now have or have ever had through and including December 31, 2002; (iv) will participate in good faith negotiations to reduce the maintenance fees paid by the Debtors for certain Licenses under the Agreement so as to more accurately reflect the Debtors' current business needs; and (v) receive the benefits of a cooperative relationship with SAP on a going forward basis. By assuming the License Agreement through the Settlement Agreement, the Debtors, with the payment of negotiated cure costs: (i) obtain the benefit of additional future services at a cost commensurate with services required; and (ii) maintain a stabilized and beneficial relationship with SAP on a going forward basis in the event additional Licenses will be needed in the future. Given the extensive nature of the Parties' business relationships and the complexity of their contractual transactions, any litigation arising from the outstanding payments due and owing under the Agreement would likely be time-consuming and costly. In addition, extensive litigation would divert the attention of the Debtors' management and personnel from their efforts to implement the Plan and focus on Global Crossing's future. Mr. Walsh notes that one element of the Settlement Agreement is the Debtors' continued payment of maintenance fees, which are calculated based on the number of Licenses maintained by the Debtors. Due to the significant downsizing of the Debtors' workforce and the resulting decrease in the number of Licenses required to operate their business, assumption of the Agreement will result in ongoing obligations to pay maintenance fees for more Licenses than the Debtors currently require. Pursuant to the Settlement Agreement, the Debtors will have the opportunity to work with SAP to negotiate in good faith for reduced maintenance fees to more accurately reflect the current needs of their employees. Considering the benefit to the estates accruing from the assumption and the reduction in cost to the Debtors through the negotiated cure amounts, as well as the potential to reduce maintenance obligations on a going forward basis, the Debtors have determined, in their business judgment, to assume the Agreement. Mr. Walsh asserts that the Licenses are vital components of the Debtors' business. Moreover, if the Debtors do not assume the contract, they may be obligated to pay administrative expenses totaling $1,409,348.88 for postpetition products and services, which in itself far exceeds the agreed $950,000 cure amount. Failure to assume the contract would force the Debtors to terminate the SAP system and to look elsewhere for the provision of similar products and services, a conversion that would be at best difficult, uncertain, and extremely costly. (Global Crossing Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) HEARTLAND SECURITIES: Court Fixes June 30, 2003 Claims Bar Date --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has established June 30, 2003, as the deadline for creditors of Heartland Securities Corp., except for governmental claim holders, to file their proofs of claim against the Debtor or be forever barred from asserting their claims. To be timely, Proofs of Claim must be received by the Clerk of the Bankruptcy Court on or before 5:00 p.m. Eastern Time on June 30. On the other hand, Governmental Claims are due on Sept. 22, 2003. Claims need not be filed at this time if they are on account of: 1. Claims already properly filed with the Clerk of the Bankruptcy Court; 2. Claims not listed as contingent, unliquidated or disputed; 3. Claims previously allowed by Order of the Court; 4. Claims already paid in full by the Debtor; 5. Claims for which a specific deadline has been set by the Court; and 6. Claims for the Debtor's administrative expenses. Heartland Securities Corp., a provider of securities brokerage services for professional day traders, filed for chapter 11 protection on March 26, 2003 (Bankr. S.D.N.Y. Case No. 03- 11817). Thomas R. Califano, Esq., at Piper Marbury Rudnick & Wolfe LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $13,386,000 in total assets and $25,833,000 in total debts. HORIZON NATURAL: Princess Beverly Coal Mine is Closing ------------------------------------------------------ Princess Beverly Coal Company, a subsidiary of Horizon Natural Resources (Nasdaq: HZONQ.pk), announced that the Princess Beverly mine located in Kanawha and Raleigh Counties, West Virginia, will close by the end of August 2003, because reserves remaining at the site are very limited. Slightly over 80 employees work at the Princess Beverly mine. Residual work on equipment removal and reclamation will continue for a few employees as the company reclaims the property. Layoffs will begin August 21, 2003. Notice was given today in accordance with the Worker Adjustment and Retraining Notification Act of 1988. "Closing a mine is always difficult, because the decision affects our employees, their families and the surrounding communities," said Horizon's acting chief executive officer and chief restructuring officer, Scott M. Tepper. "The Princess Beverly mine has been a fine operation, but limited coal reserves make it economically unfeasible to continue operations there." Tepper also noted, "Affected employees will receive benefits as outlined by our contracts, including medical coverage, educational assistance and re-training for additional employment. We will be working with the State of West Virginia regarding outplacement assistance for affected employees." The Princess Beverly mine produced 1.5 million tons of coal in 2001 and 0.7 million tons of coal in 2002. Through May of 2003, the mine produced 0.6 million tons of coal. Horizon Natural Resources Company (formerly known as AEI Resources Holding, Inc.) conducts mining operations in five states with about 35 underground mines: -- Central Appalachian operations include all of the company's mining operations in southern West Virginia and Kentucky, currently totaling 30 surface and underground mines. -- Western operations include mining in Colorado, Illinois and Indiana, currently totaling five surface and underground mines. 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. IDEC PHARMACEUTICALS: S&P Places BB Ratings on Watch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit and senior unsecured debt ratings on IDEC Pharmaceuticals Corp., on CreditWatch with positive implications, following the company's announcement that it is planning to acquire another biopharmaceutical company, Biogen Inc. (unrated), in an all equity transaction valued at more than $6.6 billion. The acquisition would enable San Diego, Calif.-based IDEC to significantly diversify its product revenues and research pipeline. IDEC specializes in the development of monoclonal antibody-based (Mab) cancer treatments. Its Rituxan treatment for B-cell non-Hodgkin's lymphoma was the first Mab approved by the FDA as a cancer treatment. IDEC collects royalties on the sale of the drug from co-promotion partner Genentech. Rituxan generated 2002 sales of more than $1.4 billion, which translated into nearly $370 million of royalties for IDEC (or 92% of the company's annual revenues). Cambridge, Massachusetts-based Biogen specializes in the treatment of autoimmune diseases. Avonex, its treatment for multiple sclerosis, generated $1.1 billion of sales and had an approximately 50% market share in 2002. The company recently launched Amevive, a treatment for moderate-to-severe chronic plaque psoriasis. "Following the transaction, IDEC would retain financial capacity to fund new drug development and further acquisitions," said Standard & Poor's credit analyst Arthur Wong. As of March 31, 2003, IDEC had $860 million in cash and short-term investments, as well as $622 million in long-term investments. The company has no significant near-term debt maturities. Meanwhile, Biogen is cash flow positive and has very limited debt. As of March 31, 2003, Biogen had $812 million of cash and short-term investments. The acquisition is expected to close in the late second half of 2003. Standard & Poor's will discuss IDEC's business strategy with the management and await completion of the transaction before taking action, possibly raising the ratings to investment grade. IMC GLOBAL: Preparing $125 Million Preferred Stock Offering ----------------------------------------------------------- IMC Global Inc. (NYSE: IGL) intends to publicly offer $125 million of Mandatory Convertible Preferred Shares (2.5 million shares with liquidation preference $50 per share). The Company also will grant the underwriters an over-allotment option to purchase up to an additional 250,000 preferred shares. The Mandatory Convertible Preferred Shares will be issued pursuant to IMC Global's shelf registration. JPMorgan is serving as sole book-running manager for the offering. Proceeds from the offering will be used for general corporate purposes, including funding working capital, possible debt reduction and transaction costs. Separately, IMC Global commenced Monday tender offers for a portion of its 6.55% Notes and 7.625% Senior Notes due in January and November 2005, respectively. The Company said it plans to fund this repayment with the proceeds of a new debt financing. With 2002 revenues of $2.1 billion, IMC Global is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. Copies of the prospectus and prospectus supplement related to the public offering may be obtained from J.P. Morgan Securities Inc., Prospectus Department, One Chase Manhattan Plaza, New York, NY 10081 (Telephone Number 212-552-5121). * * * As previously reported, Fitch Ratings assigned a 'BB' rating to IMC Global Inc.'s new 11.25% senior unsecured notes due June 1, 2011. Fitch also affirmed the 'BB+' rating on the senior secured credit facility, the 'BB' rating on the existing senior unsecured notes with subsidiary guarantees and the 'B+' rating on the senior unsecured notes with no subsidiary guarantees. The Rating Outlook has been changed to Negative from Stable. IMC GLOBAL: Commences Tender Offers for 6.55% and 7.625% Notes -------------------------------------------------------------- IMC Global Inc. (NYSE: IGL) commenced tender offers to purchase for cash up to $100 million aggregate principal amount of its 6.55% Notes due 2005 and up to $200 million aggregate principal amount of its 7.625% Senior Notes due 2005. The total maximum consideration for the 6.55% Notes is an amount, payable in cash, equal to 104.0% of the principal amount of the 6.55% Notes, which includes a premium of 2.0% payable to each holder who properly tenders 6.55% Notes prior to 12:00 midnight, New York City time, on Tuesday, July 8, 2003. The total maximum consideration for the 7.625% Notes is an amount, payable in cash, equal to 106.5% of the principal amount of the 7.625% Notes, which includes a premium of 2.0% payable to each holder who properly tenders 7.625% Notes prior to 12:00 midnight, New York City time, on the Early Tender Date. The offers will expire at 5:00 p.m., New York City time, on Tuesday, July 22, 2003, unless extended or earlier terminated, in either case, by the Company in its sole discretion. The consummation of the tender offers is subject to several conditions, including the receipt of net proceeds from a debt financing sufficient to pay for Notes accepted in the tender offers. Notes tendered pursuant to the offers may not be withdrawn unless the offer, with respect to such Notes, is terminated without any Notes being purchased thereunder. The offers are made upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 23, 2003. Copies of the Offer to Purchase can be obtained from Bondholder Communications Group at (888) 385-BOND (888-385-2663), Attention: Irene Miller. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are serving as the Dealer Managers for the offers. Questions concerning the terms of the offers may be directed to Goldman, Sachs & Co., Liability Management Group, toll free at (800) 828-3182. Questions concerning procedures regarding the offers may be directed to Bondholder Communications Group, toll free at (888) 385-BOND (888-385-2663). With 2002 revenues of $2.1 billion, IMC Global is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. * * * As previously reported, Fitch Ratings assigned a 'BB' rating to IMC Global Inc.'s new 11.25% senior unsecured notes due June 1, 2011. Fitch also affirmed the 'BB+' rating on the senior secured credit facility, the 'BB' rating on the existing senior unsecured notes with subsidiary guarantees and the 'B+' rating on the senior unsecured notes with no subsidiary guarantees. The Rating Outlook has been changed to Negative from Stable. IMCLONE SYSTEMS: December 31 Net Capital Deficit Widens to $185M ---------------------------------------------------------------- ImClone Systems Incorporated (NASDAQ: IMCLE) announced its financial results for the fourth quarter and year ended December 31, 2002. The Company also announced that it filed amended 10-Q's for the first, second and third quarters of 2002. As disclosed in its recently filed Annual Report on Form 10-K for the year ended December 31, 2002, the Company restated its consolidated financial statements for the first three quarters of 2002 and for the years ended December 31, 2001 and 2000 primarily to recognize withholding tax liabilities and certain related write-downs. Total revenues for the year ended December 31, 2002 were $60.0 million compared with total revenues of $50.2 million for the year ended December 31, 2001, as restated. Net loss to common stockholders was $157.9 million for the year ended December 31, 2002, compared with a net loss to common stockholders of $127.6 million for the year ended December 31, 2001, as restated. For the quarter ended December 31, 2002, the Company reported total revenues of $14.9 million compared with total revenues of $12.6 million for the fourth quarter of 2001, as restated. Net loss to common stockholders was $39.4 million for the quarter ended December 31, 2002, compared with a net loss to common stockholders of $55.8 million for the quarter ended December 31, 2001, as restated. The Company disclosed on March 31, 2003 that it estimated that the liability to be reflected on the December 31, 2002 balance sheet relating to the nonpayment of state and federal taxes by Samuel D. Waksal, its former President and Chief Executive Officer, and the Company's review of certain other options and warrants could be up to $60.0 million. The Company also previously disclosed that the amount to be ultimately charged against earnings would be at least $23.3 million, an amount representing the withholding tax liability attributable to Samuel D. Waksal. Both estimated amounts were exclusive of penalties and interest that may be imposed. The actual withholding tax liability reflected on the Company's December 31, 2002 balance sheet is approximately $38.8 million. The actual amounts charged against earnings were approximately $3.4 million in 2002, $25.3 million in 2001 and $0 in 2000, for a total of $28.7 million. All these amounts are exclusive of penalties, interest and other related contingencies for which the Company does not believe a loss is probable. The consolidated financial statements for the three months ended March 31, 2002 and 2001, the three and six months ended June 30, 2002 and 2001 and the three and nine months ended September 30, 2002 and 2001 have been restated to reflect the effect of the restatements. The Company made these quarterly changes by filing Form 10-Q/A reports with the SEC concurrently with its Form 10-K. The Company had $247.7 million in cash, cash equivalents and securities available for sale at December 31, 2002, compared with $334.0 million at December 31, 2001. The Company believes that its existing cash on hand, marketable securities and amounts to which it is entitled under licenses and other agreements should enable it to maintain its current and planned operations through at least June 2004. As restated, the Company's December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $185 million. As previously announced, due to ImClone Systems' inability to file its 2002 Form 10-K on a timely basis, the Company's trading symbol was changed by NASDAQ from "IMCL" to "IMCLE" on April 11, 2003. The Company's trading symbol will not revert back to "IMCL" until such time as the Company cures all of its listing deficiencies, namely the filing of its first quarter 2003 report on Form 10-Q. The Company previously announced that it intends to file its Form 10-Q on or before July 7, 2003. ImClone Systems Incorporated is committed to advancing oncology care by developing a portfolio of targeted biologic treatments, designed to address the medical needs of patients with a variety of cancers. The Company's three programs include growth factor blockers, angiogenesis inhibitors and cancer vaccines. ImClone Systems' strategy is to become a fully integrated biopharmaceutical company, taking its development programs from the research stage to the market. ImClone Systems' headquarters and research operations are located in New York City, with additional administration and manufacturing facilities in Somerville, New Jersey. IMPAC: Fitch Downgrades Class B1 & B2 Certificates to B/CC ---------------------------------------------------------- Fitch Ratings affirms 4 classes, upgrades 2 classes & downgrades 2 classes of the following Impac SAC RMBS securitizations: Impac Secured Assets Corp., mortgage pass-through certificates, series 2000-1: -- Class A affirmed at 'AAA' -- Class M1 upgraded to 'AAA' from 'AA' -- Class M2 upgraded to 'AA' from 'A' -- Class M3 affirmed at 'BBB' -- Class B1 downgraded to 'B' from 'BB' and removed from Rating Watch Negative -- Class B2 downgraded to 'CC' from 'CCC' Impac Secured Assets Corp., mortgage pass-through certificates, series 2000-2: -- Class A affirmed at 'AAA' Impac Secured Assets Corp., mortgage pass-through certificates, series 2000-3: -- 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. INTEGRATED HEALTH: Signs-Up TriAlliance as Real Estate Brokers -------------------------------------------------------------- Integrated Health Services, Inc., and its debtor-affiliates seek to employ TriAlliance Commercial Real Estate Services as their real estate brokers pursuant to an Amended Agreement for the purpose of procuring a buyer or lessee for certain improved real property located in Sparks, Maryland, owned by IHS-Highlands. Alfred Villoch III, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, recounts that the Debtors sought to employ TriAlliance for this transaction, based on an Exclusive Agency Agreement. An order authorizing the retention was entered on April 7, 2003 based on the certificate of no objection filed by counsel for the Debtors. However, subsequent to the filing of the certificate, the parties to the Exclusive Agency Agreement entered into a revised form of the Agreement on April 8, 2003, one day after the Court signed the Order approving the original Agreement. The Court never signed the proposed Order covering the Amended Agreement. The Debtors believe that if the original form of agreement were unobjectionable, the minor changes in the Revised Agency Agreement would not change that result. Thus, the Debtors now ask the Court to approve the Revised Agency Agreement. The Revised Agency Agreement differs from that originally submitted to: a. reflect that the revised agency agreement will automatically renew, unless proper notice is given; b. clarify fee sharing, if any, among any real estate brokers other than TriAlliance Commercial Real Estate Services LLC used in the transactions contemplated; and c. clarify the "excluded Parties" to the Revised Agency Agreement. (Integrated Health Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 609/392-0900) INT'L MULTIFOODS: Appoints KPMG LLC as New Independent Auditors --------------------------------------------------------------- Multifoods' Chairman and Chief Executive Officer Gary E. Costley told shareholders at the company's annual meeting that Multifoods is succeeding in its transformation into a focused, branded food company in North America. "Today, Multifoods is better equipped to compete and thrive in the marketplace than ever before in its 111-year history," Costley said. "As a company, we have a lot going for us today. We have a clear focus and growth path. We have great brands with leadership positions in most of them. And we have talented, dedicated employees with deep experience in branded foods and baking products, and a passion for winning." During his remarks to the more than 130 shareholders who attended the 2003 annual meeting, Costley also outlined the company's strategies to achieve long-term growth. These strategies include: leverage the equity of Multifoods' brands through value-added marketing initiatives, increased promotions and more effective merchandising; accelerate product innovation; expand distribution in channels and geographies that have potential for significant growth; improve operating margins by capitalizing on opportunities for supply-chain efficiencies, cross-company synergies and profitable volume growth; and pursue value-enhancing acquisitions and strategic alliances. In other business, shareholders elected the company's three nominees to the board of directors for three-year terms: Costley; J. David Pierson, chairman and chief executive officer, CPI Corp.; and Nicholas L. Reding, retired vice chairman, Monsanto Company. Two directors retired from the company's board at this year's annual meeting: Jack D. Rehm, retired chairman, Meredith Corp., and Lois D. Rice, guest scholar, The Brookings Institution. Both have served as directors since 1991. Multifoods' board of directors is now comprised of eight members -- seven of whom are outside, non-employee directors who are independent under the standards of the New York Stock Exchange. Shareholders also ratified the appointment of KPMG LLP as the company's independent auditors for the fiscal year ending Feb. 28, 2004. Election of Corporate Officers After the annual meeting, Multifoods' board of directors elected the following employees as officers of the corporation: -- Gary E. Costley, chairman and chief executive officer; -- Dan C. Swander, president and chief operating officer; -- Frank W. Bonvino, senior vice president, general counsel and secretary; -- John E. Byom, senior vice president, finance, and chief financial officer; -- Ralph P. Hargrow, senior vice president, administration, human resources, and research, development and quality; -- Randall W. Cochran, vice president, supply chain; -- Martin R. Jamieson, vice president, International Multifoods, and president, Robin Hood Multifoods Inc.; -- Dennis R. Johnson, vice president and controller; -- Gregory J. Keup, vice president and treasurer; -- Jill W. Schmidt, vice president, investor and corporate relations; -- James H. White, vice president, International Multifoods, and president, U.S. Consumer Products Division; -- Michael J. Wille, vice president, International Multifoods, and president, Foodservice Products Division. -- David R. Berryman, assistant controller; -- Frederick J. Huppert, assistant treasurer; -- Timothy J. Keenan, senior attorney and assistant secretary; and -- Scott R. Riddle, assistant treasurer and director, corporate development and strategic planning. Hargrow assumes the additional responsibility for the company's research, development and quality function following the departure of Daryl Schaller. Schaller joined Multifoods in November 2001 as vice president, research and development, in conjunction with the company's acquisition of several leading U.S. consumer brands from General Mills and Pillsbury. Schaller was a 25-year veteran of The Kellogg Company, where he served as senior vice president, scientific affairs, and led the company's worldwide research and development activities. At Multifoods, Schaller was instrumental in helping establish a centralized research, development and quality organization following the company's brand acquisition and putting in place the processes needed to effectively leverage its R&D capabilities to accelerate growth. International Multifoods Corp. (NYSE:IMC) is a manufacturer and marketer of branded consumer foods and foodservice products in North America. The company's food manufacturing businesses have combined annual net sales of about $940 million. Multifoods' brands include Pillsbury(R) baking mixes for items such as cakes, muffins, brownies and quick breads; Pillsbury (R)ready-to-spread frostings; Hungry Jack(R) pancake mixes, syrup and potato side dishes; Martha White(R) baking mixes and ingredients; Robin Hood(R) flour and baking mixes; Pet(R) evaporated milk and dry creamer; Farmhouse(R) rice and pasta side dishes; Bick's(R) pickles and condiments in Canada; Softasilk(R) premium cake flour; Red River(R) hot flax cereal; and Golden Temple(R). Further information about Multifoods is available on the Internet at http://www.multifoods.com * * * As previously reported in Troubled Company Reporter, Standard & Poor affirmed its double-'B' corporate credit rating as well as its double-'B'-plus senior secured debt rating on International Multifoods Corp. The ratings were removed from CreditWatch, where they were placed on July 30, 2002. At the same time, the company's single-'A'-plus senior unsecured debt rating was affirmed. The rating was not on CreditWatch, and the senior unsecured debt issue is unconditionally guaranteed by Diageo PLC. The outlook is stable. KMART CORP: Court Ratifies May 6 Distribution Record Date --------------------------------------------------------- The U.S. Bankruptcy Court has confirmed May 6, 2003 as Kmart Corporation's record date for distribution purposes. Rule 3021 of the Federal Rules of Bankruptcy Procedure, titled "Distribution Under Plan," provides that (a) creditors include holders of bonds, debentures, notes and other debt securities and (b) interest holders include the holders of stock and other equity securities of record at the time distributions commence unless a different time is fixed by a chapter 11 plan or the confirmation order. Distributions commenced under the confirmed Kmart Plan on May 6, 2003. On that date, the Plan was substantially consummated in that, among other things: -- credit was extended and made available to the Debtors under the $2,000,000,000 Exit Financing Facility; -- the Plan Investors ESL Investments Inc. and Third Avenue Value Fund funded $187,000,000; -- the Kmart creditor trust was funded; -- the collateral trust establishing the trade vendor lien became fully effective; and -- the restructuring transactions were consummated. These distributions were also made on that date: (1) a total of $243,224,909 in cash was distributed to the holders of Allowed Prepetition Lender Claims other than the Plan Investors; and (2) Kmart Holdings Corporation distributed 89,677,509 shares of its common stock, including: (i) 32,723,775 shares to the Plan Investors; (ii) 25,008,573 shares to the servicers of Prepetition Note Claims; and (iii) 31,945,161 shares to the Disbursing Agent for distribution to the holders of Trade Vendor and Lease Rejection Claims. (Kmart Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 609/392-0900) KSAT SATELLITE: Shareholders Approve Voluntary Dissolution Plan --------------------------------------------------------------- KSAT Satellite Networks Inc. (TSX Venture - KSA) announced that at the Annual and Special Meeting of the Corporation held on June 20, 2003, the shareholders of the Corporation approved a special resolution authorizing and approving the voluntary dissolution of the Corporation. As described in the information circular prepared and mailed to all shareholders for that meeting, the Corporation will now take steps to dissolve. The resolution authorizing the directors to make an application to delist the Corporation from the TSX Venture Exchange did not receive the required approval of shareholders. The resolution authorizing the directors to make application to the relevant securities commissions for an order that the Corporation cease to be a reporting issuer was approved, though any such application will only be made pursuant to the involuntary delisting of the Corporation by the TSX Venture Exchange. The Corporation also has signed an agreement with two of its major shareholders and loan holders, Global Space Investments Limited and Gilat Satellite Networks Ltd., regarding the orderly dissolution of the Corporation and distribution of its assets. As previously disclosed in the Press Release dated May 12, 2003, management anticipates that shareholders are unlikely to receive any value after the discharge of the Corporation's liabilities. As previously reported, the Company's most recent publicly available financial statements of the Corporation, as at September 30, 2002 (unaudited), the Corporation's shareholders' deficit was $11,927,629. LARRY'S STANDARD: Asks Court to Extend Lease Decision Period ------------------------------------------------------------ Larry's Standard Brand Shoes, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas, to extend their lease decision period. The Debtor tells the Court that it needs until October 6, 2003 to decide whether to assume, assume and assign or reject unexpired nonresidential real property leases and executory contracts. The Debtor relates that it is in the process of assessing the viability of the various locations where the Debtor operates its stores. Thus, the Debtor seeks to preserve its interests in any unexpired leases until it concludes its assessment efforts. The Debtor intends to continue make payments to the lessors under the various unexpired leases, while moving forward to resolve good faith disputes over unpaid past due rent. Larry's Standard Brand Shoes, Inc., is in the business of retail sales of men's shoes and accessories. The Company filed for chapter 11 protection on June 3, 2003 (Bankr. N.D. Tex. Case No. 03-45283). J. Robert Forshey, Esq., at Forshey and Prostok, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $8,836,861 in total assets and $10,782,378 in total debts. MAGELLAN HEALTH: Secures Clearance for Group Practice Settlement ---------------------------------------------------------------- Magellan Health Services, Inc., and its debtor-affiliates obtained the Court's approval of an agreement dated March 17, 2003, to settle all obligations among Group Practice, GPA Inc., Magellan Behavioral, Integrated, under certain unsecured promissory note. On November 1, 2000, debtor New GPA, Inc., a Debtor, and Group Practice Affiliates, LLC entered into that certain Asset Purchase Agreement, whereby GPA sold, among other things, several business units to Group Practice LLC. As full payment for the assets sold under the APA, Group Practice executed and delivered to GPA that certain unsecured promissory note dated November 1, 2000 in the original principal amount of $2,000,000. The term of the Note is 15 years and it bears interest at the rate of 7% per annum, paid in arrears semi-annually, with no principal due until 2015. However, principal under the Note is subject to reduction based on the occurrence of certain events. The note has a current principal balance of $1,250,000. Under the terms of the Note, the unpaid principal amount was reduced by $200,000 because of the occurrence of certain events related to that certain memorandum of understanding, dated November 1, 2000, between Group Practice Arizona, Inc., a subsidiary of Group Practice, and Human Affairs International, Inc., a Debtor. More specifically, the outstanding principal under the Note was to be reduced $50,000 if either Human Affairs or Group Practice Arizona exercised its termination right under the MOU. The outstanding principal amount under the Note was to be further reduced by $150,000 if Group Practice determined that one of its outpatient facility must be closed as a result of Human Affairs exercising its termination rights under the MOU. In December of 2001, Human Affairs exercised its termination rights under the MOU, thereby allowing Group Practice to close its Arizona facility. In March of 2002, Group Practice closed the Arizona facility. These events triggered the net $200,000 reduction of the principal balance of the Note. Reductions of $534,000 of principal due under the Note were triggered by operation of two provisions of that certain Program Participation Agreement dated November 1, 2000 entered into by Magellan Behavioral Health, Inc., a Debtor affiliate of GPA, and Integrated Mental Health Services, Inc., an affiliate of Group Practice. Pursuant to the Provider Agreement, Magellan Behavioral guaranteed a minimum amount of visits by subscribers to Integrated per year. Unpaid principal due under the Note would be reduced by a certain specified amount if Integrated did not receive the guaranteed minimum amount of visits by subscribers. Since November of 2000, Magellan Behavioral was unable to refer a sufficient number of plan subscribers to satisfy the minimum amount of visits under the Provider Agreement. For each of the periods of November 1, 2000 to October 31, 2001 and November 1, 2001 to October 31, 2002, Magellan Behavioral owed $138,000 to Integrated as a result of this guaranteed minimum. It is projected that Magellan Behavioral will owe an additional $138,000 for the period of November 1, 2002 to October 31, 2003. Accordingly, Magellan Behavioral's failure to meet its referral requirements under the Provider Agreement amounts to $414,000, which is to be applied to reduce the principal amount of the Note. Further, under the Provider Agreement, Magellan Behavioral was required to pay Integrated for claims arising from the provision of services by Integrated to its' members according to the rates set forth in Magellan Behavioral's standard fee schedule, less any applicable co-payments, coinsurance or deductible. However, notwithstanding amount of the Standard Fee, Magellan Behavioral also promised to pay Integrated $65 per visit by a member, regardless of the actual cost of the Standard Fee. The Provider Agreement required Magellan Behavioral and Integrated periodically to reconcile the difference between the Target Fee and the Standard Fee. If the Standard Fee was less than the Target Fee, Magellan Behavioral was required to pay Integrated the difference. Since November of 2000, both the Debtors and Integrated believe that the Standard Fee was less than the Target Fee. However, no Reconciliation was done by either party, notwithstanding the requirements of the Provider Agreement. Nevertheless, Magellan Behavioral estimates that, under a reconciliation as provided under the Provider Agreement, it would be obligated to pay Integrated $120,000. In addition, a portion of the Note was guaranteed by individual members of Group Practice, under which they agreed to guarantee repayment of $200,000 of the principal due under the Note. The outstanding principal amount of the Note has been reduced from $2,000,000 to $1,250,000. In order to convert the Note to cash and avoid the risks associated with its long-term nature, Magellan Behavioral entered into discussions with the other parties. The salient terms of the Settlement Agreement are: A. Group Practice will pay GPA $741,830 after entry of an order authorizing the Settlement Agreement. B. GPA will release, discharge, acquit and forgive Group Practice from any and all claims, actions, suits, demands, liabilities, judgments, and proceedings, both at law and in equity, related to or arising from the Note. C. GPA will release, discharge, acquit and forgive the Guarantors from any and all claims, actions suits, demands, liabilities, judgments, and proceedings, both at law and in equity, related to or arising from the Guaranty. D. Group Practice and its affiliate, Integrated, and GPA and its affiliate, Magellan Behavioral Health, acknowledge and agree that the $741,830 payment amount takes into account any payments owed by to Integrated or by Integrated to MBH pursuant to the Reconciliation and to the minimum referrals of subscribers. Group Practice and Integrated settle, waive and discharge any claims against Magellan Behavioral or GPA with respect to the Reconciliation and the minimum referral obligations and Magellan Behavioral and GPA settle, waive and discharge any claims against Group Practice or Integrated with respect to the Reconciliation and the minimum referrals of subscribers. E. The Reconciliation provisions and the minimum subscriber referrals are deleted from the Provider Agreement effective November 1, 2002 and thereafter. (Magellan Bankruptcy News, Issue No. 9: Bankruptcy Creditors' Service, Inc., 609/392-0900) MANITOWOC: Teams-Up with Kvichak to Build Coast Guard Prototype --------------------------------------------------------------- The Manitowoc Company, Inc. (NYSE: MTW) and its subsidiary, Marinette Marine Corporation, will partner with Kvichak Marine Industries, Inc. to develop and construct a prototype Response Boat Medium (RB-M) for the U.S. Coast Guard. Kvichak, located in Seattle with full-service waterfront facilities, will build the prototype RB-M. The Marinette/Kvichak team is using a design developed by Camarc, Ltd., an expert in the design of water jet-driven high-speed aluminum boats. Marinette Marine will serve as the prime contractor and program manager for the project. Delivery of the $2.5-million test boat is expected in late 2003. "We are pleased to work with the Northwest's finest high-speed aluminum boat builder on this very important project," said Dennis McCloskey, president of Manitowoc's Marine Group. "We believe the strengths of Marinette Marine and Kvichak Marine greatly compliment each other and will result in a high-quality class of vessels that will serve the Coast Guard's multi-mission needs for many years to come." The Marinette/Kvichak team, along with two other contractors, will each build a RB-M test boat as part of the competitive process. After evaluating each prototype vessel, conducting extensive sea trials, and reviewing competitive proposals from the shipyards, the Coast Guard intends to award a contract for a fleet of approximately 180 RB-M vessels to replace its aging fleet of 41- foot Utility Boats. The six-year contract is expected to be awarded in 2004. Marinette and Kvichak will share vessel construction if awarded the production contract. The new fleet, which will perform missions such as homeland security and search-and-rescue operations, will be safer, more efficient, and more cost-effective for the Coast Guard to operate and maintain due to standardized systems, improved maintenance, and logistics support capabilities. The new RB-Ms will be highly maneuverable and capable of speeds exceeding 40 knots (46 mph). Kvichak Marine, located in Seattle, Wash., is a world-renowned builder of high-quality, high-speed aluminum boats for a wide range of markets. Kvichak is a full-service yard, encompassing new vessel design and construction, vessel conversion and refit, and life cycle support. Since initiating new vessel construction in 1988, Kvichak Marine has successfully delivered more than 300 vessels for a number of demanding markets and applications. The Manitowoc Company, Inc. is one of the world's largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * As previously reported, Standard & Poor's assigned its single- 'B'-plus rating to The Manitowoc Company Inc.'s $175 million senior subordinated notes due 2012. At the same time, the double-'B' corporate credit rating was affirmed on the Manitowoc, Wisconsin-based company. In addition, the rating was removed from CreditWatch where it was originally placed on March 19, 2002, following the company's announcement of the acquisition of Grove Investors Inc. The outlook is negative. MASTER FIN'L: Fitch Affirms Two BB Class B2 Note Ratings -------------------------------------------------------- Fitch Ratings has affirmed the following Master Financial Asset Securitization Trust transactions: Master Financial, series 1998-1: -- Class A-6 'AAA'; -- Class M-1 'AA+'; -- Class M-2 'A+'; -- Class B-1 'BBB'; -- Class B-2 'BB'. Master Financial, series 1998-2: -- Class A-4 'AAA'; -- Class M-1 'AA'; -- Class M-2 'A'; -- Class B-1 'BBB'; -- Class B-2 'BB'. The affirmations reflect credit enhancement consistent with future loss expectations. MEDISOLUTION LTD: Reports Improved Performance for March Quarter ---------------------------------------------------------------- MediSolution Ltd. (TSX: MSH) announced its financial results for the quarter and year ended March 31, 2003. For the quarter ended March 31, 2003, revenues increased to $12.0 million from $7.4 million in the quarter ended March 31, 2002. The company reported a loss of $1.0 million for the quarter ended March 31, 2003 compared to a loss of $11.0 million for the quarter ended March 31, 2002. For the fiscal year ended March 31, 2003, revenues increased by 15% to $44.8 million from $39.0 million in the prior year. The company achieved income from operations of $1.2 million in fiscal 2003, compared to a loss from operations of $9.6 million in fiscal 2002. The net loss in fiscal 2003 amounted to $6.0 million compared to a net loss of $50.5 million in fiscal 2002. The significant improvement in revenue was achieved across both of MediSolution's business segments, Healthcare Information Systems and Human Resources/ Administrative Solutions. Productivity initiatives resulted in stronger contribution margins on software implementation, ongoing maintenance and outsourced services. The company also benefited from a cost reduction program carried out during fiscal 2002, and the exit from lower margin product lines. Fiscal 2002 included unusual expenses, including a $15.3 million restructuring charge and a $13.0 million loss from discontinued operations. MediSolution Ltd.'s March 31, 2003 balance sheet shows a working capital deficit of about $13 million, and a total shareholders' equity deficit of about $6.7 million. Highlights During the quarter, MediSolution signed an additional $3.2 million in new contracts, including the following customers: - Ministry of Health and Social Services of the Northwest Territories for MediPatient+(R) enhancements; - SCO Health Service, Ontario, for Virtuo(R), a financial and materials management information system; - Centre Hospitalier Jonquiere, Quebec, for MediHR(R), a human resources information management system, and MediTime(R), a scheduling system; - Ross Memorial, Ontario, for Patient Billing and Accounts Receivable, an accounts receivable application, and MediPatient+(R), a patient scheduling system. - CRSSSBJ Chibougameau, Quebec, for MediRad(R) and MediConnect(R). During fiscal 2003, the company successfully completed a number of initiatives, including: - Signed $18 million in new contracts during the year. - Strengthened the senior management team with the addition of 6 senior executives. - Created a new organizational structure, including a new marketing and business strategy function. - Streamlined, centralized and improved business processes such as management and time reporting, billing and contract administration, and national bid management. - Strengthened its third party contracts with partners such as Oracle, TECHNIDATA and MAK SYSTEM. - Strengthened its US operations with the hiring of a new President and a doubling of sales staff. - Recapitalization of the company including: - A $15 million rights offering, - A $14.5 million convertible debenture, and - $10 million of credit facilities. - Exited the following non-core businesses included in the Practice Management Systems segment of the business: - Networking, - Physician's clinical software, - Retail pharmacy. Outlook Allan D. Lin, President and Chief Executive Officer, said: "With the successful restructuring of the company behind us and a significantly improved profitability, MediSolution is now well positioned to aggressively pursue a profitable growth strategy for our core products and services." MediSolution Ltd. is a leading Canadian healthcare information technology company with offices in Canada and the United States. The company markets a comprehensive suite of information systems and professional services to the healthcare industry. More information about MediSolution is available at http://www.medisolution.com MICROSTRATEGY: Opts to Convert $53 Million of Debt into Equity -------------------------------------------------------------- MicroStrategy(R) Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, has elected to convert on July 30, 2003 the remaining $53,035,445 in principal amount outstanding of its 7-1/2 % series A unsecured notes plus all accrued and unpaid interest on the Notes, based on a conversion price of $32.2611, into shares of the company's class A common stock, in accordance with the terms of the indenture pursuant to which the Notes were issued. Under the indenture, MicroStrategy has the right, at any time prior to the maturity date of the Notes, to mandatorily convert the Notes into shares of MicroStrategy class A common stock at a conversion price equal to 80% of the dollar-weighted average trading price per share for all round lot transactions in the stock on The Nasdaq National Market for the ten trading days ending two days prior to the date that written notice of conversion has been given to the trustee for the Notes. Written notice electing to convert all outstanding Notes was given by MicroStrategy to the trustee Monday. The conversion will result in MicroStrategy issuing an aggregate of approximately 1,656,297 shares of class A common stock in the conversion. The conversion ratio for the Notes is 3.1230 shares of class A common stock for each $100 in principal amount of the Notes. The conversion ratio includes the shares of class A common stock to be issued with respect to the $0.75 of accrued and unpaid interest that will be outstanding on each $100 principal amount of the Notes at the time of conversion. Interest on the Notes will cease to accrue as of the Conversion Date. Notices of conversion will be mailed to each record holder of the Notes on June 30, 2003. The Notes trade on The Nasdaq SmallCap Market under the symbol "MSTRG." As of June 20, 2003, MicroStrategy had issued and outstanding approximately 10,454,245 shares of class A common stock and approximately 3,882,780 shares of class B common stock. Giving effect to the conversion of the Notes and the issuance of the Conversion Shares, MicroStrategy expects that immediately following the conversion it will have a total of approximately 12,110,542 shares of class A common stock outstanding and 3,882,780 shares of class B common stock outstanding. By converting the Notes into class A common stock, MicroStrategy will eliminate its obligations under the Notes to pay $53 million in principal and approximately $4 million in cash interest annually, or approximately $16 million in total interest that would have been paid in cash over the remaining term of the Notes. Upon conversion of the Notes, MicroStrategy expects that its balance sheet will reflect an increase in stockholders' equity of approximately $39.8 million. On the Conversion Date, MicroStrategy expects to incur a non-recurring, non-cash charge equal to the difference between the fair market value of the Conversion Shares on the Conversion Date and approximately $39.8 million, the carrying value of the Notes plus accrued and unpaid interest on the Conversion Date. For example, if the fair market value of a Conversion Share on the Conversion Date were equal to $38.00, the closing sale price per share of the class A common stock on June 20, 2003, MicroStrategy would incur a non-recurring, non-cash charge in the third quarter of 2003 of approximately $23.1 million as a result of the conversion. This charge would decrease MicroStrategy's GAAP net income for the third quarter of 2003 and for the year ended December 31, 2003. Accordingly, MicroStrategy expects that the charge resulting from the conversion will decrease GAAP net income expected for the same periods compared to guidance previously provided by MicroStrategy on April 29, 2003, which did not contemplate any conversion of the Notes or any charges associated with a conversion. The interest savings from the conversion of the Notes will have the effect of increasing MicroStrategy's GAAP net income for the fourth quarter of 2003 and for future periods during the term of the Notes in absolute terms as compared to GAAP net income for these periods if the Notes had remained outstanding. Founded in 1989, MicroStrategy is a worldwide leader in the increasingly critical business intelligence software market. Leading Fortune 2000 companies are integrating MicroStrategy's industrial-strength software into virtually all facets of their businesses. The MicroStrategy Business Intelligence Platform(TM) distills vast amounts of data into insight to help drive cost- efficiency, productivity, customer relations and revenue- generation. MicroStrategy offers exceptional capabilities -- excellent scalability, powerful analytics, user-friendly query and reporting features and an outstanding, easy-to-use Web interface. Top companies are using MicroStrategy to cost-effectively harness large, multi-terabyte databases; empower thousands of employees at all operational levels; and extend the benefits of business intelligence enterprise-wide and beyond to customers, partners and suppliers. MicroStrategy has over 2,000 enterprise-class customers, including General Motors, Best Buy, Lowe's Home Improvement Warehouse, Yahoo!, Visa International, Wells Fargo, Telecom Italia, AT&T Wireless Group and Aventis. MicroStrategy also has relationships with over 500 systems integrators and application development and platform partners, including IBM, PeopleSoft, Sun, and JD Edwards. MicroStrategy is listed on Nasdaq under the symbol MSTR. For more information or to purchase or demo MicroStrategy's software, visit MicroStrategy's Web site at http://www.microstrategy.com MicroStrategy's March 31, 2003 balance sheet shows a working capital deficit of about $3 million, and a total shareholders' equity deficit of about $32 million. MIRANT: S&P Revises Junk Debt Watch Implications to Negative ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit ratings on energy provider Mirant Corp., and its subsidiaries to 'CC' from 'CCC', and revised its CreditWatch listing for the corporate credit ratings to negative from developing. Standard & Poor's also lowered its senior unsecured debt rating on Mirant and its subsidiaries to 'CC' from 'CCC' and its trust preferred stock rating on the company to 'C' from 'CC'. The senior secured debt rating on Mirant Mid-Atlantic LLC was lowered to 'CC' from 'CCC'. These ratings remain on CreditWatch with developing implications. These rating actions follow additional developments in Mirant's efforts to extend near- and intermediate-term debt maturities to avert a bankruptcy filing. Atlanta, Georgia-based Mirant has about $9.7 billion in debt, including lease-related debt. Mirant asked creditors holding approximately $3.5 billion of Mirant unsecured debt that matures on or before May 1, 2006, to amend terms to extend their debt maturities until July 15, 2008. The ammendment is to be achieved by creditors exchanging their obligations for new obligations in which Mirant will pledge essentially all of its remaining unencumbered assets and grant warrants on Mirant's common equity. "If such an exchange were completed, the new obligations likely would have better recovery prospects in the event of a Mirant bankruptcy filing than the obligations they replace, and Mirant would receive more time to improve its profitability and financial position," said Standard & Poor's credit analyst Bruce Schwartz. "However, we do not equate this form and process of settlement with the original terms of each obligation." The rating actions follow Mirant's disclosure on June 20, 2003 that it also asked its bank group to vote on a prepackaged Chapter 11 bankruptcy filing plan, which could indicate difficulties completing the exchange offer. The threshold for completing a prepackaged bankruptcy filing (two-thirds vote of creditors needed for approval) is less than for the exchange offer (requiring the approval of at least 85% of outstanding creditors). Mirant also disclosed that its Mirant Americas Generation LLC unit received notice of a default on credit facilities from Lehman Brothers Commercial Paper Inc. because of its failure to deliver March 31, 2003, financial statements on a timely basis. In addition to concerns that Mirant may be more likely to file for Chapter 11 bankruptcy protection, the lowering of the corporate credit rating reflects Standard & Poor's opinion that the planned exchange offer (often referred to as an "out-of-court" restructuring) qualifies as a coerced distressed exchange. Standard & Poor's believes that Mirant would have great difficulty meeting all of its obligations as originally promised absent the exchange. Under Standard & Poor's criteria, such offers are deemed coercive by virtue of the investor's contemplation that refusal to accept the offer may lead to an even worse alternative, which in this case could involve a voluntary bankruptcy filing and the use of the bankruptcy code's "cramdown" provisions. In recent SEC filings, Mirant has indicated that it could seek bankruptcy protection, whether through a prepackaged transaction or otherwise, if the exchange offer is not completed. If the exchange offer were to be completed, Standard & Poor's would lower Mirant's corporate credit rating to 'SD', which represents selective default and then immediately assign a new rating based on Mirant's prospective creditworthiness. Such a rating is likely to be higher than 'CC'. If the exchange offer is not completed, Standard & Poor's believes that a voluntary bankruptcy filing likely would occur shortly thereafter, and the ratings would be lowered to 'D' upon such an event. The rated unsecured and trust preferred obligations remain on CreditWatch with developing obligations. If Mirant were to file for bankruptcy protection, whether prepackaged or otherwise, Standard & Poor's would lower all of its senior unsecured debt ratings to 'D'. However, if Mirant completes the exchange offer, Standard & Poor's could raise the ratings on Mirant's obligations to reflect Mirant's prospective default risk and each security's relative positioning within Mirant's capital structure. Standard & Poor's notes that the exchange offer, if completed, will not result in a payment default or impairment to Mirant's unsecured indebtedness, although various securities will become more deeply subordinated in Mirant's capital structure. Standard & Poor's expects to resolve the CreditWatch in accordance with the outcome of the exchange offer and pending a review of the company after a successful debt restructuring. The exchange offers will expire on July 14, 2003, unless extended. MISSISSIPPI CHEMICAL: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Mississippi Chemical Corporation 3622 Highway 49 East Yazoo City, Mississippi 39194-0388 Bankruptcy Case No.: 03-02984 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Mississippi Nitrogen, INC. 03-02985 MissChem Nitrogen, L.L.C. 03-02986 Mississippi Chemical Company, LP 03-02987 Mississippi Chemical Management Company 03-02988 Mississippi Phosphates Corporation 03-02989 Mississippi Potash, INC. 03-02990 Eddy Potash, INC. 03-02991 Triad Nitrogen, L.L.C. 03-02992 Melamine Chemicals, INC. 03-02993 Type of Business: Mississippi Chemical Corp., through its indirect subsidiaries and affiliates, produces and markets all three primary crop nutrients, as well as similar chemicals for industrial uses. Chapter 11 Petition Date: May 15, 2003 Court: Southern District of Mississippi Judge: Edward Ellington Debtors' Counsel: James W. O'Mara, Esq. Doug Noble, Esq. Phelps Dunbar LLP PO Box 23066 Jackson, MS 39225-3066 Tel: 601-352-2300 Total Assets: $552,934,000 Total Debts: $462,496,000 A. Miss. Chemical Corporation's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ BancorpSouth Bank Senior Notes $207,250,000 Attn: Corp. Trust PO Box 1605 Jackson, MS 39215 The Bank of New York IRBs $14,675,208 Trust Co. of Florida, NA The FinanciaL center 505 North 20th Street, Suite 750 Brimingham, Alabama 35203 Vanguard Group Trade Debt $264,578 PO Box 2600 Valley Forge, PA 19482-2600 Blue Cross Blue Shield of Trade Debt $107,993 MS Inc. AT and T Trade Debt $43,895 Nature Conservancy Trade Debt $10,000 Metallurgical and Materials Trade Debt $8,518 Tech, Inc. Clayton Charles Trade Debt $8,000 Elevon Inc. Trade Debt $7,500 Better Marketing Trade Debt $6,901 Konnection, Inc. RIA Trade Debt $6,407 Grantham Poole Trade Debt $4,178 Smith Ephraim Trade Debt $4,178 Avaya Inc. Trade Debt $3,805 Ikon Office Solutions Trade Debt $2,508 Vertex Tax Technology Trade Debt $2,500 Enterprises LLC Jackson Pauline D Trade Debt $2,388 IOS Capital Trade Debt $2,091 Baker Distributing Trade Debt $1,950 Ships Inc. EBS A/R Trade Debt $1,902 United Parcel Service Trade Debt $1,274 Vopak USA Trade Debt $1,142 B. Mississippi Nitrogen's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Farmland Misschem Limited Trade Debt $2,621,442 PO Bag 38 Couva Post Office Point Lisas, TR C. MissChem Nitrogen's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ CN Trade Debt $156,318 Bareco Trade Debt $38,613 Martin Marietta Basic Trade Debt $29,295 Products G E Betz Inc. Trade Debt $9,565 Marley Cooling Tower Trade Debt $9,000 Atlas Copco Trade Debt $8,532 Greson Technical Sales and Trade Debt $8,532 Service Inc. Pressure Products Trade Debt $7,892 AWF Inc. Trade Debt $7,278 Security Support Services Trade Debt $7,160 Newsom Trade Debt $6,653 V R C Company Trade Debt $4,272 Public Service Commission Trade Debt $4,043 Formosa Plastics Corp. USA Trade Debt $3,626 Harcros Chemicals Trade Debt $3,373 Mayfield Oils Inc. Trade Debt $3,359 Certified Laboratories Trade Debt $3,325 Federal Container Corp. Trade Debt $3,000 CRDU Trade Debt $2,987 Marley Cooling Tower Co. Trade Debt $2,864 D. Mississippi Chemical Co., LP's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Continental NIT Trade Debt $417,561 12955 Courthouse Blvd. Rosemount, MN 55068 CN Trade Debt $170,093 UP Trade Debt $54,604 ACBL Trade Debt $46,572 VBGPlant Trade Debt $45,849 American Comm'l. Barge Trade Debt $34,002 Line LLC Liquidtr Trade Debt $33,050 Oakley Louisiana Inc. Trade Debt $32,778 Kirby Trade Debt $31,534 CNR L.P. Trade Debt $28,794 Southtow Trade Debt $18,615 CSXT Trade Debt $17,970 BruceOak Trade Debt $15,768 Longstra Trade Debt $12,915 Liquid Transport Inc. Trade Debt $12,151 Babin Trade Debt $10,117 American Plant Food Corp. Trade Debt $9,998 Terral Trade Debt $9,018 Newsom Trade Debt $8,449 Farmland Ind-Kansa City KS Trade Debt $4,546 E. Mississippi Chemical Mgt Co.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ MFA Inc. Trade Debt $6,568 Sparks Companies Inc. Trade Debt $3,000 Shipp, Mary Sue Trade Debt $2,908 Ware, Wes Trade Debt $1,131 Wascom, Malcolm Jr. Trade Debt $1,052 Fleet Pride-Jackson Trade Debt $926 Jackson Medical Clinic Trade Debt $828 American Railcar Industries Trade Debt $750 Rescar Inc. Trade Debt $589 Harrelson, Jim Trade Debt $547 B and A Chemical Company Trade Debt $467 Boot Store Trade Debt $449 Officesource Inc. Trade Debt $406 City Truck & Trailer Parts Trade Debt $387 Inc. Gainwell Tire Service Trade Debt $361 Hilton Jackson Trade Debt $355 Officesource Inc. Trade Debt $276 Peyton Michael D Trade Debt $188 Certified Map Corp. Trade Debt $96 AR Secretary of State Trade Debt $50 F. Mississippi Phosphates Corp.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ International Commodities Trade Debt $1,189,727 Export Corporation 2975 Westchester Avenue US Fusion Trade Debt $85,324 James Construction Group Trade Debt $80,791 LLC Manning Trucking Trade Debt $68,227 English Boiler and Tube Trade Debt $67,280 Inc. Arrmaz Products Trade Debt $64,356 Mobil Oil Corp. Trade Debt $56,359 Transammonia Trade Debt $56,301 GSE Lining Technology Trade Debt $52,447 Exxon Mobil Trade Debt $45,149 ACBL Trade Debt $41,887 Marathon Transportation Trade Debt $30,786 Inc. Bacourt Industrial Trade Debt $27,438 Constructors, Inc. RXPower Trade Debt $24,456 Pirnie Malcolm Inc. Trade Debt $22,986 Process Pump Repair Trade Debt $21,308 Inc. Inter Chem Trade Debt $20,439 Cheeney Lime and Cement Co. Trade Debt $19,988 American Commercial Barge Trade Debt $19,900 Line LLC PEPCO Trade Debt $19,003 G. Mississippi Potash, Inc., and Triad Nitrogen's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Xcel Energy Trade Debt $448,697 PO Box 9477 Minneapolis, MN 55484-9477 BNSF Trade Debt $351,323 PO Box 847347 Dallas, TX 75284-7347 NM Taxation and Revenue Trade Debt $45,663 Dept. Saber Supply Co. Inc. Trade Debt $45,177 LSI Lubrication Services Trade Debt $44,960 LLP Union Home and Industrial Trade Debt $43,280 Corp. B and M Machinery Company Trade Debt $36,376 Joy Manufacturing Co. Trade Debt $28,951 Chevron Phillips Chem. Co. Trade Debt $28,775 Langston Companies Inc. Trade Debt $27,090 UHI Trade Debt $24,607 LPC Packaging Trade Debt $23,729 Turbo Specialties Trade Debt $22,866 Industrial Electric Motors Trade Debt $21,335 Inc. Highland Machinery Trade Debt $19,651 Titan Trade Debt $19,025 Eimco Coal & Machinery - Trade Debt $18,942 Carlsband Plant Services Trade Debt $18,400 Rmiller Trade Debt $17,255 Baker Process Company Trade Debt $17,050 H. Eddy Potash, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Xcel Energy Trade Debt $3,187 Plains Welding Supply Inc. Trade Debt $864 ACM Equipment Rental and Trade Debt $523 Sales Co. Global Computer Supplies Trade Debt $499 Fairbanks Scales Trade Debt $450 McMaster Carr Supply Co. Trade Debt $430 Wagner Equipment Trade Debt $414 FMH Material Handling Trade Debt $355 Solutions Wesport Steel and Supply Trade Debt $318 Inc. Forrest Tire Company Trade Debt $292 Universal Boiler Works Trade Debt $250 Airmaster Equipment Corp. Trade Debt $249 Queen Oil and Gas Trade Debt $247 UHI Trade Debt $239 Motion Industries Inc. Trade Debt $222 Connells Office Supplies Trade Debt $115 Carlsbad Auto Supply Co. Trade Debt $110 Hall Machine and Welding Trade Debt $100 Co. Inc. Eastern Telecommunication Trade Debt $98 Services Co Union Home and Industrial Trade Debt $90 Corp. MISSISSIPPI CHEMICAL: UST Appoints Official Creditors' Committee ---------------------------------------------------------------- The United States Trustee for Region 5 appointed 3 members to an Official Committee of Unsecured Creditors in Mississippi Chemical Corporation's Chapter 11 cases: 1. Conseco Capital Management Corp. Attn: Greg J. Sekata 11825 N. Pennsylvania Street Carmel, IN 46032 Tel: 317 8172794 Fax: 317 8174115 2. Perry Capital LLC Attn: Richard Paige 599 Lexington Ave. New York, NY 10022 Tel: 212 5834000 Fax: 212 5834040 3. Integrity Life Insurance Attn: Bernard M. Casey 420 East Fourth Street Cincinnati, OH 45202 Tel: 513 3617647 Fax: 513 3617689 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Mississippi Chemical Corporation, through its direct or indirect subsidiaries and affiliates, produces and markets all three primary crop nutrients (nitrogen-phosphorus and potassium-based products), as well as similar chemicals for industrial uses. The Company filed for chapter 11 protection on May 15, 2003 (Bankr. S.D. Miss. Case No. 03-02984). James W. O'Mara, Esq., at Phelps Dunbar LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $552,9342,000 in total assets and $462,496,000 in total debts. MOSAIC GROUP: Court Stretches Lease Decision Time Until Oct. 15 --------------------------------------------------------------- Mosaic Group (US) Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Texas to extend their lease decision period. The Court gave the Debtors until October 15, 2003, to decide whether to assume, assume and assign, or reject unexpired nonresidential real property leases. Mosaic Group (US) Inc., a world-leading provider of results- driven, measurable marketing solutions for global brands, filed for chapter 11 petition on December 17, 2002. Charles R. Gibbs, Esq., David H. Botter, Esq., and David P. Simonds, Esq., at Akin, Gump, Strauss, Hauer & Feld, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million each. NATIONAL CENTURY: Takes Action to Challenge DCHC $310-Mil. Claim ---------------------------------------------------------------- Robert W. Hamilton, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, recounts that the Doctors Community Healthcare Corporation and its affiliates filed proofs of claim in the National Century Financial Enterprises Entities' Chapter 11 cases. The DCHC Entities assert claims against the NCFE Entities in amounts "unknown, but not less than $310,000,000." The DCHC Entities assert claims in unliquidated amounts, which they allege are property of their own estates and subject to adjudication only in their own Chapter 11 cases. However, Mr. Hamilton points out that the DCHC Entities cannot assert these unliquidated claims in the Court while maintaining that they cannot be adjudicated here. The DCHC Entities are comprised of: -- DCHC, -- Greater Southeast Community Hospital Corporation I, -- Michael Reese Medical Center Corporation, -- Pacifica of the Valley Corporation, -- PACIN Healthcare Hadley Memorial Hospital Corporation, and -- Pine Grove Hospital Corporation. Specifically, the DCHC Entities filed seven claims allegedly "on behalf of DCHC and its subsidiaries". In May 2003, the DCHC Entities again filed identical claims. The claims are summarized as: Original Amended Entity Claim No. Claim No. ------ --------- --------- NPF XII 392 734 NPF X 393 735 NPF VI 394 736 NPF-LL 395 737 NCFE 396 739 NPF-CSL 397 738 NPFS 398 733 The amounts asserted in each of the Original DCHC claims is "unknown, but not less than $600,000,000." Each Amended DCHC Claims asserted that an amount "unknown, but not less than $310,000,000" is due. The Debtors maintain that the DCHC Claims should be disallowed in their entirety. Mr. Hamilton argues that the DCHC Entities made incorrect assertions in its proof of claim, including: (A) The DCHC Claims incorrectly assert that, pursuant to certain sales and subservicing agreements and amendments, the NCFE Entities are holding some $98,000,000 of the DCHC Entities' funds in reserve. The NCFE Entities dispute this allegation and state that the DCHC Entities in fact owe the NCFE Entities over $500,000,000 under the Sale Agreements. All amounts alleged to be held pursuant to the Sale Agreements in reserve accounts constitute the NCFE Entities' property and may be applied in reduction of obligations due from the DCHC Entities. (B) The DCHC Claims assert that there were reserve overages. Mr. Hamilton argues that these unsupported assertions are contradicted by the NCFE Entities' books and records, which indicate over $500,0000,000 due and owing to the NCFE Entities. (C) The DCHC Claims incorrectly assert that certain subservicing fees owed to the DCHC Entities remain outstanding. "This assertion is simply incorrect. All subservicing fees that were owed were in fact paid or were otherwise credited for the account of the DCHC Entities," Mr. Hamilton attests. (D) The DCHC Claims incorrectly assert that the DCHC Entities refinanced their equipment and are therefore owed some $10,000,000. Mr. Hamilton tells the Court that the NCFE Entities purchased and paid for equipment from the DCHC Entities as part of a sale-leaseback transaction. The NCFE Entities own the equipment. Thus, no amounts remain due to the DCHC Entities. (E) The DCHC Claims incorrectly assert damages in an unliquidated amount for alleged breach of contract. The asserted breach was a failure to fund the DCHC Entities. However, Mr. Hamilton explains, the NCFE Entities did not have an obligation to fund, let alone to continue to fund the DCHC Entities in amounts in excess of healthcare receivables sold to the NCFE Entities, or any obligation at all under the Sale Agreements given the numerous contractual provisions breached by the DCHC Entities. The NCFE Entities had no obligation to allow the DCHC Entities to continue to perpetrate their fraudulent scheme on the NCFE Entities' creditors. (F) The DCHC Claims incorrectly assert that various avoidance actions may be brought in the DCHC Entities' cases. No support for the claims is provided and the NCFE Entities dispute the existence of these claims. (G) The DCHC Claims incorrectly assert that re-characterization and equitable subordination of the NCFE Entities' claims may be pursued against the NCFE Entities in the D.C. Bankruptcy Court. The NCFE Entities dispute any claims, and the NCFE Entities dispute the propriety of any re-characterization claims being heard in any court other than the Ohio Court. Mr. Hamilton points out that the portions of the DCHC Claims asserting re-characterization are unliquidated. (H) The DCHC Claims incorrectly assert that the DCHC Entities hold further claims based on conversion, lender liability, usury, fraudulent inducement, misrepresentation and other tortious or statutory bases. Mr. Hamilton adds that the DCHC Claims include no supporting documents, information or calculations. Therefore, the DCHC Entities have failed to carry their burden of providing prima facie proof of the allowable amounts for the DCHC Claims, if any, under Section 502 of the Bankruptcy Code. Accordingly, the DCHC Claims should not be given any prima facie evidentiary weight under Rule 3001 of the Federal Rules of Bankruptcy Procedure and should be disallowed. Thus, the NCFE Entities ask the Court to: (a) disallow Claim Nos. 392, 393, 394, 395, 396, 397 and 398 on the basis that they have been amended and superseded; and (b) disallow Claim Nos. 733, 734, 735, 736, 737, 738 and 739, including reducing or disallowing the claims based on the counterclaims and defenses set forth, together with a finding that the defenses are not subject to re-characterization. The NCFE Entities specifically reserve the right to amend these objections, file additional papers in support of these objections or take other appropriate actions to: (a) respond to any allegation or defense that may be raised in a response filed by or on behalf of the DCHC Entities; (b) further object to the DCHC Claims in the event the DCHC Entities provide additional documentation or substantiation; or (c) further object to the DCHC Claims based on additional information that may be discovered upon further review by the NCFE Entities or through discovery pursuant to the applicable provisions of the Bankruptcy Rules. (National Century Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETBANK INC: Court OKs Claims Settlement Pact with Ch. 7 Trustee ---------------------------------------------------------------- On June 11, 2003, the California Bankruptcy Court approved a settlement agreement among NetBank, a wholly owned federal savings bank subsidiary of NetBank,Inc., Lakeland Bank and the chapter 7 bankruptcy trustee. The Amended NetBank Agreement resolves all claims of the Trustee with respect to the leases that were guaranteed by surety bonds and insurance policies issued by Safeco Insurance Company of America and Illinois Union Insurance Company, as well as all claims related to the surety bonds and insurance policies. The Amended NetBank Agreement did not settle the Trustees alleged claims related to the leases guaranteed with surety bonds issued by Royal Indemnity Company or its claim related to those surety bonds. NetBank believes that the approval of the Amended NetBank Agreement enhances its position in the separate MDL Proceeding since the agreement resolves any conflicts previously presented by the Trustee's assertion of claims relating to the Safeco and Illinois Union leases and surety bonds. NetBank intends to seek recovery against Safeco, Illinois Union and Royal for the amounts paid pursuant to this settlement. The Trustee's claims against NetBank concern the leases and related surety bonds that NetBank purchased from Commercial Money Center,Inc. These claims are based on the Trustee's assertion that NetBank's interests in the leases were not properly perfected and that he could avoid those interests, as well as NetBank's interests in the related surety bonds, under the Bankruptcy Code. NetBank disputes these claims, but contends that, in any event, it was the responsibility of CMC, as well as all of the Sureties who issued surety bonds guaranteeing payment of NetBank's interests in the leases purchased from CMC, to make sure that NetBank's interests were properly perfected. In addition to approving the Amended NetBank Agreement, the California Bankruptcy Court approved a settlement agreement between the Trustee and one of the Sureties, Royal Indemnity Company. Under the Amended Royal Agreement, Royal has agreed, among other things, to fund litigation by the Trustee against NetBank to avoid its interests in the leases that were guaranteed by surety bonds issued by Royal, as well as NetBank's interests in the surety bonds themselves. NetBank intends to vigorously defend these claims and to pursue recovery from Royal for all damages suffered and costs incurred as a result of Royal's financing of these claims. NEXTEL PARTNERS: Closes Private Placement of 8-1/8% Senior Notes ---------------------------------------------------------------- Nextel Partners, Inc. (Nasdaq:NXTP) announced that the previously announced consent solicitation commenced in connection with its tender offer for its 14% Senior Discount Notes due 2009 (CUSIP No. 65333FAC1) expired at 5:00 p.m., New York City time, on June 20, 2003, and that Nextel Partners has accepted for purchase approximately $375.8 million aggregate principal amount at maturity of the 14% Notes, representing approximately 94% of the total principal amount at maturity of the 14% Notes. Nextel Partners has paid $1,059.35 per $1,000 principal value at maturity of the 14% Notes for all such 14% Notes tendered before the Consent Date, or total consideration of approximately $398.1 million. Nextel Partners has also received the consents necessary to amend the indenture governing the 14% Notes to eliminate certain restrictive covenants and certain related event of default provisions. The tender offer expires at 5:00 p.m., New York City time, on July 10, 2003, unless extended by Nextel Partners. Holders who validly tender their 14% Notes prior to expiration of the tender offer will receive $1,034.35 per $1,000 face value at maturity of the 14% Notes tendered. The tender offer is being made solely upon the terms and is subject to the conditions set forth in an Offer to Purchase and Consent Solicitation Statement dated June 12, 2003. The 14% Notes were purchased with the net proceeds from Nextel Partners' private placement of $450 million 8-1/8% Senior Notes due 2011, which closed Monday. The offer and sale of the 8-1/8% Notes were not registered under the Securities Act of 1933, as amended, and the 8-1/8% Notes may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. A more comprehensive description of the tender offer can be found in the Offer to Purchase and Consent Solicitation Statement dated June 12, 2003. Nextel Partners has retained Credit Suisse First Boston LLC and Morgan Stanley & Co. Incorporated to serve as the dealer managers, and Mellon Investor Services to serve as the information agent for the tender offer. Requests for documents may be directed to Mellon Investor Services by telephone at 800/522- 6645 or 917/320-6286, or in writing at 44 Wall Street, 7th Floor, New York, New York 10005. Questions regarding the tender offer should be directed to Credit Suisse First Boston at 800/820-1653 or 212/538-8474, attention: Liability Management Group, or Morgan Stanley at 800/624-1808 or 212/761-1123, attention: Jeff Kelly. Nextel Partners has the exclusive right to provide digital wireless communications services using the Nextel brand name in 31 states where approximately 53 million people reside. Nextel Partners offers its customers the same fully integrated, digital wireless communications services available from Nextel Communications (Nextel) including digital cellular, text and numeric messaging, wireless Internet access and Nextel Direct Connect(R) digital walkie-talkie, all in a single wireless phone. Nextel Partners customers can seamlessly access these services anywhere on Nextel's or Nextel Partners' all-digital wireless network, which currently covers 198 of the top 200 U.S. markets. To learn more about Nextel Partners, visit http://www.nextelpartners.comor http://www.nextel.com * * * As reported in the Troubled Company Reporter's March 12, 2003 edition, Fitch Ratings revised the Rating Outlook on Nextel Communications Inc. to Positive from Stable. The Positive Outlook applies to Nextel's senior unsecured note rating of 'B+', the senior secured bank facility of 'BB' and the preferred stock rating of 'B-'. The Positive Outlook reflects Fitch's view that favorable financial and operating trends will continue over the next several quarters based on the positive momentum produced from the following factors during 2002: -- The significant improvement in operating performance through strong cost containment, low churn and solid ARPUs despite a somewhat unfavorable climate within the wireless industry and a weak economic environment. -- The reduction in financial risk due to the repurchase of $3.2 billion in debt and associated obligations. -- A strong competitive position relative to other operators due to the unique push-to-talk application that allows Nextel to target higher-value and lower churn business users. NHC COMMS: May 2 Balance Sheet Upside-Down by CDN$4.5 Million ------------------------------------------------------------- NHC Communications Inc. (TSE: NHC), a leading provider of automated mainframe and cross-connect solutions for the copper- based telecommunications market, reported its results for the third quarter of fiscal 2003, ended May 2, 2003. Revenues for the third quarter of 2003 were $0.31 million, compared with $0.62 million in the same period in 2002. Net loss for the third quarter was $3.31 million, compared with a net loss of $2.67 million for the same period last year. Deferred revenue increased to $21.04 million as of May 2, 2003 (from nil one year ago). Deferred revenue is comprised of the deliveries invoiced to customers that are not yet recognized as revenue. Although the deemed acceptance from its current principal incumbent local exchange carrier customer will have been received shortly for all of its products delivered during the last two quarters, revenues were not yet recognized as at May 2, 2003 since this customer had not completed the testing of the Company's CMS version 3 software, a UNIX(TM)/Oracle(TM) element management system that integrates into this ILEC customer operating support system (OSS) which controls the ControlPoint(TM) robotic main distribution frame (MDF), while at the same time the vendor specific objective evidence of fair value for this undelivered component of the bundled sale arrangement could not be determined. To date, all of ControlPoint solutions installed by the Company's ILEC customers are controlled by CMS 2.4, NHC's Windows(TM) based software which uses a LAN/WAN to remotely control the robotic MDF. Based on the most recent information provided by its current principal ILEC customer with regards to the schedule for testing and installation of the CMS version 3 software that will upgrade the currently used Windows(TM) based software, and in accordance with its revenue recognition policy, the Company expects that all of the short-term portion of the deferred revenue of $20.14 million will be recorded during the next five months. During the third quarter, the Company completed shipments of $0.23 million to its US ILEC no. 1 customer and $0.32 million to its US ILEC no. 2 customer. "We believe that the decrease in capital expenditures budgets, regulatory uncertainty relating to the telecommunications' industry and geopolitical uncertainty all had an adverse impact on our US ILEC customers to increase their investments in NHC's products during the first five months of calendar 2003," said Sylvain Abitbol, Chairman, president and Chief Executive Officer for NHC. "During the third quarter, we have been very close and dedicated to our ILEC customers by providing them with technical support services for installations, as well as for their testing over NHC's CMS 3 software for its OSS integration," concluded Mr. Abitbol. Total operating expenses decreased to $2.61 million in the third quarter of fiscal 2003, compared with $2.90 million in the same quarter of last year. This decrease explained by a favorable adjustment of $0.32 million following the collection of an income tax credit related to research and development activities of prior years, and by a decrease in discretionary research and development and marketing expenses. Additional information, as well as the Management's Discussion and Analysis of the financial results, will be filed shortly with the relevant securities regulatory authorities and will be available on the NHC Web site at http://www.nhc.com Recent highlights - On April 16, the Company announced that, following a Request for Proposal process, it has received a Letter of Intent (LOI) from a major ILEC to supply its ControlPoint(TM) automated mainframe solutions. This LOI confirmed the deployment of NHC's ControlPoint(TM) solutions in three unmanned central offices (COs) and the ILEC's immediate intention to enter into negotiations for a definitive agreement. Contract negotiations are underway and to date, the Company received all of the purchase orders related to the LOI, and initiated the training process for this ILEC's operating and installation personnel. This ILEC, one of the world's leading communications companies, is NHC's third major carrier to go through field trials and select NHC as a supplier of automated MDF. - On April 7, the Company reached an agreement in principle with certain members of senior management pursuant to which $1.07 million will be invested in convertible debentures of the Company. The debentures will have a five-year term, will bear interest at 9% per annum and will be secured by a movable hypothec over substantially all of the assets of NHC. The debentures will be convertible at any time into common shares of NHC at a conversion price of $0.60 per share. In addition, 1,667 warrants to acquire common shares will be issued for each $1,000 in principal amount of debentures. Each warrant will be exercisable for one common share of NHC and will have a term of five years. The debentures will be issued in two tranches, the first of which, in the amount of $500,000, will close upon receipt of applicable regulatory approvals and the second tranche, representing the balance of the subscription proceeds, will close within thirty days thereafter, subject to the right of subscribers to terminate their subscription prior to that date. Pending receipt of regulatory approvals, two senior members of management have agreed to advance a secured bridge loan for an aggregate of $500,000 to NHC, which amount will be repaid in full upon closing of the first tranche of the debenture financing. The issuance of the debentures and the warrants is subject to regulatory approval. - On April 7, the board of directors of NHC has agreed to various cost cutting measures to address certain working capital issues the Company is currently facing. Specifically, the board has approved head count reductions at various levels of the Company as well as salary cuts of 10% to 20% at all levels. To compensate employees for salary cuts, the board of directors has approved the grants of options to acquire an aggregate of 176,295 common shares of the Company exercisable until April 7, 2008 at an exercise price of $0.60 per share. - On June 23, 2003, the Company announced its intention to enter into an agreement with two members of the senior management for a financing in the aggregate amount of $150,000 in favor of the Company. The financing will be in the form of two convertible debentures in the amount of $75,000 each to be issued by the Company in favor of the lenders, bearing interests at a annual rate of 9 % and guaranteed by a movable hypothec on the universality of over substantially all of the assets of NHC and on certain specific accounts receivable of the Company. Each debenture will be convertible into common shares of the Company at a price of $0.88 per share. In consideration of the debenture, the Company will also issue in favor of each lender a warrant certificate representing 125,000 warrants for the subscription to common shares of the Company. The warrants will carry the right to purchase common shares of the Company at a price of $0.88 per share and will have a two-year term. At the date of its exercise, each warrant will give the right to acquire either (i) one common share of the Company if at such date of exercise the debenture have been fully converted or have not been reimbursed, or (ii) half a common share if at such date of exercise the debenture has been fully reimbursed. The issuance of the warrant certificates is subject to regulatory approvals. NHC plans to continue to finance its activities from the collection of sales to its ILEC customers No. 1 and No. 2. In addition, NHC continues to seek additional long-term financing to carry out its operations and investing activities. NHC -- http://www.nhc.com-- is a leading provider of carrier class test access and deployment solutions for the copper-based telecommunications and Internet access markets and of innovative remotely controlled physical layer cross-connect solutions for established and next-generation voice/data networks. With a unique range of technologies, NHC is at the heart of today's corporate enterprise service market and the telecommunications industry. NHC maintains offices in Montreal, Quebec; Paris, France; and Manassas, Virginia. NHC's ControlPoint(TM) is an automated, true any-to-any copper cross-connect switch capable of performing the four fundamental functions at the heart of all operations performed by incumbent local exchange carriers, competitive local exchange carriers, and multiple-tenant units and multiple-dwelling units: loop qualification, deployment and provisioning, fallback switching and service migration of DSL, ISDN, E1/T1 and POTS. "ControlPoint(TM)" is a trademark of NHC Communications Inc. At May 2, 2003, NHC Communications' working capital deficit tops CDN$5 million while total shareholders' equity deficit is stands at about $4.5 million. NHC COMMUNICATIONS: Entering $150K Management Financing Pact ------------------------------------------------------------ NHC Communications Inc. (TSE: NHC), a leading provider of automated mainframe solutions for the copper-based telecommunications and Internet access markets, intends to enter into an agreement with two members of the senior management for a financing in the aggregate amount of $150,000 in favor of the Company. The financing will be in the form of two convertible debentures in the amount of $75,000 each to be issued by the Company in favor of the lenders, bearing interests at a annual rate of 9 % and guaranteed by a movable hypothec on the universality of over substantially all of the assets of NHC and on certain specific accounts receivable of the Company. Each debenture will be convertible into common shares of the Company at a price of $0.88 per share. In consideration of the debenture, the Company will also issue in favor of each lender a warrant certificate representing 125,000 warrants for the subscription to common shares of the Company. The warrants will carry the right to purchase common shares of the Company at a price of $0.88 per share and will have a two-year term. At the date of its exercise, each warrant will give the right to acquire either (i) one common share of the Company if at such date of exercise the debenture have been fully converted or have not been reimbursed, or (ii) half a common share if at such date of exercise the debenture has been fully reimbursed. The issuance of the warrant certificates is subject to regulatory approvals. The Company intends to use the net proceeds of this financing to satisfy certain payment obligations and for general purposes. NHC Communications Inc. is a leading provider of products and services enabling the management of voice and data communications for telecommunication service providers. NHC's ControlPoint(TM) solutions utilize a high-performance software driven Element Management System controlling an automated, true any-to-any copper cross-connect switch, to enable incumbent local exchange carriers and other service providers to remotely perform the four key tasks that historically have required manual on-site management. These four tasks fundamental to all operations are loop qualification, deployment and provisioning, fallback switching and service migration of Voice and Data services including DSL and T1/E1. Using ControlPoint(TM), NHC's customers avoid the risk of human error and dramatically reduce labor and operating costs. NHC maintains offices in Montreal, Quebec; Paris, France; and Manassas, Virginia. Visit http://www.nhc.comfor more information. At May 2, 2003, NHC Communications' working capital deficit tops CDN$5 million while total shareholders' equity deficit is stands at about $4.5 million. NRG ENERGY: Court Establishes Interim Compensation Procedures ------------------------------------------------------------- Pursuant to Sections 105(a) and 331 of the Bankruptcy Code and General Order M-219, NRG Energy, Inc., and its debtor-affiliates sought and obtained the Court's approval permitting professionals to seek interim payment of compensation and reimbursement of expenses in accordance with these Compensation Procedures: (a) On or before the 20th day of each month following the month for which compensation is sought, each Professional seeking compensation, other than a Professional retained as an ordinary course professional, will serve a monthly statement, by hand or overnight delivery on: (1) Scott J. Davido, Esq., General Counsel for the NRG Companies; (2) counsel for the Debtors, Kirkland & Ellis, Citigroup Center, 153 East 53m Street, New York, New York 10022- 4675; (3) the Office of the U.S. Trustee, 33 Whitehall Street, 21st Floor, New York, New York 10004; (4) counsel for any statutory committee of unsecured creditors once appointed; (5) counsel to the administrative agents for certain of the Debtors' prepetition lenders; (6) counsel to the Debtors' postpetition lenders; (7) the indenture trustees pursuant to the Debtors' secured indentures; and (8) Xcel and its counsel; (b) The monthly statement need not be filed with Court and a courtesy copy need not be delivered to the presiding judge's chambers since this Procedure is not intended to alter the fee application requirements outlined in Sections 330 and 331 of the Bankruptcy Code and since Professionals are still required to serve and file interim and final applications for approval of fees and expenses in accordance with the relevant provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules for the United States Bankruptcy Court for the Southern District of New York; (c) Each monthly fee statement must contain a list of the individuals and their respective titles who provided services during the statement period, their respective billing rates, the aggregate hours spent by each individual, a reasonably detailed breakdown of the disbursements incurred, and contemporaneously maintained time entries for each individual in increments of tenths of an hour; (d) Each person receiving a statement will have at least 15 days after service to review the statements and, in the event that he or she has an objection to the compensation or reimbursement sought in a particular statement, he or she will, by no later than the 35th day after the month for which compensation is sought, serve upon the Professional whose statement is objected to, and the other Persons designated to receive statements, a written "Notice Of Objection To Fee Statement," setting forth the nature of the objection and the amount of fees or expenses at issue; (e) At the expiration of the 35-day period, the Debtors will promptly pay 80% of the fees and 100% of the expenses identified in each monthly statement to which no objection has been served; (f) If the Debtors receive an objection to a particular fee statement, they will withhold payment of that portion of the fee statement to which the objection is directed and promptly pay the remainder of the non-objectionable fees and disbursements in the percentages set forth; (g) If the parties to an objection are able to resolve their dispute after the service of a Notice Of Objection To Fee Statement and if the party whose statement was objected to serves on all of the notice parties a statement indicating that the objection is withdrawn and describing in detail the terms of the resolution, then the Debtors will promptly pay that portion of the fee statement, which is no longer subject to an objection; (h) All objections that are not resolved by the parties, will be preserved and presented to the Court at the next interim or fund fee application hearing to be heard by the Court; (i) The service of an objection will not prejudice the objecting party's right to object to any fee application made to the Court in accordance with the Bankruptcy Code on any ground whether raised in the objection or not. Furthermore, the decision by any party not to object to a fee statement will not be a waiver of any kind or prejudice that party's right to object to any fee application subsequently made to the Court in accordance with the Bankruptcy Code; (j) Approximately every 120 days, but not more than every 150 days, each of the professionals will serve and file with the Court an application for interim or final Court approval and allowance of the compensation and reimbursement of expenses requested; (k) Any professional who fails to file an application seeking approval of compensation and expenses previously paid under this Procedure when due: (1) will be ineligible to receive further monthly payments of fees or expenses as provided until further Court order, and (2) may be required to disgorge any fees paid since retention or the last fee application, whichever is later; (l) The pendency of an application or a Court order that payment of compensation or reimbursement of expenses was improper as to a particular statement will not disqualify a Professional from the future payment of compensation or reimbursement of expenses, unless otherwise ordered by the Court; (m) Neither the payment of, nor the failure to pay, in whole or in part, monthly compensation and reimbursement will have any effect on this Court's interim or final allowance of compensation and reimbursement of expenses of any Professionals; and (n) Counsel for any official committee may collect and submit statements of expenses, with supporting vouchers, from members of the committee he or she represents; provided, however, that the committee counsel ensures that the reimbursement requests comply with the Court's Administrative Orders dated June 24, 1991 and April 21, 1995. The Court further orders that each professional may seek, in its first request for compensation and reimbursement of expenses, compensation for work performed and reimbursement of expenses incurred during the period beginning on the date of the Professional's retention and ending June 30, 2003. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in New, York, asserts that the Compensation Procedures are justified because they will: (a) enable parties-in-interest to monitor more closely the costs of administration, (b) diminish undue financial burdens on the Professionals and avoid having Professionals fund the costs of the Debtors' reorganization, and (c) permit the Debtors to better predict and manage their monthly cash costs. (NRG Energy Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) NUEVO ENERGY: Redeems $157MM of 9-1/2% Senior Subordinated Notes ---------------------------------------------------------------- Nuevo Energy Company (NYSE:NEV) (S&P/BB-/Stable) announced that the partial redemption of $157.2 million of the $257.2 million 9-1/2% Senior Subordinated Notes due June 1, 2008 was completed effective June 23, 2003. The Notes were redeemed at 104.75% per Note and the partial redemption was funded by a combination of cash on hand and bank debt. Nuevo Energy Company is a Houston, Texas-based company primarily engaged in the acquisition, exploitation, development, exploration and production of crude oil and natural gas. Nuevo's domestic producing properties are located onshore and offshore California and in West Texas. Nuevo is the largest independent producer of oil and gas in California. The Company's international producing property is located offshore the Republic of Congo in West Africa. To learn more about Nuevo, refer to the Company's internet site at http://www.nuevoenergy.com OGLEBAY NORTON: Appoints John P. O'Brien to Board of Directors -------------------------------------------------------------- Oglebay Norton Company (Nasdaq: OGLE) announced that John P. O'Brien has joined its board of directors. Mr. O'Brien currently serves as a Managing Director of Inglewood Associates, Inc., a private investment and consulting firm specializing in turnarounds of financially underperforming companies, litigation support, and valuation services. Prior to joining Inglewood, Mr. O'Brien was the Southeast Regional Managing Partner for Price Waterhouse resident in Atlanta, and a member of the firm's Policy Board and Management Committee. Oglebay Norton Company President and Chief Executive Officer Michael D. Lundin commented: "We are very pleased to have John O'Brien join our board. He has demonstrated exceptional ability working with distressed companies and helping them improve their performance. His experience, insight and guidance will be valuable assets for Oglebay Norton Company as we continue to strive to improve our operations, reduce our debt and return to profitability." During Mr. O'Brien's career at Price Waterhouse, he worked on a number of that firm's largest clients, including, in Cleveland: Goodyear Tire & Rubber, Cleveland Electric Illuminating, East Ohio Gas, and Diamond Shamrock. In Atlanta, he had direct responsibility for National Data Corporation, Management Science America, and the firm's restructuring assistance to Southmark Corporation in Dallas. Mr. O'Brien served as Chairman of the Board and Chief Executive Officer of Jeffrey Mining Products L.P., a manufacturer and distributor of underground mining products, including continuous miners, haulage systems, and ventilation fans, from 1995 until 1999. Additionally, he has served as the chairman of the board of Allied Construction Products, LLC, a manufacturer and distributor of hydraulic and pneumatic demolition, compaction, and horizontal boring tools and trench shoring devices, since 1993. He also serves as a Director or Trustee of the following: Century Aluminum Company (NASDAQ); Cleveland Sight Center (and Past President); MainStreet Chagrin Falls (currently President); and The Country Club of Pepper Pike. Mr. O'Brien received a Bachelor of Science degree from the University of Pennsylvania's Wharton School in 1963. He also holds a current, but inactive Certified Public Accountant certificate. Oglebay Norton Company, a Cleveland, Ohio-based company, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. Building on a 150-year heritage, our vision is to be the best company in the industrial minerals industry. The company's Web site is located at http://www.oglebaynorton.com As reported in Troubled Company Reporter's June 18, 2003 edition, Oglebay Norton Company extended the waiver from its bank group for certain covenants of its senior secured bank loan agreements. The waiver extension resets all covenant restrictions through August 15, 2003. The Company is in discussions with its senior bank group and its senior secured note holder group on longer-term amendments to the various lending agreements. ONE PRICE CLOTHING: May 3 Balance Sheet Upside-Down by $1.2 Mil. ---------------------------------------------------------------- One Price Clothing Stores, Inc. (Nasdaq: ONPR) reported financial results for the thirteen-week period ended May 3, 2003. For the thirteen-week period ended May 3, 2003, the Company reported a net loss of $5.4 million compared with net income of $0.4 million for the same thirteen-week period last year. As previously reported, net sales for the thirteen-week period ended May 3, 2002 were $77.2 million as compared with $87.3 million for the same period last year. The Company operated thirty fewer stores on average in the first quarter of 2003 than in the same period last year. Comparable store sales decreased 10.0 percent during the quarter. The Company's May 3, 2003 balance sheet shows a working capital deficit of about $26 million, and a total shareholders' equity deficit of about $1.2 million. Leonard M. Snyder, Chairman & Chief Executive Officer, commented, "Our financial results for the first quarter are very disappointing. Continuing economic uncertainty due, in part, to the conflict in Iraq resulted in lackluster demand for apparel. Sales were also negatively impacted by continued cool and wet weather in many of our markets, as well as imbalances in inventory in select merchandise categories. The Company also faced significantly greater price competition which resulted in lower gross margin as compared to the first quarter last year. Unfortunately, selling conditions have not materially changed thus far in the second quarter. Accordingly, inventories are being held to appropriate levels due to the uncertain demand environment. "As we announced last week, the Company has executed a stock purchase agreement with an affiliate of Sun Capital Partners, Inc. whereby Sun Capital has agreed to purchase newly issued One Price shares for $7.0 million in cash. Following the purchase, Sun Capital will own 85% of One Price's outstanding capital stock. We also announced that the Company had reached an agreement in principle with its existing lenders for an increase in its working capital facility from $44.65 million to $54.65 million. Final closing of the Sun Capital acquisition and the enhanced working capital facility is subject to certain conditions, including One Price obtaining concessions from its existing vendors and finalization of documentation reflecting the agreed upon enhancements to the working capital facility. We continue to work to satisfy these closing conditions and expect to complete the Sun Capital acquisition and the working capital facility enhancements on or before June 30, 2003," concluded Mr. Snyder. One Price Clothing Stores, Inc., operates a national chain of retail specialty stores offering first quality, in-season apparel and accessories for women and children at exceptional values every day. The Company currently operates 574 stores in 30 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands under the One Price & More!, BestPrice! Fashions and BestPrice! Kids brands. ORBITAL SCIENCES: S&P Gives $135M Unsecured Notes B+ Rating ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Orbital Sciences Corp.'s proposed $135 million senior unsecured notes due 2011 to be sold under Rule 144A with registration rights. At the same time, Standard & Poor's affirmed its ratings, including the 'B+' corporate credit rating, on Orbital. The outlook is stable. The proceeds from the proposed notes are to be used to refinance Orbital's outstanding $135 million 12% second-priority secured notes due 2006 via a tender offer. In addition, the company will be replacing its $35 million secured revolving credit facility with a new secured revolver. The expected lower coupon on the new notes is likely to result in improved earnings protection measures in 2003. "The ratings on Dulles, Virginia-based Orbital reflect the company's modest size and somewhat high debt leverage, offset by leading positions in market niches and increased military spending, especially for national missile defense," said Standard & Poor's credit analyst Christopher DeNicolo. Orbital is a leading provider of small launch vehicles and small geostationary communications satellites, as well as boost vehicles and targets for the U.S. national missile defense program. The company has divested a number of units over the past two years to focus on its core launch vehicle and satellite operations. The launch vehicle segment has been bolstered by a contract with Boeing, which could be worth over $1 billion with options over the next seven years, to develop the booster for one segment of the U.S. national missile defense program. Orbital's Pegasus and Taurus small launch vehicles have been affected by weakness in the overall launch services market. The GEO satellite program had been operating at a loss due to development costs, but is now profitable. Demand for communications satellites has been weak due to overcapacity, but the company's small GEO satellites could benefit from their lower capital costs and ability to add incremental capacity. Earlier this year Orbital reached an agreement with bankrupt affiliate ORBIMAGE where upon the launch of the OrbView-3 imagery satellite Orbital will pay ORBIMAGE $2.5 million and will be released from all claims by ORBIMAGE and its creditors. In addition, daily penalties (up to a total of $5 million in aggregate) will apply if the satellite is not launched by April 30, 2003, or checked out by Aug. 1, 2003. The satellite is scheduled to be launched by the end of June 2003. Profitability improved significantly in 2002, reversing net losses the past two years, due to the turnaround in the company's satellite operations and the elimination of the exposure to ORBIMAGE. Operating margins were over 11% in 2002. Cash generation also improved, with funds from operations to debt a respectable 27%. However, free cash flow was negative, due largely to the payment of around $50 million in vendor financing as well as modest capital expenditures. Further increases in profitability and positive free cash flow are expected in 2003. Revenues, profitability, and cash flows are expected to benefit from the NMD contract, improved satellite operations, and the settlement of the ORBIMAGE contingency, resulting in modest improvement to the company's overall financial profile over the intermediate term. ORGANOGENESIS: Files Amended Plan and Disclosure Statement ---------------------------------------------------------- On June 19, 2003, Organogenesis Inc. (ORGG-PK) filed an amended plan of reorganization and disclosure statementwith the United States Bankruptcy Court for the District of Massachusetts. The Plan incorporates a funding proposal from a group of unsecured creditors (including current and former officers and directors of the Company) under the terms and conditions set forth in a plan funding agreement approved by the Bankruptcy Court on June 18, 2003. The filing of the Plan will keep the Company's "fast-track" voluntary Chapter 11 reorganization on schedule and put in motion a timeline for emerging from Chapter 11 protection in August 2003. The Plan is subject to approval by the Bankruptcy Court. The Plan contemplates that, subject to certain possible adjustments and limitations set forth in the Plan, a cash distribution of 35% will be made to the holders of allowed general unsecured claims but that no distribution will be made on shares of the Company's outstanding preferred and common stock, which will be cancelled on the Plan's effective date. Under the Plan, all shares of new common stock of the Company, as reorganized, will be distributed to the members of the plan funding group and the holder(s) of the $10,350,000 allowed claim of Novartis Pharma AG, the former distributor of Apligraf(R), the Company's flagship product. The Official Committee of Unsecured Creditors supports the Plan. If the Bankruptcy Court approves the adequacy of the Disclosure Statement at a hearing to be held on June 26, 2003, the Company will be able to commence solicitation of votes for confirmation of the Plan by its creditors. The Bankruptcy Court has scheduled a confirmation hearing for the Plan for August 12, 2003. The Plan, as proposed, will be funded through a combination of the Company's available cash and capital contributions or loans from the plan funding group. Gary S. Gillheeney, Chief Operating Officer of the Company, said, "The filing of the Plan represents a critical step forward in the resolution of the company's reorganization efforts. Organogenesis continues to demonstrate a new focus and is committed to emerge from Chapter 11 later this year as a stronger competitor." Organogenesis was the first company to develop and gain FDA approval for a mass-produced product containing living human cells. The Company's principal product, Apligraf, a living, bi- layered skin substitute, has received FDA approval for the treatment of diabetic foot ulcers and venous leg ulcers. PRIMUS KNOWLEDGE: Regains Compliance with Nasdaq Requirements ------------------------------------------------------------- Primus Knowledge Solutions, Inc. (Nasdaq:PKSI) has received notification from the Nasdaq Stock Market that the company had regained compliance with Nasdaq's minimum bid price rule. Primus' closing stock price has been at or above the minimum bid price requirement of $1.00 for 10 or more consecutive trading days. Accordingly, Primus is currently in full compliance with all listing requirements of the Nasdaq SmallCap Market, and Nasdaq's delisting matter has been closed. For more than a decade, Primus(R) (Nasdaq:PKSI) has provided knowledge management software solutions that help companies define, meet, and exceed the productivity and quality goals of their contact centers, help desks, and Web self-service environments. Businesses around the world use Primus software to increase customer satisfaction, improve employee efficiency, and lower operating costs. Primus customers include such industry leaders as 3Com, The Boeing Company, Concord Communications, EMC, Enterasys, Ericsson, Inc., Fujitsu Limited, Inc., IBM, Motorola, Novell, and VeriSign. For more information, visit http://www.primus.com * * * Liquidity and Going Concern Uncertainty In its Form 10-Q for the quarter ended March 31, 2003, the Company said: "Our operations have historically been financed through issuances of common and preferred stock. For the quarter ended March 31, 2003, we incurred a net loss of approximately $1,130,000 and operating activities provided cash of approximately $224,000. At March 31, 2003, we have working capital of approximately $6.9 million. We believe we have sufficient resources to continue as a going concern through at least March 31, 2004. To reduce our cash used in operations, we put in place cost containment efforts during 2001 and restructured our operations during 2001 and 2002 by reducing headcount, exclusive of attrition, by 104 employees and eliminating excess facilities. Our plan to address our liquidity issues is to generate sufficient revenue from customer contracts or further reduce costs to provide positive cash flows from operations. There can be no assurance that we will be able to generate sufficient revenue from customer contracts, or further reduce costs sufficiently, to provide positive cash flows from operations. If we are not able to generate positive cash flows from operations, we will need to consider alternative financing sources. Alternative financing sources may not be available when and if needed by us or on favorable terms." PSC INC: S.D.N.Y. Court Confirms Plan of Reorganization ------------------------------------------------------- PSC Inc. (OTCBB: PSCX.OB), a global provider of integrated data- collection solutions and services for the retail supply chain, announced that on June 19, 2003 the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's Plan of Reorganization, allowing the Company to take the final actions necessary to emerge from Chapter 11. "Since filing to reorganize just eight months ago, PSC has successfully restructured the Company's financial position, strengthened and refined its business and built a foundation from which we can grow. PSC will emerge from this process a leaner, more competitive Company with a strong balance sheet," said President and CEO Edward J. Borey. The Company noted that under the terms of the Plan, one or more affiliates of Littlejohn & Co., L.L.C., a private equity firm, will convert into new equity a significant portion of the Company's debt that it acquired in November 2002, immediately prior to the commencement of the Company's bankruptcy proceedings. All of PSC's existing preferred and common stock will be canceled. Following the transaction, PSC will become a private company. PSC's debt will be reduced from approximately $124.1 million to approximately $34.5 million and the annual interest expense will be reduced from approximately $13.7 million to approximately $2.8 million. "This will provide the Company with additional resources to compete more effectively in the marketplace, along with financial flexibility to invest in the Company's future," Borey noted. "The restructuring process would not have been as successful in such a short period of time without the hard work and dedication of every PSC employee. We are also very appreciative of the cooperation and commitment we received from all of our constituents," said Borey. PSC provides innovative data-collection solutions for the retail supply chain worldwide. Its range of products includes mobile and wireless data-capture terminals, self-checkout systems, and fixed- position and handheld bar code scanners. PSC(R) products are used to improve efficiency, speed, and agility in the retail, and warehouse and distribution sectors. Headquartered in Portland, Oregon, PSC has major manufacturing facilities in Eugene, Oregon as well as sales and service offices throughout the Americas, Europe, Asia and Australia. To learn more about PSC, visit http://www.pscnet.com PENTHOUSE INT'L: Eisner LLP Steps Down as Independent Auditors -------------------------------------------------------------- On May 30, 2003, Penthouse International Inc. filed communication with the SEC to report the resignation of Eisner LLP as its independent certified public accountants and certain other matters. A copy of the letter dated June 6, 2003, from Eisner to the Securities and Exchange Commission states in part: "Our report on our audit of Penthouse International, Inc.'s financial statements for the year ended December 31, 2002 included both an explanatory paragraph to reflect the conclusion that substantial doubt exists about the entity's ability to continue as a going concern and an emphasis of matter paragraph regarding the Registrant's debt obligation. We did not qualify our opinion. "During the period subsequent to December 31, 2002 and preceding our resignation we were asked by the Company to consider the accounting treatment regarding a website management agreement. We communicated to accounting personnel of the Registrant our preliminary view, the transaction did not appear to result in the culmination of an earnings process. We note that the Form 10-Q, as filed, has taken a position that is contrary to our preliminary view. Such view, however, is tentative since we did not review the interim financial statements as of and for the three-month period ended March 31, 2003." POLYPHALT: Grandwin Extends Loan Repayment Deadline Until Sat. -------------------------------------------------------------- Polyphalt Inc., announced that Grandwin Holdings Limited has agreed to further extend the time for repayment of its secured loan until June 28, 2003 while Polyphalt continues to seek for other refinancing or investor alternatives. As previously announced, Grandwin issued a demand for repayment of its secured loan to Polyphalt in a notice dated June 4, 2003 and has previously agreed to extend the repayment date under the Loan Agreement until June 21, 2003. RELIANCE GROUP: Committee Hires Crossroads for Financial Advice --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Reliance Group Holdings, Inc., and debtor-affiliates, seeks the Court's authority to retain Crossroads as financial advisors. Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, explains that within a few months, a plan of reorganization will be promulgated. Therefore, the Committee needs to develop a perspective on RGH's assets and operations and perform an analysis in the scope of an enterprise valuation. Crossroads have an excellent reputation for providing high quality advisory services in bankruptcy reorganizations and considerable experience in asset valuation and viability assessments. Pursuant to an engagement letter, Crossroads will render these services to the Committee: (a) A valuation of the assets scheduled to be disbursed to the Debtors' creditors represented by the Committee as outlined in the plan of reorganization; and (b) A valuation recovery range estimate of the claims filed by the Debtors' creditors represented by the Committee. The Engagement Letter is signed by Eric R. Johnson and Mohan V. Phansalkar, Co-Chairpersons of the Official Unsecured Creditors' Committee. Crossroads advises the Committee that it tracks billing time in one-tenth hour increments. Crossroads will receive $40,000 as an initial upfront fee. Crossroads' current hourly rates are: Principals $495 - 595 Managing Directors 430 - 495 Directors 350 - 425 Senior Consultants 330 - 390 Consultants 225 - 335 Associates 150 - 210 Crossroads will seek reimbursement for out-of-pocket expenses incurred in connection with these cases. Holly Felder Etlin, a principal at Crossroads, assures the Court that the firm is a disinterested person, within the meaning of Section 101(14) of the Bankruptcy Code and does not represent or hold any interest adverse to the Debtors, its estates or creditors. (Reliance Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) RIBAPHARM: ICN Airs Disappointment with Board's Recommendation -------------------------------------------------------------- ICN Pharmaceuticals, Inc. (NYSE: ICN) issued the following statement in response to Monday's announcement by the Board of Directors of Ribapharm Inc. (NYSE: RNA). ICN Chairman and Chief Executive Officer, Robert W. O'Leary, stated, "We are disappointed in Ribapharm's recommendation and other actions. We continue to believe our cash offer of $5.60 per Ribapharm share represents a substantial premium to the fundamental value of Ribapharm shares on a standalone basis. We are reviewing our options. "As we've previously stated, we and our financial advisors remain available to meet with Ribapharm's board or financial advisors to discuss the merits of our offer." ICN's tender offer expires at 12:00 midnight, New York City time, on Tuesday, July 22, 2003. ICN's Offer to Purchase and certain other documents are on file with the Securities and Exchange Commission. Ribapharm stockholders and other interested parties are urged to read ICN's Offer to Purchase and other relevant documents filed with the SEC because they contain important information. These offering materials, together with a letter of transmittal, have been mailed to Ribapharm stockholders. Ribapharm stockholders will be able to receive such documents free of charge at the SEC's Web site, http://www.sec.gov or from ICN at 3300 Hyland Avenue, Costa Mesa, CA 92626, Attn: Investor Relations. The Depositary for the tender offer is the American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 10038. The Dealer Manager for the tender offer is Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004. The Information Agent for the tender offer is Georgeson Shareholder Communications Inc., 17 State Street, 10th Floor, New York, NY 10004. Banks and brokers call collect (212) 440-9800. All others call toll free (800) 965- 5215. ICN is an innovative, research-based global pharmaceutical company that manufactures, markets and distributes a broad range of prescription and non-prescription pharmaceuticals under the ICN brand name. Its research and new product development focuses on innovative treatments for dermatology, infectious diseases and cancer. Ribapharm, whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $335 million, is a biopharmaceutical company that seeks to discover, develop, acquire and commercialize innovative products for the treatment of significant unmet medical needs, principally in the antiviral and anticancer areas. SASKATCHEWAN WHEAT: Hosting Q3 Results Conference Call Today ------------------------------------------------------------ Saskatchewan Wheat Pool, a leading provider of grain handling, merchandising and agri-products services, will be hosting a conference call regarding its third quarter results for the period ending April 30, 2003. Media and other interested parties are invited to listen to the call. Wednesday, June 25, 2003 Time: 8:30 a.m. CST (10:30 a.m. EST) Dial-in: 1-416-695-5261 (Please dial in at least five minutes prior to scheduled start time) * * * As reported in Troubled Company Reporter's June 19, 2003 edition, Standard & Poor's Ratings Services raised its long-term corporate credit rating on Saskatchewan Wheat Pool to 'B' from 'SD' (selective default). At the same time, the senior secured debt rating was raised to 'B' from 'D' and the ratings on the company's subordinated notes and convertible debentures were raised to 'CCC+' from 'D'. The outlook is stable. "The ratings reflect the company's completion of its financial restructuring, a relatively stable market position with a modern grain-handling infrastructure, and an expected return to more historical levels of profitability in fiscal 2004 (year ending July 2004), following the two worst drought years in the past century for Canadian grain handlers," said Standard & Poor's credit analyst Don Povilaitis. These factors are offset by fiscal 2003 results, which are expected to be extremely weak; leverage that remains relatively high; and liquidity that is somewhat constrained. SCORES HOLDING: Anticipates Improved 2003 Financial Results ----------------------------------------------------------- Scores Holding Company Inc. (OTC Bulletin Board: SCOH) Richard Goldring, Chairman and Chief Executive Officer of SCOH projects operating income for 2003 to nearly double and cash flow to increase. "We are very pleased to see our strategies continuing to add value to the Company, especially looking ahead to our first year of profitability for SCOH. We intend to continue building on the accomplishments we have achieved so far this year, which will include the swing to operating income from operating loss and to positive free cash flow," Goldring said. "2003 third and fourth quarter segment results are expected to be higher than last year due to an increase in license fees from SCORES SHOWROOM in New York, the opening of SCORES CHICAGO in late August and the opening of SCORES WEST in New York in late September. The expenses of our recent restructuring were reported in the first quarter and will further reduce our cost structure going forward. We anticipate SCORES SHOWROOM to achieve gross revenues for 2003 which should equate to over $1,000,000 in license fees to the Company with SCORES WEST and SCORES CHICAGO contributing another estimated $250,000 in combined licensing fees from their first quarter of operations. "The Company owns the brand and intellectual property associated with the "SCORES" trademark, which is the most recognizable name in adult nightclub entertainment. Since our recent restructuring our new business strategy will be to focus our efforts to actively market the "SCORES" brand name in order to take full commercial advantage of the name and its recognition value. We will continue to seek, through Entertainment Management Services Inc. our Master Licensee, to generate revenue by granting licenses to use the "SCORES" brand name to adult entertainment nightclubs. We will also shift our focus to take advantage of merchandising opportunities as well as opportunities in other media outlets. "On March 31, 2003, we entered into a Master License Agreement with Entertainment Management Systems, Inc. The Master License grants to EMS the exclusive worldwide license to use and to grant sublicenses to use the "SCORES" trademarks in connection with the ownership and operation of upscale, adult-entertainment cabaret night clubs/restaurants and for the sale of merchandise by such establishments. Merchandise must relate to the nightclub that sells it, and may be sold at the nightclub, on an internet site maintained by the nightclub, by mail order and by catalogue. The term of the Master License is twenty years. EMS has the option to renew the Master License for six consecutive five-year terms. We will receive royalties equal to 4.99% of the gross revenues of all sublicensed clubs that are controlled by EMS. Sublicenses are currently in effect with three adult nightclubs, SCORES SHOWROOM in New York City, SCORES WEST in New York City and SCORES CHICAGO." As of its latest Form 10-Q filing for the quarter ended September 30, 2002, the company posted a working capital deficit of $254,025 and total shareholders' equity deficit of $38,441. SENTRY TECHNOLOGY: Clinches $1 Mill. Supplier Debt Restructuring ---------------------------------------------------------------- Sentry Technology Corporation (OTC Bulletin Board: SKVY) announced the restructuring and postponement of approximately $1,100,000 of its supplier debt as part of a comprehensive plan to restructure the Company. Creditors participating in the plan will be paid 10 cents on the dollar over three years beginning January 2004. They will also receive two shares of unregistered Sentry common stock per dollar of debt. "The restructuring of approximately 75% of past due supplier debt is one of several steps being taken to improve our balance sheet," said Peter L. Murdoch, President and CEO of Sentry Technology Corporation. "We greatly appreciate the support and assistance of our suppliers and we anticipate their partnership in Sentry's future will be rewarded through an increase in the value of the Company." Sentry Technology Corporation -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $940,000 -- designs, manufactures, sells and installs a complete line of Radio Frequency (RF) and Electro-Magnetic (EM) EAS systems and Closed Circuit Television (CCTV) solutions. The CCTV product line features SentryVision(R) SmartTrack, a proprietary, patented traveling Surveillance System. The company's products are used by retailers to deter shoplifting and internal theft and by industrial and institutional customers to protect assets and people. The Company's partnership with Dialoc ID Holdings BV expands the Company's product offering to include RFID and proximity Access Control solutions. For further information please visit its Web site at http://www.sentrytechnology.com SLATER STEEL: Wants Nod to Hire Jones Day as Bankruptcy Counsel --------------------------------------------------------------- Slater Steel U.S., Inc., and its debtor-affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ Jones Day as their bankruptcy counsel. The Debtors tell the Court that Jones Day is particularly well suited for the type of representation it requires. Jones Day is one of the largest law firms in the United States, with a national and international practice, and has substantial experience in virtually all aspects of the law that may arise in these chapter 11 cases. In particular, Jones Day bas extensive bankruptcy and restructuring, corporate, employee benefits, environmental, finance, intellectual property, labor and employment, litigation, real estate, securities and tax expertise. Jones Day is also intimately familiar with the Debtors' businesses and financial affairs since the firm rendered a variety of legal services to the Debtors since 2001. Through these various prepetition activities, Jones Day's professionals have worked closely with the Debtors' management and other professionals and have become well acquainted with the Debtors' corporate history, debt structure, business and related matters. In this engagement, the Debtors expect Jones Day to: a) advise the Debtor's of their rights, powers and duties as debtors and debtors in possession continuing to operate and manage their respective businesses and properties under chapter 11 of the Bankruptcy Code; b) prepare on behalf of the Debtors all necessary and appropriate applications, motions, draft orders, other pleadings, notices, schedules and other documents and review all financial and other reports to be filed in these chapter 11 cases; c) advise the Debtors concerning, and prepare responses to, applications, motions, other pleadings, notices and other papers that may be filed and served in these chapter 11 cases; d) advise the Debtors with respect to, and assist in the negotiation and documentation of; financing agreements and related transactions; e) review the nature and validity of any liens asserted against the Debtors' property and advise the Debtors concerning the enforceability of such liens; f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; g) counsel the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization and related documents; h) advise and assist the Debtors in connection with any potential property dispositions; i) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings and recharacterizations; j) assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; k) continence and conduct any and all litigation necessary or appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 1 I estates or otherwise further the goal of completing the Debtors' successful reorganization; l) provide corporate governance, litigation and other general nonbankruptcy services for the Debtors to the extent requested by the Debtors; and m) perform all other necessary or appropriate legal services in connection with these chapter 11 cases for or on behalf of the Debtors. The customary hourly rates of Jones Day's professionals working on Slater Steel's cases are: Paul E. Harner Partner $625 per hour Lawrence C. DiNardo Partner $490 per hour Richard H. Engman Associate $395 per hour Mark A. Cody Associate $395 per hour Reginald A. Greene Associate $350 per hour Ilana N. Glazier Associate $295 per hour Daniel B. Prieto Associate $295 per hour H. Joseph Acosta Associate $290 per hour Robert E. Krebs Associate $200 per hour Ronald L. Cappellazzo Staff Attorney $155 per hour The Debtors also seek the Court's approval to retain Richards Layton & Finger as co-counsel in these cases. The Debtors assure the Court that the two firms will do everything to avoid duplication of efforts in their duties representing the Debtors. Slater Steel U.S., Inc., a mini mill producer of specialty steel products, filed for chapter 11 protection on June 2, 2003 (Bankr. Del. Case No. 03-11639). Daniel J. DeFranceschi, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and debts of more than $100 million. SLI INC: Delaware Court Confirms Chapter 11 Reorganization Plan --------------------------------------------------------------- SLI, Inc., announced that on June 19, 2003, the U.S. Bankruptcy Court for the District of Delaware confirmed the amended Plan of Reorganization that was filed by the Company and its U.S. subsidiaries. Confirmation of the amended Plan should permit the Company to meet its goal of emerging from Chapter 11 on or about June 30, 2003. The Plan garnered overwhelming support from its unsecured creditors and the secured lenders. Emergence from Chapter 11 is subject to the order becoming a final order, consummation of the purchase of equity in the reorganized Company by the secured lenders and funding of a term loan by the secured lenders. "We are pleased that our Plan has been confirmed by the Court and was supported by an overwhelming majority of our creditors," said a spokesperson from the Company. "This is wonderful news for our employees, customers and suppliers, and we want to thank all of them for their support." As previously announced and in accordance with the Plan, holders of prepetition secured claims will receive 100% of the equity in reorganized SLI. Holders of general unsecured claims will receive a pro rata distribution of an agreed upon cash payment and a funded interest in certain preference and other claims. There will be no recovery for SLI's prepetition stockholders and their stock will be cancelled. SLI and its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on September 9, 2002. SLI, Inc., based in Canton, MA, is a vertically integrated designer, manufacturer and seller of lighting systems, which are comprised of lamps and fixtures. The Company offers a complete range of lamps (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, LED and special lamps). The Company also offers a comprehensive range of fixtures. The Company serves a diverse international customer base and markets, has 35 plants in 11 countries and operates throughout the world. The Company believes that it is also the #1 global supplier of miniature lighting products for automotive instrumentation. SPIEGEL: Wants Go-Signal to Sell Certain Accounts & Receivables --------------------------------------------------------------- Andrew V. Tenzer, Esq., at Shearman & Sterling, in New York, reminds the Court that The Spiegel Debtors previously operated through two segments: retail merchandising and bankcard. Under the bankcard segment are the operations of the First Consumers National Bank and Financial Services Acceptance Corporation, which are the Debtors' wholly owned non-Debtor subsidiaries. In January 2003, in contemplation of a pending liquidation of FCNB, Mr. Tenzer relates that the Debtors' merchant companies -- Eddie Bauer, Spiegel Catalog, and Newport News -- began issuing their own-private label cards using Gemini Credit Services, Inc., a wholly-owned debtor subsidiary, as servicer. Thus, the Merchant Companies own these credit card accounts and the generated receivables. The receivables generated by the merchant-issued cards have been serviced by Gemini, which in turn has subcontracted the servicing of the Receivables to FCNB. Pursuant to the liquidation plan, FCNB will cease servicing credit cards by June 30, 2003. In this regard, the Debtors have been forced to examine other options with respect to their Accounts and Receivables. The Debtors considered: -- liquidating the Receivables themselves; -- appointing a new third party servicer to replace FCNB by June 30, 2002; or -- selling the Receivables to a third party liquidator. The Debtors have concluded that it would not be a good idea to assume the economic and business risk of undertaking the liquidation of the Receivables on their own. Moreover, no feasible opportunities with third party servicers have been uncovered. The Debtors believe that a sale of the Accounts and Receivables to a potential third party purchaser is the best way out. The Debtors note that the finality and termination of obligations associated with a sale of the Accounts and Receivables is advantageous to them. Mr. Tenzer explains that selling relieves the Debtors of all their obligations with respect to the Receivables in exchange for a purchase price. In light of this, the Debtors embark on marketing the Accounts and Receivables to potential purchasers. Their advisors are currently contacting a number of potential takers. They are also in the process of evaluating the preliminary expressions of interest they have received so far. By this motion, the Debtors ask the Court for authority to sell the Accounts and Receivables to a "stalking horse" bidder or to any other party that submits a higher and better bid. The Debtors anticipate selling the principal amount of outstanding Receivables and all Accounts to a potential buyer in exchange for a guaranteed percentage recovery on the principal amount. There may be a provision for reduction of the purchase price for, among other things, the Receivables generated fraudulently or for the Receivables which may be the subject of a cardholder bankruptcy about which the Debtors had not yet received notice before the end of the buyer's due diligence. But the Debtors do not anticipate that the potential reductions will be material. (Spiegel Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) SR TELECOM: Initiates Private Placement to Raise $6 Million ----------------------------------------------------------- SR Telecom(TM) Inc. (TSX: SRX) has entered into an agreement with an agent for a private placement on a best effort basis of units for gross proceeds of up to $6,000,000. The units will be offered at a price to be determined according to market conditions. Each unit will be comprised of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share at a price to be determined according to market conditions. Completion of the private placement is subject to customary regulatory approval. * * * As reported, Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit and senior unsecured debt ratings on SR Telecom Inc. At the same time, the outlook was revised to negative from stable due to weak first-quarter results. The ratings on SR Telecom reflect the company's strong position in this market and the extent of its customer and geographic diversity. This is offset by the company's limited near-term financial flexibility, its reliance on the successful rollout of its new products to restore profitability growth, and ongoing exposure to emerging markets and prolonged economic weakness in South America, which continues to negatively affect SR Telecom's Chilean subsidiary. TENET HEALTHCARE: Fitch Cuts Sr. Debt & Bank Loan Ratings to BB+ ---------------------------------------------------------------- Fitch Ratings has lowered Tenet Healthcare Corp.'s senior unsecured debt and bank facility ratings to 'BB+' from 'BBB-'. The ratings remain on Rating Watch Negative. The change in ratings is in response to the company's announcement that expected operational performance will suffer from a host of issues impacting the company's top and bottom line. The Negative Rating Watch is in deference to still outstanding issues related to investigations regarding the company's previous pricing practices, investigations at individual facilities stemming from allegations of physician and management misconduct as well as outstanding shareholder suits. Tenet announced the results of a bottom-up budgeting process and provided related guidance for 2003. While Tenet management had not previously discussed operational 2003 guidance, the announced results are below Fitch expectations. A current driving force for Tenet's top-line concerns is difficulty in achieving market-level price increases with some managed care payors. For its part, Tenet management is accepting lower revenues in the current year while positioning for 2004. In addition, Tenet, like the rest of the companies in its sector is also addressing industry-wide pressures including an acceleration in nursing wages, an expected decline in Medicaid revenues in states with budget difficulties, rising malpractice insurance expenses and rising technology costs. Some mitigants include apparently stable Medicare pricing and patient volumes which have held fairly-strong for Tenet, while soft industry-wide. While Tenet's coverage will remain sufficient and leverage modest based on 2003 expectations, cash flow will be poor. Fitch anticipates that for 2003 Tenet's coverage (EBITDA/interest) will likely be between 5.0 times and 6.0x and leverage (total debt/EBITDA) will be between 2.0x and 2.2x. Tenet's total debt at March 31, 2003 was approximately $4 billion. The company, however, is likely to generate only minimal free cash flow for 2003 given its capital expenditure commitments. Tenet management indicates that capital expenditures are likely to total between $800-$900 million for 2003 and as such, cash flow from operations is expected to be entirely consumed by capital expenditures. Spending on capital projects is expected to scale back in 2004 to approximately $700 million. The company has reaffirmed its commitment to its target leverage ratio of at, or about 2.0x. Fitch anticipates that overall debt levels will decrease by yearend as Tenet also announced that funds from its pending asset sales (the company announced in March that it plans to sell or close 14 hospitals) will be used for debt reduction. The company anticipates using $500 million of the proceeds to reduce debt. Liquidity is still robust given there are no amounts outstanding on the company's $1.5 billion credit facility, and anticipated proceeds from asset sales. Due to the company's recent debt restructuring, the company faces no material maturities until 2006. TRANSDIGM INC: Commences Tender Offer for 10.375% Sr. Sub. Notes ---------------------------------------------------------------- TransDigm Inc. has commenced a cash tender offer for any and all of its outstanding 10.375% Senior Subordinated Notes due 2008. The tender offer will expire at midnight, New York City time, on July 21, 2003, unless extended or terminated by TransDigm Inc. The tender offer is made upon the terms and conditions set forth in TransDigm Inc.'s Offer to Purchase dated June 23, 2003. Under the terms of the offer, the purchase price to be paid for each $1,000 principal amount of notes tendered and not revoked will be $1,083.93, plus accrued and unpaid interest up to, but not including, the date on which the company pays for tendered notes. Included in this purchase price is a consent payment equal to $20 per $1,000 principal amount of the notes, which will be paid to those holders who validly consent to the proposed amendments to the indenture governing the notes before 5:00 p.m., New York City time, on July 7, 2003 (or such later date on which the company has received the consents required to make such amendments) unless extended by TransDigm Inc. Payment for validly tendered notes is expected to be made promptly following the expiration of the tender offer. In connection with the tender offer, TransDigm Inc. is seeking consents from the holders of the notes to amend the indenture governing the notes by eliminating substantially all of the restrictive covenants, certain event of default provisions and certain provisions relating to a merger, consolidation or sale of assets and amending certain defeasance provisions currently contained in the indenture and the notes. Subject to certain conditions, each holder of the notes who consents to the proposed amendments by validly tendering such holder's notes on or prior to 5:00 p.m., New York City time on, July 7, 2003 (or such later date on which the company has received the consents required to make such amendments), unless extended, will receive the consent payment if such notes are accepted by TransDigm Inc. Holders of notes may tender their notes after such date and time, but such holders will not receive the consent payment if such notes are accepted by TransDigm Inc. Tendered notes may not be withdrawn and consents may not be revoked after 5:00 p.m., New York City time on, July 7, 2003 (or such later date on which the company has received the consents required to make such amendments) except in certain limited circumstances. The company's obligation to make any payment in respect of tendered notes and delivered consents is subject to a number of conditions described in the Offer to Purchase, several of which are beyond the company's control. Such conditions include the receipt by the company of the necessary number of consents to amend the indenture to implement the proposed amendments set forth in the offer to purchase and the consummation of the merger of the company's parent, TransDigm Holding Company, with TD Acquisition Corporation pursuant to the Agreement and Plan of Merger between TransDigm Holding Company and TD Acquisition Corporation dated June 6, 2003. TransDigm -- whose March 29, 2003 balance sheet shows a total shareholders' equity deficit of about $53 million -- is a leading manufacturer of highly engineered component products for the commercial and military aerospace industries. The company sells its products to commercial OEM and aftermarket customers. TransDigm's major product lines include gear pumps, igniters and ignition systems, electromechanical actuators and controls, NiCad batteries/chargers, engineered connectors, lavatory components, and engineered latches. TYCO: Appoints Charles Young as Senior V-P, Corp. Communications ---------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) has appointed Charles Young as Senior Vice President, Corporate Communications. He comes to Tyco from GE Medical Systems, the healthcare technology division of General Electric, where he served as General Manager of Global Marketing. Mr. Young will be responsible for media relations, brand management, employee communications, corporate philanthropy, community relations, and marketing communications. He will report to Chairman and CEO Ed Breen. Mr. Breen said: "Charlie Young is an outstanding global business leader who brings to Tyco extensive communications and marketing experience from both the manufacturing and services industries. Charlie will be instrumental in building world-class communications processes supporting our internal and external stakeholders globally. He will be an integral part of Tyco's senior leadership team." Mr. Young said: "Ed Breen and his leadership team are committed to creating one of the world's most respected and successful companies. I believe in Tyco's solid operating foundation and exciting future, and I am proud to lead the effort to create a high-credibility, best-in-class communications team to ensure that Tyco's key audiences are closely connected to the Company." During his 15-year tenure with GE, Mr. Young held a number of positions of increasing responsibility, including global marketing leader for GE Medical, General Manager of Corporate Communications for GE Medical, and Director of Communications and Public Affairs for GE Global Research. Mr. Young has extensive functional experience in the areas of marketing, public relations, marketing communications, brand management, and government relations. Mr. Young holds a B.S. degree in Liberal Arts and Journalism from the State University of New York College at Cortland. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. * * * As previously reported, Fitch Ratings affirmed its ratings on the senior unsecured debt and commercial paper of Tyco International Ltd., as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A., at 'BB'/'B', respectively. The Rating Outlook has been changed to Stable from Negative. The ratings affect approximately $21 billion of debt securities. The change to Outlook Stable reflects Tyco's progress with respect to reestablishing access to capital, addressing its liability structure, implementing steps to improve operating performance, and demonstrating cash generation despite a difficult economic environment in a number of key end-markets. The impact of fundamental favorable changes in Tyco's financial policies and profile since late fiscal 2002 is constrained by economic weakness in its markets, potential legal liabilities related to shareholder lawsuits and SEC investigations, and the possibility, although reduced, of further accounting charges and adjustments. The ratings could improve over time as Tyco demonstrates more consistent results and that it has put behind it the accounting concerns that have obscured the transparency of its financial reporting in the past. TYCO INT'L: Unit Wins Patent Suit against Universal Surveillance ---------------------------------------------------------------- Sensormatic Electronics Corporation, which was acquired by Tyco International's Fire & Security business segment in 2001, won a jury verdict in a patent infringement case against Universal Surveillance Systems, Inc. The jury found that Universal's UNIPRO anti-theft tag infringed upon a patent owned by Sensormatic and awarded damages based on lost profits and reasonable royalties. An injunction has been in effect that prohibits Universal from selling its UNIPRO anti-theft tag. Sensormatic anti-theft tags are the most popular tags in the market on a global basis, protecting billions of dollars worth of inventory from shoplifting and internal theft. Last year, more than 143 million Sensormatic anti-theft tags were produced and sold and are used by leading retailers to protect goods and increase profits. This verdict upholds Sensormatic's patent related to its anti- theft tags. Sensormatic currently holds nearly 900 patents on its anti-theft systems, with more than 600 pending patents on file. "We will vigorously protect our intellectual property throughout the world to ensure that our customers receive the highest quality products," said Dave Robinson, president of Tyco Fire & Security. "For more than 30 years, Sensormatic anti-theft systems have helped customers reduce theft, increase sales and improve profits. This verdict will help ensure that we continue to deliver quality products and services in the years ahead." The case was heard in the United States District Court, Southern District of Florida. Sensormatic sued Universal in this case under United States Patent No. 5,426,419. Within Tyco Fire & Security, Sensormatic's products are developed and manufactured by the Tyco Safety Products Group and are sold worldwide by ADT Security. Tyco Fire & Security, one of the major business units of Tyco International Ltd., (NYSE: TYC, LSE; TYI, BSX: TYC), designs, manufactures, installs and services electronic security systems, fire protection, detection and suppression systems, sprinklers and fire extinguishers. Tyco Fire & Security consists of more than 60 brands, which are represented in over 100 countries. Its products are used to safeguard firefighters, prevent and fight fires, deter thieves and protect people and property. * * * As previously reported, Fitch Ratings affirmed its ratings on the senior unsecured debt and commercial paper of Tyco International Ltd., as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A., at 'BB'/'B', respectively. The Rating Outlook has been changed to Stable from Negative. The ratings affect approximately $21 billion of debt securities. The change to Outlook Stable reflects Tyco's progress with respect to reestablishing access to capital, addressing its liability structure, implementing steps to improve operating performance, and demonstrating cash generation despite a difficult economic environment in a number of key end-markets. The impact of fundamental favorable changes in Tyco's financial policies and profile since late fiscal 2002 is constrained by economic weakness in its markets, potential legal liabilities related to shareholder lawsuits and SEC investigations, and the possibility, although reduced, of further accounting charges and adjustments. The ratings could improve over time as Tyco demonstrates more consistent results and that it has put behind it the accounting concerns that have obscured the transparency of its financial reporting in the past. UNITED AIRLINES: US Bank Demands $20 Mill. Admin Expense Payment ---------------------------------------------------------------- A Trust was established between United Airlines and U.S. Bank on October 1, 1991. The Trust issued certificates, which were purchased by investors. Proceeds from the certificates were used by the trust to purchase equipment trust notes issued under an indenture between United and the indenture trustee. Equipment Note No. 1 was issued to Pass Through Trust No. 1 and is payable through 2008, and Equipment Note No. 2 was issued to Pass Through Trust No. 2 and is payable in 2009 through 2015. United is the lessor of Aircraft, which secures the Equipment Notes. Lease payments are passed through to pay the Equipment Notes. United, pursuant to Section 1110(a) of the Bankruptcy Code, elected to perform their obligations under the 1991-A PTC Transactions. But the Debtors breached this commitment. Accordingly, U.S. Bank, as Trustee under the Pass Through Trust Agreement, asks the Court to compel United to pay administrative expenses due under the 1991-A PTC Transaction. Approximately $20,000,000 is due and outstanding. Tail No. Missed Payment Grace Period Rent Total -------- -------------- ----------------- ------ N179UA $5,693,164 $210,542 $5,903,706 N534UA 6,466,547 254,067 6,720,614 N540UA 3,515,913 68,237 3,584,150 N541UA 3,510,209 68,177 3,578,386 N911UA 1,759,240 32,646 1,791,886 N915UA 1,605,649 36,768 1,642,417 Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, in Chicago, Illinois, reminds the Court that on February 7, 2003, the Debtors agreed to perform all obligations and cure any defaults under their existing aircraft financing transactions, including aircraft that are the subject of the 1991-A Pass Through Certificates Transaction. The Debtors were required to make scheduled payments to the PTC Trustee before March 22, 2003. The payments were not made and the Debtors continue to use the Aircraft. U.S. Bank is responding to "the Debtors' unauthorized and unprecedented manipulation of the 1110(a) Election process." The Debtors made public their intent to fulfill their obligations related to the Aircraft and enjoy the resulting continuation of the automatic stay under Section 1110(a). However, the Debtors are now refusing to make the payments previously agreed to. Mr. Barliant notes that under Section 323, the trustee is a representative of the estate. Since the Debtors are vested with the rights, powers and duties of a trustee, their Section 1110(a) elections were made as representatives of the estates. Therefore, any cure payment and all obligations under the leases and security agreements become administrative expenses of the estates until the equipment is returned to the lessor or secured party. (United Airlines Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED DEFENSE: S&P Keeps Watch on BB- Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB-' corporate credit rating, on United Defense Industries Inc., on CreditWatch with positive implications. "The CreditWatch placement reflects United Defense's improved financial profile resulting from solid profitability and cash generation, and the generally favorable outlook for defense spending," said Standard & Poor's credit analyst Christopher DeNicolo. Debt to EBITDA is expected to decline to below 2x in 2003 from around 2.5x in 2002, reflecting debt repayments from solid internal cash generation. United Defense's equity turned positive in the first quarter of 2003 as a result of full retention of earnings. The company could pursue further debt-financed acquisitions, but they are not expected to be as large as USMR (approximately $305 million), at least in the near term. EBIT and EBITDA interest coverage, 5x and 6.4x, respectively, in 2002, should continue to improve as a result of satisfactory profitability and debt repayment. Funds from operations to debt of around 30% in 2002 is above average for the rating. Liquidity is more than sufficient for operational needs, with over $150 million in cash and around $40 million of revolver availability as of March 31, 2003. Arlington, Virginia-based United Defense produces the Bradley fighting vehicle, the M113 armored personnel carrier, and the Mk45 naval gun system. The company, teamed with General Dynamics Corp., is developing the manned ground vehicles portion of the Army's Future Combat System, including the non-line of sight cannon, which is effectively replacing the cancelled Crusader artillery program. In addition, United Defense is developing the advanced gun system and the advanced vertical launch system for the Navy's DDX next generation destroyer program. Preparations for the war in Iraq positively affected revenues at USMR in the first quarter of 2003 as ship maintenance was accelerated prior to deployment. However, work previously scheduled for the remainder of 2003 could be delayed due to the large number of ships still deployed. Standard & Poor's is currently in the process of reviewing its ratings on United Defense and expects to resolve the CreditWatch shortly. US AIRWAYS: Strikes Claims Settlement Pact with General Electric ---------------------------------------------------------------- On January 16, 2003, the Court authorized the US Airways Debtors to enter into a Global Settlement, including a DIP liquidity facility, with General Electric Capital Corporation. GECC was acting through its agents, GE Capital Aviation Services, Inc., and GE Engine Services, Inc. Pursuant to the Global Settlement, GE forgave deferred sums that were payable by US Airways and, in exchange, US Airways assumed GE Agreements. On October 4, 2002, GE Engine Services filed Proof of Claim No. 3316 asserting liability equal to $78,237,470. On April 15, 2003, the Debtors objected in its Fourth Omnibus Objection to Claims on the grounds that it was moot in light of the Reorganized Debtors' assumption of the Agreements pursuant to the Global Settlement. As a result, Claim No. 3316 is withdrawn. Any and all other general unsecured claims asserted against any of the Reorganized Debtors by GE Engine Services are disallowed. Linda J. Najjoum, Esq., at Hunton & Williams, in McLean, Virginia, agrees on GE Engine Services' behalf. (US Airways Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) US DATAWORKS: Brings-In Ham Langston as Independent Accountants --------------------------------------------------------------- Effective June 11, 2003, the Audit Committee and the Board of Directors of US Dataworks Inc. approved a change in the Company's independent accountants for the fiscal year ending March 31, 2003 from Singer Lewak Greenbaum & Goldstein LLP to Ham, Langston & Brezina, LLP. As a result, US Dataworks informed Singer Lewak that, effective June 11, 2003, they had been dismissed as its independent accountants. The report of Singer Lewak for the fiscal years ended March 31, 2002 and March 31, 2001, contained an explanatory paragraph concerning US Dataworks' ability to continue as a going concern. US Dataworks is a developer of electronic check processing software, serving several of the top banking institutions, credit card issues, and the United States Government. The software developed by US Dataworks is designed to enable organizations to transition from traditional paper-based payment and billing processes to electronic solutions. Core products include MICRworks, Returnworks, Remitworks, and Remoteworks. WEIRTON STEEL: Court Approves Interim Compensation Procedures ------------------------------------------------------------- Weirton Steel Corporation seeks the Court's authority to establish procedures for compensating and reimbursing professionals on a monthly basis. Mark E. Freedlander, Esq., at McGuireWoods LLP, in Pittsburgh, Pennsylvania, outlines the proposed Compensation Procedures: (a) On or before the 25th day of each calendar month, each Professional seeking interim compensation will file an Application for interim approval and allowance of compensation for services rendered and reimbursement of expenses incurred during the immediately preceding month and serve a copy of the Fee Application on: -- the Debtor, -- counsel to the Debtor, McGuireWoods LLP; -- counsel to the Creditors Committee, if any; -- Fleet Capital Corporation, for itself and as agent for the DIP Lenders; and -- the Office of the U.S. Trustee. All Fee Applications will comply with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, applicable Fourth Circuit law and the Local Rules of this Court. Each Notice Party will have 20 days after service of a Fee Application to object. Upon the expiration of the Objection Deadline, the Professional may file a certificate of no objection with this Court after which the Debtors are authorized to pay each Professional the Actual Interim Payment equal to the lesser of: (1) 80% of the fees and 100% of the expenses requested in the Fee Application, and (2) the aggregate amount of fees and expenses not subject to an objection; (b) If any Notice Party objects to a Professional's Fee Application, it must file with this Court and serve on the affected Professional and each of the Notice Parties a written objection, which must be filed with this Court and actually received by the affected Professional and the Notice Parties on or before the Objection Deadline. Thereafter, the objecting party and the affected Professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution of the Objection within 20 days after service of the Objection, the affected Professional may either: (1) file a response to the Objection with this Court, together with a request for payment of the difference, if any, between the Maximum Interim Payment and the Actual Interim Payment made to the affected Professional -- the Incremental Amount; or (2) forego payment of the Incremental Amount until the next interim or final fee application hearing, at which time this Court will consider and dispose of the Objection on the parties' request; (c) Beginning with the period ending on August 31, 2003 and at four-month intervals thereafter, each Professional must file with this Court and serve on the Notice Parties a request for interim Court approval and allowance of the compensation and reimbursement of expenses sought in the Fee Applications filed during the Interim Fee period. Each Professional must file its Interim Fee Application Request within 30 days after the end of the Interim Fee Period for which the request seeks allowances of fees and reimbursement of expenses. Each Professional must file its first Interim Fee Application Request on or before October 15, 2003, and the First Interim Fee Application Request should cover the Interim Fee Period from the Petition Date through and including August 31, 2003; (d) The Debtor will request that this Court schedule a hearing on the Interim Fee Application Requests promptly after the date on which the Interim Fee Application Requests are filed, or at other intervals as this Court deems appropriate; (e) The pendency of an Objection to payment of compensation or reimbursement of expenses will not disqualify a Professional from the future payment of compensation or reimbursement of expenses; and (f) Neither the payment of, or the failure, to pay monthly interim compensation and reimbursement of expenses under the Compensation Procedures nor the filing of or failure to file an Objection will bind any party-in- interest or this Court with respect to the allowance of the interim or final applications for compensation and reimbursement of expenses of Professionals. The Debtor also asks Judge Friend to limit the hearing notices to consider interim and final fee applications to the Notice Parties and all parties who have filed a notice of appearance with the Clerk of this Court and requested the notice. Mr. Freedlander asserts that this notice should reach the parties most active in these cases and will save the expense of undue application and mailing. The Debtor further asks the Court to permit each member of any official committee, once appointed, to submit statements of expenses and supporting vouchers to counsel for its committee, who will collect and submit the requests for reimbursement in accordance with the Compensation Procedures. The Debtor will include all payments made to Professionals in accordance with the compensation procedures in its monthly operating reports identifying the amount paid to each of the Professionals. * * * After due deliberation, Judge Friend approves the Debtor's proposed procedures for interim compensation and reimbursement of expenses of professionals. In addition, Judge Friend orders each Professional to file its Interim Fee Application Request within 45 days after the end of the Interim Fee Period. (Weirton Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPOINT STEVENS: Gets Interim Approval to Hire Rothschild Inc. ---------------------------------------------------------------- WestPoint Stevens Inc., and its debtor-affiliates seek the Court's authority to employ Rothschild Inc. to serve as their financial advisor and investment banker in connection with these Chapter 11 cases. WestPoint Senior Vice President and Chief Financial Officer Lester D. Sears informs the Court that Rothschild is an investment banking firm with its principal office located at 1251 Avenue of the Americas in New York 10020. Rothschild's professionals have extensive experience in providing investment banking services in reorganization proceedings. They enjoy an excellent reputation for the services they have rendered on behalf of debtors, creditors and equity holders in large and complex chapter 11 cases, including Barney's, Inc., Bedford Fair Industries, Comdisco, Inc., Crown Vantage, Inc., Edison Brothers Stores, Inc., Federal-Mogul Global, Inc., Geneva Steel Company, Globe Manufacturing, Guilford Mills, Inc., Heartland Steel, HomePlace, Inc., James River Coal Company, Key Plastics LLC, La Roche Industries, Inc., Leiner Health Products, Inc., Merrill Corporation, Metro Affiliates Inc., Microcell Communications, Inc., Mpower Holdings Corp., Orbital Imaging Corporation, Pacific Gas & Electric Company, Service Merchandise Corp., Special Metals Corporation, Superior Telecom Inc., The FINOVA Group Inc., Thermadyne Holdings Corp., Thorn Apple Valley, Inc., Trans World Airlines, UAL Corporation, Viasystems Group, Inc., Wilcox & Gibbs, Inc. and Zenith Electronics, Inc. According to Mr. Sears, Rothschild has provided prepetition services to the Debtors in connection with their restructuring efforts and is therefore very familiar with the Debtors' business and financial affairs. As a consequence, its engagement will facilitate the provision of the services required by the Debtors in their Chapter 11 cases. On May 1, 2003, the Debtors engaged Rothschild to assist and advise them with respect to evaluating strategic alternatives and their implementation. In providing professional services, Rothschild has worked closely with the Debtors' management and become well acquainted with their capital structure, financial affairs, and related matters. The Debtors desire to continue to use Rothschild's services in these Chapter 11 cases pursuant to the terms of the Rothschild Agreement, and Rothschild has agreed to perform these professional services pursuant to the Rothschild Agreement consistent with Section 328 of the Bankruptcy Code. Based on the experience of its members and employees, Mr. Sears believes that Rothschild is well qualified to act as financial advisor and investment banker to the Debtors. Rothschild has acquired substantial familiarity with the Debtors and their affairs, resulting in the efficient and expeditious performance of its services. Messrs. David Resnick and Neil Augustine, among other Rothschild professionals, each have extensive experience in advising debtors as to reorganization and restructuring matters. Mr. Sears contends that Rothschild's experience and expertise, its knowledge of the capital markets, and its merger and acquisition capabilities, will inure to the Debtors' benefit in providing an enterprise valuation of the Debtors and in pursuing any "Transactions." The services to be provided by Rothschild are necessary and will be beneficial to the Debtors, their estates, and creditors. Pursuant to the Rothschild Agreement, Rothschild will provide financial advisory services as the Firm and the Debtors deem appropriate and feasible in the course of these Chapter 11 cases, including the financial advisory services to the Debtors. In addition, these services are not duplicative of the services to be performed by any of the Debtors' other proposed professionals. In connection with the formulation, analysis and implementation of various options for a restructuring, reorganization or other strategic alternative relating to the Debtors, whether pursuant to a Transaction, any series or combination of Transactions or otherwise, the Debtors submit that it is necessary to employ Rothschild to perform services including, but not limited to: A. to the extent deemed desirable by the Company, identify and initiate potential Transactions or other transactions; B. to the extent Rothschild deems necessary, appropriate and feasible, or as the Company may request, review and analyze the Company's assets and the operating and financial strategies of the Company; C. review and analyze the business plans and financial projections prepared by the Company including, but not limited to, testing assumptions and comparing those assumptions to historical Company and industry trends; D. evaluate the Company's debt capacity in light of its projected cash flows and assist in the determination of an appropriate capital structure for the Company and assist the Company in analyzing strategic alternatives; E. assist the Company and its other professionals in reviewing the terms of any proposed Transaction or other transaction, in responding thereto and, if directed, in evaluating alternative proposals for a Transaction or other transaction, whether in connection with a Plan or otherwise; F. determine a range of values for the Company and any securities that the Company offers or proposes to offer in connection with a Transaction or other transaction; G. advise the Company on the risks and benefits of considering a Transaction or other transaction with respect to the Company's intermediate and long-term business prospects and strategic alternatives to maximize the business enterprise value of the Company, whether pursuant to a Plan or otherwise; H. review and analyze any proposals the Company receives from third parties in connection with a Transaction or other transaction, including, without limitation, any proposals for debtor-in-possession financing, as appropriate; I. assist or participate in negotiations with the parties-in- interest, including, without limitation, any current or prospective creditors of, holders of equity in, or claimants against the Company and their respective representatives in connection with a Transaction or other transaction; J. advise and attend meetings of the Company's Board of Directors, creditor groups, official constituencies and other interested parties, as necessary; K. if requested by the Company, participate in hearings before the Bankruptcy Court in which these cases are commenced and provide relevant testimony with respect to the matters described and issues arising in connection with any proposed Plan; and L. render any other financial advisory and investment banking services as may be agreed by Rothschild and the Company in connection with any of the foregoing. The term of the Rothschild Agreement will extend until the effective date of a plan of reorganization. Rothschild Managing Director David L. Resnick assures the Court that the Firm does not hold any interest adverse to the Debtors' estates or their creditors in any matters in which they are to be engaged. In addition, Rothschild is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. However, Rothschild currently performs, in the past has performed or in the future may perform services in unrelated matters to these parties: ABN Amro Bank N.V., Aegon, Bank of New York, Barclays Bank plc, Bear Stearns, Cargill, Chesapeake Partners, CIT Group, Citibank, Credit Suisse, Walt Disney, Duke Power Company, Dupont Textile & Interior, Exel Global Logistics, Federated Department Stores Inc., Fidelity, Galaxy Partners, GE Capital Corporation, GSC, IBM, Kmart Corporation, Morgan Stanley, Rabobank, Salomon Smith Barney, Sanderson, Scotia Bank, The Williams Company, and UBS Warburg. The Rothschild Agreement contemplates that Rothschild will be entitled to these compensation in consideration of the services to be performed: A. A retainer in an amount equal to twice the Monthly Fee, to be applied against the fees and expenses of Rothschild under the Rothschild Agreement; B. Commencing as of the date of the Engagement Letter, and whether or not a Transaction is proposed or consummated, a cash advisory fee of $200,000 per month. The Monthly Fee will be payable by the Company in advance on the first day of each month; C. A $10,000,000 fee, payable in cash on the earlier of the confirmation and effectiveness of a Plan or the substantial consummation of another Transaction, provided, that Rothschild will credit against this Fee: -- 50% of the Monthly Fees paid in excess of the first $300,000; and -- to the extent not otherwise applied against the fees and expenses of Rothschild under the terms of the Rothschild Agreement, the Retainer; provided that the sum of these credits will not exceed the Completion Fee; and D. To the extent the Company requests Rothschild to perform additional services not contemplated by the Rothschild Agreement, additional fees as will be mutually agreed on by Rothschild and the Company, in writing, in advance. The Debtors have agreed to reimburse Rothschild for its reasonable expenses incurred in connection with the provision of services, including, without limitation, the fees, disbursements and other charges of Rothschild's counsel. Reimbursable expenses will also include, but not be limited to, travel and lodging, data processing and communication charges, research and courier services. During the period May 1, 2003 through the Petition Date, Mr. Resnick estimates that Rothschild incurred actual, necessary unpaid expenses aggregating between $10,000 and $15,000 in connection with this engagement, which Rothschild will deduct from its Retainer. Mr. Resnick relates that the Debtors have agreed to indemnify and hold harmless Rothschild and its affiliates, counsel and other professional advisors, and the directors, officers, controlling persons, agents and employees from and against any losses, claims or proceedings, including, without limitation, stockholder actions, damages, judgments, assessments, investigation costs, fees and expenses directly or indirectly relating to or otherwise arising out of the services. The Debtors, however, will not be liable to the extent that any loss is finally judicially determined by a court of competent jurisdiction to have resulted from the gross negligence, willful misconduct, fraud or substantive and material violation of law of the Indemnified Party. The Debtors selected Rothschild after considering several other investment banking firms. Rothschild was selected because, among other things: (i) Rothschild and its senior professionals have excellent reputations for providing high quality investment banking services in bankruptcy reorganizations and other debt restructurings; (ii) the Debtors believe that their skill and expertise are essential to the their reorganization efforts and maximizing the value of these estates; and (iii) Rothschild has gained extensive knowledge of the Debtors' financial and business operations. The terms of the Rothschild Agreement, including the indemnification provisions, are similar to those requested by other investment banks the Debtors considered, and were negotiated at arm's length with the benefit of experienced counsel on both sides. * * * Accordingly, Judge Drain authorizes the Debtors to employ Rothschild on an interim basis pending a final hearing on July 22, 2003. Rothschild will receive only the Monthly Fees and reimbursement of expenses, which, will not be subject to challenge except under the standard of review under Section 328(a) of the Bankruptcy Code. All requests of Rothschild for payment of indemnity pursuant to the Rothschild Agreement will be made by means of an application and will be subject to review by the Court to ensure that payment of the indemnity conforms to the terms of the Rothschild Agreement and is reasonable based on the circumstances of the litigation or settlement in respect of which the indemnity is sought; provided, however, that in no event will Rothschild be indemnified in the case of its own bad faith, self-dealing, breach of fiduciary duty, gross negligence or willful misconduct. (WestPoint Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM INC: Pushing for Approval of Valor Settlement Agreement ---------------------------------------------------------------- Adam P. Strochak, Esq., at Weil Gotshal & Manges LLP, in New York, informs the Court Valor Telecommunications Enterprises, Inc. is a local exchange carrier serving customers in Arkansas, New Mexico, Oklahoma, and Texas. Valor provides long-distance services to customers in those states by reselling facilities and services offered by Debtor MCI WorldCom Network Services, Inc. MCI Network Services, as successor-in-interest to Debtor UUNet Technologies, Inc., purchases Cyber Port circuits and other services from Valor pursuant to Valor's Federal Communications Commission tariff. As of the Petition Date, the Debtors owed valor $4,823,788 for prepetition services and Valor owed the Debtors $1,732,148 for prepetition services. Valor filed proof of claim number 14152 against the Debtors amounting to $4,823,788. Valor subsequently sold, transferred and assigned all right, title, and interest in its claim against the Debtors to Longacre Master Fund, LTD. Valor also filed various other proofs of claim against other Debtors in these Chapter 11 cases. On December 26, 2002, and February 12, 2003, Mr. Strochak reports that the Debtors filed notices seeking to reject some, but not all of the Cyber Port circuits governed by the FCC tariff. Valor objected to the notices of rejection and asserted that, pursuant to the FCC tariff, a postpetition cancellation penalty of $1,465,108 would be due and owing to Valor. The Debtors disputed the applicability of the cancellation penalty and the priority of any penalty should it be found applicable. The parties also have negotiated with respect to the setoff of mutual prepetition debts. On March 26, 2003, the Debtors, Valor, and Longacre concluded a settlement agreement resolving the dispute over the cancellation penalty. The salient terms of the Settlement are: -- The parties agree to effect the setoff of $1,636,372 owed by Valor to the Debtors for prepetition services against the amount of Valor's $4,823,788 prepetition claim against the Debtors, leaving a $3,187,416 net claim against the Debtors. -- The parties agree that Claim Number 14152 will be allowed as a general unsecured claim amounting to $3,187,416. -- Valor will withdraw all proofs of claims against the Debtors except for Claim Number 14152. -- Valor will withdraw all objection to the Debtors' notices of rejection of Cyber Port circuits and further agrees that the Debtors may submit future orders to cancel additional Cyber Port circuits without need to file additional notices of rejection. -- The Debtors agree that Valor may bill the full termination penalty of $1,465,108 pursuant to the FCC tariff for all circuits listed by the Debtors in their notices of rejection dated December 26, 2002, and February 12, 2003. Valor also may apply the full termination penalty pursuant to the terms of the FCC tariff for all Cyber Port circuits the Debtors may cancel in the future. -- The parties agree that any charges for early termination penalties for Cyber Port circuits are prepetition claims against the Debtors and Valor will file additional proofs of claim for these penalties within 30 days of execution of the Settlement. -- Valor agrees to execute a long distance contract extension consistent with the parties' agreements. By this Motion, the Debtors seek entry of an order, pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, approving the Settlement. Mr. Strochak admits that WorldCom is uncertain whether it would succeed in challenging Valor's assertion that termination penalties must be paid, as postpetition administrative expenses, pursuant to the FCC tariff. Litigation of this matter would involve significant legal and factual disputes in an unsettled area of the law. The risks and costs of the litigation for the Debtors outweigh the probability of complete success on the merits. Indeed, even if the Debtors were successful in challenging the priority of the penalties, Valor still could assert a rejection damages claim. The Debtors have investigated Valor's contention that setoff rights apply here and have concluded that the debts are in fact mutual and subject to setoff. Accordingly, there is little or no chance that the Debtors could collect the prepetition amount owed by Valor. Mr. Strochak believes that litigation of the dispute regarding the applicability, amount, and priority of cancellation penalties would be complex, costly, and time-consuming. The dispute could entail significant discovery and require the devotion of extensive staff resources by the Debtors. The Debtors have concluded that the time and energy of their employees is better spent focusing on business responsibilities to ensure that the Debtors' operations run smoothly during this critical period of WorldCom's reorganization. Mr. Strochak adds that a protracted litigation of the dispute would divert the attention of the WorldCom's management and legal personnel from the reorganization efforts at hand. The Settlement precludes the need for any employees of WorldCom to devote time to preparing for litigation rather than attending to their significant business-related duties. The consequences of a court decision adverse to the Debtors are significant, including the inability to effectively manage its relationship with Valor, a significant customer. Finally, the mutually agreeable resolution of the dispute will foster better business relationships with Valor, most significantly by extending its long distance services agreement. Mr. Strochak points out that the Settlement forecloses a significant downside risk -- the potential requirement to pay termination penalties as administrative expenses. Without the Settlement, there is a possibility that the Debtors might not prevail on that issue. Further, the Settlement permits the Debtors to terminate additional Cyber Port circuits in the future, facilitating the reorganization and streamlining of the Debtors' business. Finally, the Settlement establishes a framework for continuation of the business relationship with Valor. These facets of the Settlement inure to the benefit of all the Debtors' creditors. (Worldcom Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Meetings, Conferences and Seminars ------------------------------------ June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org July 17-20, 2003 Northeast Bankruptcy Conference AMERICAN BANKRUPTCY INSTITUTE Hyatt Regency, Newport, RI Contact: 1-703-739-0800 or http://www.abiworld.org July 30-Aug. 2, 2003 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton, Amelia Island, FL Contact: 1-703-739-0800 or http://www.abiworld.org July 31, 2003 FOUNDATION FOR ACCOUNTING EDUCATION Bankruptcy and Financial Reorganization Conference New York, NY Contact: 1-800-537-3635 or visit www.nysscpa.org September 18-21, 2003 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Venetian, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org September 12, 2003 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown Univ. Law Center, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org October 2-3, 2003 EUROFORUM INTERNATIONAL European Securitisation Hilton London Green Park Contact: http://www.euro-legal.co.uk October 10 and 11, 2003 AMERICAN BANKRUPTCY INSTITUTE Symposium on 25th Anniversary of the Bankruptcy Code Georgetown Univ. Law Center, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org October 15-18, 2003 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Sixth Annual Meeting San Diego, CA Contact: http://www.ncbj.org/ October 16-17, 2003 EUROFORUM INTERNATIONAL Russian Corporate Bonds Renaissance Hotel, Moscow Contact: http://www.ef-international.co.uk November 12-14, 2003 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Emory University, Atlanta, GA Contact: 1-703-739-0800 or http://www.abiworld.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org February 5-7, 2004 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, CO Contact: 1-703-739-0800 or http://www.abiworld.org March 5, 2004 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West The Century Plaza, Los Angeles, CA Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 29-May 1, 2004 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Fairmont Hotel, New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 3, 2004 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millennium Broadway Conference Center, New York, NY Contact: 1-703-739-0800 or http://www.abiworld.org June 2-5, 2004 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800 or http://www.abiworld.org June 24-26,2004 AMERICAN BANKRUPTCY INSTITUTE Hawaii Bankruptcy Workshop Hyatt Regency Kauai, Kauai, Hawaii Contact: 1-703-739-0800 or http://www.abiworld.org July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 10-13, 2003 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***