/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/030704.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 4, 2003, Vol. 7, No. 131 Headlines ACTERNA CORP: Wants More Time to Make Lease-Related Decisions ADVANCED LIGHTING: Court OKs New DIP Financing with Wells Fargo AEROSTRUCTURES: Ratings Withdrawn After Acquisition by Vought AHOLD: Completes Internal Forensic Accounting Investigations AIR CANADA: Air Norterra Presses for Compliance with Agreement ALLIANCE GAMING: Inks Definitive Pacts to Sell Non-Core Assets ALPHASTAR INSURANCE: Fails to Meet Nasdaq Listing Requirements AMERCO: Bringing-In BDO Seidman to Perform Accounting Services AMERICAN STONE: Seeks Replacement to Term Loan & Credit Facility ANTARES PHARMA: Continuing Initiatives to Deliver Business Plan ATA AIRLINES: June Revenue Passenger Miles Increase 22.4% AURORA FOODS: S&P Drops Corporate Credit Rating to D from CCC BALLY TOTAL: Completes Sr. Notes Offering & $90 Million Revolver BMC INDUSTRIES: Receives Bank Waiver of Loan Covenant Violations BOOTS & COOTS: Reaches Pact with Prudential to Cure Loan Default BUDGET GROUP: Court Approves Miller Ellin as Tax Accountants BURLINGTON INDUSTRIES: Wants Nod to Hire Hilco as Appraisers CANWEST GLOBAL: Australian Operation Posts 24% Q3 EBITDA Growth CINCINNATI BELL: Prices $500 Million 7.25% Senior Unsec. Notes CINCINNATI BELL: S&P Assigns Junk Rating to $300MM Senior Notes CINCINNATI BELL: Fitch Assigns B+ Rating to $300MM Senior Notes CMS ENERGY: Sells CMS Field Services Unit to Cantera Natural Gas CORRPRO COS.: Continues Talks to Amend & Extend Credit Facility CREDIT SUISSE: Ratings on Class K & N Notes Dive Down to B+/C CROSS MEDIA: Hires Getzler Henrich as Restructuring Consultants CROWN PACIFIC: Court Approves $40 Million DIP Financing Pact CRUM & FORSTER: S&P Assigns BB L-T Counterparty Credit Rating DETROIT MEDICAL: Fitch Keeps B Bond Rating on Watch Evolving DKW LAW: Files for Chapter 11 Protection in Pennsylvania Court DKW LAW GROUP: Voluntary Chapter 11 Case Summary DLJ COMMERCIAL: Fitch Affirms Low-B and Junk Class Notes Ratings DTI DENTAL: Commences Normal Course Issuer Bid Effective July 3 DUANE READE: S&P Concerned about Weaker-Than-Expected Results EASTMAN HILL: Fitch Downgrades 3 Note Class Ratings to B/CC/C ENCOMPASS SERVICES: Qwest Wants Amended Sale Order Reconsidered ENGAGE INC: Turns to Deloitte & Touche for Financial Advice ENRON CORP: Seven Creditors Sell 11 Claims Totaling $37 Million FEDERAL-MOGUL: Committee Has Until Sept. 30 to Sue Lenders FIRST UNION NAT'L: Fitch Affirms Six Low-B Note Class Ratings FLEMING COMPANIES: Exclusivity Extension Hearing Set for July 17 FORMICA CORP: Gains Nod for Cerberus & Oaktree Investment Deals GALAXY NUTRITIONAL: Reports Improved Year-End 2003 Performance GENERAL DATACOMM: Wants Plan Exclusivity Extended to August 29 GLENOIT CORP: Seeks Open-Ended Extension for Final Decree GRUPO IUSACELL: Fitch Hacks Senior Unsecured Debt Rating to D IBEAM BROADCASTING: Trust Wants Time for Final Decree Extended INSCI CORP: March 31 Balance Sheet Insolvency Narrows to $3 Mil. JACKSON PRODUCTS: Lenders & Bondholders to Forbear Until Oct. 20 LARRY'S STANDARD: Taps Prime Locations as Real Estate Consultant LEAP WIRELESS: Court Okays Poorman's Appointment as Claims Agent LEVI STRAUSS: Names Pat House to Company's Board of Directors LNR PROPERTY: Will Be Paying Quarterly Cash Dividends on Aug. 20 MALDEN MILLS: Expecting to Emerge from Chapter 11 on August 26 MASSEY ENERGY: Closes Short-Term Credit Facilities Refinancing METALS USA: Asks Court to Approve LTV-Contrarian Stipulation MINERS FUEL CO.: Voluntary Chapter 11 Case Summary MIRANT CORP: Completes Sale of Canadian Contracts to Cargill MOHEGAN TRIBAL: Extends Tender Offer for 8.75% Notes to Tuesday MTS/TOWER RECORDS: Sr. Lenders Agree to Extend Forbearance Pacts MUSEUM CO: Taps Great American to Conduct GOB Sales at 48 Stores NORTHWESTERN CAPITAL: S&P Downgrades Preferreds Ratings to D NTELOS INC: Virginia Court Approves Disclosure Statement NUWAY MEDICAL: Receives Second Installment of Augustine II Loan ON SEMICONDUCTOR: Will Publish Second-Quarter Results on July 30 ORBITAL SCIENCES: Fitch Withdraws Lower-B Level Debt Ratings OWENS-ILLINOIS: CEO Joseph Lemieux Plans to Retire by Year-End PAC-WEST: Settles $6.8 Mill. Claims and Disputes with SBC Calif. PACIFIC SAFETY: Arranges $4.5 Million Debt Financing with RoyNat PACKAGED ICE: Launches Tender Offer for 9-3/4% Senior Notes PERLE SYSTEMS: Arranges New Debt Arrangement with Royal Capital PG&E CORP: Completes Private Placement of Senior Secured Notes PHARMCHEM INC: Completes New $3.5 Mill. Credit Pact Transaction PHOENIX GROUP: Files Amended Plan and Disclosure Statement PINNACLE ENTERTAINMENT: Names Sarah Lee Tucker VP of Operations POLYPHALT INC: Files Notice of Intention to Make BIA Proposal PRIME HOSPITALITY: Glen Rock Unit Defaults on Security Deposits PRIME HOSPITALITY: Ratings on Watch After Failure to Pay Rent REDDY ICE GROUP: S&P Ups Corporate Credit Rating to B+ from B- SAFETY-KLEEN: Wants Nod for Heritage Environmental Settlement SOLUTIA INC: Provides Q2 Financial Results Outlook Update STARTECH ENVIRONMENTAL: Nasdaq Delists Shares Effective July 3 TEXAS PETROCHEMICALS: Misses Interest Payment on 11-1/8% Notes TEXAS PETROCHEMICALS: Interest Nonpayment Spurs S&P's D Rating UNITED AIRLINES: Amends United Express Pact with Air Wisconsin UNITED AIRLINES: Improves Ranking in Operational Excellence UNITED AIRLINES: Earns Nod to Expand McKinsey's Engagement UNOVA: Fitch Ups Sr. Unsec. Rating to B- over Strong Performance VENTAS INC: Will Publish Second-Quarter Results on July 23, 2003 VICEROY RESOURCE: Completes Plan Arrangement & Private Placement WACKENHUT CORRECTIONS: Closes Sale of UK Joint Venture Interest WARNACO GROUP: Judge Bohanon Closes All Subsidiaries' Cases WATERLINK: Seeks Nod to Use Cash Collateral to Finance Operation WCI STEEL: Misses Interest Payment on 10% Senior Secured Notes WEIRTON STEEL: Court Approves McGuirewoods as Bankruptcy Counsel WESTPOINT STEVENS: Fitch Withdraws D Rating on $1-Bil. Sr Notes WORLDCOM INC: Reaches Amended Settlement Agreement with SEC WORLDCOM INC: Shareholder Boycott Threat Passes 15,000 Mark * John Patrick Oroho Esq., Joins Porzio, Bromberg as Principal * BOOK REVIEW: The Money Wars: The Rise and Fall of the Great Buyout Boom of the 1980s ********* ACTERNA CORP: Wants More Time to Make Lease-Related Decisions ------------------------------------------------------------- According to Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, despite Acterna Corp., and its debtor-affiliates' efforts to identify additional real property leases for rejection, the Debtors have been unable to fully analyze those, which may be targeted for rejection. The Debtors anticipate that it will take a considerable amount of time to perform an analysis. Mr. Basta explains that given the importance of the Leases to the Debtors' continued operations, it would be "virtually impossible for the Debtors to make a reasonable and informed decision as to whether to assume or reject the Leases within the statutory 60-day period under Section 365(d)(4) of the Bankruptcy Code." Section 365(d)(4) of the Bankruptcy Code provides that: "[I]f the trustee does not assume or reject an unexpired lease of nonresidential real property under which the debtor is a lessee within 60 days after the date of the order for the relief, or within such additional time as the court, for cause, within such 60-day period, fixes, then such lease is deemed rejected, and the trustee shall immediately surrender such nonresidential real property to the lessor." Mr. Basta relates that the Unexpired Leases cover a wide range of property interests, including corporate headquarters, office space, warehouses, and other manufacturing facilities. Each of these interests, although varying in their purpose, is potentially important to the continuation of the Debtors' operations, Mr. Basta emphasizes. Thus, the Debtors ask the Court to extend the deadline within which they may assume or reject the Leases to the earlier of November 3, 2003 or the effective date of the Debtors' reorganization plan. Mr. Basta states that the extension would give the Debtors sufficient opportunity to make reasoned and informed decisions regarding whether to assume or assign or reject unexpired Leases. The Debtors assure the Court that the extension would not prejudice the affected lessors. The size of these Chapter 11 cases justifies the extension of the lease decision deadline. Mr. Basta points out that the cases involve numerous Debtors, thousands of creditors, and over $1,000,000,000 in liabilities. As a consequence of the multitude of tasks the Debtors have been required to address at the inception of these cases, the Debtors have simply not had an opportunity to complete the time-consuming task of reviewing and evaluating all of the Unexpired Leases. Because the Debtors still have to fully appraise each lease's value to their plan of reorganization, the 60 days allotted by Section 365(d)(4) simply is inadequate in light of these circumstances. To recall, on May 29, 2003, the Court authorized the Debtors to reject 19 leases as well as nine unexpired subleases of non- residential real property. The Debtors are currently parties to 20 more unexpired non-residential real property leases. (Acterna Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADVANCED LIGHTING: Court OKs New DIP Financing with Wells Fargo --------------------------------------------------------------- Advanced Lighting Technologies, Inc. (OTCBB:ADLTQ) announced that the US Bankruptcy Court for the Northern District of Illinois, Eastern Division, approved the company's new DIP financing agreement with Wells Fargo Foothill, which has now replaced the prior DIP credit facility. The replacement facility allows the Debtors to complete the filings related to the amended plan and to seek approval of the amended plan without the requirement in the prior DIP credit facility to enter into agreements to sell assets of the Company prior to reorganization. The case has been assigned to the Honorable Bankruptcy Judge Squires. Information regarding the filings in this case is available on the court's web site. ADLT's case is jointly administered under case No. 03-05255. ADLT is an innovation-driven designer, manufacturer and marketer of metal halide lighting products, including materials, system components, systems and equipment. ADLT and certain of its United States subsidiaries, including APL Engineered Materials, Inc., are currently operating as debtors-in-possession while the companies reorganize under Chapter 11 of the United States Bankruptcy Code. ADLT also develops, manufactures and markets passive optical telecommunications devices, components and equipment based on the optical coating technology of its wholly owned subsidiary, Deposition Sciences, Inc., which is not operating under protection of the Bankruptcy Code. Wells Fargo Foothill is a leading provider of senior secured financing to middle-market companies across the United States and Canada. It is part of Wells Fargo & Company (NYSE:WFC), a diversified financial services company with $370 billion in assets, providing banking, insurance, investments, mortgage and consumer finance from more than 5,800 stores and the Internet -- http://www.wellsfargo.com-- across North America and elsewhere internationally. For more information, visit Wells Fargo Foothill on the Internet at http://www.wffoothill.com AEROSTRUCTURES: Ratings Withdrawn After Acquisition by Vought ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'BB-' corporate credit rating, on Aerostructures Corp. and removed the ratings from CreditWatch, where they were placed on May 16, 2003. The company has been acquired by Vought Aircraft Industries Inc. (B+/Stable/--) and all of its outstanding rated debt has been repaid. AHOLD: Completes Internal Forensic Accounting Investigations ------------------------------------------------------------ Ahold (NYSE:AHO) announced that all internal forensic accounting investigations at Ahold, its subsidiaries and its joint ventures have been completed. The forensic accountants have identified, for review by Ahold management and the Audit Committee of the Supervisory Board, an approximately additional Euro 73 million of intentional accounting irregularities related to improper purchase accounting. Ahold may be required to reduce pre-tax earnings by this additional amount. The Euro 73 million excludes the pre-tax earnings reductions of an expected USD 856 million (compared to approximately USD 880 million previously announced) related to U.S. Foodservice and approximately USD 29 million principally related to Tops Markets in the U.S., also previously announced. This amount also excludes a reduction of pre-tax earnings of approximately Euro 8 million related to Disco S.A. The investigation at Disco has identified questionable transactions, including inaccurate documentation, and control weaknesses. The investigations confirmed or identified for management review various other accounting issues and internal control weaknesses. Ahold management and the Audit Committee are studying the findings to assess whether additional adjustments may be required to correct any accounting errors, and to identify needed improvements in controls and procedures at relevant companies. In total, all of the forensic accounting investigations found approximately Euro 970 million of accounting irregularities that may require adjustments in the year 2002 and restatements in one or more prior years. A task force reporting to the Audit Committee has been created consisting of members of Ahold management and outside advisors. Ahold's Internal Audit function, reporting directly to the CEO as well as to the Audit Committee, will play a central role in this task force. The task force will address the various accounting practices and internal control weaknesses raised, or confirmed, as a result of the investigations, and will oversee implementation of required changes. It is expected that these required changes will be implemented by the end of 2003. In addition, Ahold has made, or is in the process of making, personnel changes involving U.S. Foodservice, Disco, Tops and the Ahold parent company. As previously announced, although the forensic accounting work at U.S. Foodservice has been completed, the internal legal investigation at U.S. Foodservice is continuing. With respect to the status of the Ahold 2002 audit, Ahold announced that its auditors at all of the company's operations have resumed audit work. Management is working closely with its auditors to expedite completion of the audit of Ahold's 2002 consolidated financial statements. Under its Euro 2.65 billion credit facility, Ahold is required to deliver its audited consolidated 2002 financial statements by August 15, 2003 to the syndicate of the banks involved. Ahold is filing a Notification of Late Filing with the U.S. Securities and Exchange Commission relating to its Form 20-F for the fiscal year ended December 29, 2002. Ahold's Form 20-F would otherwise have been due on June 30, 2003. Ahold currently expects to file its Annual Report on Form 20-F for fiscal year 2002 as soon as possible after completion of the audit of its fiscal year 2002 consolidated financial statements. * * * As previously reported, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Netherlands- based food retailer and food service distributor Ahold Koninklijke N.V. to 'BB-' from 'BB+', following the announcement by the group that accounting irregularities at its U.S. Foodservice arm were materially larger than expected. In addition, the senior unsecured debt ratings on Ahold were lowered to 'B+' from 'BB+', reflecting structural subordination. At the same time, Standard & Poor's affirmed its 'B' short-term rating on the group. AIR CANADA: Air Norterra Presses for Compliance with Agreement -------------------------------------------------------------- By an agreement dated August 31, 1998, Air NorTerra Inc., purchased from Canadian Airlines International Ltd. a business consisting of existing scheduled and charter airline passenger and cargo service carried on by CAIL and Canadian Regional Airlines (1988) Ltd. Air NorTerra bought the business as a going concern under the trade name and style "Canadian North", which operates into and within and from the boundaries of the Northwest Territories. Air NorTerra also purchased "Canadian Regional", which covers flights to and from Fort Smith and Hay River in the Northwest Territories. Air NorTerra also provides air services to Nunavut. Under the Purchase Agreement, Air NorTerra and CAIL further entered into subleases for three B737-200 aircraft. The parties later entered into leases on two more B737-200 aircraft and an operating lease and an aircraft lease agreement for two Fokker F28 MK1000 aircraft. At the same time, Air NorTerra inked a Commercial Agreement to generally coordinate its airline services and optimize its operations with CAIL's. The parties also signed an Aircraft Engine and Maintenance Services Agreement on September 1, 1998 wherein CAIL agreed to maintain Air NorTerra's Boeing 737 aircraft fleet. The Commercial Agreement was later replaced by an Aircraft and Engine Maintenance Services Agreement on November 16, 2001 between Air NorTerra and Air Canada. The term of the Commercial Agreement ends on the earlier of August 25, 2003 or the date on which the subleases of certain Boeing 737 Aircraft from Air Canada to Air NorTerra terminate or are amended to revise the return conditions, taking into account that Air Canada is no longer providing maintenance on an Hours Flown basis. To date, the subleases remain in effect and the return conditions have not been revised. Terrence M. Warner, Esq., at Miller Thomson LLP, in Edmonton, Alberta, tells Mr. Justice Farley that Air Canada breached the Commercial Agreement and an Undertaking given by it to the Government of Canada. That Agreement provides that Air Canada will continue providing services to Air NorTerra after January 1, 2001. This happened after the amalgamation of Air Canada with 3847233 Canada Ltd., Canada Airlines International Ltd., Lignes Aeriennes Canadien International Ltee and 3846091 Canada Ltd. The breach, Mr. Warner says, gives rise to a damage claim on Air NorTerra's part. Consequently, Air Canada and Air NorTerra resolved their dispute. In a settlement agreement, Air Canada agreed to provide to NorTerra a value equal to $11,400,000 and enter into a new commercial agreement. The value will comprise cash payments, provision of certain credits and amendment to certain agreements. However, in the context of its restructuring, Air Canada has repudiated the Settlement Agreement and the Commercial Agreement. It has also threatened to reject the Maintenance Agreements and withdraw various services, including insurance and maintenance services. By this motion, Air NorTerra asks the Court to declare that Air Canada cannot unilaterally withdraw its services without further Court order and without proving that there is some commercial benefit to be derived that would assist in its restructuring efforts. Air NorTerra believes that Air Canada remains obligated to perform its end pursuant to the Settlement Agreement and that Air Canada's debts are unaffected by the repudiation of the Settlement Agreement. Air NorTerra represents that it will suffer millions of dollars of losses as a result of the repudiation of the Settlement Agreement and the Commercial Agreement. It will also suffer irreparable harm as a result of the loss of the right to use the name "Canadian North". (Air Canada Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALLIANCE GAMING: Inks Definitive Pacts to Sell Non-Core Assets -------------------------------------------------------------- Alliance Gaming Corp. (NYSE: AGI) has signed definitive agreements for the sale of its entire gaming route operations, consisting of United Coin Machine Co., and Video Services, Inc., as well as its Bally Wulff subsidiary. The sale of these businesses will allow Alliance Gaming Corp., to continue to focus its efforts on its core asset, Bally Gaming and Systems. Additional details for each transaction are summarized as follows: Route Division: -- United Coin Machine Company, a wholly-owned subsidiary of Alliance, is a Nevada based route operator with offices in Las Vegas and Reno, and operates more than 8,000 gaming devices. Alliance has entered into a definitive agreement to sell 100 percent of the stock in UCMC to privately-held Century Gaming, Inc., headquartered in Missoula, Mont. Century currently has route operations throughout Montana. The total consideration to be received is based on a multiple of 12 months trailing EBITDA at the time of closing (as defined in the sale agreement). The total consideration is currently estimated at $127 million, which consists of $103 million in cash, $18 million of 10% Pay- in-Kind Preferred Stock and assumption of approximately $6 million of liabilities. The closing of this transaction is subject to customary closing conditions, including that the business achieve a minimum EBITDA of $21 million during a defined period of time prior to closing and that the buyer obtain the necessary gaming licenses. The transaction is expected to close in early calendar 2004. -- Video Services, Inc., is a New Orleans-based route operator of which Alliance, through a wholly-owned subsidiary, owns 49 percent. VSI operates 710 gaming devices in 9 off-track betting facilities throughout the New Orleans extended metro area. Alliance and the owners of the remaining stock have entered into a definitive agreement to sell 100 percent of VSI's stock to Gentilly Gaming, LLC. The all- cash transaction is subject to customary closing conditions and is expected to close on June 30, 2004. Concurrent with the sale agreement, VSI has entered into a 12-month operating agreement extension under terms and conditions that are the same as the existing agreement with the Fair Grounds Corporation. Wall Machines: -- Bally Wulff, a wholly-owned subsidiary of Alliance based in Berlin, Germany, manufactures German wall machines. Alliance has entered into a definitive agreement to sell 100 percent of the stock of Bally Wulff to a private equity investment group advised by Orlando Management GmbH in a $16.5 million all-cash transaction. The sale is expected to close on or before July 31, 2003. The Company will take a charge in the quarter ending June 30, 2003, to reflect the lower valuation of this business as a result of the sale. As a result of the Company's adoption of a formal plan of disposition for each of these businesses, they will be treated as "discontinued operations" in accordance with generally accepted accounting principles (GAAP) both prospectively and retroactively, as of June 30, 2003. Discontinued operations are classified as assets held for sale, and therefore annual depreciation and amortization expense of approximately $6.8 million ($0.13 net of tax) will no longer be recognized for the fiscal year that begins July 1, 2003. Refinancing The Company is actively reviewing proposals for refinancing of both its $190 million Senior Term Credit facility and its $150 million 10 percent Subordinated Notes due 2007 and callable as of August 1, 2003 at a price of 103.3% of the principal amount. Such refinancing, should it be completed, would occur in the first quarter of fiscal 2004, at which time the Company would record a pre-tax charge of approximately $12 million ($0.16 net of tax) to write-off previously capitalized debt issue costs and early retirement bond premium. Updated Guidance for Fiscal Year 2003 and 2004 For fiscal year 2003, the Company expects to report EPS of $0.68 which includes a $0.20 charge for the write down of Bally Wulff. Excluding the write down EPS is expected to be at least $0.88 for fiscal year 2003, unchanged from prior guidance. The 2003 expected EPS will consist of approximately $0.80 from the continuing operations (Bally Gaming and Systems business unit and Casinos), $0.08 from the discontinued operations (Routes and Bally Wulff), and $(0.20) for the write down of Bally Wulff. The Company has updated its fiscal year 2004 guidance to reflect the anticipated charge for the refinancing which is expected to be completed in September 2003 quarter. Including the $0.16 charge to write off the previously capitalized debt issue costs and the early retirement bond premium, EPS for fiscal 2004 is expected to be at least $.94 for continuing operations (Bally Gaming and Systems and Casinos), or $1.10 excluding the refinancing charge. Discontinued operations (Routes) are expected to contribute additional EPS of approximately $0.23. This guidance assumes that the UCMC sale is completed in the March 2004 quarter, the gain from which is estimated to be $0.65 per share, which is not included in the guidance shown above. Alliance Gaming (S&P/BB- Corporate Credit Rating/Stable) is a diversified gaming company with headquarters in Las Vegas. The Company is engaged in the design, manufacture, distribution and operation of advanced gaming devices and systems worldwide, is currently the nation's largest gaming machine route operator, and operates two casinos. Additional information about the company can be found on the Alliance Gaming Web site at http://www.alliancegaming.com ALPHASTAR INSURANCE: Fails to Meet Nasdaq Listing Requirements -------------------------------------------------------------- AlphaStar Insurance Group Limited (Nasdaq: ASIGE) reported on July 1st that the Nasdaq Listing Qualifications Department has notified the Company that its securities will be delisted unless it is able to demonstrate by July 11, 2003 the Company's full compliance with the requirements for continued listing on The Nasdaq Small Cap Market. The Company had previously reported that it had not timely filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2002 or its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003. The Company therefore is not in compliance with the filing requirements for continued listing set forth in NASD Marketplace Rule 4310(C)(14), which requires that Nasdaq issuers timely file their periodic reports in compliance with the reporting obligations under the federal securities laws. The Company indicated that its Form 10-K remains in the final stages of review by the Company's auditors, and that the Company remains optimistic that the auditors can complete their review in time to meet the NASD deadline. The Company further anticipates that its Form 10-Q for the first quarter of 2003 also should be able to be filed prior to the deadline. The Company continues to believe that neither the 10-K nor the 10-Q will reflect any restatement of prior results (except to reflect certain discontinued operations). As of the opening of business on April 22, 2002, the Company's trading symbol, "ASIG", was amended to include the fifth character "E" to denote the Company's filing delinquency. AlphaStar Insurance Group Limited is a Bermuda-domiciled holding company with subsidiaries in the United States and United Kingdom. Among its subsidiaries are a property-casualty insurance company, managing general agencies, and reinsurance intermediaries. AlphaStar Insurance's September 30, 2002 balance sheet shows that the company's accumulated deficit has widened to about $38 million, while total shareholders' equity stumbled to about $14 million, from close to $36 million recorded at Dec. 31, 2001. AMERCO: Bringing-In BDO Seidman to Perform Accounting Services -------------------------------------------------------------- Pursuant to Sections 327(c) and 329 of the Bankruptcy Code, Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure, AMERCO asks the Court to authorize the employment and retention of BDO Seidman LLP as its accountants. According to Bruce T. Beesley, Esq., at Beesley, Peck & Matteoni, Ltd., BDO Seidman is a nationally recognized accounting and consulting firm. BDO Seidman has a broad-based practice, including expertise in providing assurance, tax, financial advisory and consulting services to private and publicly traded businesses. Moreover, Bradly W. Schrupp, a partner in BOD Seidman, informs Judge Zive that BDO Seidman has assembled a highly qualified team of accountants to service AMERCO as accountants during its reorganized efforts. On August 9, 2002, AMERCO retained BDO Seidman to represent it as its accountants in connection with the audit of the March 31, 2003 fiscal year financial statements. Moreover, as of May 8, 2003, AMERCO retained BDO Seidman to represent it as accountants in connection with its re-audit and restatement of prior period financial statements, pursuant to the Engagements Agreement. As a result of its current representation of AMERCO, BDO Seidman is familiar with AMERCO and its business, its capital structure, financial documents and other material agreements. Also, BDO Seidman is familiar with AMERCO's business affairs and many of the complex accounting issues that may arise in the context of the re-audit and restatement engagement. BDO Seidman agrees to render these services: (a) Complete the audit of AMERCO's financial statements for the fiscal year ended March 31, 2003; and (b) Complete the re-audit of AMERCO's financial statements for fiscal years ended March 31, 2002 and 2001. In exchange for the services to be rendered, BDO Seidman will charge AMERCO on these hourly rates: Partners $450 - 825 Associates 110 - 350 Administrative staff 65 BDO Seidman will also seek the reimbursement of out-of-pocket expenses, including, among other things, long distance telephone calls, facsimiles, photocopying, postage and package delivery charges, messengers, court fees, transcript fees, travel expenses, working meals and computer-assisted research. In accordance with the prepetition engagement, BDO Seidman requested and received a $200,000 retainer. BDO Seidman will continue hold the Retainer in trust during the pendency of the audit and re-audit and restatement engagement and this Chapter 11 case, provided that the estate pays all fees and expenses incurred once the Court approves the payment. Aside from the Retainer, within one year prior to the Petition Date, BDO Seidman received $2,649,496 on account of its prepetition services to AMERCO. According to Mr. Schrupp, BDO Seidman does not hold or represent an interest adverse to AMERCO's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, with respect to matters for which it is to be retained. In addition, BDO Seidman's professionals do not have any connection with AMERCO or its affiliates, its creditors, its estate, any U.S. District Judge or Bankruptcy Judge for the District of Nevada, the U.S. Trustee or any person employed in the Office of the U.S. Trustee for Region 17, or any other party- in-interest, or their respective attorneys and accountants. * * * In accordance with Sections 327(a) and 329 of the Bankruptcy Code, the Court allows AMERCO, on an interim basis, to employ BDO Seidman as its accountants as of June 20, 2003. If no objections are filed and served by the objection deadline, the Court may enter the Final Order without further notice. (AMERCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392- 0900) AMERICAN STONE: Seeks Replacement to Term Loan & Credit Facility ---------------------------------------------------------------- American Stone Industries, Inc. (AMST.OB), a supplier of building stone products, is in discussions with several Cleveland-area banks on a new term loan and revolving credit facility. The Company said the primary holder of its existing term loan and credit facility has requested immediate payment of the balance due. The bank had earlier granted a temporary waiver for certain covenants of the loan agreements between the bank and American Stone Corporation, a wholly owned subsidiary of the Company. Although the liquid assets of the Company at the present time are significantly less than the current liabilities of the Company, the Company continues to believe that the value that can ultimately be realized from the Company's assets significantly exceeds the Company's liabilities. American Stone Industries, Inc. is a holding company that mines and sells stone predominantly for the building stone market through its wholly owned subsidiary, American Stone Corporation. American Stone Corporation owns and operates Cleveland Quarries in Amherst, Ohio, one of the world's largest sandstone quarries. The Company's stock is traded on the OTC Bulletin Board under the symbol AMST. The Company has experienced significant operating losses over the previous two years. Additionally, the Company has not been able to comply with its loan covenants at March 31, 2003 and, December 31, 2002, although they have obtained waivers from the bank. These matters raise substantial doubt about the Company's ability to continue as a going concern. ANTARES PHARMA: Continuing Initiatives to Deliver Business Plan --------------------------------------------------------------- Antares Pharma, Inc. (OTC Bulletin Board: ANTR) said it was continuing its program to deliver on its business plan as articulated prior to the July 1 transfer of its shares from the Nasdaq SmallCap Market to the OTC Bulletin Board. Specifically, this includes a goal to close on two significant business transactions for licenses to its technology before year- end and the intent to secure sufficient financing to enable the Company to achieve short-term plans. Dr. Roger G. Harrison, Antares Pharma's Chief Executive Officer and President, indicated, "While the delisting of our securities from the Nasdaq SmallCap Market is a disappointment, this action does not change our business plans, the strengths of our technologies or the key support of certain major investors. We continue to look forward to a positive future for ourselves and our shareholders." Antares Pharma develops pharmaceutical delivery systems, including needle- free and mini-needle injector systems and transdermal gel technologies. These delivery systems are designed to improve both the efficiency of drug therapies and the patient's quality of life. The Company currently distributes its needle-free injector systems in more than 20 countries. In addition, Antares Pharma conducts research and development with transdermal gel products and currently has several products in clinical evaluation with partners in the US and Europe. The Company is also conducting ongoing research to create new products that combine various elements of the Company's technology portfolio. Antares Pharma has corporate headquarters in Exton, Pennsylvania, with manufacturing and research facilities in Minneapolis, Minnesota, and research facilities in Basel, Switzerland. Antares Pharma's March 31, 2003 balance sheet shows a working capital deficit of about $4 million and a total shareholders' equity deficit of about $3 million. ATA AIRLINES: June Revenue Passenger Miles Increase 22.4% --------------------------------------------------------- ATA Airlines, Inc., the principal subsidiary of ATA Holdings Corp. (Nasdaq:ATAH), reported that June scheduled service traffic, measured in revenue passenger miles (RPMs), increased 22.4 percent on 23.3 percent more capacity, measured in available seat miles (ASMs), compared to 2002. ATA's June scheduled service passenger load factor decreased 0.6 points to 81.4 percent and passenger enplanements grew by 19.1 percent compared to 2002. ATA enplaned 987,213 scheduled service passengers in June and 5.1 million for the first half of 2003. ATA Holdings Corp. common stock trades on the NASDAQ Stock Market under the symbol "ATAH". As of June 30, 2003, ATA has a fleet of 31 Boeing 737-800's, 15 Boeing 757-200's, 11 Boeing 757-300's, and 8 Lockheed L1011's. Chicago Express Airlines, Inc., the wholly owned commuter airline based at Chicago-Midway Airport, operates 17 SAAB-340B's. ATA -- whose corporate credit is rated by Standard & Poor's at 'B-' -- is the nation's 10th largest passenger carrier, based on revenue passenger miles and operates significant scheduled services from Chicago-Midway, Indianapolis, St. Petersburg, Fla. and San Francisco to over 40 business and vacation destinations. Stock of the Company's parent company, ATA Holdings Corp. (formerly known as Amtran, Inc.), is traded on the Nasdaq stock market under the symbol "ATAH." For more information about the Company, visit the Web site at http://www.ata.com AURORA FOODS: S&P Drops Corporate Credit Rating to D from CCC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Aurora Foods Inc., to 'D' from 'CCC'. The ratings on the company's senior secured debt rating have been lowered to 'CC' from 'CCC', and the subordinated notes rating has been lowered to 'D' from 'CC'. "The rating action follows St. Louis, Missouri-based Aurora Foods' failure to make the $8.8 million interest payment on its 8.75% senior subordinated notes due July 1, 2003," said Standard & Poor's credit analyst Ron Neysmith. "Moreover, the company has announced that it intends to file a pre-negotiated bankruptcy reorganization plan and has started negotiations with its current bank lenders and bondholders." The senior secured rating will be lowered to 'D' upon the firm's filing for bankruptcy. The company has an agreement in principle with J.W. Childs Associates for an investment of $200 million for a 65.6% equity investment in the reorganized company. Aurora is a producer and marketer of branded food items, including Duncan Hines baking mixes, Log Cabin and Mrs. Butterworth table syrups, and Lenders bagels. The company also has positions in frozen pancakes, waffles, and pizza. BALLY TOTAL: Completes Sr. Notes Offering & $90 Million Revolver ---------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE:BFT) completed its offering of $200 million in aggregate principal amount of 10-1/2% Senior Notes due 2011 (S&P/B/Stable) in a offering under Rule 144A and Regulation S under the Securities Act of 1933, as amended. Additionally, the Company announced that, concurrent with the closing of the Senior Notes Offering, it has entered into a $90 million Senior Secured Revolving Credit Facility due 2008 (S&P/B+/Stable). The Company also announced that it has completed the refinancing of $100 million of its outstanding $155 million Securitization Series 2001-1, which was scheduled to start amortizing in December 2003. The refinancing extends the maturity of $100 million of the Securitization Series to July 2005, and requires that the remaining balance begin amortizing in October 2003. Bally Total Fitness (S&P/B+ Corporate Credit Rating/Stable) is the largest and only nationwide, commercial operator of fitness centers, with approximately four million members and nearly 420 facilities located in 29 states, Canada, Asia and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. The Senior Notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws. BMC INDUSTRIES: Receives Bank Waiver of Loan Covenant Violations ---------------------------------------------------------------- BMC Industries, Inc. (NYSE:BMM) has received a two-week waiver from its banks regarding certain covenants under its credit facility, with which the company was non-compliant as of June 30. The waiver extends the time period for the company to make certain scheduled principal payments and fees. Discussions continue between BMC, its banks and the company's advisors, regarding a longer-term resolution of the situation. BMC Industries, founded in 1907, comprises two business segments: Buckbee-Mears and Optical Products. The Buckbee-Mears group offers a range of services and manufacturing capabilities to meet the most demanding precision metal manufacturing needs. The group is also the only North American manufacturer of aperture masks, a key component in color television picture tubes. The Optical Products group, operating under the Vision-Ease Lens trade name, is a leading designer, manufacturer and distributor of polycarbonate, glass and plastic eyewear lenses. Vision-Ease Lens is a technology and a market share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet (UV) filtering and impact resistant characteristics. BMC Industries, Inc. is listed on the New York Stock Exchange under the ticker symbol "BMM." For more information about BMC Industries, Inc., visit the company's Web site at http://www.bmcind.com BOOTS & COOTS: Reaches Pact with Prudential to Cure Loan Default ---------------------------------------------------------------- Boots & Coots International Well Control, Inc. (Amex: WEL), has concluded negotiations with Prudential Insurance Company of America to restructure its obligations that will cure its current loan defaults. As previously disclosed, the Company has been in default under its subordinated note agreement with Prudential since March 31, 2002. As part of the agreement, Boots & Coots agreed to issue approximately $2.4 million of new subordinated notes to Prudential representing past due interest, with the option through December 31, 2003, to pay in kind the interest on the subordinated notes accruing through that period. The Company further agreed to accelerate the optional conversion date for approximately 33% of the Company's outstanding Series E Preferred Stock, all of which are held by Prudential, to January 1, 2004, from the original optional conversion date of December 27, 2005. In exchange, Prudential has agreed to waive the Company's past covenant defaults that required it to maintain certain debt to earnings ratios, and to waive compliance with all such covenants through December 31, 2003. Prudential has also agreed to defer the requirement that the Company pay cash dividends on its Series E and G preferred stock until March 31, 2004. As a result of this debt restructuring initiative, the Company is now current in its debt obligations to Prudential and is in full compliance with all loan covenants related to Prudential. The Company's Chief Executive Officer Jerry Winchester said, "Reaching this agreement with Prudential is a key accomplishment in Boots & Coots' objective to restructure its debt. We will continue our efforts toward simplifying the Company's financial structure. The management team at Boots & Coots remains committed to this objective while improving our operating performance." Boots & Coots International Well Control, Inc., Houston, Texas, is a global emergency response company that specializes, through its Well Control unit, as an integrated, full-service, emergency- response company with the in-house ability to provide its expanded full-service prevention and response capabilities to the global needs of the oil and gas and petrochemical industries, including, but not limited to, oil and gas well blowouts and well fires, as well as providing a complete menu of non-critical well control services. Additionally, Boots & Coots' WELLSUREr program offers oil and gas exploration and production companies, through retail insurance brokers, a combination of traditional well control and blowout insurance with post-event response, as well as preventative services. BUDGET GROUP: Court Approves Miller Ellin as Tax Accountants ------------------------------------------------------------ U.S. Bankruptcy Court Judge Walrath approves in part the employment of Miller, Ellin & Company, LLP as Budget Group Inc., and its debtor-affiliates' tax accountant and tax claims and reconciliation advisers nunc pro tunc to April 1, 2003. However, Judge Walrath disqualifies Jeffrey E. Olsberg from being employed by the Debtors or by Miller to perform services to the Debtors pursuant to Sections 327(1) and 101(14)(D) of the Bankruptcy Code. * * * As previously reported, the Debtors asked the Court for permission to employ and retain the accounting firm of Miller, Ellin & Company, LLP and its consultant Jeffrey E. Olsberg as their tax accountants and tax claims and reconciliation advisors, nunc pro tunc to April 1, 2003. The Retained Professionals will render tax accounting and claims reconciliation services as needed throughout the course of these Chapter 11 cases. The Retained Professionals will provide the Services as the Retained Professionals and the Debtors will deem appropriate and necessary in the course of these Chapter 11 cases, including, but not limited to: 1. assistance in the preparation of local, state and federal tax returns required by the jurisdictions in which the Debtors operate; 2. assistance in the analysis and reconciliation of the claims made by local, state and federal tax authorities on the Debtors' estates; 3. assistance with the diligence activities required in connection with the various tax claims made on the Debtors' estates; 4. providing testimony, if needed, in the defense and reconciliation of the various tax claims made on the Debtors' estates; 5. managing and providing advisory services regarding franchise, income, sales, personal property, real property, payroll, excise and other miscellaneous tax examinations; and 6. providing other taxation advisory services as required by the Debtors and their legal counsel. Subject to the Court's approval, the Retained Professionals will charge the Debtors for their services on an hourly basis in accordance with its ordinary and customary rates for matters of this type in effect on the date the services are rendered, and for reimbursement of all costs and expenses incurred in connection with these cases. The Retained Professionals' billing rates currently range from: Staff Hourly Rate ----- ----------- Partners $250 - 400 Accounting Manager $250 - 400 Tax managers $250 - 400 Tax and accounting staff $55 - 190 Clerical staff $55 - 190 (Budget Group Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON INDUSTRIES: Wants Nod to Hire Hilco as Appraisers ------------------------------------------------------------ According to John D. Englar, Senior Vice President, Corporate Development and Law of Burlington Industries, Inc., the Debtors are aggressively pursuing the sale of substantially all of their capital stock or assets through a Court-approved auction process. The Debtors currently intend to amend the plan of reorganization and related disclosure statement filed on February 11, 2003 to incorporate the results of the auction process. The auction process currently contemplates a final bid deadline of July 10, 2003 and an auction date of July 21, 2003. In line with this, potential bidders have requested appraisals of the company's assets to assist them in obtaining financing commitments from financial institutions to support their bids. The Debtors determined that it is in their best interests to accommodate the potential bidders' request and obtain appraisals of their assets for the potential bidders' use in the auction process. However, the Debtors believe that it is essential that these appraisals be obtained as soon as reasonably practical and not delay the auction process. Accordingly, the Debtors approached the Creditors' Committee and the Prepetition Lenders regarding the proposed employment of Hilco Appraisal Services, LLC to perform the appraisals. Both the Creditors' Committee and the Prepetition Lenders do not object to Hilco's employment. Hilco agreed to commence work immediately, pending the Debtors' submission and the Court's approval of its employment, and to deliver the final appraisals by July 14, 2003. Thus, the Debtors seek to employ Hilco to provide appraisal and valuation services relating to their inventory, machinery and equipment and real estate in connection with the auction process. The parties entered into two engagement letters, dated June 13, 2003 and June 16, 2003. The Agreements describe the various appraisal services and valuation methods that Hilco anticipates performing for the Debtors and the terms and conditions of Hilco's proposed engagement by the Debtors. Pursuant to the Agreements, Hilco's provision of services to the Debtors is contingent upon the Court's approval of the Agreements' terms and conditions. Mr. Englar relates that Hilco is well suited to provide the Debtors with the Appraisal Services, given the short time frame in which the Debtors need to obtain the appraisals. Hilco has a widespread reputation as an experienced appraisal and valuation firm with national commercial experience and has provided similar services in a number of bankruptcies and out-of-court restructurings for assets similar to the Sale Assets. Moreover, because Hilco is a nationally known appraisal firm, its appraisals of the Sale Assets will be acceptable to potential bidders and their financial institutions in preparing the bidders' final bids. Particularly, Hilco is intimately familiar with the Debtors' businesses and these Chapter 11 cases and is in the best position to complete the appraisals the Debtors require, in an efficient and expeditious manner. One of Hilco's affiliates, Hilco Real Estate, currently performs real estate consulting and advisory services for the Debtors. The Debtors have a good working relationship with Hilco Real Estate and believe that Hilco may benefit from certain institutional knowledge Hilco Real Estate developed during its engagement in these Chapter 11 cases. Moreover, Hilco previously performed a prepetition appraisal of the Debtors' inventory at JPMorgan Chase Bank' request and, consequently, is familiar with the Debtors' businesses. Thus, Hilco is in the best position to provide the Appraisal Services without delay. In addition, JPMorgan has agreed to waive any actual or potential conflict arising from Hilco's prepetition appraisal services to it. Accordingly, and in light of the substantial amount of time that has lapsed since Hilco performed appraisal services for JPMorgan, the Debtors believe that Hilco is disinterested and qualified to perform the Appraisal Services for the Debtors. According to Mr. Englar, Hilco will provide these valuations: (a) For the Inventory, Hilco will provide to prospective lenders a projection of net and gross liquidation value and forced liquidation value scenario; (b) For the Equipment, Hilco will provide prospective lenders with a detailed net orderly liquidation value and net forced liquidation value appraisal for the assets in question; (c) For the Real Estate, Hilco will estimate the market value of the fee simple interest in eight of the Debtors' properties, as of the date of the inspection; and (d) For all the Sale Assets, Hilco will prepare reports outlining these valuations for the Debtors. In exchange for the services, Andy Dahlman, Vice President of Hilco Appraisal Services, LLC, informs Judge Newsome that Hilco intends to charge an all-in-fee for its professional services rendered to the Debtors on these terms: (a) Inventory and Equipment Hilco's fee for the Inventory and Equipment evaluation and appraisal will be $275,000 plus direct out-of-pocket costs consisting of travel and expenses. Of this amount, $137,000 is due on the Court's approval of Hilco' employment and the balance is due upon completion but prior to the delivery of the final report. (b) Real Estate Hilco's fee for the Real Estate evaluation and appraisal will be $72,000 plus direct out-of-pocket costs consisting of travel and expenses, which will be payable upon the report's completion and the Debtors' acceptance. Moreover, the Debtors seek approval of the Fee Structure pursuant to Section 328(a) of the Bankruptcy Code. Mr. Englar asserts that the Fee Structure appropriately reflects the nature of the services Hilco will provide and the fee structures typically utilized by leading appraisers when billing on a non-hourly basis. The Debtors believe that the Fee Structure is fair and reasonable in light of: (a) industry practice, (b) market rates charged for comparable services both in and out of the Chapter 11 context, (c) Hilco's substantial experience with respect to appraisal and valuation services, and (d) the nature and scope of work Hilco already performed prior to being retained in these cases. The Debtors further request the Court to allow, without the filing of an application, all of Hilco's fees and expenses. Pursuant to the Agreements, the Debtors will pay Hilco certain portions of the amounts owed when the Court approves its retention and the Agreements with the balance due on acceptance or completion of the appraisals and valuations. Because Hilco is seeking compensation on a fixed all-in-fee basis and because the Debtors are seeking approval of the Fee Structure under Section 328 of the Bankruptcy Code, the Debtors do not believe that it is necessary for Hilco to comply with the fee application process applicable to other professionals the Debtors retained in these Chapter 11 cases. Mr. Dahlman confirms that other than in connection with these cases, Hilco has no connection with the Debtors, their creditors, the U.S. Trustee or any other party with an actual or potential interest in these Chapter 11 cases or their attorneys or accountants. However, since the Debtors are a large enterprise with thousands of creditors and other relationships, Hilco is unable to state with certainty that every client relationship or other connection has been disclosed. In this regard, Mr. Dahlman assures the Court that if Hilco discovers additional information that requires disclosure, Hilco will file a supplemental disclosure with the Court. Hilco neither holds nor represents any interest adverse to the Debtors or their estates in the matters for which it is proposed to be employed. Hence, Mr. Dahlman concludes that Hilco is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code and as required in Section 327(a) of the Bankruptcy Code. Thus, the Debtors ask the Court to: (a) authorize the Debtors to employ Hilco as appraisers in these Chapter 11 cases, pursuant to Section 327(a), on the terms and conditions described in the Agreements, nunc pro tunc to June 13, 2003; (b) approve the Fee Structure, pursuant to Section 328(a); and (c) waive the fee application requirement for Hilco's fees and expenses. (Burlington Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) CANWEST GLOBAL: Australian Operation Posts 24% Q3 EBITDA Growth --------------------------------------------------------------- CanWest Global Communications Corp., reported that Network TEN, its television and out-of-home advertising operation in Australia, recorded a 24% growth in EBITDA to A$42.5 million and a record 12% growth in group revenues to A$ 186.5 million for the third quarter ended May 31, 2003. Television revenues for the quarter increased by 14% to A$168 million, generating EBITDA of A$41 million, a 21% improvement compared to the same quarter one year ago. Eye Corp, TEN's out-of-home advertising business, reported EBITDA of A$1.5 million for the quarter, a continuation of the positive trend, and a reasonable performance given the difficult market conditions for this sector and the substantial restructuring of Eye Corp during the past year. TEN's Executive Chairman, Nick Falloon, said the third quarter results were "outstanding" and reflected the gains TEN has achieved in Australian television revenue share, as well as growth in the overall advertising market in Australia in April and May. "TEN's revenue grew strongly across the three months, as it had in the first half of 2003. TEN has deserved a bigger slice of the advertising pie because of our ratings growth over the past two years, and clearly that is being achieved." Falloon added that "TEN has the best margins in our sector, and this quarterly performance again highlights how we maintain our focus on costs while building revenue." Leonard Asper, CanWest's President and Chief Executive Officer, said he was pleased with TEN's continued strong revenue and EBITDA performance, which show every sign of further progress as the television advertising market in Australia emerges from a period of slow growth. "TEN's increased revenue share, combined with a growing overall television advertising market, should contribute to further earnings growth in the fourth quarter and beyond," said Asper. "TEN has clearly developed a winning programming strategy, with prudent investment in a combination of Australian sports, Formula One racing, Australian drama and popular imported programming that should enable the network to remain number one in its core 16-39 demographic for the third consecutive year." CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.S and CGS.A) -- http://www.canwestglobal.com-- is an international media company. CanWest, Canada's largest publisher of daily newspapers, owns, operates and/or holds substantial interests in newspapers, conventional television, out-of-home advertising, specialty cable channels, Web sites and radio networks in Canada, New Zealand, Australia, Ireland and the United Kingdom. The Company's program production and distribution division operates in several countries throughout the world. * * * As previously reported, Standard & Poor's lowered its long-term corporate credit and senior secured debt ratings on multiplatform media company CanWest Media Inc., to 'B+' from 'BB-'. At the same time, the ratings on the company's senior subordinated notes were lowered to 'B-' from 'B'. The outlook is now stable. The downgrade reflects CanWest Media's continued relatively weak financial profile, which was not in line with the 'BB' rating category. CINCINNATI BELL: Prices $500 Million 7.25% Senior Unsec. Notes -------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) announced the pricing of $500 million aggregate principal amount of 7.25% Senior Unsecured Notes due 2013. The Notes will mature on July 15, 2013. Interest on the Notes will be payable semiannually on January 15 and July 15 of each year, beginning on January 15, 2004. The Notes were placed in a private placement transaction pursuant to Rule 144A under the Securities Act of 1933. 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. The Company intends to use the net proceeds from the Notes to repay debt outstanding under the company's term and revolving credit facilities and has received the necessary amendment from its lenders to its bank credit facility. The offering is expected to close on July 11, 2003. 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 As reported in Troubled Company Reporter's Thursday Edition, Standard & Poor's Ratings Services placed its ratings on Cincinnati, Ohio-based telecommunications service provider Cincinnati Bell Inc. (formerly known as Broadwing Inc.) and subsidiaries on CreditWatch with positive implications following the company's disclosure that it plans to issue approximately $300 million of senior unsecured notes. Proceeds will be used to repay debt outstanding under the company's term and revolving credit facilities. "The CreditWatch reflects the fact that proceeds from the new notes will enable Cincinnati Bell to significantly address a looming liquidity issue in 2006," said Standard & Poor's credit analyst Michael Tsao. Upon completion of the new notes issuance, Standard & Poor's expects to raise the corporate credit rating on Cincinnati Bell to 'B' from 'B-' and assign a positive outlook. The company had total debt of about $2.5 billion at March 31, 2003. CINCINNATI BELL: S&P Assigns Junk Rating to $300MM Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to Cincinnati Bell Inc.'s proposed $300 million senior notes due 2013, to be issued under Rule 144A with registration rights. Proceeds from the proposed unsecured notes will be used to permanently reduce bank debt at the Cincinnati, Ohio-based telecommunications service provider, formerly known as Broadwing Inc. Standard & Poor's also placed the ratings on Cincinnati Bell's outstanding debt on CreditWatch with positive implications. The $300 million proposed senior notes, however, are not on CreditWatch. "The CreditWatch listing reflects the fact that after the transaction, Cincinnati Bell will be able to address a looming liquidity issue in 2006," said credit analyst Michael M. Tsao. "Upon completion of the new issue, Standard & Poor's expects to raise the corporate credit rating on the company to 'B' from 'B-' and assign a positive outlook." Cincinnati Bell Inc. had total debt of about $2.5 billion at March 31, 2003. The company has a strong business risk profile. As the result of its recent disposition of the long-haul data business (Broadwing Communications Inc.), the company has strengthened its business risk profile by concentrating on its solid incumbent local exchange carrier (ILEC) business and its wireless operation. The ILEC business, run through operating subsidiary Cincinnati Bell Telephone Company (CBT), is well managed and less vulnerable to competition than regional Bell operating companies. The wireless operation enjoys strong market share and has industry-leading operating metrics. However, the ratings have been constrained by the company's substantial financial risk, a result of its debt incurred to finance the Broadwing Communications venture. After issuing the new notes, Cincinnati Bell will have significantly reduced a liquidity concern in 2006. Cincinnati Bell was originally forecasted to have sufficient liquidity to meet only about $300 million out of about $730 million due in 2006 (assuming that its annual free cash flow was between $200 million and $250 million and that its current debt amortization schedule would not change). The new notes will allow the company to reduce this potential funding gap to a far more manageable $130 million. The rating on the new notes reflects the significant amount of the obligations that rank ahead of it. These priority obligations include $270 million of debt at the CBT operating subsidiary, $100 million of trade-related claims and accrued liabilities, $50 million of senior secured notes, and an estimated $950 million of bank debt outstanding after the new notes issuance. Cincinnati Bell provides local phone, long distance, wireless, and digital subscriber line services in the greater Cincinnati metropolitan area. Its ILEC operation serves more than one million access lines and accounts for about 70% of total revenues. Its wireless operation, which has a 28% market share, accounts for about 22% of total revenues. CINCINNATI BELL: Fitch Assigns B+ Rating to $300MM Senior Notes --------------------------------------------------------------- Fitch Ratings has assigned a 'B+' rating to Cincinnati Bell, Inc.'s proposed $300 million senior notes due 2013. The proceeds from the proposed offering are expected to repay the company's senior secured bank facility. Fitch has affirmed the following ratings for Cincinnati Bell, Inc. and its subsidiaries: CBB's senior secured bank facility at 'BB-', CBB's 7.25% senior secured notes due 2023 at 'BB-', CBB's 9.00% convertible subordinated notes due 2009 at 'B', and CBB's 6.75% convertible preferred stock at 'B-'. Fitch has downgraded the rating assigned to CBB's $350 million 16% senior subordinated discount notes to 'B' from 'B+'. Fitch has also affirmed the 'BB+' rating of Cincinnati Bell Telephone's debentures and MTNs. Fitch has assigned a Stable Rating Outlook for CBB and CBT. The 'CC' rating of Broadwing Communications, Inc.'s 9.0% senior subordinated notes due 2008 and the 'C' rating on BCI's 12.5% junior exchangeable preferred stock remain on Rating Watch Negative. Fitch expects to withdraw the BCI ratings upon closure of the proposed exchange of these securities for Cincinnati Bell common stock. Fitch's rating of the company's senior notes considers the approximately $1.4 billion of debt that is senior to the senior notes including $270 million of CBT notes. The notching between the senior secured and senior unsecured rating is reflective of the quality of the collateral securing the bank facility. The notching of the subordinate discount notes and the convertible notes are indicative the potential recovery risks inherent at that level of the capital structure. The ratings incorporate the stability and expected free cash flow generation of the company's local exchange and wireless business and the improved financial flexibility reflected in the recently amended senior secured bank facility and the capital (including the senior notes) raised by the company. From Fitch's perspective the new senior notes debt will help ease the refinancing risk connected with the amortization of the company's bank facility during 2006. The issuance also demonstrates the company's ability to access public capital markets. While Cincinnati Bell Telephone and Cincinnati Bell wireless are market share leaders, Fitch's rating also reflects the company's high leverage relative to other independent LECs. The leverage was incurred to finance the acquisition and cash requirements of the company's recently sold broadband business. CBT has been successful in defending its market share in its service area. The company's access line losses and revenue growth have been impacted by second line losses and competition from CLECs but not to the extent experienced by the RBOCs. Stemming in part from the relative lack of competition in the Cincinnati markets, Fitch expects the ILEC to continue to generate EBITDA margins that are higher than the RBOC peer group. Fitch also anticipates that CBT will continue to contribute free cash flow to the CBB parent. Cincinnati Bell Wireless is the market share leader in the Cincinnati and Dayton BTAs and provides an avenue for CBT to offer a bundled service package. Free cash flows during 2003 could be impacted by additional capital expenditures required to upgrade its wireless network from TDMA to a GSM platform. The network upgrade is needed to remain competitive and to capture roaming revenue from AT&T subscribers utilizing CBW's network. Fitch still anticipates that CBW will generate free cash flow through the network upgrade process, however free cash flow could be affected by competitive and pricing pressures as subscriber growth slows. CMS ENERGY: Sells CMS Field Services Unit to Cantera Natural Gas ---------------------------------------------------------------- CMS Energy (NYSE: CMS) has completed the sale of its CMS Field Services subsidiary to Cantera Natural Gas, Inc. The proceeds were approximately $112.6 million cash and a $50 million face-value note, which is payable from 2005 through 2009 contingent on the financial performance of the Fort Union and Bighorn natural gas gathering systems in Wyoming. The net sale proceeds will be used to reduce debt. Ken Whipple, CMS Energy's chairman and chief executive officer, said the CMS Field Services sale and the $1.8 billion sale of the CMS Panhandle Companies in June keep the Company on track to reach its goal of realizing about $900 million in net proceeds from asset sales this year and reducing its debt. "The sale of CMS Field Services and other non-core assets helps us reduce debt and strengthen liquidity. The goal of our back-to- basics strategy is to be a smaller, stronger company with less business risk and more predictable earnings. The completion of the CMS Field Services sale boosts our efforts to increase our financial flexibility and focus on our core businesses," Whipple said. CMS Energy has completed or announced more than $3.8 billion in asset sales, including assumed debt, over the past 18 months. The Company is in the process of selling additional non-core assets. CMS Field Services provides gathering, compression, treating and processing services for natural gas and natural gas liquids. It has facilities in Oklahoma, Texas, Louisiana, and Wyoming. Cantera Natural Gas, Inc. is a Morgan Stanley Capital Partners portfolio company. CMS Energy (S&P, senior secured rated 'BB-', Rating Outlook Negative) is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. For more information on CMS Energy, visit http://www.cmsenergy.com CORRPRO COS.: Continues Talks to Amend & Extend Credit Facility --------------------------------------------------------------- Corrpro Companies, Inc. (Amex: CO), reported results for its fiscal year ended March 31, 2003. For the fiscal year ended March 31, 2003, the Company's revenues and net loss from continuing operations were $104.2 million and $2.8 million, respectively, versus revenues and net loss of $123.1 million and $12.3 million, respectively, in fiscal 2002. The gross profit margin improved nearly 230 basis points to 31.3% compared with 29.0% in the prior year. During fiscal 2003, the Company's continuing operations incurred charges of $3.4 million for expenses related to professional fees in connection with its loan agreements and its Australian Subsidiary, and severance costs related to its restructuring plan. In the prior-year period the Company incurred similar charges of $0.7 million related to professional fees in connection with its loan agreements and its Australian Subsidiary. The adoption of SFAS No. 142 "Goodwill and Other Intangible Assets" reduced amortization expense for continuing operations by approximately $0.8 million for the year ended March 31, 2003 as compared to the year ended March 31, 2002. The Company's net loss of $7.8 million from discontinued operations for the fiscal year ended March 31, 2003, is primarily due to charges totaling $6.5 million required to recognize the cumulative effect of currency translation adjustments, other comprehensive income amounts and charges for professional fees related to the discontinuance of the International and Other Operations segments. For fiscal 2002, the loss from discontinued operations was $5.9 million, which included charges of $2.5 million related to the loss on investment of Australian subsidiary and a gain of $2.1 million from the sales of assets. Additional financial information is contained in the Company's Annual Report on Form 10-K for the period ended March 31, 2003, which was filed on June 30, 2003. For the fiscal year ended March 31, 2003, the Company reported a consolidated net loss of $28.8 million. This compares to the prior year consolidated net loss of $18.2 million. The fiscal 2003 net loss includes a non-cash charge of $18.2 million related to the previously reported cumulative effect of change in accounting principle related to SFAS No. 142 "Goodwill and Other Intangible Assets". The Company is currently not in compliance with certain financial ratios required to be maintained under its senior debt agreements. In addition, the Company's revolving credit facility agreement is scheduled to expire on July 31, 2003. The Company is also required to make a $7.6 million principal payment on its Senior Notes, which mature in 2008, by July 31, 2003. The Company is having continuing discussions with its lenders regarding an amendment to extend the maturity date of the revolving credit facility beyond July 31, 2003, and plans to negotiate arrangements with its lenders to, among other things, waive the covenant violations under the senior debt, extend the maturity of the senior bank facility and defer the principal payments due on the Senior Notes. There can be no assurance, however, that any waiver or extension will be obtained on terms acceptable to the Company or at all. Failure to do so would have a material adverse effect on the Company's liquidity and financial condition and could result in the Company's inability to operate as a going concern, in which case the Company would consider available alternatives. Commenting on fiscal 2003 results, Joseph W. Rog, Chairman, Chief Executive Officer and President, said, "We are pleased with the progress we made in the execution of our business restructuring plan during the fiscal year and our operating costs have been significantly reduced. However, our financial situation has restricted our progress. Brown, Gibbons, Lang, & Company, the investment banking firm that successfully negotiated the sale of our Bass-Trigon Software and Rohrback Cosasco Systems business units, is assisting with our efforts to recapitalize our balance sheet and refinance our outstanding senior debt. This process is ongoing and we are currently having discussions with various parties in order to effect a refinancing transaction." Mr. Rog continued, "Our fiscal 2004 results to date are encouraging. Our revenues from continuing operations have been enhanced by growth in our coatings services as well as the impact of stronger pricing in the oil and gas markets. We have streamlined our cost structure and are now able to leverage more of our growth to the bottom line." Corrpro, headquartered in Medina, Ohio, with over 50 offices worldwide and whose December 31, 2002 balance sheet shows a working capital deficit of about $17 million, is the leading provider of corrosion control engineering services, systems and equipment to the infrastructure, environmental and energy markets around the world. Corrpro is the leading provider of cathodic protection systems and engineering services, as well as the leading supplier of corrosion protection services relating to coatings, pipeline integrity and reinforced concrete structures. Based in Santa Fe Springs, California, RCS is a worldwide leader in corrosion monitoring equipment and systems. RCS provides comprehensive lines of corrosion monitoring probes, mounting and access fittings for inserting and retrieving probes, instruments for collection, display and analysis of corrosion related data, and systems and software to remotely monitor corrosion. RECENT EVENTS The Company has retained an investment banking firm to assist in its efforts to recapitalize its balance sheet and refinance its currently outstanding Senior Notes and Revolving Credit Facility. The refinancing process is ongoing and the Company is currently having discussions with various parties in order to effect a refinancing transaction. There can be no assurance, however, that the Company will be able to obtain other financing or as to the terms and conditions under which such financing may be available. The Company is currently in default of certain financial ratios required to be maintained under it Senior Note and Revolving Credit Facility agreements. In addition, the Revolving Credit Facility is scheduled to expire on July 31, 2003 and the Company is required to make a $7.6 million principal payment on the Senior Notes by July 31, 2003. The Company is also, at the current time, not able to provide any assurances regarding its ability to make the $7.6 million Senior Note principal payment that is due on July 31, 2003. Further information about our Long-Term Debt is included in Note 3, Long-Term Debt, Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. The Company has had preliminary discussions with its lenders regarding an amendment to the Revolving Credit Facility which would, among other things, extend the maturity date of the Revolving Credit Facility beyond July 31, 2003. The Company intends to continue its efforts to obtain such an amendment, however, there can be no assurances that the Company will be able to negotiate such an amendment at all or under terms and conditions acceptable to it. Until such time when the Company is able to refinance the Senior Notes and Revolving Credit Facility it will attempt to negotiate arrangement with its lenders to, among other things, waive the covenant violations under the Senior Notes and Revolving Credit Facility agreement, extend the maturity of the Revolving Credit Facility beyond July 31, 2003 and defer the principal payments due under the Senior Notes. If the Company is not able to negotiate mutually acceptable arrangements with its existing lenders, events could occur that would have a material adverse effect on the Company's liquidity and financial condition and could result in its inability to operate as a going concern. If the Company is unable to operate as a going concern, it may file, or have no alternative but to file, bankruptcy or insolvency proceedings or pursue a sale or sales of assets to satisfy creditors. CREDIT SUISSE: Ratings on Class K & N Notes Dive Down to B+/C ------------------------------------------------------------- Fitch Ratings downgrades Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 1999-C1 $11.7 million class K to 'B' from 'B+' and $7.1 million class N to 'C' from 'CC'. The remaining classes are affirmed by Fitch as follows: $145.8 million class A-1, $660.5 million class A-2 and interest only class A-X at 'AAA'; $52.6 million class B at 'AA'; $58.5 million class C at 'A'; $14.7 million class D at 'A-'; $40.9 million class E at 'BBB'; $20.5 million class F at 'BBB-'; $32.2 million class G at 'BB+'; $23.4 million class H at 'BB'; and $11.7 million class J at 'BB-'. Fitch does not rate $15.8 million class L, $9.3 million class M or $10.5 million class O. The rating downgrades and affirmations follow Fitch's annual review of the transaction, which closed in November 1999. The downgrades are attributed to the weakening pool performance and the anticipated losses on several specially serviced loans. The loss estimates are expected to deplete class O and affect class N, which significantly reduces the credit support available to class K. Currently, nine loans (10.3%) are being special serviced by Lennar Partners Inc., five (2.8%) of which Fitch expects to result in approximately $14 million of losses. Three of the loans (2.78%) are currently real estate owned and secured by a parking garage in St. Louis, MO, a limited service hotel in South Bend, IN, and an office in Dallas, TX. Another loan (0.4%) expecting losses is secured by an office property in Redwood City, CA that is currently 50% occupied. The last loan (0.02%) expecting a loss is secured by multifamily in Kansas City, MO in poor condition. Wells Fargo Bank, the master servicer, collected year-end 2002 operating statements for 78% of the non-credit tenant lease loans. The YE 2002 weighted average debt service coverage ratio (DSCR) for those loans with financials declined to 1.31 times, compared to 1.47x in YE 2001 and 1.37x at issuance. Twenty-one loans, representing 13.9% of the pool, reported YE 2002 DSCRs below 1.00x. As of the June 2003 distribution date, the pool's aggregate certificate balance is $1.1 billion, down 4.4% from issuance of $1.2 billion. Fitch reviewed the credit assessment of the Exchange Apartments loan (5%). The Exchange Apartments loan is secured by a 345-unit multifamily property located in lower Manhattan. The stressed DSCR for YE 2002 was 1.43x compared to 1.25x at issuance. The DSCR for the loan is calculated using servicer provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. Based on the stable performance, the loan maintains a below investment grade credit assessment. Fitch analyzed the performance of the entire pool and given the expected losses, combined with overall deterioration of the pool performance, Fitch deemed it necessary to downgrade classes K and N. Fitch will continue to monitor this transaction, as surveillance is ongoing. CROSS MEDIA: Hires Getzler Henrich as Restructuring Consultants --------------------------------------------------------------- Cross Media Marketing Corporation tells the U.S. Bankruptcy Court for the Southern District of New York that it needs to employ the services of Getzler Henrich & Associates LLC as its restructuring consultants in connection with the commencement and prosecution of the Company's chapter 11 cases. During the months preceding the Commencement Date, the Debtors relate that they have experienced financial difficulties that led to defaults under their credit facility with a syndicate of lenders led by Fleet National Bank as agent. At the request of the Lenders, a restructuring firm was required to be engaged to determine the financial status of the Company. Accordingly, the Debtors engaged Getzler Henrich as their restructuring consultant. Thereafter, the Debtors and Getzler Henrich agreed to the appointment of Peter A. Furman, a Managing Director at Getzler Henrich, as the Company's Chairman of the Board, Chief Executive Officer Chief Executive Officer, and Chief Restructuring Officer. The Debtors ask the Court to approve Mr. Furman continuing to serve as Chairman of the Board, CEO and CRO. In addition to Mr. Furman, Getzler will provide additional professionals as needed to assist Furman in carrying out his duties. Specifically, Getzler will: a. conduct financial, operational and financial analyses of the Debtors' business plan; b. prepare cash flow models, budgets and projections in connection with restructuring and potential refinancing transactions; c. review financial processes and controls; d. make final and binding decisions with respect to all aspects of the management and operation of the Debtors' business, subject to Board of Directors approval for transactions of a type typically subject to such approval; e. devote sufficient business time to the performance of their duties; and f. report his conclusions and recommendations to the Lenders and will communicate to the Debtors other creditors and professionals as to the status of the Debtors' operations and restructuring plans. The current hourly rates of the professionals in Getzler Henrich are: Principals/Managing Directors $300 - $400 per hour Associates $240 - $300 per hour Paraprofessionals $75 - $100 per hour Mr. Furman's current hourly rate is $335. Cross Media Marketing Corporation is a direct marketer and seller of magazine subscriptions. The Company filed for chapter 11 protection on May 16, 2003 (Bankr. S.D.N.Y. Case No. 03-13901). Jack Hazan, Esq., and Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $91,357,187 in total assets and $77,668,088 in total debts. CROWN PACIFIC: Court Approves $40 Million DIP Financing Pact ------------------------------------------------------------ Crown Pacific Partners, L.P. (OTC Bulletin Board: CRPP), an integrated forest products company, and its affiliates have received an interim order from the Bankruptcy Court approving the implementation of a $40 million debtor-in-possession (DIP) loan facility previously arranged with The CIT Group/Business Credit, Inc., a unit of CIT Group (NYSE: CIT). With the implementation of the DIP facility, the Partnership should have adequate liquidity to pay its vendors for goods and services delivered to the Partnership after the filing of Chapter 11 petitions on behalf of the Partnership and its affiliates on June 29, 2003. During the reorganization process vendors who deliver goods and provide services to the Partnership receive priority payment protection under the bankruptcy law for such goods and services. Crown Pacific Partners, L.P., is an integrated forest products company. Crown Pacific owns and manages approximately 524,000 acres of timberland in Oregon and Washington, and uses modern forest practices to balance growth with environmental protection. Crown Pacific operates mills in Oregon and Washington, which produce dimension lumber, and also distributes lumber products through its Alliance Lumber operation. CRUM & FORSTER: S&P Assigns BB L-T Counterparty Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' long-term counterparty credit and senior unsecured debt ratings to Crum & Forster Holdings Corp. The latter rating reflects CFI's recent assumption of $300 million of debt from Crum & Forster Funding Corp. The outlook is negative. At the same time, the senior unsecured debt rating on CFF is now 'NR'. CFF, a special-purpose entity administered by Wilmington Trust Corp., was formed solely to raise and hold the aforementioned obligations until CFI, a wholly owned subsidiary of Fairfax Financial Holdings Ltd. (NYSE:FFH), was granted permission to assume such debt without creating an event of default. "At the time of the issuance, Fairfax's existing bank credit facilities prohibited CFI from borrowing money. On June 30, 2003, Fairfax announced that it was successful in renegotiating the terms and conditions of its bank credit facility, which now allows CFI to assume the aforementioned debt," said credit analyst Matthew T. Coyle. In a related matter, Standard & Poor's is in the process of reviewing the appropriateness of its rating and outlook on Fairfax and its subsidiaries. The areas of focus continue to be underwriting, reserving, and liquidity management. In regards to liquidity management, Standard & Poor's acknowledges that management has made significant progress in addressing this concern during the past couple of months. Standard & Poor's expects to provide a more comprehensive opinion on the progress management has made in each of these areas in a few weeks. DETROIT MEDICAL: Fitch Keeps B Bond Rating on Watch Evolving ------------------------------------------------------------ Fitch Ratings downgrades the approximately $569.1 million outstanding revenue bonds of Detroit Medical Center to 'B' from 'BB+'. In addition, the bonds are placed on Rating Watch Evolving, indicating that the direction of the rating is uncertain and will be resolved in a short period. For the 1993B and the 1997A bonds, the action pertains to the unenhanced rating, since the bonds are insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch. The downgrade to 'B' reflects DMC's escalating operating losses, eroding liquidity position, and the uncertainty of the future structure of the system and public assistance from local and state governments. Credits rated in the 'B' category indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met. However, capacity for continued payments is contingent upon a sustained, favorable business and economic environment. The placement of the bonds on Rating Watch Evolving signifies that the outcome of on- going discussions between government officials and DMC executives may be material to the rating. Since Fitch's last review that was detailed in a press release dated March 28, 2003, an 11-month operating loss (per Fitch's calculation) of $77 million with maximum annual debt service coverage of 1.1 times has significantly deteriorated. DMC's Dec. 31, 2002 audit, received by Fitch on June 27, 2003, revealed a year-end loss from operations of $101.6 million and MADS coverage of 0.6x. Through five months of 2003 losses from operations are averaging close to $10 million per month ($48.2 million in total), and days cash on hand has declined from 42 days as of 11/30/02 to 22 days as of May 31, 2003 (accounting for $19.9 million draw from a $60 million line of credit). Cash to debt is 15% as of May 31, 2003. DMC's received a Medicaid payment in June, net of a repayment back to the Medicaid program, of $24 million which would increase days cash on hand to 29 days as of May 31, 2003. Management has announced its intention to close Detroit Receiving Hospital and University Health Center, and Hutzel Hospital, which both serve a large uninsured and Medicaid population and combined equaled 50% of DMC's losses through five months of 2003, if additional public assistance is not agreed upon by July 30. A task force organized by the Governor that includes the mayor of Detroit and the Wayne County executive, is discussing options, including the creation of a public health authority that would help to provide additional funding for indigent care. DRH serves as the only Level I trauma center that services the inner city of Detroit. The closure of DRH would redirect trauma services to Henry Ford Medical Center and Saint John Health System, and would eliminate about 550-600 full-time equivalent positions at DMC, according to management. Fitch will continue to monitor DMC on a monthly basis. Fitch will formally review DMC's rating upon the establishment of a formal operating plan, which may include additional public funding. The long-term operating structure of the system will likely be clearer in the next few months, although the political process may extend discussions. Absent a substantial change in DMC's reimbursement mechanics and/or operating structure, Fitch is hard-pressed to view DMC as a viable, long-term credit. DMC operates nine hospitals, seven of which serve the metropolitan Detroit area. DMC is the largest healthcare provider in the Detroit market, with 11,973 full-time equivalent employees and about $1.6 billion in annual revenues. DMC does not covenant to provide quarterly disclosure to bondholders, as was standard during DMC's last bond offering. However, DMC proactively provides monthly financial statements to bondholders and other interested parties requesting to be on its distribution list. Affected issues: -- $108,650,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1998A; -- $174,460,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1997A; -- $42,615,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Sinai Hospital of Greater Detroit), series 1995; -- $131,445,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1993B; -- $109,320,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1993A; -- $2,575,000 Michigan State Hospital Finance Authority, revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1988A and 1988B. DKW LAW: Files for Chapter 11 Protection in Pennsylvania Court -------------------------------------------------------------- DKW Law Group, a top-10 Pittsburgh-based firm long known as Doepken Keevican & Weiss, has filed for voluntary bankruptcy, the Pittsburgh Tribune-Review reported. The firm took the drastic step after its main creditor, PNC Bank, prodded DKW to liquidate, according to the chapter 11 petition filed on June 30, in the U.S. Bankruptcy Court in Pittsburgh, the online newspaper reported. "Bankruptcy is extremely rare. But law firms are having financial difficulties today," said consultant Bill Brennan of Altman Weil, a Philadelphia-area business consultant to the legal industry, the Tribune-Review reported. (ABI World, July 2, 2003) DKW LAW GROUP: Voluntary Chapter 11 Case Summary ------------------------------------------------ Lead Debtor: DKW Law Group, PC 58th Floor US Steel Tower 600 Grant Street Pittsburgh, Pennsylvania 15219 Bankruptcy Case No.: 03-28186 Type of Business: Law firm Chapter 11 Petition Date: June 30, 2003 Court: Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: Michael Kaminski, Esq. DKW Law Group PC 58th Floor US Steel Tower 600 Grant Street Pittsburgh, PA 15219 Tel: 412-355-8117 Fax : 412-355-2609 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million DLJ COMMERCIAL: Fitch Affirms Low-B and Junk Class Notes Ratings ---------------------------------------------------------------- DLJ Commercial Mortgage Corp.'s mortgage pass-through certificates, series 1999-CG3, $109.1 million class A-1A, $109.1 million class A-1B, $17.7 million class A-1C and interest-only class S are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms $25 million class A-2 at 'AA', $49.5 million class A-3 and $13.5 million class A-4 at 'A', $15.7 million class A-5 at 'A-', $18 million class B-1 at 'BBB', $15.7 million class B-2 at 'BBB-', $27 million class B-3 at 'BB+', $13.5 million class B-4 at 'BB', $9 million class B-5 at 'BB-', $11.2 million class B-6 at 'B+', $9 million class B-7 at 'B', $9 million class B-8 at 'B-' and $4.5 million class C at 'CCC'. Class D is not rated by Fitch. The rating affirmations follow Fitch's annual review of the transaction, which closed in October 1999. The ratings affirmations are due to consistent overall pool performance and minimal collateral paydown since issuance. The certificates have been reduced by 3.3% since issuance, to $867.7 million as of June 2003, from $899.2 million at issuance and the loan number remains unchanged with 160. GEMSA Loan Services, the master servicer, collected year-end 2002 financials for 92% of the pool by current balance. According to the information provided, the YE 2002 weighted average debt service coverage ratio decreased to 1.39 times from 1.41x at YE 2001. However it has increased from 1.36x at issuance for the same loans. There are currently seven loans with the special servicer comprising 4% of the deal. The largest of these loans (1.7%), is collateralized by the Ameriserve Building located in Burlington, NJ. The building was occupied by Ameriserve before their bankruptcy filing in 2000 and was re-tenanted with Fleming Foods. The building is currently vacant after Fleming filed for bankruptcy protection in 2003. The loan is current. The second largest loan at the special servicer (0.8%) is collateralized by a multifamily property in Cary, North Carolina. The loan became delinquent; however the borrower has since brought the loan current. The third largest loan (0.4%) is collateralized by a healthcare property in Winter Haven, Florida. The loan is real estate owned and Fitch liquidated the loan with a 26% loss severity. Fitch reviewed the credit assessment of the Westin-Hilton Head loan (3.9% of the pool) and the underlying property. The loan is secured by a 412-room full-service hotel that is owned by Starwood Hotels. The DSCR for YE 2002 decreased to 1.43x, compared to 2.03x as of trailing twelve months ending June 2001 and 1.80x at issuance. The performance has improved since the 2002 annual review with a YE 2001 DSCR of 1.14x, however it has not improved enough to maintain an investment grade rating. The decline in 2001 can primarily be attributed to the numerous cancellations that occurred in the fourth quarter, following the events of Sept. 11. The DSCR is calculated using a stressed debt service which is determined by applying at 10.48% debt constant to the original loan balance. The hotel's RevPAR has remained stable with $102 and $105 as of YE 2002 and 2001, respectively. While the lowered credit assessment of the Westin loan is seen as a negative event for the deal, the slight improvement in overall WADSCR and small amount of collateral paydown offsets the impact of the reassessment. In addition, Fitch assumed approximately $6.2 million in losses to the pool and the resulting credit enhancement remained sufficient to affirm the ratings. Fitch will continue to monitor this transaction, as surveillance is ongoing. DTI DENTAL: Commences Normal Course Issuer Bid Effective July 3 --------------------------------------------------------------- DTI Dental Technologies Inc. (Stock Symbol TSX-V: DTI) intends to make a normal course issuer bid, subject to regulatory approval, whereby it may purchase up to 345,000 Common Shares, representing approximately 5% of DTI's 6,950,985 issued and outstanding Common Shares. The normal course issuer bid will commence on July 3, 2003 and end on July 2, 2004 or on such earlier date that DTI completes its purchases. All purchases will be effected through the facilities of the TSX Venture Exchange by Raymond James Ltd. and the price that DTI will pay for any shares acquired by it will be the market price of the shares at the time of acquisition. The consideration to be offered will be cash, payable from DTI's current unallocated working capital, in accordance with the by- laws and rules of the TSX Venture Exchange. There will be no restrictions on the price DTI is prepared to pay per share other than that purchases will not be made if DTI does not believe that the purchases would be advantageous to DTI and its shareholders. All shares purchased by DTI will be cancelled. The Board of Directors of DTI is of the view that, from time to time, the Common Shares may trade at a discount to the underlying assets of DTI. DTI's Board of Directors believes that the purchase by DTI of its own shares pursuant to a normal course issuer bid is a worthwhile investment which is beneficial to all non-selling shareholders of DTI and which will not preclude DTI from pursuing other business opportunities. DTI acquires, consolidates and manages dental laboratories that design and fabricate custom dental prosthetics such as crowns, bridges, dentures, implants and orthodontic appliances. As of December 31, 2002, DTI Dental Technologies Inc.'s total shareholders' equity deficiency stands at $2,462,401. DUANE READE: S&P Concerned about Weaker-Than-Expected Results ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Duane Reade to negative from stable. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit and senior unsecured debt ratings and its 'B' subordinated notes rating. The outlook revision follows Duane Reade's announcement that sales and profits were weaker than expected in the second quarter of 2003 (ended June 28, 2003). The company continues to be affected by the soft New York economy. The unusually wet and cold spring in the New York-metropolitan area also contributed to the sales and profit shortfall. New York, New York-based Duane Reade is one of the largest drug chains in the New York City metropolitan area; more than half of its 232 stores are in Manhattan. "Standard & Poor's believes the company's operating performance will be under pressure for the remainder of 2003 due to the high level of unemployment in the New York metropolitan area, and that credit protection measures will fall below 2002's level," said Standard & Poor's credit analyst Diane Shand. Credit protection measures declined in the first quarter of 2003. EBITDA coverage of interest declined to 1.7x from 1.8x on a year- over-year basis. Leverage is high, with total debt to EBITDA at 6.3x. Debt reduction is expected to be low for the next few years because internally generated cash is being used to fund growth. The company's financial flexibility is good. Liquidity is provided by an $80 million secured revolving credit facility that matures on Feb. 15, 2004, and $1.2 million of cash and short-term investments as of March 29, 2003. Duane Reade had $60 million available under its revolving credit facility as of March 29, 2003. Standard & Poor's expects Duane Reade's credit protection measures in 2003 will be below 2002 levels. Ratings could be lowered if the company does not strengthen credit protection measures in 2004 or if operating performance continues to deteriorate. EASTMAN HILL: Fitch Downgrades 3 Note Class Ratings to B/CC/C ------------------------------------------------------------- Fitch Ratings downgrades six classes of notes and the subordinate preference shares issued by Eastman Hill Funding I, Ltd. The following rating actions are effective immediately: -- $488,015,097 class A-1 floating-rate notes to 'AA' from 'AAA'; -- $9,531,545 class A-1 fixed-rate notes to 'AA' from 'AAA'; -- $497,546,642 class A-2 interest only fixed-rate notes to 'AA' from 'AAA'; -- $10,000,000 class A-3 floating-rate notes to 'BBB' from 'AA'; -- $25,743,389 class B-1 fixed-rate notes to 'B' from 'BBB'; -- $25,000,000 combination securities to 'CC' from 'BBB'; -- $17,875,000 subordinated preference shares to 'C' from 'B+'. Eastman Hill is a collateralized debt obligation supported by a pool of high yield corporate bonds (11.1%), investment grade corporate bonds (42.3%), loans (14.3%), and residential mortgage- backed securities (32.3%). The CDO is managed by Trust Company of the West. As part of the annual rating review process, Fitch has reviewed in detail the portfolio performance of Eastman Hill. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios. As a result of this analysis, Fitch has determined that the original ratings assigned to the referenced notes no longer reflect the current risk to noteholders. Eastman Hill has been failing its class A-1 and B-1 overcollateralization tests since November 2002, as measured by the monthly trustee reports. As of the report dated June 25, 2003, Eastman Hill's defaulted assets represented 3.5% of the $570 million par portfolio amount and eligible investments. Assets rated 'CCC+' and below represented approximately 3.6%, of the portfolio collateral, excluding defaults. The deterioration of the portfolio's credit quality has resulted in a current weighted average rating factor of 22 versus a test level of 20. Additionally, the interest rate swap agreement that is in place to hedge the mismatch between the predominantly fixed-rate collateral and floating-rate liabilities has impacted the performance of Eastman Hill. The current low interest rate environment causes a gap between the strike rate of the interest rate swap agreement and current LIBOR rates. After discussing Eastman Hill with TCW, Fitch believes that the collateral manager is making efforts to improve the credit quality of the portfolio with purchases of higher quality assets. TCW is actively monitoring the portfolio on a daily basis. Fitch will continue to monitor Eastman Hill closely to ensure accurate ratings. ENCOMPASS SERVICES: Qwest Wants Amended Sale Order Reconsidered --------------------------------------------------------------- As previously reported, the Court approved the sale of Encompass Services Corporation and debtor-affiliates' business units -- Sequoyah Corporation to Jamestown Electric, LLC and Wilson Electric Co. Inc., doing business as EET Northern Arizona, to Wilson Electric Services Corporation. After the sale, Jamestown Electric LLC changed its name to Sequoyah Electric, LLC (Sequoyah LLC). Qwest Corporation and Qwest Business Resources, Inc., now want the Court Order vacated. Qwest also wants the Debtors to pay monetary damages for their default and provide the required adequate assurance of future performance. According to James Matthew Vaughn, Esq., at Sills Cummis Radin Tischman Epstein & Gross, in Newark, New Jersey, the Debtors and Qwest are parties to various contracts under which the Debtors, through numerous subcontractors, agreed to provide construction services to Qwest at a number of Qwest facilities in numerous states. Among these contracts are: -- The September 1, 2001 Construction Contract between Qwest and Sequoyah Corporation, also known as Sequoyah Electric, for the electrical work to be performed on a Qwest facility located in Port Ludlow, Washington; -- The August 31, 2001 Construction Contract between Qwest and Sequoyah for electrical work to be performed at Qwest's facility in Camp Union (Bremerton), Washington; and -- Several other contracts with Wilson Electric. Mr. Vaughn contends that the Debtors failed to provide proper notice of the sale of assets and the assumption and assignment of numerous Qwest contracts. Qwest did not receive actual notice until the day on which the Court held a hearing regarding the relief. Additionally, the notice provided by the Debtors was made in a calculated manner to provide the least possible notice and opportunity to be heard in derogation of Qwest's due process rights. Mr. Vaughn explains that the notices of the assumption of the Wilson Contracts were incomprehensible and lacking in any meaningful information. Both the notices regarding the Sequoyah Contract and the Wilson Contracts contained brief information concerning the potential purchaser that apparently was the Debtors' attempt to satisfy the adequate assurance of future performance requirement of Section 365(f)(2)(B) of the Bankruptcy Code. However, the statements, which include only minimal information about the potential purchaser and its intentions and no financial statements or other hard data, fall woefully short of the requirements for adequate assurance of future performance. Mr. Vaughn tells the Court that the Sale motion provides for the cure of monetary defaults, but fails to identify who will make the cure payments, when the cure payments will be made and the procedure for resolving any disputes with respect to the amount of the cure. The letters of intent attached as exhibits to the Sale Motion are similarly uninformative as to who will make the cure payments, when the cure payments will be made and the procedure for resolving any disputes with respect to the amount of the cure. Qwest Stipulates With Sequoyah Qwest Corporation, Qwest Business Resources, Inc., and Sequoyah LLC, formerly known as Jamestown Electric LLC, have reached a stipulation resolving the dispute. Pursuant to the Court-approved stipulation, the parties agree that: (a) Qwest will withdraw its Motion for Reconsideration with respect to the assumption and assignment of the Qwest Agreements; (b) The Debtors' assumption and assignment of the Qwest Agreements to Sequoyah LLC, and Sequoyah's acceptance of the assignment are acknowledged by the parties and will be deemed to have been effective as of December 31, 2002; (c) For each Qwest Agreement, upon the completion of Sequoyah LLC's obligations or a partial completion for which payment contractually is due from Qwest, and each condition for payment disclosed in the agreement has been satisfied or waived by Qwest, Qwest will pay to Sequoyah the applicable "Settlement Amount", and upon payment of which, Qwest will have no further obligations under the Agreement; (d) With respect to the Qwest Agreements, Sequoyah will have all of the rights and will perform all of the Debtors' obligations indicated in the Qwest Agreements and will be bound by all of the terms of each Agreement; and (e) None of the provisions release or excuse Sequoyah or Qwest from timely performing any and all of their obligations stated in the Qwest Agreements. Both parties have likewise agreed that the automatic stay will be modified to the extent necessary to effectuate the Stipulation terms. Debtors and Wilson Object The Debtors and Wilson Electric Services Corporation, the buyer of EET Arizona, ask Judge Greendyke to deny Qwest's request as it relates to Wilson Electric. The Debtors remind the Court that their business is highly decentralized. The Debtors relate that the only method they had for identifying the parties to the executory contracts and unexpired leases to be assumed and assigned in connection with the sale was to ask their field personnel, like the employees on-site at EET Arizona, to generate a report of their outstanding contracts. Understandably, these personnel are not necessarily well versed in the legal requirements relating to identification of executory contracts. The Debtors admit that they erred on the side of being over- inclusive when identifying potential executory contracts and unexpired leases. Nevertheless, the Debtors and Wilson note that neither the facts nor the circumstances are so extraordinary as to warrant the reconsideration of the Sale Order. At the Sale Hearing, the Court approved the sale of Sequoyah to Jamestown and the sale of EET Arizona to Wilson because the sales were in the best interests of the Debtors' creditors and their estates. The Court found that the Debtors satisfied the requirements set forth in Section 365(b)(1) of the Bankruptcy Code in connection with assumption of contracts and provided adequate notice of the sales to be consummated as well as adequate notice of assumption and assignment of the contracts. The Court also found that the Debtors provided the counterparties to the Contracts with adequate assurance of future performance pursuant to Section 365(f)(2) of the Bankruptcy Code. Therefore, the Debtors and Wilson assert that there has been no manifest injustice. The Debtors and Wilson contend that the EET Arizona Contract is not an executory contract within the meaning of Bankruptcy Code Section 365 such that the Debtors were required to notify Qwest of the sale and the assumption and assignment. While they erred on the side of caution in identifying these contracts and giving notice, the Debtors assert that the fact that Qwest purports not to have received appropriate notice of the assumption and assignment is, in this case, irrelevant. Upon the filing of Qwest's request for reconsideration, the Debtors and Wilson investigated the Qwest contracts with EET Arizona and determined that they were not in fact executory. The EET Arizona Contracts provide that the Debtors would perform certain services and Qwest would pay the Debtors for such services. The Debtors had fully performed all of their obligations, other than their warranty obligations, under the Contracts. However, Qwest has not performed its obligation to pay the Debtors for their services. The Debtors are obligated to perform corrective work in the event that the quality of their work falls below the standards contemplated in the Contracts. These obligations are, however, contingent and do not represent the type of future reciprocal obligations, which make a contract executory. Even if the Contracts are found to be executory and that Qwest should have received notice of the sale and the assumption and assignment of the Contracts, the Debtors and Wilson point out that Qwest did receive sufficient notice of the expedited Sale Motion as required by Bankruptcy Code Section 363. But, even if it did not receive sufficient notice of the sale, Qwest has not suffered any harm, which is so extraordinary that the Court should vacate the Sale Order. The Debtors and Wilson believe that the sale and the assumption and assignment of the Contracts placed Qwest is in a better position than it would have been in if the Debtors had not assigned the Contracts to the Buyers. The Debtors are an insolvent entity. Absent the assumption and assignment of the Contracts, it is unlikely that the Debtors could have continued with their performance obligations under the Contracts. Wilson, on the other hand, is a solvent, non-Chapter 11 entity that is fully capable of carrying on the EET Arizona business operations. Therefore, the Debtors and Wilson believe that Qwest has received a benefit from the sale and the assumption and assignment of the Contracts. In addition, the Debtors and Wilson do not believe that Qwest was deprived of its right to monetary damages because the Debtors were not in default under the Contracts at the time of the sale. The Debtors had performed all of their obligations under the Contracts, other than warranty obligations. (Encompass Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ENGAGE INC: Turns to Deloitte & Touche for Financial Advice ----------------------------------------------------------- Engage, Inc., and its debtor-affiliates ask for permission from the U.S. Bankruptcy Court for the District of Massachusetts to employ the services of Deloitte & Touche LLP as their Consultants and Financial Advisors. The Debtors expect that Deloitte & Touche will: i) assist the Debtors in the review the its current financial condition including and in the review of its financial and cash flow projections; ii) assist the Debtors in its review of the executory contracts such as real property leases, equipment leases, supplier contracts, severance agreements, and employee contacts and assess the financial impact of rejection of those contracts; iii) assist the Debtors in its review and analysis of the potential secured, priority, and general unsecured claims; iv) assist the Debtors in the review and analysis of potential payroll issues and priority claims; v) assist the Debtors in the review and analysis of payroll and property tax issues and potential tax claims; vi) assist the Debtors in completing the Schedules and the Statement of Financial Affairs as well as all required supporting documentation; vii) assist the Debtors in the development of a key employee retention plan in order to retain employees responsible for the eventual completion and implementation of a Plan of Reorganization; viii) assist the Debtors and its other professionals in the development of a Plan of Reorganization and Disclosure Statement and assist in the development of the analyses and documentation required by each; ix) assist the Debtors and its other professionals in the potential disposition of its assets in the event a sale of assets under Section 363 of the bankruptcy code; x) assist the Debtors in the review and analysis of all potential avoidance actions, including, but not limited to, fraudulent transfers and preference payments; xi) attend and participate in meetings on matters within the scope of the services to be performed under this engagement letter; and xii) provide assistance with respect to other related matters as the Debtors or their professionals may request from time to time. Sheila T. Smith, a member of the firm Deloitte & Touche reports that the current hourly rates billed by Deloitte & Touche for their services are: Principal $425 to $475 per hour Senior Manager $325 to $375 per hour Manager $275 to $325 per hour Senior Consultant $225 to $275 per hour Consultant $175 to $225 per hour Support Staff $100 to $125 per hour Engage, Inc., headquartered in Andover, Massachusetts, sells software that enables publishers, advertisers and merchants to streamline the creation, approval, production and re-purposing of advertising and other marketing material. The Company filed for chapter 11 protection on June 19, 2003 (Bankr. Mass. Case No. 03-43655). Kevin J. Walsh, Esq., at Mintz Kevin Cohn Ferris Glovsky & Popeo, PC, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $52,113,000 in total assets and $16,593,000 in total debts. ENRON CORP: Seven Creditors Sell 11 Claims Totaling $37 Million --------------------------------------------------------------- Pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure, the Court, overseeing Enron Corporation's chapter 11 cases, received these notices of claim transfers from April 24, 2003 through May 20, 2003: CLAIM TRANSFEREE TRANSFEROR NO. AMOUNT ---------- ---------- ----- ------ Contrarian Funds LLC Union Oil Company 7324 $2,702,624 of California Unocal Energy 7322 3,745,588 Trading, Inc. Fidelity and Deposit 2525 209,271 Company of Maryland Intellibridge Corp. 1224 1,025,000 Ormet Corporation 14816 3,662,496 14818 3,662,496 14852 3,662,496 14853 3,662,496 Longacre Master Seneca Resources 7624 5,380,525 Fund, Ltd. Corporation 7625 5,380,525 Atlantic Mutual 16396 4,120,034 Insurance Co. (Enron Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Committee Has Until Sept. 30 to Sue Lenders ---------------------------------------------------------- The Official Committee of Unsecured Creditors of Federal-Mogul Corporation and debtor-affiliates ask the Court to further extend the time within which they may commence actions pursuant to the Final DIP Order. To allow more time to fully explore resolutions, the Creditors' Committee, the Asbestos Claimants' Committee and the legal representative for future asbestos claimants, on one hand, and the Prepetition Agent, on behalf of the Existing Lenders and the holders of Tranche C Loans, as well as the Surety Bond Issuers, on the other, have mutually agreed to the extension of the Litigation Commencement Date until September 30, 2003. (Federal- Mogul Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) FIRST UNION NAT'L: Fitch Affirms Six Low-B Note Class Ratings ------------------------------------------------------------- First Union National Bank-Chase Manhattan Bank's commercial mortgage pass-through certificates, series 1999-C2, $111 million class A-1, $673.7 million class A-2 and interest-only class IO are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms the following classes: $47.3 million class B at 'AA', $62 million class C at 'A', $14.8 million class D at 'A-', $41.4 million class E at 'BBB', $17.7 million class F at 'BBB-', $41.4 million class G at 'BB+', $11.8 million class H at 'BB', $11.8 million class J at 'BB-', $11.8 million class K at 'B+', $11.8 million class L at 'B' and $11.8 million class M at 'B-'. The $20.7 million class N is not rated by Fitch. The rating affirmations follow Fitch's annual review of the transaction, which closed in May 1999. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. Wachovia Securities, the master servicer, collected year-end 2002 financials for 57% of the pool balance. Based on the information provided the resulting YE 2002 weighted average debt service coverage ratio is 1.31 times compared to 1.30x at issuance for the same loans. Currently, five loans (2.9%) are in special servicing. The largest loan is secured by a full-service hotel property located in Charleston, SC and is currently 90+ days delinquent. The special servicer is in negotiations for a possible note sale of the loan. The next largest specially serviced loan is secured by a retail property in Derby, CT and is currently 30 days delinquent. Kmart, which occupied 56% net rentable area, rejected their lease and vacated their space in May 2003. The borrower is actively marketing the vacant space. Fourteen loans (14.7%) reported YE 2002 DSCRs below 1.00x. One of the loans, the Sheraton Suites Portfolio, is the largest loan in the transaction, (4.3%) and is secured by three full-service hotel properties located in Wilmington, DE, Dallas, TX and Elk Grove Village, IL. The loan is below 1.0x due to significant declines in occupancy and performance caused by the current economic conditions of the hotel industry. Fitch will continue to monitor this transaction and loans of concern, as surveillance is ongoing. FLEMING COMPANIES: Exclusivity Extension Hearing Set for July 17 ---------------------------------------------------------------- Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a Chapter 11 case during which a debtor has the exclusive right to propose a plan of reorganization. In addition, Section 1121(c)(3) provides that if a debtor proposes a plan within the Exclusive Proposal Period, it has the balance of 180 days after the commencement of the Chapter 11 case to solicit acceptances of that plan. During the Exclusive Proposal Period and the Exclusive Solicitation Period, plans may not be proposed by any party-in-interest other than the debtor. Section 1121(d) provides that the Court may extend the Exclusive Periods for cause. Fleming Companies, Inc., and debtor-affiliates tell the Court that the four-month exclusivity period for filing a reorganization plan is a short period of time in which to address myriads of disputes, matters and proceedings that accompany a "Mega Case". During the three months since the Petition Date, the Debtors and their professionals have devoted substantial time and effort addressing fundamental issues like maintaining liquidity and stabilizing operations. The Debtors have begun closing or selling their retail grocery stores as part of a strategic plan to exit the retail grocery business and concentrate on their multi-tiered wholesale distribution network for consumable goods. They have established procedures to conduct store closing sales. Several customers are seeking to terminate supply arrangements with the Debtors. In this regard, the Debtors' management and professionals have been expending an extraordinary amount of time preparing for litigation and litigating with customers to preserve the going concern value of their business. The Debtors are also defending a number of actions brought by suppliers seeking to impose a constructive trust over funds received from customers. Additionally, the Debtors are reconciling and resolving an extraordinarily large number and amount of claims asserted under the Perishable Agricultural Commodities Act and similar statutes. The Debtors have also received 620 reclamation claims totaling $305,000,000. They plan to file a reclamation claims report on July 21, 2003. The Debtors believe that their continuing efforts will result in their ability to propose a confirmable Chapter 11 plan that will be in the best interest of all their constituents. The Debtors want to avoid filing a premature plan. They want to ensure that the formulated plan takes into account the interests of their estates, employees and creditors. Against this backdrop, the Debtors ask the Court to extend their exclusive periods to file a Chapter 11 plan through and including November 27, 2003 and to solicit plan votes through and including January 26, 2004. Judge Walrath will convene a hearing on July 17, 2003 to consider the Debtors' request. Objections are due July 10, 2003. (Fleming Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) FORMICA CORP: Gains Nod for Cerberus & Oaktree Investment Deals --------------------------------------------------------------- Formica Corporation announced that the United States Bankruptcy Court for the Southern District of New York has approved the Stock Purchase Agreement involving the Company and all of its subsidiaries with an investment group sponsored by Cerberus Capital Management L.P. and Oaktree Capital Management LLC. Cerberus and Oaktree are the Company's largest holders of Formica bonds. The Stock Purchase Agreement calls for the investment group to invest $175 million, $173 million of which will be used to repay secured bank debt leaving the Company with approximately $160 million of senior secured debt remaining in the reorganized business in a transaction valued at $427 million. Formica had over $540 million in debt at the time of its Chapter 11 filing. Additionally, the Court approved an extension for sixty days for the Company to exclusively file a Plan of Reorganization. The Bankruptcy Court also authorized the Company to proceed directly to filing a consensual Plan of Reorganization without a bidding process. The Company also announced said that it has reached a consensual settlement agreement with its Committee of Unsecured Creditors to support the Company's Plan of Reorganization jointly developed with the investors. Under the settlement reached by the Unsecured Creditors Committee, the Steering Committee for the Prepetition Senior Secured Lenders, the Company and the buyer, FC Acquisition Holding Corp., general unsecured creditors' claims shall be discharged by receiving a pro-rata share of up to $12.775 million in cash and up to $8.675 million in new subordinated secured notes, which cash and notes are subject to reduction for payment to the Unsecured Convenience Class of creditors, each member of which will receive the lesser of 20% of each allowed unsecured claim or $10,000. Under the Joint Plan of Reorganization, the investors will not participate in the recovery by unsecured creditors. As previously disclosed, the Company has received the support of its secured lenders for the transaction and the Plan of Reorganization. Implementation of the Plan is conditioned on confirmation by the Bankruptcy Court. "[Wednes]day's actions are indeed welcome news and significant milestones in our reorganization," said Formica President and Chief Executive Officer Frank A. Riddick, III. "These developments should accelerate the timetable for the Company's emergence from Chapter 11 because all of the relevant constituencies have agreed to support the Company's prompt emergence. We continue to be appreciative of the support we have received during this period from our customers, suppliers and employees, all of whom have allowed us to use this process to lay the foundation for future success worthy of Formica's great heritage. We are excited by the participation of Cerberus and Oaktree as investors. Formica will emerge as a more competitive and financially stronger company with a steady stream of new product offerings and operational capabilities that will ensure we will be the best supplier to our customers in this industry." Formica Corporation was founded in 1913, and is the preeminent worldwide manufacturer and marketer of decorative surfacing materials, including high-pressure laminate, solid surfacing materials and laminate flooring. GALAXY NUTRITIONAL: Reports Improved Year-End 2003 Performance -------------------------------------------------------------- Galaxy Nutritional Foods (Amex: GXY), a leading producer of nutritious plant-based dairy alternatives for the retail and foodservice markets, announced the results for its fiscal year ended March 31, 2003. The Company reported net income of $1,034,128 for its fiscal year ended March 31, 2003 (Fiscal 2003) compared to a net loss of $17,059,152 for its fiscal year ended March 31, 2002 (Fiscal 2002). Net loss available to common shareholders for Fiscal 2003, after non-cash preferred stock dividends and non-cash preferred stock accretion for estimated redemption value, was $601,077 versus a net loss available to common shareholders of $19,147,995 for Fiscal 2002. The Company also reported a major turnaround in operating income for Fiscal 2003 versus Fiscal 2002. In Fiscal 2003, operating income was $4,064,992 (including $2,906,762 of non-cash compensation income) versus an operating loss of $11,383,351 (including $2,373,662 of non-cash compensation expense) for Fiscal 2002. The aforementioned $2.9 million of non-cash compensation income and $2.4 million non-cash compensation expense relates primarily to the valuation of stock options and warrants in each period. In Fiscal 2003, the Company has reported four consecutive quarters of positive operating profits. There were also major turnarounds reported in EBITDA, cash flow and gross margin in Fiscal 2003 versus Fiscal 2002. EBITDA for Fiscal 2003 was $6,230,692, or 15.6% of net sales, versus EBITDA of $9,542,161 or 22.2% of net sales, for Fiscal 2002. EBITDA is earnings before interest, taxes, depreciation and amortization, and is inclusive of non-cash compensation related to stock options and warrants. Additionally, the Company is reporting net cash provided by operating activities of $1,175,875 for Fiscal 2003 versus net cash used in operating activities of $3,728,489 for Fiscal 2002. This substantial turnaround in operating cash flow is a result of key initiatives implemented over the past year, which have enabled us to strengthen internal controls, streamline operations, increase production efficiencies and reduce ingredient and packaging costs. Gross margin for Fiscal 2003 has also greatly improved to 30% versus 18% for Fiscal 2002 due to the implementation of the aforementioned key initiatives along with the strategic reduction of non-core items produced, as well as a sales mix focused towards higher margin branded products. Net sales for Fiscal 2003 were $40,008,769 compared to net sales of $42,927,104 for Fiscal 2002, a decrease of 6.8% due primarily to management's decision to reduce the amount of lower margin, non-branded business, which it had previously. Results for the year ended March 31, 2003, reflect a correction of the calculation for preferred stock accretion. This correction results in additional non-cash preferred stock accretion for estimated redemption value, which decreases the net income available to common shareholders by $161,692 and $223,588 in the quarters ended June 30 and September 30, 2002, respectively. Additionally, it increases the net loss available to common shareholders by $1,079,173 in the quarter ended December 31, 2002. However, this correction has no affect on revenue, operating income, net income, or cash flow. The Company plans to reflect this correction in its filing on Form 10-K and plans to file amended Forms 10-Q for the quarters ended June 30, September 30, and December 31, 2002. RESULTS FOR THE 4th QUARTER ENDED MARCH 31, 2003 For the fourth quarter ended March 31, 2003, the Company reported a net loss of $241,059 compared to a net loss of $9,950,452 for its fourth quarter ended March 31, 2002. After non-cash preferred stock dividends and non-cash preferred stock accretion for estimated redemption value, net income available to common shareholders for the quarter ended March 31, 2003 was $70,755 versus a net loss available to common shareholders of $10,505,757 for the quarter ended March 31, 2002. Operating income for the fourth quarter ended March 31, 2003 was $329,937 (including $112,132 of non-cash compensation income) versus an operating loss of $6,642,806 (including $303,418 of non-cash compensation expense) for the same quarter last year. MANAGEMENT COMMENTS Christopher J. New, Galaxy's CEO, stated, "During Fiscal 2003, Galaxy's Board of Directors and senior management made vital decisions relative to operations and growth strategies which resulted in major turnarounds in operating cash flow, gross margin, operating profit, and EBITDA. These were crucial steps toward transforming our business and achieving the positive results we are reporting today. I expect these positive trends to continue into Fiscal 2004 as we continue to strengthen operations and strategically manage sales. The recent equity raise and financial restructuring announced on June 2, 2003 were also key events, which will play a major role in our ability to efficiently and effectively grow our business during Fiscal 2004. These events provide Galaxy with additional working capital, reduced debt service and a more favorable debt structure." Mr. New continued, "Our growth plan and key initiatives for Fiscal 2004 include leveraging our strategic brand platforms and category awareness, especially in the super-mass category of the retail market, forming new international partnerships, introducing a new product position with broader mass market appeal, and developing effective micro-marketing methods and promotional partnerships. We now have a solid foundation from which to launch these efforts with strong product positions in each of our primary distribution channels. Our goal is to successfully implement these initiatives through disciplined focus and resolute execution." RECENT DEVELOPMENTS * Textron Financial Corporation has replaced Finova Capital Corporation as Galaxy's asset-based lender. As a result of this change, we have significantly improved our cash availability due to lower interest rates and higher advance rates on eligible accounts receivable and inventory items. * We raised $3.85 million through private placements of Galaxy common stock to several investors including Fromageries Bel, a leading international dairy company, Fred DeLuca, the founder of Subway(R), Apollo Capital Management Group, L.P. and Apollo MicroCap Partners, L.P., investment funds based in St. Petersburg, Florida, David Lipka, a director of Galaxy, and John Ruggieri, Galaxy's Vice President of Manufacturing. $2 million of the proceeds from these transactions was used to repay one- half of the $4 million subordinated debt with Finova Mezzanine Capital, Inc. The balance of the proceeds will be used for working capital purposes. * SouthTrust Bank increased its lending position in Galaxy with a new $2 million term loan. These funds were used to repay the remaining balance of Galaxy's $4 million subordinated debt with FMC. The new $2 million term loan was consolidated with the Company's previously outstanding $8.1 million equipment loan. The new consolidated $10.1 million loan extends the maturity date on the original loan from March 2005 to June 2009 with a more favorable amortization. * Galaxy entered into a master distribution and licensing agreement with Fromageries Bel, the number one branded cheese company in Europe with sales of approximately $2.3 billion. Fromageries Bel has the exclusive rights to distribute certain Galaxy products to the fifteen European Union States and to more than twenty-one other European countries and territories. We will share key learnings and marketing strategies and Bel will create and support commercial plans for the development and distribution of these products within their exclusive territories. * Galaxy's Board of Directors recently approved the appointment of Patrice Videlier as a Director of the company. Patrice is the Senior Vice President of Marketing for Fromageries Bel and has held various executive positions with Fromageries Bel since joining them in 1990. Prior to joining Fromageries Bel, he spent twenty years with the Unilever Company. Galaxy's Board is now comprised of 8 directors -- 6 outside directors and two employees. BUSINESS OUTLOOK Fiscal Year Ended March 31, 2004 Guidance * We expect annual top line sales for Fiscal 2004 to increase 10% or more versus the prior fiscal year as key growth strategies are implemented into the market place and begin taking effect. However, we expect that first quarter sales will decrease by approximately 10% or more versus the first quarter of the prior year due to the Company's strategic decision to focus first quarter selling efforts on higher margin branded products versus lower margin non-branded products. * We expect to report comparable or improved gross margins for Fiscal 2004 as compared to Fiscal 2003. * We expect to report positive operating profits (excluding non- cash compensation) for Fiscal Year 2004. * We expect EBITDA (excluding non-cash compensation) to remain at positive levels throughout Fiscal 2004. * With the conclusion of our financial restructuring on May 30, 2003, we expect to report positive cash flow from operating activities for Fiscal 2004. Galaxy Nutritional Foods is the leading producer of great-tasting, health-promoting plant-based dairy and dairy-related alternatives for the retail and foodservice markets. These phytonutrient- enriched products, made from nature's best grains -- soy, rice and oats -- are low and no fat (no saturated fat and no trans-fatty acids), have no cholesterol, no lactose, are growth hormone and antibiotic free and have more calcium, vitamins and minerals than conventional dairy products. Because they are made with plant proteins, they are more environmentally friendly and economically efficient than dairy products derived solely from animal proteins. Galaxy's products are part of the nutritional or functional foods category, the fastest growing segment of the retail food market. Galaxy brand names include: Veggie Nature's Alternative to Milk(R), Galaxy Nutritional Foods(R), Soyco(R), Soymage(R), Wholesome Valley(R), formagg(R), Lite Bakery(R), Veggie Caf,(TM) and Veggie Lite Bakery(TM). For more information, visit Galaxy's Web site at http://www.galaxyfoods.com Galaxy Nutritional Foods' March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $3 million. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-Q for the period ended December 31, 2002, the Company reported: "Net cash provided by operating activities was $1,901,996 for the nine months ended December 31, 2002 compared to net cash used of $1,504,597 for the same period ended December 31, 2001. The increase in cash from operations is primarily attributable to a net income of $1,275,187 evidencing the improved gross margins and reduction in cash operating expenditures in fiscal 2003 along with further collections on accounts receivable and reductions in inventory levels. In fiscal 2002, the Company used a significant portion of its cash to decrease its amounts payable to vendors and to fund operating losses. "The Company's ability to continue as a going concern depends upon successfully obtaining sufficient financing to pay down or replace the FINOVA debts due in July 2003. In the event the Company cannot extend the loans, or raise the capital to pay off or replace the debt in July 2003, FINOVA Capital and FINOVA Mezzanine could exercise their respective rights under their loan documents to, among other things, declare a default under the loans and pursue foreclosure of the Company's assets which are pledged as collateral for such loans. In the event that FINOVA exercises their right to pursue foreclosure, then SouthTrust has the ability to do the same based on a cross- default provision in their loan agreement. The Company is seeking to obtain the necessary funds through its positive cash flows from operating activities, equity financing, and/or refinancing with FINOVA or a substitute lender. There are no assurances, however, that such financing, if available will be at a price that will not cause substantial dilution to the Company's shareholders. If the Company is not able to generate sufficient cash through its operating and financing activities in fiscal 2003, it will not be able to pay its debts in a timely manner. However, the Company, with direct involvement from key new board and management members, is currently discussing terms with several independent parties to provide the funds required to replace FINOVA Capital as the Company's primary asset-based lender and to pay off the debt to FINOVA Mezzanine." Early last month, Textron Financial Corporation replaced Finova Capital Corporation as the Company's asset-based lender. The Company's new revolving line of credit from Textron Financial has a maximum facility amount of $7.5 million and an interest rate that is 2.25% lower than the rate previously charged by Finova Capital, whose line was due to mature July 1, 2003. GENERAL DATACOMM: Wants Plan Exclusivity Extended to August 29 -------------------------------------------------------------- General DataComm Industries, Inc., and its debtor-affiliates ask the Court to extend their exclusive periods to file a Chapter 11 Plan and solicit acceptances of that plan from creditors. The Debtors ask the Court for an extension of both key dates through August 29, 2003. The Debtors submit that cause exists for an extension of the exclusive periods in these cases. The Debtors have worked diligently in their attempts to obtain support from the Committee and the Lenders for a consensual chapter 11 plan. As a result of such efforts the Debtors and the Lender filed the Plan on June 25, 2003. The Court approved the Disclosure Statement and the Debtors have commenced the voting solicitation process with respect to the Plan. A hearing to consider confirmation of the Plan is scheduled for August 5, 2003. The Debtors seek this extension of the Exclusive Periods to afford them time to complete the plan confirmation process. The Debtors assure the Court that the salient provisions of the Plan have been agreed upon by the Lenders and the Committee and that they are requesting these extensions in good faith, and there is no risk of harm to the Debtors' creditors from the requested extension of the Exclusive Periods. General DataComm Industries, Inc., a worldwide provider of wide area networking and telecommunications products and services, filed for Chapter 11 protection on November 2, 2001 (Bankr. Del. Case No. 01-11101). James L. Patton, Esq., Joel A. Walte, Esq. and Michael R. Nestor, Esq., represent the Debtors in their restructuring efforts. In their July 2002 monthly report on form 8-K filed with SEC, the Debtors account $19,996,000 in assets and $77,445,000 in liabilities. GLENOIT CORP: Seeks Open-Ended Extension for Final Decree --------------------------------------------------------- Glenoit LLC formerly Glenoit Corporation, asks the U.S. Bankruptcy Court for the District of Delaware to extend the deadline for the Debtors to file a final report and for the entry of a final decree formally closing their chapter 11 proceedings. Since confirmation of the Plan, the Debtors have been working to resolve any pending matters that remain prior to closing these Chapter 11 cases. To that end, the Debtors have resolved several of the administrative claims filed in the case, leaving two remaining. The Debtors recently resolved another administrative claim, since the filing of the most recent motion to extend the deadlines, leaving one substantial administrative claim remaining. The Debtors have also obtained orders from this Court or agreements dealing with over $32 million in unsecured claims. The Debtors anticipate filing a final objection to unsecured and priority claims shortly, and either resolving the remaining administrative claims consensually or setting them for hearing. Accordingly, the Debtors are not in a position to prepare the final report required by Local Rule 5009-1(c). The Debtors believe that they will expeditiously resolve the remaining matters in these cases, such that an additional 60 days will be enough to complete such matters and prepare their final report. Accordingly, the Debtors submit that good cause exists under Bankruptcy Rule 9006 and Local Rule 5009-1(c) for this extension. Once a final report is complete, the Debtors would propose giving parties and the Office of the United States Trustee a few weeks to review it, and then seeking entry of an order closing these cases via issuance of a final decree by this Court. Accordingly, the Debtors ask the Court to extend the closure of this case to thirty days after the filing of a final report. Headquartered in New York City, Glenoit Corporation is a domestic manufacturer of small rugs, knit pile fabrics and an importer and manufacturer of home products such as quilts, comforters, shams, shower curtains, table linens, pillows and pillowcases with operations in North Carolina, Ohio, California and Canada. The Company filed for Chapter 11 protection on August 8, 2000 (Bankr. Del. Case No. 00-3309). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor, represents the Debtors in their restructuring efforts. GRUPO IUSACELL: Fitch Hacks Senior Unsecured Debt Rating to D ------------------------------------------------------------- Fitch Ratings downgraded the senior unsecured debt of Grupo Iusacell, S.A. de C.V.'s (Holding company) and the senior unsecured debt of Grupo Iusacell Celular, S.A (Operating company) - collectively known as Iusacell - to 'D' from 'C' Rating Watch Negative. The rating action applies to US$350 million 14.25% senior notes of holding company debt due 2006 and US$150 million 10% senior notes of operating company debt due 2004. The downgrade to the 'D' default category reflects the inability of Iusacell to cure the missed interest payments on its senior notes due 2006 within the 30 day grace period allowed under the senior note indentures. On June 1, 2003, Iusacell failed to make semiannual interest payments of US$25 million on its senior notes due 2006. A default on the senior notes due 2006 effectively triggers an event of default to the company's secured syndicated loan and senior notes due 2004. The 'D' default ratings that have been assigned indicate that potential recovery for bondholders is estimated to be below 50% of principal. Iusacell now faces the challenges of restructuring its debt profile, which currently totals slightly over US$800 million and includes US$350 million senior notes due 2006, US$150 million senior notes due 2004 and a US$266 million secured syndicated loan. Iusacell is a holding company that controls several telecommunications assets in Mexico. The company's primary asset is Grupo Iusacell Celular, S.A. de C.V. Currently, the company is the third largest wireless operator in Mexico after Telcel and Telefonica Moviles with 2.1 million subscribers and an estimated 8.0% market share. Iusacell's competitive positions remains challenged given Telcel's nationwide network and the expanded presence of Telefonica Moviles following its acquisition of wireless provider Pegaso. In addition, Iusacell's profitability has been pressured by the slowdown in the Mexican economy. Verizon Communications has managerial control over Iusacell through its 39.4% equity stake, while Vodafone PLC held 34.5% and the remaining 26.1% is held by the public. On June 13, 2003, Verizon Communications and Vodafone PLC announced that they intend to sell their equity stakes in Iusacell to Movil Access, S.A. de C.V., a subsidiary of Biper, S.A. de C.V., which is controlled by the Salinas family. The Salinas family controls Unefon, S.A. de C.V, the fourth largest wireless operator. IBEAM BROADCASTING: Trust Wants Time for Final Decree Extended -------------------------------------------------------------- The iBEAM Broadcasting Corporation Liquidating Trust asks the U.S. Bankruptcy Court for the District of Delaware to extend through September 30, 2003, the deadline by which it must file a consolidated final report and automatic entry of the final decree closing this case. Bankruptcy Code section 350(a) provides that: "[a]fter an estate is fully administered and the court has discharged the trustee, the court shall close the case," and Federal Bankrruptcy Rule 3022 provides that: "[a]fter an estate is fully administered in a chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case." However, Delaware Bankruprcy Rule 9006-2 states that if a motion to extend the time to take any action is filed before the expiration of the prescribed period, "the time shall automatically be extended until the Court acts on the motion, without the necessity for the entry of a bridge order." The Liquidating Trust reports that a list of non-exclusive factors or events that courts often consider when determining whether to close a chapter 11 case: (a) whether deposits required by the plan have been distributed; (b) whether the property proposed by the plan to be transferred has been transferred; (c) whether the debtor or the successor of the debtor under the plan has assumed the business or the management of the property dealt with by the plan; (d) whether payments under the plan have been commenced; (e) whether the order confirming the plan has become final; and (f) whether all motions contested matters, and adversary proceedings have been finally resolved. Since the Confirmation Date, the Liquidating Trust has engaged in substantial analysis and reconciliation of claims and has completed the overwhelming majority of the claim objection process by evaluating claims. The Liquidating Trust has filed objections to individual claims and four omnibus objections to claims, and has sought the entry of orders with respect to the non-responding claimants, has entered into stipulations with many of the responding claimants, and has resolved other claims without objection. Despite these efforts, the Liquidating Trust is still in the process of reconciling certain claims filed in this case. At a minimum, the claim reconciliation process will take another 30 - 60 days to complete. The deadline by which the Liquidating Trust must object to claims expires on August 31, 2003. The Liquidating Trust argues that adequate time for completion of the claim reconciliation process is required in order to determine the correct distribution amounts to creditors. It would therefore be premature to close this Chapter 11 case at this time. The relief requested herein is in the best interests of creditors and other parties in interest. iBeam Broadcasting Corporation delivers streaming media over the Internet. The Company filed for chapter 11 protection on October 11, 2001. Aaron A. Garber, Esq., and Adam Hiller, Esq., at Pepper Hamilton LLP and Thomas G. Macauley, Esq., at Zuckerman and Spaeder LLP, represent the Debtors in their restructuring efforts. INSCI CORP: March 31 Balance Sheet Insolvency Narrows to $3 Mil. ---------------------------------------------------------------- INSCI Corp. (OTC Bulletin Board: INSS), a leading enterprise content management solutions provider, announced record profits and its seventh consecutive profitable quarter for its 2003 fiscal year and fourth quarter ended March 31, 2003. President and CEO Henry F. Nelson said that the Company's focus on core operations, improving margins and its ability to invest in new products resulted in increased revenues and significant bottom line growth over year earlier periods. Nelson also said that the Company's fiscal year 2003 balance sheet improved substantially over the fiscal 2002 year end as cash balances rose and debt was reduced. Revenues for the 2003 fiscal year's fourth quarter increased 22 percent to $2.2 million with net income of $221,000. This compares to revenues of $1.8 million for the prior year period with net income of $246,000. Product revenues in the fiscal 2003 fourth quarter increased 84 percent over the same period in fiscal 2002, reflecting strong increases in demand for the company's applications. The modest decline in fourth quarter net income was due principally to increased product development expenditures. Revenues for the fiscal year ended March 31, 2003, rose 9 percent to $9.2 million with net income increasing substantially to $1.4 million. This compares to revenues of $8.5 million for fiscal year 2002, with net income of $368,000. Gross margin as a percentage of sales improved for both the 2003 fourth quarter and fiscal year to 86.5 percent and 85.4 percent, respectively, as compared to 78.9 percent and 78.5 percent for the prior year periods. Operating Income expressed as a percentage of revenues improved to 19 percent for the current fiscal year compared to 9 percent for the prior fiscal year. "We made significant progress in all operational areas in fiscal 2003 with solid improvements in the Company's financial performance despite a challenging economic climate," Nelson said. "Strong profit margins have enabled us to invest in new product development and the resulting new products, ESP+mailstore, ESP+messenger, and ESP+infostore, are strategically important as we position the company in the broader enterprise content management market." As a result of improved cash flows from operations, the re- financing of an existing term debt and the conversion of a debt instrument to equity, INSCI also reported substantial year-over- year improvements in the Company's balance sheet. INSCI Corp.'s March 31, 2003 balance sheet shows a working capital deficit of about $2 million, and a total shareholders' equity deficit of about $3 million. Nelson further commented, "The sustained financial performance has given INSCI the market credibility necessary to forge strategic alliances. This year alone we established 12 new relationships, both reseller and marketing alliances, which has expanded our vertical market presence and created a potential platform for future growth. Most notably, we have a partnership agreement with EMC wherein we have integrated the INSCI ESP+ Solution Suite with EMC Centera, a cost-effective solution that will satisfy regulatory compliance requirements for long-term preservation of content." INSCI Corp. is a leading provider of integrated enterprise content management solutions with over a decade of experience providing advanced and cost effective solutions. The Company's highly scalable ESP+ Solution Suite is designed for the capture and long- term preservation of mass volumes of wide-ranging digital assets, with Web-based presentment capability for such content as banking and financial statements, customer bills, explanation of benefits, e-mail, digital voice, and transaction confirmations. By bringing this business-critical content together and assuring future retrieval, INSCI enables its use in e-commerce, customer service, regulatory compliance, or cost-reducing business functions. The Company's innovative technology provides a robust platform to meet the unique demands of high-volume Internet-based content retrieval by thousands of users. INSCI has strategic partnerships and relationships with such companies as Xerox, Unisys, PFPC and EMC. For more information about INSCI, visit http://www.insci.com JACKSON PRODUCTS: Lenders & Bondholders to Forbear Until Oct. 20 ---------------------------------------------------------------- Jackson Products, Inc. announced that the lenders under its secured credit facility, and in excess of 75% of the holders of its 9-1/2% Senior Subordinated Notes due 2005, have entered into forbearance agreements regarding specified existing defaults until October 21, 2003. The Lenders' and Bondholders' forbearance is subject to JPI's satisfaction of certain monthly restructuring milestones on various dates prior to October 21, 2003. The Bondholders have proposed a restructuring framework to JPI and various of its stakeholders. JPI is currently working diligently with its Lenders and Bondholders to effect a comprehensive restructuring plan. David M. Gilchrist, JPI's President, stated: "We are making progress in developing a long-term restructuring plan with our Lenders and Bondholders, as we work to rebuild the confidence of our customers, suppliers and employees and execute our restructuring initiatives. This forbearance period, we believe, indicates our Lenders' and Bondholders' desire to see JPI succeed in effecting a comprehensive restructuring plan." In addition to the forbearance agreements, JPI announced the results of an internal investigation, certain management changes in its finance department as well as restatements to its 2001 year-end financial statements, the expected impact of these restatements on its 2002 quarterly financial statements, and preliminary 2002 year-end financial results. JPI expects to file a current report on Form 8-K with the Securities and Exchange Commission detailing these other developments and providing additional information regarding its restructuring efforts. JPI is a leading designer, manufacturer and distributor of safety products serving a variety of niche applications within the personal and highway safety markets, principally throughout North America and in Europe. JPI markets its products under established, well-known brand names to an extensive network of distributors, wholesalers, contractors and government agencies. The Company currently has two reportable business segments: Personal Safety Products and Highway Safety Products. Additional information regarding JPI can be obtained at http://www.jpisafety.com LARRY'S STANDARD: Taps Prime Locations as Real Estate Consultant ---------------------------------------------------------------- Larry's Standard Brand Shoes, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ Prime Locations, LLC as its Special Real Estate Consultant. The Debtors expect Prime Locations to: a) review ail Leases for the thirteen stores operated by the Debtor, lease summaries, deeds, surveys, databases, spreadsheets or related documents provided by the Debtor; b) correspond with real estate professionals and/or retail operators knowledgeable with respect to the sites where the leases are located; c) analyze the marketability and disposition potential of the Leases based on an analysis of the market and the documents provided by the Debtor; d) negotiate with and solicit offers or settlements from the landlords of the sites where the leases are located; e) advise the Debtor in connection with the advisability of accepting particular offers or settlements from landlords; f) testify at any hearings and/or trials as to one or more of the matters set forth above as is determined to be necessary or appropriate; and g) provide all other advice to the Debtor in connection with its Leases as may be required or necessary. James B. Matthews reports that the members of Prime Locations who will be working with the Debtor have agreed to reduced hourly rates ranging from $250-$300 instead of the normal standard hourly billing rates, which range from $300 to $400 per hour. 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, LLP 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. LEAP WIRELESS: Court Okays Poorman's Appointment as Claims Agent ---------------------------------------------------------------- Leap Wireless International Inc., and its debtor-affiliates obtained the Court's authority to employ Poorman-Douglas Corporation as their notice, claims and data management agent in these Chapter 11 cases. Poorman is one of the country's leading Chapter 11 administrators with experience in noticing, claims processing, data management, claims reconciliation and distribution. Poorman has substantial experience in the matters upon which it is to be engaged. Poorman has acted or is acting as official notice, claims and data management agent in several notable cases including: United Airlines, Harnischfeger Industries, Inc., Marvel Entertainment Group, Allegheny Health, Education and Research Foundation, Bennett Funding Group, Xpedior, World Access and Consolidated Freightways. At the request of the Debtors or the Clerk's Office, Poorman will: A. prepare and serve required notices in these Chapter 11 cases, including: i. Notice of the commencement of these Chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code; ii. Notice of the claims bar date; iii. Notice of objections to claims; iv. Notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and v. Other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these Chapter 11 cases; B. after the mailing of a particular notice, file electronically with the Clerk's Office a certificate or declaration of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; C. maintain copies of all proofs of claim and proofs of interest filed; D. maintain official claims registers, including, among other things, these information for each proof of claim or proof of interest: i. the applicable Debtor; ii. the name and address of the claimant and any agent, if the proof of claim or proof of interest was filed by an agent; iii. the date received; iv. the claim number assigned; and v. the asserted amount and classification of the claim; E. implement necessary security measures to ensure the completeness and integrity of the claims registers; F. transmit to the Clerk's Office on a weekly basis a compact disk containing the updated claims register and the pdf images for each proof of claim; G. maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available after request of a party-in- interest or the Clerk's Office; H. provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; I. record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e); J. comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and other requirements; K. provide temporary employees to process claims, as necessary; L. promptly comply with any further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; M. provide any other claims processing, noticing and data management as may be requested from time to time by the Debtors; and N. except for proofs of claim, and the creditor matrix which will be in text format and filed electronically, all documents required to be filed by Poorman, will be prepared in pdf format. In addition, the Debtors seek to employ Poorman to assist them with, among other things: A. the collection and data management of the schedule of assets and liability information; B. the reconciliation and resolution of claims, and C. the preparation, mailing and tabulation of ballots for the purpose of voting to accept or reject any plans of reorganization proposed by the Debtors in these cases. The compensation arrangement provided for in the Poorman Agreement is consistent with and typical of arrangements entered into by Poorman and other such firms with respect to rendering similar services for clients like the Debtors. Details of this compensation have yet to be disclosed to the Court. The Debtors will pay Poorman fees and expenses upon the submission of monthly invoices by Poorman summarizing, in reasonable detail, the services for which compensation is sought. The Debtors submit that the compensation to be paid to Poorman is reasonable in light of the services to be performed. (Leap Wireless Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEVI STRAUSS: Names Pat House to Company's Board of Directors ------------------------------------------------------------- Levi Strauss & Co., elected Pat House, vice chair of Siebel Systems, Inc., to its Board of Directors. House, 49, co-founded Siebel Systems in 1993 and has been instrumental in the firm's impressive growth during the past decade. She has held a variety of executive positions at Siebel, including executive vice president, and was named by Fortune magazine as one of "The Most Powerful Women in Business" in 2000. "I'm thrilled to welcome a leader of such high caliber to our Board," said LS&CO.'s chairman Bob Haas. "Pat has an exceptional track record. She is a superb marketer with an extensive business background and can provide us with critical insights as we transform and grow the company. I look forward to working with her and to the valuable contributions she will make to our Board deliberations." House has held managerial and executive positions at Verbatim Corporation, Oracle Corporation and Frame Technology Corporation. She is a guest professor at Stanford University and the co-author of the business best seller, "Cyber Rules," published by Doubleday. "There aren't many companies that are 150 years old and have such an excellent reputation for doing business distinctively and responsibly. I am excited about the opportunity to help build the company's brands with its leadership team and Board members," House said. House graduated from Western Michigan University with a B.A. in Education. Levi Strauss & Co., whose May 25, 2003 balance sheet shows a total shareholders' equity deficit of about $1 billion -- is one of the world's largest brand-name apparel marketers with 2002 sales of $4.1 billion. The company manufactures and markets branded jeans and casual sportswear under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. LNR PROPERTY: Will Be Paying Quarterly Cash Dividends on Aug. 20 ---------------------------------------------------------------- LNR Property Corporation (NYSE: LNR) declared a quarterly cash dividend of $0.0125 per common share and $0.01125 per Class B common share. Both dividends are payable on August 20, 2003 to shareholders of record at the close of business on August 5, 2003. LNR has approximately 29.6 million shares outstanding, 19.8 million of which are common stock and 9.8 million are Class B common stock. LNR Property Corporation is a real estate investment, finance and management company. As reported in Troubled Company Reporter's Thursday Edition, Fitch Ratings assigned a 'BB-' rating to LNR Property Corp's $350 million ten year 7.625% senior subordinated notes. The notes have a final maturity of July 15, 2013 and are pari passu with LNR's existing senior subordinated debt. The Rating Outlook is Stable. Partial proceeds from the transaction will be used to fully refinance LNR's $200 million of 9.375% senior subordinated notes due in 2008. MALDEN MILLS: Expecting to Emerge from Chapter 11 on August 26 -------------------------------------------------------------- Polartec maker Malden Mills Industries Inc. said it expects to emerge successfully from bankruptcy-court protection on Aug. 26 after nearly two years of restructuring, Reuters reported. Malden Mills' chapter 11 reorganization plan has the support of a creditor group led by General Electric Co.'s finance arm, GE Capital. A confirmation hearing on the plan is set for Aug. 14. The plan is expected to take effect on Aug. 26, Malden Mills spokesman David Costello said. A fire in 1995 led to the company's bankruptcy filing in Nov. 2001 as higher debt and a sales shortfall limited its cash flow. Insurance did not cover the entire cost of building a $400 million plant in Lawrence, Mass., leaving the company with about 25 percent of the bill, reported the newswire. (ABI World, July 1, 2003) MASSEY ENERGY: Closes Short-Term Credit Facilities Refinancing -------------------------------------------------------------- Massey Energy Company (NYSE: MEE) completed the replacement of its short-term credit facilities. The Company completed the refinancing with the execution of a $355 million secured financing package. The package consists of a $105 million revolving multi- year credit facility maturing on January 1, 2007 and a 5-year $250 million term loan with an early maturity date of January 1, 2007 if the Company's existing 6.95% Senior Notes are not refinanced by that date. Earlier, on May 29, 2003, the Company took the first step in this refinancing when it issued $132 million of 4.75% convertible notes in a private placement, the proceeds of which were used to repay outstanding borrowings and to reduce commitments under its existing revolving credit facilities. "We are pleased to meet our goal of completing this refinancing well ahead of the expiration of our existing facilities," said Don L. Blankenship, Massey CEO and Chairman. "The structure of the refinancing has enabled the Company to raise more than initially planned and has increased our liquidity position and letters of credit capacity to our targeted objectives." A portion of the proceeds from the sale of the convertible notes and the term loan were used to repay all outstanding amounts under both the previously existing revolving credit facilities and the Company's accounts receivable securitization program. The term loan interest rate is set at LIBOR plus 3.5%. There are currently no borrowings under the new revolving credit facility, which will initially bear interest at LIBOR plus 2.5%. The currently untapped accounts receivable securitization program remains in place as a source of up to $80 million of additional liquidity. The Company plans to issue its second quarter earnings press release with further information about its financial results after the market closes on Wednesday, July 30, 2003 and to hold its conference call and live webcast at 11:00 a.m. on Thursday, July 31. The call can be accessed by going to the Investor Relations page on http://www.masseyenergyco.com Massey Energy Company, headquartered in Richmond, Virginia, is the fourth largest coal company in the United States based on produced coal revenue. As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services revised its outlook on coal producer Massey Energy Co., to negative from developing based on refinancing concerns. Standard & Poor's also assigned its 'B+' rating to Massey's new $100 million convertible senior notes due 2023. Standard & Poor's also affirmed its 'BB' corporate credit rating on the Richmond, Va.-based company. Total outstanding debt at March 31, 2003, was $589 million. METALS USA: Asks Court to Approve LTV-Contrarian Stipulation ------------------------------------------------------------ LTV Steel Company, Inc. filed a $6,021,173.81 claim in Metals USA, Inc., and debtor-affiliates' Chapter 11 cases. By notice dated October 9, 2002, Contrarian Capital Trade Claims, L.P. became the transferee of all rights, title and interest in the LTV Claim. Johnathan C. Bolton, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, recounts that on February 24, 2003, the Debtors objected to the LTV Claim because it was excessive. In addition, LTV owed the Debtors $105,155.62 prepetition. In a Court-approved stipulation, Contrarian, LTV and the Debtors agreed that Contrarian, as holder of the LTV Claim, will have an Allowed Class 4 General Unsecured Claim against the Debtors for $4,867,747. The parties further stipulated that all other claims of LTV and Contrarian against the Debtors are disallowed in their entirety. (Metals USA Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) MINERS FUEL CO.: Voluntary Chapter 11 Case Summary -------------------------------------------------- Lead Debtor: Miners Fuel Company Inc. Route 209 and Interstate 81 Tremont, Pennsylvania 17918 Bankruptcy Case No.: 03-53104 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Miners Environmental Inc. 03-53149 Miners Oil Company 03-53148 Type of Business: The Miners Entities operate a long haul solid waste transporting business, a fuel oil supply business and a specialty waste company in Pennsylvania and New Jersey. Chapter 11 Petition Date: June 27, 2003 Court: Middle District of Pennsylvania (Wilkes-Barre) Judge: John J. Thomas Debtors' Counsel: Michael Fiorillo, Esq Fiorillo Law Office RT 209 P.O. BOX 268 Tremont, Pennsylvania 17981 Tel: 570 695-3663 Estimated Assets: Estimated Debts: ----------------- ---------------- Miners Environmental $100K to $500K $50K to $100K Miners Oil $1MM to $10MM $1MM to $10MM MIRANT CORP: Completes Sale of Canadian Contracts to Cargill ------------------------------------------------------------ Cargill Limited has completed the acquisition of Mirant's (NYSE:MIR) Canadian natural gas aggregator services contracts, a significant portion of its natural gas transportation contracts and a portion of its storage contracts. The sale was originally announced on May 1, 2003. "We are very excited about the opportunities we now have to strengthen relationships with Canadian natural gas producers and to provide a broader range of risk management solutions to producers and consumers in the North American natural gas market," said David Gabriel, president, Cargill Power & Gas Markets. "This transaction is the latest of several that are expected to allow Mirant to reduce its collateral obligations by more than $200 million over time," said Rick Pershing, executive vice president, Mirant. "With this transaction, we move closer to achieving our goal of reducing collateral obligations to $500 million by the end of the year." The acquired contracts represent 380 million cubic feet per day of natural gas transportation assets and approximately 1.3 billion cubic feet of natural gas storage, as well as Mirant's "netback pool." The netback pool is the portion of the natural gas marketing contracts that market the aggregate supply of natural gas from over 500 Canadian natural gas producers associated with the former TransCanada pool business. Cargill also will assume the management services agreements to operate the aggregator businesses of Pan-Alberta Gas Ltd., Northwest Pacific Energy Marketing Inc. and CanWest Gas Supply, Inc. Cargill Limited is one of Canada's largest agricultural merchandisers and processors with interests in meat, egg, malt and oilseed processing, livestock feed, salt and fertilizer manufacturing, as well as crop input products, grain handling and merchandizing. The company employs approximately 5,000 across Canada. Cargill Limited is a subsidiary of Cargill, Incorporated -- http://www.cargill.com-- headquartered in Minneapolis. Cargill provides distinctive customer solutions in supply chain management, food applications, and health and nutrition. Visit Cargill Limited at http://www.cargill.ca Mirant is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 21,000 megawatts of electric generating capacity globally. Mirant operates an integrated asset management and energy marketing organization from our headquarters in Atlanta. A complete list of its assets is available at http://www.mirant.com As reported in Troubled Company Reporter's Tuesday Edition, Mirant was advised by representatives of an ad hoc committee of the company's bondholders that the holders of approximately 66.67 percent of those bonds have indicated their support for the company's exchange offers and related pre-packaged plan of reorganization, as amended on June 30, and that they intend to tender and vote accordingly. The ad hoc committee represents holders of the company's 2.5 percent convertible senior debentures due 2021 and its 7.4 percent senior notes due 2004. MOHEGAN TRIBAL: Extends Tender Offer for 8.75% Notes to Tuesday --------------------------------------------------------------- As previously announced on June 19, 2003, the Mohegan Tribal Gaming Authority commenced a cash tender offer and consent solicitation for any and all of its $300,000,000 aggregate principal amount of 8.75% Senior Subordinated Notes due 2009. The consent solicitation described in the Offer to Purchase and Consent Solicitation Statement and the accompanying Letter of Transmittal and Consent, dated June 19, 2003, expired at 5 p.m., New York City time, on Monday, June 30, 2003, and the expiration date for the Offer is midnight, New York City time, July 17, 2003. The Authority announced that, in connection with the Offer, it has received consents sufficient to amend the indenture governing the Notes as described in the Tender Offer Documents. The supplemental indenture incorporating these amendments has been executed, and the amendments will become operative when the tendered Notes are accepted for payment. As of noon (EDT) July 2, 2003, holders of the Notes have tendered $273,175,000 aggregate principal amount of the Notes (approximately 91% of the total issued and outstanding principal amount). The Authority is extending the period of time in which holders of the Notes may tender their Notes and receive the Total Consideration (as defined in the Tender Offer Documents) of $1,077.50 per $1,000 principal amount of Notes until 5:00 p.m., New York City time, Tuesday, July 8, 2003. The Expiration Date and all other terms of the Offer, as described in the Tender Offer Documents, remain unchanged. It is expected that payment for all Notes validly tendered on or prior to 5:00 p.m., New York City time, on July 8, 2003, will be made on July 9, 2003. The Authority is an instrumentality of the Mohegan Tribe of Indians of Connecticut, a federally recognized Indian tribe with an approximately 405-acre reservation situated in southeastern Connecticut, which has been granted the exclusive power to conduct and regulate gaming activities on the existing reservation of the Tribe located near Uncasville, Connecticut, including the operation of the Mohegan Sun, a gaming and entertainment complex that is situated on a 240-acre site on the Tribe's reservation. The Tribe's gaming operation is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games. Mohegan Sun currently operates in an approximately 3.0 million square foot facility, which includes the Casino of the Earth, Casino of the Sky, the Shops at Mohegan Sun, a 10,000-seat Arena, a 300-seat Cabaret, meeting and convention space and an approximately 1,200-room luxury hotel. More information about Mohegan Sun and the Authority can be obtained by visiting http://www.mohegansun.com As previously reported, Standard & Poor's Ratings Services assigned its 'BB-' rating to the Mohegan Tribal Gaming Authority's proposed $330 million senior subordinated notes due July 15, 2009. Proceeds from this offering will be used to refinance the outstanding 8.75% $300 million senior subordinated notes due 2009 and to pay fees and expenses associated with the repayment. Concurrently, Standard & Poor's revised its outlook for MTGA to stable from negative, while affirming its 'BB+' corporate credit rating. At June 30, 2003, pro forma for the sale of the proposed notes, total debt outstanding is expected to be approximately $1.1 billion. MTS/TOWER RECORDS: Sr. Lenders Agree to Extend Forbearance Pacts ---------------------------------------------------------------- On June 10, 2003, MTS, Incorporated received an extended forbearance agreement from the senior lenders under its credit facility agented by The CIT Group/Business Credit, Inc., pursuant to which such senior lenders have agreed not to exercise their default rights relating to defaults arising from the Company's failure to make the interest payment on the Company's 9-3/8% senior subordinated notes that was due on May 1, 2003. In connection with the forbearance agreement, the Company and such senior lenders amended the CIT credit facility to provide for additional covenants relating to the Company's operations and capital structure. The forbearance period will terminate on September 30, 2003 (or earlier, upon any new event of default under the CIT credit facility), unless it is extended by agreement of such lenders or by that date there has occurred a restructuring of the Notes or a sale or merger of the Company that provides for the payment of all obligations under the CIT credit facility, in either case on terms reasonably acceptable to the Agent. MTS, the #2 US specialty retailer of music (after Musicland), owns and franchises more than 180 stores in 10 countries around the world. Its Tower stores offer a wide selection of music, books, and videos. MTS also runs WOW! stores (a joint venture with electronics retailer The Good Guys) and publishes several free music magazines. Facing stiff competition from discounters and online retailers, MTS is continuing overseas expansion (international operations -- including more than 40 stores in Japan -- account for about 40% of sales). Founder and chairman Russell Solomon, a high-school dropout, and his son and CEO Michael, own 99% of MTS. MUSEUM CO: Taps Great American to Conduct GOB Sales at 48 Stores ---------------------------------------------------------------- Great American Group, one of the nation's leading asset management firms, has launched going-out-of-business sales for 48 Museum Company stores across the country. The sale began Wednesday, June 25, 2003 and is expected to run 8- 10 weeks. An estimated $15 million of inventory will be liquidated during the sale period. Customers will be able to take advantage of great discounts off apparel, home accents, jewelry, accessories, science and exploration, books and media, collectibles, games and toys, stationery, and various unique gift items. "We are extremely pleased to assist The Museum Company in closing their remaining stores. Their confidence in our ability to help implement their store-closings is a compliment to Great American Group's long-standing reputation as the country's premier asset disposition firm," stated Brian Yellen, Vice President of Great American Group. Great American Group provides financial services to North America's most successful retailers, distributors, and manufacturers. Their well-established services center on turning excess assets into immediate cash through strategic store closings and wholesale and industrial liquidations and auctions. In the past several years, they have converted over $16 billion of problem inventories into cash. With over 30 years of liquidation experience, Great American Group has successfully completed over 1,000 transactions. Headquartered in Los Angeles, Great American Group also has offices in Chicago, Boston, New York, and Atlanta. For more information, please visit the Great American Group Web site at http://www.greatamerican.com The Museum Company, a national retailer of museum-related gifts and other items, filed for Chapter 11 reorganization on January 10, 2002, in the U.S. Bankruptcy Court for the Southern District of New York (Manhattan) (Bankr. Case No. 02-10116). NORTHWESTERN CAPITAL: S&P Downgrades Preferreds Ratings to D ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Northwestern Corp., affiliate Northwestern Capital Financing I's $32.5 million 8.125% trust preferred stock due 2025, its $55 million 7.2% trust preferred stock due 2038, and affiliate Montana Power Capital I's $65 million 8.45% trust preferred stock due 2036 to 'D' from 'C', and removed the issue ratings from CreditWatch with negative implications. The 'B' corporate credit rating on Northwestern remains on CreditWatch with negative implications. The rating action is the result of the company's failure to make dividend payments on these preferred stock issues. The Sioux Falls, South Dakota-based company has about $1.7 billion in debt and $370 million in preferred stock outstanding. The Northwestern Capital Funding I and Montana Power Capital I preferred stock issues are the next in the series of several trust preferred securities that the company intends to defer dividends on as previously announcement by the company's board of directors on May 23, 2003. The company has one trust preferred issue remaining that has not defaulted, which will maintain the current 'C' rating until its dividend payments are also deferred. Deferral of the dividend on the remaining issue is expected for July 15, 2003. The company has the right to defer dividends up to 20 consecutive quarters under the preferred stock covenants. The preferred stock holders must be made current on or before the end of the twentieth quarter. NTELOS INC: Virginia Court Approves Disclosure Statement -------------------------------------------------------- NTELOS Inc. announced that the United States Bankruptcy Court for the Eastern District of Virginia approved the company's Disclosure Statement, which provides details regarding the company's Joint Plan of Reorganization. The Court's approval of the Disclosure Statement dated July 1, 2003 allows NTELOS to commence soliciting votes for confirmation of its Joint Plan of Reorganization. NTELOS believes that its Joint Plan of Reorganization is consistent with the Plan Support Agreement the company has entered into with a majority of its bank lenders. In addition, the official committee of unsecured creditors has issued a letter to the company's unsecured creditors supporting confirmation of the company's Joint Plan of Reorganization and encouraging unsecured creditors to vote to accept the Plan. The Disclosure Statement and ballots are expected to be mailed on or about July 7, 2003, with a deadline for returning completed ballots of August 1, 2003. The Court's confirmation hearing is expected to be held on August 11, 2003. James Quarforth, Chief Executive Officer of NTELOS, said, "We are very pleased with the Court's approval of our Disclosure Statement, which both underscores the progress we have made in the Chapter 11 process and paves the way toward emergence for our company. The support of our creditors' committee and bank lenders for our proposed Joint Plan of Reorganization gives us confidence in a favorable and expedient conclusion to our reorganization process. Although we must await the outcome of the vote and the Court's ruling at the confirmation hearing, we are optimistic that the company is on track to emerge from bankruptcy in the third quarter of 2003." The Joint Plan of Reorganization is subject to, among other things, a vote of the various classes of constituents, confirmation by the Court, the new investment by certain of the company's senior noteholders and access to an exit financing credit facility, as described in the company's Disclosure Statement. NTELOS and certain of its subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on March 4, 2003 in order to complete development and implementation of a comprehensive financial restructuring plan that would significantly reduce the company's debt. The full text of the Disclosure Statement and the Joint Plan of Reorganization, each dated July 1, 2003, are available on the company's Web site at http://www.ntelos.com NTELOS Inc. (OTC Bulletin Board: NTLOQ) is an integrated communications provider with headquarters in Waynesboro, Virginia. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Tennessee and North Carolina, including wireless digital PCS, dial-up Internet access, high- speed DSL (high-speed Internet access), and local and long distance telephone services. Detailed information about NTELOS is available online at http://www.ntelos.com NUWAY MEDICAL: Receives Second Installment of Augustine II Loan --------------------------------------------------------------- NuWay Medical, Inc. (OTC: NMED) has received the $100,000 second installment of its loan from Augustine II, LLC. On June 13, 2003, Augustine II agreed to loan the Company a total of $420,000 and, on that date, made the first installment of $250,000. Augustine II has agreed to extend to the Company the $70,000 balance of the loan by August 1, 2003. Commenting on Augustine's investment, Dennis Calvert, NuWay's CEO and President, said, "Augustine and its affiliates have, over the past few years, made significant investments in NuWay. These investments, most of which were made prior to current management taking office, have declined in value. We view Augustine's willingness to invest additional funds at this point as a vote of confidence in current management and in our revamped business plan." Principal and interest (at an annual rate of 10%) on the loan are due in full on February 29, 2004, subject to certain requirements that the Company make mandatory prepayments of the loan from the proceeds of any asset sales outside of the ordinary course of business and, on a quarterly basis, from positive cash flow. In addition, the Company may prepay all or any portion of the loan at any time without premium or penalty. As additional consideration for agreeing to extend to the Company the $420,000 loan, Augustine received five-year warrants to purchase up to 6,158,381 shares of the Company's common stock at an exercise price of $.16 per share. As security for the loan, New Millennium (an affiliate of Mr. Calvert) has pledged 2,500,000 shares of the Company's common stock owned by New Millennium and the Company has granted Augustine a security interest in the Company's ownership interest in its subsidiary, NuWay Sports, LLC. NuWay Medical, Inc. recently began to offer medical and health related technology products and services with an initial focus on the health and information software technology needs of the sports industry. The Company's primary product is its Player Record Library System, a highly specialized electronic medical record and workflow process software. The PRLS was designed to address the information technology needs of the sports industry relating to player health and to facilitate the compliance by sports leagues with certain regulatory requirements, including the Health Insurance Portability and Accountability Act. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-KSB filed with SEC, Nuway Medical reported: "Cash and cash equivalents decreased by $440,302 to $521 at December 31, 2002, reflecting the fact that the Company disposed of its operating entities on October 1, 2002 and had earlier begun a major change in strategy towards medical technology. As a result, NuWay had no revenues in 2002 and was forced to consume cash on hand to fund its new operations. Due to our limited liquid resources, among other things, our auditors have included an explanatory paragraph in this report which expresses substantial doubt about our ability to continue as a going concern. "At December 31, 2002, management believes the Company had no debt obligations requiring future cash commitments other than as follows: Significant debts at December 31, 2002 included $150,000 of convertible debentures, and a $1,120,000 note payable which was purchased in March of 2003 by New Millennium Capital Partners, LLC, an entity controlled by NuWay's president. On March 26, 2003, the Board voted to convert the note into equity of the Company at a 37.5% discount to the current market rate. Prior to issuing the shares, and after receiving a NASDAQ staff determination letter indicating that issuing the shares without shareholder approval violated certain Nasdaq Marketplace Rules, the Board modified its resolution to condition the conversion of the note into equity on shareholder approval at the next shareholder meeting (scheduled to take place in the third quarter of 2003). As we have had, and continue to have, limited cash resources, we have engaged consultants to assist our company who are compensated in shares of Company common stock. These agreements can generally be terminated with fifteen-day notice." ON SEMICONDUCTOR: Will Publish Second-Quarter Results on July 30 ---------------------------------------------------------------- ON Semiconductor Corp. (Nasdaq: ONNN) plans to announce its financial results for the second quarter ending July 4, 2003, after the market closes on Wednesday, July 30. The company will host a conference call at 5 p.m. Eastern time (EDT) following the release of its financial results. Investors and interested parties can access the conference call in the following manner: -- Through a webcast of the conference call via the Investors section of the company's Web site at http://www.onsemi.com The re-broadcast of the call will be available at this site approximately one hour following the live broadcast and will continue through Aug. 6. -- Through a telephone call by dialing 712/257-2272. To access the conference, callers must use the pass code "ON Semiconductor" when prompted by the call-in service. The company will provide a dial-in replay approximately one hour following the live broadcast that will continue through Aug. 6. The dial-in replay number is 402/220-9695. ON Semiconductor offers an extensive portfolio of power and data management semiconductors and standard semiconductor components that address the design needs of today's sophisticated electronic products, appliances and automobiles. For more information, visit ON Semiconductor's Web site at http://www.onsemi.com As reported in Troubled Company Reporter's February 19, 2003 edition, Standard & Poor's assigned its 'B' rating to ON Semiconductor Corp.'s (B/Negative/--) $200 million of Rule 144a senior secured notes due 2010. ORBITAL SCIENCES: Fitch Withdraws Lower-B Level Debt Ratings ------------------------------------------------------------ Fitch Ratings affirms Orbital Sciences Corporation's 'B+' senior secured credit facility rating and 'B' second priority secured notes rating, and simultaneously withdraws the ratings. OWENS-ILLINOIS: CEO Joseph Lemieux Plans to Retire by Year-End -------------------------------------------------------------- The Board of Directors of Owens-Illinois, Inc. (NYSE: OI), announced that Joseph H. Lemieux, the current Chairman and Chief Executive Officer, has advised them of his plans to retire effective December 31, 2003. As a result, the Board of Directors has initiated a search for Mr. Lemieux's successor. To assist with the mission of finding a new CEO, the board has retained Heidrick & Struggles, an international executive search firm, which will review appropriate internal and external candidates. Mr. Lemieux, 72, is a 46-year veteran of the Company. He became chief executive officer in 1990 and Chairman of the Board of Directors in 1991. Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. Plastics packaging products manufactured by O-I include consumer products (blow molded containers, injection molded closures and dispensing systems) and prescription containers. As reported in Troubled Company Reporter's April 25, 2003 edition, Fitch Ratings assigned a 'BB' rating to Owens-Illinois' (NYSE: OI) $450 million senior secured notes and a 'B+' rating to its $350 million senior notes offered in a private placement. The senior secured notes are due 2011 and the senior notes are due 2013. The Rating Outlook remains Negative. The rating and Outlook incorporate OI's high leverage position, refinancing requirements, and asbestos exposure. Total debt outstanding was $5.3 billion at year-end. OI has retained high leverage as a result of a number of meaningful acquisitions as well as high levels of asbestos payments. The backlog of cases and associated cash outflows continue to trend down (OI spent $221.1 million in asbestos-related payments in 2002, a 10% decline from 2001) and management anticipates asbestos payments will fall moderately over the next couple of years. OI's bank debt was paid down to $3 billion in January 2002 and was further reduced with the additional issuance of senior secured notes offered in November and December 2002. After the transactions, approximately $1.3 billion of bank debt, $2.1 billion of senior secured notes and $1.4 billion of senior notes are outstanding. PAC-WEST: Settles $6.8 Mill. Claims and Disputes with SBC Calif. ---------------------------------------------------------------- Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated communications services to service providers and business customers in the western U.S., announced the signing of a Settlement Agreement for $6.8 million in claims and disputes with SBC California. On June 27, 2003, Pac-West entered into a Settlement Agreement with SBC California regarding various disputes between the parties for charges billed in prior periods through June 1, 2003. Under the terms of the Settlement Agreement, SBC California agreed to pay Pac-West $6.8 million. In an unrelated matter, Ravi Brar, Pac-West's CFO, commented, "On June 26, 2003, we appeared before a Nasdaq Listing Qualifications Panel to present the company's plan for regaining compliance with Nasdaq's minimum bid price requirement and request additional time to do so. We currently anticipate receiving a decision from the Panel in the next several weeks, which should provide guidance on the company's plan for regaining compliance and a timeframe for doing so. However, our investors should be aware that there can be no assurances that the Panel will accept the company's plan for regaining compliance or grant the company additional time to do so. We will make public the relevant details of the Panel's decision as well as our response, if any, as soon as reasonably practicable following receipt of the decision." Founded in 1980, Pac-West Telecomm, Inc., is one of the largest competitive local exchange carriers headquartered in California. Pac-West's network carries over 100 million minutes of voice and data traffic per day, and an estimated 20% of the dial-up Internet traffic in California. In addition to California, Pac-West has operations in Nevada, Washington, Arizona, and Oregon. For more information, visit Pac-West's Web site at http://www.pacwest.com * * * As reported in Troubled Company Reporter's May 1, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Stockton, Calif.-based competitive local exchange carrier Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on the 13.5% senior notes due 2009 has been lowered to 'D' from 'C'. S&P explained, "Given the company's significant dependence on reciprocal compensation (the rates of which the company expects to further decline in 2003) and its limited liquidity, Pac-West will likely find the implementation of its business plan continue to be challenging." PACIFIC SAFETY: Arranges $4.5 Million Debt Financing with RoyNat ---------------------------------------------------------------- Pacific Safety Products Inc. (PSP: TSX Venture Exchange) has closed debt facilities with RoyNat Capital totaling $4.5 million. As part of the financing RoyNat Capital has extended the Company a 10-year conventional term debt facility of $2.5 million, of which $2.0 million was drawn on closing. This facility replaces a mortgage facility extended previously by RoyNat on which approximately $1.6 million remained outstanding on June 30, 2003. It is also intended to eliminate at least $100,000 of other term debt. Consequently, PSP will have access to approximately an additional $800,000 in capital to fund the growth of its business from this mortgage facility. The $500,000 that was not immediately drawn will be used to fund future capital expenditures, including equipment required to manufacture PSP's newest product, O2B.O.S.S.(TM)., a unique patented medical oxygen securing system designed to safely store and transport oxygen cylinders in emergency vehicles. The interest rate on this mortgage is RoyNat's base lending rate, currently 3.78%, plus 2.75% with an option to convert to a fixed rate. This is an improvement over the current term debt which had interest rates ranging from 6.75% to 8.9%. In addition, RoyNat Capital has extended the Company a 5-year subordinated debt facility of $2.0 million, which was fully drawn on closing. Virtually all of this capital will be employed to fund growth of PSP's business. The subordinated debt facility has a current interest coupon of 14% per annum payable monthly and a deferred interest coupon of 4% per annum with an option to pay this interest annually. In addition, the facility has a bonus option calculated at 20% of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) calculated on an average of the best two years over the five year period. There is no equity component and the funds are intended to provide working capital. "We are delighted to have secured the increased interest and financial support of RoyNat", stated Brad Field, CEO. "The new subordinated debt facility, along with the renewed and increased conventional debt facility, will provide PSP with the first significant injection of growth capital since our initial public offering in 1995. An additional benefit of these facilities is that they are non-dilutive to the Company's shareholders, meaning that most of the financial benefits of PSP's anticipated growth will still accrue to the existing shareholders. PSP is now in a position to take advantage of certain opportunities that we have had to put on hold due to capital constraints. The entire management team is excited by the opportunity this new capital represents." "Readers of our financial statements will have noted that PSP has been offside certain of its debt covenants with our operating lender for some time", added Shawn VanderMeer, CFO. "In addition to the benefits outlined by Mr. Field, this financing will bring the Company onside with all of our covenants with all lenders, providing additional security to all of our key constituents and financial partners. While some of the covenants are more technical in nature, we believe that eliminating any uncertainty involving our credit facilities is prudent and in the best interests for the Company." "RoyNat and PSP have a history of working well together", stated Derek Strong of RoyNat Capital. "We are pleased to have the opportunity to back PSP in their growth initiatives by completing the funding and being 'More than Money'. PSP is in an exciting stage of its development and we believe this additional capital and the structure provided will be to everyone's benefit." Pacific Safety Products Inc.'s mission is "... we bring everyday heroes home safely(TM)". PSP is an established industry leader in the production, distribution and sale of high performance safety products such as: ballistic, stab and fragment protection vests; bomb and land mine retrieval suits; tactical clothing; emergency medical kits and rescue equipment; and flame resistant and industrial clothing. The Company strives to provide effective protective solutions for its customers by seeking out the latest technologies to serve their needs. Founded in 1984, PSP has grown to include more than 130 employees at three Canadian facilities in Kelowna, British Columbia; Brampton, Ontario; and Arnprior, Ontario. These facilities are equipped with complete design, production and research capabilities with the Kelowna facility possessing one of the most advanced ballistic research labs in North America. PSP is a well- established manufacturer of a number of safety related product lines under the labels Pacific Emergency Products(R), PROTECTED by PSP(TM) FIREWALL(TM) and EXPLOSAFE(R). In light of the sensitive nature of its products and customers, PSP may not disclose all information regarding end-users, government agencies or countries purchasing its products. It continues to be PSP's corporate policy to conduct business only with recognized domestic law enforcement, military and government agencies and foreign agencies that are approved by the Canadian Department of Foreign Affairs and International Trade. RoyNat Capital has been providing unique financial solutions to businesses since 1962. It is a leading term debt, sub and mezzanine-debt and equity finance provider with over 1300 clients and a wholly owned subsidiary of The Scotiabank. RoyNat Capital manages a portfolio in excess of $2 billion including a mezzanine and equity portfolio of $300 million from offices in Canada and the United States. RoyNat Capital believes in the growth of successful businesses through innovative, creative solutions. RoyNat Capital specializes in providing a full range of financing services for enterprises with revenues in the $5-$200 million range. It provides businesses with funds for acquiring fixed assets, refinancing existing borrowings, working capital, buyouts and acquisitions and business transitions. RoyNat Capital provides clients with various solutions that include; equity, subordinated debt and term debt needs, as well as mezzanine financing, and business advisory services. It has an extensive network, broad industry knowledge, corporate finance advisory services and contacts within North America's financial communities, which allows it to quickly identify business opportunities and put in place strategies that will help businesses achieve their vision of success. PACKAGED ICE: Launches Tender Offer for 9-3/4% Senior Notes ----------------------------------------------------------- Packaged Ice, Inc. (Amex: ICY) is commencing a cash tender offer relating to all of its $255.0 million aggregate principal amount outstanding 9-3/4% Series A Senior Notes Due 2005 and 9-3/4% Series B Senior Notes Due 2005 (CUSIP Number 695148 AL 0). In conjunction with the tender offer, Packaged Ice is also soliciting consents to adopt proposed amendments to the indenture under which the Notes were issued that would eliminate substantially all restrictive covenants and certain event of default provisions. The tender offer and consent solicitation are being made upon the terms and subject to conditions set forth in Packaged Ice's Offer to Purchase and Consent Solicitation Statement dated July 2, 2003. The total consideration for Notes tendered and accepted for purchase pursuant to the Offer is $1,025.63 per $1,000 principal amount of the Notes. Each tendering holder will also receive accrued and unpaid interest up to, but not including, the date of payment for such Notes accepted for purchase. Included in the Total Consideration is a consent payment for each holder who validly consents to the proposed amendments on or prior to the Consent Expiration Date in the amount of $1.25 per $1,000 principal amount of Notes. The Total Consideration, including the Consent Payment will be made on the Payment Date if, but only if, such holder's Notes are accepted for purchase pursuant to the terms of the Offer. The solicitation of consents will expire at 5:00 p.m., New York City time, on July 16, 2003, unless extended. The Offer will expire at 5:00 p.m., New York City time, on July 31, 2003, unless extended (such time and date, as the same may be extended, the "Tender Offer Expiration Date"). Holders who desire to tender their Notes pursuant to the Offer and receive the Tender Offer Consideration and the Consent Payment, plus accrued and unpaid interest up to, but not including, the Payment Date, are required to consent to the proposed amendments on or prior to the Consent Expiration Date. Holders who tender their Notes after the Consent Expiration Date but on or prior to the Tender Offer Expiration Date will receive only the relevant Tender Offer Consideration, which does not include the Consent Payment, plus accrued and unpaid interest up to, but not including, the Payment Date. On May 12, 2002, Packaged Ice entered into an agreement and plan of merger with CAC Holdings Corp. and Cube Acquisition Corp. pursuant to which Cube will be merged with Packaged Ice, subject to the approval of Packaged Ice's shareholders and the satisfaction of various other conditions, with Packaged Ice surviving the Merger and continuing as a wholly-owned subsidiary of CAC. CAC and Cube were jointly formed by Trimaran Fund Management, L.L.C. and Bear Stearns Merchant Banking for purposes of completing the Merger. In order to finance the Merger and the Total Consideration, it is expected that Trimaran and Bear will make a cash equity contribution to CAC and that Packaged Ice will obtain additional funds through borrowings under a new credit facility and through the issuance of a new series of senior subordinated notes through a private placement under Rule 144A of the Securities Act of 1933, as amended, and/or a senior subordinated bridge loan. The tender offer and consent solicitation are conditioned upon the consummation of the Merger and the receipt of adequate financing. If the Merger is not consummated or adequate financing is not available to fund the Total Consideration, Packaged Ice will not be required to complete the tender offer and consent solicitation. Packaged Ice is the largest manufacturer and distributor of packaged ice in the United States. With over 1,700 employees, the Company sells its products primarily under the widely known Reddy Ice brand to more than 73,000 locations in 31 states and the District of Columbia. The Company provides a broad array of product offerings in the marketplace through traditional direct store delivery, warehouse programs, and its proprietary Ice Factory technology. Packaged Ice serves most significant consumer packaged goods channels of distribution, as well as restaurants, special entertainment events, commercial users and the agricultural sector. As reported in Troubled Company Reporter's May 15, 2003 edition, Standard & Poor's Ratings Services placed its 'B-' corporate credit and senior unsecured debt ratings on Packaged Ice Inc. on CreditWatch with developing implications. Dallas, Texas-based Packaged Ice had about $366 million of debt and preferred stock outstanding at March 31, 2003. PERLE SYSTEMS: Arranges New Debt Arrangement with Royal Capital --------------------------------------------------------------- Perle Systems Limited (OTCBB: PERL; TSE: PL), a leading provider of networking products for Internet Protocol and e-business access, announced a new debt arrangement. Under this arrangement, Royal Capital Management Inc., a Toronto based merchant bank has purchased for itself, and related parties, all of the Company's debt, previously held by its bankers, including term debt and operating credit lines, totaling approximately Cdn$25,300,000. Roycap has taken over the existing Credit Agreement formerly between the Company and its bankers. Roycap has stated that it intends to present to the Company for its consideration, on or before August 31, 2003, a proposed plan to reorganize the Company's debt and capital structure. Subject to its statutory and fiduciary duties, the Company has agreed to consider and negotiate, in good faith, the terms of this plan. In all likelihood, this reorganization will be significantly dilutive to existing shareholders. The Company has also entered into a forbearance agreement with Roycap, with respect to any current or anticipated future defaults on the Credit Agreement, between now and the completion of these negotiations, subject to earlier termination in certain circumstances. Jean Noelting, Managing Director of Royal Capital Management Inc. stated, "This is a positive development for the company as it provides a framework to address debt issues during the forbearance period. We look forward to working with the company to proactively resolve these issues. Subject to a successful reorganization, Perle will have the capacity to take advantage of a marketplace that is now recovering." Joe Perle, Chief Executive Officer of Perle said, "I am looking forward to this new arrangement with Roycap, and the opportunity to address the issues, which have constrained the Company in the past. Our goal remains to better serve our customers and channel partners in the short term and into the future." Perle Systems -- whose February 28, 2003 balance sheet shows a total shareholders' equity deficit of about $4 million -- is a leading developer, manufacturer and vendor of award-winning networking products. These products are used to connect remote users reliably and securely to central servers for a wide variety of e-business and general business applications. Perle specializes in Internet Protocol connectivity applications, with an increasing focus on mid-size IP routing solutions. Product lines include routers, remote access servers, serial/console servers, emulation adapters, multi-port serial cards, multi-modem cards, print servers and network controllers. Perle distinguishes itself by its ownership of extensive networking technology, depth of experience in major network connectivity environments and long-term channel relationships in major world markets. Perle Systems has offices and representative offices in 12 countries in North America, The United Kingdom, Europe, and Asia and sells its products through distribution channels worldwide. Its stock is traded on the OTCBB (symbol PERL) and the Toronto Stock Exchange (symbol PL). For more information about Perle and its products, access the Company's Web site at http://www.perle.com PG&E CORP: Completes Private Placement of Senior Secured Notes -------------------------------------------------------------- PG&E Corporation (NYSE: PCG) has closed on the private placement of $600 million of 6-7/8 percent Senior Secured Notes due 2008. The notes were offered within the United States only to qualified institutional investors pursuant to Rule 144A under the United States Securities Act of 1933 and, outside the United States, only to non-U.S. investors. The net proceeds of the offering, together with cash on hand, were used to pay off and terminate PG&E Corporation's existing credit agreement, including accrued interest and prepayment premiums. The offer and sale of the 6-7/8 percent Senior Secured Notes due 2008 have not been registered under the United States Securities Act of 1933 or under any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act and applicable state securities laws. PG&E Corporation is an energy-based holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company and PG&E National Energy Group. PHARMCHEM INC: Completes New $3.5 Mill. Credit Pact Transaction --------------------------------------------------------------- PharmChem, Inc. (Nasdaq:PCHM) entered into a Loan and Security Agreement with a new lender replacing its existing credit agreement. The new Agreement provides for a revolving line of credit of $3,500,000, permits borrowing at 80% of eligible receivables, has a term of three years, bears interest at prime plus 1% and requires the Company to maintain certain financial ratios. In addition, the Agreement provides for a term loan of up to $1.5 million which bears interest at prime plus 3% and is repayable monthly over 36 months; the initial draw down under this term loan facility will be $900,000. On June 30, 2003, the Company's subordinated debt holders agreed to an early payoff of the subordinated debt at a 50% discount. The Company agreed to a reduction in the exercise price of the 150,000 warrants held by the subordinated debt holders from $3.00 to $0.29 (the average of the closing prices for the 30 days ending June 26, 2003). The warrants continue to expire on September 30, 2006. As a result of the foregoing, the Company will report a gain on the early extinguishment of debt in the third quarter of approximately $665,000 which includes reductions for the unamortized discount (established when the subordinated debt was issued) and the fair value of re-pricing the warrants. PharmChem is a leading independent laboratory providing integrated drug testing services to corporate and governmental clients seeking to detect and deter the use of illegal drugs. PharmChem operates a certified forensic drug-testing laboratory in Haltom City, Texas. * * * Liquidity and Capital Resources In its Form 10-Q filed with SEC, the Company reported: "Our continuing operations during the three-month periods ended March 31 used cash of $612,000 and provided cash of $481,000 in 2003 and 2002, respectively. The decrease in cash flow from operations between 2003 and 2002 reflects a larger loss from continuing operations in 2003. Days sales outstanding at the end of the first quarter 2003 was 58 days compared to 64 days at the end of March 2002. Decreases in accounts payable and related accruals in the first quarter of both years reflect the declining business volume and ongoing cost containment measures. As of March 31, 2003, we had $2,417,000 in unrestricted cash and cash equivalents, and $500,000 in restricted cash. During the three months ended March 31, 2003, we used approximately $156,000 in cash to purchase property and equipment, principally for information systems development. "On July 31, 2002, the Company entered into a Second Amended and Restated Loan and Security Agreement with its principal lender whereby the line of credit is $4,250,000, the maturity date is June 30, 2003, interest is at the prime rate plus one-half percent (4.75% as of March 31, 2003), and the annual fee is 0.10% of the credit line, payable quarterly. The July 31, 2002 Agreement permits borrowings on eligible receivables up to 85% thereof and is secured by a lien on a significant portion of our assets. It permits up to $2,000,000 of the revolving line of credit to be used to repurchase our common stock under our common stock repurchase program and permits the declaration and distribution of a dividend in connection with our stockholder rights plan. "As of March 31, 2003, the calculated maximum that could be borrowed was $3,164,643 and the amount outstanding was $3,129,147. We were in compliance with all covenants as of March 31, 2003, except for the 2003 profitability covenant for which we are discussing a waiver from the lender. In addition, the Company is currently negotiating a new line of credit to replace its existing credit agreement. "We anticipate the existing cash balances, amounts available under existing and future credit agreements and funds to be generated from future operations will be sufficient to fund operations and forecasted capital expenditures for the next twelve months." PharmChem Inc.'s March 31, 2003 balance sheet shows that its total current liabilities outweighed its total current assets by about $2 million. PHOENIX GROUP: Files Amended Plan and Disclosure Statement ---------------------------------------------------------- The Phoenix Group Corporation (OTC Pink Sheets: PXGP) filed an amendment to the plan of reorganization and disclosure statement with the United States Bankruptcy Court for the Northern District of Texas Ft. Worth Division on June 30, 2003. In that filing, the Company articulated a plan of reorganization whereby Phoenix will be converting debt to equity, allowing Phoenix to exit bankruptcy with a clean balance sheet. Commenting on this latest filing, Ron Lusk, Chairman of The Phoenix Group, said, "This has been a long process for The Phoenix Group and its staff, but we have persevered through numerous legal proceedings, and we are now ready to come out of bankruptcy and move the Company forward. Throughout the last year, we have put our best efforts forward for our shareholders, and now they should be in a position to benefit from our work and dedication. Once we come out of this process, we will apply Fresh Start Accounting principles to get current with our SEC filings. With our strategic partners in place, we will be in a position to resume our acquisition and growth strategy, and we will work on our plan of attaining a full NASDAQ listing." The Phoenix Group Corporation is a Delaware Corporation organized in June 1988. Phoenix has predominately been engaged in providing healthcare management and ancillary services to the long-term care industry. Management of the Company has undertaken to implement a strategic business plan to reposition Phoenix through new growth initiatives involving targeted business acquisitions in the home health care industry. PINNACLE ENTERTAINMENT: Names Sarah Lee Tucker VP of Operations --------------------------------------------------------------- Pinnacle Entertainment, Inc., (NYSE: PNK) has appointed Sarah Lee Tucker as the Company's Vice President of Operations. In that position, Ms. Tucker will be responsible for producing strategic plans for increasing revenues and streamlining costs. In her role, Sarah will work closely with the general managers of each Pinnacle Entertainment property and the Company's Chief Operating Officer to increase operating efficiencies and improve margins. Ms. Tucker has extensive financial/operational analysis and development experience in the gaming industry. She began her career as an internal control analyst at The Mirage in 1992, and held various positions including Operational Evaluation Controller at Beau Rivage Resorts in Mississippi until 1999. From late 1999 to until now, she worked at Station Casinos in Las Vegas as the Director of Operations Development. "I was very fortunate to have the opportunity to work for two of the best gaming companies in the country, Mirage Resorts and Station Casinos," said Ms. Tucker. "I plan to use the experience and knowledge I gained from my previous positions to improve the operating results at all Pinnacle properties. I am looking forward to working with the property general managers and helping to raise Pinnacle to the next level." "We welcome Sarah to our management team. Her highly pertinent experience should be valuable in continuing our efforts to build revenues and improve margins," commented Daniel R. Lee, Pinnacle Entertainment's Chairman and Chief Executive Officer. Pinnacle Entertainment (S&P - B Corporate Credit Rating - Stable) owns and operates seven casinos (four with hotels) in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is also developing a major casino resort in Lake Charles, Louisiana, subject to continued compliance with the conditions of the Louisiana Gaming Control Board. POLYPHALT INC: Files Notice of Intention to Make BIA Proposal ------------------------------------------------------------- Polyphalt Inc. has filed a "Notice of Intention to Make a Proposal" under the Bankruptcy and Insolvency Act. The filing will provide the Company with protection from its creditors for 30 days (subject to extension with court approval) while it considers its restructuring alternatives. Coincident with that filing, the Company is engaging Deloitte & Touche Inc., to provide counsel, identify restructuring opportunities and serve as NOI trustee assisting the Company in realizing economic value for its stakeholders. In a press release issued in June 2003 the Company reported that its key secured lender, Grandwin Holdings Limited had demanded repayment of Grandwin's secured advances. In a subsequent press release, the Company reported that Grandwin twice extended the date on which payment of such secured advances was to be made. Currently, the payments are due on or before June 28, 2003 and the Company is not in a position to repay Grandwin at this time. On June 30, 2002, Grandwin delivered Notices of Intention to Enforce Security under the Bankruptcy and Insolvency Act to the Company. The Company intends to seek opportunities to generate value for its stakeholders by finding investors or strategic purchasers for some or all of its assets. The Company is currently reviewing a number of non-binding expressions of interest with respect to certain of its assets. Mr. Douglas Kong, CEO said: "We are very disappointed that we haven't been able to generate sufficient cash flow to enable us to repay our secured debt and other obligations. We have explored a number of alternatives to refinance the Company and/or generate value from a sale of some of the Company's assets. However, in the current economic climate, the Company will need additional time to complete these transactions and the Company intends to pursue all available options to maximize stakeholder value during the restructuring process. Our employees have been extremely supportive while we've pursued these initiatives and we are very grateful to them for their on-going activities and loyal support." PRIME HOSPITALITY: Glen Rock Unit Defaults on Security Deposits --------------------------------------------------------------- Glen Rock Holding Corp., a subsidiary of Prime Hospitality Corp. (NYSE: PDQ), received a default notice from Hospitality Properties Trust (NYSE: HPT) for failure to pay the July 1 rent of approximately $2.0 million, net of interest credited on security deposits. The lease covers 24 AmeriSuites hotels owned by HPT. For the past twelve months, lease payments have exceeded operating cash flow by approximately $9 million. In addition, there are approximately $42.1 million in security deposits and approximately $4.2 million in capital replacement deposits. The default notice has stated that HPT intends to retain these amounts. Prime and HPT intend to meet to discuss the management and franchise agreements on these hotels which are subordinated to the lease obligations to HPT. Prime Hospitality Corp., [S&P/BB-/--) one of the nation's premiere lodging companies, owns, manages, develops and franchises more than 240 hotels throughout North America. The Company owns and operates three proprietary brands, Prime Hotels & Resorts(SM) (full-service), AmeriSuites(R) (all-suites), and Wellesley Inns & Suites(R) (limited service). Also within Prime's portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Radisson, Sheraton and Holiday Inn. Prime can be accessed over the Internet at http://www.primehospitality.com PRIME HOSPITALITY: Ratings on Watch After Failure to Pay Rent ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating and its 'B' subordinated debt rating for Prime Hospitality Corp. on CreditWatch with negative implications. This action stems from the potential loss of 24 AmeriSuits hotels following the company's failure to pay its rent due July 1, 2003 to Hospitality Properties Trust (BBB-/Stable/--). Given the existing lease terms, Prime was losing approximately $9 million in EBITDA on these assets. The CreditWatch placement reflects Standard & Poor's increased concern over Prime's long-term strategy since these 24 AmeriSuites hotels represent roughly 16% of Prime's total AmeriSuites portfolio. The potential magnitude of a ratings action would likely be limited to one notch. "In resolving the CreditWatch listing, Standard & Poor's will consider several additional points such as: the position and strategy of the AmeriSuites brand during a prolonged weak lodging environment, limited room under its bank facility covenant tests, and a recent senior management change," said credit analyst Stella Kapur. Standard & Poor's plans to meet with management in the near term and review the above mentioned concerns. A subsidiary of Prime Hospitality currently leases 24 AmeriSuites hotels from HPT for annual minimum rent of roughly $24 million and eight percent of revenue in excess of a base year. If the lease is terminated, Prime could lose around $42.1 million in deposits. In addition, Prime's obligation to maintain these hotels is partially secured by a reserve account in which there was approximately $4.2 million on deposit on May 31, 2003. The notices of default sent by HPT earlier today state that HPT intends to retain the security and guaranty deposits and take control of the improvement reserve account. HPT has the right to install new management and to re- brand these hotels. REDDY ICE GROUP: S&P Ups Corporate Credit Rating to B+ from B- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Dallas, Texas-based Reddy Ice Group Inc., formerly known as Packaged Ice Inc., to 'B+' from 'B-'. At the same time, Standard & Poor's assigned its 'B+' senior secured debt rating to Reddy Ice's proposed $170 million senior secured credit facilities maturing 2009. Standard & Poor's also assigned its 'B-' subordinated debt rating to the company's proposed $150 million subordinated notes due 2011. The ratings on the proposed facilities and notes offering are based on preliminary offering statements and are subject to review upon final documentation. Proceeds from the new credit facilities and notes offering will be used as part of the financing for Reddy Ice's proposed merger with a new entity formed by Trimaran Capital Partners and Bear Stearns Merchant Banking. The new revolving credit facility will be used for general corporate purposes. All ratings have been removed from CreditWatch where they were placed on May 13, 2003, following Reddy Ice's proposed merger announcement. The outlook is stable. The upgrade reflects Standard & Poor's expectation that the proposed transaction would improve Reddy Ice's financial profile and address near-term refinancing risk related to the $50 million term loan due October 2004, $255 million in senior unsecured notes due February 2005, and $42 million of preferred stock that is mandatorily redeemable in April 2005. The senior secured debt is rated the same as the corporate credit rating. The senior secured credit facilities comprise a $35 million, five-year revolving credit facility due 2008, which includes a $12 million sublimit for letters of credit and a $5 million sublimit for swing-line loans. The senior facilities also include a $135 million six-year term loan due 2009. "The speculative-grade ratings on Reddy Ice Group Inc. continue to reflect its narrow product focus, its participation in the highly fragmented and competitive packaged ice industry, and its leveraged financial profile," said Standard & Poor's credit analyst David Kang. "Somewhat offsetting these factors are the company's strong EBITDA margins, established infrastructure, and solid regional market positions." Reddy Ice is a leading U.S. manufacturer and distributor of packaged ice, serving more than 73,000 customer locations in 31 states and the District of Columbia. Revenues are derived primarily from traditional ice delivery, as well as from placement of the company's proprietary, automated "Ice Factory." The $1.8 billion North American packaged-ice industry is regional, highly competitive, and fragmented, with roughly 3,000 participants, most of which lack significant capital resources. SAFETY-KLEEN: Wants Nod for Heritage Environmental Settlement ------------------------------------------------------------- Safety-Kleen Corp. and Safety-Kleen Systems, Inc., ask Judge Walsh's permission to settle with Heritage Environmental Services LLC, Heritage Crystal Clean LLC, and Edward Guglielmi, Kevin Hennkens, Bret A. Henry, Billy J. Hurin, Scott D. Lisberg, Michael McGinn, Don R. Pennell, Craig Andrew Rose, Dennis R. Salvino, John Ure, and Jim Zielinski, individually, which, among other things, fully resolves any and all claims, disputes or causes of action between and among the Debtors, HES, HEC, and the Individual Parties. These include all claims, disputes or causes of action, which are or could have been asserted by any of the parties in connection with any and all of these lawsuits: -- "Safety-Kleen Corporation v. Heritage Environmental Systems, LLC; Heritage Crystal Clean, LLC; Crystal Clean Parts Washer Service, Billy J. Hurin, and John Ure," pending in the South Carolina Court of Common Pleas in Richmond County; -- "Safety-Kleen Systems, Inc. v. Edward Gugliemi, Scott D. Lisberg, and Dennis R. Salvino," pending in Federal District Court in the Northern District of Illinois; -- "Safety-Kleen Systems, Inc. v. Craig Andrew Rose," pending in Federal District Court in the Northern District of Illinois; -- "Safety-Kleen Systems, Inc. v. Kevin Hennkens," pending in Federal District Court in the Eastern District of Missouri; -- "Safety-Kleen Systems, Inc. v. Bret A. Henry," pending in the Illinois Tenth Circuit Court of Peoria County; -- "Safety-Kleen Systems, Inc. v. Don R. Pennell," pending in the Federal District Court in the Eastern District of Pennsylvania; -- "Safety-Kleen Systems, Inc. v. Michael McGinn," pending in the Federal District Court in the District of Massachusetts; -- "Safety-Kleen Systems, Inc. v. Jim Zielinski," pending in Federal District Court in the Western District of New York; and -- "Heritage Crystal Clean, LLC v. Safety-Kleen Corp. and Safety-Kleen Systems, Inc.," pending in Federal District Court in the Northern District of Illinois. On January 6, 2003, Heritage-Crystal Clean filed suit against SKC and SK Systems, seeking damages in excess of $400,000,000 in consequential and punitive damages, which amount is subject to trebling under applicable antitrust statutes, as well as injunctive relief. In its suit, HCC also alleges postpetition injuries, including causes of action under Section 2 of the Sherman Act (antitrust), violation of the Illinois unfair and deceptive business practices act, tortuous interference with prospective business relations, defamation, trade libel and business disparagement, and abuse of process. On January 21, 2003, HCC filed an administrative proof of claim for the full amount of damages sought in this litigation. The Debtors previously asserted similar allegations of unfair and deceptive business practices and unfair solicitation of customers against HES, HCC and other parties in an action filed in South Carolina state court in December 2001. In that action, the court entered a temporary restraining order prohibiting HCC from engaging in certain unfair business practices. The court later entered a consent order restraining both parties with respect to business practices. The consent restraining order does not make any findings of unlawful conduct. In the South Carolina Action, Safety-Kleen contends that HES and HCC engaged in a pattern and practice of conduct designed to induce current and former employees of SK Systems to breach non-compete and confidentiality agreements and other contractual, statutory and common law obligations of loyalty and confidentiality. Additionally, during the past 18 months Safety-Kleen also initiated suit against the Individual Parties under similar legal theories in several district courts. On February 18, 2003, HCC filed its objection to the Disclosure Statement. At the hearing on the approval of the Disclosure Statement, HCC withdrew certain of the grounds stated its Objection and deferred other grounds in the Objection to the hearing on confirmation of the Plan. Since that date, the parties have accomplished a consensual resolution of all the litigation. The Settlement Agreement The most salient terms and conditions of the Settlement Agreement are: (1) Dismissal of Litigation. The Debtors, HES, HCC, and the Individual Parties will take all steps necessary to cause each of the Actions to be dismissed with prejudice and without costs, including filing a joint motion for dismissal in each of the Actions within five business days after the Effective Date of the Settlement Agreement; (2) Non-Disparagement. Safety-Kleen and HCC will not, directly or indirectly, make, or encourage or cause any third-party to make, any false, misleading, disparaging, or defamatory statements about the other or the other's products or services; (3) Withdrawal of Objection and Administrative Claim. The Objection and the Administrative Claim are deemed to be withdrawn with prejudice on the Effective Date of the Settlement Agreement. HCC agrees not to oppose in any manner confirmation of the Debtors' Plan -- as it may be amended from time to time; (4) Future Hiring Practices. In any instance in which Safety-Kleen or HCC now or in the future hires or employs in any capacity a current or former employee of the other, the hiring party will take all appropriate and necessary steps to ensure that the employee does not use or convey to any other person or entity any confidential or trade secret information of the other party; (5) Removal of Information. Safety-Kleen, HES, HCC, and the Individual Parties each will remove from their files and records any and all confidential or trade secret information of the others and will, at the option of the other, destroy or return any such confidential or trade secret information, if any. In the event that, at any time following the Effective Date of the Settlement Agreement, Safety-Kleen, HES or HCC comes into possession of any confidential or trade secret information of the other, it will make no use of such confidential or trade secret information and will promptly destroy or return any such information to the other; (6) Mutual Releases. Except for the obligations created or arising under the Settlement Agreement, the parties exchange mutual releases; and (7) Effective Date. The Effective Date of the Settlement Agreement will be 12:01 a.m. on the first date following the occurrence of the later of: (i) the entry of the proposed order, or (ii) the date upon which duly authorized representatives of Safety-Kleen, HES, and HCC have executed this Settlement Agreement, regardless of whether any or all of the Individual Parties will have executed the Settlement Agreement, and provided that the Settlement Agreement will become effective as to each of the Individual Parties only upon its execution by the duly authorized representatives of Safety-Kleen, HES, HCC, and the Individual Parties. The Debtors' Sound Business Judgment The Debtors argue that the settlement meets the standards for judicial approval. The terms and conditions of the Settlement Agreement were reached only after extensive, arm's-length negotiations between the parties. By reaching the settlement, the Debtors' estates avoid incurring additional administrative expenses, including attorney's fees and other costs that would be incurred if any of the Actions proceeded to a full trial on the merits. Moreover, the Debtors avoid the risks and uncertainties inherent in any litigation. (Safety-Kleen Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392-0900) SOLUTIA INC: Provides Q2 Financial Results Outlook Update --------------------------------------------------------- Solutia Inc. (NYSE: SOI) indicated that it expects a loss in the range of 15 to 20 cents per share for the second quarter. This loss includes restructuring charges of 6 to 7 cents per share resulting from planned cost savings actions at the Company and at both of its fifty percent owned joint ventures. Operating results versus previous guidance were negatively impacted by higher-than- expected raw material and energy costs and by weaker downstream markets in the Integrated Nylon business segment, most notably in the Acrilan product line. This product line has been adversely impacted by the continued, severe decline of the U.S. textiles industry. "The second quarter has proven to be a very difficult one for Solutia as our businesses continued to be adversely impacted by the weakened state of the manufacturing sector, characterized by significant overcapacity and persistently high raw material and energy costs," said chairman and chief executive officer John C. Hunter. "These factors have resulted in a decline in our Integrated Nylon business segment during the quarter and we unfortunately do not see the current operating environment improving significantly over the remainder of the year." In anticipation of weaker-than-expected second quarter results, the Company sought and received an amendment granting relief from certain of the financial covenants in its $300 million revolving credit facility for the period June 30, 2003 through Sept. 29, 2003. The Company also indicated that it has initiated discussions concerning a refinancing of this credit facility. "Our financial performance also continues to be adversely influenced by the continued drain from legacy issues we assumed as part of the spin-off from what is now Pharmacia," stated Hunter. "Most notable of the legacy liabilities with which we are saddled is the PCB litigation in Alabama, which continues to be the most challenging issue I have dealt with in my thirty-plus year business career. We are facing a slow, agonizing process in the Alabama state court system. The verdicts in the property damage phase of Abernathy continued to mount in the second quarter. These verdicts and the lack of approval by the federal court in the second quarter of the proposed consent decree with the U.S. EPA have significantly dampened our earlier hopes of reaching a global resolution of the PCB issues in Anniston." Each of the two major PCB cases approaches significant milestones in the near future. The personal injury phase of Abernathy is now scheduled to begin in September in state court, while dispositive motions are scheduled for August in Tolbert with the trial scheduled for October in federal court. Solutia plans to discuss its financials in greater detail at its second quarter conference call on Friday, July 25, 2003, at 9 a.m. CDT, 10 a.m. EDT. The teleconference will be webcast on its Web site at: http://www.solutia.com/pages/corporate/investors/investor_relations.asp under the presentations and speeches tab. Solutia -- http://www.Solutia.com-- uses world-class skills in applied chemistry to create value-added solutions for customers, whose products improve the lives of consumers every day. Solutia is a world leader in performance films for laminated safety glass and after-market applications; process development and scale-up services for pharmaceutical fine chemicals; specialties such as water treatment chemicals, heat transfer fluids and aviation hydraulic fluid and an integrated family of nylon products including high-performance polymers and fibers. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $232 million. STARTECH ENVIRONMENTAL: Nasdaq Delists Shares Effective July 3 -------------------------------------------------------------- Startech Environmental Corp.'s (Nasdaq: STHK) common stock was delisted from the Nasdaq Stock Market effective with the open of business on Thursday, July 3, 2003. The delisting was a result of Startech's inability to meet Nasdaq's shareholders' equity listing requirement. "While the decision by NASDAQ is disappointing it was not wholly unexpected. We have been planning for this eventuality and my goal is to now implement actions that will prevent this from having a significant long term impact on our business strategy or our ability to finance the company operations," stated Joseph S. Klimek, president and CEO. Startech's common stock will be eligible for trading on the Over- the-Counter Bulletin Board (OTCBB) effective with the open of business on July 3, 2003. Startech's ticker symbol will remain "STHK" on the OTCBB; however, some internet quotation services add an "OB" to the end of the symbol for the purpose of providing stock quotes (e.g. STHK.OB). The OTCBB is a regulated quotation service that displays real-time quotes, last sale price, and volume information in over-the-counter equity securities. OTCBB securities are traded by a community of market makers that enter quotes and trade reports through a sophisticated computer network. Investors work through a broker/dealer to trade OTCBB securities. Information regarding the OTC Bulletin Board, including stock quotations, can be found on the internet at http://www.otcbb.com * * * Liquidity and Going Concern Uncertainty In its Form 10-Q filed for the quarter ended April 30, 2003, the Startech reported: "As of April 30, 2003, we had cash and cash equivalents of $367,527 and a negative working capital of $289,074. During the six months ended April 30, 2003, our cash decreased by $141,794. Our current cash position of approximately $232,000 as of June 20, 2003 will only allow us to continue operations through July 31, 2003 unless further cash is generated during that time period. Unless we secure investment capital or generate cash from operations and sales we will be unable to continue as a going concern beyond that date. "The Company has taken measures to reduce costs, we have reviewed all internal and external expenses and have reduced and eliminated expenses to reduce our burn rate, in addition we are currently discussing with potential investors an equity private placement to satisfy our listing requirement with NASDAQ. While there are no assurances a deal will be executed it must be noted, however, that if the progress payments are not received in a timely manner or additional sales of Plasma Converters or funding is not available we may not have enough working capital to maintain our operations beyond July 31, 2003. The Company will require immediate additional financing to fund current operations through the remainder of 2003. The Company has historically satisfied its capital needs primarily by issuing equity securities. The Company will require approximately $1.0 million to finance operations through fiscal 2003 and intends to seek such financing through sales of its equity securities. "Since October 2002 the Company announced that contracts to sell three Plasma Converters were signed aggregating in excess of $15 million dollars in sales. The contracts include an established payment schedule coordinated to provide progress payments at various stages of the manufacturing and delivery cycle. We believed these progress payments, along with a recently completed sole source private placement dated March 28, 2003 which raised $138,757 after commissions that required the issuance of 152,480 shares of our unregistered common stock at $1.00 per share, would be enough operating capital to sustain company operations at the current level for more than 1 year. However, the expected down payments for these sales have been consistently delayed since December 2002 up until the present time and there can be no reasonable assurance that they will be received before the end of July 2003. "In addition to the internally generated investment opportunities, the Company is also working with a group of investors led by Joseph F. Longo, a director and greater than 10% shareholder. While an agreement with this group would cause a change in board control and management personnel, we are taking every step available to secure the capital necessary to protect the long term interests of the Company. "Assuming the aforementioned $1.0 million in financing is obtained, the Company believes that continuing operations for the longer term will be supported through anticipated growth in revenues and through additional sales of the Company's securities. Although longer-term financing requirements may vary depending upon the Company's sales performance there can no assurance that management will be able to obtain any additional financing on terms acceptable to the Company, if at all. We are in discussions with several potential investors for additional financing, however at this time the company has no binding commitments. "Our investing activities have consisted primarily of short-term high quality liquid investments, with maturities with three months or less when purchased, which are considered cash equivalents. The primary investments are high quality commercial paper, U.S. treasury notes and Treasury-bills." TEXAS PETROCHEMICALS: Misses Interest Payment on 11-1/8% Notes -------------------------------------------------------------- Texas Petrochemicals LP did not make the interest payment due on July 1 on its 11-1/8% Senior Subordinated Notes due 2006. Under the terms of the Sub Note indenture, TPC has a 30-day grace period, before it becomes in default, to either cure the payment default or reach an accommodation with the holders of the Sub Notes. In this regard, TPC also announced the signing of forbearance agreements with holders of a majority of the face value of the Sub Notes under which those holders agreed, subject to the terms of the forbearance agreement, to forbear until August 31, 2003 from (i) declaring the principal of and accrued and unpaid interest on the Sub Notes to be due and payable, (ii) bringing suit for the enforcement of payment of interest on the Sub Notes or (iii) commencing any proceeding under any provision of the Bankruptcy Code or under any other state, federal or foreign bankruptcy law against TPC, in each case arising, whether directly or indirectly, from the failure of TPC to make the interest payment due July 1, 2003. The Company will continue during the grace period to pursue the execution of forbearance agreements with additional holders of Sub Notes. TPC believes that the signing of the forbearance agreements provides TPC time to continue to work with the ad hoc bondholders' committee, and its advisors, on possible restructuring alternatives. The bondholders' committee has retained Houlihan Lokey Howard & Zukin as its financial advisor and has also retained Stroock & Stroock & Lavan LLP as its legal counsel. TPC will pay the fees of such advisors. Mr. John A. McKenna, Jr. of Houlihan Lokey Howard & Zukin stated as follows: "We have been retained by the Ad Hoc Committee of Senior Subordinated Noteholders and are in the process of conducting due diligence on the Company. We are actively engaged in discussions with the Company with the hope of reaching a consensual restructuring agreement as expeditiously as possible." TPC also announced today that Texas Petrochemical Holdings, Inc., parent holding company of TPC, did not make the interest payment due on July 1 on the 13.5% Discount Note due in 2006. Under the terms of the Discount Note indenture, TPHI has a grace period of 30 days from July 1, 2003 to either cure the payment default or to negotiate a restructuring of the Discount Note with the holder of the Discount Note. TPC also announced that it and the lenders under its existing Revolving Credit Facility have entered into an amendment to this facility pursuant to which the lenders will continue to provide access to available liquidity under this facility through at least July 31, 2003. TPC is also negotiating with certain of its senior lenders, and other financial institutions, to provide additional, incremental liquidity financing to the Company while restructuring discussions proceed. TPC continues to be current on terms with its trade creditors. There can be no assurance that TPC will be able to reach an agreement with the holders of the Sub Notes, the holder of the Discount Note or any of its other lenders regarding any restructuring transaction, or that any transaction negotiated with the bondholders' committee will be consummated. TPC is a producer of quality C4 chemical products widely used as chemical building blocks for synthetic rubber, nylon carpets, adhesives, catalysts and additives used in high-performance polymers. TPC is the largest on-purpose producer and marketer of butadiene in the Western Hemisphere. TPC is also the largest producer and marketer of butene-1 and the first or second largest domestic producer of specialty chemicals such as isobutylene diisobutylene and polyisobutylene. TPC also manufactures fuel products used in the formulation of cleaner burning gasoline. The company has manufacturing facilities in the industrial corridor adjacent to the Houston Ship Channel and operates product terminals in Baytown, Texas and Lake Charles, Louisiana. TPC is a Responsible Care(R) company dedicated to supporting the continuing effort to improve the industry's responsible management of chemicals. For more information about TPC products and services visit the company online at http://www.txpetrochem.com TEXAS PETROCHEMICALS: Interest Nonpayment Spurs S&P's D Rating -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Texas Petrochemicals LP to 'D' from 'CCC+'. At the same time, Standard & Poor's lowered its subordinated debt rating on the company's 11-1/8% notes due July 2006 to 'D' from 'CCC-'. The downgrade follows Texas Petrochemicals' announcement that it did not make the July 1, 2003, interest payment due on its 11-1/8%, $209.5 million subordinated notes or the July 1, 2003, interest payment due on its 13-1/2% holding company discount note. The company will have a 30-day grace period to cure these situations before an event of default occurs under the indentures. The company also disclosed that it has entered into a forbearance agreement with a majority of the subordinated note holders to waive certain provisions through Aug. 31, 2003, and is pursuing the execution of forbearance agreements with additional holders of the notes. In addition, the company has entered into an amendment with lenders under its revolving credit facility that provides access to this facility through at least July 31, 2003. Texas Petrochemicals, based in Houston, Texas, is the largest North American merchant producer of butadiene and specialty butylene chemicals, which are key ingredients for synthetic and specialty rubber, plastics, lubricant additives, and coatings. Profitability and cash flow have been negatively affected by a significant decline in demand for the commodity gasoline additive methyl tertiary-butyl ether and higher raw material and energy costs. UNITED AIRLINES: Amends United Express Pact with Air Wisconsin -------------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) has reached a Memorandum of Understanding with Air Wisconsin Airlines to operate select portions of the Company's United Express Service. In addition to its existing fleet, the amended agreement also provides Air Wisconsin the opportunity to place an additional 20 regional jets in the United Express program in Washington, Chicago and Denver. The agreement is for an 11-year term. "Given our long-standing relationship with Air Wisconsin, I'm pleased we have reached a Memorandum of Understanding that furthers this partnership," said Greg Kaldahl, director-United Express at United Airlines. "Our amended agreement will allow Air Wisconsin to continue operating under the United Express brand while offering a first-rate level of service to United's customers." The MOU is conditioned upon negotiation of final agreements as well as approval by the U.S. Bankruptcy Court. Air Wisconsin must also finalize agreements on labor cost savings with its flight attendants, mechanics and customer service personnel in order for the agreement to become effective. In 2002, United's employees broke 35 company records and achieved the best overall operational performance in the company's 77-year history. United Airlines finished 2002 ranked No. 1 in the industry in domestic on-time performance, according to the official U.S. Department of Transportation's Air Travel Consumer report. United and United Express operate more than 3,300 flights each day on a route network that spans the globe. News releases and other information about United can be found at the company's website at www.united.com . UNITED AIRLINES: Improves Ranking in Operational Excellence ----------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) maintained or improved its ranking among the other major carriers in several categories and retained its number-one ranking for on-time arrival performance for the past 12-month average, according to the U.S. Department of Transportation's May report on U.S. airline performance. "This summer is expected to continue to generate very high load factors across our system," said John Tague, United's executive vice president -- Customer. "However, we continue to perform better than ever. Our employees keep focusing on getting our flights in and out on-time day after day while delivering exceptional service to our customers." With the 4th of July holiday coming up this week and the busy summer travel, United Airlines wants to remind its customers of some helpful travel tips to make their experience easier: -- Arrive early: Customers who are not checking bags should arrive at the airport at least an hour before their scheduled flight. Those customers who have luggage to check should get to the airport at least 90 minutes before they fly, and customers who are flying to international destinations should arrive at least two hours before their flight. Customers are also reminded to allow extra time when traveling during this busy summer season, especially if traveling during peak airport hours. To help plan their travel, customers should visit united.com to get their local airport peak time and security line wait information. -- Get real time flight information using united.com and EasyUpdate: Prior to their trip, customers should visit united.com for up-to-the-minute flight information. They also may receive real-time flight information by signing up for United's flight status alert service, EasyUpdate. Flight information can be sent to a pager, cell phone or Web-enabled PDA. -- Baggage: United's free checked bag allowance is two bags weighing 50 lbs each. For bags over 50 lbs, there is a $25 fee per bag. Customers traveling internationally are allowed a free checked bag allowance of 70 lbs per bag. Checked luggage should be unlocked at all times. The TSA may need to search the luggage to see the contents. If the luggage is locked, the TSA will have to break the lock to conduct a search. -- Travel light: Federal regulations allow only one carry-on bag, not to exceed 45 linear inches in size, and a small personal item such as a briefcase, purse or laptop. Customers should keep undeveloped film in their carry-on luggage. Checked baggage scanners used by the TSA might damage film. -- Use EasyCheck-in Online: United has introduced EasyCheck- in Online, which gives its customers the ability to check in from home, the office or anywhere where they have access to an Internet connection. This feature allows customers to print their boarding pass before they get to the airport, then proceed through the security checkpoint directly to their departure gate. EasyCheck-in Online is easily accessible through the carrier's homepage at united.com and is available for domestic travel on United and United Express flights. -- Use EasyCheck-in: United's EasyCheck-in self serve kiosks are now available at 28 airports. Customers can use EasyCheck-in to print boarding passes and choose seat assignments, then proceed directly through the security checkpoint to their departure gate. -- Use EasyCheck-in Curbside: United as curbside check-in at 28 airports. Customers are encouraged to use this convenient service that enables those traveling domestically to check luggage and receive their boarding pass even before they enter the terminal. -- Use Priority Security Checkpoint Lines: United was the first airline to introduce the very popular Priority Checkpoint lines for United's First Class and Business Class customers, Pass Plus customers, Mileage Plus 1K, Premier Executive and and STAR Alliance Gold members. Priority Lines are available at Chicago, Los Angeles, San Francisco, Denver, Newark, Phoenix, Minneapolis, Honolulu and Seattle. In Seattle and Honolulu, United offers Priority Lines to United's 1K Mileage Plus members. -- Children Traveling Unaccompanied: Customers who have children traveling unaccompanied should allow plenty of time when dropping off or picking up children. They will need extra time to check in at the ticket counters and to obtain a pass that will allow one adult through a security check-point to the gate. Parents or guardians should also have pertinent flight information available for the agents. In 2002, United's employees broke 35 company records and achieved the best overall operational performance in the company's 77-year history. United Airlines finished 2002 ranked No. 1 in the industry in domestic on-time performance, according to the official U.S. Department of Transportation's Air Travel Consumer report. United and United Express operate more than 3,300 flights each day on a route network that spans the globe. News releases and other information about United can be found at the company's Web site at http://www.united.com UNITED AIRLINES: Earns Nod to Expand McKinsey's Engagement ---------------------------------------------------------- UAL Corporation obtained permission from the Court to revise the scope of McKinsey & Company's employment. Thus, the Debtors expand the scope of McKinsey's services, pursuant to an Engagement Letter dated April 7, 2003, to include: -- McKinsey assessing alternatives of strategic sourcing of the Debtors' fuel purchases, and -- McKinsey executing strategy to consolidate and centralize station level expenditures for goods and services. Pursuant to an Engagement Letter dated and April 29, 2003, McKinsey agreed to: -- support the development of the analytical framework, and -- provide project management and external perspectives to assist in the reset of the strategic plan. McKinsey will also provide objective perspectives on key assumptions in the strategy reset design and develop contingency actions to cover unexpected shortfalls in the plan. The Debtors have agreed to pay McKinsey $650,000 for April 2003, pro rated to $532,000. The Debtors have agreed to pay McKinsey $295,000 for May 2003. (United Airlines Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNOVA: Fitch Ups Sr. Unsec. Rating to B- over Strong Performance ---------------------------------------------------------------- Fitch Ratings has upgraded UNOVA Inc.'s (NYSE: UNA) senior unsecured rating to 'B-' from 'CCC'. The Rating Outlook is Stable. The change in the rating reflects UNA's strengthening its balance sheet by reducing debt levels through a pension reversion, asset sales, reduction of net working assets, and a series of patent settlements. Also, high level of liquidity and improved operating performance support the rating. In January 2003, UNA paid off its term loan and currently has $200 million of public debt and $8 million of industrial revenue bond. Net debt fell to $20.9 million at March 31, 2003, from $46.4 million at December 31, 2002, $177.8 million at December 31, 2001, and $342.0 million at December 31, 2000. At March 31, 2003, the company had $188 million in cash, providing ample liquidity in the short term. During the same period, UNA's EBITDA turned positive and free cash flow (EBITDA minus increase in WC minus capex minus cash interest minus cash taxes) was $86.5 million in 2002, up from $41.1 million in 2001 and negative $32.4 million in 2000. Consolidated results have been stabilized, due to positive trends at its ADS business. Intermec sales, excluding IP transactions, grew at a double-digit rate during the past three consecutive quarters, aided by growing share and growth in its end markets. Concerns include continuous weakness in the overall operating performance due to weak IAS business and unstable cash flow from operations. In addition, the growing AIDC market may attract more competition, however, given the number of patents and reasonably high switching costs, the threat should not be material in the near term. UNA has successfully reduced costs and brought down Intermec's sales breakeven point to $145 million per quarter from a previous $220 million. The operating margin in this segment has improved to 5.5% during the first quarter of 2003. Excluding intellectual property settlements, Intermec's operating margin in 2002 was about 2.4%. Backlog at December 31, 2002 was $299 million, down from $386 million and $581 million at December 31, 2001 and 2000, respectively. The majority of the backlog is concentrated in the IAS segment. Continuous weakness in the automotive and aerospace industries has negatively impacted the IAS business and weakness in this segment has limited UNA's overall improvement. UNA has consolidated three divisions (Cincinnati Machine, Lamb Machining Systems, and Lamb Body & Assembly Systems) into one operating entity called UNOVA Manufacturing Technologies during the fourth quarter of 2002. In conjunction with the consolidation, UNA has identified more fixed assets to be sold. The transaction is expected to be completed during the third quarter, generating additional cash. UNA had a cash position of close to $190 million at March 31, 2003. Fitch expects the company to maintain relatively high cash level over the near term, with $100 million in notes maturing in 2005. UNA does not anticipate any large capital spending nor acquisition activities in the near term, and cash on hand provides ample liquidity in the near term. Over the long term, UNA will need to demonstrate sustainable improvement to restore meaningful improvement in margins and free cash flow to enhance financial flexibility. VENTAS INC: Will Publish Second-Quarter Results on July 23, 2003 ---------------------------------------------------------------- Ventas, Inc. (NYSE:VTR) will issue its second quarter 2003 earnings on Wednesday evening, July 23, 2003. A conference call to discuss those earnings will be held on the morning of Thursday, July 24, 2003 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The call will be webcast live by CCBN and can be accessed at the Ventas Web site at http://www.ventasreit.comor at http://www.companyboardroom.com Ventas, Inc. is a healthcare real estate investment trust that owns 44 hospitals, 204 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 additional healthcare and senior housing facilities. More information about Ventas can be found on its Web site at http://www.ventasreit.com As previously reported, Standard & Poor's affirmed Ventas Inc.'s corporate credit ratings at BB-. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $43 million. VICEROY RESOURCE: Completes Plan Arrangement & Private Placement ---------------------------------------------------------------- Quest Capital Corp., f.k.a. Viceroy Resource Corporation, said that the Arrangement involving the reorganization and exchanges of securities of Viceroy Resource Corporation (VOY-TSX), Quest Investment Corporation (Q.A and Q.B - TSX) Avatar Petroleum Inc. (AVA - TSX Venture) and Quest Management Corp has been completed and Viceroy's name changed to Quest Capital Corp. In addition, the previously announced private placement of $10 million has been completed. The Class A Subordinate Voting Shares and the Class B Variable Multiple Voting Shares of Quest Capital will be listed and posted for trading at the opening on Friday, July 4, 2003. The listed shares of Viceroy, Quest Investment and Avatar will be delisted at that time. Quest Capital will commence trading under the symbols "QC.A" for the Class A Shares and "QC.B" for the Class B Shares. Quest Capital Class A Shares carry one vote per share. Quest Capital Class B Shares carry two votes per share and will increase by one vote for each 6 million additional votes attached to newly issued Class A Shares or Class B Shares (in any combination) to a maximum of five votes per share. Based on the share exchange ratios set out in the Arrangement and following completion of the private placement Quest Capital has approximately 78.4 million Class A Shares and 4.3 million Class B Shares issued and outstanding. Quest Capital's transfer agent, Computershare Trust Company of Canada, commenced on June 30, 2003, sending Letters of Transmittal to registered shareholders of Viceroy, Quest Investment and Avatar, which provide instructions on how to exchange existing share certificates. Shareholders who hold their shares with financial service companies should contact their respective service agent. Shareholders of Viceroy as of June 30, 2003 will also be entitled to receive shares of Viceroy Exploration Ltd. and SpectrumGold Inc. in accordance with the terms of the Arrangement. Shareholders of the companies who are entitled to receive less than one board lot of shares pursuant to the Arrangement, will receive a cash payment unless they elect to receive Quest Capital shares and provide the necessary documentation to the transfer agent on or before August 5, 2003. Quest Capital has in excess of $90 million of total assets which will provide the basis for expanding its merchant banking activities - specifically, increasing its bridge loan business by providing collateralized bridge loans to publicly listed venture companies. WACKENHUT CORRECTIONS: Closes Sale of UK Joint Venture Interest --------------------------------------------------------------- Wackenhut Corrections Corporation (NYSE: WHC) has successfully completed the sale of its 50% interest in Premier Custodial Group Limited to its former joint venture partner in the United Kingdom, Serco Investments Limited. WCC received approximately $80 million in pre-tax proceeds from the sale. WCC currently anticipates that it may use the proceeds from the sale of its joint venture interest to acquire a prison or mental health services business or to otherwise expand its existing operations in those lines of business. George C. Zoley, Chairman of the Board and Chief Executive Officer of WCC, said: "We are pleased with the completion of the sale of our UK joint venture interest. This transaction provides WCC with an opportunity to pursue further growth. We intend to use the net proceeds from the sale to make one or more acquisitions that would enable us to continue to grow and enhance our business." WCC is a world leader in the delivery of correctional and detention management, health and mental health services to federal, state and local government agencies around the globe. WCC offers a turnkey approach that includes design, construction, financing and operations. The Company represents 31 government clients servicing 48 facilities in the United States, Australia, South Africa, New Zealand, and Canada with a total design capacity of approximately 36,000 beds. As reported in Troubled Company Reporter's May 5, 2003 edition, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and 'BB' senior secured debt ratings on Wackenhut Corrections Corp., on CreditWatch with negative implications. Negative implications mean that the ratings could be lowered or affirmed, following Standard & Poor's review. Boca Raton, Florida-based WCC, a provider of a comprehensive range of prison and correctional services, had about $125 million of debt outstanding at Dec. 29, 2002. WARNACO GROUP: Judge Bohanon Closes All Subsidiaries' Cases ----------------------------------------------------------- After due consideration, Judge Bohanon closes all of the The Warnaco Debtors' bankruptcy cases, except for Authentic Fitness Corporation (Case No. 01-41648) and Warnaco Inc.'s (Case No. 01- 41671) cases. All future docket entries in Authentic Fitness and Warnaco Inc.'s cases will be entered directly in their cases. (Warnaco Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 609/392-0900) WATERLINK: Seeks Nod to Use Cash Collateral to Finance Operation ---------------------------------------------------------------- Waterlink, Inc., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Delaware to use Cash Collateral in these chapter 11 cases. As of the Petition Date, Debtors are parties to a Credit Agreement with Bank of America, National Association, as Agent and as Lender. Pursuant to the Credit Facility, Debtors are obligated to the Lender in the principal amount of $35 million as of the Petition Date. The Debtors believe that Lender will assert that the Obligations are secured by enforceable first priority liens and security interests in substantially all of Debtors' assets. All cash and cash equivalents in which Debtors have an ownership interest, and in which the Lender claims an interest, constitute cash collateral within the meaning of Section 363 of the Bankruptcy Code. William W. Vogelhuber, Chief Executive Officer of Waterlink, assure that Court to use only that cash which Debtors absolutely require to avoid irreparable harm to their estates. The Debtors will not expend funds in excess of cash receipts. Debtors require access to cash generated by their accounts receivable collections. The continued use of cash collateral will assure that the going concern value of Debtors, and the jobs of 175 employees, are not destroyed. The Debtors further argue that they need immediate authority to use cash collateral to fund their operations. The failure to obtain authorization for the use of cash collateral will be fatal to Debtors, and disastrous to their creditors. The Debtors wish to obtain Cash Collateral pursuant to the Budget: 4-Jul 11-Jul 18-Jul 25-Jul 1-Aug ----- ------ ------ ------ ----- Cash Receipts 748 1,143 968 748 792 Cash Inflows 837 1,156 723 1,088 1,076 Net Cash (126) (13) 245 (340) (285) Beginning Cash 675 549 536 781 441 Ending Cash 549 536 781 441 156 8-Aug 15-Aug 22-Aug 29-Aug 5-Sep ----- ------ ------ ------ ----- Cash Receipts 1,150 1,500 1,350 1,000 1,150 Cash Inflows 952 985 902 960 1,562 Net Cash 198 515 448 40 (412) Beginning Cash 156 354 869 1,317 1,358 Ending Cash 354 869 1,317 1,358 945 12-Sep 19-Sep 26-Sep ------ ------ ------ Cash Receipts 1,500 1,350 1,000 Cash Inflows 960 952 1,080 Net Cash 540 398 (80) Beginning Cash 945 1,486 1,884 Ending Cash 1,486 1,884 1,804 The Debtors wish to provide adequate protection by providing their secured creditor an additional or replacement lien and grant the Lender, valid and perfected, replacement security interests in, and liens on all of the postpetition property of the estate. Waterlink, Inc., headquartered in Columbus, Ohio, is an international provider of integrated water and air purification solutions for both industrial and municipal customers. The Company filed for chapter 11 protection on June 27, 2003 (Bankr. Case No. 03-11989). Kurt F. Gwynne, Esq., at Reed Smith LLP represents the Debtors in their restructuring efforts. As of March 31, 2003, the Debtors listed $36,719,000 in total assets and $51,081,000 in total debts. WCI STEEL: Misses Interest Payment on 10% Senior Secured Notes -------------------------------------------------------------- WCI Steel, Inc., did not make the required interest payment due on June 1, 2003 in respect to its 10% Senior Secured Notes due 2004 within the 30-day grace period provided for in the indenture governing the notes. The company's restructuring process, first announced in December 2002, continues on track. Edward R. Caine, president and CEO of WCI Steel, stated in December 2002 that as part of its restructuring the company would develop a new strategic plan, revise its capital structure and make its cost base more competitive. The following progress has been made: -- In concert with Metal Strategies, Inc., the company has developed a strategic plan that provides guidance on how the company will effectively produce and market its products going forward. -- As a result of discussion with the United Steelworkers of America, the company has established a process whereby self- directed work teams are being evaluated that, if implemented, should allow the company to be more productive and provide more authority and autonomy to the workforce. -- The company has received an indication from its parent, The Renco Group, Inc., that as part of any restructuring it is prepared to provide a substantial capital infusion that will allow for targeted investments in the key operating facilities at WCI. -- Discussions are being scheduled with the financial advisors of the Senior Secured Notes to begin the process of restructuring the outstanding indebtedness. -- The company has held discussions with its bank group that have resulted in the bank group's continued daily funding of the company through its $100 million revolving credit facility. "The restructuring process continues at a thoughtful yet rapid pace," Caine said. "With the continued support of our dedicated workforce, our bondholders, our bank group and the Renco Group we can successfully complete our restructuring journey and continue to provide our customers with the on- time delivery and product satisfaction they have come to expect from WCI Steel." WCI Steel is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steels at its Warren, Ohio facility. WCI products are used by steel service centers, convertors, electrical equipment manufacturers and the automotive and construction markets. WEIRTON STEEL: Court Approves McGuirewoods as Bankruptcy Counsel ---------------------------------------------------------------- Weirton Steel Corporation and its debtor-affiliates obtained permission from the Court to employ the law firm of McGuireWoods LLP as its counsel with regard to the filing and prosecution of this case, and all related matters, effective as of the Petition Date. Compensation will be payable to McGuireWoods on an hourly basis, plus reimbursement of actual, necessary expenses and other charges incurred by the Firm. The hourly rates charged by McGuireWoods are consistent with the rates charged in comparable non-bankruptcy matters and are subject to periodic adjustments to reflect economic and other conditions. The Firm's current hourly rates are: Partners $220 - 575 Associates 155 - 350 Legal assistants 95 - 200 McGuireWoods holds a $120,000 general retainer for its services and expenses to be rendered or incurred for or on behalf of the Debtor. The Debtor has agreed that McGuireWoods will hold this retainer during the pendency of this case and will apply the retainer against the Firm's final fee application. In addition, the Firm was paid $130,000 by the Debtor for work performed through May 18, 2003. As counsel, McGuireWoods will: A. advise the Debtor with respect to its powers and duties as a debtor-in-possession in the continued management and operation of its 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 Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any action commenced against the Debtor, negotiations concerning all litigation in which the Debtor is involved, and objections to claims filed against the estate; D. prepare on the Debtor's behalf all motions, applications, answers, orders, reports and papers necessary to the administration of the estate; E. negotiate and prepare on the Debtor's behalf a plan of reorganization, disclosure statement, and all related agreements and documents, and take any necessary action on behalf of the Debtor to obtain confirmation of the plan; F. represent the Debtor in connection with postpetition financing if obtained; G. advise the Debtor in connection with any potential sale of assets; H. appear before the Court, any appellate courts, and the United States Trustee and protect the interests of the Debtor's estate before the courts and the United States Trustee; I. consult with the Debtor regarding tax, intellectual property, labor and employment, real estate, corporate finance, corporate and securities, and litigation matters; and J. perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with this Chapter 11 case. (Weirton Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPOINT STEVENS: Fitch Withdraws D Rating on $1-Bil. Sr Notes --------------------------------------------------------------- Fitch Ratings has withdrawn the 'D' rating of WestPoint Stevens' $1 billion of senior notes. The withdrawal was initiated by Fitch in accordance with established procedures regarding companies that file for bankruptcy under Chapter 11. WORLDCOM INC: Reaches Amended Settlement Agreement with SEC ----------------------------------------------------------- The following statement should be attributed to Bob Blakely, MCI Chief Financial Officer: "From the beginning we have cooperated with the SEC as part of our commitment to regaining trust and creating a new future for our company. "[Wednes]day's settlement reflects an additional contribution of $250 million in common stock that will allow shareholders and bondholders to participate in the future success of the company. "We appreciate the efforts of everyone involved in reaching this decision, which remains subject to court approval. We believe that it is another significant step toward MCI's emergence from Chapter 11 expected this fall." WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone and wholly-owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com WORLDCOM INC: Shareholder Boycott Threat Passes 15,000 Mark ----------------------------------------------------------- A group of MCI WorldCom, Inc. (OTC Bulletin Board: WCOEQ, MCWEQ), stockholders has announced that it has received over 15,000 email messages supporting a possible future boycott of the 'new MCI'. "Thousands of people apparently feel that the current bankruptcy reorganization plan is unfair," said Neal Nelson, Spokesperson for the MCI WorldCom Stockholders Group. "The U.S. Trustee and the bankruptcy judge may accept this plan but the average citizens may reject it by cancelling their MCI WorldCom service." "The reorganization plan would transfer ownership of the 'new MCI' to the current bondholders and leave the current WorldCom and MCI stockholders with nothing," continued Nelson. "The stockholders favor an alternate plan with 50% debt reduction, where the bondholders would get 50% ownership of the new company and the current stockholders would be given 50% equity in the new firm." "Through total domination of the bankruptcy committees, the bondholders have prevented consideration of a compromise plan," added Nelson. "The only avenue left for effective protest against this plan is to threaten a boycott of the 'new MCI'". Any current, or possible future, MCI WorldCom customer can help support the MCI WorldCom stockholders by sending an empty email message to: cancel.mci@nna.com . By sending an email, an individual would be stating that, if the WorldCom bankruptcy plan is approved in its current form, that individual would not intend to do business with the "new MCI". More information about this threatened boycott can be found on the MCI WorldCom Stockholder Web Site at http://www.wcom-iso.com Stockholders that are interested in the group, but do not have access to the World Wide Web, can contact the group's spokesperson, Neal Nelson, at (847) 851-8900, email: neal@nna.com The MCI WorldCom stockholder group is totally independent and is not sponsored by, associated with or endorsed by MCI WorldCom, Inc., any of its officers or affiliated companies. * John Patrick Oroho Esq., Joins Porzio, Bromberg as Principal -------------------------------------------------------------- Porzio, Bromberg & Newman, P.C., one of New Jersey's most prominent law firms, announces the addition of John Patrick Oroho, Esq. as a principal in the Pharmaceutical Regulatory Compliance Practice. Oroho has an extensive pharmaceutical regulatory and compliance background. He spent three years as General Counsel for Integrated Pharma Technologies and Computer Systems Services & Consulting, Inc. Prior experience includes 11 years as a shareholder at Struble Ragno Petrie Oroho Spinato Bonanno MacMahon & Conte, P.C. "For the past several years, I have been heavily involved in computer system validation and Prescription Drug Marketing Act compliance. I have worked with exciting technology in the areas of sales force automation and sample accountability. I strongly believe that technology will continue to help pharmaceutical companies attain their sales and marketing goals, but, at the same time help them remain compliant with all federal and state regulations." "An emerging use of technology that I see as a real benefit to the pharmaceutical companies is e-detailing. In light of the high costs associated with face to face sales calls and because managed care has significantly curtailed the time that physicians can devote to such meetings, I feel that a properly tailored e- detailing program can be a cost effective solution for pharma companies of all sizes. Additionally, e-detailing programs can be an effective compliant medium to educate and inform physicians." "Another area where I see the convergence of law and technology is gift-to-physician programs. These programs have come under scrutiny by state and federal regulators, as well as by the industry itself with the adoption of the PhRMA Code on Interactions with Healthcare Professionals. Technology and the law are coming together to enable companies to offer ethical, compliant, gift-to-physician programs. The technology is available not only to track such programs, but also to enable pharmaceutical companies to file the state disclosure reports where necessary." "This is an exciting time in the pharmaceutical industry. I look forward to helping create an environment that allows for the use of e-detailing and gift-to-physician programs that are designed to serve the pharma companies and physicians in an ethical, legal manner." Oroho received a J.D. from the University of Notre Dame School of Law in 1985 and an undergraduate degree from the United States Merchant Marine Academy in 1978. Porzio, Bromberg & Newman, founded in 1962, is headquartered in Morristown, New Jersey, and maintains offices in New York City and Brick, New Jersey. The firm focuses on litigation, environmental law and business counseling, resulting in a more specialized practice and entry into major nationally-litigated matters, including toxic tort and pharmaceutical liability controversies. Firm lawyers are also active in bankruptcy, land use and real estate development, alternative dispute resolution, and governmental affairs, as well as intellectual property, commercial, education, employment, insurance, transportation and motor carrier, construction, securities, and family law. For additional information, visit http://www.pbnlaw.com * BOOK REVIEW: The Money Wars: The Rise and Fall of the Great Buyout Boom of the 1980s ------------------------------------------------------------- Author: Roy C. Smith Publisher: Beard Books Softcover: 370 pages List Price: $34.95 Review by David Henderson Get your own personal today at http://www.amazon.com/exec/obidos/ASIN/1893122697/internetbankrupt Business is war by civilized means. It won't get you a tailhook landing on an n aircraft carrier docked in San Diego, but the spoils of war can be glorious to behold. Most executives do not approach business this way. They are content to nudge along their behemoths, cash their options, and pillage their workers. This author calls those managers "inertia ridden." He quotes Carl Icahn describing their companies as run by "gross and widespread incompetent management." In cycles though, the U.S. economy generates a few business warriors with the drive, or hubris, to treat the market as a battlefield. The 1980s saw the last great spectacle of business titans clashing. (The '90s, by contrast, was an era of the investment banks waging war on the gullible.) The Money Wars is the story of the last great buyout boom. Between 1982 and 1988, more than ten thousand transactions were completed within the U.S. alone, aggregating more than $1 trillion of capitalization. Roy Smith has written a breezy read, traversing the reader through an important piece of U.S. history, not just business history. Two thirds of the way through the book, after covering early twentieth century business history, the growth of financial engineering after WWII, the conglomerate era, the RJR-Nabisco story, and the financial machinations of KKR, we finally meet the star of the show, Michael Milken. The picture painted by the author leads the reader to observe that, every now and then, an individual comes along at the right time and place in history who knows exactly where he or she is in that history, and leaves a world-historical footprint as a result. Whatever one may think of Milken's ethics or his priorities, the reader will conclude that he is the greatest financial genius this country has produced since J.P. Morgan. No high-flying financial era has ever happened in this country without the frothy market attracting common criminals, or in some cases making criminals out of weak, but previously honest men (and it always seems to be men). Something there is about testosterone and money. With so many deals being done, insider trading was inevitable. Was Michael Milken guilty of insider trading? Probably, but in all likelihood, everybody who attended his lavish parties, called "Predators' Balls," shared the same information. Why did the Justice Department go after Milken and his firm, Drexel Burnham Lambert with such raw enthusiasm? That history has not yet been written, but Drexel had created a lot of envy and enemies on the Street. When a better history of the period is written, it will be a study in the confluence of forces that made Michael Milken's genius possible: the sclerotic management of irrational conglomerates, a ready market for the junk bonds Milken was selling, and a few malcontent capitalist like Carl Icahn and Ted Turner, who were ready and able to wage their own financial warfare. This book is a must read for any student of business who did not live through any of these fascination financial eras. Roy C. Smith is a professor of entrepreneurship, finance and international business at NYU, and teaches on the faculty there of the Stern School of Business. Prior to 1987, he was a partner at Goldman Sachs. He received a B.S. from the Naval Academy in 1960 and an M.B.A. from Harvard in 1966. ********* 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. 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