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/raid1/www/Hosts/bankrupt/TCR_Public/030805.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 5, 2003, Vol. 7, No. 153 Headlines ABACUS COMMS: Case Summary and 20 Largest Unsecured Creditors ACTERNA CORP: Files Plan & Disclosure Statement in New York ACTERNA CORP: Gets Final Nod to Continue AP Services' Engagement AFTON FOOD: Strikes Restructuring Pact with Senior & Sub Lenders AIRTRAN AIRWAYS: July Revenue Passenger Miles Slide-Up 32.4% ALLIANCE COMMS: Sells Cable Systems to Cequel and Classic Holdco ALTERNATIVE FUEL: Second Quarter Net Loss Widens to $2 Million ALTHRU HEALTH: Fitch Withdraws Bq Quantitative Insurer Rating AMERCO: Court Fixes November 10, 2003 as General Claims Bar Date AMERICA WEST: Completes $75 Mill. Senior Notes Private Offering AMERICAN AIRLINES: July Load Factor Slides-Up 5.3 Points to 81% AMERIPOL SYNPOL: Sells Certain Assets to International Specialty ANC RENTAL: Plan Filing Exclusivity Extended to November 3, 2003 ARMOR HLDGS: S&P Assigns BB Corp. Credit & B+ Sub. Notes Ratings ASIA GLOBAL CROSSING: Chapter 7 Trustee Posts $95 Million Bond ASSOC. MATERIALS: S&P Places BB- Credit Rating on Watch Negative ATCHISON CASTING: Files for Chapter 11 Protection in Missouri ATCHISON CASTING: Case Summary & Largest Unsecured Creditors AVISTA CORP: Unit Requests Nod to Increase Natural Gas Prices BETHLEHEM STEEL: Posts Overview of Joint Plan of Liquidation BIOSPECIFICS TECH: Continues Conditional Nasdaq SmallCap Listing BONUS STORES: Seeks Court Nod to Pay Vendors' Prepetition Claims CABLETEL COMMS: Renegotiating Payment Terms of Promissory Note CALPINE CORP: Commences Note Offering to Refinance CCFC I Debt CINCINNATI BELL: Commences Exchange Offers for BRCOM Preferreds CINEMARK USA: Intends to Amend Senior Secured Credit Facility COLUMBIA LABORATORIES: Holding Q2 Conference Call on Thursday COM21 INC: Hearing on Proposed Asset Sale to Convene on Thursday CONTINENTAL AIRLINES: Flies 6BB Revenue Passenger Miles in July CSK AUTO: Hal Smith Steps Down as SVP of Marketing/Merchandising DELTA AIR LINES: Names Paul Graves VP Global Diversity Affairs DETROIT MEDICAL: Fitch Affirms B Rating on $569 Mil. of Bonds DOANE PET CARE: Lowered Ratings Reflect Weak Ops. Performance DVI INC: Misses Interest Payment on 9-7/8% Senior Notes due 2004 DVI INC: S&P Drops Counterparty and Senior Unsecured Rating to D DVI INC: Fitch Further Junks Senior Unsecured Debt to C from CCC DYNEGY HOLDINGS: S&P Assigns Junk and Low-B Debt Ratings DYNEGY INC: Prices $1.45 Billion Senior Secured Notes Offering ENRON CORP: ENA Wants Go-Signal to Sell BT Exploration for $21MM EXCHANGE INSURANCE: S&P Assigns 'R' Financial Strength Rating EXEGENICS INC: Receives Amended Tender Offer from EI Acquisition FARMLAND IND.: Files First Amended Plan and Disclosure Statement FLEMING COMPANIES: Court OKs Dovebid's Engagement as Auctioneer FORD MOTOR COMPANY: Reports 7% Decline in Sales for July 2003 FRONTIER OIL: Fitch to Raise Ratings Following Holly Merger GEO SPECIALTY: Interest Nonpayment Spurs S&P to Junk Rating GEORGIA-PACIFIC CORP: Board Declares Regular Quarterly Dividend GEORGIA-PACIFIC: Commences Exchange Offer for 8.875% Sr. Notes GOODYEAR TIRE: Names Stephanie Wernet VP, Information Technology GREAT ATLANTIC & PACIFIC: S&P Cuts Rating over Weak Cash Flow GUAM POWER: Fitch Downgrades Electric Revenue Bond Rating to BB+ HMP EQUITY HOLDINGS: S&P Affirms B+ Corporate Credit Rating HOLLYWOOD CASINO: Fails to Make Interest Payments on 13% Notes HOLLYWOOD CASINO: Interest Nonpayment Prompts S&P's D Ratings IMC GLOBAL: Reports Final Results of Tender Offers for Notes INTERBANK FUNDING: All Voting Ballots Due by Thursday JOLIET JR. COLLEGE: Fitch Downgrades Bond Rating to BB from BBB- JP MORGAN: Fitch Places Class F, G & H Ratings on Watch Negative KAISER ALUMINUM: Court Approves Stipulation with Pension Benefit KCS ENERGY: Will Publish Second Quarter 2003 Results Tomorrow KISTLER AEROSPACE: Court Clears $1.2 Mill. Interim DIP Financing LEAP WIRELESS: Files 4th Plan & 5th Disclosure Statement LORAL SPACE: Bringing-In Greenhill & Co. as Financial Advisors MAGELLAN HEALTH: Secures Deutsche Bank's $230MM Exit Financing MAGELLAN HEALTH: Amended Plan's Claim Classification & Treatment MICRON TECHNOLOGY: SEC Declares Registration Statement Effective MIKE TYSON: Case Summary and Largest Unsecured Creditors MIRANT CORP: First Creditors' Meeting to Convene on August 21 NATIONAL STEEL: Proposes Solicitation and Tabulation Procedures NATIONSRENT: UBS Securities Asks for Summary Judgment on Fees NETWORK PLUS: Ch. 7 Trustee Hires BTB as Liquidation Consultant NEXTWAVE: Cingular Confirms Negotiation of an Asset Purchase Pact NORTHWEST AIRLINES: S&P Affirms B+ Long-Term Corp. Credit Rating NORTHWEST AIRLINES: Can't Legally Buy-Back Series C Preferreds NORTHWEST AIRLINES: Flight Attendants Say Airline Breaks Promise NORTHWEST AIRLINES: Mechanics Cry Foul Over Board's Decision NOVA COMMS: Inks LOI to Sell Unit to Trimfast for $2 Million NQL DRILLING: Arranges $10 Million Short-Term Subordinated Loan NRG ENERGY: Honoring and Paying Up to $1.5M in Prepetition Taxes OAKWOOD HOMES: Fitch Takes Rating Actions on 63 RMBS Classes OGLEBAY NORTON: S&P Keeps Watch after Deferring Interest Payment ORYX TECHNOLOGY: Completes $625K Common Stock Private Placement PACIFICARE HEALTH: Clarifies Effect of Potential Debt Conversion PETROLEUM GEO: Files Plan and Disclosure Statement in New York PG&E NATIONAL: USGen Wants to Hire Ordinary Course Professionals PILLOWTEX: Asks Court to Approve Asset Purchase Pact with GGST POLAROID CORP: Committee Asks Court to Reduce 20 Claims REMINGTON PRODUCTS: Reports Improved Second Quarter 2003 Results RENT-A-CENTER: Repurchases 440,000 Shares of Common Stock SAFETY-KLEEN: IRS Wants Payment of $7.4M Corporate Income Taxes SAGENT TECHNOLOGY: Group 1 Extends Existing Loan Until Sept. 30 SAMUELS JEWELERS: Files for Chapter 11 Reorganization in Del. SAMUELS JEWELERS: Case Summary & 20 Largest Unsecured Creditors SEITEL INC: Brings-In Jefferies & Company as Investment Banker SHERIDAN GROUP: S&P Rates $100 Million Senior Secured Notes at B SK GLOBAL AMERICA: Schedules & Statement Might Appear on August 20 SMITHWAY MOTOR: Obtains Waivers for Loan Covenant Violations SOLUTIA: Fitch Lowers Facility & Senior Debt Ratings to B-/CCC TRICO MARINE: Inks Pact to Sell Brazilian Asset to Up Liquidity UAL CORPORATION: Second Quarter Loss Doubles to $623 Million UICI: AMS Unit Obtains Waiver of Defaults Under Financing Docs. U.S. CAN CORP: June 29 Net Capital Deficit Stands at $345 Mill. U.S. CELLULAR: Completes Exchange of Wireless Assets with AT&T VISHAY: Prices $450 Million of Convertible Subordinated Notes WABASH NATIONAL: Completes $125MM Sale of Conv. Sr. Unsec. Notes WEATHERLY: Hahn's Disinterestedness Hearing Set for Tomorrow WEIRTON STEEL: Names D. Leonard Wise CEO and Mark E. Kaplan CFO WILLIAMS: Agrees to End Power Contract in Exchange for $128 Mil. WILLIAMS COS.: Enters Pacts to Sell Assets for over $100 Million WORLD HEART: Closes Convertible Debentures Private Placement WORLDCOM INC: Asks Court to Appove $18 Million Digex Acquisition * Atlas Partners Offers New Real Estate Financing Alternatives * Price Law Group Opens San Bernardino, California Office * Price Law Group Opens Modesto, California Office * Large Companies with Insolvent Balance Sheets ********* ABACUS COMMS: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Abacus Communications LC 4456 Corporation Lane, Suite 200 Virginia Beach, Virginia 23462-0000 fka Abacus Business Services, Inc. fka Executive Exchange, Inc. fka Abacus Exchange, Inc. fka Abacus Communications Partners, L.P. fka Abacus Communications Bankruptcy Case No.: 03-75562 Type of Business: The Debtor is an outsourcing service bureau. Chapter 11 Petition Date: August 1, 2003 Court: Eastern District of Virginia (Norfolk) Judge: Stephen C. St. John Debtor's Counsel: Frank J. Santoro, Esq. Karen M. Crowley, Esq. 355 Crawford Parkway, Suite 700 Marcus, Santoro & Kozak, P.C. P. O. Box 69 Portsmouth, VA 23705-0069 Tel: 757-393-2555 Fax: 757-399-6870 Total Assets: $12,750,352 Total Debts: $13,049,014 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ First Tennessee Bank Lease claim subject $2,900,000 c/o Thomas E. Kurth, Esq. to litigation 901 Main Street, Ste. 3100 Dallas, TX 75202 Kalik, Allen and Patricia. Disputed claim $1,900,000 c/o Steven E. Grill, Esq. arising from stock 111 Amherst Street, purchase agreement PO Box 719 Manchester, NH 03105 McPhail San Antonio Lease deficiency $726,400 Properties, Inc. (before 502(b)(6) cap) 1201 Austin Highway, Suite 207 San Antonio, TX 78209 Frank Stassek Disputed claim of $300,000 c/o James C. Ochs former Employee 9818 Olive Boulevard Saint Louis, MO 63132 MCI/Worldcom Consolidated Claim $194,162 for various utility accounts 2700 International Lease Deficiency $111,977 Parkway Corporation AT&T Consolidated claim $98,571 for various utility accounts Sprint Consolidated claim $79,007 for various utility accounts Cox Virginia Telcom, Inc. Utility Account $75,492 Statewide Patrol, Inc. Disputed trade debt $51,644 subject to litigation Matrix Technologies LLC Disputed claim of vendor $48,477 Dallas County Tax Assessor $41,502 Time Warner Telecom $27,249 Netdecisions $25,000 Infohighway Comms Co. $19,193 Bravo Sales & Supply $15,261 City Public Services $14,504 Teledirect International, $12,559 Inc. KPMG, LLP $7,835 Jani-King of Hampton $7,537 Roads Inc ACTERNA CORP: Files Plan & Disclosure Statement in New York ----------------------------------------------------------- Acterna Corporation filed its proposed Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. Developed with the support of its senior secured debt holders, Acterna's Plan of Reorganization will reduce the company's long term debt by $770 million, or 80 percent, and lower its annual cash interest expense by at least $45 million. The plan is also supported by the company's official committee of unsecured creditors. Assuming court approval of the plan, Acterna expects to emerge from chapter 11 protection in early October. "Because the terms of our chapter 11 filing were pre-negotiated with our senior secured debt holders, we have been able to move quickly to a formal Plan of Reorganization that already has the support of our largest creditors," said John Peeler, Acterna's president and chief executive officer. "We have managed cash effectively and continue to successfully contain costs while investing in the communications test technologies that help our customers run their networks more efficiently and productively." "We are well funded to support our business plan and product development initiatives, and are on track to emerge from chapter 11 protection in early October as a stronger company ready to build on its leadership position in communications test solutions." As of June 30, 2003, Acterna had $53 million of cash on hand. The company also has access to a $30 million debtor-in-possession credit facility arranged by a group of banks led by JP Morgan Chase Bank and General Electric Capital Corporation. The terms of Acterna's Plan of Reorganization call for a debt-for- equity swap that will give Acterna's senior secured debt holders 100 percent of the company's equity. Acterna will exit chapter 11 as a privately held company with long-term debt of approximately $190 million and quarterly cash interest expense of less than $2 million. Holders of Acterna's current convertible and subordinated notes will receive warrants having diminimus value. Unsecured creditors will receive a cash distribution of approximately 10 percent of their claims. Current equity holders will receive no distribution under the terms of the plan. Grant Barber Named CFO Acterna also announced that Grant Barber, who joined Acterna in January as corporate vice president and controller, has been named chief financial officer. He replaces John Ratliff, who has decided to retire from Acterna following a successful transition of his responsibilities. "John Ratliff has served Acterna with distinction during his three years with the company, providing Acterna and its finance organization with strong leadership," said Peeler. "We thank him for his service to the company and for the role he played in driving us to a reorganization plan that has us poised for a strong recovery." Before joining Acterna, Barber was vice president, finance - Global Performance Management, with Nortel Networks. During his 18-year career with Nortel, Barber also had responsibility for Major Accounts in the Americas and served as controller for Europe, vice president for Shared Services - Europe, Enterprise Networks - Europe, Corporate Reporting, Financial Planning & Reporting, and Finance Operations. He has lived and worked in London, Paris, Toronto and the U.S. "We are fortunate to have Grant's talents and experience," added Peeler. "He has worked side-by-side with John since the beginning of this year, ensuring a seamless transition of responsibilities." Based in Germantown, Maryland, Acterna Corporation (OTCBB:ACTRQ.OB) is the holding company for Acterna, da Vinci Systems and Itronix. Acterna is the world's second largest communications test and measurement company. The company offers instruments, systems, software and services used by service providers, equipment manufacturers and enterprise users to test and optimize performance of their optical transport, access, cable, data/IP and wireless networks and services. da Vinci Systems designs and markets video color correction systems to the video postproduction industry. Itronix sells ruggedized computing devices for field service applications to a range of industries. Additional information on Acterna is available at http://www.acterna.com ACTERNA CORP: Gets Final Nod to Continue AP Services' Engagement ---------------------------------------------------------------- At the Acterna Debtors' request, Judge Lifland authorizes the continued employment AP Services LLC as crisis managers effective as of May 6, 2003. Judge Lifland also approves the designation of John Dubel as Chief Restructuring Officer. AP Services staff has commenced assisting the Debtors in their restructuring efforts. Effective June 4, 2003, John Dubel replaced AP Services employee Shyam Gidumal as the Debtors' Chief Restructuring Officer because of Mr. Dubel's greater experience in the telecommunications industry. Working collaboratively with the senior management team, the Board of Directors and the Debtors' other professionals, Mr. Dubel will assist the Debtors in evaluating and implementing strategic and tactical options through the restructuring process. Mr. Dubel will be paid $620 per hour and will work full time. John D. Ratliff, Acterna Corporation's Chief Financial Officer and Senior Vice President, says that John Dubel, a principal with AlixPartners -- AP Services' affiliate -- brings a unique blend of operating, strategic and financial expertise to his turnaround and crisis management engagements. Mr. Ratliff informs the Court that Mr. Dubel has 20 years experience providing these services. Mr. Dubel also has significant restructuring experience in large and mid-size corporations. Mr. Dubel's background includes operational reorganizations and cost reductions, financial department restructurings, strategic repositioning and divestitures. Mr. Dubel's industry experience includes telecom and high tech, travel, retail and apparel, manufacturing, publishing, financial services and oil and gas. Mr. Dubel recently served as CFO at WorldCom, Inc., a global communications provider for the digital generation, operating in more than 65 countries. With more than $100,000,000,000 in assets, WorldCom's Chapter 11 filing is the largest in U.S. corporate history. As CFO, Mr. Dubel assisted WorldCom in its restructuring, including negotiating with existing creditors, evaluating proposals, overseeing the development of financial projections, disseminating appropriate information to stakeholders and overseeing the sale of any non-core assets. Before joining AlixPartners, Mr. Dubel operated his own turnaround firm where his roles included Chief Restructuring Officer and Chief Operating Officer at CellNet Data Systems, Inc. CellNet was the leading provider of data and information management services in the telemetry industry and was the fourth largest domestic wireless carrier based on subscriber endpoints. Mr. Dubel assisted CellNet through its financial crisis, which culminated in a prearranged Chapter 11 sale to Schlumberger Ltd. Before CellNet, Mr. Dubel was the Chief Financial Officer and an Executive Committee member of Barney's New York -- a family owned luxury retail store group -- during its Chapter 11 proceedings, and the CFO of The Leslie Fay Companies. The Court also allowed the Debtors to engage additional AP Services professionals. The Debtors will compensate the temporary employees according to these hourly rates: Professional Services Rate Commitment ------------ ----------- ---- ---------- Tony Horvat International business $470 Full Time planning and cash management Adam Marr Cash Forecasting and 390 Full Time Management Erik Post Chapter 11 schedules and 540 Part Time processes Tim Fagen Consolidated business 470 Full Time planning and cash management Ted Burr Chapter 11 processes and 440 Full Time Expense initiatives Carter Subsidiary business plan and 440 Part Time Pennington expense initiatives Bettina Whyte TBD 640 As authorized by the Company (Acterna Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) AFTON FOOD: Strikes Restructuring Pact with Senior & Sub Lenders ---------------------------------------------------------------- Afton Food Group Ltd. (TSX: AFF) announced the Company's first quarter results, for the three-month period ended March 31, 2003. For the first quarter ended the Company reported revenue of $5.1 million and EBITDA of $336 thousand versus revenue of $6.9 million and EBITDA of $1.4 million for the same period a year ago. The loss per share was 5 cents compared to an income of 3 cents a year ago. Revenue declined principally due to the closure in 2003 of under performing and redundant store locations as well as lower new store openings in 2003. Although EBITDA was $336 thousand, this included final net losses of $741 thousand generated from the call centre, which was closed on March 10, 2003. EBITDA for the period would have been $1.1 million, had there been no call centre losses. The challenges and impediments to achieving planned levels of revenue growth faced by Afton's brands are similar to the challenges faced by other operators in the Quick Service Restaurant Industry. These external challenges have had a significant impact on Afton's financial results over the past twenty-four months. The Company is well underway in its implementation of its 20-point plan to address these issues. This plan is designed to grow revenues from the Company's existing operations as well as new strategic initiatives. The Company's medium term goal is to restore revenue and EBITDA to historic levels. While a specific focus is being directed on the restructuring and enhancement of operations, the Company now has placed increased emphasis on revenue growth and brand development, as well as restructuring its balance sheet. These initiatives are occurring simultaneously. The company is continuing to focus on its restructuring plans and is making steady progress. The Company has signed agreements with its senior and subordinated debt lenders that are subject to final credit approval by the senior lender, anticipated by August 15th. If the final approval of the senior lenders had been received prior to the release of these financial statements, under the terms of the agreements, the current liabilities would have been reduced by $25,026,000 to $9,531,533. As part of its restructuring plan the Company is placing emphasis on improving its working capital and top line revenues. The Company intends to increase its communications with its shareholders and as part of this process timely and informative press releases on the Company's progress may be expected. Afton owns, operates, develops and franchises QSR Brands and is one of Canada's leading franchisor consolidators in Canada's Quick Service Restaurant Industry. Afton's principal brands include: 241 Pizza(R) and Robin's Donuts(R). Results of Operations Revenue: Franchise revenue for the first quarter has decreased to $3.6 million from $4 million when compared to the first quarter of 2002 due to a decrease in revenues from franchisees related to closed stores and a decrease in the number of new stores sold. Corporate store revenue decreased by $1.3 million to $1.5 million for the first quarter of 2003. This decrease is a direct result of the company's elimination of a substantial number of under performing stores in the second and third quarters of 2002. Cost of sales: The cost of sales in the first quarter decreased by $811 thousand from the same period in 2002. The decrease is principally the result of the planned closure of under performing corporate stores that took place during 2002. Selling, general and administrative expenses: The selling, general and administrative costs overall increased by $107 thousand resulting from an increase in professional fees of $180 thousand over 2002. The increase in professional fees is the result of the negotiations with various lenders and creditors. Interest and amortization: The interest costs for the first quarter have remained consistent with those of the first quarter of 2002. Amortization costs decreased by $60 thousand in comparison to the same quarter last year as a result of the reduction in other assets that occurred in 2002. EBITDA: EBITDA decreased to $336 thousand compared to $1.4 million for the same period in 2002. However the losses from the call centre that amounted to $741 thousand were a substantial factor in the decrease. The call centre losses have now been eliminated and the companies normalized EBITDA for the period would therefore be $1.1 million. Liquidity and Capital Resources Cash and cash equivalents: The Company's cash position decreased to $155 thousand from $680 thousand at December 31, 2002. The decrease is a result of the timing of the receipt of various supplier administration fees and the payment of the upfront costs of $130 thousand to the new third party call centre provider. Accounts receivable: The Company's accounts receivable balance increased by $562 thousand at December 31, 2002. This increase reflects the timing of the receipt of the supplier administration fees. Other Assets: Other assets increased by a net amount of $39 thousand over the year-end balance. The increase is a result of the one time costs to move to a third party call center provider of $130 thousand less the effect of regular amortization charges. Franchise Agreements & Trademarks: The pronouncements of the Canadian Institute of Chartered accountants no longer requires the amortizing of franchise agreements and trademarks unless there has been impairment in their value. The Company will continue to follow this method of accounting and will complete annual impairment tests. The balance in this account relates solely to 241 Pizzar and Robin's Donutsr. Accounts payable: The balance increased by $554 thousand over December 31, 2002 due to the continued accrual of subordinated debt interest and the continuing costs of the call centre operations for the first quarter. Future call centre lease commitments: This balance represents all of the future operating and facility lease costs from April 1, 2003 forward to the end of the leases. These amounts will be substantially eliminated upon the sale or the lease of the closed call centre and will be reduced as payments are made. Future lease commitments: These relate to the future lease commitments for closed stores where the Company has the continued obligation under the lease. The company is attempting to eliminate a portion of this obligation through negotiations with the respective landlords and the sub leasing of the closed premises. Long Term Debt: The Company has signed agreements with its senior and subordinated lenders to reduce its principal repayments and extend the maturities of the financings. The agreement with the senior lender is subject to final credit approval, anticipated by August 15th. The agreements significantly reduce the scheduled principal repayment requirements to $200,000 in 2003, $600,000 in 2004 and $500,000 to May 30, 2005. In addition, to the scheduled principal repayment requirements in 2004 and 2005, the company is required to pay a defined earnings excess cash flow sweep. AIRTRAN AIRWAYS: July Revenue Passenger Miles Slide-Up 32.4% ------------------------------------------------------------ AirTran Airways, a subsidiary of AirTran Holdings, Inc., (NYSE:AAI) reported that the month of July represented the highest traffic, or revenue passenger miles, and enplanement statistics in the company's history. Based on RPMs, traffic grew by 32.4 percent, to a record 695.4 million RPMs, on an increase of 19.3 percent in capacity, based on available seat miles (ASMs). July's load factor reached 78.4 percent compared to 70.6 percent in July 2002. The airline also enplaned an all-time record high of 1,141,528 passengers in the month of July, a 27.0 percent increase over July 2002. "We are extremely pleased to reach this company milestone of record traffic. For the second month in a row, AirTran Airways has served more than one million passengers," stated Robert L. Fornaro, president and chief operating officer. "Our continuing strong results are a tribute to our Crew Members, our business model and our dedication to high quality, low-fare service." AirTran Airways is one of America's largest low-fare airlines - employing more than 5,000 professional Crew Members and serving 492 flights a day to 43 destinations. The airline's hub is at Hartsfield Atlanta International Airport, the world's busiest airport (by passenger volume), where it is the second largest carrier operating 189 flights a day. The airline never requires a roundtrip purchase or Saturday night stay, and offers an affordable Business Class, assigned seating, easy online booking and check-in, the A-Plus Rewards frequent flier program, and the A2B corporate travel program. AirTran Airways, a subsidiary of AirTran Holdings, Inc., (NYSE:AAI), is the world's largest operator of the Boeing 717, the most modern, environmentally friendly aircraft in its class. In 2004, the company will begin taking delivery of 100 Boeing 737-700s, one of the most popular and reliable jet aircraft in its class. For more information and reservations, visit http://www.airtran.com As reported in Troubled Company Reporter's May 6, 2003 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to AirTran Holdings Inc.'s $100 million 7% convertible notes due 2023, offered under Rule 144A with registration rights. At the same time, the rating was placed on CreditWatch with negative implications. Existing ratings on AirTran Holdings and its major operating subsidiary, AirTran Airways Inc., including the 'B-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on March 18, 2003. The original CreditWatch placement reflected financial damage to the airline industry from the effects of the Sept. 11, 2001, attacks and their aftermath, and the Iraq war. ALLIANCE COMMS: Sells Cable Systems to Cequel and Classic Holdco ---------------------------------------------------------------- Officials of Cequel III, LLC, and Classic Holdco, LLC, announced have entered into a definitive agreement to acquire and assume management of cable systems currently owned by Alliance Communications Partners, LP. The Alliance systems serve approximately 81,000 customers in nine states, including Arkansas, Illinois, Indiana, Missouri, Maryland, Ohio, Pennsylvania, Tennessee, and West Virginia. The agreement is valued at approximately $81 million, and is expected to close in the fourth quarter, this year, subject to franchise transfers, standard regulatory approvals, customary closing conditions, and bankruptcy court approval. The transaction has the support of a majority of existing Alliance lenders and interest holders, and will be a key component of Alliance's court- assisted restructuring and liquidation plan, anticipated to be filed with the United States Bankruptcy Court in Delaware on September 8. "The footprint of the Alliance systems is comparable, in many places, to the other systems we manage, which makes them a wonderful complement to our current operations," said William Shreffler, President and Chief Operating Officer of the cable properties managed by Cequel III. "Moreover, with a newly strengthened capital structure, the Alliance systems will represent a very attractive broadband opportunity. The costs associated with deploying advanced services like high-speed Internet access and digital programming continue to decline, and as the Alliance systems are integrated with our other cable properties, economies of scale will further improve these systems' cash flow." Along with the June 30 closing of the acquisition of several Houston-area systems serving approximately 27,000 customers, Shreffler said the agreement with Alliance represents yet another key step in Cequel III's larger efforts to create a major U.S. cable operator. Pro forma estimates for all announced transactions will give the cable systems managed by Cequel III a total customer base of approximately 430,000. Daniels & Associates, the Denver-based media and telecommunications mergers and acquisitions specialists, represented Alliance in this transaction. USA Cable was purchased by Triax Cable USA in the late 1980s. After management changes in 1998, the name of the company was also changed - to Alliance Communications Partners, LP, at which time R&A Management, LLC (formerly Rifkin & Associates, Inc.) assumed oversight of the systems. None of the entities listed in this paragraph have a current Web site address. Cequel III -- http://www.cequel3.com-- is a management company for growth-oriented firms in the cable and telecommunications industries. Today, the Cequel III team is involved with a number of distinctive properties, including: AAT Communications Corporation, the largest privately held wireless tower-site provider in the industry; Classic Cable, the nation's twelfth- largest cable operator; and Broadwing Communications, the worlds' first and only intelligent, nationwide network that combines longhaul and ultra-longhaul transport with integrated, true all- optical switching. Classic Holdco owns cable systems that currently serve more than 350,000 customers nationwide. Cequel III is an investor in and the management company for the systems owned by Classic Holdco. Oaktree Capital Management, LLC (www.oaktreecapital.com) - a Los Angeles-based money management firm - is Classic's controlling shareholder. Officials at Classic Holdco, Cequel III, and Oaktree continue to look for additional acquisition opportunities in non- metropolitan, multi-channel distribution. ALTERNATIVE FUEL: Second Quarter Net Loss Widens to $2 Million -------------------------------------------------------------- Alternative Fuel Systems Inc. (TSX:ATF) announced its financial results for the three and six month periods ended June 30, 2003, and provides an update on its corporate restructuring. AFS reported a net loss for the six months ended June 30, 2003 of $5.3 million as compared to a net loss of $1.5 million for the comparable six-month period in the prior year. The net loss for the three months ended June 30, 2003 was $2.1 million compared to last year's second quarter net loss of $0.8 million. Corporate Restructuring AFS continues to operate under creditor protection granted to the Company on April 9, 2003 pursuant to the Companies' Creditors Arrangement Act. The CCAA process was undertaken by AFS in order to facilitate a corporate restructuring. As part of the process, the Company's creditors and contingent creditors were required to submit their claims to AFS by May 21, 2003. At the time of writing of this release, AFS had come to an agreement on the claim values for almost all of the creditors. AFS is working to resolve the few remaining claims that are still outstanding and continues to work with its advisors to develop a Plan of Arrangement for approval by the Company's creditors, and if necessary, its shareholders. Financial Statements The Company's financial statements for second quarter ended June 30, 2003, have been prepared using generally accepted accounting principals applicable to a going concern. However, as disclosed in the notes to these statements, there is some question as to the future sustainability of the Company and, as such, the going concern assumption may not be appropriate. AFS has incurred losses since inception, has recently lost its major customer and there is no assurance that the Company will emerge from creditor protection. The management of AFS anticipates that the restructuring steps being taken will enable the Company to continue as a going concern. If the going concern assumption were not appropriate, material adjustments to the carrying value of assets and liabilities would be required. As recorded on the June 30, 2003 balance sheet, the combined carrying value of inventories and property, plant and equipment was $2.1 million. Liquidation values of these items, as determined by an independent valuation firm acting on behalf of the court-appointed monitor, approximated $250,000. AFS is a Canadian environmental technology company providing innovative and cost-effective solutions to the growing global problem of harmful exhaust emissions from internal combustion engines. AFS has commercialized electronic engine management systems enabling diesel and gasoline engines to operate on cleaner burning natural gas. AFS' natural gas systems and components are installed worldwide in new vehicles manufactured by Original Equipment Manufacturers, or retrofitted in existing fleets. AFS is headquartered in Calgary, Canada and trades on the Toronto Stock Exchange under the trading symbol ATF. ALTHRU HEALTH: Fitch Withdraws Bq Quantitative Insurer Rating ------------------------------------------------------------- Fitch Ratings has withdrawn its 'Bq' quantitative insurer financial strength rating on Altru Health Plan of Minnesota. Altru Health Plan has voluntarily relinquished their license and has terminated their contracts in 2002. Fitch's quantitative insurer financial strength ratings (Q-IFS ratings) are generated solely based on quantitative analysis of publicly available financial statement data filed by the HMO on a quarterly basis with its state regulator. Although the model's general assumptions are reviewed by Fitch's rating committee, the Q-IFS ratings generated by the model on individual HMOs are not reviewed by the rating committee. Altru Health Plan --Withdrawn / 'Bq'. AMERCO: Court Fixes November 10, 2003 as General Claims Bar Date ---------------------------------------------------------------- According to Patricia Gray, the Clerk of the Bankruptcy Court for the District of Nevada, all creditors, except a governmental unit, have until November 10, 2003 to file a proof of claim against Amerco. Creditors wishing to file a proof of claim must submit an original and two copies to: Trumbull Associates, LLC 4 Griffin Road North Windsor, Connecticut 06095 If a creditor wants to submit a proof of claim by mail, a postage-paid, self-addressed envelop must be included in order to receive acknowledgment that the proof of claim has been received. For a governmental unit, the proof of claim will be no later than 180 days after the date of the order for relief pursuant to Rule 3002(c) of the Federal Rules of Bankruptcy Procedure. Ms. Gray stresses that creditors must not file their proofs of claim with the Court. (AMERCO Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMERICA WEST: Completes $75 Mill. Senior Notes Private Offering --------------------------------------------------------------- America West Airlines, Inc., a wholly-owned subsidiary of America West Holdings Corporation (NYSE: AWA), on Wednesday, July 30, 2003, completed its private placement of $75 million issue price of its Senior Exchangeable Notes due 2023. The notes pay cash interest until July 30, 2008. Thereafter, the notes will cease bearing cash interest and begin accruing original issue discount at a rate of 7.25% until maturity. Each note was issued at a price of $343.61 and is exchangeable for class B common stock of America West Holdings Corporation at an exchange ratio of 32.038 shares per $1,000 principal amount at maturity of the notes. This represents an equivalent conversion price of approximately $10.73 per share (subject to adjustment in certain circumstances). The aggregate amount due at maturity, including accrued original issue discount from July 31, 2008, will be $218,271,000. Holders of the notes may require America West Airlines to repurchase the notes at a price equal to the original issue price plus accrued cash interest and original issue discount, if any, on July 30, 2008, 2013 and 2018. The purchase price of such notes may be paid in cash or class B common stock of America West Holdings Corporation, subject to certain restrictions. America West Airlines may redeem the notes, in whole or in part, on or after July 30, 2008 at a price equal to the original issue price plus accrued cash interest and original issue discount, if any. The offering was made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933. America West Airlines will place $42.9 million of the net proceeds in a cash collateral account to secure scheduled principal and interest payments on certain of its indebtedness through September 30, 2004 and use the balance of the net proceeds for working capital and general corporate purposes. The notes being offered and the class B common stock issuable upon exchange of the notes have not been registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration under, or an applicable exemption from, the registration requirements of the Securities Act and applicable state securities laws. As reported in Troubled Company Reporter's July 30, 2003 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to America West Airlines Inc.'s $75 million 7.25% senior exchangeable notes due 2023, offered under Rule 144A with registration rights. The notes are guaranteed by America West Airlines' parent, America West Holdings Corp. (both rated B-/Negative/-). "The ratings on America West reflect risks relating to the adverse airline industry environment, a weak balance sheet, and limited financial flexibility," said Standard & Poor's credit analyst Betsy Snyder. "After significant losses incurred since 2001, which almost resulted in its filing for Chapter 11 bankruptcy protection, the company finally reported a profit in the second quarter of 2003, even before the inclusion of an $81 million refund from the federal government," the credit analyst continued. America West Holdings' major subsidiary is America West Airlines Inc., the eighth-largest airline in the U.S, with hubs located at Phoenix and Las Vegas. America West benefits from a low cost structure, among the lowest in the industry. However, it competes at Phoenix and Las Vegas against Southwest Airlines Co., the other major low-cost, low-fare, operator in the industry and financially the strongest. As a result, due to the competition from Southwest, as well as America West's reliance on lower-fare leisure travelers, its revenues per available seat mile also tend to be among the lowest in the industry. In addition, America West Holdings owns the Leisure Co., one of the nation's largest tour packagers. AMERICAN AIRLINES: July Load Factor Slides-Up 5.3 Points to 81% --------------------------------------------------------------- American Airlines, the world's largest carrier, reported a record high July load factor of 81 percent, an increase of 5.3 points compared to last year, and an improvement of 0.8 points over the prior July record of 80.2 percent set in 2000. The year-over-year gains were achieved in both domestic and international markets, with a load factor increase of 6.8 points in domestic markets and 1.4 points in international markets. For the month, overall capacity declined 6.9 percent year over year, yet traffic fell by a much smaller 0.4 percent. Domestic traffic was down 1.3 percent on a 9.6 percent capacity reduction. In international markets, July traffic increased 1.9 percent on virtually flat capacity year over year. American boarded 8.7 million passengers in July. American Airlines is the world's largest carrier. American, American Eagle and the AmericanConnection regional carriers serve nearly 275 cities in 50 countries and territories with approximately 4,300 daily flights. The combined network fleet numbers more than 1,100 aircraft. American Airlines is a founding member of the oneworld Alliance. As reported in Troubled Company Reporter's June 24, 2003 edition, Standard & Poor's Ratings Services raised its ratings of AMR Corp. (B-/Negative/--) and subsidiary American Airlines Inc., (B-/Negative/--), including raising the corporate credit ratings of each to 'B-' from 'CCC'. The ratings were removed from CreditWatch, where they were placed with developing implications on March 28, 2003. S&P says the outlook is negative. AMR's balance sheet shows that the carrier is insolvent with liabilities exceeding assets by more than $100 million. AMERIPOL SYNPOL: Sells Certain Assets to International Specialty ---------------------------------------------------------------- International Specialty Products Inc. announced that through a subsidiary it has completed the acquisition of certain assets from Ameripol Synpol Corporation with respect to its synthetic rubber business in Port Neches, Texas. With the assets acquired from ASC, ISP will commence operating its new business under the name ISP Elastomers effective July 31, 2003. The Port Neches facility, which will serve as the base of ISP's synthetic rubber operations, has been successfully manufacturing and shipping product to synthetic rubber customers since its start-up during World War II. In the 60 years since, it has consistently enjoyed a high reputation for technical excellence and superior products in the marketplace. However, the downturn in demand for SBR over the last seven years coupled with low margins left ASC in the position of being unable to reinvest in the business, ultimately resulting in its bankruptcy filing in December, 2002. "When ISP reviewed the ASC operations, we found a sound manufacturing capability, with great people who wanted to be given the opportunity to make the Port Neches facilities survive and be successful," stated Sunil Kumar, ISP President and CEO. Mr. Kumar added, "In particular we were impressed by the experience, dedication and loyalty of the employees, all of whom were committed to providing their support to the reorganization of the business." Additionally, Mr. Kumar noted that ISP received the support and encouragement from the customer base, the local community, the labor union and the suppliers serving the plant. While ISP is not currently involved in the synthetic rubber business, it does have a long and successful history in polymer manufacturing. The Company expects the R&D, process technology and manufacturing expertise which ISP utilizes in its other businesses to have great synergy with the processes at Port Neches. It is ISP's plan to restart manufacturing at the plant by mid- August. Shipments of many grades of product will begin in early September. The Company anticipates that production of all grades will occur by the end of September. ISP is committed to investing in the Port Neches complex during the next several years in order to ensure the future viability and success of this business. International Specialty Products is a leading multinational manufacturer of specialty chemicals and mineral products. ISP manufactures products around the world and serves its 6000 customers in more than 90 countries, using 60 sales offices and technical centers strategically located closed to its customers. ANC RENTAL: Plan Filing Exclusivity Extended to November 3, 2003 ---------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates obtained the Court's approval extending the period within which they have the exclusive right to file a Chapter 11 plan to November 3, 2003 and the period within which they have the exclusive right to solicit acceptances of that plan to January 2, 2004. (ANC Rental Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMOR HLDGS: S&P Assigns BB Corp. Credit & B+ Sub. Notes Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its "BB" corporate credit rating to law enforcement products and armor supplier Armor Holdings Inc. At the same time, Standard & Poor's assigned its "B+" rating to the company's proposed $150 million senior subordinated notes due 2013, which will be sold under rule 144A with registration rights. The outlook is stable. "The ratings on Armor reflect the company's modest size and active acquisition program, including the pending acquisition of Simula Inc, partly offset by leading positions in niche markets and moderate leverage," said credit analyst Christopher DeNicolo. Jacksonville, Florida-based Armor is a leading provider of law enforcement equipment, including body armor, holsters, riot gear, and batons, through its Products division (around 55% of revenue) and military and commercial vehicle armoring through Armor Mobile Security (45%). The company is in the process of divesting its ArmorGroup unit, requiring a $24 million writedown of goodwill in 2002, which provides security risk management solutions to government agencies and corporations. Armor has signed a letter of intent to acquire Simula, a provider of crew seats for military helicopters and transports, body armor, and vehicle armoring for $110.5 million, which is expected to close by the end of the year. The acquisition will be funded with a portion of the proceeds of the subordinated notes offering and possibly some stock. Armor has grown rapidly since 1996 through over 20 acquisitions and solid organic growth. The company's various law enforcement products have leadership positions in the markets they participate and strong brand identities. Products are sold through 500 distributors worldwide and Armor provides comprehensive product training support. Domestic sales have recently been flat due to the fiscal problems at many states and local municipalities, but international sales are growing. Armor also is the leading provider of aftermarket vehicle armoring. The company's military business in this segment is largely from the up-armored HMMWV contract with the U.S. Army, under which over 600 vehicles were delivered in 2002. Sales of commercial armored vehicles likely will benefit from increased threats of terrorism throughout the world. ASIA GLOBAL CROSSING: Chapter 7 Trustee Posts $95 Million Bond -------------------------------------------------------------- Pursuant to Section 322(a) of the Bankruptcy Code and Rule 2010(a) of the Federal Rules of Bankruptcy Procedure, Robert L. Geltzer, Asia Global Crossing's Chapter 7 Trustee, posts a $95,000,000 bond issued by Atlantic Mutual Insurance Company Fund, Hartford Fire Insurance Company, Fidelity and Deposit Company of Maryland, Zurich American Insurance Company, XL Specialty Insurance Company and XL Reinsurance America, Inc. -- the Sureties. Under the Bond, Mr. Geltzer agrees to obey all Court orders in relation to the trusts, and will faithfully and truly account for all monies, assets and effects of the Debtors' estates, which will come into his hands and possessions, and will in all respect faithfully perform all his official duties. Other terms of the Bond are: A. In no event will the total obligation of the Sureties exceed the amount stated, regardless of the number of years this bond is in force; B. The obligation of the Sureties will be several and not joint, and no Surety will be responsible in an amount greater than their maximum amount of liability. A Surety's liability will not be increased or affected in any way whatsoever as a result of the performance or non-performance by any other Surety of other Surety's obligation under this Bond; and C. The maximum amount of liability for each surety will be limited to these amounts: Hartford Fire Insurance $25,000,000 Fidelity and Zurich American 20,000,000 XL Specialty and XL Reinsurance 25,000,000 Atlantic Mutual Insurance 25,000,000 (Global Crossing Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) ASSOC. MATERIALS: S&P Places BB- Credit Rating on Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Cuyahoga Falls, Ohio-based vinyl siding and window manufacturer Associated Materials Inc. on CreditWatch with negative implications. "This rating action follows Associated Materials' announcement that it will acquire unrated, privately held Gentek Holdings Inc. for $118 million in cash," said Standard & Poor's credit analyst Cynthia Werneth. The transaction, which should close by the end of August, is expected to be financed with a new $113.5 million term loan and expansion of Associated Materials' existing revolving credit facility to $70 million from $40 million. Gentek's operating subsidiaries manufacture and distribute vinyl, aluminum, and steel siding and accessories and vinyl windows. For the year ended Dec. 31, 2002, Gentek reported sales of $260.1 million, net income of $9.2 million, and EBITDA of $19.3 million. Standard & Poor's expects to review the effect of this transaction on Associated Materials' credit profile and resolve the CreditWatch shortly. ATCHISON CASTING: Files for Chapter 11 Protection in Missouri ------------------------------------------------------------- Atchison Casting Corporation (OTC Bulletin Board: AHNC) and its U.S. subsidiaries (with the exception of The G&C Foundry Company) have filed a voluntary petition for reorganization. ACC filed its voluntary petition in the U.S. Bankruptcy Court in the Western District of Missouri, located in Kansas City, Missouri. ACC has requested that the filings be jointly administered for procedural purposes. ACC's Canadian and U.K. operations have not been included in any bankruptcy filings and are operating as usual. Substantially all of the assets of G&C are expected to be sold within 30 days. "Over the past several months the management of the Atchison Casting Corporation has worked diligently with our bankers to develop a debt restructuring plan that would lead to an extension of the credit agreement to September 2004," said Tom Armstrong, ACC's President. "Unfortunately, we have been unable to reach an agreement and are now filing a voluntary petition for Chapter 11 reorganization with the U.S. Bankruptcy Court." ACC has secured a $7.5 million debtor-in-possession (DIP) financing facility with Harris Trust & Savings Bank as Agent for the lending group. This financing will be used to supplement ACC's existing cash flow during the reorganization process and ensures post-petition payment of payroll and benefits, payments to vendors, as well as other normal operating costs. ACC intends to sell its remaining businesses and assets as a going concern for the highest value. Management is unable to predict how much cash will be generated from these sales or how much money, if any, will be available to pay unsecured creditors. At this time, it appears unlikely that any funds will be left for stockholders. The Company will be filing monthly financial reports in the bankruptcy case. "After our long struggle to survive against the backdrop of the recession in the manufacturing sector, too much debt and related costs, and closures and sales of unprofitable operations, among other things, this filing should enable our core operations to continue to operate while we offer them for sale, which provides the best opportunity for our employees, customers, vendors and creditors going forward. To continue to burden our core operations with these costs would ultimately lead to their deterioration, thereby jeopardizing their future," said Kevin McDermed, ACC's Chief Financial Officer. ACC produces iron, steel and non-ferrous castings for a wide variety of equipment, capital goods and consumer markets. ATCHISON CASTING: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Atchison Casting Corporation 3811 South 48th Terrace St. Joseph, Missouri 64503 aka Atchison Casting Corporation of Kansas aka Atchison Steel Casting & Machining Bankruptcy Case No.: 03-50965 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Amite Foundry and Machine, Inc. 03-50966 Quaker Alloy, Inc. 03-50968 Prospect Foundry, Inc. 03-50970 Inverness Castings Group, Inc. 03-50971 Milwaukee Impeller Castings, Inc. 03-50972 Empire Steel Castings, Inc. 03-50973 LaGrange Foundry, Inc. 03-50974 PrimeCast Incorporated 03-50975 ACC Global Corporation 03-50976 Claremont Foundry, Inc. 03-50977 Springfield Iron Corporation 03-50978 Pennsylvania Steel Foundry & Machine Co., Inc. 03-50979 Type of Business: The Debtors produce iron, steel and non-ferrous castings and machining for a wide variety of equipment, capital goods and consumer markets. Chapter 11 Petition Date: August 4, 2003 Court: Western District of Missouri (St. Joseph) Judge: Jerry W. Venters Debtors' Counsel: Mark G. Stingley, Esq. Cassandra L. Writz, Esq. Bryan Cave LLP 3500 One Kansas City Place 1200 Main St. Kansas City, MO 64105-2152 Tel: 816-374-3200 Fax: 816-374-3300 Total Assets: $136,750,000 Total Debts: $96,846,000 A. Atchison Casting's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ GE Transportation Systems Claim for damages $2,000,000 2901 East Lake Road Erie, PA 16531 Attn: Roger H. Taft MacDonald, Illig, Jones & Britton LLP 100 State Street, Suite 700 Erie, PA 16507-1459 Tel: 814-870-7603 Fax: 814-454-4647 Caterpillar World Trade Trade Set-Off $750,961 100 N.E. Adams Attn: Terry Wiley Peoria, IL 61629-6321 Tel: 309-494-0525 Fax: 309-494-0526 HA International LLC Trade $271,073 630 Oakmont Lane Westmont, IL 60559 Attn: Alex Otte Tel: 800-323-6863 Fax: 614-889-1190 Canton Drop Forge Trade $262,262 4575 Southway Street S.W. Canton, OH 44706 Attn: John Motsay Tel: 330-477-4511 Fax: 330-477-2046 General Electric Capital Trade $196,418 Canfield & Joseph Inc. Trade $180,972 Keokuk Steel Castings Trade $179,096 Westar Energy/KGS Trade $162,084 R & W Machine Division Trade $137,984 Kennametal, Inc. Trade $106,952 Peggy J. Campbell - Taxes $94,473 Collector American Electric Trade $89,304 Industrial Bearing & Trade $81,849 Transmission Koni-ITT Automotive, Inc. Trade $74,113 Graphite Electrode Trade $73,374 Network LLC Standard Steel Trade $72,000 Praxair Distribution, Inc. Trade $68,839 Ossola Industrials, Inc. Trade $68,279 Executive Protection, Inc. Trade $64,126 Independent Electric Trade $62,913 Mach. Co. B. Amite Foundry and Machine's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Dynegy Marketing and Trade $233,510 Trade Caterpillar World Trade $135,156 Trading Corp. HA International, LLC Trade $100,175 Entergy Trade $78,445 Canfield & Joseph, Inc. Trade $75,464 Doussan Trade $46,509 Cameron & Barkley Co. Trade $42,997 Capitol Steel, Inc. Trade $20,174 Cambridge Patterns Ltd. Trade $19,745 Pride Machine & Tool Trade $17,800 Co., Inc. Avondale Industries, Inc. Trade $17,862 American Colloid Company Trade $14,153 Harbison Walker Trade $13,848 Thermal Ceramics, Inc. Trade $13,070 Minteq International Inc. Trade $12,933 Superior Graphite Co. Trade $12,441 Benefit Management Services $11,917 Services Motion Industries, Inc. Trade $10,571 Ingersoll-Rand Co. Trade $10,090 The Nock and Son Co. Trade $7,312 C. Quaker Alloy, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Myerstown Pattern Shop Trade debt $209,207 HA International LLC $104,322 NUI Energy Utility $82,331 Cooper Alloy Metals Trade debt $74,404 Behler Patterns Inc. Trade debt $66,424 Foseco Inc. Trade debt $53,687 Met-Ed Utility $52,610 Reading Pattern Works Trade debt $50,930 UGI Utilities Trade debt $42,625 Varian Oncology Systems $39,231 Eastern Lebanon County $36,791 School Dist. Praxair, Inc. $32,092 Arcos Alloys $20,819 Metal Prep $20,649 MFS Pattern Enterprises, Trade debt $20,270 Inc. F.H. Bentzel Associates Inc. $17,700 Acceletronics Inc. $16,009 REX Heat Treat - $13,265 Lansdale, Inc. Harbison Walker $17,875 Refractories Co. Emsco, Inc. $13,149 D. Prospect Foundry, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Fireman's Fund Workman's Comp. Claim $473,000 Dept. LA 21410 Pasedena, CA 91185-1410 Attn: Evett Nelson Tel: 415-899-4779 Fax: 415-899-4779 Caterpillar World Trading Trade Debt $311,227 Corp. 100 NE Adams St. Peoria, IL 61629-2470 Attn: Terry Wiley Tel: 309-494-0501 XCEL Energy (NSP) Utility $94,669 Foseco Trade Debt $48,113 Gopher Pattern Works, Inc. Trade Debt $47,875 Alliance Steel & Service Trade Debt $36,439 Carpenter Brothers Trade Debt $36,020 Smith Sharpe Co. Trade Debt $28,106 Miller & Company Trade Debt $26,779 Christopherson Patterns Trade Debt $23,750 Enviro Logic Inc. Trade Debt $15,169 Hill & Griffith Co. Trade Debt $14,952 Allied Mineral Products Trade Debt $10,947 Hill Industrial Tools Trade Debt $10,717 Sterling Supply Trade Debt $10,223 Export Packaging Trade Debt $9,860 Jetson Trade Debt $9,592 Pine Point Wood Products Trade Debt $8,336 Inc. John Henry Foster Trade Debt $8,158 IGC Technologies Trade Debt $5,792 E. Inverness Castings Group, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Cat World Trading Corp Trade Set-off $1,866,190 100 N.E. Adams LT 6321 Peoria, IL 61629 Attn: Terry Wiley Tel: 309-494-0525 Fax: 309-494-0526 Nowak Machined Trade $104,565 Products Liten Automotive Trade $80,755 Partnership Toefco Engineering Inc. Trade $79,823 Castall Products Inc. Trade $67,355 Clayton De Windt Trade $65,165 City of Dowagiac Utility $62,427 Charlevioux Energy Trading Utility $55,986 Ottawa Gage Inc. Trade $48,742 D and F Mold Company Trade $45,420 Werkema Machine Co. Trade $42,270 G.W. Smith & Son Inc. Trade $45,261 Standard Tool & Die Trade $30,000 Alko Tool Corporation Trade $22,649 Reliance Finishing Trade $17,677 Pri Mar Petroleum Trade $16,183 Rimrock Trade $13,408 Brammall Supply Co. Trade $13,407 Franchino Mold & Eng'g Trade $246,025 Symonds Machine Trade $15,359 F. Empire Steel Castings, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pat Lupia Taxes $44,776 Muhlenberg Township Tax Collector Met-Ed Utility $18,736 U.S. Security Associates Trade $6,310 Gasmark Utility $4,032 Marks Environmental $3,587 Kistler O'Brien Fire Trade $2,714 Protection Fromm Electric Trade $1,757 Int'l Minerals & Raw Trade $1,502 Material IFS Industries, Inc. Trade $1,279 Waste Management Utility $1,092 Verizon Cabs Trade $916 Sindall Transport Trade $577 MSC Industrial Supply Co. Trade $386 Central Transport Trade $392 International, Inc. Conestoga Fuels, Inc. Utility $384 Berks Industrial Supply Co. Trade $282 Stauffer Manufacturing Trade $180 Mazaika Concrete Trade $155 Construction Red Hill Grinding Wheel Trade $148 Corp. MAI Logistics, Inc. Trade $146 G. LaGrange Foundry, Inc.'s 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ AmerenUE Trade $271,500 PO Box 66529 St. Louis, MO 63166-6529 Attn: Tom Thompson Tel: 314-206-0665 Century Tel Utility $630 Jet Oil Judgment $9,830 Safety Kleen Corp. Trade $1,267 City of La Grange $9,710 Lewis Co. Collector of Revenue $49,173 H. ACC Global Corporation's 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Shenyang Machine Trade $319,673 (Canada) Ltd. 103-6558 Sussex Ave. Burnaby, BC V5H 3C6 Canada Accts Receivable Tel: 604-439-8919 Fax: 604-439-8999 Qingdao Singho Trade $38,861 Industrial Co. Ltd. Hong Bank Industrial Trade $25,850 Company Limited Jarvis Int'l Freight Trade $2,039 A Helping Hand Trade $275 Federal Express Corp. Trade $77 AVISTA CORP: Unit Requests Nod to Increase Natural Gas Prices ------------------------------------------------------------- In response to higher current and projected wholesale natural gas prices, Avista Corp. (NYSE: AVA) operating division Avista Utilities filed requests with the state utility commissions in Washington, Idaho, Oregon and California to increase natural gas prices. These requests are called purchased gas cost adjustments (PGAs) and are filed annually by Avista to reflect changes in the cost of gas purchased by Avista to serve customers. As a natural gas distribution company, Avista is only passing through the costs of acquiring gas for its customers through the PGAs. The utility does not mark up or make additional profits from PGA filings -- any increase or decrease in revenues is offset by the cost of gas purchased by Avista for its customers. In 2002, in response to lower wholesale prices, Avista reduced natural gas rates by an average of 16 percent in Idaho, by 17 percent in Washington, by 23 percent in Oregon, and by 16 percent in California. This year, Avista is requesting an overall price increase of 2.4 percent in Idaho, or $1.2 million in annual revenues. In Washington, the requested increase is 8.7 percent, or $11.8 million. In Oregon, the requested increase is 18 percent, or $11.7 million. And in California, the requested increase is 15 percent, or $2.5 million. The differences in the percentage increases between the states are due to timing variances in the collection of prior gas costs in each of the states. Avista's filings propose an effective date of Sept. 5 in Washington, Sept. 15 in Idaho, Oct. 1 in Oregon and California. Avista Utilities serves 292,000 natural gas customers in the four states. The following chart outlines the proposed price changes in each state for residential customers. The price changes must be approved by state regulators. Proposed Average residential monthly bill Increase usage/bill increase* Idaho 2.5 percent 70 therms/$1.39 Washington 9.4 percent 70 therms/$5.14 Oregon 17.8 percent 55 therms/$7.68 California 15.2 percent Summer 33 therms/$3.73 Winter 107 therms/$12.08 *The average monthly residential usage varies from state to state. The percentage increase for commercial and industrial customers will generally be slightly higher than the residential increases shown above due to lower base rates. "Natural gas remains an excellent energy value," said Avista Utilities President Scott Morris. "Even with the proposed price changes, natural gas is still the most cost-effective home heating source when compared with other fuel sources. Natural gas is efficient, clean, comfortable, safe and reliable." In a separate filing, Avista filed a request with the Washington Utilities and Transportation Commission to increase its present Washington natural gas energy efficiency rate by 0.46 percent. If approved by regulators, a total of about $1.2 million would be collected through a tariff on residential natural gas sales and would be used to provide energy efficiency and conservation programs. The impact on a typical Avista residential natural gas customer using an average of 70 therms would be about 68 cents per month. If approved by the WUTC, the current program offerings could be expanded. These include weatherization, assistance for low-income energy efficiency programs and site-specific conservation projects. According to Morris, the efficiency program represents Avista's ongoing commitment to energy conservation and its emphasis on the wise and efficient use of natural gas by its customers. Morris said that Avista's natural gas conservation programs have been well received by participating customers, citing the more than 1.6 million therms of natural gas saved by Avista's Washington customers since 2001. Avista customers are encouraged to visit the company's Web site at http://www.avistautilities.comfor energy saving tips and a full listing of energy efficiency programs. Avista also offers its customers a range of convenient payment options, including Comfort Level Billing, which averages the customer's bill into equal monthly payments. For more information, customers may call Avista Utilities at 800-227-9187. Avista's PGA filings and request to increase its Washington natural gas energy efficiency rider rate are subject to review and a decision by the respective state utility commissions. Copies of the filings and proposed tariff changes are available in Avista's offices and the utility commissions' offices in each state. Avista Corp. (S&P, BB+ Corporate Credit Rating, Stable) is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides electric and natural gas service to customers in four western states. Avista's non-regulated subsidiaries include Avista Advantage, Avista Labs and Avista Energy. Avista Corp.'s stock is traded under the ticker symbol "AVA" and its Internet address is http://www.avistacorp.com BETHLEHEM STEEL: Posts Overview of Joint Plan of Liquidation ------------------------------------------------------------ Bethlehem Steel Corporation and its debtor-affiliates delivered their Joint Plan of Liquidation under Chapter 11 of the Bankruptcy Code to the Bankruptcy Court on July 29, 2003. The Plan contemplates the liquidation of the steelmaker and the resolution of all outstanding claims against and interests in the Debtors' Estates. Lonnie A. Arnett, Bethlehem Vice-President, Controller, and Chief Accounting Officer, tells Judge Lifland that the Plan is predicated on the substantive consolidation of the Debtors. Specifically, these Debtors and their estates will be merged into Bethlehem on the effective date: -- Alliance Coatings Company, LLC; -- BethEnergy Mines Inc.; -- Bethlehem Cold Rolled Corporation; -- Bethlehem Development Corporation; -- Bethlehem Rail Corporation; -- Bethlehem Steel de Mexico, S.A. de C.V.; -- Bethlehem Steel Export Company of Canada, Limited; -- Bethlehem Steel Export Corporation; -- BethPlan Corporation, Chicago Cold Rolling, L.L.C.; -- Eagle Nest Inc.; -- Encoat-North Arlington, Inc.; -- Energy Coatings Company; -- Greenwood Mining Corporation; -- HPM Corporation; -- Kenacre Land Corporation; -- LI Service Company; -- Marmoraton Mining Company, Ltd.; -- Mississippi Coatings Limited Corporation; -- Mississippi Coatings Line Corporation; -- Ohio Steel Service Company, LLC; and -- Primeacre Land Corporation. Moreover, Mr. Arnett discloses that: (i) all of these Debtors' assets and liabilities will be deemed merged into Bethlehem; (ii) all guaranties of any Debtor of the payment, performance, or collection of obligations of another Debtor will be eliminated and cancelled; (iii) any obligation of any Debtor and all guaranties executed by one or more of the other Debtors will be treated as a single obligation, and the guaranties will be deemed a single Claim against the consolidated Debtors; (iv) all joint obligations of two or more Debtors and all multiple Claims against the entities on account of the joint obligations will be treated and allowed only as a single Claim against the consolidated Debtors; (v) all Claims between or among the Debtors will be cancelled, and (vi) each Claim filed in the Chapter 11 Case of any Debtor will be deemed filed against the consolidated Debtors and a single obligation of the consolidated Debtors on and after the Effective Date. Claims and Interests Administrative Claims and Priority Tax Claims are not classified and will be paid in full under the Plan. Other Claims and Equity Interests are divided into four Classes: * Other Secured Claims, * Priority Non-Tax Claims, * General Unsecured Claims, and * Equity Interests. All classes are impaired and entitled to vote on the Plan. On the Effective Date, the Debtors will remit to holders of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and, if applicable, Allowed Other Secured Claims, cash equal to the allowed amount of the Claims. Furthermore, the Debtors will transfer certain Liquidating Trust Assets free and clear of all liens, claims, and encumbrances to the Liquidating Trust, but subject to any obligations imposed by the Plan, on behalf of holders of General Unsecured Claims. The Liquidating Trust On the Effective Date, a Liquidating Trust Agreement will be executed, and all other necessary steps will be taken to establish the Liquidating Trust and its beneficial interests, which will be for the benefit of the holders of Allowed General Unsecured Claims. The Liquidating Trust will be established for the sole purpose of liquidating and distributing its assets, in accordance with Treasury Regulation Section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business. Any cash or other property received from third parties from the prosecution, settlement, or compromise of the Avoidance Actions will constitute Liquidating Trust Assets for purposes of distributions under the Liquidating Trust. On the Effective Date, the Debtors will transfer all of the Liquidating Trust Assets to the Liquidating Trust free and clear of all liens, claims, and encumbrances, except to the extent otherwise provided in the Plan. Also, on the Effective Date, Bethlehem will transfer and assign to the Liquidating Trust full title to all of the Debtors' books and records. The Liquidating Trust will have the responsibility of storing and maintaining the transferred books and records until one year after the date Bethlehem is dissolved in accordance with the Plan, after which time the books and records may be abandoned or destroyed without further Bankruptcy Court order. The Debtors will cooperate with the Trustee to facilitate the delivery and storage of their books and records. The Debtors, as well as their current and former officers and directors, will be entitled to reasonable access to any books and records transferred to the Liquidating Trust for all necessary corporate purposes, including, without limitation, defending or prosecuting litigation, determining insurance coverage, filing tax returns, and addressing personnel matters. Non-transferability of Liquidating Trust Interests The beneficial interests in the Liquidating Trust will not be certificated and are not transferable, except as otherwise provided in the Liquidating Trust Agreement. Vesting of Assets The property of the Estates will vest in the Debtors and, subject to exceptions, the Liquidating Trust Assets will be transferred to the Liquidating Trust. From the Effective Date onwards, the Trustee may dispose of the assets of the Liquidating Trust free of any restrictions of the Bankruptcy Code, but in accordance with the provisions of the Plan and the Liquidating Trust Agreement. All of the Debtors' assets and the Liquidating Trust will be free and clear of all Claims, except as provided in the Plan or the Confirmation Order. Claims Administration and Plan Distributions The Debtors will continue to have the power and authority to prosecute and resolve objections to Disputed Administrative Expense Claims, Disputed Priority Tax Claims, Disputed Other Secured Claims, and Disputed Priority Non-Tax Claims. Similarly, the Debtors may hold, manage, and distribute Plan distributions to holders of Allowed Claims. The Debtors anticipate having more than sufficient cash available on the Confirmation Date from the proceeds of the ISG Sale, as well as other sources, to pay in full Allowed Administrative Expense Claims and Allowed Priority Tax Claims in accordance with the Plan, fund the Trustee Expense Fund, and complete the administration of these Chapter 11 Cases. Dissolution Within 30 days after its completion of the acts required by the Plan, or as soon thereafter as is practicable, each Debtor will be deemed dissolved for all purposes without the necessity for any other or further actions to be taken by or on behalf of each Debtor. However, this is provided that each Debtor will file with the office of the Secretary of State or other appropriate office for the state of its organization a certificate of cancellation or dissolution. In the alternative, a Debtor may be merged with and into another Debtor and so file an appropriate certificate of merger. The Creditors' Committee and the Retirees' Committee will likewise dissolve on the Effective Date, except that the Creditors' Committee and its professionals will have the right to pursue, review, and object to any applications for compensation and reimbursement of expenses filed. Repayment of Cash or Certain Assets to ISG If the Debtors possess any cash or other assets after (i) transferring the Liquidating Trust Assets to the Liquidating Trust, including the funding of the Trustee Expense Fund (ii) the payment in full of all Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Other Secured Claims, and Allowed Priority Non-Tax Claims, and (iii) completing the post- confirmation acts, the Debtors will repay the Cash amounts to ISG by wire transfer of immediately available funds to an account designated by ISG and convey to ISG any other assets -- other than the Liquidating Trust Assets, or any other asset as directed by ISG, which assets may be abandoned without further Bankruptcy Court order -- by delivering instruments of assignment and conveyance reasonably satisfactory to ISG. Likewise, in the event any Cash remains in the Trustee Expense Fund after all the obligations imposed on the Trustee and the Liquidating Trust pursuant to the Plan have been satisfied, the Trustee will repay the Cash amounts to ISG by wire transfer of immediately available funds to an account designated by ISG. Except to the extent that ISG otherwise agrees, if the Consideration Shares or the proceeds of its sale are not distributed to the Trustee for the benefit of the holders of Allowed General Unsecured Claims before July 1, 2004, or the Confirmation Date does not occur before July 1, 2004, then on that day, or on the effective date of an alternative Chapter 11 plan, as the case may be, the Debtors will: (a) pay $15,000,000 to ISG, by wire transfer of immediately available funds; or (b) deliver the Consideration Shares, or its sale proceeds to ISG. Committee Supports Plan After consultation with the Debtors, the Creditors' Committee believes that the Plan provides the best recoveries possible for the holders of claims against the Debtors. Accordingly, the Creditors' Committee "strongly recommends" that creditors to vote to accept the Plan. The Debtors will file supplements to the Liquidation Plan at least 10 days before the Confirmation Hearing, but copies are available upon request to Bankruptcy Services LLC, the Debtors' voting agent at: If by overnight or hand delivery: Bankruptcy Services LLC 757 Third Avenue New York, NY 10017 Attn: Bethlehem Steel Balloting Ctr. If by standard mailing: Bankruptcy Services LLC P.O. Box 5295 Grand Central Station New York, NY 10163-5295 Attn: Bethlehem Steel Balloting Center A full-text copy of Bethlehem Steel's Disclosure Statement is available for free at: http://www.sec.gov/Archives/edgar/data/11860/000090951803000502/mv7-30ex99_1 .txt A full-text copy of Bethlehem Steel's Liquidating Plan is available for free at: http://www.sec.gov/Archives/edgar/data/11860/000090951803000502/mv7-30ex2_1. txt (Bethlehem Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) BIOSPECIFICS TECH: Continues Conditional Nasdaq SmallCap Listing ---------------------------------------------------------------- BioSpecifics Technologies Corp. (Nasdaq: BSTCE) has been notified by The Nasdaq Stock Market that the Nasdaq Listing Qualifications Panel has determined to continue the listing of the Company's common stock on The Nasdaq SmallCap Market pursuant to the following exception: On or before August 14, 2003 and November 14, 2003, BioSpecifics must file the Forms 10-QSB for the quarters ending June 30, 2003 and September 30, 2003, respectively with the Securities and Exchange Commission and Nasdaq, evidencing continued compliance with all requirements for continued listing on The Nasdaq SmallCap Market. The Panel reserved the right to terminate or otherwise modify the terms of this exception subsequent to a review of BioSpecifics' publicly filed financial statements. Based upon BioSpecifics' current compliance with Nasdaq's filing requirement, the Panel determined to eliminate the fifth character "E" currently appended to BioSpecifics' trading symbol. Effective with the open of business on Monday, August 4, 2003, BioSpecifics' trading symbol will be changed from BSTCE to BSTC. In order to fully comply with the terms of this exception, BioSpecifics must be able to demonstrate compliance with all requirements for continued listing on The Nasdaq SmallCap Market. In the event BioSpecifics fails to comply with any of the terms of this exception, its securities will be delisted from The Nasdaq SmallCap Market. There can be no assurances that BioSpecifics will be able to meet the requirements of the Nasdaq exception. BioSpecifics Technologies Corp. is a biopharmaceutical company with a focus on wound healing and tissue remodeling. It has pioneered the application of Collagenase for several disease conditions, notably dermal ulcers, pressure sores (bedsores), and second and third degree burns. BioSpecifics produces Collagenase ABC, the essential ingredient in the prescription drug Collagenase Santylr Ointment sold in the United States, and under other trademarks abroad. BioSpecifics is also developing an injectable form of collagenase, which has been used in published clinical trials for treatment of Dupuytren's disease, Peyronie's disease, keloids, hypertrophic scars, and glaucoma. Phase 2 clinical trials are completed in the U.S. for the use of injectable collagenase in treating Dupuytren's disease, which restricts the extension of one or more fingers. In addition, clinical trials investigating the use of injectable collagenase in the treatment of lipoma reduction have been initiated. Clinical and laboratory investigations further profiling the potential role of collagenase and its pharmacological activity for wound healing are being pursued. Santyl(R) is a registered trademark of Abbott Laboratories (NYSE: ABT). Visit BioSpecifics' Web site at http://www.biospecifics.comits Dupuytren's Disease patient discussion forum at http://www.biospecifics.com/forum and its Peyronie's Disease patient discussion forum at http://www.biospecifics.com/forum/index2 As reported in Troubled Company Reporter's July 11, 2003 edition, the Company announced that as of January 2003 it had limited cash resources available to fund its operations. Biospecifics has been able to fund its operations only because (1) the Company borrowed $100,000 from an unaffiliated individual and an aggregate of $500,000 on seven separate occasions from an individual who is a principal of Bio Partners LP, a private investment group and unrelated third party, (2) the Company received from Abbott Laboratories, its major U.S. customer, in May 2003, early payment of royalties earned from distribution of Santyl(R) ointment from a supply that Biospecifics estimates will be depleted by July 30, 2003, (3) Biospecifics Chairman has deferred salary of approximately $100,000 since February 1, 2003 and in February and April repaid a total of $50,000 of the $1,025,309 principal amount he and his affiliate owed to the Company as of January 31, 2003, and (4) Biospecifics is deferring or making partial payments to creditors. On June 19, 2003, the Company entered into a financing transaction with Bio Partners LP, a private investor group, under which the Company sold to Bio Partners, in a private placement, I) a $1.575 million convertible note, issued at face value, and (II) 295,312 shares of Company common stock, issued at par value, or $.001 per share. The net proceeds to the Company were approximately $890,000, after the payment of expenses and repayment of $500,000 previously advanced to the Company by a principal of Bio Partners. Based on Biospecifics operating projections, the Company believes these funds will enable it to continue operations to December 31, 2003. The Company's projections assume that, among other things: - The Company obtain FDA approval of its production facilities by August 2003; - It is determined that the Company can sell its quarantine inventory (inventory produced at the renovated Curacao manufacturing facility, its primary manufacturing facility) in the United States; - Its Chairman repays to the Company $325,000 of the amount he and his affiliate owe the Company by the end of July 2003. Biospecifics Chairman has indicated that he intends to refinance the mortgage on Biospecifics administrative headquarters in Lynbrook, New York, which is owned by the affiliate of Biospecifics Chairman, and use the proceeds of the refinancing to repay this $325,000 to the Company; and - The Company receives a tax refund of $425,000 in August 2003. There is no assurance that any of these events will occur. If any of the assumptions on which the Company projections are based do not occur, the Company may not be able to fund its operations past the next several months. In addition, the Company cannot assure that it will be able to obtain any additional financing on acceptable terms, or at all. The Company is also in negotiations to license its injectable collagenase product under development for up-front license fees and milestone payments. The Company's projections do not assume this transaction. BONUS STORES: Seeks Court Nod to Pay Vendors' Prepetition Claims ---------------------------------------------------------------- Bonus Stores, Inc., is asking the U.S. Bankruptcy Court for the District of Delaware for permission to pay the prepetition claims of its critical freight carrier and service provider. In the ordinary course of its business, the Debtor utilizes the services of Allen Freight Services to ship, transport and deliver the retail merchandise used in the Debtor's business operation to and from its distribution center and stores. Without continuation of the services of the Freight Carrier, the Debtor would face a crippling interruption in the delivery and sale of its Retail Merchandise, and a substantial disruption of the operation of the stores. The Freight Carrier is compensated based upon contractual rates agreed between the Debtor and the Freight Carrier. The Debtor estimates these charges not to exceed $150,000 in the aggregate. A.R. Williams, the Executive Vice President-Chief Financial Officer of the Debtor says that the failure to pay the prepetition claims of the Freight Carrier could severely undermine the Debtor's rehabilitation efforts. For one, refusal by the Freight Carrier to continue to deliver Retail Merchandise to the Debtor's stores could cripple its ability to operate and, even on a short term basis, cause serious harm to its business operations. Additionally, the Debtor has an existing agreement with Strategic Outsourcing, Inc., a professional employment organization, which performs critical employment related services as to all or substantially all of the persons utilized by the Debtor in its day-to-day business operations. Strategic Outsourcing is responsible for supplying all of the Debtor's store level, corporate and distribution personnel on a contract, leased or assigned basis, as well as all of the payroll and associated fringe and welfare benefits to each such individual. The Debtor believes that continued maintenance of the relationship with Strategic Outsourcing pending a decision whether to assume or reject the Strategic Outsourcing Agreement is necessary and essential to the continued maintenance of the Debtor's business operations. In the absence of such relationship, the Debtor would be deprived of the services of the "assigned employees," the very lifeblood of the Debtor's business. Under the Agreement, the Debtor is obligated to fund payments to Strategic Outsourcing in respect of the services it provided. The Debtor typically funds Strategic Outsourcing related payments bi- weekly in arrears, which payments customarily aggregate approximately $1.25 million for each bi-weekly period. As of the Petition Date, the Debtor estimates that the total amount outstanding and owing to Strategic Outsourcing is $$650,000. In addition, the Debtor will be obligated to fund Strategic Outsourcing an additional $600,000 in the normal course for the first postpetition week. Bonus Stores, Inc., headquartered in Columbia, Mississippi, is a chain of over 360 stores in 13 Southeastern states, that offers everyday deep discount prices on basic everyday items. The Company filed for Chapter 11 protection on July 25, 2003 (Bankr. Del. Case No. 03-12284). Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimates debts and assets of over $50 million each. CABLETEL COMMS: Renegotiating Payment Terms of Promissory Note -------------------------------------------------------------- Cabletel Communications Corp. (AMEX: TTV; TSE: TTV), the leading distributor of broadband equipment to the Canadian television and telecommunications industries, announced that, for its second quarter ended June 30, 2003, it anticipated reporting lower revenues of approximately CDN$9 million, compared to CDN$15 million reported in the same second quarter of 2002 and CDN$11 million for the first quarter of 2003. In addition, the Company announced that for the quarter ended June 30, 2003, it anticipated reporting an increased net loss and that it expects to take a restructuring charge, the total amount of which has not yet been determined. The Company attributed its lower revenues and increased net loss to continued weakness in the cable and satellite sector. The Company is due to release its second quarter results on or about August 15, 2003. In order to better position the Company to compete in the current market, as announced at the Company's annual meeting held on July 27, 2003. The Company has undertaken a restructuring plan to seek to reduce operating costs and total indebtedness. The restructuring plan is expected to include the following key components: - A reduction in the size of its workforce by approximately 25%. - Explore the sale of non-core assets. - A reduction of occupancy costs through the consolidation of its operation into fewer facilities. - Efforts to renegotiate terms with key suppliers. The Company has commenced these efforts and believes that, if successful, they should result in cost savings and increased working capital. However, no assurances can be given that the restructuring plan can be successfully completed. In particular, in connection with its restructuring plan, the Company announced that it is in the process of seeking to renegotiate the payment terms of its US $2.2 million senior subordinated promissory note issued to one of its major suppliers. As a result, it has obtained the consent of the payee to pay half of each of the full US$120,000 installments due under the note on each of May 31, June 30 and July 31, 2003. The promissory note, which was issued in May 2002 as part of the conversion of US$2.2 million in outstanding payables owed by the Company to a major supplier, bears interest at the rate of 12% per annum and called for repayment in monthly installments of US$60,000 through April 2003 and US$120,000 thereafter through April 30, 2004. Because of the continued weakness in the Canadian television and telecommunication industries, the Company has been in discussions with the payee of the note regarding a restructuring which would reduce the monthly payments below the required US $120,000. Although discussions with the payee have commenced, to date the Company and the payee have not agreed upon the terms of a restructuring. Unless an agreement is reached by August 15, 2003, the Company will be required to pay the full US$120,000 installment due on August 31, 2003, plus the amount of the Company's total underpayment of US$180,000 with respect to the May 31, June 30 and July 31, 2003 installments. Unless an agreement is reached, the Company does not expect to be in a position to make those payments. If the Company is unable or otherwise fails to make those payments in full it would constitute a default of the terms of the note, which is unsecured and subordinated to the rights of the senior bank lenders under the Company's senior credit facility. The Company has been coordinating its efforts to renegotiate the terms of the note with its senior bank lenders, who have been supportive of the Company in that regard. While the Company remains hopeful that it can conclude a renegotiation of the payment terms of note on terms mutually satisfactory to the Company, the payee and the bank, no assurances can be given that such agreement can be reached. If no agreement is reached, the Company may not be in a position to make all of the required payments, an event that could permit the payee to call an event of default under the note and have a material adverse impact on the Company and its business. Greg Walling, President of Cabletel, stated that: "The Company is experiencing some of its most difficult challenges in its 30 year history. Our primary customer base, the Canadian cable industry, continues to reduce its spending levels, which has seriously hampered our current sales levels. Further, in light of the ongoing troubles of major players in the US and the continued weakness of the telecom sector, our suppliers have implemented aggressive collection and credit policies. This has created cash flow issues for the Company. However, while the current environment is causing serious short-term difficulties, the Company's market share in its traditional markets has actual grown and we remain optimistic that, through our restructuring plan, we will be successful in protecting the Company's market position and better position it to prosper." Cabletel Communications offers a wide variety of products to the Canadian television and telecommunications industries required to construct, build, maintain and upgrade systems. The Company's engineering division offers technical advice and integration support to customers. Stirling Connectors, Cabletel's manufacturing division supplies national and international clients with proprietary products for deployment in cable, DBS and other wireless distribution systems. More information about Cabletel can be found at http://www.cabletelgroup.com CALPINE CORP: Commences Note Offering to Refinance CCFC I Debt -------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, announced that its wholly owned subsidiary Calpine Construction Finance Company, L.P. (CCFC I) intends to commence an offering of up to $750 million of term loans and secured notes. The offering will include approximately $300 million of First Priority Secured Institutional Term Loans Due 2009 and approximately $450 million of Second Priority Secured Floating Rate Notes Due 2011. The final principal amounts will be determined by market conditions. The noteholders' recourse will be limited to CCFC I's seven natural gas-fired electric generating facilities located in various power markets in the United States. The company intends to use the net proceeds from the offering to refinance a portion of CCFC I's existing indebtedness, which matures in November 2003. The remaining balance of CCFC I will be repaid from cash on hand. Current outstanding indebtedness, including letters of credit under the CCFC I credit facility, is approximately $910 million. The First Priority Secured Institutional Term Loans Due 2009 will be placed in the institutional term loan market. The Second Priority Secured Floating Rate Notes Due 2011 will be offered in a private placement under Rule 144A, have not been and will not be registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. * * * As previously reported, Standard & Poor's Ratings Services assigned its 'B' rating to Calpine Corp.'s $3.3 billion second- priority senior debt. The $3.3 billion includes: a $750 million term loan due 2007, $500 million floating rates notes due 2007, $1.15 billion 8.5% secured notes due 2010, and $900 million secured notes due 2013. The notes carry the same rating as other Calpine senior secured debt and are rated two notches higher than the 'CCC+' rated senior unsecured debt. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on Calpine, its 'B' rating on Calpine's secured debt, its 'CCC+' rating on Calpine's senior unsecured bonds, and its 'CCC' rating on Calpine's preferred stock. The 'BB-' rating on the existing $950 million secured term loan and the $950 million secured revolver are withdrawn, as this debt was refinanced with the proceeds of the recent $3.8 billion financing. CINCINNATI BELL: Commences Exchange Offers for BRCOM Preferreds --------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) launched Friday two exchange offers. Cincinnati Bell will offer to exchange shares of its common stock for all of the outstanding shares of 12-1/2% Series B Junior Exchangeable Preferred Stock of its BRCOM Inc. (f/k/a Broadwing Communications Inc.) subsidiary. It will also offer to exchange shares of its common stock for the entire outstanding aggregate principal amount of 9% Senior Subordinated Notes due 2008 of BRCOM. Holders of BRCOM Preferred Stock will receive 35.8 shares of Cincinnati Bell common stock for each outstanding share of BRCOM Preferred Stock validly tendered. If all of the outstanding shares of BRCOM Preferred Stock are tendered, the company will issue 14,148,518 new shares of its common stock. Concurrently with the preferred stock exchange offer, Cincinnati Bell is also soliciting consents from holders to amend the certificate of designation under which the shares were issued to eliminate all voting rights and restrictive covenants. The preferred stock exchange offer is conditioned upon, among other things, the receipt of valid tenders and consents from holders of not less than 66-2/3% of the outstanding BRCOM Preferred Stock. As of July 30, 2003, holders of shares representing approximately 72.9% of BRCOM Preferred Stock have already agreed with Cincinnati Bell to tender their shares and give their consents. If the preferred stock exchange offer and consent solicitation are completed, Cincinnati Bell will effect a merger of a newly-formed wholly owned subsidiary into BRCOM, in which any remaining shares of BRCOM Preferred Stock not tendered will be converted into the same number of shares of Cincinnati Bell common stock that the holders would have received if they tendered their shares in the exchange offer, unless the holders properly perfect appraisal rights under Delaware law. Holders of BRCOM 9% Notes will receive 241.06 shares of Cincinnati Bell common stock for each outstanding $1,000 aggregate principal amount of BRCOM 9% Notes validly tendered. If the entire outstanding aggregate principal amount of BRCOM 9% Notes are tendered, the company will issue 11,076,707 new shares of its common stock. Concurrently with the debt exchange offer, Cincinnati Bell is also soliciting consents from holders to amend the indenture under which the notes were issued to eliminate all restrictive covenants. The debt exchange offer is conditioned upon, among other things, the receipt of valid tenders from holders of not less than 95% of the outstanding BRCOM 9% Notes. As of July 30, 2003, holders of notes representing approximately 94.0% of the outstanding aggregate principal amount of BRCOM 9% Notes have already agreed with Cincinnati Bell to tender their notes. Both the preferred stock and debt exchange offers will expire at 5:00 p.m., New York City time, on Friday, August 29, 2003, unless extended. The terms and conditions of the exchange offers, and other important information, are contained in each of the company's Prospectus and Solicitation Statement for the preferred stock exchange offer and the debt exchange offer, both dated July 31, 2003. The dealer manager and solicitation agent for both exchange offers is Lehman Brothers Inc. Holders of BRCOM Preferred Stock or BRCOM 9% Notes may request additional copies of the Prospectus and Solicitation Statements, the related Letters of Transmittal by contacting Lehman Brothers at (800) 438-3242. Holders may also get copies of the Prospectus and Solicitation Statements at the Securities and Exchange Commissions' internet Web site at http://www.sec.gov 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 third year in a row, by J.D. Power and Associates for 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 July 25, 2003 edition, Standard & Poor's Ratings Services raised the corporate credit rating of incumbent local exchange carrier Cincinnati Bell Inc. to 'B' from 'B-'. Ratings on Cincinnati Bell's secured debt, which includes its $941 million bank credit facility and $50 million senior secured notes, are raised to 'B+' from 'B-'. "The upgrade of the secured debt reflects both the higher corporate credit rating and permanent reduction of bank debt," said credit analyst Michael Tsao. Ratings have been removed from CreditWatch, where they had been placed with positive implications on July 1, 2003 after Cincinnati Bell announced that it planned to issue new notes to reduce bank debt. The outlook is positive. Total debt is currently about $2.5 billion. CINEMARK USA: Intends to Amend Senior Secured Credit Facility ------------------------------------------------------------- Cinemark USA, Inc., one of the leaders in the motion picture exhibition industry, is seeking certain amendments to its senior secured credit facility from its lenders to provide a $165 million term loan with a term expiring on March 31, 2008 subject to extensions permitted in the senior credit facility. The net proceeds of the term loan and additional borrowings under the revolving facility will be used to (i) repay $125 million of term loans currently incurred under the Company's senior secured credit facility and (ii) redeem the approximately $42 million of the Company's 9-5/8% Senior Subordinated Notes due 2008 which remain outstanding. The effectiveness of the amendments is subject to the requisite consent of the lenders and the prepayment of approximately $125 million under the existing term loan. The Company intends to issue a redemption notice for the approximately $42 million of its 9-5/8% Senior Subordinated Notes which remain outstanding upon the effectiveness of the amendments. Cinemark USA, Inc. continues to be a leader in the development of stadium seating multiplex theatres. As of June 30, 2003, the Company's aggregate screen count is 3,044 with operations in the United States, Canada, Mexico, Argentina, Brazil, Chile, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Colombia and the United Kingdom. The Company, headquartered in Plano, TX, has a Web site at http://www.cinemark.comwhere customers can view showtimes and purchase tickets over the internet. As reported in Troubled Company Reporter's May 7, 2003 edition, Moody's Investors confirmed the ratings for Cinemark USA, Inc., and assigned a B3 rating to the company's $210 million follow-on offering of 9% senior subordinated notes. Affected Ratings * $75 million Gtd Senior Secured Revolver due 2007 - Ba3 * $125 million Gtd Senior Secured Term Loan due 2008 - Ba3 * $360 ($150 originally plus $210 follow-on) million of 9% Gtd Senior Subordinated Notes due 2013 - B3 * $200 million of 9-5/8% Gtd Senior Subordinated Notes due 2008 - B3 (a portion of which will be redeemed) * $75 million of 9-5/8% Gtd Sr Sub Notes due 2008 - B3 (a portion of which will be redeemed) * Senior Implied Rating - B1 * Senior Unsecured Issuer Rating - B2 Outlook is stable. COLUMBIA LABORATORIES: Holding Q2 Conference Call on Thursday ------------------------------------------------------------- Columbia Laboratories (Amex: COB) will be holding a conference call on August 7, 2003 at 8:30 AM EDT to discuss second quarter 2003 earnings results. Fred Wilkinson, Columbia's chairman, president and chief executive officer, and David Weinberg, Columbia's Chief Financial Officer, will be available for questions regarding the subject. Questions can only be asked through dial-in. The U.S./Canada dial-in number is 800-387-5428. The international dial-in number is (706) 634-1328. The conference ID number is 2114756. A recording of the conference call will be available two hours after completion, and will be available until August 14, 2003 at 11:59 PM EDT at 800-642-1687 (U.S.) and 706-645-9291 (International). The call will be webcast on the Columbia Laboratories Web site, and will be available until September 6, 2003 at 11:59 PM EDT at http://www.columbialabs.com Columbia Laboratories, Inc. -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $13 million -- is a U.S.-based international pharmaceutical company dedicated to the development and commercialization of women's health care and endocrinology products, including those intended to treat infertility, dysmenorrhea, endometriosis and hormonal deficiencies. Columbia is also developing hormonal products for men and a buccal delivery system for peptides. Columbia's products primarily utilize the company's patented Bioadhesive Delivery System (BDS) technology. For more information, please visit http://www.columbialabs.com COM21 INC: Hearing on Proposed Asset Sale to Convene on Thursday ---------------------------------------------------------------- Com21, Inc. (OTC Bulletin Board: CMTO), announced that a hearing has been set for August 7, 2003, at 1:30 p.m., to obtain approval from the US Bankruptcy Court (Northern District of California, San Jose Division) for Com21's proposed sale of certain key assets including the DOCSIS CMTS product line and Com21's Irish subsidiary to ARRIS International. The proposal is subject to overbid. Any party wishing to bid for the Company's assets must submit its proposal to Com21 not later than today. To obtain information on the requirements for bidding, contact either of the following: David S. Caplan Ralph Marimon Brooks & Raub, Chief Financial Officer A Professional Corporation, Com21, Inc. 650-321-1400 408-544-1979 650-321-1450 - facsimile 408-953-9799 - facsimile dcaplan@reorglaw.com rmarimon@com21.com The proposed sale price is $2,796,000. Although the ultimate sale price may be higher, Com21 announced that it is highly unlikely that sufficient proceeds will be received to pay the approximately $25,000,000 in creditor claims and that Com21 believes that its outstanding stock is without value. Com21 also announced that the bankruptcy court has ordered that shareholders will not receive individualized notice of the commencement of its Chapter 11 case [Case No. 03-54533 MM]. Shareholders who desire to file proofs of their shareholder interests must file those proofs with the bankruptcy court not later than November 12, 2003. Proof of interest forms (including filing instructions) may be obtained from the bankruptcy court's Web site at http://www.canb.uscourts.gov CONTINENTAL AIRLINES: Flies 6BB Revenue Passenger Miles in July --------------------------------------------------------------- Continental Airlines (NYSE: CAL) reported an all-time record systemwide mainline load factor of 84.5 percent for July 2003, 5.0 points above last year's July load factor and 3.5 points above the previous record set in June 2003. In July 2003, the airline had an all-time record domestic mainline load factor of 85.7 percent, 6.5 points above July 2002 and 3.9 points above the previous record set in June 2003, and an international mainline load factor of 82.5 percent, 2.6 points above July 2002. During the month, Continental recorded a U.S. Department of Transportation on-time arrival rate of 80.4 percent and a systemwide completion factor of 99.8 percent for its mainline operations. In the final five days of the month, Continental maintained an on-time arrival rate of 90.3 percent with an average load factor of 85.5 percent and no flight cancellations. In total, the airline operated 13 days without a single flight cancellation, including the day when hurricane Claudette passed within 90 miles of Continental's Houston hub at Bush Intercontinental Airport. In July 2003, Continental flew 6.0 billion mainline revenue passenger miles (RPMs) and 7.1 billion mainline available seat miles (ASMs) systemwide, resulting in a traffic increase of 5.6 percent and a capacity decrease of 0.7 percent as compared to July 2002. Domestic mainline traffic was 3.7 billion RPMs in July 2003, up 9.3 percent from July 2002, and July 2003 domestic mainline capacity was 4.3 billion ASMs, up 1.0 percent from July 2002. Systemwide July 2003 mainline passenger revenue per available seat mile (RASM) is estimated to have increased between 4 and 6 percent compared to July 2002. For June 2003, RASM increased 0.4 percent as compared to June 2002. Continental's regional operations (Continental Express) set an all time load factor record of 74.4 percent in July 2003, 7.0 points above last year's July load factor and 0.9 points above the previous record set last month. Regional RPMs were 585.5 million and regional ASMs were 787.2 million in July 2003, resulting in a traffic increase of 61.4 percent and a capacity increase of 46.2 percent versus July 2002. Continental Airlines is the world's seventh-largest airline with 2,300 daily departures to 134 domestic and 92 international destinations. Continental has the broadest global route network of any U.S. airline, including extensive service throughout the Americas, Europe and Asia. Continental has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 41 million passengers per year on the newest jet fleet among major U.S. airlines. As recently reported, Standard & Poor's Ratings Services assigned its 'CCC+' rating to Continental Airlines Inc.'s (B/Negative/--) $150 million 5.0% senior unsecured convertible debt due 2023. Ratings on Continental were affirmed on June 2, 2003, and removed from CreditWatch, where they were placed on March 18, 2003. "Ratings on Continental are based on its heavy debt and lease burden and relatively limited financial flexibility, which outweigh better-than-average operating performance and a modern aircraft fleet," said Standard & Poor's credit analyst Philip Baggaley. The outlook on Continental's long-term corporate credit rating is negative. Losses are expected to narrow and operating cash flow should turn modestly positive in the second and third quarters of 2003, but Continental remains vulnerable to any renewed deterioration in the airline industry revenue environment. CSK AUTO: Hal Smith Steps Down as SVP of Marketing/Merchandising ---------------------------------------------------------------- CSK Auto Corp. (NYSE: CAO) announced that Hal Smith, senior vice president of merchandising and marketing, has resigned from the company to pursue other opportunities. CSK Auto Corp. (S&P, B+ Corporate Credit Rating, Stable) is the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket. As of May 4, 2003, the company operated 1,108 stores in 19 states under the brand names Checker Auto Parts, Schuck's Auto Supply and Kragen Auto Parts. DELTA AIR LINES: Names Paul Graves VP Global Diversity Affairs -------------------------------------------------------------- Delta Air Lines (NYSE: DAL) has appointed Paul Graves to the position of vice president - Global Diversity and Community Affairs. This newly-combined organization will use the strengths and resources of both Delta's Global Diversity and Community Affairs groups to meet the needs of the airline's diverse workforce and community partnerships. Graves has served as Delta's vice president of Global Diversity since August 2002. Over the past year, his responsibilities included continuing and expanding the company's diversity efforts and partnering with its Community Affairs organization to increase Delta's presence in the communities where Delta customers and employees live. In his new role, Graves will take the lead in community affairs initiatives and volunteer efforts to provide contributions to programs of nonprofit organizations that support Delta's focus areas of supporting youth wellness, leadership development and cultural diversity programs. Over the last decade, Delta's community affairs efforts have provided more than $30 million in Delta Air Lines Foundation gifts, corporate contributions and in- kind donations, as well as countless hours of employee support in the community. Graves joined Delta in November 2000 as the Human Resources director for the In-Flight Service division. Before joining Delta, he served as group vice president and director of Human Resources for Africa and the Middle East for The Coca-Cola Company, providing strategic human resources leadership for 68 countries in Africa and the Middle East. "As a company, we have made significant strides in the area of global diversity," said Delta Chairman and CEO Leo F. Mullin. "I am confident that, as we integrate our global diversity and community affairs efforts, we can maximize our effectiveness in the communities in which we live and work, and with Delta employees worldwide." Graves earned a bachelor's degree in Business Administration from Alabama A&M University. He and his wife, Sandy, live in Woodstock, GA. Delta Air Lines (S&P/BB-/Negative), the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,813 flights each day to 447 destinations in 81 countries on Delta, Song, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please go to http://www.delta.com DETROIT MEDICAL: Fitch Affirms B Rating on $569 Mil. of Bonds ------------------------------------------------------------- Fitch Ratings affirms the 'B' rating on approximately $569.1 million outstanding revenue bonds of Detroit Medical Center. In addition, the bonds are removed from Rating Watch Evolving. The Rating Outlook is Stable. 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. Subsequent to Fitch's latest rating actions of July 2, 2003, in which Fitch lowered its rating to 'B' from 'BB+' and placed the bonds on Rating Watch Evolving, DMC announced an agreement with the state, Wayne County, and the city of Detroit, in which a maximum of $50 million of public funds will be made available to DMC over a 10-month period to cover operating shortfalls at Detroit Receiving Hospital and University Health Center and Hutzel Hospital, which comprise about 50% of DMC's current operating losses. The 10-month period of funding is to begin in August (with funds arriving in October) and conclude in May. In return for the public assistance, DMC can not close DRH or Hutzel during the 10- month period, as DMC management planned to do before the agreement. A temporary oversight committee consisting of two representatives appointed by the Governor, two appointed by the Wayne County Executive, and two appointed by the mayor will have power to approve the monthly requests of the public funds. Fitch believes the $50 million public subsidy over ten months provides DMC with some relief and keeps DRH and Hutzel operational as a public task force debates the future of the two hospitals, including the concept of a public hospital authority that may or may not own and manage the hospitals. In Fitch's view, the additional funds that will be available to DMC do not materially change the creditworthiness of the organization enough to warrant a rating change. Although it appears likely that some form of permanent public funding of the two hospitals will occur, its form and composition remain uncertain. Fitch views the departure of two members of executive management, the chief financial officer and the president of Sinai-Grace Hospital, negatively. In addition, as a condition to receive the $50 million public subsidy, DMC agreed to review its board structure to ensure that all board members do not have any conflicts of interest. A new board chairman was elected recently as part of this effort; however management does not believe that the current board structure will change materially as part of this initiative. Through six months (June 30) of 2003, DMC lost $59.6 million for an excess margin of negative 7.5%. Maximum annual debt service coverage of EBITDA through the six-month period was 0.3 times (x), debt to EBITDA was an extraordinarily high 46.6x, and its average age of plant was 12.1 years. Liquidity levels are very thin, with 30 days cash on hand and 20% cash to debt as of June 30, 2003. DMC operates nine hospitals, seven of which serve the metropolitan Detroit area. DMC is the largest health care 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 in 1998. 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. DOANE PET CARE: Lowered Ratings Reflect Weak Ops. Performance ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on pet food manufacturer Doane Pet Care Co. to 'B' from 'B+'. Standard & Poor's also lowered the senior unsecured and subordinated debt ratings on Doane to 'CCC+' from 'B-'. The outlook is stable. Total debt outstanding at June 28, 2003, was about $570 million. "The downgrade reflects Doane's weaker-than-expected operating performance, which has resulted in credit measures that are below Standard & Poor's expectations," said credit analyst Jean C. Stout. "In addition, Standard & Poor's anticipates that Doane's 2003 financial results will remain weak given the company's limited pricing flexibility and the volatility of its raw material costs, which, together with packaging costs, represent about 75% of cost of goods sold." The ratings continue to reflect Brentwood, Tennessee-based Doane's heavy debt burden stemming from its LBO and aggressive acquisition strategy, its narrow business focus, and participation within a highly competitive industry. These factors are somewhat mitigated by the company's strong business position in the stable but mature pet food industry. Doane competes principally in the domestic dry pet food segment with about a 24% market share by volume. It is also the largest manufacturer of private label pet food in the U.S. The approximately $12 billion domestic pet food industry is relatively stable and mature and has exhibited unit growth in the low single- digits for the past few years. The dry pet food segment represents more than half of the U.S. market and is growing faster than moist products due to quality and taste improvements, as well as convenience of use. In 2002, private label pet food sales represented approximately 30% of industry sales. Doane manufactures products for about 600 customers worldwide; however, customer concentration is a concern, as retailer Wal-Mart Inc./Sam's Club represented about 44% of the company's 2002 sales. While Doane's relationship with Wal-Mart is longstanding, and Wal- Mart's Ol'Roy brand, manufactured primarily by Doane, is the best- selling dog food in America by volume, pricing flexibility is extremely limited. Nonetheless, Doane's significant distribution network spans the country, resulting in competitive transportation costs and better inventory management for its customers. This level of service is especially important to the mass merchandisers and large national grocery chains, which are continually striving to optimize their inventory efficiency. DVI INC: Misses Interest Payment on 9-7/8% Senior Notes due 2004 ---------------------------------------------------------------- DVI, Inc. (NYSE:DVI) did not make the scheduled interest payment due Friday on its 9-7/8% Senior Notes due 2004. Under the terms of the Indenture governing the notes, the failure to make the interest payment may be cured by DVI within 30 days. DVI's inability to make the interest payment due on the notes is a result of the severe liquidity constraints DVI is currently facing. DVI's liquidity began to tighten as certain of its lenders reduced advance rates following the announcement of credit rating downgrades. DVI's liquidity problems were further exacerbated as the result of a shortfall in the amount of qualifying collateral supporting its borrowings under its principal bank lending facility. The shortfall has triggered a default under the facility. DVI is currently in discussions with its bank lenders to resolve these issues. DVI intends to consider all alternatives available to it to secure funds to make the interest payment due on the notes and improve its liquidity. DVI and its financial advisors had already commenced discussions with various prospective lenders and other sources of funding and has received several proposals for both short term and long term solutions. However, there are several conditions that must be met to conclude these transactions, including completion of due diligence and negotiation of mutually acceptable documentation. No assurances can be provided that any of the transactions contemplated will be consummated in the next 30 days or at all. Even if DVI is able to complete a limited short term financing transaction of the type discussed with certain potential lenders, it will face significant future challenges, including the need to refinance or re-negotiate various credit agreements. The failure of DVI to obtain additional funding or resolve the defaults with respect to its bank lending facilities and notes could have a serious adverse effect on DVI's business and on the value of DVI's debt and equity securities. DVI is an independent specialty finance company for healthcare providers with $2.8 billion of managed net financed assets. DVI extends loans and leases to finance the purchase of diagnostic imaging and other therapeutic medical equipment directly and through vendor programs throughout the world. DVI also offers lines of credit for working capital backed by healthcare receivables in the United States. Additional information is available at http://www.dvi-inc.com DVI INC: S&P Drops Counterparty and Senior Unsecured Rating to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and senior unsecured debt ratings on Jamison, Pa.-based DVI Inc., to 'D' from 'CCC-' and removed them from CreditWatch, where they were placed on July 17, 2003. "The rating action follows DVI's announcement stating that the company will not make the Aug. 1, 2003 interest payment on its 9-7/8% senior notes due in 2004," said credit analyst Steven Picarillo. DVI INC: Fitch Further Junks Senior Unsecured Debt to C from CCC ---------------------------------------------------------------- Fitch Ratings lowers DVI, Inc.'s senior unsecured debt rating to 'C' from 'CCC'. The rating remains on Rating Watch Negative. This action covers $155 million of debt due in February 2004. The rating action follows DVI's announcement of its failure to make an interest payment due on Aug. 1, 2003. The company has a cure period of 30 days to make the payment. Headquartered in Jamison, Pennsylvania, DVI is an independent, specialty commercial finance company providing asset-based lending to the health care industry. DVI's core business is financing large- and medium-ticket diagnostic and surgical equipment for outpatient centers, clinics, and doctors groups in the United States. DVI also provides working capital financing for medical receivables through its DVI Business Credit subsidiary. DYNEGY HOLDINGS: S&P Assigns Junk and Low-B Debt Ratings -------------------------------------------------------- Fitch Ratings has assigned a 'B' rating to Dynegy Holdings Inc.'s $700 million 10.125% second priority senior secured notes due 2013, $520 million 9.875% second priority senior secured notes due 2010, and $225 million floating rate second priority senior secured notes due 2008 priced at Libor plus 6.50%. Fitch has also assigned a 'CCC+' rating to Dynegy Inc.'s $175 million 4.75% convertible subordinated debentures due 2023. DYN's convertible debentures are guaranteed on a senior unsecured basis by DYNH. The DYNH Notes and the DYN convertible debentures are being sold through private placement. In addition, DYNH's outstanding $360 million Term B loan is upgraded to 'B+' from 'B' as a result of improved collateral coverage following application of the Note proceeds. The Rating Outlook for the DYN and its affiliates is changed to Positive from Stable. The new financings are part of a series of related transactions that include the repurchase of near-term debt maturities, reduction of outstanding secured bank debt, and restructuring of its ChevronTexaco preferred stock. As a result of these transactions, refinancing risk is lessened and operating flexibility is improved. Specifically, debt proceeds and cash on hand will be used to repay the $200 million Term A loan and a portion of the Term B loan under DYNH's secured credit facility, repay the $696 million Black Thunder credit facility secured by Midwest electric generation assets, repurchase through a tender offer more than 90% of DYNH $650 million senior unsecured notes maturing in 2005 and 2006, and make a $225 million cash payment to CVX under its preferred stock restructuring. Bank lenders will benefit from the refinancings by now having a first lien on the Black Thunder assets. The Notes' 'B' rating reflects Fitch's current assessment of the company's overall credit profile, the Notes' ranking in DYNH's capital structure, and the expected recovery for holders of the Notes in a bankruptcy based on Fitch's valuation of DYN's collateral. The Notes are guaranteed on a second secured basis by DYN and each of DYN's domestic subsidiaries that guarantee borrowings under the DYNH credit facility. In addition, DYNH's obligations under the Notes and its guarantor's obligations under the guarantees are secured on a second priority basis by substantially the same collateral that secures DYNH's credit facility, including the assets of DYNH and that of its guarantors and a pledge of stock of DYNH and its domestic subsidiaries as well as Illinova. The Notes will effectively rank junior to DYNH's 'B+' rated secured $1.1 billion revolving credit agreement and $360 million Term B loan and also to about $1.1 billion of secured project debt. The Positive Outlook recognizes the company's improved operating and financial flexibility. The restructuring of the CVX preferred stock also resolves a significant uncertainty surrounding its November 2003 maturity at terms that are reasonable given the circumstances. CVX has agreed to exchange its $1.5 billion preferred stock for $225 million in cash, $225 million in DYN subordinated notes, and $400 million in DYN convertible preferred stock. DYN's reported liquidity at July 21, 2003, was $1.7 billion, which continues to be adequate over the near term. Moreover, the company's debt maturity schedule will be lengthened with the tendering of the 2005 and 2006 notes. Current rating levels recognize several ongoing concerns including, the significant cash drain from five remaining wholesale tolling agreements and the difficulty of terminating the agreements, the practical limits of materially reducing debt levels through cash from operations, and the negative overhang from ongoing government investigations and litigation. Cash flows from core operations remain weak relative to its high debt burden and any financial recovery should be gradual. On a consolidated basis, DYN has about $7.0 billion of debt obligations not counting the new $400 million CVX convertible preferred stock and payment obligations under its remaining tolling agreements with a net present value of about $1.4 billion. While recent efforts to eliminate third-party marketing and trading activities has helped ease collateral requirements and improve liquidity, the company must continue to provide substantial amounts of collateral to support its generation and midstream operations. Total collateral posted at July 21, 2003, including cash and letters of credit was approximately $725 million. Ratings are listed below: DYN -- Indicative senior unsecured debt 'CCC+'; -- Convertible debentures 'CCC+'. DYNH -- Secured revolving credit facility and term A loan 'B+'; -- Secured term B loan 'B+'; -- Second priority secured notes 'B'; -- Senior unsecured debt 'CCC+'. Dynegy Capital Trust I -- Trust preferred stock 'CC'. Illinois Power Co. -- Senior secured debt and pollution control bonds 'B'; -- Indicative senior unsecured debt 'CCC+'; -- Preferred stock 'CC'. Illinova Corp. -- Senior unsecured debt 'CCC+'. DYNEGY INC: Prices $1.45 Billion Senior Secured Notes Offering -------------------------------------------------------------- Dynegy Inc. (NYSE:DYN) has priced $1.45 billion of second priority senior secured notes. The senior secured offering includes $225 million of second priority senior secured floating rate notes due 2008, $525 million of 9.875% second priority senior secured notes due 2010 with a yield to maturity of 10.0% and $700 million of 10.125% second priority senior secured notes due 2013 with a yield to maturity of 10.25%, all to be issued by Dynegy Holdings Inc. The floating rate notes were priced at LIBOR plus 650 basis points and, along with the other series of second priority senior secured notes, will be secured on a second priority basis by substantially the same collateral that secures the obligations under Dynegy Holdings' recently restructured credit facilities, which consist of a substantial portion of the available assets and stock of Dynegy's direct and indirect subsidiaries, excluding its regulated energy delivery business, Illinois Power. In addition, the second priority senior secured notes will be guaranteed by the guarantors under Dynegy Holdings' existing bank credit facility. The second priority senior secured notes offering is conditioned on, among other things, the effectiveness of the previously announced credit facility amendment. This offering and the convertible subordinated debenture offering, announced earlier in the day on Aug. 1, are expected to close on or about Aug. 11. In connection with its refinancing and restructuring plan, Dynegy recently announced the execution of a Series B Exchange Agreement with Chevron U.S.A. Inc., a subsidiary of ChevronTexaco Corporation. The Series B exchange remains subject to various conditions, including the consummation of the private placement offerings and receipt of applicable regulatory and other approvals. Dynegy intends to use all of the proceeds from the private placement offerings, together with existing cash on hand, to make the initial $225 million cash payment to ChevronTexaco pursuant to the Series B exchange as well as to repay outstanding indebtedness, including notes purchased in the previously announced tender offer and consent solicitation, certain indebtedness outstanding under the credit facilities, amounts outstanding under the secured financing tied to its Midwest generation assets, and certain transaction fees and related expenses. The second priority senior secured notes will not be registered under the Securities Act of 1933, or any state securities laws. Therefore, the second priority senior secured notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and any applicable state securities laws. Dynegy Inc. provides electricity, natural gas and natural gas liquids to wholesale customers in the United States and to retail customers in the state of Illinois. The company owns and operates a diverse portfolio of energy assets, including power plants totaling more than 13,000 megawatts of net generating capacity, gas processing plants that process more than 2 billion cubic feet of natural gas per day and approximately 40,000 miles of electric transmission and distribution lines. ENRON CORP: ENA Wants Go-Signal to Sell BT Exploration for $21MM ---------------------------------------------------------------- Bonne Terre Exploration Company, L.L.C., a non-debtor Delaware limited liability company, was formed in 1998 as a joint venture between Enron and certain of its affiliates, to the extent of 62.5% of the membership interests, and BT Management -- a subsidiary of Samuel Gary, Jr. and Associates, Inc., to the extent of 37.5% of the membership interests. BT Management is the managing member of BTEC. On November 6, 2000, Enron and certain of its affiliates formed BT Exploration by transferring their 62.5% membership interest in BTEC and their interest in certain of BTEC's assets to BT Exploration, in exchange for 100% of the membership interests in BT Exploration. BT Resources LLC owns 100% of the issued and outstanding membership interests in BT Exploration. The equity interests in BTR are held by its two members: (i) Joint Energy Development Investments II Limited Partnership, a Delaware limited partnership to the extent of 75% of the issued and outstanding membership interests, and (ii) ECTMI Trutta Holdings LP -- Holding I, a Delaware limited partnership, to the extent of 25% of the issued and outstanding membership interests in BTR. JEDI II, a non-debtor, has three partners. The general partner is Enron Capital Management II Limited Partnership, an indirect wholly owned limited partnership of ENA. JEDI II's two limited partners are Enron Capital Management III LP, an indirect, wholly owned limited partnership of ENA, and the California Public Employees' Retirement System, a unit of the State & Consumer Services Agency of the State of California. Through its limited partnerships, ENA holds a 50% interest in JEDI II. CalPERS holds the remaining 50% interest. The Bonne Terre Business BTEC was formed principally for the purpose of exploring for and developing oil and gas in Cameron Parish, Louisiana, in an area referred to as the Black Bayou Project Area. The Black Bayou Project Area comprises a large acreage position, consisting largely of marshland, in which BTEC, BT Management and Nexus Resources, Inc. own certain mineral interests, which include leasehold interests under mineral leases from third party landowners as well as fee simple and mineral servitude interests. BT Exploration has rights to a share of these mineral interests pursuant to various agreements, but does not own any mineral interests of record. According to Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, a portion of the Black Bayou Project Area mineral interests were originally acquired pursuant to an exploration agreement with Chevron/Texaco that continues to govern operations in the Black Bayou Project Area. BTEC's mineral interests are also subject to an Amended and Restated Black Bayou Joint Exploration Agreement, entered into among BTEC, BT Exploration, BT Management and Nexus. In addition to these two agreements governing the activities of the owners of mineral interests in the Black Bayou Project Area, BTEC's mineral leasehold interests are subject to the terms and provisions of the mineral leases creating the interests, as well as the several operating agreements among Samuel Gary, Jr. and Associates, Inc., BTEC, BT Exploration, BT Management and Nexus pursuant to which SGA agrees to serve as operator and to perform the exploration and development operations in the Black Bayou Project Area. According to Mr. Sosland, BTEC's dissolution and liquidation commenced in 2000, but has not been completed. BT Exploration and BT Management entered into an agreement to provide for the winding-up of the business of BTEC and the orderly distribution of its assets to the members, BT Exploration and BT Management. At the time the actual distribution of BTEC's assets was commenced, BT Exploration determined that it would not participate in certain operations proposed in the Black Bayou Project Area, with the result that its share of BTEC mineral interests in these portions of, or prospect areas within, the Black Bayou Project Area were assigned to BT Management, subject to farmout agreements among BTEC, BT Exploration, BT Management and SGA affording BT Exploration the right to reacquire rights in the assigned mineral interests upon the occurrence of delineated events. As to the remaining assets, an assignment was executed purporting to assign the remaining mineral interest to BT Exploration and to BT Management. However, Mr. Sosland notes, pursuant to the terms of the mineral leases and the Chevron/Texaco agreement, it was necessary to obtain the consent to these assignments of Chevron/Texaco and various of the landowners who had granted the mineral leases. Chevron/Texaco refused to give consent to any assignment. Accordingly, the assignment including the mineral interests covered by the Chevron/Texaco agreement was not placed of record. Marketing Process Beginning in November 2002, Enron North America Corporation began exploring a possible sale of BT Exploration. However, BT Exploration is restricted under the various agreements and mineral leases from disclosing geophysical and drilling information to third parties absent written consent. Moreover, the mineral leases in the project area that are held by BTEC require landowner consent before they can be assigned to a third party. During the BTEC dissolution process, BTEX solicited the consent to assign from all the landowners and not all agreed to provide their consent. Hence, BT Exploration's ability to market its assets has been severely limited. ENA determined that the best way to maximize the value of its interests in BT Exploration was to either continue producing the assets or sell its interests to the other interest holders -- SGA or BT Management. Because the continued production of the asset carries significant risks, including price risk, concentration risk, ownership risk and production risk, ENA concluded that a sale to SGA was in its best interest. ENA, through its affiliates, then moved forward with the negotiation of a definitive agreement. The Purchase and Sale Agreement Mr. Sosland reports that on July 9, 2003, BT Management, SGA and BT Exploration executed a Purchase Agreement containing these salient terms: A. Purchase Price The purchase price for the Assets to BT Management will be $21,000,000. The Purchase Price is subject to the Preliminary Adjustment Amount and an additional adjustment amount in the amount of any deviation of the Final Adjustment Amount and the Preliminary Adjustment Amount. BT Management has placed in escrow an Earnest Money Deposit equal to 10% of the Purchase Price and will pay the remainder of the Purchase Price at Closing. B. Assets The Assets include, among others: (i) the Leases, (ii) the Wells, (iii) Hydrocarbons attributable to production from the Leases after the Effective Time and net proceeds from the sale thereof, (iv) to the extent assignable, the Contracts, (v) the Equipment, (vi) the Easements, (vii) to the extent transferable, the Permits, (viii) to the extent transferable, the Seismic Rights; (ix) the Records; and (x) BT Exploration's 62.5% membership interest in BTEC. C. Assumed Liabilities BT Management will assume the liabilities set forth in the Purchase Agreement, including, without limitation: (i) all Liabilities arising out of, in connection with or related to the ownership, development, exploration, operation, use or maintenance of the Assets, whether relating to periods before or after the Effective Time, including, without limitation, all Environmental Liabilities and Obligations, and (ii) Liability for payment of the amounts with respect to the Contracts. D. Termination of Agreement The Purchase Agreement and the transactions contemplated therein may be terminated prior to the Closing by, inter alia: (i) the mutual written agreement of BT Management and BT Exploration; (ii) by either party if the Closing has not occurred on or before 60 days after the execution of the Purchase Agreement; and (iii) by either party if BT Exploration determines an Alternative Transaction could reasonably be expected to result in a Superior Transaction. E. Alternative Transaction BT Exploration's obligation to close under the Purchase Agreement is subject to its right to respond to an unsolicited bona fide proposal for an Alternative Transaction and, if BT Exploration determines in good faith that the Alternative Transaction could be reasonably expected to result in a Superior Transaction, BT Exploration may seek Bankruptcy Court approval of the Alternative Transaction. F. Guarantee SGA has unconditionally, irrevocably and absolutely guaranteed the due and punctual performance and discharge of BT Management's obligations under the Purchase Agreement. Accordingly, pursuant to Sections 105 and 363 of the Bankruptcy Code and Rules 2002 and 6004 of the Federal Rules of Bankruptcy Procedure, ENA asks the Court to authorize the: (a) sale and assignment of substantially all of the assets and liabilities of BT Exploration LLC pursuant to the Purchase Agreement between BT Exploration, BT Management and SGA; and (b) consummation of the transactions contemplated therein. Mr. Sosland argues that the sale is warranted since: (i) ENA's interest in BT Exploration and BTEC are not integral to, nor contemplated to be part of, the Debtors' reorganization; (ii) the proposed sale and assignment of the Assets and Assumed Liabilities to BT Management is preferable to BT Exploration's continued operations of the Assets; (iii) the Purchase Agreement was negotiated at arm's length and in ENA's opinion represents fair market value for the Assets; (iv) except as set forth in the Purchase Agreement, ENA is not aware of any liens, claims, encumbrances, rights of set-off, netting, deduction, recoupment or any other interests in the Assets which have, or could have, been asserted by creditors or other parties-in-interests; (v) to the extent an interest exists, that interest can be attached to the sale proceeds with the same validity and priority; and (vi) notwithstanding the limited marketing of the Assets due to constraints under the various agreement and mineral leases, ENA has explored the various alternatives for obtaining value from the Assets and has determined that the proposed transaction represents the best use of those Assets. (Enron Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXCHANGE INSURANCE: S&P Assigns 'R' Financial Strength Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'R' financial strength rating to Exchange Insurance Co., based on the company's ongoing regulatory supervision by the Tennessee Department of Commerce and Insurance. "In December 2002, the Tennessee Department of Commerce and Insurance ordered Exchange Insurance Co. to be put under confidential administrative supervision because of the company's weak financial condition," explained Standard & Poor's credit analyst James Sung. "Subsequently, the order was made public in March 2003 when Exchange Insurance Co. announced that it would cancel about 5,000 policies and stop writing new business." Exchange Insurance Co. writes homeowners insurance, with about 23,000 policyholders in Tennessee. An insurer rated 'R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. The rating does not apply to insurers subject only to nonfinancial actions such as market conduct violations. EXEGENICS INC: Receives Amended Tender Offer from EI Acquisition ---------------------------------------------------------------- eXegenics Inc. (Nasdaq: EXEG) Thursday received an amendment to the unsolicited tender offer from EI Acquisition Inc., and Foundation Growth Investments LLC to acquire all of the outstanding common stock and Series A convertible preferred stock of eXegenics. The amendment extends the expiration date of the unsolicited tender offer until 12:00 Midnight, New York City time, on Friday, August 15, 2003, and increases the price to purchase all outstanding shares of eXegenics common stock and Series A convertible preferred stock from $0.37 per share to $0.51 per share. eXegenics' management, Board of Directors and professional advisors will evaluate the amended offer, and the Board will advise eXegenics' stockholders of its response to the amended offer. In the interim, eXegenics respectfully requests that its stockholders defer making any determination with respect to the amended offer until they have been advised of eXegenics' position with respect to the amended offer. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-Q for the quarter ended March 31, 2003, the Company reported: "At March 31, 2003, we had cash and cash equivalents of approximately $15,476,000. Since our inception, we have financed our operations from debt and equity financings as well as fees received from licensing and research and development agreements. During the three months ended March 31, 2003, net cash used in operating activities was $1,236,000, the largest elements of which were one-time payments of approximately $541,000 related to the termination of scientific programs. In addition, during the three months ended March 31, 2003, we received $10,000,000 from investing activities, from a maturing investment security. The latter funds were reinvested in short-term money market instruments. "We believe that we have sufficient cash and cash equivalents on hand at March 31, 2003 to finance our plan of operation through December 31, 2003. We currently have no new material commitments to purchase capital assets through December 31, 2003. However, we expect to incur new liabilities related to the in-licensing and clinical development of compounds as outlined in our business strategy. We anticipate that we may not have sufficient capital resources to complete new programs prior to product commercialization. There can be no assurance that any required financings will be available, through bank borrowings, debt or equity offerings on acceptable terms or at all." FARMLAND IND.: Files First Amended Plan and Disclosure Statement ---------------------------------------------------------------- Farmland Industries has filed its First Amended Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Western District of Missouri in Kansas City, a significant step toward the company's emergence from Chapter 11 reorganization. The Disclosure Statement is subject to both court approval and acceptance by the company's creditors. Farmland and its Creditors' Committees believe the direction set forth in the plan represents the greatest opportunity to maximize value for creditors. In its Disclosure Statement, Farmland estimates creditors would receive the following distributions: -- Farmland Industries Secured Lenders - 100% -- Farmland Industries Administrative and Priority Claims - 100% -- Farmland Foods General Unsecured (Trade) Creditors - 100% -- Farmland Industries Demand Loan Certificates - 100% -- Farmland Industries Convenience Claims (less than $1,000) - 100% -- Farmland Industries General Unsecured (Trade) Creditors - 50% to 65% -- Farmland Industries Subordinated Bondholders - 50% to 65% Farmland President and CEO Bob Terry said, "These recovery estimates reflect the hard work and dedication of Farmland employees. Their efforts allowed Farmland to generate significant cash from operations over the last 14 months and to realize strong values for the assets we have sold. We are pleased with the high recovery percentages we are achieving and look forward to the plan confirmation process." Larry Frazen, lead Farmland bankruptcy attorney, said, "The recovery estimates announced by Farmland [Fri]day compare quite favorably to those in other recent Chapter 11 reorganizations. For example, Kmart anticipates a 10% recovery payable in reorganized Kmart stock, St. Joseph Wire and Rope will pay its general unsecured creditors 5% in cash, Houlihans provided less than a 12% cash payout initially, while Payless Cashways and Vanguard Airlines project little or no recovery to general unsecured creditors. Any debtor providing a 50% or more cash dividend to general unsecured creditors is considered to have done quite well in a Chapter 11 case." Farmland anticipates receiving Court approval of the Disclosure Statement in September. Once the Court grants approval, a copy of the documents and a ballot will be mailed to Farmland creditors who will be asked to accept or reject the plan. If creditors accept the plan, Farmland anticipates completing its reorganization and making distributions to creditors later this year, once the plan becomes effective. The documents filed with the Court also describe significant remaining events that will be completed during the bankruptcy proceedings. The sales process for Farmland Foods contemplates a court-supervised auction in October. If overbids are received, the auction will begin at a minimum value of $374.5 million. In addition to a reorganized Farmland entity, a trust will be established to manage the remaining assets and to extract the best value for the creditors. The company's remaining major assets include grain elevators throughout the Midwest, and interest in joint ventures SF Phosphates (a phosphate fertilizer venture), Agriliance (a fertilizer marketing partnership with CHS Cooperatives and Land O'Lakes), and Land O'Lakes Feed (a feed manufacturing and distribution company). The company also owns a fertilizer plant and refinery at Coffeyville, Kan.; a letter of intent to sell the Coffeyville assets was approved by the Bankruptcy Court early last week. "Farmland's goal throughout our reorganization has been to maximize value for the benefit of our creditors. We believe this plan, which will provide unsecured creditors a recovery of over 50%, accomplishes that goal," Terry concluded. The full text of both the Amended Plan of Reorganization and Disclosure Statement will be available at http://www.bmccorp.net/farmland Farmland Industries, Inc., Kansas City, Mo., -- http://www.farmland.com-- is a diversified agricultural cooperative with interests in food, fertilizer, petroleum, grain and animal feed businesses. FLEMING COMPANIES: Court OKs Dovebid's Engagement as Auctioneer --------------------------------------------------------------- There are a number of assets Fleming Companies, Inc., and its debtor-affiliates intend to sell, including but not limited to, furniture, fixtures, equipment, computer/phone equipment, tractors, trailers and non-grocery inventory. To achieve a comprehensive restructuring of their balance sheet so as to assure their long-term stability and viability, the Debtors have decided to focus on their core operations and divest themselves of non- core businesses. While their Residual Assets are subject to the De Minimis Sale Order, the Debtors believe that they will obtain the maximum recovery if the assets are sold with the assistance of an auctioneer. In this regard, the Debtors sought and obtained the Court's authority to engage DoveBid Inc. as auctioneer. Christopher J. Lhulier, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., relates that the Debtors spent a significant amount of time selecting an auctioneer. After distributing an information package, the Debtors received four bids from numerous nationally recognized auctioneers. Hence, the Debtors conducted a four-stage selection process to determine which of the bids was the best. At the conclusion of the process, the Debtors selected DoveBid because of, among other things, its: -- superior fee structure and lower cost base; -- ability to complete sales in the required time period; -- experience selling Residual Assets; -- technology used in Internet-based auction process; -- ability to adequately market the Sales; -- established record in the auction industry; and -- experience in conducting auctions within the bankruptcy context. DoveBid is recognized as one of the global leaders in the provisions of liquidation and appraisal services. Hence, it offers the unique ability to assist the Debtors and their creditors in monetizing assets of all types. Mr. Lhulier notes that DoveBid has participated in the liquidation of more than $300,000,000 in assets over the past twelve months. DoveBid is a leader in providing asset disposition services to debtors in all industries in North America, Europe, Asia and Australia. It is an industrial and commercial asset disposition firm providing strategic services for distributors, manufacturers, asset-based lenders, venture capitalists, investment bankers, and the professionals that serve them. It has conducted over 450 industrial auctions in the previous twelve months in North America, Europe, Asia and Australia. Consequently, the Debtors entered into an Auction Agreement with DoveBid for the firm to implement sale and auction procedures. Pursuant to the Agreement, DoveBid will: (1) develop and implement the advertising and marketing plan, including, without limitation, mailing auction brochures to targeted demographic and geographic lists selected by DoveBid; (2) advertise in advance of the sale of the Residual Assets through print media, including selected newspapers, and, on selected sales, a fax, email or direct telephone marketing campaign may be implemented to reach a specific target group of prospective buyers; (3) print lot catalogs, which will list all lots to be included in the sale of the Residual Assets; (4) provide adequate information to prospective out-of-town buyers regarding travel time and travel information; (5) prepare for the sale of the Residual Assets, including gathering specifications and photographs for pictorial brochures, cleaning where deemed appropriate by DoveBid and arranging the Residual Assets in a manner which, in DoveBid's judgment, would be designed to enhance the value of the Residual Assets, and providing directional arrows and signs in strategic areas to assist buyers in locating the premises; (6) assign a sale site coordinator to oversee the Sales, plan cleanup, auction sale routing, sorting and grouping of all sale items in suitable size lots, the creation of a buyer's lot catalog, public inspection, calling of the lots during the auction and supervising the delivery of all sold items after completion of the auction; (7) engage a project management group mutually agreed upon by both parties to, among other things, oversee the auction or sale, removal of the Residual Assets and to protect the integrity of the premises; (8) conduct private negotiations for the sale of the Residual Assets outside of the auction; (9) before the start of the auction, conduct a one-day preview and inspection for the benefit of potential purchasers of the Residual Assets; (10) provide a fully qualified, experienced and licensed auctioneer who will auction the lots for cash to the highest bidder "as is, where is and with all faults" and in accordance with the terms of the Auction Agreement; (11) guarantee the payment for any Residual Asset that DoveBid allows to be removed from the premises; (12) provide a complete auction crew to handle computerized accounting functions necessary to provide auction buyers with invoices and Debtors with a complete accounting of all items sold at the auction; (13) charge and use its reasonable, best efforts to collect from all purchasers any purchase price, any buyer's premium, all applicable taxes and any other applicable charges; (14) deposit all proceeds from the auction into a separate client trust account maintained at Comerica Bank in San Mateo, California for the benefit of DoveBid's clients or another sound, well-established bank; (15) guarantee to return the premises to a condition in which rubbish resulting from the sale and removal of the Residual Assets has been removed, electrical conduit and water pipes have been capped, and any holes made in the roofs or outer walls in the course of removing sold Residual Assets have been patched after the sale and removal of the Residual Assets; and (16) submit a detailed accounting, including DoveBid's compensation and a record of all expenses from the auction and any privately negotiated sales plus the net proceeds to Debtors within two weeks after completing the collection of all funds from the sale. Under the Auction Agreement, DoveBid has the right to market the Residual Assets beginning on the date the Auction Agreement is executed and ending on December 31, 2003. The Auction Agreement will automatically renew for successive 90-day terms after the expiration of the Initial Term, unless either party provides 30 days' written notice prior to the expiration of the then current term of its intention not to renew the Agreement. On June 5, 2003, DoveBid announced a Four-Day Webcast auction from June 10, 2003 through June 13, 2003 near the Dallas-Fort Worth Airport at the Embassy Suites Hotel at 2401 Bass Pro Drive in Grapevine, Texas. The auction featured a 1,500,000-square feet of warehouse and distribution centers, racking and moving stock, over 400 vehicles including trucks, tractors, trailers, and grocery store assets from over 20 Fleming supermarkets. DoveBid announced another Webcast auction on July 1, 2003, which was held at the HomeWood Suites by Hilton at 700 Hebron Parkway in Lewisville, Texas, on July 15, 2003. The auction featured assets from 23 Food4Less and Rainbow Foods supermarkets and includes transportation assets like tractors and trailers, and grocery store assets. Mr. Lhulier explains that Webcast Sales are broadcast over the Internet using DoveBid's proprietary software, allowing bidders electing to participate electronically to watch and listen to the auction through the web. However, electronic bidders are also able to speak to the auctioneer real time via a telephone connection. Bidders may also elect to attend the auction in person. As compensation for its services, the Debtors will permit DoveBid to charge up to 16% as buyer's premium on the sales price of the Residual Assets sold through privately negotiated sales and at an auction. Mr. Lhulier, however, indicates that in most instances the effective Buyer's Premium paid will be much lower than 16% because of certain applicable discounts. A discount from the Buyer's Premium equal to 2-1/2% of the sales price will apply to purchasers who pay in cash, cashier's check, company check -- with a letter of guarantee -- or wire transfer. Purchasers who do not bid over the Internet will receive an additional discount equal to 3-1/2% of the sales price. DoveBid reserves the right to charge a non-refundable $25 registration fee for its own account to purchasers who bid over the Internet at a Webcast auction. In the auctioneer industry, there is a customary 10% seller's commission, which is paid to the auctioneer by the seller. Mr. Lhulier says that DoveBid agreed to waive this fee. DoveBid will remit to the Debtors a sum equal to a percentage of the proceeds realized as Buyer's Premium, exclusive of any surcharges collected with respect to credit card or Internet purchases and the registration fee. For all Future Sales conducted, the Rebate will equal 20%. Additionally, the Debtors will reimburse DoveBid for out-of- pocket expenses arising from advertising and other expenses pursuant to a mutually agreed to $400,000 maximum budget for the Initial Webcast Auction and an amount to be mutually agreed upon by the parties for each Future Sale. The anticipated sale proceeds from the Initial Webcast Sale is $6,000,000 to $7,000,000. The Court also permits DoveBid to engage project management companies to assist with the sales. DoveBid, however, will compensate these management companies with no additional responsibility to the Debtors. Kirk Dove, DoveBid ASA, President and COO, Worldwide Auction Services and Director, discloses that DoveBid will share a portion of the fees it receives with American Materials Handling, Inc. AMH is a dealer specializing in asset sales relating to the distribution industry. It will be assisting DoveBid with asset descriptions and the marketing and removal of certain of the Debtors' distribution center assets. According to Mr. Dove, all amounts paid to AMH will be paid from DoveBid's compensation or expense reimbursement under the Auction Agreement and will not increase the Debtors' obligation. DoveBid will also subcontract National Property Solutions Inc., Mr. Dove says, for certain logistical and operational services. NPS will be responsible for a majority of the on-site preparation, technical asset descriptions and other miscellaneous logistical issues. Mr. Dove notes that certain NPS principals are related to an employee of DoveBid. Mr. Dove attests that DoveBid is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code and holds no interest adverse to the Debtors and their estates. (Fleming Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) FORD MOTOR COMPANY: Reports 7% Decline in Sales for July 2003 ------------------------------------------------------------- U.S. customers purchased or leased 297,265 cars and trucks from Ford, Mercury, Lincoln, Jaguar, Volvo, and Land Rover dealers in July, down 7.1 percent compared with a year ago. Sales of trucks (pickups, vans, and sport utility vehicles) were 198,825, up 0.8 percent, and car sales were 98,440, down 19.8 percent. Year-to-date, the company's sales were 2.05 million, down 3.6 percent compared with the same period a year ago. Sales of trucks were 1.32 million, down 0.3 percent, and car sales were 727,103, down 9.1 percent. Ford's F-Series, America's best-selling truck for 26 years in a row, posted July sales of 69,812, up 15 percent compared with last July. "We are launching the all-new F-150 from a position of strength," said Jim O'Connor, Ford group vice president, North America Marketing, Sales and Service. "The new F-150 will help us increase our leadership position and set us apart from the competition." In July, sales of sport utility vehicles were 84,174, up 5 percent from last year's record sales. Higher sales for Ford Expedition (up 22 percent), record sales for Ford Escape (up 28 percent) and Mercury Mountaineer (up 39 percent), and two new SUVs (Lincoln Aviator and Volvo XC90) more than offset lower sales for Ford Explorer (down 21 percent from last year's near record sales.) Sales of passenger cars were sharply lower than a year ago reflecting lower fleet deliveries (down 22 percent), discontinued vehicles (Ford Escort, Mercury Cougar, and Lincoln Continental), and generally lower retail sales for several current cars. Mercury Grand Marquis, Lincoln Town Car, Lincoln LS, and Ford Thunderbird achieved higher retail sales than a year ago. Sales of minivans also were lower than a year ago (down 30 percent including the discontinued Mercury Villager). "In the last two years, we have introduced several new SUVs and trucks," said O'Connor. "Later this year, we will introduce two new minivans and next year, we embark on a major wave of new car introductions." Volvo dealers reported record July sales of 11,593, up 15 percent compared with a year ago. July was the ninth month in a row of higher sales at Volvo, a streak that started with the introduction of the award-winning XC90 sport utility vehicle. Volvo retailers remain on pace to set a new calendar year sales record in 2003 as year-to-date sales totaled 79,115, up 24 percent from a year ago. Jaguar set a new July sales record of 5,167. The all-new XJ sedan paced Jaguar's record-setting sales with a 52 percent increase. "The pace of auto sales continues to improve," noted O'Connor. "Almost every piece of incoming economic data has been positive. Good consumer spending gains and recent reports on manufacturing and jobless claims are encouraging. We continue to believe the President's tax cut and lower interest rates will support improving economic growth." FRONTIER OIL: Fitch to Raise Ratings Following Holly Merger ----------------------------------------------------------- Upon the closing of the merger of Holly Corporation and Frontier Oil Corporation, Fitch Ratings will raise the senior unsecured debt rating of Frontier to 'BB-' from 'B+' and the secured credit facility rating to 'BB' from 'BB-'. At closing, the Rating Watch will also be removed. Fitch placed the debt ratings of Frontier Oil Corporation on Rating Watch Positive following the announcement that Holly had agreed to merge with Frontier. The transaction is expected to close later in the third quarter. As part of the transaction, Holly shareholders will receive one share of Frontier stock and an aggregate cash payment of $172.5 million from Frontier. Including the assumption of Holly's outstanding debt, the value of the transaction is approximately $430 million. In April 2003, Frontier issued $220 million of 8.00% senior unsecured notes which will be used to finance the cash portion of the transaction, to repay the remaining Holly debt (approximately $26 million at April 30, 2003) and for general corporate purposes. The upgrade will reflect the conservative acquisition financing for the transaction, the low debt at Holly, the niche markets served by both Frontier and Holly and the continued benefits of being a small refiner with regards to the low sulfur regulations. The larger asset base will also reduce the magnitude that major turnarounds have had on the company's earnings. With the addition of Holly, Frontier will add three refineries and increase capacity from 156,000 barrels per day (bpd) to more than 260,000 bpd. Holly's asset base includes the Artesia, New Mexico refinery (60,000 bpd being expanded to 75,000 bpd), the 7,500 bpd Great Falls, Montana refinery and the 25,000 bpd Woods Cross refinery near Salt Lake City which was acquired from ConocoPhillips in June 2003. The Artesia refinery serves several Southwest markets including El Paso, Texas, Albuquerque, New Mexico, Phoenix, Arizona and markets in northern Mexico. Holly also operates more than 2,000 miles of crude and product pipelines which generates significant EBITDA for the company. Of continued concern is the potential start-up of the Longhorn Pipeline, a refined product pipeline from Texas Gulf Coast refiners to El Paso, Texas which would compete directly with Holly's Artesia refinery. Start-up has been delayed several times in recent years, but could add up to 72,000 bpd of initial capacity with ultimate capacity of up to 225,000 bpd. Fitch believes that Holly's established market presence, low cost crude sourcing and moderate cost of operations would help mitigate the near to medium term impact of any entrance of product via Longhorn into Holly's markets. Although the low sulfur regulations limit further growth by Frontier, a possibility of further acquisitions remains. Fitch does not expect Frontier to risk its improved credit profile following the Holly transaction, but would rather expect conservative financing for future growth opportunities. Frontier Oil Corporation is an independent refiner and wholesale marketer of petroleum products, operating two refineries, a 46,000 barrel-per-day (bpd) refinery in Cheyenne, Wyo., and a 110,000 bpd refinery in El Dorado, Kan. Frontier also offers its own branding program in the Rocky Mountain market area to accommodate smaller, independent gasoline marketers. GEO SPECIALTY: Interest Nonpayment Spurs S&P to Junk Rating ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on GEO Specialty Chemicals Inc., including its corporate credit rating to 'CCC+' from 'B'. Cleveland, Ohio-based GEO had approximately $217 million of debt outstanding as of June 30, 2003. GEO is a manufacturer and marketer of specialty chemicals. The outlook is negative. "The downgrade follows GEO's announcement that it did not make the Aug. 1, 2003, interest payment due on its 10.125%, $120 million subordinated notes," said Standard & Poor's credit analyst Franco DiMartino. The company will have a 30-day period to cure this situation before it becomes an event of default under the indenture. GEO has received a loan commitment that will allow the company to make the $6.1 million payment within the 30-day grace period. However, this commitment is subject to negotiations between the company and its senior lenders regarding amendments to covenants in its bank credit facility. The company, which continues to suffer from profitability weakness in its main businesses, especially gallium and peroxy chemicals, was in violation of these covenants as of June 30, 2003. Even if the company does make the pending interest payment, ongoing access to the credit facility is a key rating consideration in light of the company's low cash balance, persistent operating challenges, and considerable debt service requirements. Should GEO fail to make the interest payment during the 30-day grace period, the ratings on the company and its outstanding notes would be lowered to 'D'. GEORGIA-PACIFIC CORP: Board Declares Regular Quarterly Dividend --------------------------------------------------------------- Georgia-Pacific Corp.'s (NYSE: GP) board of directors approved a regular quarterly dividend on the company's common stock. The board approved a dividend of 12.5 cents per share. The dividend is payable Aug. 21, 2003, to shareholders of record Aug. 11, 2003. Headquartered at Atlanta, Georgia-Pacific is one of the world's leading manufacturers of tissue, packaging, paper, building products, pulp and related chemicals. With 2002 annual sales of more than $23 billion, the company employs approximately 61,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products distribution segment has long been among the nation's leading wholesale suppliers of building products to lumber and building materials dealers and large do-it- yourself warehouse retailers. For more information, visit http://www.gp.com * * * As reported in the Troubled Company Reporter's May 29, 2003 edition, Standard & Poor's Ratings Services assigned its 'BB+' senior unsecured debt rating to Georgia-Pacific Corp.'s $350 million senior notes due 2008 and $150 million senior notes due 2014. Standard & Poor's at the same time affirmed its 'BB+' corporate credit rating on the company. The outlook remains negative. Debt at Georgia-Pacific, excluding capitalized operating leases and unfunded postretirement obligations, totals about $11.9 billion. GEORGIA-PACIFIC: Commences Exchange Offer for 8.875% Sr. Notes -------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) commenced an offer to exchange its new 8.875 percent senior notes due 2010 and 9.375 percent senior notes due 2013 that have been registered under the Securities Act of 1933 for all of its outstanding 8.875 percent senior notes due 2010 and 9.375 percent senior notes due 2013, respectively, that originally were issued by the company in January under Rule 144A and Regulation S of the Securities Act of 1933. The terms of the new notes are substantially identical to the original notes, except that transfer restrictions and registration rights applicable to the original notes will not apply to the new notes. The exchange offer will expire at 5 p.m., Eastern time, Aug. 29, unless extended. Tenders of original notes must be made on or prior to the expiration of the exchange offer and may be withdrawn at any time on or prior to the expiration of the exchange offer. Copies of the prospectus and other documents describing the terms of the exchange offer, including the related transmittal materials for use in making tenders, may be obtained from the exchange agent, The Bank of New York, 101 Barclay Street, Floor 7E, New York, N.Y. 10286, (212) 815-3687. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers of tissue, packaging, paper, building products, pulp and related chemicals. With 2002 annual sales of more than $23 billion, the company employs approximately 61,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products distribution segment has long been among the nation's leading wholesale suppliers of building products to lumber and building materials dealers and large do-it- yourself warehouse retailers. For more information, visit http://www.gp.com GOODYEAR TIRE: Names Stephanie Wernet VP, Information Technology ---------------------------------------------------------------- The Goodyear Tire & Rubber Company has named Stephanie K. Wernet, vice president, information technology. Wernet, 35, will report to Robert W. Tieken, executive vice president and chief financial officer. She replaces Eric A. Berg, who left the company to join NCR Corp. on July 23. "Stephanie's experience in our business as well as her work as a consultant, an operating manager and at an Internet startup provide her with a combination of strategic skills and operational capabilities that will be important to our e-business and information technology team as it supports Goodyear's turnaround," said Tieken. Wernet, since January 2003, has been director of customer affairs for the company's North American Tire business. She joined Goodyear in 2001 as North American Tire's director of e-business from EyeVelocity Inc., where she served as vice president, e-commerce. Prior to that, Wernet was senior director, e-commerce at Reynolds & Reynolds Co. for three years. From 1993 to 1997, she was an engagement manager with McKinsey and Co. She previously held positions with Trilogy Development Group, International Business Machines Corp. and General Motors Corp. Wernet, a native of Romeo, Mich., has a bachelor of science degree in electrical engineering from The University of Michigan and a master of business administration degree from Stanford University. Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 85 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 92,000 people worldwide. For more information about the company, visit http://www.goodyear.comon the Internet. As reported in Troubled Company Reporter's July 2, 2003 edition, Fitch Ratings placed the Goodyear Tire & Rubber Company's senior unsecured rating of 'B' and the senior secured bank facilities rating of 'B+' on Rating Watch Negative. Approximately, $5 billion of debt is affected. GREAT ATLANTIC & PACIFIC: S&P Cuts Rating over Weak Cash Flow ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on supermarket operator The Great Atlantic & Pacific Tea Co. Inc., to 'B' from 'B+', and removed the rating from CreditWatch where it was placed April 29, 2003. The outlook is negative. Montvale, New Jersey-based A&P had $792 million of total debt at June 14, 2003. "The downgrade is based on continued weak cash flow and a very cautious outlook for improvement, mitigated by a marginally adequate liquidity position," said credit analyst Mary Lou Burde. The rating reflects poor profitability and high debt leverage, which are somewhat offset by important market positions in Canada and the metro New York area. Although Canada is performing well, difficulties in U.S. markets have caused overall profitability to fall. Soft consumer spending and increasing competition from both conventional and non-traditional food retailers are pressuring the gross margin. These industry trends combined with rising costs are resulting in significant drops in operating profit. For the first quarter of fiscal 2003 (ended June 14, 2003), same- store sales were flat and EBITDA fell more than 30% over the prior year. This follows a fourth quarter drop in EBITDA of 45%. A&P's operating margin measured 4.8% for fiscal 2002 and 4.3% in the first quarter, well below the 7.6% average for rated supermarkets. Management has taken several steps in recent years to improve the business, including reducing overhead, streamlining the management structure, enhancing the supply chain and business processes, and closing about 160 stores. However, these actions have been insufficient to offset competitive and cost pressures. Management is currently focused on maximizing cash flow while it works to halt the operating performance decline in the U.S. and maintain profitability in Canada. Steps include curtailing capital spending, reducing debt, and exiting certain markets and businesses. Given recent operating trends, liquidity is expected to be marginally adequate for the coming year. As of June 14, 2003, the company had $163 million in cash on the balance sheet and $271 million available under the bank facility, after deducting $110 million in letters of credit. There are no significant maturities until 2005. Potential asset sale proceeds from the expected sale of stores in Wisconsin and the Eight O-Clock Coffee business provide a partial cushion. Management's efforts to improve store-level execution and supply chain efficiencies are being hampered by a very difficult competitive and economic climate. Although the rating incorporates the expectation that credit measures in the current year may weaken substantially, the rating could be lowered again if EBITDA coverage falls significantly below 1.5x. GUAM POWER: Fitch Downgrades Electric Revenue Bond Rating to BB+ ---------------------------------------------------------------- Fitch Ratings downgrades the outstanding $395 million of Guam Power Authority's electric revenue bonds to 'BB+' from 'BBB'. In addition, Fitch places the electric revenue bonds on Rating Watch Negative. The downgrade reflects the deterioration of GPA's financial margins, severe liquidity pressures, and limited information from management. GPA's current credit deterioration stems from delinquent accounts including large account receivables due from the Government of Guam (totaling over $30 million) and system damages attributable to the 2002 super typhoon Pongsona and typhoon Chataan (which combined caused approximately $38 million in damage to GPA facilities). Consequently, current cash flows, cash reserves, and other sources of liquidity are very low placing pressure on GPA's financial measures. Although GPA claims to be generating sufficient revenues to pay normal operating expenses (including debt service payments), Fitch can not substantiate this claim. Additionally, GPA has not been able to acquire rate relief from the public utility commission, raising concerns about GPA's ability to generate adequate operating margins going forward. Furthermore, given GPA's current financial situation, an event such as another typhoon, would place considerable strain on GPA's ability to pay debt service. While GPA expects to receive payment on over $30 million of arrears from the Government of Guam, this is subject to the timing and ability of the government to access the general obligation bond market. Fitch will be meeting with GPA management within the next few weeks to acquire additional information, after which we expect to finalize our review of GPA's credit worthiness, and resolve the rating watch negative. HMP EQUITY HOLDINGS: S&P Affirms B+ Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on HMP Equity Holdings Corp. and its subsidiaries, Huntsman International Holdings LLC and Huntsman LLC, to negative from stable. At the same time, Standard & Poor's affirmed its 'B+' corporate credit ratings on all three companies. The Salt Lake City, Utah- based HMP is a wholly owned subsidiary of Huntsman Holdings LLC, a holding company with chemical operations conducted through subsidiaries, Huntsman LLC (formerly Huntsman Corp.), Huntsman International Holdings LLC and Huntsman Advanced Materials LLC (formerly Vantico Group SA). Total reported debt is more than $5.5 billion (excluding Huntsman Advanced Materials LLC). "The outlook revision highlights the risk of a downgrade this year given the disappointing second quarter operating results, diminished expectations for a meaningful rebound in the second half of 2003, and the potential for additional raw material pressures in the petrochemical industry," said Standard & Poor's credit analyst Kyle Loughlin. "Standard & Poor's also recognizes that adverse business conditions facing the Huntsman companies will limit prospects for reducing the onerous debt burden over the near term and may result in bank loan covenant violations at both Huntsman LLC and Huntsman International Holdings LLC within the next several quarters." On a consolidated basis, HMP generates annual sales of more than $8 billion, ranking the company among the larger chemical companies based in North America. HOLLYWOOD CASINO: Fails to Make Interest Payments on 13% Notes -------------------------------------------------------------- HCS I, Inc., the managing general partner of Hollywood Casino Shreveport announced that HCS did not make the August 1, 2003 interest payments, aggregating $12.3 million, due on the 13% Senior Secured Notes due 2006 and the 13% First Mortgage Notes due 2006 issued by HCS and Shreveport Capital Corporation. As previously reported in HCS's quarterly report on Form 10-Q for the quarter ended March 31, 2003, HCS received notice on March 14, 2003 from a representative of the holders of the Senior Secured Notes and the First Mortgage Notes that HCS had failed to make repurchase offers as required under the indentures governing the respective notes and consequently was in default under both note indentures prior to the August 1 interest payment date. HCS is presently in negotiations with representatives of the noteholders of both issues regarding a possible restructuring of its indebtedness or other possible resolution. There can be no assurance that any such restructuring or other resolution can be agreed upon and effected. In addition, there can be no assurance that HCS may not eventually be involved in a proceeding under the federal bankruptcy laws. HCS I is a wholly owned subsidiary of Penn National Gaming, Inc. and the HCS and Shreveport Capital Corporation notes are non- recourse to the parent, Penn National Gaming, Inc. Hollywood Casino Shreveport is a riverboat casino/hotel complex located on the Red River in Shreveport, Louisiana. HOLLYWOOD CASINO: Interest Nonpayment Prompts S&P's D Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit and senior secured ratings on Hollywood Casino Shreveport to 'D' from 'CCC-'. The debt of HCS, a wholly owned subsidiary of Penn National Gaming Inc., is non-recourse to Penn National. "This action follows HCS' announcement that it will not make the Aug. 1, 2003, interest payments, aggregating $12.3 million, due on the 13% senior secured notes due 2006 and the 13% first mortgage notes due 2006 issued by HCS and Shreveport Capital Corp.," said Standard & Poor's credit analyst Michael Scerbo. IMC GLOBAL: Reports Final Results of Tender Offers for Notes ------------------------------------------------------------ IMC Global Inc. (NYSE: IGL) announced the expiration of its tender offers to purchase for cash up to $140 million aggregate principal amount of its 6.55% Notes due 2005 and up to $273 million aggregate principal amount of its 7.625% Senior Notes due 2005, which were commenced on June 23, 2003 and amended on July 18, 2003 to increase the aggregate principal amounts being tendered for (from up to $100 million to up to $140 million with respect to the 6.55% Notes and from up to $200 million to up to $273 million with respect to the 7.625% Notes) and to extend the early tender date and the expiration time to 12:00 noon, New York time, on August 1, 2003. As of the expiration at 12:00 noon, New York time, on August 1, 2003, IMC Global had received valid tenders totaling approximately $140.4 million aggregate principal amount of the 6.55% Notes and approximately $277.9 million aggregate principal amount of the 7.625% Notes. Pursuant to Rule 14e-1(b) promulgated under the Securities Exchange Act of 1934, IMC Global will accept all validly tendered 6.55% Notes. As the amount of valid tenders of the 7.625% Notes exceeded the amount of aggregate principal amount that IMC Global had offered to purchase, IMC Global will accept on a pro rata basis approximately $273.1 million aggregate principal amount of the 7.625% Notes, representing approximately 98.3% of the 7.625% Notes validly tendered. Payment, including accrued interest to, but not including, the settlement date, will be made promptly for all accepted tenders. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. acted as Dealer Managers and Bondholder Communication Group acted as information agent for the tender offers. With 2002 revenues of $2.1 billion, IMC Global is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. As reported in Troubled Company Reporter's July 21, 2003 edition, Standard & Poor's Ratings Services assigned its 'B+' rating to fertilizer producer IMC Global Inc.'s proposed $310 million senior unsecured notes due 2013. Standard & Poor's at the same time affirmed its 'B+' corporate credit rating on the company. Lake Forest, Illinois-based IMC is one of the largest global producers of phosphate and potash crop nutrients for the agricultural industry and has more than $2.1 billion of debt outstanding. The outlook is stable. INTERBANK FUNDING: All Voting Ballots Due by Thursday ----------------------------------------------------- On May 28, 2003, Arthur J. Steinberg, Investment Company Act Trustee for Debtors IBF Collateralized Finance Corporation and IBF VI-Secured Lending Corporation, filed a Proposed Chapter 11 Liquidating Plan together with an accompanying Disclosure Statement with respect to InterBank Funding Corp., and its debtor- affiliates. The U.S. Bankruptcy Court for the Southern District of New York found that the Disclosure Statement contains adequate information, as required by 11 U.S.C. Section 1125 and, if creditors will read it, contains the right kind and amount of information to enable creditors to make informed decisions whether to accept or reject the Plan. The deadline for serving and filing of ballots with the Voting Agent is set for Thursday, Aug. 7. Ballots must be sent to: InterBank Funding Corp. c/o The Garden City Group, Inc. 105 Maxess Road Melville, New York 11747-3836 Tel: 800-627-3875 Fax: 631-940-6554 The Honorable Burton R. Lifland will convene a hearing on August 14, 2003, at 10:00 a.m., to see whether creditors voted to accept the plan and consider whether it should be confirmed. Objections, if any, to the confirmation of the plan must be filed electronically at the Bankruptcy Court's Web site -- http://nysb.uscourts.gov-- with copies served on: 1. Kaye Scholer LLP 425 Park Avenue New York, NY 10022 Attn: Andrew A. Kress, Esq. 2. Office of the United States Trustee 33 Whitehall Street 21st Floor New York, NY 10004 Attn: Gregory M. Zipes 3. Counsel for the Official Committee of Unsecured Creditors Schulte Roth & Zabel, LLP 919 Third Avenue New York, NY 10022 Attn: James Peck, Esq. 4. Counsel for Debtors InterBank Funding Corp. and IBF Premier Hotel Group, Inc. Swidler Berlin Shereff Friedman, LLP 405 Lexington Avenue New York, NY 10174 Attn: Neil P. Forrest, Esq. InterBank Funding Corp. is a holding company for companies that invest and manage operating real estate and other businesses through equity and debt investments including asset securitizations. The Debtors filed for Chapter 11 protection on June 7, 2002, (Bankr. S.D.N.Y. Case No. 02-41590). Neil P. Forrest, Esq., Roger Frankel, Esq., and Debra Kramer, Esq., at Swidler Berlin Shereff Friedman, LLP represent the Debtors in their liquidating efforts. JOLIET JR. COLLEGE: Fitch Downgrades Bond Rating to BB from BBB- ---------------------------------------------------------------- Fitch Ratings downgrades to 'BB' from 'BBB-' its rating of Will County, Illinois' $14,455,000 student housing revenue bonds (Joliet Junior College Project), series 2002A and taxable series 2002B. The bonds also are placed on Rating Watch Negative, indicating the possibility of further downgrade in the coming months depending on occupancy and budget performance of the 296- bed housing facility, Centennial Commons, that opened in Aug. 2002. 'BB' category ratings are not investment grade, and they indicate both the possibility of developing credit risk and the fact that business or financial alternatives may be available to allow financial commitments to be met. Neither JJC nor its fundraising foundation are required to pay the housing facility's debt service. Project financial margins missed forecasts by huge percentages during the initial year of operations. Rental and related revenues reportedly totaled $953,809, or more than 25% below levels projected in the official statement (OS). Operating expenses reportedly totaled $489,865, nearly double the level projected in the OS. Capitalized interest allowed the project to meet fiscal year 2003 debt service requirements and to accumulate some balances to meet fiscal year 2004 needs. Gross debt service requirements for fiscal 2004, including a Sept. 1, 2003 interest payment, equal $971,050 and will escalate to $1.16 million through 2010. Project officials report the possibility that portions of the bond-financed debt service reserve fund will be used to make the Sept. 1 interest payment. The primary reason for the rating downgrade is the significantly increased expense load for the project, relative to projections. The project's 2003-2004 budget indicates that operating expenses, less subordinated management fees, will be more than 25% above OS projections, and this calculation assumes both significant year- to-year spending reductions (such as reductions of unplanned one- time capital-type expenses) and successful appeal of an unprojected $71,000 annual property tax burden. The heftier expense burden constrains significantly the project's long-term ability to generate surplus revenues to fund operating and replacement reserves. Fitch's initial rating assumed that the project would have a stronger ability to generate such surpluses. The tighter cash flows suggest a heightened risk that DSRF funds will be needed on a periodic or regular basis to meet payment requirements. In Fitch's opinion, meeting the 1.2 times (x) rate covenant could be challenging over the medium term for the project. The secondary reason for the rating downgrade is the project's weak occupancy track record to date. Higher-than-expected payment delinquencies, vacancies, and evictions caused last year's poor revenue performance. In addition to snow removal costs, security and surveillance expenses contributed to budget variances, as project officials responded to several incidents caused by disruptive residents and visitors. Initial occupancy of about 95%, which allowed release of bond funds to repay an interim construction loan, dwindled to 78% by year-end. The fiscal 2004 project budget assumes that rental and related revenue will grow more than 60%, with a part of this increase attributable to about 1.5 months of extra revenue in this, the project's first 12-month fiscal year. Academic year occupancy is projected to be at 99% in this budget. The marketing plan targets 95% leasing of the project by Aug. 15, 2003; as of July 25, 2003, management reported that applications and signed leases for 78% of beds were in hand. Rents are being increased between 3.2% and 6.5%, depending on the unit type. Criminal and guarantor credit checks are being implemented to reduce receivables, and authorizations to direct some student aid checks of residents directly to the project have now been put in place after a delay. These latter actions are positive, in Fitch's opinion, but the ability to meet or exceed the revenue budget for fiscal 2004 seems doubtful, particularly if the project's history leads to negative perceptions by parents or students. These factors also contribute to the tighter cash flow outlook and the lower rating. The Rating Watch reflects the possibility that the bonds will be downgraded further in the coming months if revenue, occupancy, and/or expenditure forecasts are weaker than now budgeted. Between now and Oct. 2003, any of the following factors could contribute to a further downgrade: a) failure to achieve 95% or greater initial occupancy for fall 2003, b) any significant negative adjustment to the project's fiscal 2004 budget, c) loss of the property tax appeal, or d) a significant draw on the DSRF to meet Sept. 2003 debt service requirements. According to the bond indenture, a continuing default under the loan agreement (which includes the rate covenant) is an indenture default, allowing registered owners of a majority of outstanding bonds to accelerate bond payments. Strengths of the credit continue to be JJC's healthy enrollment profile, limited direct competition due in part to development restrictions, and the expertise of Century Campus Housing Management, one of the student housing industry's market leaders. Pursuant to a continuing disclosure agreement, Foundation Housing, L.L.C., the project owner, has agreed to provide income, balance sheet, occupancy, and other data on a quarterly basis to national repositories and any bondholder, upon written request. JP MORGAN: Fitch Places Class F, G & H Ratings on Watch Negative ---------------------------------------------------------------- Fitch Ratings places the following J.P. Morgan Commercial Mortgage Finance Corp. mortgage pass-through certificates, series 1998-C6, on Rating Watch Negative. -- $39.8 million class F 'BB'; -- $19.9 million class G 'B'; -- $6 million class H 'B-'. The classes are placed on Rating Watch Negative due to the interest shortfalls caused by the modification of the Days Inn - Airport loan (0.5%). Although the loan modification has recently been completed, the effective date of the modification is January 2003. As a result, Midland Loan Services, L.P., the master servicer, who was advancing on the loan during this period, will be taking back $350,000 in advances, as well as approximately $11,000 in advance interest. The interest shortfalls caused by this modification will commence with the August 2003 distribution date and should affect only the below investment grade classes. The shortfalls are expected to be repaid within the next three months. Fitch is also concerned with the potential losses associated with the loans of concern. KAISER ALUMINUM: Court Approves Stipulation with Pension Benefit ---------------------------------------------------------------- In view of the filing of the nine new Kaiser Debtors, Pension Benefit Guaranty Corporation is required to file 24 separate proofs of claim against each of the New Debtors for those claims the New Debtors are jointly and severally liable to the Debtors' defined benefit pension plans and PBGC. Accordingly, PBGC is required to file 216 separate proofs of claims. PBGC is a wholly owned United States government corporation that administers the defined benefit pension plan termination insurance program under Title IV of the Employee Retirement Income Security Act of 1974. The Debtors and PBGC agree that the multiple claims would impose an unnecessary administrative burden on and provide little, if any, corresponding benefit. In a Court-approved stipulation, the Debtors and PBGC agree that each proof of claim PBGC filed on its own behalf or on behalf of the Debtors' Pension Plans in Chapter 11 Case No. 02-10429 by delivery will be deemed to constitute the filing of the proof of claim in each of the New Debtor's Chapter 11 cases. The Debtors, including the New Debtors, acknowledge that each proof of claim that PBGC previously delivered to the Debtors' claims agent is timely filed in each of the New Debtors' Chapter 11 cases for all purposes under the New Bar Date Order and the New Bar Date Notice. The Stipulation is intended solely for the purpose of administrative convenience and will not affect the substantive rights of the Debtors, PBGC or any party-in-interest, including, without limitation, the Debtors' rights to object to each proof of claim PBGC filed on any and all grounds, other than on the ground that the proof of claim should have been filed in one or more of the Debtors' cases other than Case No. 02-10429. To the extent that PBGC determines to file an amendment to one or more of its proof of claim, any amendment will also be deemed to be filed against all Debtors. (Kaiser Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) KCS ENERGY: Will Publish Second Quarter 2003 Results Tomorrow ------------------------------------------------------------- KCS Energy, Inc. (NYSE: KCS) will release second quarter and six months financial results for the period ended June 30, 2003 on Wednesday, August 6, 2003. Management will conduct a conference call to review the Company's financial and operating results. The conference call is scheduled for 2:00 p.m. ET on Wednesday, August 6, 2003. Parties interested in listening to the conference call should call 800-366-3908. International callers should dial 303-262-2191. For those unable to listen at that time, a replay of the call will be available through August 13, 2003 at 800-405- 2236 for domestic callers or 303-590-3000 for international callers. The pass code for the replay is 548383. The live call and the replay can also be accessed via the Web at http://www.vcall.com KCS is an independent energy company engaged in the acquisition, exploration and production of natural gas and crude oil with operations in the Mid-Continent and Gulf Coast regions. KCS Energy's March 31, 2003 balance sheet shows a working capital deficit of about $13 million, and a total shareholders' equity deficit of about $24 million. KISTLER AEROSPACE: Court Clears $1.2 Mill. Interim DIP Financing ---------------------------------------------------------------- Kistler Aerospace Corporation sought and obtained interim approval from the U.S. Bankruptcy Court for the Western District of Washington to enter into a DIP Loan and Security Agreement with Lenders and Bay Harbour Management, LC, a Florida limited liability company as agent. The Debtor reports insufficient available funds or sources of working capital and financing needed to maintain its operations to fund the costs and expenses of its chapter 11 case. Absent interim financing, the Debtor and its estate will suffer immediate and irreparable harm. The Debtor has been unsuccessful in its attempts to obtain interim financing from other sources on terms more favorable other than that of the Lenders. The Debtor was also unable to obtain interim unsecured credit under section 503(b)(1) of the Bankruptcy Code as an administrative expenses. New credit on an interim basis is unavailable to the Debtor without granting to the Lenders claims having priority over that of administrative expenses specified in Sections 503(b) and 507(b). The Court has determined that the ability of the Debtor to finance its operations in chapter 11 and the availability of sufficient working capital through the incurrence of new indebtedness for borrowed money in the best interests of the Debtor and its creditors and estate. Furthermore, the agreement has been negotiated in good faith and at arm's length between the Debtor, the Agent and the Lenders, and any credit extended to the Debtor will be deemed to have extended and made in good faith within the meaning of Section 364(e) of the Bankruptcy Code. The Interim loans are required to meet the emergency cash requirements of the Debtors pending Final Hearing currently scheduled for August 6, 2003 at 11:00 a.m. Consequently, the Court grants the Debtor an authority to borrow from the Lenders on an interim basis up to an aggregate of $1.2 million. The proceeds of the DIP Loans will be used to pay actual postpetition ordinary and necessary operating and other business expenses incurred in this chapter 11 case. The Debtor intends to borrow from the Lenders, an aggregate principal amount of up to $4,6000,000 for the initial 6-month term of the Agreement. The Debtor's obligations to the Lenders will have administrative superpriority under Section 364(c)(1) and the Lenders are also granted, in accordance with Section 364(d)(1), valid and perfected first priority security interest and liens on all Prepetition Collateral and all proceeds of such Collateral. Kistler Aerospace Corporation, headquartered in Kirkland, Washington is developing a fleet of fully reusable launch vehicles to provide lower cost access to space for Earth orbiting satellites. The Company filed for chapter 11 protection on July 15, 2003 (Bankr. W.D. Wash. Case No. 03-19155). Jennifer L. Dumas, Esq., and Youssef Sneifer, Esq., at Davis Wright Tremaine LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $6,256,344 in total assets and $587,929,132 in total debts. LEAP WIRELESS: Files 4th Plan & 5th Disclosure Statement -------------------------------------------------------- Leap Wireless files its Fourth Amended Plan of Reorganization and Disclosure Statement dated July 25, 2003. The Plan represents a global settlement of all Intercompany Claims and Litigation Claims between the Debtors and their Estates, the current and former Holders of Old Vendor Debt, the current and former administrative agents under the Vendor Debt Facilities and Holders of Leap General Unsecured Claims. Robert A. Klyman, Esq., at Latham & Watkins, in Los Angeles, California, relates that the Official Committee of Unsecured Creditors informed the Debtors that a substantial delay in confirming the Plan could jeopardize the carefully crafted global settlement. In addition, the Debtors believe that the bankruptcy filings have adversely affected their businesses. The Debtors also believe that prolonged bankruptcy proceedings will reduce the recovery available to the creditors and will continue to adversely affect the Cricket business. Accordingly, the Debtors urge the Holders of Claims and Interests to vote in favor of the Plan. The material modifications to the Plan include: A. The Leap Creditor Trust Assets to be transferred to the trust are: (i) the PCS licenses in the Bemidji, Minnesota (10MHz); Brained, Minnesota (10 MHz); Escanaba, Michigan (10MHz); Pueblo, Colorado (10MHz); and Salem, Oregon (10MHz), Basic Trading Areas and any causes of action resulting from the proposed sale pursuant to a previously executed agreement; (ii) Leap's stake in the Idaho joint venture with NTCH; (iii) any Leap cause of action listed in Leap's Schedules, including the cause of action related to the Endesa note receivable, together with any Leap causes of action that are not otherwise released under the Plan and that do not have or could reasonably be expected to have a material adverse effect on the Debtors or the Reorganized Debtors or their respective businesses or prospects, as reasonably determined by the Debtors or the Reorganized Debtors, with prior approval Informal Vendor Debt Committee in accordance with the Plan; (iv) any cause of action that is part of the Leap Estate arising from Sections 542, 543, 544, 545, 547, 548, 549 or 550 of the Bankruptcy Code under that Plan, that is not otherwise released under the Plan and that is not against a potential defendant that is a vendor, customer or other party with whom the Debtors or the Reorganized Debtors have or reasonably expect to have, a material business relationship, as reasonably determined by the Debtors or the Reorganized Debtors, with the prior approval of the Informal Vendor Debt Committee in accordance with the Plan; (v) any and all Tax Refunds that are to be delivered to the Leap Creditor Trust in accordance with the Plan; (vi) cash to be paid by Cricket in an amount equal to the Leap Deposits estimated to be approximately $2,500,000 (but if all the deposits are assumed by the Reorganized Debtors and corresponding amounts are paid by Cricket, the maximum amount would be approximately $3,300,000); and (vii) the PCS licenses in the Bozeman, Montana (20 MHz); Casper, Wyoming (15 MHz); Lewiston, Idaho (15MHz); and Redding, California (15 MHz) BTAs and any causes of action resulting from the proposed sale pursuant to the previously executed agreement. The Debtors reserve the right to merge, on or prior to the Effective Date with the consent of the Informal Vendor Debt Committee: (i) one or more License Holding Companies into another License Holding Company or into Cricket or Reorganized Cricket, or (ii) one or more Property Holding Companies into another Property Holding Company or into Cricket or Reorganized Cricket. B. Claims As to the Claims against and Interests in Leap, Cricket, License Holding Companies, the estimated recovery of Class 1A Old Vendor Debt Claims is modified to 30-37% from 36-43%. The Debtors may satisfy the distribution for Class 2A et seq. Claim with the funds from Cricket. In addition, with respect to Leap, Class 4A is renamed as Subordinated General Unsecured Claims. To the extent the Bankruptcy Court enters an order subordinating a Class 4 Claim against Leap, that claim will be placed in Class 4A. C. Reserve for Disputed Claims Leap Creditor Trust The Leap Creditor Trust Trustee will hold back from the distributions from the Leap Creditor Trust reserves in respect of each Administrative Claim and Disputed Claim against Leap until the Claims are resolved, so that the total amount of all Allowed Leap Administrative Claims and Allowed Leap General Unsecured Claims includes the sum of (i) each estimated Administrative Claim not otherwise fully reserved for by Leap, (ii) the amount of each Disputed Claim (or the maximum amount of any such Disputed Claim as estimated by the Bankruptcy Court pursuant to Section 502(c) of the Bankruptcy Code, if less), and (iii) potential rejection claims, until the Claims are resolved. Cricket Companies' Administrative and Priority Claims Prior to the Confirmation Date, Cricket will establish an Appropriate reserve in an amount to be agreed upon by Cricket and the Informal Vendor Debt Committee, to satisfy Allowed Administrative Claims against Cricket and the other Cricket companies through and including the Effective Date and Allowed Priority Claims against Cricket and the other Cricket companies. If and to the extent that the reserves are insufficient to satisfy all Allowed Administrative Claims and Allowed Priority Claims, the Claims will be satisfied by other assets of Cricket. Reserve for Disputed Old Vendor Debt Claims Prior to the Effective Date, Cricket will establish a reserve in respect of each Disputed Old Vendor Debt Claim, by holding back that portion of the Old Vendor Debt Distribution that would be distributed in respect of each Disputed Old Vendor Debt Claim as if the Claim was an Allowed Claim on the Effective Date, until the Disputed Claim is resolved. If the resolution of a Disputed Old Vendor Debt Claim results in the Claim becoming an Allowed Old Vendor Debt Claim, that portion of the Old Vendor Debt Distribution held back in respect of the Claim will be Distributed to the Holder thereof as promptly as practicable. D. Executory Contracts and Unexpired Leases If a Debtor other than Cricket assumes a contract or lease and the non-Debtor party to the contract or lease objects to the Debtors' ability to provide adequate assurance of future performance, the Debtor may assign the contract or lease to Cricket. In that circumstance, Cricket may demonstrate Cricket's ability to provide adequate assurance of future performance. (1) Assumption and Cure If, as of the date the Court enters the Confirmation Order, there is pending before the Bankruptcy Court a dispute concerning the cure amount or adequate assurance for any particular contract or lease, the assumption of the contract or lease will be effective as of the date the Bankruptcy Court enters and orders resolving any dispute and authorizing assumption by the applicable Debtor. Moreover, the assumption of the Lucent System Equipment Purchase Agreement is conditioned upon Cricket's payment of the applicable cure amount and Cricket demonstrating adequate assurance of future performance. The Debtors reserve the right to amend the Assumption Schedule at or prior to the Confirmation Hearing. If the Debtors add a contract or lease to the Assumption Schedule after the Assumption Schedule is originally filed, the Debtor party to the applicable contract or lease will serve the non-Debtor party to the contract or lease with notice: (i) that the contract or lease has been added to the Assumption Schedule, and (ii) of the Debtor's proposed cure amount. The Non-Debtor will have 30 days after service of the Amended Assumption Schedule Notice to File and serve and objection to the cure amount. To the extent the parties have a dispute with respect to the cure amount, the Debtors will create a reserve for the full amount of the cure amount pending resolution of the dispute. (2) Rejections Based on their review, the Debtors currently believe that the total amount of rejection damages solely for Leap will not exceed $15,000,000. Leap has not yet finalized its list of contracts and leases to be rejected, and the estimate could vary materially after Leap has finally determined which contracts and leases to reject, rejection damage claims have been filed by the other parties to contracts and leases that are rejected, and the claims have been settled between Leap and the parties or otherwise have been resolved. Any rejection damages will be classified as Class 4 General Unsecured Claims against Leap. D. Feasibility The Debtors project that the Reorganized Leap would accumulate cash during the seven-year projection period, with projected cash balances growing from $112,600,000 at the Effective Date to $169,400,000 at the end of 2006 to $263,100,000 at the end of 2010, with the Reorganized Debtors repaying the outstanding FCC Debt and New Senior Notes in full over the same period of time. Reorganized Leap also would incur an aggregate of $647,400,000 in capital expenditures during this same period. The Reorganized Leap aims to generate EBITDA of $83,600,000 In 2004, $210,600,000 in 2006 and $344,600,000 in 2010 with net income (loss) of $(10,100,000), $83,500,000 and $140,100,000 in each of 2004, 2006 and 2010, respectively. E. Confirmation Hearing Pursuant to Section 1128 of the Bankruptcy Code, the Confirmation Hearing is scheduled for September 29, 2003 at 10:00 a.m., Pacific Time. Objections to the Confirmation of the Plan must be filed with the Court and served on parties so as to be received by the parties before 4:00 p.m., Pacific Time on September 8, 2003. Plan Opposition Judge Adler approved Leap's Fifth Amended Disclosure Statement at a hearing last week in San Jose. MCG PCS, Inc., Leap's major shareholder, opposes the plan and intends to solicit votes against the company's restructuring proposal. MCG says the company is undervalued under the plan by a wide margin. (Leap Wireless Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) LORAL SPACE: Bringing-In Greenhill & Co. as Financial Advisors -------------------------------------------------------------- Loral Space & Communications Ltd., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to retain Greenhill & Co., LLC, as their financial advisor and investment banker in their chapter 11 cases. Greenhill is well qualified to serve as the Debtors' financial advisor. Greenhill is a leading corporate finance investment bank and has provided financial advice to numerous major corporate entities and investors worldwide. Greenhill is also very familiar with the Debtors' businesses and financial affairs. Its engagement will facilitate the provision of the services required by the Debtors in their chapter 11 cases. Greenhill's experience and expertise, its knowledge of the capital markets, and its merger and acquisition capabilities, will inure to the benefit of the Debtors in providing an enterprise valuation of the Debtors and in pursuing any Reorganization, Financing, or Sale. The Debtors expect Greenhill to provide: A. General Financial Advisory Services: 1. review and analyze the business, operations, properties, financial condition, and prospects of the Debtors; 2. evaluate the Debtors' debt capacity in light of projected cash flows; 3. assist in the determination of an appropriate capital structure for the Debtors; 4. assist the Debtors in negotiations with their lenders and other parties; 5. determine a range of values for the Debtors on a going concern basis and on a liquidation basis; 6. assist the Debtors in the formulation and implementation of any plan to delever their capital structure; 7. advise and attend meetings of the Debtors' Boards of Directors and their Committees and, if appropriate, their creditors; 8. participate in hearings before any court with respect to the matters upon which Greenhill has provided advice, including, as relevant, coordinating with the Debtors' counsel as to necessary testimony relating thereto; and 9. advise and assist the Debtors in structuring and effecting the financial aspects of any Reorganization, Financing, and/or Sale, subject to the terms and conditions of the Greenhill Agreement. B. Reorganization Services: 1. provide financial advice and assistance to the Debtors in developing and seeking approval of a Reorganization plan under chapter 11 of the Bankruptcy Code; 2. provide financial advice and assistance to the Debtors in structuring any new securities, other consideration, or other inducements to be offered and/or issued under the Plan; 3. assist the Debtors and/or participate in negotiations with entities or groups that may be impaired by the Plan; and 4. assist the Debtors in preparing documentation within Greenhill's area of expertise as required in connection with the Plan. C. Financing Services: 1. provide financial advice and assistance to the Debtors in structuring and effecting a Financing, identify potential Investors, and, at the Debtors' request, contact such Investors; 2. if Greenhill and the Debtors deem it advisable, assist the Debtors in developing and preparing a memorandum under the terms described in the Greenhill Agreement; and 3. assist the Debtors and/or participate in negotiations with potential Investors. D. Sale Services: 1. provide financial advice and assistance to the Debtors in connection with a Sale, identify potential acquirors and, at the Debtors' request, contact such potential acquirors; 2. assist the Debtors in preparing a memorandum, to be used in soliciting potential acquirors under the terms described in the Greenhill Agreement; and 3. assist the Debtors and/or participate in negotiations with potential acquirors. Bradley A. Robins disclose that Greenhill will be paid: A. a $1,000,000 initial financial advisory fee; B. $200,000 per month; C. a $7,000,000 Transaction Fee if within 18 months, a Reorganization or Financing is consummated; and D. Sale Fees equal to: Sale Value Sale Fee Percentage ----------------------- ------------------- $100,000,000 or less 2.00% $200,000,000 1.50% $500,000,000 1.00% $1,000,000,000 0.85% $2,000,000,000 0.55% $5,000,000,000 0.30% $10,000,000,000 or more 0.20% Loral Space & Communications Ltd., headquartered in New York, New York, and together with its affiliates, is one of the world's leading satellite communications companies with substantial activities in satellite-based communications services and satellite manufacturing. The Company filed for chapter 11 protection on July 15, 2003 (Bankr. S.D.N.Y. Case No. 03-41710). Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $2,654,000,000 in total assets and $3,061,000,000 in total debts. MAGELLAN HEALTH: Secures Deutsche Bank's $230MM Exit Financing -------------------------------------------------------------- Magellan Health Services, Inc. (OCBB:MGLH) has accepted a letter from Deutsche Bank under which Deutsche Bank has committed, subject to certain conditions, to provide Magellan with a credit facility totaling $230 million effective on Magellan's exit from its Chapter 11 bankruptcy proceedings. The new credit facility will replace the credit facility contemplated by the Plan of Reorganization filed by Magellan on March 26, 2003 and will provide reorganized Magellan with more favorable terms and greater financial flexibility than it would have had under the previously contemplated credit facility. The commitment for the new facility has the support of the Official Committee of Unsecured Creditors appointed in Magellan's Chapter 11 case. Magellan stated that it expects to consummate the new facility upon its emergence from Chapter 11 in September 2003. "The refinancing of Magellan's senior secured debt through the Deutsche Bank commitment further enhances the prospective strength and value of reorganized Magellan," said Steven J. Shulman, CEO of Magellan Health Services. "In Deutsche Bank, Magellan will have a strong financial partner that shares the goal of positioning the company to compete and succeed when it emerges from Chapter 11. We are pleased with the commitment Deutsche Bank has delivered and look forward to a mutually rewarding relationship with them." Mark S. Demilio, chief financial officer of Magellan, stated, "With this new credit facility and the equity commitment we previously announced, we expect to exit Chapter 11 with a strong and sustainable balance sheet and the financial flexibility to continue to enhance service and product offerings for our members, customers and providers while investing in Magellan's future as the industry leader. Deutsche Bank's commitment is further evidence of the confidence that the financial community has in the strength of our business and the prospects for our future performance." The new credit facility will have a maturity of approximately five years compared to approximately two years under the previously contemplated credit facility. Interest rates under the new facility are contemplated to be less than under the previously contemplated facility. The components of the new facility will be term loans of $100 million; the ability to borrow additional funds, and/or issue letters of credit, of up to $50 million under a revolving loan facility; and the ability to issue letters of credit of up to $80 million under a separate letter of credit facility. Magellan will use the proceeds from the term loans, as well as cash on hand, to pay in full the outstanding loans under its current credit facility of approximately $160 million. Letters of credit currently outstanding and supported by the current credit facility will be supported by the new facility. The complete terms of the commitment letter will be filed with the U.S. Bankruptcy Court for the Southern District of New York. The Deutsche Bank commitment is subject to certain conditions as set forth in the commitment letter, including approval by the Bankruptcy Court having jurisdiction over Magellan's Chapter 11 case and certain other conditions customary for commitments of this nature. The consummation of the new facility with Deutsche Bank and the effectiveness of Magellan's restructuring are conditioned on confirmation and consummation of the Plan in accordance with the U.S. Bankruptcy Code. Gleacher Partners LLC is serving as financial advisor to Magellan Health Services, and Weil, Gotshal & Manges LLP is bankruptcy counsel to Magellan Health Services. Headquartered in Columbia, Md., Magellan Health Services (OCBB: MGLH), is the country's leading behavioral managed care organization, with approximately 65 million covered lives. Its customers include health plans, corporations and government agencies. MAGELLAN HEALTH: Amended Plan's Claim Classification & Treatment ---------------------------------------------------------------- This table summarizes the classification and treatment of the principal prepetition Claims and Interests under Magellan Health Services, Inc.'s Plan and in each case reflects the amount and form of consideration that will be distributed in exchange for these Claims and Interests and in full satisfaction, settlement, release and discharge of these Claims and Interests: Class Description Treatment ----- ---------------------- --------------------------------- Administrative Expense Payment in full. Claims Priority Tax Claims Payment in full on Effective Date or over six years from the date of assessment of the tax, with interest or payment as otherwise agreed. 1 Senior Secured Lender At the option of the Debtors, Claims holders of Senior Secured Lender Claims will receive either $50,000,000 in Cash and the New the New Secured Obligations or payment in full. 2 Other Secured Claims Reinstated or any other treatment determined by the Debtors. 3 Priority Non-Tax Paid in full in cash on the later Claims of the Effective Date and the date on which the Claim is Allowed. 4 Aetna Claims $15,000,000 in Cash and the New Aetna Note. 5 Provider Claims Reinstated. 6 Customer Claims Reinstated. 7 Senior Note Claims Cash equal to the Note Claim Percentage of the Cash Distribution Amount and New Notes with a principal amount equal to the Senior Note Claims inclusive of interest at 10 3/8% per annum through the Effective Date less the Cash Payment. 8 Senior Subordinated A number of shares of New Common Note Claims Stock equal to the product of the Class 8/Class 9 Distributable Share Amount and the Note Claim Percentage, subject the Partial Cash-out Election and the Equity Subscription Rights. 9 Other General For each $1,000 of Allowed Unsecured Claims General Unsecured Claims, a principal amount of New Notes equal to the Note Distribution Amount, Cash Equal to the holder's Ratable Proportion of the Other General Unsecured Claim Percentage of the Cash Distribution Amount, the holder's Ratable Proportion of shares of New Common Stock equal to the product of the Other General Unsecured Claim Percentage and Class 8/Class 9 Distributable Share Amount, subject the Partial Cash-Out Election and the Equity Subscription Rights. 10 Convenience Claims Paid in full in Cash. 11 Intercompany Claims Reinstated. 12 Subsidiary Equity Reinstated. Interests 13 Magellan Preferred Class 13 Distributable Share Stock Interests Amount of shares of New Common Stock equal to the Class 13 Distributable Share Amount. 14 Magellan Common Class 14 Distributable Share Stock Interests Amount of shares of New Common Stock equal to the Class 14 Distributable Share Amount. 15 Securities Litigation No distribution. Claims (Magellan Bankruptcy News, Issue No. 11: Bankruptcy Creditors' Service, Inc., 609/392-0900) MICRON TECHNOLOGY: SEC Declares Registration Statement Effective ---------------------------------------------------------------- On July 30, 2003, Micron Technology, Inc., filed an amendment to its Registration Statement on Form S-3 with the Securities and Exchange Commission relating to the resale by selling securityholders of its 2.5% Convertible Subordinated Notes due February 1, 2010, and the Common Stock issuable upon conversion of the Notes. The Company will not receive any proceeds from the resale of the Notes or the underlying Common Stock. The Registration Statement was declared effective by the SEC on August 1, 2003. As reported in Troubled Company Reporter's June 23, 2003 edition, Standard & Poor's Ratings Services revised its outlook on Micron Technology Inc., to negative from stable, reflecting continued price pressures and weak demand levels, which have pressured the company's profitability and liquidity. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on the Boise, Idaho-based supplier of "dynamic memory" chips. At May 31, 2003, Micron had about $1.1 billion of debt and capitalized operating leases outstanding. MIKE TYSON: Case Summary and Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Michael G. Tyson c/o Barry Hankerson 155 W. 19th Street New York, New York 10011 Bankruptcy Case No.: 03-41900 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Mike Tyson Enterprises, Inc. 03-41901 Type of Business: Professional boxer and former heavyweight champion of the world Chapter 11 Petition Date: August 1, 2003 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtors' Counsel: Robert Joel Feinstein, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 461 Fifth Avenue 25th Floor New York, NY 10017-6234 Tel: (212) 561-7700 Fax: (212) 561-7777 -and- Debra Grassgreen, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. Three Embarcadero Center, Suite 1020 San Francisco, CA 94111 Tel: 415-283-7000 Fax: 415-263-7010 Estimated Assets: Estimated Debts: ----------------- ---------------- Michael G. Tyson $10MM to $50MM $10MM to $50MM Mike Tyson Enterprises $10MM to $50MM $1MM to $10MM Michael G. Tyson's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $13,368,233 Fresno, CA 93888 Inland Revenue Service - Taxes $4,000,000 Taxes UK Ziffren, Brittenham & Legal Services $382,028 Branca 1801 Century Park West Los Angeles, CA 90067 Tel: 310-286-9971 USI of Southern California Insurance $257,555 Ins. Services PO Box 9004 Van Nuys, CA 91409 Tel: 818-704-1000 Jewelers, Inc. Jewelry $173,706 Jimmerson Hansen Legal Services $130,528 Darius Rugs Home Furnishings $78,000 Ferrari of Beverly Hills Litigation $60,603 E&R Electric, Inc. Home Improvements $54,408 Kimberly Scarborough Debt $51,949 Kajan Mather and Barish Legal Services $45,617 Don King Litigation Unliquidated Lennox Lewis Litigation Unliquidated Lion Promotions LLC Litigation Unliquidated Roosevelt McKinley Litigation Unliquidated Monica Turner Tyson Litigation Unliquidated Wonda Laquette Graves Litigation Unliquidated Keith Rhodes Litigation Unliquidated Mitch Rose Litigation Unliquidated WBC, Inc. Litigation Unliquidated Mike Tyson Enterprises' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ BLH Management Company Consultant $500,000 Barry Hankerson 10345 West Olympic Blvd. 2nd Floor Los Angeles, CA 90064 Tel: 646-638-2585 J & J Management, Inc. Consultant $450,000 (Jimmy Henchmen) c/o S.E.C.R.E.T.S. Fin'l Group, LLC 1133 Broadway Suite 1127 New York, NY 10010 Tel: 646-336-6503 CLS-Limo Services Transportation $308,749 15303 Ventura Blvd. Suite 1100 Sherman Oaks, CA 91403 Tel: 818-981-9700 Michigan Dept. of Treasury Taxes $224,621 Assante Business Management Accounting Services $162,624 Jeff Wald Consultant $150,000 Travelers Gateway Center Insurance $111,361 Holland & Knight, LLP Legal Services $101,305 Georgia Income Tax Division Taxes $92,580 Greenberg Glusker Fields Legal Services $80,160 Lionel Sawyer & Collins Legal Services $62,374 Barksdale, Vernon M.D. Medical Services $57,242 James Rosamond Consultant $50,000 Diamond Resort Hotel & Lodging $30,000 Mitchell E. Gibson, M.D. Medical Services $29,360 Proskauer Rose, LLP Legal Services $28,046 Don King Litigation Unliquidated Lennox Lewis Litigation Unliquidated Lion Promotions LLC Litigation Unliquidated Roosevelt McKinley Litigation Unliquidated MIRANT CORP: First Creditors' Meeting to Convene on August 21 ------------------------------------------------------------- William T. Neary, the United States Trustee for Region 6, has called for a meeting of the Mirant Debtors' Creditors pursuant to 11 U.S.C. Sec. 341(a) to be held on August 11, 2003 at 2:00 p.m. The Meeting will be held at Fritz G. Lanham Federal Building, 819 Taylor Street, Room 7A24, in Ft. Worth, Texas All creditors are invited, but not required, to attend. This Official Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath. (Mirant Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONAL STEEL: Proposes Solicitation and Tabulation Procedures --------------------------------------------------------------- National Steel Corporation and its debtor-affiliates ask the Court to establish procedures for the solicitation and tabulation of votes to accept or reject their Joint Plan of Liquidation. The Debtors also ask the Court to approve: * the form and manner of notice of the disclosure statement hearing; * the proposed record date and voting deadline; * the treatment of claims for notice and voting purposes; and * confirmation objection deadline and procedures. Form and Manner of Notice of the Disclosure Statement Pursuant to Rule 3017(a) of the Federal Rules of Bankruptcy Procedure, the Court has set a hearing on August 19, 2003 to consider the adequacy of the Debtors' Disclosure Statement. Bankruptcy Rule 2002(b) requires the Debtors to give notice of the hearing by mail to their equity security holders. Consequently, the Debtors have provided these parties with a notice attached to the Proposed Solicitation Order: 1) The U.S. Trustee; 2) The Securities and Exchange Commission; 3) The District Director for the Internal Revenue Service; 4) Counsel for the Creditors' Committee; 5) All parties on the Master Service List; 6) Parties on the Bankruptcy Rule 2002 List; 7) All creditors with filed claims; 8) All creditors with scheduled claims; and 9) All parties to executory contracts. The Debtors did not mail the Disclosure Statement Hearing Notice to each individual equity security holder. The Debtors defend that the circumstances of their Chapter 11 cases make providing a notice of the Disclosure Statement Hearing by actual mail to their public equity holders impractical and costly. The Debtors explain that these equity holders are not receiving a recovery under the Plan, are not voting on the Plan and are deemed to have rejected the Plan. The Debtors believe that the notice procedures provide sufficient and appropriate notice to all parties-in-interest of the Disclosure Statement Hearing as well as the procedure for objecting to the adequacy of the Disclosure Statement. Record Date To have sufficient time to compile a list of bondholders, the registrars of the Debtors' securities need advance notice of the date that will serve as the record date. Thus, the Debtors propose to fix August 12, 2003 -- a week before the Disclosure Statement hearing -- as the record date for determining (i) creditors entitled to receive Solicitation Packages and (ii) creditors entitled to vote to accept or reject the Plan. Temporary Allowance of Claims for Voting The Debtors maintain that certain creditors have claims that are contingent, unliquidated or disputed. Under applicable Bankruptcy Rules, these creditors are not entitled to vote on the Plan. Pursuant to Section 105(a) of the Bankruptcy Code, the Debtors propose to fix September 30, 2003 at 4:00 p.m. as the deadline for any creditor to file and serve a motion pursuant to Bankruptcy Rule 3018(a) seeking temporary allowance of a claim for voting purposes. The Debtors further propose that any party timely filing and serving a Rule 3018(a) Motion be provided a ballot and be permitted to cast a provisional vote to accept or reject a plan. If the parties are not able to resolve the issues by the Voting Deadline, the Court will consider the motion at the Confirmation Hearing and will determine the amount in which the particular creditor will be entitled to vote. Solicitation Procedures (A) Duties of Voting Agent The Debtors have asked Logan & Company, Inc. to act as the voting agent for the solicitation of votes with respect to the Plan. Logan will assist the Debtors in: a) mailing Solicitation Packages; b) receiving, tabulating, and reporting on Ballots cast for or against the Plan by holders of claims against the Debtors; c) responding to inquiries from creditors relating to the Plan, the Disclosure Statement, the Ballots and related matters including the voting procedures and requirements; d) soliciting votes on the Plan, and e) contacting creditors regarding the Plan. (B) Ballots Bankruptcy Rule 3017(d) requires the Debtors to mail a form of Ballot only to "creditors and equity security holders entitled to vote on the plan." The Debtors propose to distribute to creditors the proposed form of Ballots for classes NSC-3, NSC-4, NSC-5, NSC-6, NSP-3, NSP-4, PRO-3, PRO-4, Inactive-2 and No Asset-2. The forms for the Ballots are based on Official Form No. 14 but have been modified to address the particular aspects of their Chapter 11 cases and to include certain additional information that the Debtors believe are relevant and appropriate for each class of Claims. The appropriate Ballot forms will be distributed to claimholders in these Classes entitled to vote under the Plan: Ballot No.1 Ballot for holders of: Class NSC-3 PBGC Claims; NSP-3 PBGC Claims; PRO-3 PBGC Claims; Inactive-2 PBGC Claims; and No Asset-2 PBGC Claims Ballot No.2 Beneficial Owner Ballot for holders of Class NSC-4 Bond Claims against the NSC Debtors Ballot No.3 Master Ballot for holders of Class NSC-4 Bond Claims against the NSC Debtors Ballot No.4 Ballot for holders of Class NSC-5 Mitsubishi and Marubeni Claims against the NSC Debtors Ballot No.5 Ballot for holders of Class NSC-6 General Unsecured Claims against the NSC Debtors Ballot No.6 Ballot for holders of Class NSP-4 General Unsecured Claims against the NS Pellet Debtors Ballot No.7 Ballot for holders of Class PRO-4 General Unsecured Claims against the ProCoil Debtors All creditor Ballots will be accompanied by pre-addressed, postage prepaid return envelopes addressed to Logan at: Logan & Company, Inc. 546 Valley Road, Upper Montclair, New Jersey, 07043 Attention: National Steel Corporation, et al. Ballots sent to the holders of the Debtors' Bonds will be accompanied by pre-addressed, postage prepaid return envelopes addressed to the beneficial owner's record holder. (C) Content of General Transmittal of Solicitation Package The Debtors intend to transmit by August 25, 2003 a solicitation package containing: * the Plan; * the Disclosure Statement; * an appropriate Ballot; * the Confirmation Hearing Notice; * the Solicitation Procedures Order; and * other information the Court may direct or approve. This package will be sent to the holders of claims in Classes NSC-3, NSC-4, NSC-5, NSC-6, NSP-3, NSP-4, PRO-3, PRO-4, Inactive- 2 and No Asset-2 by U.S. mail, first-class postage prepaid, or by hand or overnight courier. The Debtors propose that claim holders under these classes (i) who have filed timely proofs of claim that have not been disallowed by the Record Date, or (ii) whose claims are scheduled in the Schedules, receive a Solicitation Package. To avoid duplication and reduce expenses, the Debtors intend that creditors who have filed duplicate claims in any given class will be required to receive only one package and one Ballot for voting their claims. Solicitation Packages will also be mailed to the master service list, the 2002 List and the U.S. Trustee. The Debtors will not include in the package certain exhibits or appendices to the Plan and Disclosure Statement that are voluminous. All these exhibits and appendices will be filed with the Court and will be available for review. (D) Transmittal of Solicitation Packages to Holders of Contingent, Unliquidated and Disputed Claims For all persons or entities listed on the Debtors' Schedules as having a claim or a portion of claim which is disputed, unliquidated or contingent or which is scheduled as zero or unknown in amount, the Debtors plan to distribute a Solicitation Package that contains, in lieu of a Ballot and the Confirmation Hearing Notice, a Notice of Disputed Claim Status. This notice informs the receiver that its claim has been identified as disputed, contingent or unliquidated or that it is scheduled as Zero or unknown in amount. The receiver will be instructed to contact the Voting Agent to get a Ballot for the claim if a Rule 3018(a) Motion is timely filed. (E) Special Procedures for Holders of Class NSC-4 Claims Transmittal to Record Holders Because of the complexity and difficulty associated with reaching the beneficial owners of publicly traded securities and with identifying the Beneficial Bondholders, the Debtors contemplate that all known record holders will be required to provide Logan with the addresses of these beneficial holders, as of the Record Date, in electronic format by August 21, 2003. For those who will fail to provide this information, the Debtors will require the Record Holders to send the appropriate solicitation materials so as to maximize the likelihood that the Beneficial Bondholders will be given the opportunity to review the Disclosure Statement and to vote on the Plan in a timely manner. The Solicitation Packages to be sent by Record Holders to the Beneficial Bondholders will include a Ballot and a return envelope. The Record Holders must then summarize the individual votes on a master Ballot to be provided by the Debtors. The Record Holder will then return the Ballot to the Voting Agent by the Voting Deadline. (F) Procedures for Vote Tabulation To avoid uncertainty, to provide them and Logan some guidelines, and to avoid inconsistent results, the Debtors ask the Court to establish these procedures for tabulating the votes to accept or reject the Plan: (a) Votes Counted Any timely received Ballot containing sufficient information to permit the identification of the claimant will be counted and will be deemed to be cast as an acceptance or rejection, as the case may be, of the Plan. The Debtors ask the Court to order that each Record Holder or Beneficial Bondholder will be deemed to have voted the full principal amount of its claim relating to the Bonds, notwithstanding anything to the contrary on the Ballot. (b) Votes Not Counted These Ballots will not be counted or considered for any purpose in determining whether the Plan has been accepted or rejected: * Any Ballot received after the Voting Deadline unless the Debtors have granted an extension; * Any Ballot that is illegible or contains insufficient information to permit the identification of the claimant; * Any Ballot cast in a manner that neither indicates an acceptance nor rejection of the Plan or that indicates both an acceptance and rejection of the Plan; * Any unsigned Ballot; * Any Ballot form other than the official form Logan sent or its copy; * Any copy of a Ballot without an original signature; * Any Ballot that is sent by facsimile transmission; * Any Ballot cast by a person or entity that does not hold a claim in a class that is entitled to vote to accept or reject the Plan; or * Any Ballot cast for a claim identified as unliquidated, contingent, or disputed and for which no Rule 3018(a) Motion has been filed by the September 30, 2003 deadline. (c) Changing Votes Whenever two or more Ballots are cast voting the same claim before the Voting Deadline, the Ballot dated the latest will be deemed to reflect the voter's intent, and thus, to supersede any previous Ballots. (d) No Division of Claims, Interests or Votes The Debtors ask the Court to clarify that creditors may not divide their claims or interests, or the associated votes. Holders of claims or interests who vote must vote all of their claims or interests within a particular class either to accept or reject the Plan. A Ballot partially accepting and partially rejecting the Plan or Ballots voting inconsistently will not be counted for any purposes. (e) Counting Ballots from Beneficial Holders All Record Holders through which beneficial owners hold Bonds will be required to receive and summarize on a Master Ballot all Beneficial Owner Ballots cast by the beneficial owners and to retain the individual Ballots for one year after the Voting Deadline for purposes of Court inspection. To avoid double counting, the Debtors suggest that: -- votes cast by beneficial owners of Bonds through a Record Holder and transmitted by a Master Ballot be applied against the positions held by the Record Holder with respect to the Bonds; and -- votes submitted by a Record Holder on a Master Ballot not be counted in excess of the position maintained by the Record Holder on the Record Date in the Bonds. To the extent that conflicting, double or over-votes are submitted, Logan may attempt to resolve the votes before the Voting Deadline to ensure that the votes of Beneficial Bondholders are accurately tabulated. If this cannot be reconciled by the Voting Deadline, Logan will count the votes with respect to the Master Ballot in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot that contained the conflicting votes, but only to the extent of the a Record Holder's position on the Record Date in the Bonds. Voting Deadline All Ballots are due seven days before the Confirmation Hearing. All Ballots must state whether the Plan is accepted or rejected. The Debtors will transmit the Solicitation packages by August 26, 2003. Accordingly, the Voting Deadline allows for at least 45 days of voting after mailing of the Solicitation Packages. To be counted, Ballots must be returned to Logan by the Voting Deadline by mail, overnight delivery, or hand delivery. Any Ballot submitted by facsimile transmission will not be counted. Determination of Treatment of Claims for Notice and Voting Purposes Under the Plan, the holders of claims in Classes NSC-1, NSC-2, NSP-1, NSP-2, PRO-1 and PRO-2 are not impaired as defined in Section 1124 of the Bankruptcy Code. Under Section 1126(f), the Unimpaired Creditors are conclusively presumed to have accepted the Plan, and solicitation of votes from the creditors is not required. Bankruptcy Rule 3017(d) states that the Court may order that a plan and disclosure statement need not be distributed to holders of unimpaired claims that are conclusively presumed to have accepted a plan. The holders of Interests under Classes NSC-7, NSP-5, PRO-5, Inactive-3 and No Asset-3 will not receive any distributions under the Plan. Pursuant to Section 1126(g), these holders are deemed to reject the Plan and solicitation of votes in these Classes is unnecessary. In lieu of Solicitation Packages, the Debtors will mail to the Unimpaired Creditors a copy of the notice of non-voting status with respect to unimpaired classes. The Debtors will also mail to Non-Voting Shareholders a copy of the notice of non-voting status with respect to equity interests. Both notices of non-voting status provide: * a notice of the Disclosure Statement approval; * a notice of the Plan filing; * instructions on how to obtain or view the copies of the Disclosure Statement and Plan and other documents; * information regarding the Confirmation Hearing; and * detailed directions for filing confirmation objections by the Confirmation Objection Deadline. Confirmation Hearing Date and Confirmation Objections The Debtors ask the Court to set a hearing date to consider confirmation of the Plan not earlier than October 20, 2003. Pursuant to Rule 3020(b)(1), objections to confirmation of a plan must be filed and served "within a time fixed by the Court." Thus, the Debtors ask Judge Squires to set a date 20 days before the Confirmation Hearing Date as the last Date for filing and serving Plan Confirmation objections. Only timely filed and served written Confirmation Objections will be considered. Confirmation Objections must: -- be in writing; -- comply with Bankruptcy Rules and Local Rules; -- indicate the objector's name, and the nature and amount of any claim asserted by the objector against the Debtors; -- state with particularity the legal and factual bases for the objection, including suggested language to be added or existing language to be amended or deleted; and -- be filed with the Court together with a proof of service. Objections must be served by personal service, overnight delivery, or first-class mail so as to be received no later than the Objection Deadline by these parties: 1) Counsel for the Debtors; 2) United States Trustee; 3) counsel for the Creditors' Committee; 4) counsel for the Bondholders' Committee; 5) counsel for Mitsubishi Corporation; and 6) counsel for Marubeni Corporation; (National Steel Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSRENT: UBS Securities Asks for Summary Judgment on Fees ------------------------------------------------------------- UBS Securities LLC, formerly known as UBS Warburg LLC, asks the Court to issue a summary judgment on the payment of its fees owed by NationsRent Inc., and its debtor-affiliates. UBS Securities asserts that there were certain key admissions made by the Debtors regarding consummated transactions between them and Baupost Group, LLC and its affiliates. The Debtors had initially denied the closure of any transaction. UBS Securities explains that the Transaction involves an $80,000,000 investment of new money into the Debtors by Baupost in return for stock and debentures. The actual occurrence of a Transaction triggered UBS Securities' "Transaction Fee" as agreed in its engagement letter with the Debtors. UBS Securities is entitled to a receive a transaction fee equal to the greater of $1,000,000 or an amount to be determined based on a formula that includes, among other things, the value of the Transaction. UBS Securities calculates its Transaction Fee as: Consideration exchanged for equity securities $145,000,000 Addition at equity 80,000,000 Principal amount of all indebtedness acquired or assumed (less cash) 226,694,000 Cash (3,500,000) Payments made in installments 0 Amounts payable under consulting agreements 0 Contingent payments 0 ------------ Enterprise Value $448,194,000 ------------ Warburg Fee 1.0% ------------ Total Fee $4,485,000 ============ The Transaction Fee is equal to 1% of the value of the transactions consummated under the Plan. Aside from the Transaction Fee, UBS Securities has incurred $56,471 in expenses. At the onset of the engagement, the Debtors paid UBS Securities a $175,000 initial fee, which is to be applied to the Transaction Fee. Accordingly, under the Engagement Letter, the Debtors are required to pay UBS Securities, without delay, a $4,307,000 Transaction Fee. Gary A. Rubin, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, asserts that a summary judgment in UBS Securities' favor directing the Debtors to pay the Transaction Fee is warranted because a Transaction has occurred as the Debtors concede. The Transaction Fee is reasonable. In arranging the compensation terms in the engagement, Mr. Rubin points out that the Debtors themselves agree to the fee structure in light of: (a) industry practice; (b) market rates charged for comparable service both in and out of the Chapter 11 context; and (c) UBS Securities' experience with respect to financial advisory services. Mr. Rubin maintains that the Transaction Fee is not improvident. The Engagement Letter meticulously defined "Transaction" and nowhere stated that UBS Securities would have to be involved in the Transaction to be entitled to a Transaction Fee. Thus, the parties clearly anticipated the possibility that a Transaction Fee could become due even where UBS Securities' services were not material to the Transaction. Mr. Rubin tells the Court that UBS Securities' services contributed significant value to the Debtors' cases. As a result of the sale process UBS Securities conducted, the Debtors received initial indications of interest from potential buyers to purchase NationsRent. This valued NationsRent on an enterprise value basis in excess of $400,000,000. Mr. Rubin further argues that a summary judgment is proper because there is no genuine issue of material fact -- similar to the situation in Skretvedt v. E.I. DuPont de Nemours and Co., 268 F.3d 167, 173 n.4 (3d Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986), Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)). Mr. Rubin contends that the Debtors "must present affirmative evidence in order to defeat [this] properly supported motion for summary judgment" similar to Anderson, 477 U.S. The "mere existence" of immaterial factual issues, however, cannot preclude summary judgment, Mr. Rubin says, noting Brenntag International Chemicals, Inc. v. Norddeutsche Landesbank GZ, 70 F. Supp.2d 399, 405 (S.D.N.Y. 1999). Rather, the Debtors must show that there are "genuine factual issues that properly can be resolved only by a finder of fact because they may be reasonably resolved in favor of either party", Mr. Rubin continues, citing Anderson, 477 U.S. at 250. Factual disputes that are irrelevant or unnecessary will not be counted. (NationsRent Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETWORK PLUS: Ch. 7 Trustee Hires BTB as Liquidation Consultant --------------------------------------------------------------- Micheal B. Joseph, the trustee of the chapter 7 estates of Network Plus Corp., and Network Plus, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for authority to retain BTB Associates, LLC as his Liquidation Consultants. The Trustee needs BTB Associates to: a. conduct a preference analysis; b. complete the collection of preferential transfers; c. provide litigation support to the Trustee's counsel on preference litigation to the extent necessary, including potential services as an expert witness; d. review and analyze claims, making recommendations to the Trustee for allowance and objection to various claims; e. meet with and advise the Trustee and/or his counsel on matters concerning case administration that require its specific review; and f. render such other assistance as the Trustee and his counsel may deem appropriate. The principal consultants of BTB Associates who are presently designated to undertake this engagement and their current standard hourly rates are: Robert F. Troisio $250 per hour David Paddy $200 per hour Analysts $175 per hour Administrative $45 per hour Network Plus Corp., a network-based integrated communications provider, which offers broadband data and telecommunications services, filed for chapter 11 protection on February 04, 2002 (Bankr. Del. Case No. 02-10341). Raymond H. Lemisch, Esq., at Adelman Lavine, represents the Trustee in these as the Debtors wind up their assets. As of Sep 30, 2001, the Debtors post $433,239,000 in total assets and $371,300,000 in total debts. NEXTWAVE: Cingular Talking about a Potential $1.4 Billion Deal -------------------------------------------------------------- Cingular Wireless LLC is talking to NextWave about the purchase of certain spectrum licenses. A premature press release suggested it's a $1.4 billion cash deal covering 83 million potential customers in 34 markets, subject to review by the U.S. Bankruptcy Court for the Southern District of New York and the Federal Communications Commission. "A definitive agreement has not been reached and there can be no assurance that an agreement will be reached or, if reached, that any transaction will be consummated," Cingular said, adding that it "does not intend to make any further announcement with respect to this matter unless and until further disclosure is required." NextWave Telecom Inc. was formed in 1995 to provide broadband wireless services to consumer and business markets. For more information about NextWave, visit http://www.nextwavetel.com Cingular Wireless, a joint venture between SBC Communications (NYSE: SBC) and BellSouth (NYSE: BLS), serves more than 23 million voice and data customers across the United States. A leader in mobile voice and data communications, Cingular is the only U.S. wireless carrier to offer Rollover, the wireless plan that lets customers keep their unused monthly minutes. Cingular has launched the world's first commercial deployment of wireless services using Enhanced Data for Global Evolution (EDGE) technology. Cingular provides cellular/PCS service in 43 of the top 50 markets nationwide, and provides corporate e-mail and other advanced data services through its GPRS, EDGE and Mobitex packet data networks. Details of the company are available at http://www.cingular.com NORTHWEST AIRLINES: S&P Affirms B+ Long-Term Corp. Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B+' long-term corporate credit rating, on Northwest Airlines Corp. (B+/Negative/--) and unit Northwest Airlines Inc., (B+/Negative/--). All ratings were removed from CreditWatch, where they were placed March 18, 2003. (Ratings were lowered to current levels March 28, 2003.) "Northwest, like other large U.S. airlines, faces weak revenues, substantial debt and pension obligations, and a need to lower its labor costs," said Standard & Poor's credit analyst Philip Baggaley. "However, the airline's credit profile benefits from substantial liquidity, with $2.8 billion of unrestricted cash, and ongoing stringent cost-cutting efforts," he continued. Northwest, the fourth-largest U.S. airline, has a domestic route system focused on hubs in Minneapolis, Minn., and Detroit, Mich. The company also offers extensive Pacific routes (mostly to Japan) and transatlantic service through a successful joint venture with KLM Royal Dutch Airlines. Northwest reported a second-quarter 2003 pretax loss, before a gain on the sale of assets and federal reimbursement of security costs, of $181 million, slightly narrower than a pretax loss of $199 million in the second quarter of 2002. Northwest's loss reflected damage from the Iraq war and from severe acute respiratory syndrome (SARS) on Pacific routes, as well as continuing high fuel prices and a weak industrywide pricing environment. The second-quarter pretax loss margin before special items of negative 7.9% was behind Continental Airlines Inc.'s break-even margin, but less negative than the comparable margins reported by AMR Corp., UAL Corp., and Delta Air Lines Inc., continuing a pattern of the past several years. Liquidity remains strong, with unrestricted cash of $2.8 billion, a larger amount of liquidity, relative to Northwest's size, than that of any other large U.S. airline, excepting Southwest Airlines Co. Several unusual items-a $209 million federal reimbursement of security fees and $280 million from sale of Northwest's interest in WorldSpan LLC-boosted cash during the second quarter. Nevertheless, Northwest has no undrawn bank lines and few attractive unencumbered assets, and faces substantial upcoming debt maturities and pension funding requirements. Ratings could be lowered if the SARS outbreak, further substantial terrorist attacks, or faltering of the U.S. economic recovery significantly affect revenues and weaken the company's financial profile further. In addition, progress on reducing the company's labor costs will be important in restoring its financial profile. NORTHWEST AIRLINES: Can't Legally Buy-Back Series C Preferreds -------------------------------------------------------------- Northwest Airlines Corporation's (Nasdaq: NWAC) board of directors determined that at this time the company could not legally redeem the 4.8 million shares of its Series C Preferred Stock still outstanding. The Northwest board of directors issued the following statement: "After a thorough review of the legal restrictions applicable to the company, the board concluded that Northwest was not able to buy back the Series C Preferred Stock, at this time." "As a board, we recognize the valuable contributions our employees made to the company during the 1993-1996 wage reduction period and acknowledge the company's obligation to buy back the Series C Preferred Stock. We want to do so as soon as possible. We devoted substantial time and effort to this issue. We discussed the Series C Preferred Stock buy back at length in our regularly scheduled April and June board meetings, and held two special meetings in July devoted exclusively to the Series C issue." "We retained the best legal and financial experts, who advised us throughout the process. At the conclusion of these deliberations, it was clear that the legal restrictions applicable to stock buy backs under Delaware Law did not permit Northwest to proceed at this time with the buy back of the Series C Preferred Stock." "[Fri]day's decision does not mean that Northwest's obligation to repurchase the Series C Preferred Stock has expired. Rather, the company's obligation to the holders of the Series C Preferred Stock continues until Northwest has the ability to repurchase the Series C Preferred Stock. The Northwest board will, on a regular basis with the assistance of its legal and financial experts, revisit the company's ability to buy back the Series C Preferred Stock, with the objective of buying back the Series C Preferred Stock as soon as possible. Until the Series C stock is repurchased, each share will accrue a 12% per year dividend on the $46.96 per share buy back price." "These have been extraordinarily challenging times for everyone at Northwest. The board greatly appreciates the hard work, dedication, and understanding of all Northwest employees." Northwest issued the Series C Preferred Stock in 1993 to trusts for the benefit of its employees in connection with labor cost restructuring agreements between Northwest and its major unions. Northwest Airlines (S&P/B+/Negative) is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo, and Amsterdam, and approximately 1,500 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents. NORTHWEST AIRLINES: Flight Attendants Say Airline Breaks Promise ---------------------------------------------------------------- The Board of Directors at Northwest Airlines has voted to renege on their agreement to reimburse flight attendants for sacrifices they made to save the airline from bankruptcy. The Board voted to not pay the flight attendants what they are owed from a 1993 agreement granting them stock in exchange for wage concessions. Two board members voted to uphold the agreement -- Ray Benning of the International Brotherhood of Teamsters and a representative from the International Association of Machinists. "I'm outraged at the lack of respect Northwest Airlines has shown these flight attendants," said Teamsters General President James P. Hoffa. "These workers made good on their promise to keep the airline solvent. It is the duty of their employer to keep up their end of the bargain and they are failing to do so." In 1993, Northwest Airlines sought wage and benefit concessions from the flight attendants and other labor groups. In exchange, the airline distributed shares to the flight attendants in direct proportion to the wages and benefits that they would have received. Over the course of three years, the flight attendants and other employees made financial sacrifices that saved the airline approximately $900 million. On June 3 in New York, the Teamsters filed a lawsuit to force Northwest to make good on its obligation. The Teamsters intend to pursue that lawsuit to protect the flight attendants' interests. Flight attendants were given a "put" right with respect to any shares of the Preferred Stock they still hold. A "put" is an option permitting its holder to sell stock at a fixed price. Northwest has publicly acknowledged that it is obligated to repurchase the flight attendants' Preferred Shares for cash. Now, based on a questionable interpretation of Delaware corporation law, a majority of the Northwest Board of Directors is refusing to pay the flight attendants and other hardworking employees for their sacrifices. Though the Teamsters Union no longer represents the flight attendants at the airline, they retained a seat on the Board of Directors, occupied by Ray Benning, former director of the Teamsters Airline Division. This seat and the seats held by the International Association of Machinists and Aerospace Workers and the Airline Pilots Association were created to protect the rights of the preferred shareholders. By retaining the seat on the Board, the Teamsters continue to protect the rights of flight attendants who own Preferred Shares by representing their interests with respect to those shares. Founded in August 1903, the International Brotherhood of Teamsters is celebrating its 100-year anniversary as a representative and advocate for working families. As reported in Troubled Company Reporter's May 22, 2003 edition, Fitch Ratings assigned a rating of 'B' to the $150 million in convertible senior unsecured notes issued by Northwest Airlines Corp. The privately-placed notes carry a coupon rate of 6.625% and mature in 2023. The Rating Outlook for Northwest is Negative. The 'B' rating reflects continuing concerns over Northwest's capacity to deliver the substantial improvements in operating cash flow that will be necessary if the airline is to meet growing cash financing obligations (interest, scheduled debt and capital lease payments, rents and required pension plan contributions). In light of the weak business travel demand environment that clouds prospects for a quick rebound in industry unit revenue, Northwest's future liquidity position will be influenced primarily by the company's success in negotiating labor cost reductions with its unionized employees. While the dialogue with labor is ongoing, there are no signs that a substantial reduction in labor costs is imminent. NORTHWEST AIRLINES: Mechanics Cry Foul Over Board's Decision ------------------------------------------------------------ Aircraft Mechanics Fraternal Association (AMFA) Local 33, serving Northwest and Mesaba Airlines, called Friday's decision by Northwest's board of directors not to repay a $226 million debt to employees unfair. Northwest earlier announced that its board would vote on August 1 on repurchasing shares distributed in 1993 to employees in exchange for wage and benefit concessions. "The 1993 agreement was tantamount to a 10-year, interest-free loan by employees to the company," according to AMFA Local 33 President Jim Atkinson. "The board's decision not to repay this good-faith loan, and to force employees to hold onto the stock instead, is unfair. Northwest's board had no problem approving management bonuses, stock options and even 'phantom stock' worth many millions of dollars, but when it comes to repaying a long-standing debt to employees, they suddenly plead poverty. To our knowledge, nothing in the law prevents Northwest from repaying this debt; Northwest has simply chosen not to do so," Atkinson said. "It's harder to maintain morale when executives seem more concerned with feathering their own nest than with the welfare of the airline and its employees. We have people who are laid off and were counting on this repayment money." NOVA COMMS: Inks LOI to Sell Unit to Trimfast for $2 Million ------------------------------------------------------------ Nova Communications Ltd. (OTCBB:NCVM) has executed a Letter of Intent to sell its Kadfield, Inc., d/b/a BuyMicro, subsidiary for $2,000,000 to Trimfast Group, Inc. (Pink Sheets:TRFG), a publicly traded company based in Deerfield Beach, Fla. More information will be available once the Letter of Intent is filed under Securities and Exchange Commission Form 8-K. Per the Letter of Intent, the parties will enter into a definitive acquisition agreement once due diligence reviews are completed and all terms are satisfied. It is expected that the acquisition will close within 90 days. Nova Communications recently announced that it has entered into a Letter of Intent to merge with PowerSki International, the designer and manufacturer of the patented PowerSki Jetboard, the World's most innovative watercraft. To learn more about the World's most innovative watercraft and to view behind the scenes footage of the Jetboard in action for Fox Sports' 54321 sports program, please visit the Company's Web site at http://www.powerski.com/home.html Nova Communications has and continues to institute changes to its strategies, operations and processes to address these risk factors and to mitigate their impact on Nova Communication's results of operations and financial condition. However, no assurances can be given that Nova Communications will be successful in these efforts. At December 31, 2002, Nova Communications' balance sheet shows a working capital deficit of close to $1 million, and a total shareholders' equity deficit of about $2 million. NQL DRILLING: Arranges $10 Million Short-Term Subordinated Loan --------------------------------------------------------------- NQL Drilling Tools Inc. (TSX-NQL.A) announced the completion and funding of its previously announced $10 million short term subordinated loan arrangement with CanFund VE Investors II, L.P. In addition, the Company has entered into a comprehensive loan extension agreement with its Canadian senior bank lenders. As a result of these arrangements, together with the previously announced $25 million private placement to Lime Rock Partners II, L.P., and CanFund and $22 million rights offering (when completed), the Company's financial stability will be restored, providing a platform for normal operations and growth. The completion of the $10 million short term subordinated loan arrangement and the loan extension agreement represent the first two parts of a refinancing package that includes the private placement and the rights offering. Completion of the private placement and rights offering is subject to the satisfaction of certain conditions, including shareholder approval, regulatory approval and completion of documentation. The Company believes that all parties are committed to pursue satisfaction of these conditions and the completion of the refinancing, but no assurance can be given that these transactions will be completed. NQL, CanFund and Lime Rock have agreed to complete negotiation of definitive documentation necessary to complete the private placement a week prior to NQL's shareholder meeting and on settlement of such documentation to deposit the subscription funds with their respective counsel pending closing to expedite closing of the private placement. The Company will shortly mail meeting materials to shareholders in respect of a meeting to be held on September 2, 2003 at which time shareholders will be asked to approve certain matters in respect of the private placement and rights offering. The Company will use the net proceeds of the subordinated loan financing for working capital purposes. All amounts owing thereunder are due and payable on March 31, 2004, other than $4 million which is to be paid out of the proceeds of the rights offering. Under the loan extension agreement, subject to the completion of the remaining steps of the refinancing and other conditions, the repayment of the indebtedness owed by the Company to its Canadian senior bank lenders has been extended to June 30, 2004, provided that the Company's non-revolving bridge loan facility must be paid in full by March 31, 2004. The net proceeds of the private placement will be used to reduce the Company's non-revolving bridge loan facility, other than $2 million which will be retained for working capital purposes. The net proceeds of the rights offering, other than $4 million to be repaid to CanFund as partial repayment of the subordinated loan, will be used to reduce the Company's non-revolving bridge loan facility. Following these financings and repayments towards the Company's non-revolving bridge loan facility, $10 million of additional working capital is available to the Company. NQL Drilling Tools' December 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $17 million. NRG ENERGY: Honoring and Paying Up to $1.5M in Prepetition Taxes ---------------------------------------------------------------- U.S. Bankruptcy Court Judge Beatty authorizes the NRG Energy Debtors to pay all prepetition taxes and fees in an amount not to exceed $1,500,000 in the aggregate, including any amounts subsequently determined upon audit to be owed for periods prior to May 14, 2003, by whatever means the Debtors may deem appropriate, including the issuance of postpetition checks and electronic transfers. Furthermore, the Debtors' banking institutions are authorized and directed to receive, process, honor and pay all checks or electronic transfers sent to the applicable taxing authorities with respect to the prepetition taxes and fees whether the checks or transfers were issued before or after May 14, 2003, provided that sufficient funds are available in the applicable accounts to cover the payments. (NRG Energy Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) OAKWOOD HOMES: Fitch Takes Rating Actions on 63 RMBS Classes ------------------------------------------------------------ Fitch Ratings downgrades 30 classes and affirms 33 classes of Oakwood Homes manufactured housing transactions. The negative rating actions are a result of the continued poor performance of the underlying collateral. Oakwood Homes, a major manufacturer and lender in the manufactured housing industry, filed for Chapter 11 bankruptcy protection on Nov. 15, 2002. Oakwood received approval from the bankruptcy court to continue to service its portfolio. The servicing fee has been moved to a senior position in the waterfall in accordance with the pooling and servicing agreement. Additionally, Oakwood was able to secure continued access to a $200 million loan purchase facility and $215 million in debtor in possession facilities, which have provided liquidity during the bankruptcy proceedings. Access to the debtor in possession facilities expires in October, 2003. Prior to the bankruptcy filing, the repossession rate had increased due to Oakwood's decision to discontinue its Loan Assumption Program. After the bankruptcy filing, when Oakwood ceased providing financing for repossession refinancing, loss severities on liquidations increased dramatically. The repossession inventory rate appears to have stabilized or declined from its peak for most vintages, but remains elevated. Fitch will continue to closely monitor developments related to the bankruptcy and the ongoing performance of the transactions. Series 1998-B: -- Classes A-3, A-4 and A-5 affirmed at 'AAA'; -- Class M-1 downgraded to 'BBB' from 'AA-'; -- Class M-2 downgraded to 'B' from 'BBB-'; -- Class B-1 downgraded to 'CCC' from 'B-'; -- Class B-2 remains at 'C'. Series 1998-C: -- Classes A-1, A-1A affirmed at 'AAA'; -- Class M-1 downgraded to 'BBB' from 'A+'; -- Class M-2 downgraded to 'B' from 'BBB-'; -- Class B-1 downgraded to 'C' from 'B-'; -- Class B-2 remains at 'C'. Series 1999-A: -- Classes A-2, A-3, A-4 and A-5 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA-'; -- Class M-2 downgraded to 'BB' from 'BBB'; -- Class B-1 downgraded to 'CCC' from 'B'; -- Class B-2 remains at 'C'. Series 1999-B: -- Classes A-2 and A-3 affirmed at 'AAA'; -- Class A-4 affirmed at 'AA+'; -- Class M-1 downgraded to 'BBB' from 'A'; -- Class M-2 downgraded to 'B' from 'BB'; -- Class B-1 downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1999-C: -- Class A-2 affirmed at 'AA+'; -- Class M-1 downgraded to 'BBB' from 'A+'; -- Class M-2 downgraded to 'B' from 'BB'; -- Class B-1 downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1999-E: -- Class A-1 affirmed at 'AA+'; -- Class M-1 downgraded to 'BBB' from 'A+'; -- Class M-2 downgraded to 'B' from 'BBB-'; -- Class B-1 downgraded to 'CCC' from 'B'; -- Class B-2 remains at 'C'. Series 2000-A: -- Classes A-2 and A-3 affirmed at 'AAA'; -- Class A-4 affirmed at 'AA+'; -- Class A-5 affirmed at 'AA'; -- Class M-1 downgraded to 'BBB' from 'A'; -- Class M-2 downgraded to 'B' from 'BBB-'; -- Class B-1 downgraded 'CCC' from 'B'. -- Class B-2 remains at 'C'. Series 2000-B: -- Class A-1 downgraded to 'BBB' from 'AA'; -- Class M downgraded to 'B' from 'BBB-'; -- Class B-1 downgraded to 'CCC' from 'B'; -- Class B-2 remains at 'C'. Series 2000-D: -- Classes A-2, A-3 and A-4 affirmed at 'AAA'; -- Class M-1 affirmed at 'BBB-'; -- Class M-2 affirmed at 'B-'; -- Class B-1 downgraded to 'C' from 'CCC'; -- Class B-2 downgraded to 'D' from 'C'. Series 2001-B: -- Class A-2 affirmed at 'AAA'; -- Class A-3, A-4 downgraded to 'AA' from 'AAA'; -- Class M-1 downgraded to 'A' from 'AA'; -- Class M-2 downgraded to 'B' from 'BBB'; -- Class B-1 downgraded to 'CCC' from 'BB'. OGLEBAY NORTON: S&P Keeps Watch after Deferring Interest Payment ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on minerals and aggregates supplier Oglebay Norton Co., to 'CC' from 'B-'. In addition, Standard & Poor's placed the rating on CreditWatch with developing implications. The Cleveland, Ohio-based company has about $435 million in debt outstanding. "The rating action reflects Oglebay's decision to defer its Aug. 1, 2003, interest payment on its 10% senior subordinated notes until amendments with senior lenders are reached," said Standard & Poor's credit analyst Dominick D'Ascoli. Oglebay is currently operating under covenant waivers from both its bank syndicate and senior secured note lenders. All covenant waivers expire on Aug. 15, 2003. The CreditWatch with developing implications implies that ratings could be raised, lowered, or affirmed. Ratings could be raised if Oglebay makes the $5 million subordinated note interest payment within a 30-day grace period, otherwise ratings would be lowered to 'D'. During the second quarter of 2003, Oglebay had been operating under a covenant waiver that expired on Jun. 15, 2003, and was subsequently extended until Aug. 15, 2003. The company is currently in negotiations with its senior lenders to amend these covenants. As of Aug. 1, 2003, Oglebay had sufficient funds to make its $5 million interest payment with approximately $10 million of borrowing availability under its revolving credit facility, but neglected to do so under management's own volition. Oglebay intends to make its interest payment by the end of August, but will only do so after a new covenant package is secured. Weak demand throughout most of Oglebay's end markets, together with rising healthcare, interest, and energy costs have significantly weakened Oglebay's financial position and liquidity. Moreover, Oglebay's debt levels are at an all time high of $462 million (adjusted for operating leases) while free cash flow generation remains negligible. Oglebay's access to capital markets remains limited amidst eroding liquidity. In order to maintain liquidity and reduce debt leverage, the company has been exploring strategic alternatives including potential asset divestitures. ORYX TECHNOLOGY: Completes $625K Common Stock Private Placement --------------------------------------------------------------- Oryx Technology Corporation (OTCBB: ORYX), a technology licensing, investment and management services company, announced the completion of a private placement of 625,000 shares of its common stock at a purchase price $1.00 per share with a group of investors, resulting in cash proceeds to Oryx of $625,000. The investors also received warrants to purchase an additional 156,250 shares of Oryx common stock at a purchase price of $3.00 per share. "I am very pleased we were able to secure this financing in a very difficult market. The proceeds of the financing will be used to support our investment activity with our portfolio company S2 Technologies and our SurgX activities. I believe both of these opportunities offer long term value to our stockholders, as S2 Technologies continues to capture new customers and sales of SurgX products from our licensees continue to increase," said Phil Micciche, Chairman and Chief Executive Officer of Oryx. The securities sold in this private placement have not been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from applicable registration requirements. Headquartered in San Jose, California, Oryx Technology Corporation is a technology licensing, investment and management service company with a proprietary portfolio of high technology products in surge protection. Oryx also provides management services to early-stage technology companies through its affiliate, Oryx Ventures, LLC. Oryx's common stock trades on the OTC Bulletin Board under the symbol ORYX. * * * In its Form 10-QSB for the quarter ended May 31, 2003, Oryx Technology reported: "The financial information for the periods ended May 31, 2003 and 2002 included herein is unaudited but includes all adjustments which, in the opinion of management of the Company, are necessary to present fairly the financial position of the Company and its subsidiaries at May 31, 2003, and the results of their operations and cash flows for the three month periods ended May 31, 2003 and 2002. "The unaudited consolidated financial statements include the accounts of Oryx Technology Corp. and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. "The Company does not have sufficient capital to meet its anticipated working capital requirements through fiscal year 2004. The Company must raise additional capital through public or private financings or other arrangements in order to have sufficient cash to continue its business operations. The Company is actively exploring financing opportunities however, there can be no assurance that it will be successful in raising any additional funding at all or in time to meet its financial needs or that any such funding would be on terms acceptable to the Company or in the best interest of its stockholders. If the Company cannot raise additional capital on or before August 2003 on acceptable terms, it will not be able to achieve its business objectives and continue as a going concern. As a result of these circumstances, the opinion of the Company's independent accountants with respect to our consolidated financial statements included in our Form 10-KSB for the year ended February 28, 2003 includes an explanatory paragraph indicating that these matters raise substantial doubt about the Company's ability to continue as a going concern." PACIFICARE HEALTH: Clarifies Effect of Potential Debt Conversion ---------------------------------------------------------------- PacifiCare Health Systems, Inc. (NYSE: PHS), provided clarification on the effect of the potential issuance of common stock in connection with its outstanding convertible debt. If the company's stock price remains above $46.20 for 20 of the last 30 trading days of the third quarter of 2003 this would trigger the conversion feature of the debt, and cause an additional 3.2 million shares of stock to be included in the calculation of outstanding shares on a diluted basis for the fourth quarter of 2003. As such, the estimated weighted-average number of shares used in the calculation of the current full-year EPS guidance of $6.45 to $6.55 would increase by approximately 800,000 shares. The net effect of this increase in WANS on full-year 2003 EPS guidance would be approximately $0.12, or approximately $0.47 on an annualized basis. PacifiCare Health Systems serves more than 3 million health plan members and approximately 9 million specialty plan members nationwide, and has annual revenues of about $11 billion. PacifiCare is celebrating its 25th anniversary as one of the nation's largest consumer health organizations, offering individuals, employers and Medicare beneficiaries a variety of consumer-driven health care and life insurance products. Specialty operations include behavioral health, dental and vision, and complete pharmacy and medical management through its wholly owned subsidiary, Prescription Solutions. More information on PacifiCare Health Systems is available at http://www.pacificare.com * * * As reported in Troubled Company Reporter's December 4, 2002 edition, Standard & Poor's assigned its 'B' rating to PacifiCare Health Systems Inc.'s $125 million 3% convertible subordinated debentures, which are due in 2032 and are being issued under SEC Rule 144A with registration rights. Standard & Poor's also said that it revised its outlook on PacifiCare to stable from negative. PETROLEUM GEO: Files Plan and Disclosure Statement in New York -------------------------------------------------------------- Petroleum Geo-Services ASA filed its Chapter 11 Plan Of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. Full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=030731012442 This Disclosure Statement describes how Claims against, and Equity Interests in, the Debtor will be treated under the Plan and the terms of the securities to be issued under the Plan. The Plan provides for the distribution and treatment of 8 classes of claims and equity interests: Class Description Treatment Recovery ----- ----------- --------- -------- 1 Secured Claims Unimpaired; either 100% a) leaves unaltered the legal, equitable, or contractual rights entitled to the Claimholder or b) leaves such Allowed Claims unimpaired pursuant to Section 1124(2) 2 Piority Non-Tax Unimpaired; will receive 100% Claims cash equal to the Claim 3 General Unimpaired; either 100% Unsecured a) leaves unaltered the Claims legal, equitable, or contractual rights entitled to the holder of the Claim or b) leaves such Allowed Claims unimpaired pursuant to Section 1124(2) 4 Bondholder Impaired; will receive a A: 61% Claims and Bank Pro Rata share to 73% Claims B: 64% 5 Junior Impaired; if Class 5 11% Subordinated votes to accept the Plan; Debentures will receive a Pro Rata Claims Share 6 Securities Law Impaired; will not receive N/A Claims or retain any distribution under the Plan 7 Ordinary Shares Impaired; if holders vote N/A vote to accept the Plan, will receive a pro rata share of the Rights 8 Equity Interests Impaired; will be deemed 0% cancelled and will not receive or retain any distribution under the Plan The Debtor believes that the Plan is fair and equitable in light of the relative rights of its creditors and shareholders and that it represents the best opportunity for the Debtor to emerge from this proceeding. The Plan represents an integrated set of compromises and agreements that are highly beneficial to the Estate and should strengthen the Company's ability to operate effectively post-confirmation. Petroleum Geo-Services ASA, headquartered in Lysaker, Norway is a technology-based service provider that assists oil and gas companies throughout the world. The Company filed for chapter 11 protection on July 29, 2003 (Bankr. S.D.N.Y. Case No. 03-14786). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher represents the Debtor in its restructuring efforts. As of May 31, 2003, the Debtor listed total assets of $3,686,621,000 and total debts of $2,444,341,000. PG&E NATIONAL: USGen Wants to Hire Ordinary Course Professionals ---------------------------------------------------------------- In the ordinary course of business, USGen turns to specialized or local professional assistance in connection with licensing matters, intellectual property, labor and employee issues, contract negotiation and litigation, state and local tax issues, real property matters, environmental matters, tort and personal injury matters, engineering services, and accounting services. To address these matters, USGen needs to retain attorneys and other professionals on an "as needed" basis so it may act in an efficient and timely manner. USGen often utilizes on a regular or semi-regular basis particular professionals in specific locations who are familiar with the legal and other issues that arise in its business. Due to the limited nature of work to be performed by these ordinary course professionals and the costs associated with the preparation of their employment and fee applications, USGen deems it impractical and burdensome if it submits individual applications for each of them. Since these professionals referred to by USGen assist in the day-to-day operation and routine maintenance of its business rather than the administration of the bankruptcy estate, they are not subject to the provisions of Section 327 of the Bankruptcy Code. Accordingly, with respect to ordinary course professionals already rendering services before the Petition Date, USGen asks the Court for authority to employ them if needed, on the same terms as those in effect prepetition, without the need to file individual retention applications. To the extent it is necessary to hire additional manpower, USGen proposes to serve notices on the U.S. Trustee and any Committees appointed in its cases. USGen proposes to pay the ordinary course professionals on a monthly basis, without formal application to the Court, 100% of the interim postpetition fees and disbursements included in an appropriate invoice that indicates in reasonable detail the nature of the services these professionals rendered. USGen will utilize this procedure provided the fees and disbursements to be paid to any ordinary course professional do not exceed $25,000 in any calendar month or $100,000 in any six-month period. Should it become apparent that any professional's fees would be more than this rate, USGen asks the Court for permission to pay these fees without further Court order. (PG&E National Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX: Asks Court to Approve Asset Purchase Pact with GGST -------------------------------------------------------------- Pillowtex's Board of Directors met on July 28, 2003, to approve the filing of the Chapter 11 petitions. At that meeting, Pillowtex Vice President, General Counsel and Secretary John F. Sterling reports, the Board also reviewed a proposed transaction to sell substantially all of its assets to GGST LLC. That purchase proposal includes designation rights with respect to Pillowtex's real estate and certain executory contracts and unexpired leases. GGST is a joint venture comprised of: * SB Capital Group, * Gibbs International, * Gordon Brothers Retail Partners and * Tiger Capital Group. GGST, subject to higher and better offers that may emerge in a competitive bidding process in the bankruptcy process, has offered $56,000,000 for Pillowtex's assets, excluding inventory and accounts receivable. GGST, in turn, plans to dispose of Pillowtex's assets and directs inquiries to: Steve Luquire and John Deem Luquire, George, Andrews, Inc. Telephone (704) 552 - 6565. Group 3 Design, a leading brand management firm, has been retained to manage the branded licensing activities of the acquired brands. Inquiries regarding the brands may be directed to mgleason@groupthree.com The Board concludes, the sale transaction is in the best interests of the Corporation and its creditors, and the Board has authorized and empowered Pillowtex's officers to pursue the transaction and obtain approval of its terms from the Bankruptcy Court. (Pillowtex Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Committee Asks Court to Reduce 20 Claims ------------------------------------------------------- The Official Committee of Unsecured Creditors of the Polaroid Corp. Debtors asks the Court to reduce the amounts of 29 Claims and reclassify seven claims. According to Joseph A. Malfitano, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, the Debtors have reviewed their books and records in an effort to reconcile the proofs of claim in these cases. The Debtors discovered that a portion of the Claims were not due and owing by the Debtors as of the Petition Date. There is also incomplete information provided by the Claims to support the amounts claimed. Among the claims to be reduced are: Claim Claim Modified No. Claimant Amount Amount ----- -------- ------ -------- 1166 Da-Lite Screen Co. Inc. $142,181 $133,411 322 Holland Mark Martin Corp. 1,100,000 772,230 80 IBM Corporation 90,107 8,163 309 Morrison & Foerster, LLP 99,344 74,731 1396 Nsight 59,947 40,485 1219 Perchards 17,000 8,500 2997 Plastics Color & Compounding Inc. 302,184 269,252 483 Porter Novelli Inc. 274,670 270,026 463 RDA Interactive LLC 123,086 103,086 1516 The Rogers Company 257,393 244,869 1136 Tocco Corporation 238,379 182,702 78 US Merchants/Merchants of Tennis 190,314 123,130 4349 Wirthlin Worldwide Corp. 24,359 20,300 2351 York International Corp. 23,917 17,554 Furthermore, the Debtors discovered that some Claims filed asserted a different priority status than it is entitled. Thus, these Claims must be reclassified: Claim Claimed Modified Claimant Number Status Status -------- ------ ------- -------- Grandwell 5306 Unsecured General Systems, Limited Priority Unsecured Susanne Merritt 2448 Unsecured General Priority Unsecured New York Stock 3020 Administrative General Exchange, Inc. Unsecured NY- Dept. of Taxation 7131 Administrative General and Finance Unsecured Opsitech A-15,815 5190 Secured General Unsecured Siemens Business 4195 Unsecured General Services, Inc. Priority Unsecured William M. Mercer Inc. 4802 Unsecured General Priority Unsecured Mr. Malfitano contends that failure to reduce, reclassify or expunge the Claims as requested will result in the relevant creditors receiving an unwarranted recovery against the Estates, to the detriment of other similarly-situated creditors. (Polaroid Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) REMINGTON PRODUCTS: Reports Improved Second Quarter 2003 Results ---------------------------------------------------------------- Remington Products Company, L.L.C. announced that net sales for the second quarter of 2003 were $71.3 million, an increase of $1.3 million from last year's second quarter. Operating income was $8.7 million, compared to $4.9 million in last year's quarter. The higher net sales in the second quarter of 2003 reflect increased sales in the Company's International segment primarily as a result of favorable foreign exchange and strong sales of shaver & grooming products in North America. These gains were partially offset by a decline in sales of haircare and wellness products in North America and lower sales in the Company's U.S. Service Stores segment. Net sales in North America decreased 3% or $1.3 million. An increase in North American sales of shaver and grooming products was offset by lower wellness sales resulting from the decision to de-emphasize this product line and lower haircare sales. The International segment reported a $4.1 million or 25% increase in net sales which was driven primarily by the positive impact of foreign currency. Also impacting this increase was higher sales of shaver, grooming and haircare products. Net sales in the Company's U.S. Service Stores segment declined $1.5 million or 21% due to the fewer stores operating compared to the prior year's second quarter, and a decrease in same store sales of 12.5%. The $3.8 million increase in operating income for the quarter was due primarily to the higher gross profit margin, which was 44.2% compared to 40.4% last year. This margin increase was the result of the combination of a better sales mix toward shaver and grooming products and continued product cost savings, including the positive impact of foreign currency on U.S. dollar denominated inventory purchases in the International segment. Also contributing to the improved operating income were the higher sales and lower operating expenses, particularly distribution expenses. Net interest expense was $5.6 million in the second quarter of 2003, compared to $5.8 million in last year's quarter. The decrease was due primarily to lower average borrowings during the period. Other income decreased to $0.3 million in the second quarter compared with $0.5 million in the same period of the prior year due primarily to lower currency gains on U.S. dollar denominated obligations in the Company's International segment. As a result of higher pretax income generated within the International segment the provision for income taxes was $0.5 million in the second quarter of 2003 compared to a benefit in the prior year of $0.2 million. The Company's net income for the second quarter of 2003 was $2.9 million compared with a $0.2 million loss in the second quarter of 2002. Net sales for the six months ended June 30, 2003 decreased 4% to $119.0 million compared with $123.8 million in the first six months of 2002. The decrease was the result of lower sales in the North American and the U.S. Services Stores operating segments, while sales in the Company's International segment increased. Operating income for the six month period was $10.0 million compared to $6.6 million in the same period of 2002. This increase was the result of a 400 basis point increase in the gross profit margin to 44.4% on a more favorable sales mix and the impact of a weaker U.S. dollar, as well as slightly lower operating expenses. Net interest expense decreased by $0.7 million to $11.2 million for the period as a result of lower average borrowings. Other income increased by $0.3 million for the first six months of 2003 compared to the same period of 2002 as a result of an increase in currency gains within the International segment. The Company had a net loss of $0.9 million for the first six months of 2003 compared with a net loss of $4.3 million in the first six months of 2002. As of June 30, 2003 debt was $180.5 million, compared to $203.1 million as of June 30, 2002. Additionally, cash increased to $24.8 million compared to $3.7 in the prior year. This combined improvement of $43.7 million was the result of improvements in earnings and working capital management. Neil DeFeo, Remington's Chairman, Chief Executive Officer and President, commented: "We are pleased to report higher sales and record high profits for the second quarter of 2003. Our profits for the quarter and six months to date reflect fundamental improvements within the Company. Specifically, our focus on our core products has allowed us to generate significantly higher margins. Additionally, this focus has helped us control our working capital resulting in a $22.6 million decline in total borrowings and an increase in cash of $21.1 million compared to June 2002." Remington Products Company, L.L.C. -- whose June 30, 2003 balance sheet shows a net capital deficit of about $26 million -- is a leading consumer products company focusing on the development and marketing of personal care products. The Company designs and distributes electric shavers and accessories, grooming products, hair care appliances, and other small electrical consumer appliances. The Company's headquarters are located at 60 Main Street, Bridgeport, Connecticut. RENT-A-CENTER: Repurchases 440,000 Shares of Common Stock --------------------------------------------------------- Rent-A-Center, Inc. (Nasdaq/NNM:RCII), the leading rent-to-own operator in the U.S., has agreed to repurchase an aggregate of 440,000 shares of its common stock at $73 per share: * 200,000 of which will be repurchased from Mark E. Speese, the Company's Chairman of the Board and Chief Executive Officer, * 200,000 of which will be repurchased from Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P., and * 40,000 of which will be repurchased from Mitchell E. Fadel, the Company's President and Chief Operating Officer. In connection with the recent refinancing of the Company's debt and equity structure, the Company effected the repurchase of 1,769,960 shares of its common stock pursuant to a tender offer for up to 2,200,000 shares of common stock. The Company also recently repurchased 774,547 shares of its common stock pursuant to the previously announced agreement with the Apollo entities. The tender offer and the agreement with the Apollo entities resulted in the repurchase of a total of 2,544,507 shares of the Company's common stock at $73 per share. "The repurchases announced [Fri]day are consistent with our stated intention to repurchase a total of 3,200,000 shares of our common stock," commented Robert D. Davis, the Company's Chief Financial Officer. "These purchases will bring the total shares repurchased to 2,984,507 shares, still short of our 3,200,000 goal. As such, we intend to continue repurchasing shares of our common stock in the open market or in privately negotiated transactions," Davis continued, "to the extent we have available cash on hand which is not needed for store openings, acquisitions or other corporate purposes." The repurchase transactions were made pursuant to the Company's stock repurchase program. Following the closing of these repurchases, approximately $23.6 million will be available under the stock repurchase program for additional open market and privately negotiated repurchases of common stock. Rent-A-Center, Inc. (S&P/BB-/Positive), headquartered in Plano, Texas currently operates 2579 company-owned stores nationwide and in Puerto Rico. The stores generally offer high-quality, durable goods such as home electronics, appliances, computers, and furniture and accessories to consumers under flexible rental purchase agreements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed-upon rental period. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchisor of 321 rent-to-own stores, 309 of which operate under the trade name of "ColorTyme," and the remaining 12 of which operate under the "Rent-A-Center" name. SAFETY-KLEEN: IRS Wants Payment of $7.4M Corporate Income Taxes --------------------------------------------------------------- The Internal Revenue Service wants payment from Safety-Kleen Systems, Inc., of $4,711,314.54 for 1992 corporate income taxes plus $203,555.52 in interest through September 1, 2003. E. Hennessey, an IRS Insolvency Manager, describes this $4,914,870.08 demand as a "protective filing." The IRS puts a similar Motion and Request before the Bankruptcy Court, described as another protective filing, demanding $2,469,334.05 for 1992 corporate income taxes owed by Safety-Kleen Corporation plus $106,689.25 in interest through September 1, 2003, for a total of $2,576,023.30. These claims total $7,490,893.38. The Government doesn't ask for payment of any penalties in either claim. (Safety-Kleen Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 609/392- 0900) SAGENT TECHNOLOGY: Group 1 Extends Existing Loan Until Sept. 30 --------------------------------------------------------------- Sagent (Nasdaq:SGNT.OB) has entered into agreements with Group 1 Software Inc. to (1) extend the due date for the existing loans from Group 1 totaling $7 million in principal from July 31, 2003 to September 30, 2003, (2) obtain up to $2 million in additional loans from Group 1 on the same terms as the existing loans and (3) extend the outside date for closing the sale of Sagent's assets to Group 1 until October 30, 2003. Sagent plans to schedule a new stockholders meeting for late September for the stockholders to consider approval of the sale of assets to Group 1. Additionally, Group 1 and Sagent have decided to expand their commercial relationship beyond the original cooperative marketing agreement of May 2003, to cross-license to each other certain code bases which will permit each of the companies to get to market faster with advanced functionality embedded in their respective products. Group 1 Software Inc. will also become a worldwide reseller for all of Sagent's products. Commenting on Friday's announcement, Andre M. Boisvert, Sagent's Chairman & CEO, said, "This agreement is a clear and mutual endorsement by both Group 1 and Sagent that our combined technologies and people would and will better serve our respective customers and partners." Boisvert went on to add, "it was unfortunate that a lack of a quorum at our special stockholders' meeting earlier this week prevented us from consummating the sale of our operational assets to Group 1 but we are confident that by resetting the date of record, in order to better reflect the interest of our current stockholders, that next month's special meeting of stockholders will have a much different level of stockholder participation." Sagent will be filing a proxy statement and other relevant documents concerning the transaction with the Securities and Exchange Commission (SEC). Stockholders of Sagent are urged to read the proxy statement and other relevant documents filed with the SEC because they will contain important information. Investors and security holders can obtain free copies of the proxy statement and other relevant documents by contacting Sagent Technology, Inc., 800 West El Camino Real Suite 300, Mountain View, CA 94040 or at Sagent's Web site at http://www.sagent.com In addition, documents filed with the SEC by Sagent are available free of charge at the SEC's Web site at http://www.sec.gov Sagent Technology, Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $8 million, while its total shareholders' equity dwindled to about $1.7 million from $6.3 million recorded three months ago. SAMUELS JEWELERS: Files for Chapter 11 Reorganization in Del. ------------------------------------------------------------- Samuels Jewelers Inc., (Nasdaq:SMJW) has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the District of Delaware to reorganize the Company and restructure its debt as the next step in a successful turnaround effort begun over two years ago. Samuels is the eighth-largest retail jewelry chain in America. All Operations to Continue as Usual with No Interruption in Services The Company intends to continue to conduct business as usual. Customers nationwide will continue to receive superior service without interruption. Post-petition obligations to vendors, employees and others will be honored and satisfied in the normal course of business. Samuels intends to use the chapter 11 process to reorganize approximately $78 million in debt to greatly reduce the burden of the Company's debts incurred over the last five years and to position Samuels for continued growth and increased profitability. The Company's intention is to convert certain debt to equity in order to clean up its balance sheet thus positioning Samuels as a stronger Company. Randy McCullough, who became President and CEO of Samuels in March 1998, said, "This is a positive step that continues to build on the successful turnaround effort we began over two years ago. Our efforts have already resulted in greatly improved customer satisfaction and retention rates, improved associate productivity and improved EBITDA performance. When we emerge from these proceedings with a new capital structure combined with the commitment of our management team and employees to execute our strategy, we believe we will finally be able to unlock Samuels' tremendous potential." Mr. McCullough continued, "This is an industry with remarkable growth opportunities. At the same time, the debt burden incurred in the past has seriously limited Samuels' ability to move forward to capture increased market share in our existing stores. After careful consideration of the various strategic alternatives available to the Company, we have determined that the decision to pursue restructuring of our debt through Chapter 11 is the optimum solution, given current economic conditions and the current state of the equity and debt markets. Restructuring our debt burden will provide: -- The resources to continue to improve market share and customer count; -- The means to further enhance our product offering to our customers; and -- Access to the operating capital to complete all phases of the turnaround." Positioned to Take Advantage of Sales Growth Opportunities in the Jewelry Industry Mr. McCullough noted that, despite the current pressure on sales in the jewelry sector, the demand for diamonds is expected to continue increasing in 2003 and subsequent years. The jewelry industry is poised for high growth as demand increases over the next several years. "Samuels is operationally and strategically positioned to take full advantage of this business opportunity," Mr. McCullough said, "with a strong brand, knowledgeable and motivated employees and a seasoned, experienced management team committed to staying with the Company through this process focused on executing our strategic plan. We believe our plan will provide for a significantly better capitalized Company that will allow us to further improve our customer service, product offering, store contribution and to systematically grow our business." Senior Management Committed to Building on Progress Senior management, including Mr. McCullough, is committed to building on the progress the Company has achieved thus far and will remain in place to lead Samuels through the Chapter 11 proceedings and beyond. They have made substantial progress and will continue with efforts to: streamline operations, continue to institute strict financial controls, improve the Company's revenue and provide the superior customer service that has become a hallmark of the Company. Mr. McCullough concluded, "I look forward to the coming months, working closely with the management team and our talented and dedicated employees to realize the goals we have set for Samuels and for ourselves. In addition, I will be working with our vendor partners, with whom we have strong relationships, to further improve on our merchandise assortments in order to maximize the return on our mutual investment in Samuels." Background on Chapter 11 Chapter 11 of the U.S. Bankruptcy Code allows a Company, like Samuels, to continue to operate its business and manage its assets in the ordinary course of business. Congress enacted Chapter 11 to avoid the negative effects of liquidation proceedings and to enable a business to preserve its going concern value and its operations, as well as to provide its employees with jobs and to satisfy creditor claims based upon the value of the reorganized Company. Samuels Jewelers Inc., operates a national chain of specialty retail jewelry stores located in regional shopping malls, power centers, strip centers and stand-alone stores. The Company sells fine jewelry items in a wide range of styles and prices, with a principal emphasis on diamond and gemstone jewelry. As of August 4, 2003, the Company operates 113 retail jewelry stores in 19 states. The Company also sells jewelry online at http://www.SamuelsJewelers.com The Company currently operates stores under the following four trade names: "Samuels," "C&H Rauch," "Schubach" and "Samuels Diamonds." Measured by the number of retail locations, Samuels is the eighth-largest specialty retailer of fine jewelry in the country. SAMUELS JEWELERS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Samuels Jewelers, Inc. 2914 Montopolis Drive Suite 200 Austin, Texas 78741 Bankruptcy Case No.: 03-12399 Type of Business: The debtor operates a national chain of specialty retail jewelry stores located in regional shopping malls, power centers, strip centers and stand-alone stores. Chapter 11 Petition Date: August 4, 2003 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Scott D. Cousins, Esq. William E. Chipman Jr., Jr. Victoria W. Counihan, Esq. Greenberg Traurig LLP Brandywine Bldg 1000 West St. Suite 1540 Wilmington, DE 19801 Tel: 302 661-7000 Fax: 302-661-7360 Total Assets: $42,500,000 Total Debts: $78,400,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Michael Werdiger Inc. Trade $1,193,683 Attn: Richard Werdiger 35 West 45th Street New York, NY 10036 Tel: 212-869-5160 Fax: 212-391-5471 M. Fabrikant & Sons Inc. Trade $884,302 Attn: Mike Shaffet One Rockefeller Plaza New York, NY 10020 Tel: 212-554-9730 Fax: 212-338-1099 Amikam Trade $611,210 Attn: Samir Mehta 592 Fifth Avenue 3rd Floor New York, NY 10036 Tel: 212-869-1889 Fax: 212-764-7593 Shane of New York Inc. Trade $569,129 Attn: Sahne Manilial 1212 Avenue of the Americas Suite 1401 New York, NY 10036 Tel: 212-302-4502 Fax: 212-921-8767 Seiko Time Trade $450,465 Attn: Kevin Green PO Box 100167 Atlanta, GA 100167 Tel: 800-332-8463 Fax: 201-512-3309 S A Kitsinian, Inc. Trade $319,225 Attn: Sarkis Kitsinian 6743 Odessa Avenue Van Nuys, CA 91406 Tel: 800-821-2351 Fax: 818-988-9592 Star Ring Inc. Trade $294,505 Attn: Mitchell Reiffin 9256 Owensmouth Avenue Chatsworth, CA 91311 Tel: 818-773-4900 Fax: 818-773-4910 Europa Diamond Syndicate Trade $224,035 Basic Programs Ltd. Trade $219,639 Frederick Goldman Inc. Trade $169,776 R.P. Diamond & Gold Inc. Trade $138,995 S&S Jewelry Corp. Trade $131,304 Ambras Fine Jewelry Corp. Trade $118,851 CJC Holdings Inc. Trade $118,169 MGM Jewelry Mfg. Co. Inc. Trade $109,581 Merit Diamond Corp. Trade $101,627 Regent Fine Jewelry Trade $97,293 Delaware Secretary of State Trade $90,000 Bulova Watch Corp. Trade $79,562 De Hantsetter & Verhaere Trade $79,063 SEITEL INC: Brings-In Jefferies & Company as Investment Banker -------------------------------------------------------------- Seitel, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for approval to hire Jefferies & Company, Inc., as their Investment Bankers as necessary during the course of the companies' chapter 11 restructuring. The Debtors expect Jefferies & Company to: a) become familiar, to the extent Jefferies deems appropriate, with and analyze the business, operations, properties, financial condition and prospects of the Debtors; b) assist and advise the Debtors in implementing a plan of reorganization on behalf of the Debtors; c) assist and advise the Debtors in evaluations and analyzing a Reorganization including the value of the securities, if any, that may be issued to any creditors or equity holders under any reorganization plan; and d) render such other financial advisory services as may from time to time be agreed upon by the Debtors and Jefferies. Jefferies' compensation will be: a) a $500,000 Financial Advisory Fee; b) a Placement Fee equal to the aggregate of (i) 3.5% of the aggregate principal amount of any new debt Securities issued, (ii) 5.0% of the aggregate gross proceeds from the private sale of any equity Securities to all other purchasers, plus (iii) 7.0% of the aggregate gross proceeds from the public offering and sale of any equity Securities; c) an M&A Fee equal to 1.25% of the total Sale Value; d) if a consummated plan provides for Ranch Capital LLC or Berkshire Hathaway Inc. or any partner or co-investor, the Company will pay Jefferies $2,125,000; and e) in the event the Debtors request a Fairness Opinion in connection with a Transaction, then the Debtors will pay Jefferies a nonrefundable $100,000 fee. Seitel, Inc., headquartered in Houston, Texas, markets its proprietary seismic information/technology to more than 400 petroleum companies, licensing data from its library and creating new seismic surveys under multi-client projects. The Company filed for chapter 11 protection on July 21, 2003 (Bankr. Del. Case No. 03-12227). Scott D. Cousins, Esq., at Greenberg Traurig LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $379,406,000 in total assets and $345,525,000 in total debts. SHERIDAN GROUP: S&P Rates $100 Million Senior Secured Notes at B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to the Sheridan Group Inc.'s proposed $100 million senior secured notes due 2011. Proceeds from the proposed note issue, together with $44 million equity investment by Bruckmann, Rosser, Sherrill & Co., and Jefferies Capital Partners, will be used to complete the acquisition of the Sheridan Group by Sheridan Acquisition (upon consummation of the transaction, Sheridan Acquisition will merge into the Sheridan Group as the surviving entity) and for working capital and other related expenses. In addition, a 'B+' corporate credit rating was assigned to the company. The outlook is stable. Hunt Valley, Maryland-based Sheridan provides a full range of printing, publishing, and other support services. Pro forma debt outstanding at June 30, 2003, was approximately $101 million. "The ratings on the Sheridan Group reflect the company's small cash flow base, expected ongoing growth strategy, and competitive market conditions in the print industry. These factors are tempered by the company's niche position in the scientific, technical and medical journal segment, diversified customer base, and long-term customer relationships and contracts," said Standard & Poor's credit analyst Michael Scerbo. The company serves more than 3,000 customers including publishers, associations, and university presses. Sheridan has six fully owned specialty printing subsidiaries, concentrating in domestic STM journals, short-run books, specialty magazines, and article reprints. SK GLOBAL AMERICA: Schedules & Statement Might Appear on August 20 ------------------------------------------------------------------ SK Global asked the U.S. Bankruptcy Court for the Southern District of New York for an extension of time to prepare and deliver its Schedules and Statements until October 4, 2003. That's a bit too long at this early juncture, Judge Blackshear says. With that in mind, Judge Blackshear extends the deadline for SK Global America Inc., to file its Schedules of Assets and Liabilities and Statement of Financial Affairs through August 20, 2003, without prejudice to the Debtor's right to request further extensions as necessary. (SK Global Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) SMITHWAY MOTOR: Obtains Waivers for Loan Covenant Violations ------------------------------------------------------------ Smithway Motor Xpress Corp. (Nasdaq: SMXC) announced financial and operating results for the second quarter and six months ended June 30, 2003. For the quarter, operating revenue decreased approximately 6.6% to $42.2 million from $45.2 million for the corresponding quarter in 2002. Smithway's net loss was $458,000, compared with net loss of $1.2 million for the same quarter in 2002. For the first six months in 2003, operating revenue decreased approximately 5.0% to $82.1 million from $86.5 million for the first six months in 2002. Smithway's net loss was $2.0 million, compared with net loss of $3.2 million for the first six months in 2002. The improvement in performance is primarily attributable to decreased expenses resulting from ongoing cost containment efforts. On a cost per mile basis, comparing second quarter 2003 to second quarter 2002 non-driver wages decreased 20.6%, fringe benefits decreased 12.0%, fuel expense, net of fuel surcharge revenue, decreased 7.9% and general and administrative costs decreased 20.7%. Following the end of the quarter, five operating terminals have been consolidated into existing locations and two maintenance facilities have been closed. These measures are a part of the Company's initiatives to return to profitability. Following the end of the quarter the Company obtained waivers for loan covenant violations at June 30, 2003. Additionally, the primary lender extended the due date of the credit agreement to July 1, 2004. At June 30, 2003, Smithway Motor Xpress' balance sheet shows that its total current liabilities outweighed its total current assets by about $4 million. In other matters, the Company has scheduled its annual shareholders meeting for Friday, October 24, 2003, at 10:00 a.m. in Fort Dodge, Iowa. Smithway is a truckload carrier that hauls diversified freight nationwide, concentrating primarily on the flatbed segment of the truckload market. Its Class A Common Stock is traded on the Nasdaq National Market under the symbol "SMXC." SOLUTIA: Fitch Lowers Facility & Senior Debt Ratings to B-/CCC -------------------------------------------------------------- Fitch Ratings has lowered Solutia Inc.'s senior secured bank facility (revolver) rating to 'B-' from 'BB-' and lowered the senior unsecured debt and senior secured notes rating to 'CCC' from 'B'. The ratings have been placed on Rating Watch Negative. The ratings downgrade is based on a number of factors including near-term liquidity issues, as well as continued weak operating performance. Weak earnings and cash flow generation has resulted in the deterioration of the company's overall credit quality. The Rating Watch Negative status reflects a number of near term issues. These include the ability of the firm to successfully obtain additional bank covenant waivers, current renegotiation of credit facilities which expire in August 2004, as well as the result of Solutia's decisions after looking at all available alternatives regarding liquidity and legacy issues. Additionally, the risk related to the polychlorinated biphenyls contamination litigation in Anniston, Alabama may continue to hinder Solutia's refinancing efforts. Solutia is a specialty chemical company with $2.2 billion in sales in 2002. This diverse company produces films, resins, and nylon plastics and fibers for domestic and international markets. Some of Solutia's products are name brands, such as Saflex plastic interlayer for windows and Wear-Dated carpet fibers. End-use markets for Solutia's products include construction and home furnishings, automotive, aviation/transportation, electronics, and pharmaceuticals. TRICO MARINE: Inks Pact to Sell Brazilian Asset to Up Liquidity --------------------------------------------------------------- Trico Marine Services, Inc. (Nasdaq: TMAR) has entered into an agreement to sell its interest in a newbuild construction project for an anchor handling, towing and supply vessel in Brazil in furtherance of the Company's plan to enhance liquidity. The Company has agreed to sell its interest in a construction contract for an AHTS being built in Brazil and a contract with Petrobras to charter the vessel once completed. Nordea Securities acted as a consultant for the transaction. The Company anticipates recovering substantially all of its costs related to the project. The purchase agreement is subject to customary closing conditions including final approval from Petrobras. As part of this liquidity enhancing plan, the Company also announced the refinancing of its outstanding NOK term loan. The new three-year NOK 150 million term loan facility contains identical covenants to the existing NOK revolving credit facility. Proceeds from the loan were used to paydown an outstanding NOK 40 million term loan and repay amounts outstanding under the Company's NOK 760 million revolving credit facility and provide additional borrowing capacity. Additional information about the Company's plans to improve its liquidity are discussed in the Company's Form 10-Q for the quarter ended March 31, 2003, previously filed with the Securities and Exchange Commission. Trico Marine provides a broad range of marine support services to the oil and gas industry, primarily in the Gulf of Mexico, the North Sea, Latin America, and West Africa. The services provided by the Company's diversified fleet of vessels include the marine transportation of drilling materials, supplies and crews, and support for the construction, installation, maintenance and removal of offshore facilities. Trico has principal offices in Houma, Louisiana, and Houston, Texas. As reported in Troubled Company Reporter's June 18, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on petroleum industry services provider Trico Marine Services Inc., to 'B' from 'B+' and senior unsecured rating to 'CCC+' from 'B'. The ratings downgrade follows a review of Trico's current and expected liquidity and financial performance. The outlook remains negative. As of March 31, 2003, Houma, Louisiana-based Trico had roughly $382 million worth of debt outstanding. UAL CORPORATION: Second Quarter Loss Doubles to $623 Million ------------------------------------------------------------ UAL Corporation (OTC Bulletin Board: UALAQ), the holding company whose primary subsidiary is United Airlines, reported its second- quarter financial results and released its Monthly Operating Report for June. UAL's second-quarter loss was $623 million, or a loss per basic share of $6.26, which includes a net $147 million in special items described in the notes to the financial tables. This performance compares to a second-quarter 2002 tax-effected loss of $341 million, or a loss per basic share of $6.08, including special items. Excluding $300 million received from the government in compensation for losses related to the Iraq war and $447 million in special items, UAL's loss for the second quarter totaled $476 million, or a loss per basic share of $4.79. "The second quarter began as a severe challenge for United and the industry as a whole, but we saw a particularly positive trend as we moved through the period," said Glenn Tilton, chairman, president and chief executive officer. "We steadily improved revenue and realized a 4% improvement in domestic passenger unit revenue for June over the same month last year. We also achieved a large decrease in our labor and other costs as we continue to implement our various cost-reduction initiatives," continued Tilton. "Despite the continued difficult economic environment, the improvement in both revenue and cost is encouraging." The Company recorded positive operating cash flow of almost $2 million per day in the quarter, excluding the $300 million in government reimbursement and a $365 million income tax refund the Company received during the quarter. The Company's cash position increased to $2.3 billion, including $684 million in restricted cash. In June, for the fifth straight month, United satisfied the covenants of its debtor-in-possession financing, which required the Company to achieve a cumulative EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) loss of no more than $585 million between December 2002 and June 2003. Operational Performance As the Company continued to reduce unit costs during the quarter, United employees delivered strong operational performance, including: * On-time departure performance in the quarter was the best in United's history at 76.9 %. * Arrivals within 14 minutes of schedule was 86.1% for the quarter, another all-time record for United, compared to 82.3% for the same period last year. * For January through May 2003, United is #1 in arrivals within 14 minutes of schedule among the six major network carriers, according to the U.S. Department of Transportation. * For January through May 2003, United had the second fewest passenger complaints among the six major network carriers, also according to US DOT rankings. * For the first six months of 2003, United recorded its highest customer satisfaction since the Company began studying a set of key customer perception and service metrics in 1996. Performance in all the metrics on which the survey is based, including flight attendant service, check-in efficiency and on-time performance among others, were well above last year's levels. During the quarter, United made significant progress enhancing its customer value proposition and improving revenue performance, including: * Fully restoring United's transatlantic schedule by June 2, 2003. * Announcing the phased restoration of United's Pacific schedules to be completed by September 3, 2003. * Adding 160 domestic flights to accommodate current strong levels of demand. * Executing agreements to expand United's regional jet network and significantly reducing turboprop operations. * Continuing efforts to further improve United's Mileage Plus program, already recognized as the industry's leading frequent flyer program, with well-received marketing initiatives targeting our core business customers, including "Fly Three, Fly Free" and "Travel the World for Free" incentives. * Introducing Verizon JetConnect onboard e-mail access, online check-in, Easy Update -- an industry-leading wireless flight information notification service -- and a new, more customer-friendly boarding process. Financial Results UAL's second quarter 2003 operating revenues were $3.1 billion, down 18% compared to second quarter 2002. Passenger revenue for the quarter was down 18% from last year on a 14% decrease in capacity. System passenger unit revenue was 4% lower on a 7% yield decline and a 2.6 point increase in load factor. Traffic decreased 11% year-over-year. United's load factor for the quarter was 77%. United's operating expenses for the quarter were $3.5 billion, down 17% from the same quarter last year. While the Company's unit cost (operating expenses per available seat mile) decreased 3%, excluding its fuel subsidiary and special items, unit cost decreased 6% year-over-year. This unit cost improvement was among the best in the industry. Salaries and related costs decreased $543 million or 30% for the quarter. This amount reflects the dramatic reduction in wages, changes in benefits and changes in work rules and productivity improvement associated with United's new collective bargaining agreements, including a benefit of $102 million for the reversal of accruals as a result of contract renegotiations. While capacity was down for the quarter, productivity was up 9% for the quarter year-over-year and in June improved 12% over June 2002. Aircraft rent was down $73 million or 35% compared to second quarter 2002. United is still in negotiations with respect to a large number of aircraft in its fleet and further savings are expected to be realized as these negotiations are finalized over the next several months. The Company had an effective tax rate of zero for the second quarter, which makes the Company's pre-tax loss the same as the Company's net loss. In the second quarter of 2002, the Company recorded a credit for income taxes of $191 million. June Monthly Operating Report On Friday, UAL filed, with the United States Bankruptcy Court, its Monthly Operating Report for June. The Company maintained a strong cash balance in June, and for the fifth straight month, met requirements of its DIP financing agreements. United began June with a cash balance of approximately $2.2 billion, which included $659 million in restricted cash (filing entities only). It ended the month with a cash balance of approximately $2.3 billion, which included $674 million in restricted cash (filing entities only). The Company's cash balance increased approximately $92 million for the month, or approximately $3 million per day. The Company said it also expects to meet the EBITDAR requirements for its DIP agreements in July. The Company said that it had earnings from operations of $20 million and a net loss of $310 million for June 2003, which includes $334 million in reorganization expense. News releases and other information about United Airlines can be found at the Company's Web site at http://www.united.com UICI: AMS Unit Obtains Waiver of Defaults Under Financing Docs. --------------------------------------------------------------- UICI (NYSE: UCI) reported operating results at its Self-Employed Agency Division, Group Division, Life Division and Other Key Factors business segments for the three and six months ended June 30, 2003. Full consolidated results of operations and balance sheet data for the Company have been withheld pending further investigation by the Audit Committee of the Company's Board of Directors into previously disclosed negative developments at the Company's Academic Management Services Corp. subsidiary. UICI's results of operations at its Self-Employed Agency Division, Group Insurance Division, Life Division and Other Key Factors business segments were particularly impacted by the following factors: Self Employed Agency Division The Company's Self Employed Agency Division enjoyed significant continued period-over-period growth in both revenue and operating income. Operating income increased to $24.5 million and $48.3 million in the three and six-month periods ended June 30, 2003, respectively, from $19.7 million and $35.4 million in the corresponding 2002 periods. Earned premium revenue increased from $222.4 million in the second quarter of 2002 to $297.8 million in the second quarter of 2003 and from $418.5 million in the first six months of 2002 to $579.2 million in the first six months of 2003. For the six months ended June 30, 2003, submitted annualized premium volume increased to $462.8 million from $457.8 million in the corresponding 2002 period. Submitted annualized premium volume decreased to $215.5 million in the second quarter of 2003 from $230.6 million in the corresponding period of the prior year. Submitted annualized premium volume in any period is the aggregate annualized premium amount associated with health insurance applications submitted by the Company's agents for underwriting by the Company. Operating income as a percentage of earned premium revenue in the three and six months ended June 30, 2003 was 8.2% and 8.3%, respectively, compared to 8.8% and 8.5% in each of the corresponding periods of the prior year. This decrease in operating margin was attributable primarily to the higher commission expense associated with the increase in first year earned premium revenue. The SEA Division's results for the first six months of 2003 included pre-tax income in the amount of $4.8 million associated with the release of reserves resulting from an adjustment to the Company's reserve methodology and certain changes in accounting estimates. Group Insurance Division The Company's Group Insurance Division (consisting of the Company's Student Insurance and STAR HRG business units) reported operating income of $3.0 million and $8.1 million in the three and six months ended June 30, 2003, respectively, compared to operating income of $3.3 million and $5.1 million in the corresponding 2002 periods. The increase in operating income for the six month 2003 period was primarily attributable to the incremental operating income associated with the Company's STAR HRG unit (which was acquired by the Company on February 28, 2002) and an increase in earned premium revenue and a moderate decrease in administrative expenses as a percentage of earned premium at the Company's Student Insurance Division. These favorable factors were offset somewhat by a slight increase in the loss ratio at the Group Insurance Division. Life Insurance Division For the three and six months ended June 30, 2003, the Company's Life Insurance Division reported operating losses of $4.7 million and $2.9 million, respectively, compared to operating income of $2.8 million and $5.4 million in the corresponding 2002 periods. The decrease in the three months ended June 30, 2003 was primarily attributable to a previously announced charge associated with the final resolution of litigation arising out of the close down in 2001 of the Company's former workers compensation business and costs associated with the closedown of the Company's College Fund Life Division operations. Other Key Factors In the three and six months ended June 30, 2003, the Company's Other Key Factors segment reported operating losses of $2.8 million and $1.9 million, respectively, compared to operating losses of $10.5 million and $15.4 million in the corresponding periods of 2002. The decrease in losses in the Other Key Factors category in the first six months of 2003 as compared to 2002 was primarily attributable to significant decreases in variable stock- based compensation expense in 2003 and $5.1 million of realized losses taken in the second quarter of 2002. The continued lower prevailing interest rate environment in 2003 negatively affected investment income attributable to equity determined after allocation to operating segment portfolios. Investment income after allocation to the operating segments decreased by $1.4 million in the first quarter of 2003 and by $2.2 million in the first six months of 2003, in each case as compared to such income in the corresponding 2002 periods. In connection with the Company's stock accumulation plans established for the benefit of the independent insurance agents and independent sales representatives associated with UGA -- Association Field Services, New United Agency and Cornerstone America, the Company has recognized and will continue to recognize non-cash variable stock-based compensation benefit (expense) in amounts that depend and fluctuate based upon the market performance of the Company's common stock. In the three and six months ended June 30, 2003, the Company recognized non-cash variable stock-based benefit expense in the amount of $1.7 million and $452,000, respectively, associated with its agent stock accumulation plans. During the three and six months ended June 30, 2002, the Company recognized non-cash variable stock-based expense in the amount of $6.8 million and $11.3 million, respectively, of which $3.9 million and $5.7 million, respectively, was attributable to the Company's stock accumulation plans established for the benefit of its independent agents, $2.2 million and $4.1 million, respectively, was attributable to the allocation of the $5.25 UICI shares under the UICI Employee Stock Ownership and Savings Plan and $700,000 and $1.5 million, respectively, was attributable to other stock-based compensation plans. As of December 31, 2002, all $5.25 UICI shares had been allocated to participants' accounts under UICI's Employee Stock Ownership and Savings Plan. Accordingly, in all periods commencing after December 31, 2002 the Company will not recognize additional variable stock-based compensation associated with the ESOP feature of the UICI Employee Stock Ownership and Savings Plan. Developments at Academic Management Services Corp. Academic Management Services Corp., (based in Swansea, MA) is a wholly owned subsidiary of UICI engaged in the student loan origination and funding business, student loan servicing business, and tuition installment payment plan business. AMS finances its student loan origination activities through seven special financing subsidiaries that issue debt securities secured by a pledge of student loans and other qualified collateral. On July 21, 2003, UICI reported the discovery of a shortfall in the type and amount of collateral supporting two of the securitized student loan financing facilities entered into by three special financing subsidiaries of AMS. The problems at one of the financing facilities (the EFG-III LP commercial paper conduit facility) are of three types: insufficient collateral, a higher percentage of alternative loans (i.e., loans that are privately guaranteed as opposed to loans that are guaranteed by the federal government) included in the existing collateral than permitted by the loan eligibility provisions of the financing documents and failure to provide timely and accurate reporting. The problems related to the second financing subsidiary (AMS-1 2002, LP) consist primarily of a higher percentage of alternative loans included in the existing collateral than permitted by the loan eligibility provisions of the financing documents, and the failure to provide timely and accurate reporting. In addition, AMS and the other four special financing subsidiaries of AMS have failed to comply with their respective reporting obligations under the financing documents. As announced on July 24, 2003, AMS has obtained waivers and releases from interested third parties, as described more fully below, with respect to four of the six securitized student loan financing facilities. The waiver and release agreements were entered into with Bank of America and Fleet Bank (the providers of a liquidity facility that supports the EFG-III, LP commercial paper facility), Bank One (the trustee under the indentures that govern the terms of the debt securities issued by each of AMS' special financing subsidiaries) and MBIA Insurance Corporation (the financial guaranty insurer of debt securities issued by four of the seven AMS financing subsidiaries). The waiver and release agreement for the EFG-III, LP (one of AMS' special purpose financing subsidiaries) commercial paper securitized student loan facility calls for UICI's contribution of $48.25 million ($1.75 million on July 24, 2003, $36.5 million on July 31, 2003 and $10.0 million on August 15, 2003) in cash to the capital of AMS, all of which, as of July 31, 2003, UICI had contributed to AMS. The financial institutions have agreed to waive all existing defaults under the relevant financing documents with respect to EFG-III, LP and EFG Funding (both of which are exclusively involved in the commercial paper program) until January 1, 2004, which date will be automatically extended for successive 90-day periods through September 30, 2004 if the outstanding amount of commercial paper is reduced to agreed-upon levels from its current outstanding amount (approximately $440 million). As previously announced, AMS has agreed to partially address the under- collateralization problem by transferring to EFG-III, LP approximately $189 million of federally-guaranteed student loan and other assets that meet loan eligibility requirements under the financing documents and by transferring approximately $34.4 million of uninsured student loans that do not meet loan eligibility requirements under the financing documents. In addition, AMS will contribute to EFG-III LP $46.5 million of the $48.25 million in cash contributed to AMS by UICI either in the form of cash or federally guaranteed student loans. These various transfers by AMS will substantially eliminate the shortfall in collateral amount with respect to the EFG-III LP commercial paper conduit facility. With respect to the AMS-1 2002, LP facility, as of July 24, 2003, the interested parties agreed to waive, for a period of 90 days, all defaults, amortization events and events of default based solely on defaults arising prior to July 24, 2003 resulting from non-federally insured student loans included in the collateral in excess of the maximum percentage limit for such loans as set forth in the documents governing the financing, which waiver is not extendable. In addition, with respect to four other student loan financing facilities, the interested parties agreed to waive, as of July 24, 2003, all immaterial previously-existing defaults resulting from inaccurate or untimely reporting or any other reporting deficiency by the applicable issuer under each such facility, AMS or any other affiliate of AMS, for a period of 90 days, which period is not extendable. Upon expiration of the 90- day waiver period, all then uncured events of default shall be reinstated and be in full force and effect. UICI believes that it has no obligations with respect to the indebtedness of AMS' special financing subsidiaries or with respect to the obligations of AMS relating to such financings. Nonetheless, in exchange for UICI's capital contribution to AMS as described above, the financial institutions named above have agreed to release UICI from any and all existing claims or suits (other than claims for fraud at the UICI level) that could arise relating to the AMS student loan financing facilities. The recently announced events at AMS have had the immediate effect of increasing AMS' cost of borrowings used to fund AMS' student loan originations. This increase in borrowing cost will negatively impact the amount of student loan interest rate spread income that AMS may earn in future periods. Based on its investigation to date, UICI believes that its previously published consolidated financial statements are fairly presented. UICI will continue to assess the impact of the events at AMS on the carrying value of UICI's investment in AMS, which, at March 31, 2003, was approximately $62.0 million and, giving effect to UICI's new contributions to the capital of AMS, would be approximately $110.0 million. Any impairment in UICI's carrying value may be reflected as a charge to UICI's earnings in the second quarter of 2003. To assist in assessing possible impairment, the Company has engaged an independent firm to perform a valuation of the goodwill at AMS. As previously disclosed, the former president of AMS has been put on leave and relieved of all responsibilities pending the completion of AMS' and UICI's ongoing investigation into the matter. The Audit Committee of UICI's Board of Directors, with the assistance of independent counsel, has commenced an investigation into the matters and events leading to the announcement of the collateral shortfalls at AMS' student loan financing facilities. Final release of the Company's consolidated financial results for the three and six months ended June 30, 2003 will be subject to completion of such investigation to the satisfaction of the UICI Audit Committee. The Company currently intends to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 in a timely fashion. However, there can be no assurance that the Company will in fact file its Quarterly Report on Form 10-Q on or before August 14 as required. Liquidity Issues On July 31, 2003, UICI completed its contribution to the capital of AMS of cash in the amount of $48.25 million in accordance with the terms of the waiver and release agreements with the interested third parties to the AMS financings. UICI is a holding company, the principal assets of which are its investments in its separate operating subsidiaries, including its regulated insurance subsidiaries. The holding company's ability to fund its cash requirements is largely dependent upon its ability to access cash, by means of interest income, loans or dividends or other means, from its subsidiaries. At June 30, 2003, the Company at the holding company level held cash in the amount of $20.6 million. The Company generated additional cash to fund its $48.25 million obligations under the AMS waiver and release agreements from loans and dividends from offshore insurance subsidiaries, reimbursements under tax sharing agreements with subsidiaries and loans and dividends from non- insurance subsidiaries. Payment by UICI of the capital contributions to AMS pursuant to the terms of the waiver and release agreements has had a material adverse effect upon the liquidity of the Company at the holding company level. Following payment by the Company to AMS of $48.25 million in accordance with the terms of the AMS waiver and release agreements, at July 31, 2003, the Company at the holding company level held approximately $8.0 million in cash. The Company currently anticipates that it will be able to fund its future estimated cash requirements at the holding company level with cash currently on hand and cash generated from the sources set forth above, plus dividends from regulated domestic insurance subsidiaries. However, there can be no assurance that the cash requirements at the holding company level will not exceed current estimates. The Company intends to adhere to its historical policy with regard to dividends from its regulated domestic insurance company subsidiaries. The Company's domestic insurance company subsidiaries have not paid cash dividends in 2003. These subsidiaries will be able to pay $39.1 million in cash dividends to the UICI holding company in December 2003 in the ordinary course of business without prior approval of the regulatory authorities. However, as has been its policy in the past, during the fourth quarter of 2003 the Company will assess the results of operations of the regulated domestic insurance companies to determine the prudent dividend capability of the subsidiaries, consistent with UICI's practice of maintaining risk-based capital ratios at each of the Company's domestic insurance subsidiaries significantly in excess of minimum requirements. Historically, the Company has not received dividends from its regulated domestic insurance subsidiaries in the full amount that it could otherwise receive without prior regulatory approval. Discontinued Operations The Company will report a net loss from discontinued operations in the amount of $6.4 million and $6.5 million for the three and six months ended June 30, 2003, respectively, compared to a net loss in the corresponding periods of 2002 in the amount of $1.2 million and $2.1 million, respectively. Results from discontinued operations in all periods presented include the results of the Company's former Senior Market Division (other than premium and expenses associated with the in-force insurance policies previously written by the Senior Market Division). On May 30, 2003, UICI announced that its Board of Directors, at a meeting held on May 29, 2003, adopted a plan to close by sale or wind down the Senior Market Division, which the Company established in 2001 to develop long-term care and Medicare supplement insurance products for the senior market. Included in results from discontinued operations in the three and six months ended June 30, 2003 is a loss (net of tax) in the amount of $(7.4) million and $(8.5) million, respectively, consisting of a write off of impaired assets, operating losses incurred at the Senior Market Division through the close-down date and costs associated with the wind down and closing of the operations. The Company currently anticipates incurring additional exit costs in the amount of approximately $800,000, substantially all of which costs will be expensed as incurred in future periods in accordance with Financial Accounting Standards Board Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities. UICI (headquartered in North Richland Hills, Texas) through its subsidiaries offers insurance (primarily health and life) and selected financial services to niche consumer and institutional markets. Through its Self Employed Agency Division, UICI provides to the self-employed market health insurance and related insurance products, which are distributed primarily through the Company's dedicated agency field forces, UGA-Association Field Services and Cornerstone America. Through its Group Insurance Division, UICI provides tailored health insurance programs for students enrolled in universities, colleges and kindergarten through grade twelve and markets, administers and underwrites limited benefit insurance plans for entry level, high turnover, hourly employees. Through its Life Insurance Division, UICI offers life insurance products to selected markets. The Company's Academic Management Services Corp. unit (headquartered in Swansea, Massachusetts) seeks to provide financing solutions for college and graduate school students, their parents and the educational institutions they attend by marketing, originating, funding and servicing primarily federally guaranteed student loans and by providing student tuition installment payment plans. In 2002, UICI was added to the Standard & Poor's Small Cap 600 Index. For more information, visit http://www.uici.net U.S. CAN CORP: June 29 Net Capital Deficit Stands at $345 Mill. --------------------------------------------------------------- U.S. Can Corporation announced the appointment of George V. Bayly to its Board of Directors. Mr. Bayly is currently a principal of Whitehall Investors, LLC, a consulting and venture capital firm located in Lake Forest, Illinois. From 1991 through 2002, he was Chairman, President & Chief Executive Officer of Ivex Packaging Corporation in Lincolnshire, Illinois. Mr. Bayly has held management, sales and marketing roles in the packaging industry since 1969. Carl Ferenbach, Chairman of U.S. Can's board commented, "George's 30-plus years of experience in the packaging industry will bring a tremendous knowledge base to U.S. Can's board. We look forward to his active participation in setting U.S. Can's future course." Mr. Bayly is a member of the Boards of Directors of General Binding Corporation, Packaging Dynamics Inc. and Huhtamaki, among other corporate and charitable boards. U.S. Can reported net sales of $210.3 million for its second quarter ended June 29, 2003 compared to $203.6 million for the corresponding period of 2002, a 3.3% increase. The increase is primarily attributable to a positive foreign currency impact on sales made in Europe and changes in product mix and pricing in the Company's U.S. segments, partially offset by lower volume. For the first six months of 2003, net sales increased to $409.2 million from $389.7 million for the same period in 2002 primarily due to a positive foreign currency impact on sales made in Europe, partially offset by decreased International volume and sales of metal paint products. For the second quarter, U.S. Can reported gross income of $24.7 million (11.7% to sales), compared to $22.9 million (11.2% to sales) in 2002. For the six months ended June 29, 2003 gross income increased to $46.1 million (11.3% to sales) from $41.9 million (10.7% to sales) for the first six months of 2002. Gross profit margin was positively impacted by operating efficiencies realized from restructuring programs partially offset by the negative impact of production inefficiencies in our International operations. Selling, general and administrative expenses were $1.2 million lower than the same quarter last year and $0.9 million lower for the year-to-date period primarily due to positive results from Company-wide cost savings programs. During the first half of 2003, the Company recorded special charges of $1.6 million. The Company recorded a special charge of $0.6 million in the second quarter of 2003 related to potential additional severance costs in its May Verpackungen operation. A $1.0 million charge was recorded in the first quarter of 2003 related to position elimination costs in the U.S. and Europe. Income tax expense was $2.3 million for the second quarter of 2003 versus an income tax benefit of $0.2 million for the second quarter of 2002. For the first half of 2003, income tax expense was $2.9 million versus an income tax benefit of $1.9 million for the first half of 2002. During the fourth quarter of 2002, the Company recorded a valuation allowance as it could not conclude that it is "more likely than not" that all of the deferred tax assets of certain of its foreign operations will be realized in the foreseeable future. Accordingly, in 2003 the Company did not record an income tax benefit related to losses of those operations. The net loss before preferred stock dividends was $1.0 million for the quarter ended June 29, 2003 compared to a net loss of $0.9 million for the quarter ended June 30, 2002. The net loss before preferred stock dividends on a year-to-date basis for 2003 was $5.0 million compared to $21.6 million for the same period of 2002. The year-to-date 2002 net loss includes the Company's non- cash goodwill impairment charge of $18.3 million recorded in the fourth quarter of 2002, retroactive to the first quarter of 2002. Earnings before interest, taxes, depreciation, amortization, special charges relating to our restructurings and certain other charges and expenses, as defined under the terms of our Senior Secured Credit Facility was $24.0 million for the second quarter of 2003, an improvement of $2.5 million versus the second quarter of 2002. Year-to-date Credit Facility EBITDA was $44.1 million for 2003, an increase of $4.6 million versus the same period of 2002. The Company considers Credit Facility EBITDA to be a useful measure of its current financial performance and its ability to incur and service debt. In addition, Credit Facility EBITDA is a measure used to determine the Company's compliance with its Senior Secured Credit Facility. The most directly comparable GAAP financial measure to Credit Facility EBITDA is net loss from operations before cumulative effect of accounting change. Below is a quantitative reconciliation of the loss from operations before cumulative effect of accounting change to Credit Facility EBITDA. At June 29, 2003, $90.0 million had been borrowed under the $110.0 million revolving loan portion of the Senior Secured Credit Facility. Letters of Credit of $11.7 million were also outstanding securing the Company's obligations under various insurance programs and other contractual agreements. In addition, the Company had $19.0 million of cash and cash equivalents at quarter end. The Company is in the process of renegotiating certain credit facilities of May Verpackungen. On July 22, 2003, the Company completed an offering of $125 million of 10-7/8% Senior Secured Notes due 2010. The Notes are secured, on a second priority basis, by substantially all of the collateral that currently secures the Company's Senior Secured Credit Facility. The Company used the $125 million in proceeds generated from the offering to prepay $23.3 million of its Tranche A term loan, $46.7 million of its Tranche B term loan and to reduce its borrowings under its revolving credit facility by $55.0 million. The repayments under the revolving credit facility did not reduce the $110.0 million amount available for borrowings under the facility. The Company incurred approximately $7.6 million of fees and expenses related to the offering and senior secured credit facility amendment. At June 29, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $345 million. U.S. Can Corporation is a leading manufacturer of steel containers for personal care, household, automotive, paint and industrial products in the United States and Europe, as well as plastic containers in the United States and food cans in Europe. U.S. CELLULAR: Completes Exchange of Wireless Assets with AT&T -------------------------------------------------------------- United States Cellular Corporation (Amex: USM) has completed the initial exchange with AT&T Wireless (NYSE: AWE) of certain wireless properties that will enhance U.S. Cellular's position in several of its existing market areas. When the transaction is fully completed, U.S. Cellular will acquire 10 and 20 MHz PCS licenses in 13 states, representing 12.2 million incremental population equivalents contiguous to existing properties and 4.4 million population equivalents that overlap existing properties. U.S. Cellular will take possession of the acquired licenses in staggered closings to comply with service requirements of the Federal Communications Commission. The initial tranche of licenses represents approximately 5.9 million incremental and 3.9 million overlapping population equivalents. The markets acquired on Aug. 1 include Oklahoma City, Okla.; St. Louis and Springfield, Mo.; and Portland, Maine. U.S. Cellular did not acquire any customers or network facilities. A complete list of the licenses U.S. Cellular acquired on Aug. 1 and that it has the right to acquire in the future as part of the transaction is found in Exhibit A. A map illustrating the properties, Exhibit B, is available at http://www.teldta.com/whatsnew/feature080103.html In addition to the licenses it acquired on Aug. 1, U.S. Cellular at the same time acquired AT&T Wireless minority interests in six U.S. Cellular-controlled markets and received approximately $31 million in cash, excluding a working capital adjustment. In exchange for the current and future deliveries by AT&T Wireless, U.S. Cellular transferred wireless assets in 10 markets in Florida and Georgia to AT&T Wireless. The assets include 25MHz A block cellular licenses and the network facilities, customers and associated assets of those markets. The licenses transferred to AT&T Wireless represent 1.5 million population equivalents and include approximately 143,000 customers. U.S. Cellular is not required to deliver any further value or assets to AT&T Wireless upon the acquisition of the deferred licenses. The two companies first announced their intention to pursue the transaction on March 10, 2003. Falkenberg Capital Corporation of Denver, Colo. represented U.S. Cellular in the transaction. John E. Rooney, president and chief executive officer of U.S. Cellular, said, "The completion of this transaction is an excellent example of our corporate strategy. We have said that we intend to strengthen our regional footprint and build on our strengths; this exchange does just that. It gives us the opportunity to substantially improve our competitive position in our Midwest and Northeast markets. It also places us in a position to offer more competitive local and regional calling plans encompassing broader areas than we were able to do in the past. This move clearly shows that we are building on our strengths." U.S. Cellular Corporation, the nation's eighth largest wireless service carrier, provides wireless service to more than 4.3 million customers in 150 markets throughout 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support and a high-quality network. U.S. Cellular's Web site is http://www.uscellular.com At March 31, 2003, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $540 million. VISHAY: Prices $450 Million of Convertible Subordinated Notes ------------------------------------------------------------- Vishay Intertechnology, Inc. (NYSE: VSH) had priced its offering of $450 million principal amount of 3-5/8% convertible subordinated notes due 2023, plus up to an additional $50 million of notes that may be issued at the option of the initial purchasers. The notes will pay interest semi-annually. Holders may convert their notes into shares of Vishay common stock, subject to certain conditions, at a conversion price of $21.28 per share, which is the equivalent to a conversion rate of 46.9925 shares per $1,000 principal amount of notes. The notes will be subordinated in right of payment to all of Vishay's existing and future senior indebtedness and will be effectively subordinated to all existing and future liabilities of Vishay's subsidiaries. Vishay intends to use approximately $130 million of the offering proceeds to pay down its revolving credit facility, approximately $176.6 million of the offering proceeds to fund the redemption of the convertible notes of one of its subsidiaries and approximately $97.4 million to fund the purchase from one of the initial purchasers of approximately $97.0 million accreted principal amount of its Liquid Yield Option Notes (LYONs)(TM). Vishay intends to use the remaining proceeds for general corporate purposes. The notes will be redeemable at Vishay's option beginning August 1, 2010 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any. Holders of the notes will have the right to require Vishay to repurchase all or some of their notes at a purchase price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest, if any, on August 1, 2008, August 1, 2010, August 1, 2013 and August 1, 2018. In addition, holders of the notes will have the right to require Vishay to repurchase all or some of their notes upon the occurrence of certain events constituting a fundamental change. On any required repurchase, Vishay may choose to pay the purchase price in cash or shares of Vishay common stock or any combination of cash and Vishay common stock. The notes and the shares of common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold absent registration under, or an applicable exemption from, the registration requirements of the Securities Act of 1933 and applicable state securities laws. Any offers of the notes will be made exclusively by means of a private offering memorandum. As reported in Troubled Company Reporter's Friday Edition, Standard & Poor's Ratings Services assigned a 'B+' rating to Vishay's proposed $450 million subordinated convertible notes due 2023. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and senior unsecured bank loan ratings on Vishay Intertechnology Inc. The outlook is stable. Vishay had $724 million of debt outstanding as of March 31, 2003. WABASH NATIONAL: Completes $125MM Sale of Conv. Sr. Unsec. Notes ---------------------------------------------------------------- Wabash National Corporation (NYSE: WNC) has completed the sale of $125 million of 3.25% convertible senior unsecured notes due 2008 in a Rule 144A offering. The net proceeds of the offering were used to repay a portion of its outstanding indebtedness. The sale was made to several institutional investors through Merrill Lynch & Co. and BB&T Capital Markets as initial purchasers. Merrill Lynch & Co. acted as the sole book running manager for the offering. Commenting on the transaction, Mark R. Holden, Senior Vice President - Chief Financial Officer, stated, "We are very pleased with the demand for and execution of this offering. We believe the interest in this transaction confirms that we have made and are continuing to make significant progress in structurally improving the Company, both operationally and financially. The results of this transaction, we believe, combined with pending asset sales and a new syndicated bank financing will place Wabash into a position of financial strength, unequalled within the U.S. trailer industry. We feel this offering marks the culmination of two years of work to turn the Company around and to secure its future." The notes are convertible under certain circumstances into shares of Wabash National's common stock at an initial conversion rate of 52.0833 shares per $1,000 principal amount of notes. This represents a conversion price of $19.20 per common share, or a conversion premium of 25% over the closing price on July 28, 2003 of $15.36. The notes bear interest at 3.25% per annum payable semi-annually. The notes and the shares of common stock of Wabash National issuable upon the conversion of the notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration. Wabash National Corporation designs, manufactures, and markets standard and customized truck trailers under the Wabash(TM) brand name. The Company is one of the world's largest manufacturers of truck trailers and a leading manufacturer of composite trailers. The Company's wholly owned subsidiary, Wabash National Trailer Centers, is one of the leading retail distributors of new and used trailers and aftermarket parts throughout the U.S. and Canada. Wabash National Corp.'s March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $205 million. As reported in Troubled Company Reporter's April 16, 2003 edition, Wabash National completed the amendment of its credit facilities, which includes its revolving line of credit, its senior notes, its receivables facility and its lease facility. The amendment revises certain of the Company's financial covenants and adjusts downward the required monthly principal payments during 2003. In another previous report, the Company said it was not prepared to predict that first quarter results, or any other future periods, would achieve net income, and did not expect to announce further results before the first quarter would be completed, given the softness in demand and other factors. The Company remains in a highly liquidity-constrained environment, and even though its bank lenders have waived current covenant defaults, there is no certainty that the Company will be able to successfully negotiate modified financial covenants to enable it to achieve compliance going forward, or that, even if it does, its liquidity position will be materially more secure. WEATHERLY: Hahn's Disinterestedness Hearing Set for Tomorrow ------------------------------------------------------------ On May 5, 2003, the Honorable Thomas P. Griesa of the U.S. District Court for the Southern District of New York approved the Securities Investor Protection Corporation's application asking for customers of Weatherly Securities Corporation to be protected under the Securities Investor Protection Act. SIPC was appointed Trustee for the liquidation of the Debtor while Hahn & Hessen, LLP was appointed as Trustee's Counsel. A hearing for objections to the disinterestedness of Hahn & Hessen as Trustee's Counsel, within the meaning of Sec. 78eee(b)(6) of SIPA, will convene tomorrow at 10:00 a.m., before the Honorable Cornelius Blackshear. Weatherly Securities Corporation, the principal operating subsidiary of Weatherly International plc, had become the subject of a series of substantial arbitration demands from customers seeking compensatory and punitive damages. These claims principally arose out of the operations of the former Garden City branch office whose operations ceased in October 2001. WEIRTON STEEL: Names D. Leonard Wise CEO and Mark E. Kaplan CFO --------------------------------------------------------------- Weirton Steel Corp.'s (OTC Bulletin Board: WRTLQ) Board of Directors named D. Leonard Wise chief executive officer and Mark E. Kaplan president and chief financial officer of the company. The appointments follow last month's announcement by John H. Walker that he would resign as president and chief executive officer to pursue other business opportunities. Wise, 68, a seasoned steel industry veteran, served as a Weirton Steel board member from 1998 to 2002. He has significant experience in tin mill products, Weirton Steel's chief product line. Kaplan, 41, who began his career at Weirton Steel in 1995, has served for the past several years as senior vice president and chief financial officer as well as a company board member. "Mr. Wise brings a wealth of experience to Weirton Steel. As a former member of our board of directors, he is fully familiar with our company and our challenges. In addition, he has a strong background in the bankruptcy reorganization process, something that will benefit Weirton Steel," said Richard R. Burt, chairman of the board. "Mr. Kaplan's service to the company has been remarkable. In particular, he played a key role in the company's recent restructuring program -- an endeavor that significantly reduced our debt and costs." Burt explained that Wise's strong steel industry management and operations background, combined with Kaplan's financial expertise, keeps the company on track to restructure. Wise is best known for the turnaround of the Youngstown Sheet and Tube Plant at Indiana Harbor, Ind., after it merged with LTV Steel Corp., Cleveland. "I sincerely appreciate the board's confidence and the opportunity to help the company. I am eager to work with all of our employees as we navigate through these difficult times. I'm sure with everybody's help and cooperation, we will reach the best possible outcome," Wise said. Wise also has been reappointed to Weirton Steel's board of directors. His executive management experience includes: - 1994 - 1997: President and chief executive officer, Carolina Steel Corp., Greensboro, N.C. The company produces steel frameworks for bridge railways and highways in addition to fabricated steel for commercial and industrial applications. - 1988 - 1991: Board member, followed by vice president and then as chairman and chief executive officer, Wheeling-Pittsburgh Steel Corp., Wheeling, W.Va. Helped guide the company's reorganization and emergence from bankruptcy. - 1986 - 1990: President and chief operating officer, Slater Industries, a specialty steel and metals producer, Toronto, Canada. - 1986: President and board member, McLouth Steel Products, Trenton, Mich. - 1972 - 1985: Ascended to President, flat rolled division, of LTV Steel Corp., Cleveland, after serving as tin mill superintendent and vice president and general manager of its speciality steel division. - 1957 - 1971: Started as management trainee at Bethlehem Steel Corp., Sparrows Point, Md. Also employed at Jones & Laughlin Steel Corp., Aliquippa, Pa., which later became LTV Steel Corp., Cleveland, and at Youngstown Sheet and Tube Co., Indiana Harbor, Ind. Kaplan joined Weirton Steel as company controller. He eventually was named vice president of information technology and controller before being appointed senior vice president and chief financial officer. "Mr. Kaplan's leadership led to the securing of a $225 million debtor-in- possession financial facility, a vital necessity to keep the company operating during our reorganization process," Burt noted. "He also has enhanced the company's presence in the financial community by improving relationships and re-establishing its credibility." Burt explained that Kaplan was a key member of the management team that, while working jointly with the company's unions, restructured Weirton Steel from early 2001 through late 2002. The accomplishments included: - a $118 million reduction in principal and a $27 million interest savings annually through a public bond exchange. - a new $200 million line of credit resulting in a $35 million availability increase. - an innovative vendor investment of more than $40 million. - a significant reduction in operating costs. "Weirton Steel has its share of challenges. There is a tremendous amount of work ahead of us and I look forward to my expanded responsibilities and the opportunity to contribute to helping the company achieve its goals," Kaplan noted. "During my tenure at Weirton Steel, I've appreciated the dedication and unyielding determination of our employees. When an obstacle is blocking the progress of their company, they either go around it, over it or through it. We will continue working together to maintain a steel industry in the Upper Ohio Valley." Before joining Weirton Steel, Kaplan was a senior audit manager for a public accounting firm and was corporate controller for a worldwide technical service provider of computer applications. Both are Pittsburgh-based firms. On May 19, Weirton Steel filed a voluntary petition to reorganize under Chapter 11 bankruptcy protection. The appointments of Wise and Kaplan are subject to bankruptcy court approval. Weirton Steel is the sixth largest U.S. integrated steel producer and employs 3,500. WILLIAMS: Agrees to End Power Contract in Exchange for $128 Mil. ---------------------------------------------------------------- Williams (NYSE: WMB) has agreed to terminate a long-term power contract with Allegheny Energy, Inc. (NYSE: AYE) subsidiary Allegheny Energy Supply Company, LLC, for cash consideration of $128 million payable to Williams. "This deal is consistent with our strategy to monetize the contracts in our trading book," said Steve Malcolm, chairman, president and chief executive officer. "Ending this power-supply arrangement will reduce credit risk specific to this contract and return good value on the position." The agreement is subject to certain conditions, including a provision that Allegheny successfully completes the sale of its energy supply agreement with the California Department of Water Resources. Allegheny earlier this week announced an agreement with a third-party for its CDWR contract. Williams is scheduled to receive $100 million upon closing of Allegheny's CDWR contract sale and another $28 million over the following 12 months. Williams' contract to supply up to 1,000 megawatts of power to Allegheny was scheduled to expire in 2018. Williams now expects to terminate the contract upon payment in full from Allegheny. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com As reported in Troubled Company Reporter's May 27, 2003 Edition, Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on energy company The Williams Cos. Inc. Ratings on Williams and its subsidiaries were removed from CreditWatch with negative implications, where they were placed July 23, 2002. The outlook is negative. In addition, Standard & Poor's raised its rating on Williams' senior unsecured debt to 'B+' from 'B' Standard & Poor's also assigned its 'B-' rating to $300 million junior subordinated convertible debentures at Williams. The rating on the junior debentures is two notches below the corporate credit rating to reflect structural subordination to the senior debt. Tulsa, Oklahoma-based Williams has about $13 billion in outstanding debt. WILLIAMS COS.: Enters Pacts to Sell Assets for over $100 Million ---------------------------------------------------------------- Williams (NYSE: WMB) has entered into agreements involving the sale of assets for cash proceeds in excess of $100 million. In its midstream business, Williams has completed the first sale involving a portion of its operations in Western Canada. Canadian Natural Resources Limited (NYSE: CNQ; Toronto) has purchased Williams' West Stoddart natural gas processing plant for an undisclosed amount. The West Stoddart plant is located roughly 50 kilometers northwest of Fort St. John, British Columbia, and has a processing capacity of 120 million cubic feet per day. Williams's midstream business also has agreed to sell its 20 percent aggregate ownership interest in the 3,000-mile West Texas LPG Pipeline Limited Partnership to Buckeye Partners, L.P. (NYSE: BPL) for approximately $28.5 million. This system transports natural gas liquids from points throughout Texas to Mont Belvieu, Texas. Williams expects to complete the sale this month, subject to typical closing conditions. In its energy marketing and risk management business, Williams has sold or has agreements to sell distributed-generation units and an associated third-party contract for approximately $31 million. The units have a total capacity of approximately 154 megawatts. Williams completed $21 million of the sales in June; the transaction for the remainder is expected to close in the third quarter, subject to typical closing conditions. In early July, Williams also received $10.1 million from Williams Energy Partners (NYSE: WEG) for a refined products management business, plus an estimated $5.2 million for inventory. The company expects to record pretax gains of approximately $3 million in the second quarter and approximately $20 million in the third quarter related to these asset sales. Williams (S&P, B+ Long-Term Corporate Credit Rating, Negative), through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com WORLD HEART: Closes Convertible Debentures Private Placement ------------------------------------------------------------ World Heart Corporation (OTCBB: WHRTF, TSX: WHT) has closed a previously announced private placement of senior subordinated convertible debentures which realized gross proceeds of $1.2 million. As anticipated, the loan for $800,000, as announced on July 28, 2003, has been fully repaid from the proceeds. The debentures, which have a maturity of October 22, 2003, are convertible at the holder's option into common shares of the corporation for $1 per share. The debentures are callable by the company at any time after September 15, 2003 upon payment of the outstanding principal amount plus accrued but unpaid interest, subject to the holders having five days in which to convert. The debentures carry interest of 14%, and additional consideration includes the issuance of warrants to purchase 1,200,000 common shares, at an exercise price of $1.20 per share, for a period of three years. World Heart Corporation, a global medical device company based in Ottawa, Ontario and Oakland, California, is currently focused on the development and commercialization of pulsatile ventricular assist devices. Its Novacor(R) LVAS (Left Ventricular Assist System) is well established in the marketplace and its next- generation technology, HeartSaverVAD(TM), is a fully implantable assist device intended for long-term support of patients with end- stage heart failure. At March 31, 2003, World Heart's balance sheet shows a total shareholders' equity deficit of about $51 million. WORLDCOM INC: Asks Court to Appove $18 Million Digex Acquisition ---------------------------------------------------------------- In July 2001, WorldCom Inc. acquired Debtor Intermedia Communications Inc., which provides integrated data and voice communications services. The primary purpose for WorldCom's acquisition of Intermedia was to obtain Intermedia's controlling interest in Digex, Incorporated. Digex is a leading provider of managed hosting services. Digex services include server management, application support, managed networking services, and customer care and support services. Digex also offers value- added information technology services, like enhanced security services, database services, high-availability services, application optimization services, stress-testing services, and consulting services. As part of these services, Digex provides for installation and maintenance of computer hardware and software, network technology, and systems management to offer its customers a broad range of managed hosting solutions. Intermedia, through its indirect wholly owned subsidiary, Intermedia Investment, Inc., currently owns 60.7% of the outstanding shares of common stock in Digex and 93.9% of the common stock's voting rights. Intermedia Investment is a Debtor in these cases. Specifically, Intermedia Investments owns 39,350,000 shares of Class B Digex Common Stock. The publicly traded shares of Digex common stock are the shares of Class A Common Stock, which represent 39.3% of the common stock and 6.1% of the voting rights of Digex. Hewlett-Packard Company holds 50,000 shares of Series A Convertible Preferred Stock of Digex, liquidation value $1,000 per share, which currently is convertible into shares of Class A Common Stock representing 0.01% of the common stock and 0.002% of the voting rights of Digex calculated on an as-converted basis. Subject to the legal availability of funds, the Preferred Stock is redeemable on January 12, 2004 for $50,000,000. Other than the ownership interest in Digex, WorldCom has these commercial agreements with Digex: (i) A January 1, 2001 Master Channel Agreement, pursuant to which MCI WorldCom Network Services, Inc. rebrands Digex Managed Hosting Services and distributes the services as WorldCom Managed Hosting Services; (ii) A January 1, 2001 Master Facilities Agreement, pursuant to which MCI WorldCom Network Services licenses to Digex the right to occupy space and agrees to provide to Digex ancillary services in certain of WorldCom's data centers; and (iii) An October 18, 2000 UUNet Multi-Megabit Agreement, pursuant to which Digex purchases bandwidth and connectivity from UUNet Technologies, Inc. WorldCom also has two Note Purchase Agreements with Digex, pursuant to which Digex borrowed funds from WorldCom: (i) A Note Purchase Agreement for $102,200,000 Floating Rate Senior Notes due December 31, 2002; and (ii) A Note Purchase Agreement for $25,000,000 Floating Rate Senior Notes due December 31, 2003. The First Note Purchase Agreement and the Digex Commercial Agreements were entered into pursuant to the terms of a settlement among Digex shareholders, Intermedia, and WorldCom, which was approved by the Delaware Chancery Court in March 2001. Funds made available under the First Note Purchase Agreement funded Digex's business plans for 2001 and 2002. In December 2002, Digex exercised its right to extend the maturity of all outstanding notes under the First Note Purchase Agreement to December 31, 2006. Having exercised that right, the First Note Purchase Agreement obligates Digex to make equal monthly straight-line amortization payments on the outstanding principal amount due to WorldCom. The Second Note Purchase Agreement, entered into subsequent to was not a condition of the Digex Settlement. Digex borrowed the entire $25,000,000 available under the Second Note Purchase Agreement in 2001. Interest is payable on the notes issued under the Second Note Purchase Agreement on a monthly basis. Principal is due in a single payment at maturity on December 31, 2003. Unlike the First Note Purchase Agreement, Digex does not have the option to extend the maturity of the notes under the Second Note Purchase Agreement. In March 2003, Digex ceased making any payments to WorldCom under the First and Second Note Purchase Agreements. As of the Petition Date, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, reports that MCI WorldCom Network Services owed Digex $60,000,000 under the Master Channel Agreement. In its proof of claim filed in January 2003, Digex asserts that it is owed $157,000,000 under the Master Channel Agreement. The amount claimed by Digex is predicated on the application of a take-or-pay commitment, or "Underutilization Fee", in the Master Channel Agreement through the end of 2002. The Claim does not take into account an EBITDA sharing provision in the Master Channel Agreement that would result in a payment back to WorldCom. However, Digex owed Intermedia in excess of $116,300,000 under the Note Purchase Agreements on the Petition Date. Digex has asserted that it is entitled to setoff any amounts it owes under the Note Purchase Agreements against any amounts it is owed under the Master Channel Agreement. The Debtors dispute the assertion. As a result of the Debtors' Chapter 11 filing as well as the financial difficulties in the telecommunications sector, Digex determined that it needed financial restructuring to ensure continued operations as a going concern. For five months beginning October 2002, a special committee of Digex's Board of Directors and its advisors contacted potential buyers to solicit bids for acquiring Digex. But after management presentations and further due diligence, only one final offer was received by the Special Committee. After consultation with WorldCom as the majority stockholder of Digex, the Special Committee notified the offeror that Digex could not accept the offer. The offeror did not raise its bid. Consequently, WorldCom reviewed the liquidity issues Digex faced and the concern about Digex's ability to continue as a going concern if it is unable to obtain external financing. WorldCom considered its financial interests in Digex, including Intermedia's common stock interest, the impact on its customers of an interruption of Digex's services and the $127, 000,000 owed to Intermedia under the Note Purchase Agreements and the related setoff issues. As a result of that analysis, WorldCom determined that it is best to acquire Digex. To effectuate the acquisition of Digex, on July 23, 2003, WorldCom and Hewlett Packard entered into a Stock Purchase Agreement pursuant to which WorldCom will acquire the outstanding shares of Digex Preferred Stock for $11,000,000. WorldCom is also poised to undertake these steps: -- WorldCom will commence a tender offer to acquire all of the outstanding Digex Publicly Traded Shares not owned by WorldCom, Intermedia, or Intermedia Investment for $0.70 per share. The consummation of the Tender Offer is conditioned on WorldCom's receiving valid tenders of a sufficient number of the Publicly Traded Shares such that, after purchase of the shares pursuant to the Tender Offer, WorldCom, Intermedia, and Intermedia Investment would own at least 90% of the outstanding shares of Class A Common Stock on an as-converted basis. "On an as-converted basis" means the percentage of shares of the Class A Common Stock that WorldCom, Intermedia and Intermedia Investment would own after the conversion of their Class B Common Stock shares and the Preferred Stock shares they propose to purchase under the Stock Purchase Agreement into Class A Common Stock shares. WorldCom believes that there are 25,519,461 shares of Class A Common Stock outstanding. WorldCom needs to acquire 18,959,416, or 74.3%, of the outstanding shares to meet the Minimum Condition; -- Upon acquisition of a sufficient number of Publicly Traded Shares as part of the Tender Offer to meet the Minimum Condition, WorldCom will merge Digex with Intermedia Investment in a short-form merger pursuant to the provisions of Section 253 of the Delaware General Corporation Law. As part of the Merger, WorldCom will cause to be paid to the remaining holders of Class A Common Stock shares -- other than WorldCom, Intermedia or Intermedia Investment -- for such shares: (i) the same consideration for their shares as paid to the holders of Class A Common Stock who tendered their shares in the Tender Offer; or (ii) for those holders that exercise appraisal rights in respect of such shares pursuant to Delaware General Corporate Law Section 262, the fair value of their shares; and -- After the consummation of the Tender Offer and the Merger, WorldCom will have an administrative claim against Intermedia and its subsidiaries equal to the sum of: (i) the purchase price of the Preferred Stock; (ii) the purchase price for the Publicly Traded Shares, whether acquired pursuant to the Tender Offer or otherwise; and (iii) any other related costs. To the extent the Debtors' proposed reorganization plan is confirmed by the Court, upon confirmation, the Administrative Claim will be deemed satisfied. WorldCom's Tender Offer will be made in accordance with all applicable securities laws and will involve the filing of appropriate materials with the Securities and Exchange Commission and the mailing of appropriate materials to the holders of the Publicly Traded Shares. The transactions have been approved by WorldCom's Board of Directors. The Digex acquisition is important for WorldCom. Ms. Goldstein explains that Digex's Web hosting services to WorldCom's customers through MCI WorldCom Network Services are an integral component of the services that WorldCom supplies to its customers. Absent a financial restructuring of Digex, there exists a likelihood of an interruption of such services to WorldCom's customers which can cause customers to terminate their relationships with WorldCom with respect to not only the Web hosting services provided through Digex, but of the entire package of services provided to the customers. If Digex files for Chapter 11, there exists a high likelihood that Intermedia's invested ownership interest in Digex would be extinguished. Hence, acquiring Digex preserves a valuable asset of WorldCom's estates -- that is, WorldCom's financial interests in Digex. WorldCom believes that it can obtain additional value from Digex's operations as a result of cost and revenue synergies. Ms. Goldstein cites that meaningful synergies can be obtained through: (a) reduction in certain back-office staffing and infrastructure; (b) streamlining customer support and management functions; (c) integrating Digex into WorldCom's sales process, including, without limitation, improved training and incentives for WorldCom's sales force; and (d) enhancement of WorldCom's and Digex's product offerings. The increased value resulting from the synergies between WorldCom and Digex is a significant benefit to the estates, Ms. Goldstein says. For these reasons, the Debtors ask the Court to approve the Stock Purchase Agreement and authorize WorldCom to commence and consummate the Tender Offer, and to the extent necessary, implement the Merger. The Debtors also want authority to pay for the Digex shares pursuant to the Stock Purchase Agreement, the Tender Offer, and the Merger, and other related costs. (Worldcom Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Atlas Partners Offers New Real Estate Financing Alternatives -------------------------------------------------------------- Atlas Partners, LLC is aggressively seeking to provide real estate capital for owner/user-occupied facilities being used for industrial purposes, such as manufacturing, distribution, warehousing, corporate office buildings, or owned retail facilities. Specifics: * Owner Occupied * Collateral is First Mortgage Debt secured by real estate * Loans up to 60% Loan-to-Value * Companies must have positive EBITDA and Debt Service Coverage * Book earnings not an issue * Loan Size: $500,000 to $3 million * Lender closed 800 small loans in 2002 * Locations: Most strong primary and secondary national markets * Single assets and portfolios * Prior years history of impaired balance sheet ratios will be considered You can further investigate Atlas Partners at: http://www.atlaspartners.com/ Biff Ruttenberg Mike Nadler biff@atlaspartners.com mike@atlaspartners.com Joel Schneider joel@atlaspartners.com Atlas Partners, LLC 55 East Monroe St., Suite 1890 Chicago, IL 60603 (312) 516-5700 * Price Law Group Opens San Bernardino, California Office --------------------------------------------------------- Price Law Group, a Professional Corporation with offices throughout California will expand its services in the Inland Empire with the opening of a new office in San Bernardino, California. Price Law Group Founder and President Stuart Price said the San Bernardino office, which officially opened Monday, will add to the firm's ability to offer its services with greater accessibility and convenience to its clients in that area. "Our San Bernardino office will make it easier and more convenient for our clients to work much more closely with our staff of debt counselors, hands-on attorneys and caring debt negotiation experts who can assist them in resolving their financial problems without having to travel a great distance," Price said. Earlier this year, Price Law Group expanded its services with more debt counselors and an ever-growing number of convenient neighborhood locations. Price Law Group is committed to accommodating the specific needs of the market. Among the many services offered by Price Law Group are the following: -- Debt negotiation with creditors. -- Consumer and commercial bankruptcy filings. Price Law Group's qualified team helps provide all services in all of the firm's locations throughout California. The San Bernardino Office is located at 498 No. Arrowhead, Suite 6, San Bernardino (909-222-2218). Price Law Group also has offices in: Bakersfield, Costa Mesa, Encino, Lancaster, Long Beach, Ontario, Palm Desert, Palmdale, Pasadena, Riverside, Sacramento, Torrance, Valencia, West Covina and Modesto. For a free consultation, call Price Law Group at 1-800-884-6000 or visit their Web site at http://www.pricelawgroup.com Price Law Group is a leading national service provider of expert debt relief solutions, including bankruptcy and debt elimination without bankruptcy. Headquartered in Southern California, Price Law Group has 16 California offices and a network of national attorneys who have provided the highest quality representation to more than 45,000 clients nationwide. * Price Law Group Opens Modesto, California Office -------------------------------------------------- Price Law Group, a Professional Corporation with offices throughout California will expand its services in Central California with the opening of a new office in Modesto, California. Price Law Group Founder and President Stuart Price said the Modesto office, which officially opened Monday, will add to the firm's ability to offer its services with greater accessibility and convenience to its clients in that area. "Our Modesto office will make it easier and more convenient for our clients to work much more closely with our staff of debt counselors, hands-on attorneys and caring debt negotiation experts who can assist them in resolving their financial problems without having to travel a great distance," Price said. Earlier this year, Price Law Group expanded its services with more debt counselors and an ever-growing number of convenient neighborhood locations. Price Law Group is committed to accommodating the specific needs of the market. Among the many services offered by Price Law Group are the following: -- Debt negotiation with creditors. -- Consumer and commercial bankruptcy filings. Price Law Group's qualified team helps provide all services in all of the firm's locations throughout California. The Modesto office is located at 948 11th St., Suite 11, Modesto, CA (209-521-0700). Price Law Group also has offices in: Bakersfield, Costa Mesa, Encino, Lancaster, Long Beach, Ontario, Palm Desert, Palmdale, Pasadena, Riverside, Sacramento, Torrance, Valencia, West Covina and San Bernardino. For a free consultation, call Price Law Group at 1-800-884-6000 or visit their Web site at http://www.pricelawgroup.com Price Law Group is a leading national service provider of expert debt relief solutions, including bankruptcy and debt elimination without bankruptcy. Headquartered in Southern California, Price Law Group has 16 California offices and a network of national attorneys who have provided the highest quality representation to more than 45,000 clients nationwide. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Aphton Corp APHT (11) 16 (5) Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (44) 295 18 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Blount International BLT (369) 428 91 Caraco Pharm Lab CARA (20) 20 (2) Cincinnati Bell CBB (2,104) 1,467 (327) Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Centennial Comm CYCL (470) 1,607 (95) Echostar Comm DISH (1,206) 6,260 1,674 D&B Corp DNB (19) 1,528 (104) Graftech International GTI (351) 859 108 Hollywood Casino HWD (92) 553 89 Hexcel Corp HXL (127) 708 (531) Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (186) 484 139 Gartner Inc. IT (29) 827 1 Jostens JOSEA (512) 327 (71) Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 631 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 Maguire Properti MPG (159) 622 N.A. MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) ON Semiconductor ONNN (548) 1,203 195 Petco Animal PETC (11) 555 113 Primedia Inc. PRM (559) 1,835 (248) Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp RAD (93) 6,133 1,676 Revlon Inc REV (1,640) 939 (44) Ribapharm Inc RNA (363) 199 92 Sepracor Inc SEPR (392) 727 413 St. John Knits Int'l SJKI (76) 236 86 I-Stat Corporation STAT 0 64 33 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (36) 1,617 172 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Tech VLNC (17) 36 4 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***