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/raid1/www/Hosts/bankrupt/TCR_Public/030821.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, August 21, 2003, Vol. 7, No. 165 Headlines ACCRUE SOFTWARE: Commences Chapter 11 Proceeding in California ACP: Court to Consider Disclosure Statement and Plan on Sept. 19 ADVANCED LIGHTING: Saratoga Acquires 100% of Preferred Shares AHOLD: General Shareholders' Meeting to Convene on September 4 ALLEGIANCE TELECOM: June 30 Balance Sheet Upside-Down by $167MM ALLMERICA FINANCIAL: Names Frederick Eppinger President and CEO AMERCO: US Trustee Resets First Creditors' Meeting to Sept. 23 AMERCO REAL: Creditors to Meet with UST Trustee on September 23 AMERICAN CELLULAR: Completes Sale of Assets to Dobson Comms. AMI SEMICONDUCTOR: S&P Affirms BB- Corporate Credit Rating ANC RENTAL: Court Clears 2003 Cananwill Financing Agreement ARVINMERITOR: Appoints Information Technology Vice Presidents ATCHISON CASTING: Seeking Nod to Employ KPMG as Accountants BERTHEL GROWTH: Liquidity Concerns Raise Going Concern Doubt BMC INDUSTRIES: June 30 Balance Sheet Upside-Down by $34 Million BULL RUN CORP: Sells Interest in Gray Television, Inc. CALL-NET: Issuing $37.5 Million Class B Non-Voting Shares CHARTER COMMS: Termination of Tender Offers Spur Ratings Raise CLAXSON INTERACTIVE: Second-Quarter Results Enter Positive Zone CONSECO FINANCE: S&P Yanks Related Trust Rating to D CORRECTIONS CORP: Inks Distribution Agreement with Moore Medical CREDIT SUISSE: Fitch Further Drops Low-B Class M Rating to B- DDI CORP: Files for Prepack. Chapter 11 Reorg. in SD of New York DDI CORPORATION: Case Summary & Largest Unsecured Creditors DELTA WOODSIDE: 4th-Quarter Results Reflect Weaker Performance DEVINE: Obtains C$200K Bridge Financing for Bailey Production DEVON MOBILE: Delaware Court to Consider Plan on September 16 DIRECTV: Court Approves Stipulation with Committee and Hughes DOW CORNING: Settles EFCO Corp. Claim by Delivering More Sealant DRS TECH.: S&P Keeps Watch Due to Proposed Acquisition of IDT ENRON CORP: Reaches Settlement Pact with Royal Bank of Canada FEDERAL-MOGUL: Solicitation Exclusivity Extended to October 13 FIRST UNION: Fitch Affirms Low-B/Junk Ratings on 6 Note Classes FOUNTAIN VIEW: Bows Out of Chapter 11 Reorganization Proceedings GENERAL MEDIA: Pachulski Stang Serves as Bankruptcy Attorneys GENTEK INC: Court Disallows 18 Duplicative Claims Totaling $10MM GLOBAL LEARNING: Files Suit vs. Makau Corp. et al. in Maryland GREENLAND CORP: June 30 Balance Sheet Upside-Down by $3 Million HAYNES: Weak Performance Prompts S&P to Further Junk Ratings HIGH VOLTAGE ENG'G: Ratings Down to D After Interest Non-Payment HORIZON PCS: Ratings Fall to D After Bankruptcy Filing IMPERIAL PLASTECH: Deloitte Completing Reports for May Quarter INTEGRATED SURGICAL: Auditors Express Going Concern Uncertainty INTERDENT: Delays Filing of June Quarter Results on Form 10-Q KEYSTONE CONSOLIDATED: Fails to Beat Form 10-Q Filing Deadline LEXAM EXPLORATIONS: Liquidity Insufficient to Continue Operation LJM2 CO-INVESTMENT: Judge Felsenthal Confirms Chapter 11 Plan LORAL SPACE: Confirms Receipt of EchoStar Offer to Buy Assets LORAL SPACE: Bringing-In Willkie Farr as Special Counsel LTV CORP: Copperweld's New Restricted Stock Plan for Management MASSEY ENERGY: Board Declares Quarterly Cash Dividend METROMEDIA FIBER: Says Facilities Unfazed by Regional Blackout METROPOLITAN MORTGAGE: Fitch Hatchets Class M-2 Rating to BB- MILESTONE SCIENTIFIC: June 30 Net Capital Deficit Widens to $7MM MIRANT CORP: Appoints Curtis A. Morgan as EVP, N.A. Operations MIRANT CORP: First Creditors' Meeting Rescheduled to Sept. 17 MOSAIC GROUP: Canadian Court Extends CCAA Protection to Sept. 15 NAT'L CENTURY: Seeks Injunctive Relief vs. Gulf Insurance et al. NRG ENERGY: Inks Pact to Sell McClain Generating to Oklahoma Gas NRG ENERGY: OG&E Confirms Acquisition of Assets in McClain Power OMEGA HEALTHCARE: Credit Rating Upped to B+ over Better Results OWENS CORNING: Files 3rd Amended Plan and Disclosure Statement OWENS-ILLINOIS: Will Close Hayward, Calif. Glass Container Plant P-COM INC: Taps Aidman Piser to Replace PricewaterhouseCoopers PETROLEUM GEO-SERVICES: 2nd Quarter Net Loss Doubles to $62 Mil. PETROLEUM GEO: Court OKs Arntzen de Besche as Norwegian Counsel PG&E CORP: Reports Slight Results Improvement for Second Quarter PG&E NATIONAL: USGen Hires Winston & Strawn as Special Counsel PILLOWTEX: Gets Go-Signal to Honor Workers' Compensation Claims PROTERGA INC: Section 341(a) Meeting to Convene on September 23 RAMTRON: Negotiates EBITDA Covenant Waivers Under Debt Agreement RCN CORP: Reports Results of Tender Offer for Senior Notes RUSHMORE FINANCIAL: Recurring Losses Raise Going Concern Doubt SANMINA-SCI: Fitch Assigns Speculative Grade Preliminary Ratings SEAVIEW VIDEO: Cash Resources Insufficient to Continue Operation SEDONA CORP: June 30 Net Capital Deficit Slides-Down to $1.6MM SK GLOBAL AMERICA: Turning to KPMG LLC for Financial Advice SPIEGEL GROUP: Court Okays Miller Buckfire as Financial Advisor STRUCTURED ASSET: Fitch Cuts & Pulls Class B3 Rating from Watch SURGICARE INC: June 30 Working Capital Deficit Tops $9 Million TECHNICOIL CORP: Obtains Covenant Waiver Under Credit Pact TERREMARK: Resources Insufficient to Meet Financial Obligations TIMCO AVIATION: June 30 Balance Sheet Upside-Down by $95 Million TRENWICK GROUP: Files for Chapter 11 Protection in Delaware TRENWICK GROUP: Case Summary & Largest Unsecured Creditors UAL CORP: Has Until Dec. 15 to Make Lease-Related Decisions UNITEDGLOBALCOM: Fitch Says Planned Deal Won't Change Ratings US AIRWAYS: Resolves Claims Disputes with Wells Fargo & Newcourt VERIDIAN: S&P Pulls-Out Low-B Ratings After Debt Repurchase WEIRTON STEEL: Wants Nod to Hire D. Leonard Wise as CEO WHEELING-PITTSBURGH: Settles Gas Dispute with BOC Group WORLDCOM: MCI Reaffirms Fin'l Guidance and Clarifies 8-K Filing WORLDCOM INC: Bloomberg Wants to Access Restricted Fee Documents * FTI Promotes Ten Professionals to Senior Managing Director * Kroll Zolfo Cooper Hires Daniel G. Montgomery as Sr. Director * DebtTraders' Real-Time Bond Pricing ********* ACCRUE SOFTWARE: Commences Chapter 11 Proceeding in California -------------------------------------------------------------- Accrue Software, Inc., (Other OTC:ACRU), on August 15, 2003, filed a voluntary petition in the U.S. Bankruptcy Court for the Northern District of California in Oakland, California, seeking relief under Chapter 11 of the U.S. Bankruptcy Code. In addition, Accrue has signed a definitive agreement with a newly formed Delaware corporation formed by institutional investors, for the sale to NewCo of substantially all of Accrue's assets subject to court approval, as required under Section 363 of the Bankruptcy Code. Accrue anticipates filing a motion with the Bankruptcy Court for approval of the sale to NewCo in the next few days, and is seeking to have the sale approved not later than September 15, 2003. Accrue also expects to file a motion with the Bankruptcy Court to establish bidding procedures to allow parties in addition to NewCo to submit offers for its assets. Accrue will continue to manage its business operations as a "debtor-in-possession" subject to the provisions and requirements of the Bankruptcy Code and Bankruptcy Court. Accrue's advisors estimate that the bidding period will last until approximately September 11, 2003, during which time any competing qualified offers for Accrue's assets will be reviewed by Accrue and submitted to the Bankruptcy Court. If no qualified offers are received prior to the expiration of the bidding period, upon approval by the Bankruptcy Court and satisfaction of the conditions in the asset purchase agreement between Accrue and NewCo, NewCo will purchase substantially all of Accrue's assets and assume Accrue's customer obligations. Following the sale of its assets, Accrue anticipates converting its case to a case under Chapter 7 of the Bankruptcy Code. In connection with these events, Accrue's Chief Executive Officer P.K. Karnik stated, "We are excited that we've signed a definitive agreement with a venture backed purchaser. Accrue remains committed to customer support and service and believes that filing Chapter 11 is an important step to maintain the viability of the Accrue software product line." In order to facilitate the proposed sale of its assets, Accrue obtained additional funding from NewCo pursuant to a Senior Secured Promissory Note, in connection with which certain secured creditors of Accrue agreed to subordinate their debt to the new funding. Accrue expects to use the resources from the sale of the Note to fund ongoing operations and pay expenses related to the bankruptcy filing. Additionally, Accrue has received a commitment from NewCo for an additional debtor-in-possession credit facility. The DIP financing will be used to supplement Accrue's cash flow through the consummation of its asset sale. ACP: Court to Consider Disclosure Statement and Plan on Sept. 19 ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter's August 19, 2003 issue, ACP Holding Company and its debtor-affiliates filed their Prepackaged Chapter 11 Plan and Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. The Bankruptcy Court will hold a combined hearing to consider the adequacy of the Disclosure Statement and confirmation of the Plan. The combined hearing will take place before the Honorable Peter J. Walsh, 6th Floor, United States Bankruptcy Court for the District of Delaware, 824 Market Street, on September 19, 2003 at 3:00 p.m. All written objections, if any, must be filed on or before September 9, 2003, and received by Clerk of Court. Copies must be served on: i) counsel for the Debtors Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. 919 North Market Street 16th Floor, PO Box 8705 Wilmington, Delaware 19899-8705 Attn: Laura Davis Jones, Esq.; - and - Kirkland & Ellis LLP 200 East Randolph Drive Chicago, Illinois 60601 Attn: James W. Kapp III, Esq. ii) Office of the United States Trustee 844 N. King Street Wilmington, Delaware 19801 iii) Weil, Gotshal & Manges LLP 767 Fifth Avenue, New York, NY 10153 Attn: Eric L. Schondorf and Michael F. Walsh iv) Richards, Layton & Finger One Rodney Square, PO Box 551 Wilmington, Delaware 19899-0551 Attn: Mark D. Collins v) Morgan, Lewis & Bockius LLP 101 Park Avenue, New York, NY 10178-0060 Attn: Kristin C. Wigness vi) Klett Rooney Lieber & Schorling 1000 West Street, Suite 1410 PO Box 1397, Wilmington, Delaware 19899-1397 Attn: Teresa K.D. Currier Neenah Foundry Company, the operating subsidiary of ACP Holding Company is headquartered in Neenah, Wisconsin. The Company is in the business of gray & ductile iron foundries, metal machining to specifications and steel forging. The Company filed for chapter 11 protection on August 5, 2003 (Bankr. Del. Case No. 03-12414). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young Jones & Weintraub P.C., and James H.M. Sprayregen, P.C., Esq., and James W. Kapp III, Esq., at Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $494,046,000 in total assets and $580,280,000 in total debts. ADVANCED LIGHTING: Saratoga Acquires 100% of Preferred Shares ------------------------------------------------------------- Saratoga Partners, the New York private equity investment firm, has acquired 100 percent of the Preferred Equity and a minority interest in the common equity of Advanced Lighting Technologies. Pursuant to an amended joint plan of reorganization, Saratoga will make an additional $18 million equity investment in ADLT that will allow the Company to emerge from Chapter 11. The amended plan was approved by the Board of Directors of ADLT and was filed with the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division on Friday. ADLT designs, manufactures and markets metal halide lighting products, including materials, system components, systems and equipment. ADLT is the world leader in key dose materials for the metal halide and high-pressure sodium lighting products. The Company generated approximately $150 million in revenue in fiscal 2003. "Upon confirmation of an amended plan, ADLT will continue its business operations uninterrupted and will have substantially improved its liquidity and opportunities for future success," said ADLT CEO Wayne Hellman. Christian Oberbeck, managing director of Saratoga, said, "As the global leader in metal halide lighting technology, we believe ADLT is positioned to achieve strong future growth. The Company has strengthened its business operations, and we are looking forward to working with ADLT CEO Wayne Hellman and his management team in further building the business. We are also pleased to work with the Company on our joint reorganization plan, which will result in all creditors being paid in full." Saratoga Partners is a leading middle-market private equity investment firm with $750 million of committed and invested institutional equity capital. It invests in businesses with strong management teams and valuations of between $50 million and $500 million, specializing in companies in manufacturing, business services and media and telecommunications industries. ADLT is the third bankruptcy/restructuring related investment Saratoga has made this year. Saratoga acquired Data Return, LLC out of the Divine, Inc. Chapter 11 proceedings in May and was recently selected to lead the Chapter 11 reorganization plan of Alterra, Inc. through its publicly traded portfolio company, Emeritus Corporation. Since Saratoga was founded in 1984 as a division of the New York investment firm Dillon, Read & Co., Inc., it has invested in 32 companies with an aggregate value of more than $3.6 billion. It has been an independent firm since 1998 after Dillon Read was acquired by Swiss Bank Corporation (a predecessor to UBS AG). AHOLD: General Shareholders' Meeting to Convene on September 4 -------------------------------------------------------------- After consultation with the VEB (Dutch Association of Securities Owners), Ahold (NYSE:AHO) announces a General Shareholders' Meeting, to be held on Thursday, September 4, 2003 at 10:00 a.m. at the Fortis Circustheater in The Hague. The main topics of the meeting include an explanation by Ahold for the delay in the release of consolidated 2002 financial statements as announced on August 8, 2003, the appointment of Anders Moberg as Ahold President and Chief Executive Officer and Hannu Ryopponen as Chief Financial Officer, and a presentation by Anders Moberg of the main principles of Ahold's strategy going forward. On September 4, 2003, specific financial information on Albert Heijn and Stop & Shop for 2000 - 2002 will be published. This information is unaudited pending publication of the 2002 consolidated financial statements of Royal Ahold. It will be found in the business segment section of the Annual Report and Annual Report on Form 20-F. http://reports.huginonline.com/914210/121798.pdf * * * As previously reported, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Netherlands-based food retailer and food service distributor Ahold Koninklijke N.V. to 'BB-' from 'BB+', following the announcement by the group that accounting irregularities at its U.S. Foodservice arm were materially larger than expected. In addition, the senior unsecured debt ratings on Ahold were lowered to 'B+' from 'BB+', reflecting structural subordination. At the same time, Standard & Poor's affirmed its 'B' short-term rating on the group. ALLEGIANCE TELECOM: June 30 Balance Sheet Upside-Down by $167MM --------------------------------------------------------------- Allegiance Telecom, Inc. (OTC Bulletin Board: ALGXQ), a facilities-based national local exchange carrier (NLEC), reported results for the second quarter ended June 30, 2003. The Company reported second quarter revenues of $196.7 million, a decrease of 3.9 percent, compared with first quarter 2003 and an increase of 6.6 percent compared with the second quarter of 2002. "After voluntarily filing for bankruptcy in May 2003, Allegiance Telecom is moving forward. As part of an ongoing effort to reduce expenses, Allegiance has been reviewing all of its costs and expenses. All contracts that are no longer necessary or appropriate for our business will be rejected or renegotiated as part of this effort," said Royce J. Holland, chairman and CEO of Allegiance Telecom. "Sales of our integrated products and services continue to be strong as we streamline our operations." Allegiance Telecom had unrestricted cash and short-term investments totaling approximately $269.2 million at the end of 2Q03. "Allegiance Telecom reduced its cash consumed in the second quarter, using approximately $7.4 million of its cash and short- term investments to fund its operations, capital expenditures and debt service requirements. This represents a reduction of $13.3 million from the $20.7 million used in 1Q03. Capital expenditures were held to $4.8 million in 2Q03," said Thomas M. Lord, Allegiance Telecom executive vice president of corporate development and chief financial officer. At June 30, 2003, Allegiance Telecom's balance sheet shows a total shareholders' equity deficit of about $167 million. The Company continues to see improved productivity and efficiency as it focuses its business on profitability. In 2Q03, the Company's revenue per employee increased to a record level of $226,900, an increase of $6,800 or approximately 3.1 percent over the revenue per employee for 1Q03 of $220,100 and an increase of $57,800 or approximately 34.2 percent over the revenue per employee for 2Q02 of $169,100. Allegiance Telecom is currently pursuing financial restructuring plans under Chapter 11 of the U.S. Bankruptcy Code, as previously announced on May 14, 2003. The bankruptcy filings were made in the U.S. Bankruptcy Court in the Southern District of New York. The Company's bankruptcy case number is 03-13057(RDD) and its Bankruptcy Court filings are available via the court's Web site at http://www.nysb.uscourts.gov Please note that a PACER password is required to access documents on the Bankruptcy Court's website. Additional information regarding the Company's reorganization is available at http://www.algx.com/restructuring Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom(TM)" -- a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source provider approach. Allegiance's common stock is traded on the Over the Counter Bulletin Board under the symbol ALGXQ.OB. For more information visit http://www.algx.com ALLMERICA FINANCIAL: Names Frederick Eppinger President and CEO --------------------------------------------------------------- Allmerica Financial Corporation (NYSE: AFC) has named Frederick Eppinger President, Chief Executive Officer and Director, effective September 8. At the time of his appointment, Eppinger, 44, was Executive Vice President of property and casualty field and service operations for The Hartford, with responsibility for approximately 6,000 employees. He joined The Hartford in 2001, as Senior Vice President for Strategic Marketing, and has more than 20 years experience in the insurance and financial services businesses. Eppinger provided consulting services to insurance and financial services companies for more than 15 years before joining The Hartford. He was a partner in the financial institutions group at McKinsey & Company, an international management consulting firm, which he joined in 1985. While with McKinsey, Eppinger worked closely with leading insurance companies focusing on critical strategy, operational and organizational issues in both the property and casualty and financial services businesses. From 2000 to 2001, he was Executive Vice President of Marketing and Service Operations for ChannelPoint, Inc., which specialized in business-to-business technology for insurance and financial services companies. Eppinger began his career as a certified public accountant with Coopers & Lybrand. A 1981 graduate of the College of the Holy Cross, Eppinger received a master's degree in business administration from the Tuck School of Business at Dartmouth College in 1985, where he was an Edward Tuck Scholar. "We are extremely pleased to welcome Fred to Allmerica," said Michael P. Angelini, Chairman of Allmerica's Board of Directors. "He brings versatility of knowledge and experience in both the financial services and property and casualty insurance businesses. Fred will be an effective leader for Allmerica as we strengthen our regional franchises with The Hanover and Citizens insurance companies and maximize the value of our life insurance, investment management and broker-dealer businesses. He adds another dimension to our company." "I am pleased to have this opportunity to lead Allmerica to a successful future, and I appreciate the confidence the company's Board of Directors has in me," said Eppinger. "My focus will be to position Allmerica for increased profitability and growth, so we can continue to serve the interests of all of our stakeholders." Eppinger succeeds John F. O'Brien, who resigned as president and chief executive officer last fall. Since O'Brien's departure, the company's operations have been managed by Allmerica's Office of the Chairman, comprised of Angelini, J. Kendall Huber, Senior Vice President and General Counsel, Edward J. Parry, III, President of Allmerica Asset Accumulation and Allmerica Financial Corporation's Chief Financial Officer, and Robert P. Restrepo, Jr., President of Allmerica Property and Casualty. "Jay Huber, Ed Parry and Bob Restrepo have done an outstanding job of seeing Allmerica through a very difficult period, directing a successful restructuring effort and positioning us for a great future," said Angelini. "They have played a key role in strengthening our focus on the company's property and casualty operations, converting its agent distribution network into an independent broker-dealer and undertaking a number of capital improvement efforts." Earlier this year, Allmerica completed a series of transactions that significantly improved the capital and surplus positions of its life insurance companies. "We've accomplished a great deal over the last nine months," said Angelini. "I'm confident of our success under Fred's leadership and with the continuing support of our many dedicated and talented employees." Angelini will continue as Chairman of the Board. Allmerica Financial Corporation is the holding company for a diversified group of insurance and financial services companies headquartered in Worcester, Massachusetts. As reported in Troubled Company Reporter's August 18, 2003 edition, Standard & Poor's Ratings Services affirmed its 'BB-' counterparty credit and senior unsecured debt ratings and its 'B-' preferred stock rating on Allmerica Financial Corp. (NYSE:AFC) and revised its ratings outlook to positive from negative. At the same time, Standard & Poor's affirmed its 'B+' counterparty credit and financial strength ratings on AFC's life subsidiaries Allmerica Financial Life Insurance & Annuity Co. and its wholly owned subsidiary First Allmerica Financial Life Insurance Co., and revised the outlook to positive from negative. Standard & Poor's also affirmed its 'BBB+' counterparty credit and financial strength ratings on AFC's property/casualty (P/C) subsidiaries Hanover Insurance Co., Citizens Insurance Co. of America, and other affiliates (collectively, Allmerica P/C) and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B' short-term counterparty credit and commercial paper ratings on AFC and its 'B' short-term counterparty credit and short-term financial strength ratings on First Allmerica Financial Life Insurance Co. and withdrew all these ratings at the company's request. AMERCO: US Trustee Resets First Creditors' Meeting to Sept. 23 -------------------------------------------------------------- Acting U.S. Trustee for Region 17, Nicholas Strozza, informs the Court that the First Meeting of AMERCO's Creditors pursuant to Section 341(a) of the Bankruptcy Code scheduled on August 11, 2003 did not push through because of Amerco's failure to attend the meeting. Accordingly, Mr. Strozza reschedules the meeting to September 23, 2003 at 10:00 a.m. The meeting will be held at C. Clifton Young Federal Bldg., 300 Booth Street, Room 2110 in Reno, Nevada. All creditors of Amerco Real Estate Company are also invited, but not required, to attend the meeting. (AMERCO Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMERCO REAL: Creditors to Meet with UST Trustee on September 23 --------------------------------------------------------------- The United States Trustee will convene a meeting of Amerco Real Estate Company and its debtor-affiliates' creditors on September 23, 2003, 10:00 a.m., at the C. Clifton Young Federal Building, 300 Booth Street, Room 2110, Reno, Nevada 89509. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Amerco Real Estate Company, headquartered in Phoenix, Arizona, is an affiliate of AMERCO. The Company filed for chapter 11 protection on August 13, 2003 (Bankr. Nev. Case No. 03-52790). Bruce Thomas Beesley, Esq., at Beesley, Peck, Matteoni, Ltd., and Craig D. Hansen, Esq., at Squire, Sanders & Dempsey LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed its estimated debts and asset of more than $100 million each. AMERICAN CELLULAR: Completes Sale of Assets to Dobson Comms. ------------------------------------------------------------ Dobson Communications Corporation (Nasdaq:DCEL) has completed its acquisition of American Cellular Corporation, following the successful restructuring of American Cellular's indebtedness and equity ownership. "With almost 1.6 million subscribers, the new Dobson Communications is now the ninth largest wireless operator in the United States and the largest independent rural wireless provider," said Everett Dobson, chairman, chief executive officer and president. "The combined entity serves markets with a population of approximately 11.1 million. These are among the most strategically attractive markets in the United States, with excellent growth potential and relatively low wireless penetration, compared to the nation as a whole." As of the quarter ended June 30, 2003, Dobson had reported trailing 12 months (TTM) total revenue of $584.6 million; EBITDA of $265.6 million (TTM); and income from continuing operations of $44.9 million (TTM). As of the end of the second quarter of 2003, American had reported total revenue of $460.6 million (TTM); EBITDA of $195.6 million (TTM); and a loss from continuing operations of $418.9 million (TTM), which included a fourth quarter 2002 impairment of goodwill totaling $423.9 million. As part of the acquisition and American Cellular restructuring, holders of $681.9 million outstanding principal amount of American Cellular 9-1/2% Senior Subordinated Notes (CUSIP No. 025058AF5) received approximately $48.7 million in cash, 43.9 million shares of newly issued Dobson Communications Class A common stock, and 681,900 shares of a new series of Dobson Communications convertible preferred stock, which has an aggregate liquidation preference of $125 million and is convertible into a maximum of approximately 13.9 million shares of Dobson Communications Class A common stock. Holders representing 97.4 percent of the outstanding principal amount of the Notes accepted the offer, and, as a result, American Cellular has become a wholly owned, indirect subsidiary of Dobson Communications. Dobson has agreed to file within 20 days a re-sale shelf registration statement for the shares of Class A common and the preferred stock issued or issuable in connection with the transaction. AT&T Wireless (NYSE:AWE), which with Dobson acquired American Cellular in February 2000, no longer has an equity stake in the subsidiary. AT&T Wireless owns approximately 4.5 million shares of Dobson Communications common stock and recently signed long-term GSM/GPRS roaming agreements with both Dobson and American Cellular. Dobson Communications stated that the restructured American Cellular's total operations combined with Dobson's operations now represent an entity with formidable competitive advantages. On a combined basis: - The Company serves wireless customers in 16 states, including being the largest wireless operator in Alaska. - The Company has a low-turnover, postpaid subscriber base in markets that it estimates are only 25 percent to 30 percent penetrated by wireless services. Dobson believes that its markets have substantial potential for growth. - The Company's markets have a significantly lower level of competition than metropolitan U.S. markets. Dobson's networks are 100 percent digital and operate primarily in the 850 MHz spectrum, which is the most efficient spectrum frequency for outer suburban and rural markets. Dobson believes that the low density of population in its markets also presents an obstacle to entry by new competitors. - Dobson's combined TDMA network comprises 1,720 cell sites throughout the continental United States and Alaska, and it is currently being overlaid with 2.5-generation, GSM/GPRS technology that will enable the Company to provide next- generation voice and data services. - Approximately 72 percent of its subscribers are under contract, with the average length of contract at June 30, 2003 being 11.5 months for current subscribers. For the second quarter of 2003, the Company's combined customer churn averaged only 1.6%. - In terms of future roaming revenue, Dobson has signed agreements to serve as Cingular's preferred roaming partner through December 2011, and with AT&T Wireless through 2008. - Dobson and American Cellular have steadily reduced cash cost per user in recent quarters, compared with the same periods of the previous year. This has enabled the companies to increase average monthly profit per subscriber, which in turn has led to impressive gains in EBITDA margins. Dobson reported an EBITDA margin on total revenue of 49.1 percent for the quarter ended June 30, 2003, compared with 40.9 percent for the same quarter last year. American Cellular reported an EBITDA margin of 45.5 percent for the quarter ended June 30, 2003, compared with 40.6 percent for the same quarter last year. "With this acquisition, we have strengthened our credit profile and can now further capitalize on our strong operating track record," Mr. Dobson said. "Given our combined footprint, strong market position and competitive strengths, we now look ahead to even greater achievements as we bring advanced wireless voice and data services to our customers in suburban and rural America." Dobson Communications is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, the Company owns or manages wireless operations in 16 states. For additional information on the Company and its operations, visit its Web site at http://www.dobson.net As reported in Troubled Company Reporter's July 17, 2003 edition, Standard & Poor's Ratings Services lowered the corporate credit rating on American Cellular Corp. to 'SD' from 'CC' and the subordinated debt rating on the company to 'D' from 'C'. The ratings have been removed from CreditWatch, where they were placed April 5, 2002. The rating actions followed the company's announcement of its proposed restructuring, which would involve a tender offer of less than full value for the company's approximately $700 million of 9.5% senior subordinated notes due 2009. The deal also proposes a prepackaged bankruptcy plan if the tender offer is not successful. The 'CC' bank loan rating on the company had been affirmed and was also removed from CreditWatch. The outlook on the bank loan rating is negative. The debt exchanged is viewed by Standard & Poor's as tantamount to a default on the original debt issue terms. AMI SEMICONDUCTOR: S&P Affirms BB- Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Pocatello, Idaho-based AMI Semiconductor Inc. and revised its outlook on the company to stable from negative, reflecting improved profitability levels. In addition, unrated AMI Holdings Inc., AMI's parent, filed a proposed $450 million initial public offering of common stock, which will primarily repay preferred stock that Standard & Poor's largely viewed as equity. AMI also expects to issue a $125 million senior secured term loan under terms similar to its existing bank facility, raising the total bank facility, including the company's $75 million revolving credit facility, to $200 million from $115 million. As a result of the increased loan size, Standard & Poor's expects to assign its 'BB-' bank loan rating to the facility once terms are final, the same as the corporate credit rating, rather than one notch above as the existing loan is rated. Proceeds from the IPO and term loan, totaling $575 million, are expected to refinance about $425 million in preferred shares, which have been largely treated as equity by Standard & Poor's. In addition, proceeds would repay AMI's existing $40 million term loan, redeem $70 million in subordinated notes, and pay about $40 million in fees and redemption premiums. As a result, these transactions have little impact on AMI's financial profile. Total debt following the completion of these transactions is expected to increase to about $255 million from $240 million. Operating margins before depreciation and amortization improved to 23% in the six months ended June 2003 from 16% in the year-earlier period. Headcount reductions, improved manufacturing and materials efficiencies, and a migration of test activities to AMI's lower- cost facility in the Philippines are making a profitable contribution to the overall business. "We expect the company's sole-source long-term customer contracts to limit revenue and cash flow volatility somewhat, providing a measure of downside support for ratings," said Standard & Poor's credit analyst Emile Courtney. "AMI's highly competitive and evolving markets limit upside potential on ratings." AMI supplies customized semiconductor chips, called application- specific integrated circuits, for industrial, communications, military, and other applications. ANC RENTAL: Court Clears 2003 Cananwill Financing Agreement ----------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates obtained the Court's approval of a premium finance agreement with Cananwill, Inc. The Court's approval also grants Cananwill first priority security interest in any unearned or returned premiums and other amounts due to the Debtors under the property insurance policies that are financed under the Financing Agreement. 2003 Insurance Program The Financing Agreement provides for $400,000,000 in property insurance coverage, including an additional $50,000,000 in earthquake coverage above the first $50,000,000 layer in earthquake coverage, for the period from June 30, 2003 to June 30, 2004. The premium to be paid by the Debtors in connection with this agreement is estimated to be $6,710,000, which consists of a $1,677,000 downpayment, with the remaining $5,033,450 to be financed over nine months at an annual interest rate of 4.28%. Therefore, the Debtors' monthly payments will be $570,000. The 2003 Insurance Program will provide $150,000,000 in additional coverage over the 2002 Insurance Program at a cost savings totaling $2,500,000. The Debtors believe that these terms are both fair and reasonable. The Financing Agreement provides that in the event that there is a payment default under the agreement, the automatic stay provisions of Section 362 of the Bankruptcy Code will be immediately lifted, and, after providing the Debtors with sufficient notice as required by applicable state law, Cananwill will have the right to cancel the underlying Policies. In this case, Cananwill would also be entitled to apply any unearned or returned premiums due under the Policies to any amount owing by the Debtors to Cananwill without further application to the Bankruptcy Court. In the event that upon cancellation of the Policies financed by Cananwill, the unearned or returned premiums are insufficient to pay the Debtors' total amount due to Cananwill under the Financing Agreement, then any remaining amount owing to Cananwill, including reasonable attorneys fees, will be given an administrative expense claim against the Debtors entitled to priority pursuant to Section 503 of the Bankruptcy Code. (ANC Rental Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARVINMERITOR: Appoints Information Technology Vice Presidents ------------------------------------------------------------- ArvinMeritor Inc. (NYSE: ARM) announced three vice president appointments in its Information Technology department. Kent Barth has been appointed vice president, eBusiness Development and Shared Services Applications; Jeanne Booth has been named vice president, Technology Infrastructure and Operations; and Yomi Famurewa has been appointed vice president, Supply Chain and Product Development Systems. All will report to Perry Lipe, senior vice president and Chief Information Officer. Barth joined the company in 1999 and previously served as senior director, eBusiness Development and Customer Value Systems. Prior to joining ArvinMeritor, he worked as manager, Internet Applications, for Fisher Controls. He holds a bachelor's degree in computer science from the University of Iowa and currently resides in Columbus, Ind. Booth also joined the company in 1999 and most recently served as senior director, Enterprise Architecture. Before coming to ArvinMeritor, she served as director of Information Management for Cummins Engine Company. Booth graduated with honors from Cardinal Stritch University in Milwaukee with a bachelor's degree in management. She is currently working on her master of science degree in Information Technology. Booth resides in Rochester, Mich. Famurewa joined ArvinMeritor in 1996 and most recently held the position of senior director, Product Design and Supply Chain eBusiness. Prior to that, he held various positions at Rockwell Automotive and AlliedSignal. Famurewa has a master's degree in industrial technology from Eastern Michigan University and a bachelor's degree in electrical engineering from the University of Ife in Nigeria. He resides in Franklin, Mich. ArvinMeritor, Inc. (S&P, BB+ Corporate Credit & Senior Unsecured Debt Ratings, Negative) is a premier $7-billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. In addition, ArvinMeritor is a leader in coil coating applications. The company is headquartered in Troy, Mich., and employs 32,000 people at more than 150 manufacturing facilities in 27 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: http://www.arvinmeritor.com ATCHISON CASTING: Seeking Nod to Employ KPMG as Accountants ----------------------------------------------------------- Atchison Casting Corporation and its debtor-affiliates is seeking permission from the U.S. Bankruptcy Court for the Western District of Missouri to employ KPMG LLP as their accountants. The Debtors need to employ KPMG to provide: A. Accounting and Auditing Services i. audit and review examinations of the financial statements of the Debtors as may be required from time to time; ii. analysis of accounting issues and advice to the Debtors' management regarding the proper accounting treatment of events; iii. assistance in the preparation and filing of the Debtors' financial statements and disclosure documents required by the Securities and Exchange Commission; iv. assistance in the preparation and filing of the Debtors' registration statements required by the Securities and Exchange Commission in relation to debt and equity offerings; v. audits of financial statements of the Debtors' employee benefit plans, as required under ERISA; and vi. performance of other accounting services for the Debtors as may be necessary or desirable. B. Tax Advisory Services i. review of and assistance in the preparation and filing of any tax returns; ii. advice and assistance to the Debtors regarding tax planning issues, including, but not limited to, assistance in estimating net operating loss carryforwards, international taxes, and state and local taxes; iii. assistance regarding transaction taxes, state and local sales and use taxes; iv. assistance regarding tax matters related to the Debtors' pension plans; v. assistance regarding real and personal property tax matters, including, but not limited to, review of real and personal property tax records, negotiation of values with appraisal authorities, preparation and presentation of appeals to local taxing jurisdictions and assistance in litigation of property tax appeals; vi. assistance regarding any existing or future IRS, state and/or local tax examinations; and vii. other consulting, advice, research, planning or analysis regarding tax issues as may be requested from time to time. C. Contingent Ad Valorem Tax Services i. assistance regarding real and personal property tax matters, including, but not limited to, review of real and personal property tax records, negotiation of values with appraisal authorities, preparation and presentation of appeals to local taxing jurisdictions and assistance in litigation of property tax appeals. D. Financial Advisory Services i. assistance in the preparation and review of reports or filings as required by the Bankruptcy Court or the Office of the United States trustee, including but not limited to schedules of assets and liabilities, statement of financial affairs, mailing matrix and monthly operating reports; ii. review of and assistance in the preparation of financial information for distribution to creditors and other parties-in-interest, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; iii. assistance with analysis, tracking and reporting regarding cash collateral and any debtor-in-possession financing arrangements and budgets; iv. assistance with implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles, including, but not limited to, Statement of Position 90-7; v. analysis of assumption and rejection issues regarding executory contracts and leases; vi. assistance in preparing documents necessary for confirmation, including, but not limited to, financial and other information contained in the plan of reorganization and disclosure statement; vii. advice and assistance on the tax consequences of proposed plans of reorganization, including, but not limited to, assistance in the preparation of Internal Revenue Service ruling requests regarding the future tax consequences of alternative reorganization structures; viii. assistance with claims resolution procedures, including, but not limited to, analyses of creditors' claims by type and entity and maintenance of a claims database; and ix. other such functions as requested by the Debtors or its counsel to assist the Debtors in its business and reorganization. KPMG will bill the Debtors their current hourly rates in exchange for its services: Accounting and Tax Advisory --------------------------- Partners $500 - $600 Directors/Senior Managers/Managers $300 - $475 Senior/Staff Accountants $175 - $275 Financial Advisory ------------------ Partners $540 - $600 Managing Directors/Directors $450 - $510 Senior Managers/Managers $360 - $420 Senior/Staff Consultants $270 - $330 Associate $180 - $240 Paraprofessionals $120 Atchison Casting Corporation, headquartered in St. Joseph, Missouri, together with its affiliates, produce iron, steel and non-ferrous castings and machining for a wide variety of equipment, capital goods and consumer markets. The Company filed for chapter 11 protection on August 4, 2003 (Bankr. W.D. MO. Case No. 03-50965). Mark G. Stingley, Esq., and Cassandra L. Writz, Esq., at Bryan Cave LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $136,750,000 in total assets and $96,846,000 in total debts. BERTHEL GROWTH: Liquidity Concerns Raise Going Concern Doubt ------------------------------------------------------------ Berthel Growth & Income Trust continues to have a deficiency in net assets, as well as net losses and negative cash flow from operations. In addition, Berthel SBIC, LLC, a wholly owned subsidiary of the Trust, was in violation of the maximum capital impairment percentage permitted by the SBA. The SBIC received notice of default from the Small Business Administration advising that the SBIC must cure its default on the outstanding debentures prior to March 22, 2002. Since that time, the capital impairment violation has not been cured. Pursuant to the notice the SBA made demand for repayment of $9,500,000 (plus accrued interest) outstanding pursuant to the subordinated debentures. On August 22, 2002, the SBA notified the SBIC that all debentures, accrued interest and fees were immediately due and payable. The SBIC was transferred into the Liquidation Office of the SBA effective August 22, 2002. The SBIC submitted a plan of debt and interest repayment to the SBA on January 31, 2003 and received a response dated February 21, 2003. Management intends to continue negotiations with the SBA regarding the interest rate and 1% SBA loan fees on the debentures that have been called. The assets and liabilities of the SBIC are $9,240,817 and $9,789,509, respectively as of June 30, 2003. These factors raise substantial doubt about the ability of the Trust to continue as a going concern. No assurance can be given that the SBIC will be successful in negotiating the terms of the debentures with the SBA. If the terms are successfully negotiated, no assurance can be given that the Trust will have sufficient cash flow to repay the debt or that the Trust will be financially viable. Berthel Fisher & Company, Inc., the parent of the Trust Advisor, has $2.2 million of unsecured debt that was due December 31, 2002. Berthel Fisher & Company, Inc. has not paid this debt as of August 11, 2003, and is in default. Since Berthel Fisher & Company, Inc. is in default, its creditors could take legal action to enforce their right to repayment. Ultimately, this could result in the bankruptcy of Berthel Fisher & Company, Inc. Since the Trust Advisor is a subsidiary and asset of Berthel Fisher & Company, Inc., the bankruptcy of Berthel Fisher & Company, Inc. could cause the Trust Advisor to be unable to continue as a going concern. If this were to happen, the Trust would need to appoint a new trust advisor. The new trust advisor could require additional fees and charges that would have a significant negative impact on the Trust. The Trust's cash and cash equivalents amounted to $1,885,110 at June 30, 2003 and $1,125,133 at December 31, 2002. Net cash from operating activities was a net source of cash of $759,977 for the six months ending June 30, 2003, and a net use of cash of $278,745 for the same period in 2002, with the difference attributable to a $1,000,000 payoff of the Futuremed note in 2003. Also, International Pacific Seafoods paid $140,000 on their note during the first two quarters of 2003. The above factors raise substantial doubt about the ability of the Trust to continue as a going concern. No assurance can be given that the SBIC will be successful in negotiating the terms of the debentures with the SBA. Even if terms are successfully negotiated, no assurance can be given that the Trust will have sufficient cash flow to repay the debt or that the Trust will be financially viable. BMC INDUSTRIES: June 30 Balance Sheet Upside-Down by $34 Million ---------------------------------------------------------------- BMC Industries, Inc. (NYSE:BMM) announced consolidated revenues from continuing operations of $42.8 million for the second quarter ended June 30, 2003, compared to $49.2 million in the year-ago period. The company reported a consolidated net loss (including charges related to restructuring items discussed below) of $95.3 million for second quarter 2003 versus a net loss of $2.3 million in second quarter 2002. Excluding the charges, BMC incurred a consolidated net loss from continuing operations of $14.4 million during the second quarter 2003, versus a consolidated net loss from continuing operations of $3.8 million in the year-earlier quarter. The second quarter 2003 net loss included $77.4 million of charges against asset valuations. Of this total, the company's Buckbee- Mears group recognized approximately $63.1 million in charges resulting from the abandonment of its German subsidiary and the impairment of its remaining aperture mask assets. The Optical Products group wrote down approximately $4.4 million of impaired assets primarily related to the group's French optical laboratory and excess real estate held for sale in Azusa, CA. The company also recognized a $9.9 million charge as a valuation reserve against its remaining deferred tax assets. "In the second quarter, our Buckbee-Mears business faced significant challenges from continued price competition, the reduction in picture-tube production by several key European mask customers, and the shift of television production to Asia," said BMC chairman and chief executive officer Douglas C. Hepper. "In addition, soft optical lens market conditions prevalent throughout most of the second quarter stalled the rebound we had seen in Vision-Ease sales during the first quarter of the year." "As we were confronted with these issues, the company took actions to implement restructuring initiatives to conserve cash and improve operational efficiencies," said Hepper. "Nevertheless, BMC's poor second-quarter results and heavy debt load have put the company in a difficult position. The company is undertaking necessary restructuring initiatives that we expect to enable us to continue operations more efficiently." For the six-months ended June 30, 2003, BMC reported consolidated revenues from continuing operations of $85.0 million compared to $98.9 million in the same period of 2002. BMC incurred a net loss of $94.6 million (including the charges discussed above) for the first six months of 2003. This compares to a net loss of $57.2 million for the same period in 2002. Excluding the charges noted above, the company recorded a net loss from continuing operations of $14.9 million for the first six months of 2003 compared to a net loss of $9.2 million, adjusted for comparative purposes, in the first half of 2002. BMC Industries' June 30, 2003 balance sheet shows a working capital deficit of about $83 million, and a total shareholders' equity deficit of about $34 million. Restructuring Initiatives As announced on June 27, 2003, in response to ongoing aperture mask market uncertainty and projections of significant negative cash flow from the German mask operations, the company ceased its financial and management support of its wholly-owned German subsidiary and has limited its mask operations to its facility in Cortland, NY. The company has also initiated a shutdown of its facility in Tatabanya, Hungary, which has performed inspection and other services for BMG and Vision-Ease. The decision on the German and Hungarian facilities reduces BMG's payroll by approximately 375 salaried and hourly employees. The company continues to work closely with its advisors and appropriate governmental authorities in Germany and Hungary to maintain compliance with its legal obligations during this process. Since the end of June, BMG has initiated further cost savings including an additional workforce reduction of 89 salaried and hourly employees at its Cortland plant. The group expects to decrease payroll and other expenses by an estimated $4.6 million annually as a result. Cash severance payments are expected to total approximately $0.3 million. BMG also announced plans to close its non-mask etching businesses, including discontinuing production of medical products. The company has discontinued its cardiovascular stent project and stopped production on other non-mask products. BMG is also reducing its mask production plans for the remainder of the year to match output with demand forecasts. The group is focused on further reducing working capital, eliminating all non- essential spending, closing the group's headquarters office in Tully, NY, and relocating all personnel to the nearby Cortland facility. Vision-Ease and the company's corporate office (which were integrated last year) are also taking additional steps to restructure in light of current market conditions and recent performance. This group is reducing headcount further, eliminating 31 positions at the division level and corporate office -- with an estimated annual savings of $2.6 million. These savings are expected to be reduced by $0.2 million in cash severance payments. Additionally, the group is leveraging the strengths of its lower- cost manufacturing facility in Jakarta, Indonesia, by further increasing the plant's polycarbonate production capacity. At the group's Ramsey, Minn., facility, the focus is on reducing excess inventory and improving production yields. Hepper added, "Our commitment to our optical lens business remains strong. This business has stable markets and growth in our principal product segments. We intend to use all available resources to ensure its growth and prosperity. At the same time, we are taking steps to cut costs and improve cash flow." Buckbee-Mears Group Operations With the discontinuation of the German aperture mask operations, second-quarter 2003 revenues for the Buckbee-Mears group from continuing operations totaled $16.4 million compared to $19.5 million in the second quarter of 2002. The continued movement of picture-tube production out of the company's home markets in North America and Europe, into Asia, and reduced demand from many traditional customers adversely affected sales during the quarter. The group's year-over-year revenue comparison was also negatively impacted by the discontinuation of several product lines last year, including computer monitor masks and the non-mask, sheet- etching business. BMG reported an operating loss from continuing operations of $47.4 million during the second quarter 2003, versus operating income of $0.6 million a year earlier. The second quarter 2003 operating loss did not include $24.1 million in charges related to the discontinuation of the German aperture mask operations and associated operating losses of the discontinued operations for the period, all of which were reported below operating income (loss) on the Statements of Operations. The second quarter 2003 loss does include $42.4 million in charges for the impairment of long-lived assets relating to the SFAS 144 valuation adjustment for certain fixed assets associated with the remaining Cortland aperture mask business, and for fixed assets associated with the closing of the Hungarian inspection facility. Additionally, the group's profitability was negatively impacted in the second quarter 2003 by lower sales and higher costs associated with unabsorbed fixed costs from the additional shutdown of manufacturing lines at the Cortland facility during the quarter. The group's operating costs also included $3.5 million in charges for additional inventory reserves, a write-off of a long-term receivable from a non-mask customer, and by severance charges associated with the Hungarian inspection facility shutdown. Overall aperture mask revenues from continuing operations declined 16 percent, or $2.8 million, in the second quarter 2003. Revenues from television masks decreased 4 percent, or $0.6 million, in the second quarter 2003 compared to last year's second quarter. The remaining portion of the variance was predominantly due to reduced computer monitor sales, given the company's exit from that business last year. Sales declines in the North American and European regions were partially offset by increased sales in Asia from a mix of both traditional customers and new customers. Prices in the aperture mask market remain under pressure, with worldwide aperture mask capacity continuing to exceed demand. Revenues from non-mask operations decreased quarter-over-quarter, and these operations have been discontinued. During the second quarter, the company temporarily shut down all three active aperture mask production lines at its Cortland manufacturing facility for a three-week period in June, negatively impacting operating margins. BMG also shut down both of its active manufacturing lines in Germany for a significant portion of the second quarter. Optical Products Group Operations Second quarter revenues for the Optical Products group totaled $26.4 million compared to $29.7 million in the prior-year quarter. Polycarbonate lens sales (representing 71% of total Optical Product group sales) declined $1.6 million compared to the year- ago period. The company lost market share in the highly price sensitive commodity polycarbonate sector, which was a factor in reduced polycarbonate sales. Lower-margin, plastic lens sales were down $0.4 million versus the second quarter 2002 as a result of supply constraints with a third party vendor. Glass lens sales decreased $1.2 million compared to last year's second quarter, consistent with the overall decline in the market for lenses of this material. The Optical Products group reported a 2003 second-quarter operating loss of $10.9 million. This compares to an operating loss in the year-ago period of $0.4 million, which did not include any adjustments. The group's second-quarter 2003 operating loss included $4.4 million in charges related to the impairment of long-lived assets related to its optical laboratory facility in Brou, France and two surplus manufacturing buildings in Azusa, CA. The Azusa facilities are held for sale and were written-down to their net realizable value. The group also had charges of approximately $6.6 million to cost of goods sold related to items including the discontinuation of certain product lines, write-offs related to certain glass raw material and finished goods, changes in plastic lens sourcing arrangements, and severance related to staff reductions made in the second quarter 2003. Commenting on Vision-Ease's second quarter results, Hepper said: "The improvement we saw in sales and operating margins in the first quarter was not evident in the second quarter. In an effort to control our debt and reduce inventories, we worked hard to reduce or eliminate slow-moving or non-critical items -- resulting in 7,000 fewer SKU's by quarter end. We also moved aggressively to reduce inventory by reducing staff and slowing production of polycarbonate and glass lenses. This led to increased unabsorbed manufacturing costs and lowered operating profit in the second quarter." "During the quarter, we made good progress improving the quality and consistency of our lens products and maintained high service levels. Our Jakarta facility continues to offer significant cost advantages, allowing Vision-Ease to re-enter several of the commodity markets where we have lost some ground. The Optical Products group holds the most promise and the most upside for the organization. We will continue the drive to improve operations and increase efficiencies in this strategic area." Debt and Liquidity Total debt at June 30, 2003, was $130.7 million, compared to $113.1 million at March 31, 2003, and $112.3 million at December 31, 2002. Total debt increased as a result of lower earnings and significant increases in working capital needs during the quarter. As of June 30, 2003, the company failed to comply with several covenants, including failure to make $3.5 million in scheduled principal payments and failure to meet a total debt to trailing 12-month EBITDA ratio, which was a covenant not to exceed 3.50 times at quarter end June 30, 2003. The company violated this covenant as of June 30, 2003, as its twelve-month EBITDA was negative. On July 1, 2003, the company also failed to make a payment of $1.0 million in fees due on that date. On July 2, 2003, BMC received a waiver from its banks regarding certain covenants, and on July 16, 2003, the company received an additional 60-day waiver from its banks regarding these covenants. This waiver extended the time period until September 15, 2003, for BMC to make its scheduled principal and fee payments. In addition, the banks and the company agreed that no additional borrowings would occur during the waiver period. BMC, on July 30, 2003, received a temporary deferral agreement relating to certain interest payments scheduled to be made in late July and early August 2003. The agreement deferred interest on five separate floating-rate notes for a total interest deferral of approximately $687 thousand. The agreement, subject to certain conditions, deferred these interest payments until August 28, 2003. The company continues to work with its lenders and advisors to secure a longer-term alternative to BMC's existing financing arrangement or another agreement for the restructuring of outstanding debt, including relief from certain covenants, extended payment terms and additional borrowing capacity. If BMC is unable to achieve additional waivers or other relief from covenants, payment obligations and other requirements under the Agreement, the company likely will be in default under its credit agreement as of either August 28, 2003, or September 15, 2003. Given the current market environment, it is unlikely that BMC will be able to negotiate such alternative arrangements before the most recent waiver expires on September 15, 2003. The failure to maintain compliance with all covenants under the credit agreement would result in a default, which would give lenders the ability to accelerate all outstanding debt. In such event, BMC would need to refinance or restructure the company's debt and, if unsuccessful in these efforts, to consider all other options, including seeking protection under the bankruptcy laws. On June 27, 2003, BMC announced that it had retained William Blair & Company, LLC, to assist the board in the evaluation of a range of strategic alternatives. Early in third quarter 2003, Blair completed its presentation of alternatives to the company, which concluded the firm's work for BMC. The company has retained a financial advisor to assist BMC and its lenders in developing a comprehensive restructuring plan. BMC's cash balance was $5.6 million at June 30, 2003. At present, the company is unable to borrow further funds under its bank credit facility. To operate within this limitation, the company is working with its vendors and customers to conserve cash. NYSE Suspension of Listing On August 18, 2003, BMC received notice from the New York Stock Exchange that its common stock, listed under the ticker symbol BMM, will be suspended prior to the market opening on August 21, 2003, or an earlier date in the event of a material adverse development. The NYSE also indicated that it would thereafter commence proceedings with the Securities and Exchange Commission to delist these securities. This action follows the NYSE's previously announced notification to BMC in July 2003 that the company was not in compliance with the NYSE's continued listing requirements and that BMC's common stock could be subject to delisting. The company is working with the NYSE to facilitate a smooth transition to the OTC (over-the-counter) Bulletin Board ("OTCBB") and do not expect the change in trading venue to impact its current operations or financial performance. We expect that BMC's common stock will be quoted on the OTCBB beginning on August 21, 2003 under a new ticker symbol. The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in OTC equity securities. Investors should be aware that trading in BMC's common stock through market makers and quotation on the OTCBB and the "pink sheets" may involve risk, such as trades not being executed as quickly as when the common stock was listed on the NYSE. BMC Industries, founded in 1907, comprises two business segments: Buckbee-Mears and Optical Products. The Buckbee-Mears group offers a range of services and manufacturing capabilities to meet the most demanding precision metal manufacturing needs. The group is also the only North American manufacturer of aperture masks, a key component in color television picture tubes. The Optical Products group, operating under the Vision-Ease Lens trade name, is a leading designer, manufacturer and distributor of polycarbonate and glass eyewear lenses. The group also sources and distributes plastic, hard-resin eyewear lenses. Vision-Ease Lens is a technology and a market share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet filtering and impact resistant characteristics. BMC Industries, Inc. is listed on the New York Stock Exchange under the ticker symbol "BMM." For more information about BMC Industries, Inc., visit the company's Web site at http://www.bmcind.com BULL RUN CORP: Sells Interest in Gray Television, Inc. ------------------------------------------------------ Bull Run Corporation (Nasdaq: BULL) has sold its entire position in Gray Television, Inc. common stock at a price of $16.95 per share. As a result of the sale, the Company reduced its debt by $28 million, and executed an amendment to its bank credit facility that substantially reduces its overall borrowing costs and extends the facility's maturity date from September 30, 2003 to November 30, 2004. Gray repurchased 1,017,647 shares of its class A common stock (NYSE: GTN.a) and 11,750 shares of its common stock (NYSE: GTN) from Bull Run. Additionally, certain family entities of J. Mack Robinson purchased the remaining 1,000,000 shares of Gray class A common stock held by Bull Run. Mr. Robinson is Bull Run's Chairman of the Board and Gray's Chairman and CEO. Bull Run reduced its outstanding bank debt to approximately $55.9 million from the proceeds on the sale of its investment in Gray. The interest rate charged by the lenders under the amended bank facility was reduced to the banks' prime rate. The Company has reduced its bank debt by $38 million over the past nine months. Bull Run, through Host Communications, provides affinity, multimedia, promotional and event management services to universities, athletic conferences, corporations and associations. * * * LIQUIDITY AND CAPITAL RESOURCES Bull Run's May 31, 2003 balance sheet shows that its total current liabilities outweighed its total current assets by about $100 million. In its Form 10-Q filed with the Securities and Exchange Commission, Bull Run reported: "As of May 31, 2003, the Company's indebtedness to its bank lenders was $83,932,000. Under an amended and restated credit agreement dated October 11, 2002, the Company and its bank lenders amended the Company's bank credit agreement to modify borrowing capacity restrictions, revise certain financial covenants, provide for certain scheduled principal payments, revise the maturity date of the obligations under the bank credit facility to September 30, 2003, and reduce the interest rate charged on outstanding borrowings, among other changes. Under the amended agreement, the Company is required to make scheduled payments on its term loans of at least $5,000,000 by each of January 15, 2003, April 15, 2003 and July 15, 2003. The amended agreement also requires the Company to maintain a minimum net worth amount at all times and requires the maintenance of minimum profitability thresholds determined quarterly, beginning November 30, 2002. "In December 2002, the Company sold its investment in Rawlings and used the proceeds to make principal payments of $6,764,000. In April 2003, the Company sold its investment in warrants for Gray common stock, resulting in proceeds of $5,121,000, of which, $3,233,000 was used to a make a principal payment. As a result, the Company met the requirement to make aggregate principal payments of at least $5,000,000 by each of January 15, 2003 and April 15, 2003. In order to facilitate the funding of the $5,000,000 principal payment obligation due by July 15, 2003, the Company intends to issue an interest-bearing short-term subordinated note or notes to an affiliate or affiliates of the Company, having an aggregate face value of $5,000,000. "The Company currently anticipates that its operations through September 2003 will experience negative cash flow. The Company is currently pursuing potential remedies to deal with its debt obligations coming due and with the cash required by its operations. The Company expects to negotiate the terms of a long- term refinancing or extension of the credit facility for execution prior to the current facility's maturity date of September 30, 2003. Although the Company believes that it will be successful in negotiating a long-term refinancing or extension of the credit facility, there is no assurance that it will be able to do so. Other remedies include (a) the sale of certain investment and/or operating assets of the Company; (b) the issuance and sale of equity securities of the Company, which may include the Company's preferred stock; (c) the issuance of subordinated debt; or (d) a combination thereof. The ability to use proceeds from the sale of investment assets for purposes other than reduction of bank debt requires the consent of all parties to the Company's bank credit agreement. The Company's bank credit agreement does provide the Company the ability to issue additional subordinated debt or equity securities for cash proceeds of up to $5,403,000 without requiring an associated reduction in its outstanding debt to the banks. Although there is no assurance that the Company will be able to effect the foregoing potential transactions or generate sufficient cash from these potential transactions within a necessary time frame, on the basis of preliminary discussions with third parties, including affiliates, with whom such transactions may be consummated, the Company believes that it has viable options available to it to satisfactorily address its current working capital deficiency. "Since all amounts outstanding under the bank credit agreement are due and payable by the September 30, 2003 maturity date, all such amounts are classified as a current liability in the Company's May 31, 2003 balance sheet. "The Company's credit agreement currently provides for (a) two term loans for borrowings currently totaling $63,932,000, bearing interest at either the banks' prime rate plus .75% or the London Interbank Offered Rate ("LIBOR") plus 3.75%, requiring minimum aggregate principal payments as previously described, with all amounts outstanding under the term loans due on September 30, 2003; and (b) a revolving loan commitment (the "Revolver") for borrowings of up to $20,000,000 until maturity on September 30, 2003, bearing interest at either the banks' prime rate plus .75% or LIBOR plus 3.75%. Borrowings under the Revolver are allowed to exceed 100% of eligible accounts receivable, however amounts borrowed exceeding such threshold will bear an additional amount of interest at a rate of 2% per annum. As of May 31, 2003, the $20,000,000 borrowing capacity under the Revolver was fully utilized, and no additional borrowing capacity was available. The Company believes that it is in its best interests to maintain the $20,000,000 outstanding balance under the Revolver at all times, due to certain terms of the credit agreement that potentially limit future borrowings under the Revolver. The Company anticipates that it will continue to utilize fully the availability under the Revolver. "In September 2002, the Company's Chairman invested $3,000,000 for 3,000 shares of Series C convertible preferred stock, which was used by the Company for working capital purposes. Under the terms of the amended credit agreement, up to $12,500,000 in funding for working capital purposes, if necessary, may be provided by the issuance of equity securities, including shares of the Company's redeemable preferred stock, or by the issuance of subordinated debt. Through May 31, 2003, the Company had received a total of $7,097,000 in cash for working capital purposes from the previously discussed issuances of preferred stock to the Company's Chairman and his affiliates. "The Company's Chairman personally guarantees substantially all of the debt outstanding under the current credit facility, and if the Company is unable to meet its principal payment obligations under the amended credit facility, it is likely that the bank lenders would call the guarantee, thereby requiring the Chairman to repay the amount of the loan to the banks. Under the terms of his guarantee, the Chairman has the option to purchase the entire loan from the banks, and thereby become the holder of the debt currently payable to the banks and the related lien on the Company's assets. The guarantee amount reduces as principal payments are made to the bank lenders on the outstanding term loans. "In connection with the Host-USA Acquisition, the Company issued 8% subordinated notes, having an aggregate face value of $16,709,000 as of May 31, 2003. Interest is payable quarterly, and the notes mature beginning in 2005. Payment of interest and principal on all subordinated notes is subordinate to the Company's bank credit agreement. During the three months ended May 31, 2003, a director of the Company and his spouse holding 8% subordinated notes representing an aggregate face amount of $1,783,000 converted their notes to shares of the Company's Series D Preferred Stock. "The Company's capital expenditures are not expected to exceed $500,000 for the fiscal year ending August 31, 2003." CALL-NET: Issuing $37.5 Million Class B Non-Voting Shares --------------------------------------------------------- Call-Net Enterprises Inc. (TSX: FON, FON.B) has agreed to sell 10,000,000 Class B Non-Voting Shares for $3.75 per share for aggregate gross proceeds of $37,500,000 to a syndicate of underwriters led by BMO Nesbitt Burns Inc. and CIBC World Markets Inc. on a bought-deal basis. Closing is expected to occur on or about September 9, 2003. Call-Net will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, a preliminary short form prospectus relating to the issuance of the 10,000,000 Class B Non-Voting Shares. Call-Net Enterprises Inc. (S&P, B Corporate Credit Rating, Stable) is a leading Canadian integrated communications solutions provider of local and long distance voice services as well as data, networking solutions and online services to households and businesses. It provides services primarily through its wholly- owned subsidiary, Sprint Canada Inc. Call-Net Enterprises and Sprint Canada are headquartered in Toronto and own and operate an extensive national fibre network with over 134 co-locations in nine Canadian metropolitan markets. CHARTER COMMS: Termination of Tender Offers Spur Ratings Raise -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Charter Communications Inc. and its indirect subsidiary, Charter Communications Holdings LLC. The corporate credit rating for both entities has been raised to 'CCC+' from 'CC'. All ratings are removed from CreditWatch. The outlook is developing. The actions are based on Charter's termination of its subpar tender offers (announced on July 11, 2003), which, if completed, would have been viewed by Standard & Poor's as tantamount to a default on original debt issue terms. "Ratings on Charter reflect high financial risk from acquisition and capital spending-related debt, significant near-term debt maturities, ongoing basic subscriber losses, limited ability to raise prices in the face of competition from satellite TV providers, and pressure from rising programming costs," said credit analyst Eric Geil. These factors are partly mitigated by the company's position as a large cable system operator serving about 6.5 million basic subscribers, the cable industry's still- leading position in the market for pay TV services, strong growth in high-speed data services, and opportunities for cash flow growth from digital video services. Charter continues to generate negative discretionary cash flow and depends on its cash balance and bank borrowing availability to meet a portion of its cash needs, including $152 million of debt maturing in 2003. As of June 30, 2003, Charter had $202 million cash and about $1.2 billion was available from various credit facilities as limited by financial covenants. These covenants tighten in subsequent quarters and could substantially reduce the company's borrowing availability. Charter has an undrawn lending commitment available through March 31, 2004, from controlling shareholder Paul Allen for up to $300 million to assist the company in meeting its bank covenants. The Paul Allen loan would mature in 2009. Charter is attempting to boost liquidity by selling noncore cable systems, and entered into an agreement to sell a small system in Port Orchard, Washington. for $91 million, or roughly $3,600 per subscriber. No further asset sales have been announced, and any additional transactions may not be as highly valued on a per-subscriber basis because the company's noncore systems are largely in less lucrative, smaller markets. CLAXSON INTERACTIVE: Second-Quarter Results Enter Positive Zone --------------------------------------------------------------- Claxson Interactive Group Inc. (OTC Bulletin Board: XSON) announced financial results for the three and six-month periods ended June 30, 2003. Financial Results Operating loss for the three-month period ended June 30, 2003 was $1.0 million, reflecting a 25% decrease from an operating loss of $1.4 million for the three-month period ended June 30, 2002. Operating loss for the six-month period ending June 30, 2003 was $1.2 million, compared to an operating loss of $3.1 million for the six-month period ended June 30, 2002. The decrease in the operating loss for the second quarter of 2003 is due to an 8.5% increase in net revenues partially offset by a 6% increase in operating expenses as compared to the same period in 2002. The 2003 results include, as a result of the new agreement with Playboy Enterprises, Inc., the consolidation of the operations of Playboy TV Latin America & Iberia into the operations of its Pay TV division for financial reporting purposes. Net revenues for the second quarter of 2003 were $19.7 million, an 8.5% increase from net revenues of $18.2 million for the second quarter of 2002. Net revenues for the six months ended June 30, 2003 totaled $38.2 million compared to net revenues of $37.4 million for the six months ended June 30, 2002. Net revenues are affected by the Argentine and Chilean currency variations and a decrease in the rates from DIRECTV(TM) Latin America. Net revenues earned in Argentina, where Claxson has significant operations, were 21% of total net revenues for both the three months ended June 30, 2003 and 2002. For the six months ended June 30, 2003, net revenues in Argentina were 20% of total net revenues compared to 23% for the same period in 2002. During the second quarter of 2003, the average exchange rate of the Argentine peso as compared to the U.S. dollar increased 14%, versus the same period in 2002. For the six-month period ended June 30, 2003 the average devaluation in Argentina was 12% compared to the same period in 2002. "During this quarter we saw an increase in our net revenues as compared to last year that together with lower operational costs (excluding the impairment of goodwill), indicate that we continue to move through an improvement path as a result of the rationalization process we undertook last year," said Roberto Vivo, Chairman and CEO. "In addition, the second quarter represents the third quarter in a row in which we have seen positive net income. We will continue to aggressively manage costs and work to meet our sales objectives; hence we plan to continue improving our financial position." Subscriber-based fees for the three-month period ended June 30, 2003 totaled $9.3 million, representing approximately 47% of total net revenues and a 15% increase from subscriber-based fees of $8.1 million for the second quarter of 2002. The increase is primarily attributed to the consolidation of PTVLA, partially offset by devaluation of currencies in the region and the effect of the renegotiation of our agreement with DIRECTV(TM) Latin America, which reduced per subscriber rates and translated prices to local currencies, in exchange for a two year extension in the contract's maturity. Subscriber- based fees for the six months ended June 30, 2003 totaled $19.1 million compared to subscriber-based fees of $17.2 million for the six months ended June 30, 2002. Advertising revenues for the three-month period ended June 30, 2003 were $8.9 million, representing approximately 45% of Claxson's total net revenues and a 29% increase from advertising revenues of $6.9 million for the second quarter of 2002. Advertising revenues for the six months ended June 30, 2003 totaled $15.9 million compared to advertising revenues of $14.1 million for the six months ended June 30, 2002. The improvement in advertising revenues is due primarily to increased revenues from Chilevision, our broadcast TV station in Chile, as a result of the efforts taken to improve its performance during 2002; and due to a better pay TV advertising market in Argentina as compared to 2002. Production services revenues for the three-month period ended June 30, 2003 were $0.6 million, which represented a 68% decrease from $1.9 million for the second quarter of 2002. This decrease was primarily due to the consolidation of PTVLA, as services provided to PTVLA are now eliminated upon consolidation, and a decrease in volumes handled by The Kitchen, Inc., Claxson's Miami-based broadcast and dubbing facility, as a result of the adverse economic situation in Latin America. Production services revenues for the six months ended June 30, 2003 totaled $1.5 million compared to production services revenues of $3.4 million for the six months ended June 30, 2002. Other revenues for the three-month period ended June 30, 2003 were $0.9 million, which represented a 31% decrease from $1.3 million for the second quarter of 2002. This decrease is due to the consolidation of PTVLA, as services provided to PTVLA are now eliminated upon consolidation, as well as the discontinuation of services provided to Playboy TV International. Other revenues for the six months ended June 30, 2003 totaled $1.6 million compared to other revenues of $2.7 million for the six months ended June 30, 2002. Operating expenses for the three months ended June 30, 2003 were $20.8 million, an increase of 6% from the $19.6 million in the second quarter of 2002, due primarily to an impairment charge as a result of the assessment of the carrying value of Claxson's goodwill in accordance with the Statement of Financial Accounting Standards No. 142 and the consolidation of PTVLA, partially offset by the decrease in amortization of our broadcast licenses in Chile. Operating expenses for the six months ended June 30, 2003 decreased to $39.4 million compared to operating expenses of $40.6 million for the six months ended June 30, 2002. Interest expense for the three-month period ended June 30, 2003 was $0.6 million compared to $3.3 million for the second quarter of 2002. This decrease is attributable to the Exchange Offer and consent solicitation as all future interest on the new Claxson Notes is reflected as part of the balance of the debt. As interest on these Notes is paid, the debt will be reduced proportionately. Interest expense for the six months ended June 30, 2003 totaled $1.3 million compared to interest expense of $6.8 million for the six months ended June 30, 2002. Net income for the three months ended June 30, 2003 was $2.0 million, including a $2.6 million foreign exchange gain as a result of the appreciation in value of the Argentine Peso during the second quarter of 2003. The second quarter net income represented a turnaround of $23.9 million over the $21.9 million net loss for the same period in 2002. For the six-month period ended June 30, 2003 net income was $7.7 million, which represents a turnaround of $164.6 million over the $156.9 million net loss for the same six months of 2002. As of June 30, 2003, Claxson had a balance of cash and cash equivalents of $4.3 million and $89.4 million in debt, which includes $21.0 million in future interest payments. Second Quarter Highlights During the first quarter of 2003, Claxson's largest client, DIRECTV(TM) Latin America, filed for protection under Chapter 11. At the filing date, Claxson's accounts receivable from DIRECTV totaled approximately $4.5 million. On July 11, 2003, Claxson signed an agreement with an affiliate of Hughes Electronic Corporation, pursuant to which Claxson assigned to a Hughes affiliate Claxson's pre-bankruptcy petition claims for the amounts owed to Claxson by DIRECTV(TM) Latin America. On July 22, 2003, Claxson received the payment from Hughes Electronic Corporation's affiliate relating to such assignment of claims. On May 17, 2002, based on its long term programming strategy, the Company sold its 50% participation in the animation channel Locomotion, a joint venture with The Hearst Corporation, to Corus Entertainment Inc. (NYSE: CJR), a Canadian media and entertainment company. As part of such transaction, Claxson continued providing affiliate sales services, program origination and post-production services to Locomotion. As of August 1, 2003 Claxson no longer provides sales services to Locomotion. The remaining contract for program origination and post-production services will not be renewed by Locomotion upon expiration on December 31, 2003. All of these services will be transferred to an affiliate of one of the Locomotion partners. Following last year's signing of a new agreement with Playboy Enterprises, Inc. (NYSE: PLA), and consistent with a new alignment of the Company's Pay TV Division properties by genre, Claxson announced the launch of an aggressive plan to position itself as the leading provider of adult content in Iberoamerica. Based on its current adult offering including Playboy TV, Venus and recently launched Spice Clips, Claxson will offer content to meet the demand of Latin audiences in order to increase its distribution and develop additional revenue streams such as syndication, new PPV channels, broadband content, event production and talent management. Claxson Interactive's June 30, 2003 balance sheet shows that its total current liabilities eclipsed its total current assets by about $14 million. Claxson announced the launch of a new online chat service created by its Broadband and Internet Division for America Online Latin America, Inc. (Nasdaq: AOLA), one of the leading interactive services providers in Latin America. Claxson will program and host a web-based chat service for AOL Mexico and AOL Argentina that combines the brand and users of AOL and http://www.elsitio.com (Claxson's Internet portal) in Mexico and Argentina. This agreement underscores Claxson's commitment to the new phase of its broadband and Internet business model by offering technology development and support services to external clients through its ESDC Digital Platform. Claxson will also oversee the chat service's operations, maintenance and hosting. Claxson announced the launch in the United States of its pay TV channel Infinito, a 24-hour Hispanic channel dedicated exclusively to the unexplained mysteries of the world, through Time Warner Cable of New York's digital package "DTV en Espanol." This agreement, together with HTV's current presence in the US Hispanic market, increases Claxson's offerings in the US to two channels evidencing the Company's expansion of its presence in this growing segment through distribution deals with major satellite and cable providers offering packages to Spanish-speaking viewers in the US. Claxson (OTC Bulletin Board: XSON.OB) is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed on September 21, 2001 in a merger transaction, which combined El Sitio, Inc. and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc. and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero- American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. CONSECO FINANCE: S&P Yanks Related Trust Rating to D ---------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'D' on class HI:B-2 from one Conseco Finance Corp.-related series issued by Home Improvement & Home Equity Loan Trust 1996-D. Conseco Finance Corp. did not make any payments under the limited guarantee on the Aug. 15, 2003 distribution date, causing an interest shortfall on class HI:B-2, resulting in default. The rating on the certificate was lowered to 'CCC-' from 'CCC+' Sept. 12, 2002, as a result of an analysis that determined that the monthly excess spread alone might not be sufficient to offset the weakening credit quality of the guarantor, Conseco Finance Corp., which provides credit support from a limited guarantee. RATING LOWERED Home Improvement & Home Equity Loan Trust Rating Series Class To From 1996-D HI:B-2 D CCC- CORRECTIONS CORP: Inks Distribution Agreement with Moore Medical ---------------------------------------------------------------- Moore Medical Corp. (Amex: MMD), a leading multi-channel specialty marketer and distributor of medical, surgical and pharmaceutical products to health care professionals in non-hospital settings, has entered into a multi-year agreement with Corrections Corporation of America (NYSE: CXW), one of the country's largest providers of detention and corrections services to the government. Under the agreement which runs through 2007, Moore Medical will continue to provide support and procurement services to the 59 facilities owned and managed by Corrections Corporation of America, extending the companies' previous agreement. Moore Medical will offer direct access to its catalog of medical, surgical and pharmaceutical products used by health care professionals serving the corrections industry. The U.S. has more than 7,000 correctional facilities including prisons, jails and detention centers. Nationally, more than two million people are confined to correctional institutions and require basic to complex health care management. Moore Medical provides an extensive line of health care products, including hundreds of items specially designed for inmate patient care and secured clinical environments. "We are pleased to expand our partnership with CCA," said Tim Kardish, Vice President, Marketing and Sales, Public Sector, EMS and Occupational Health Markets. "CCA continually strives to maintain the highest standards in inmate care. Moore Medical is proud to support that effort by providing a selection of industry- specific products and cost-efficient procurement options." "We highly respect Moore Medical's expertise, service and value. This arrangement provides important new resources for us to streamline the medical supply ordering process, while ensuring a high standard of inmate patient care," said Allan Gonce, Senior Director of Purchasing for Corrections Corporation of America. "In addition to streamlining our ordering process, this arrangement represents another step in our company's ongoing efforts to manage medical costs while ensuring quality services." Moore Medical is a multi-channel marketer and distributor of medical, surgical and pharmaceutical products to approximately 100,000 health care practices and facilities in non-hospital settings nationwide, including physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. Moore Medical also serves the medical/surgical supply needs of 30 customer community affiliates. The Company markets and serves its customers through direct mail, industry-specialized telephone support staff, field sales representatives, and the Internet. Its direct marketing and distribution business has been in operation for 55 years. More information about the Company can be found at http://www.mooremedical.com Corrections Corporation of America (S&P, B+ Corporate Credit Rating, Positive) is the nation's largest owner and operator of privatized correctional and detention facilities and one of the largest prison operators in the United States, behind only the federal government and four states. The Company currently operates 59 facilities, including 38 company-owned facilities, with a total design capacity of approximately 59,000 beds in 20 states and the District of Columbia. The Company specializes in owning, operating and managing prisons and other correctional facilities and providing inmate residential and prisoner transportation services for governmental agencies. In addition to providing the fundamental residential services relating to inmates, the Company's facilities offer a variety of rehabilitation and educational programs, including basic education, religious services, life skills and employment training and substance abuse treatment. These services are intended to reduce recidivism and to prepare inmates for their successful re-entry into society upon their release. The Company also provides health care (including medical, dental and psychiatric services), food services and work and recreational programs. CREDIT SUISSE: Fitch Further Drops Low-B Class M Rating to B- ------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CK3 are downgraded by Fitch Ratings as follows: -- $9.9 million class M to 'B-' from 'B'. Fitch also affirms the following classes. -- $29.3 million class A-1 at 'AAA' -- $105.5 million class A-2 at 'AAA' -- $127 million class A-3 at 'AAA' -- $582.4 million class A-4 at 'AAA' -- Interest-only class A-X at 'AAA' -- $42.3 million class B at 'AA' -- $56.3 million class C at 'A' -- $11.3 million class D at 'A-' -- $14.1 million class E at 'BBB+' -- $25.4 million class F at 'BBB' -- $8 million class G-1 at 'BBB-' -- $11.7 million class G-2 at 'BBB-' -- $14.1 million class H at 'BB+' -- $24.8 million class J at 'BB' -- $9 million class K at 'BB-' -- $12.7 million class L at 'B+' Fitch does not rate the $6.8 million class N or the $15.8 million class O certificates. The rating actions follow Fitch's annual review of the transaction, which closed in June 2001. The downgrade is primarily due to the losses expected on the specially serviced loans, which will cause a reduction in credit enhancement levels, thus warranting a downgrade of the lowest rated class. As of the July 2003 distribution date, the pool's aggregate certificate balance has decreased by 1.8% since closing, to $1.10 billion from $1.13 billion. The certificates are collateralized by 169 fixed-rate mortgage loans, consisting primarily of multifamily (31% by balance), retail (30%), and office (27%) properties, with significant concentrations in California (25%), New York (12%), and Texas (9%). Key Commercial Mortgage, the master servicer, provided year-end 2002 borrower operating statements for 96% of the pool's outstanding balance. The weighted average debt service coverage ratio for YE 2002 remained stable at 1.56 times, compared to 1.54x at last year's review, but up from 1.45x at issuance. Eleven loans (6%) reported YE 2002 DSCRs below 1.00x. Fitch reviewed the master servicer's watchlist and found 4% to be of concern. There are currently two loans (2%) over 90 days delinquent and in special servicing. Over $10 million in losses are expected. Fitch reviewed the credit assessment of two loans in the pool, 888 Seventh Avenue (9.5%) and Atrium Mall (4.3%). The investment grade credit assessments were affirmed based on stable performance. DSCRs for these loans are calculated using borrower-reported net operating income (NOI) less required reserves divided by debt service payments based on the current balance and a Fitch stressed refinance constant of 9.23%. The 888 Seventh Avenue (9.4%) is an office property located in New York, NY. The property contains 874,000 sq. ft. and was built in 1971 (renovated in 1998). Occupancy as of YE 2002 was 93%, while the DSCR increased to 1.59x from 1.51x at closing. The Atrium Mall (4.3%) is a 215,000 sq. ft. retail center located in Chestnut Hill, MA. Occupancy at YE 2002 was 95%, and the DSCR slightly decreased to 1.37x from 1.43x at closing. Major tenants include Borders Books (13% of net rentable area), The Gap/Gap Kids (9%) and Pottery Barn (7%). Fitch will continue to monitor this transaction, as surveillance is ongoing. DDI CORP: Files for Prepack. Chapter 11 Reorg. in SD of New York ---------------------------------------------------------------- DDi Corp. (OTC Bulletin Board: DDIC), a Delaware corporation and DDi Capital Corp., a California corporation and an indirect wholly-owned subsidiary of DDi Corp., have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement the previously- announced restructuring of the debt of DDi Corp. and DDi Capital through a pre-arranged plan of reorganization. The voluntary petitions for reorganization involve a restructuring of only the debt and equity securities of DDi Corp. and DDi Capital, which are holding companies without any business operations of their own. None of DDi Corp.'s domestic or foreign operating subsidiaries is included in the Chapter 11 filing, and those operating entities will continue operating in the ordinary course of business without interruption. Upon completion of the restructuring, the Company anticipates that its domestic debt will decline from approximately $285 million to approximately $91 million and cash interest expense will be reduced by approximately $11 million annually. DDi Corp.'s President and Chief Executive Officer, Bruce McMaster, commented, "After careful consideration and discussions with our senior lender group and convertible subordinated noteholders, we determined that keeping Dynamic Details out of Chapter 11, while simultaneously utilizing the Chapter 11 process to facilitate our restructuring of DDi Corp. and DDi Capital, was the best option for our company and our key constituencies, including our creditors, employees, vendors, customers and shareholders. One of the main benefits of Chapter 11 is that it will allow us to maintain normal business operations while we seek confirmation of our pre-arranged plan and ultimately effectuate our restructuring. During our reorganization, we will continue our business operations, production and delivery schedules without interruption. Our commitment to our customers and employees is unwavering and we remain dedicated to providing the technologically-advanced, quick turn service that we are known for." "The filing of these voluntary petitions is an important step for our ongoing restructuring efforts. Given our company's current condition, we believe that this restructuring, once fully implemented, will give us the opportunity to position our company for a viable future and to maximize our value," continued McMaster. "We will have a much improved balance sheet and a capital structure that can be supported by the cash flow of our operating subsidiaries. It is advantageous that we were able to achieve a consensual plan of reorganization that is supported by our senior lenders and convertible subordinated noteholders." DDi Corp also has reached an agreement with 100% of the senior lenders for its U.S. operating subsidiary, Dynamic Details, Inc., to achieve an out-of-court restructuring which will allow the operating units to continue business as usual with no impact on trade and other creditors. On May 13, 2003, DDi Corp. announced that it had reached agreements in principle on a restructuring plan with a steering committee of the senior lender group of the Dynamic Details senior credit facility and with the steering committee of the ad hoc committee of certain holders of DDi Corp.'s 5-1/4% and 6-1/4% convertible subordinated notes. The agreements in principle also anticipated that the claims of the holders of the DDi Capital 12.5% senior discount notes would also be restructured. Since that time, DDi Corp. and its senior lenders, the convertible subordinated noteholders and the senior discount noteholders have negotiated and finalized the significant terms of the restructuring, including the pre-arranged Chapter 11 petitions filed in Bankruptcy Court today. DDi Corp. and DDi Capital expect to file a pre-arranged plan of reorganization and a related disclosure statement with the Bankruptcy Court within the next few weeks. DDi Corp. currently estimates that DDi Corp. and DDi Capital will emerge from bankruptcy within 90 to 120 days. Dynamic Details and DDi Europe Limited, DDi Corp.'s principal operating subsidiaries, are independent legal entities that generate their own cash flow and have their own credit facilities. The Dynamic Details credit facility will be restructured outside the Chapter 11 bankruptcy process. As part of the restructuring, DDi Corp. and its senior lenders have signed an amendment to the Dynamic Details credit facility. The amendment, among other things, extends the maturity until April 15, 2008 and defers amortization payments to the senior lenders. The deferral of payments under this amendment, along with Dynamic Details' current cash position, should provide sufficient liquidity to meet Dynamic Details' liquidity needs through the reorganization. Accordingly, the operating companies will continue to pay their employees, trade and certain other creditors, regardless of whether such claims arise prior to or subsequent to the Chapter 11 filing by DDi Corp. and DDi Capital. "Our customers and suppliers should experience no change in the way we do business with them," said McMaster. "We have taken every step to make sure that vendors get paid in full in the ordinary course of business and that our customers continue to receive the same high quality services to which they are accustomed. We appreciate the ongoing loyalty and support of our customers and vendors and unending commitment of our employees." The pre-arranged plan of reorganization has received strong support from the lenders under the Dynamic Details senior credit facility and DDi Corp.'s convertible subordinated noteholders. DDi Corp. and DDi Capital have entered into support agreements with 100% of the lenders under the Dynamic Details senior credit facility and holders who collectively control 63% of the outstanding principal amount of DDi Corp.'s convertible subordinated notes. Under the support agreements, the senior lenders and the convertible subordinated noteholders have agreed to support the plan of reorganization proposed by DDi Corp. and DDi Capital and the out-of-court restructuring of Dynamic Details' senior credit facility. As is commonly the case in this type of restructuring, the senior lenders and the convertible subordinated noteholders will not be required to continue to support the plan of reorganization and the out-of-court restructuring of Dynamic Details' senior credit facility if certain events occur. Such events include (but are not limited to) the modification of the plan in a manner not agreed to by the lenders, the appointment of a bankruptcy trustee or other receiver, the plan not being confirmed by the Bankruptcy Court by December 15, 2003, and the plan not being effective by January 8, 2004. In addition, DDi Corp., DDi Capital and holders who collectively control approximately 70% of the outstanding principal amount of DDi Capital's senior discount notes have reached an agreement in principle with respect to the terms of the proposed plan of reorganization. The principal effects of the restructuring and the plan of reorganization that DDi Corp. and DDi Capital expect to file will be as follows: -- Senior Secured Credit Facility. The full amount of the senior secured credit facility (currently approximately $72.9 million in principal amount), plus all accrued interest and fees will be restructured pursuant to an out-of-court agreement. The restructured senior credit facility will have a maturity date of April 15, 2008, and amortization will be deferred until June 30, 2005 (with the exception of nominal amortization payments of $25,000 per quarter beginning in 2004). In connection with the restructuring, the lenders under the restructured senior secured credit facility will receive warrants representing 10% of DDi Corp.'s post-reorganization common stock, on a fully diluted basis. The warrants will not be exercisable until after the two year anniversary of the effective date of the restructuring and will be subject to cancellation if certain conditions are met involving the permanent prepayment of the restructured senior secured credit facility on or before such anniversary date. -- 5-1/4% Convertible Subordinated Notes. Each holder of DDi Corp.'s 5-1/4% convertible subordinated notes, of which $100 million in principal amount is currently outstanding, will receive a pro rata share of approximately (a) 43% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.'s new management equity incentive plan, and the new senior lender and senior discount note warrants, and (b) shares of a new class of preferred stock of DDi Europe, DDi Corp.'s European operating company, with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 5-1/4% convertible subordinated notes will be cancelled pursuant to the plan. -- 6-1/4% Convertible Subordinated Notes. Each holder of DDi Corp.'s 6-1/4% convertible subordinated notes, of which $100 million in principal amount is currently outstanding, will receive a pro rata share of approximately (a) 51% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.'s new management equity incentive plan, which is described below, and the new senior lender and senior discount note warrants, and (b) shares of a new class of preferred stock of DDi Europe, DDi Corp.'s European operating company, with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 6-1/4% convertible subordinated notes will be cancelled pursuant to the plan. -- Senior Discount Notes. Each holder of the DDi Capital senior discount notes, of which $16.09 million in principal amount is currently outstanding, will receive restructured senior discount notes with a maturity date of January 1, 2009. Payment-in-kind interest on such restructured senior discount notes will accrue at 16%, with a mechanism to transition to cash pay at 14%, subject to certain terms and conditions. The holders of the DDi Capital senior discount notes will also receive warrants representing 2.5% of DDi Corp.'s post- reorganization common stock, on a fully diluted basis. The warrants will not be exercisable until after the two year anniversary of the effective date of the restructuring and will be subject to cancellation if certain conditions are met involving the interest on the senior discount notes becoming cash pay. -- Management Equity Incentive Plan. DDi Corp. will establish a new management equity incentive plan. Under the new management equity incentive plan, (a) DDi Corp. will issue shares of restricted stock equaling five percent (5%) of reorganized DDi Corp.'s common stock to DDi Corp.'s senior management, (b) DDi Corp. will issue options for up to an additional twelve and one-half percent (12.5%) of DDi Corp.'s common stock for members of DDi Corp.'s senior management, and (c) DDi Corp. may issue options for up to an additional four percent (4%) of DDi Corp.'s common stock for employees. -- Current Equity. DDi Corp.'s current common stock holders will receive 1% of the common stock in the restructured company, subject to dilution for issuance of equity in connection with the exercise of DDi Corp.'s new options and new senior lender and senior discount noteholder warrants following the restructuring. All of DDi Corp.'s outstanding stock options will be cancelled in connection with the restructuring. Because the terms of the proposed plan of reorganization and the out-of-court restructuring have been agreed upon by holders holding approximately 63% of the outstanding principal amount of DDi Corp.'s convertible subordinated notes, supported by the holders of 100% of the lenders under the Dynamic Details senior credit facility, and are the subject of an agreement in principle between DDi Corp., DDi Capital and holders who collectively control approximately 70% of the outstanding principal amount of DDi Capital's senior discount notes, DDi Corp. and DDi Capital believe there is a strong likelihood that the proposed restructuring will be confirmed. However, confirmation of the plan of reorganization and consummation of the out-of-court restructuring are subject to final documentation and a number of conditions and contingencies. There can be no assurances that the required acceptances to confirm the plan will be received or that, even if the requisite acceptances are received, that the Bankruptcy Court will confirm the plan of reorganization. DDi Corp. is a leading provider of time-critical, technologically advanced, electronics manufacturing services. Headquartered in Anaheim, California, DDi Corp. and its subsidiaries offer fabrication and assembly services to customers on a global basis from facilities located across North America and in England. DDI CORPORATION: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: DDi Capital Corp. (CA) 1220 Simon Circle Anaheim, CA 92806 Bankruptcy Case No.: 03-15260 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- DDi Corp., a Delaware corporation 03-15261 Type of Business: The Debtors, through the services of their operating subsidiaries, are a leading provider of time-critical electronics design, fabrication, and assembly services for makers of communications and networking gear, computers, medical and industrial instruments and aerospace equipment to original equipment manufacturers and other providers of electronics manufacturing services. Chapter 11 Petition Date: August 20, 2003 Court: Southern District of New York (Manhattan) Debtors' Counsel: Richard L. Wynne, Esq. Sharon M. Kopman, Esq. Kirkland & Ellis 777 South Figueroa Street Los Angeles, CA 90017-5800 (213) 680-8400 Fax : (213) 680-8500 Email: richard_wynne@kirkland.com Total Assets: $202,969,000 (As of March 31, 2003) Total Debts: 381,081,000 (As of March 31, 2003) List of Debtors' Largest Unsecured Creditors: A. DDi Capital Corp. Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company, Senior Discount Notes $16,090,000 as Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890 Contact: Steven J. Reisman, Esq. Curtis, Mallet-Prevost, Colt 101 Park Avenue 1100 North Market Street New York, NY 10178 212-696-6065 B. DDi Corp. Entity Nature Of Claim Claim Amount ------ --------------- ------------ U.S. Bank, as Trustee 5.25 Convertible $100,000,000 555 SW Oak Street Notes Portland, OR 97204 Contact: Clark Whitmore Maslon Edelman 3300 Wells Fargo center 90 South Seventh Avenue Minneapolis, MN 55402 612-672-8335 U.S. Bank, as Trustee 6.25 Convertible $100,000,000 555 SW Oak Street Notes Portland, OR 97204 Contact: Clark Whitmore Maslon Edelman 3300 Wells Fargo center 90 South Seventh Avenue Minneapolis, MN 55402 612-672-8335 DELTA WOODSIDE: 4th-Quarter Results Reflect Weaker Performance -------------------------------------------------------------- Delta Woodside Industries, Inc. (NYSE: DLW) reported net sales of $48.7 million for the quarter ended June 28, 2003, compared to net sales of $52.4 million for the quarter ended June 29, 2002. The 7.1% decrease was principally due to a decline in unit sales related to customer order deferments that resulted from a slowdown at retail partially offset by a slight increase in average sales prices due to the introduction of some new products. For the year ended June 28, 2003, the Company reported net sales of $177.2 million compared to net sales of $174.7 million for the year ended June 29, 2002. This sales increase of 1.5% was principally due to an increase in average sales prices as a result of a change in product mix that included the addition of some new products. The Company reported an operating profit of $2.0 million for the quarter ended June 28, 2003 compared to an operating profit of $2.9 million for the quarter ended June 29, 2002. The decline was primarily due to reduced unit sales, higher manufacturing costs associated with reduced running schedules, costs associated with modernizing the Company's Estes plant, and the start-up of some new products partially offset by a more profitable product mix. For the year ended June 28, 2003 the Company reported operating profit of $5.8 million compared to an operating loss of $10.4 million for the year ended June 29, 2002. The operating profit for fiscal 2003 included restructuring expenses associated with the closing of the Company's Catawba Plant of $0.4 million. The operating loss reported for fiscal 2002 included asset impairment and restructuring expenses associated with closed facilities of $8.7 million. In addition to the lower asset impairment and restructuring expenses in fiscal 2003, the improvement in operating earnings from fiscal 2002 to fiscal 2003 was due to lower raw material cost, manufacturing cost reductions and a more profitable product mix. Included in the Other (expense) income category for the quarter and year ended June 28, 2003 are before tax gains of $2.3 million and $3.6 million, respectively, from the repurchase by the Company's wholly owned subsidiary, Delta Mills, Inc, of a portion of its 9-5/8% senior notes. For the quarter and year ended June 29, 2002, the Company reported a before tax gain of $15.6 million and $16.1 million, respectively, in this category. The Company reported net income of $2.0 million or $0.34 per diluted common share for the quarter ended June 28, 2003 compared to net income of $10.8 million or $1.86 per diluted common share for the quarter ended June 29, 2002. For the year ended June 28, 2003 the Company reported net income of $2.6 million, or $0.44 per diluted common share, compared to a net loss of $2.1 million, or $0.36 per diluted common share, for the year ended June 29, 2002. The net income for the year ended June 28, 2003 includes restructuring expenses associated with the closing of the Catawba Plant of $0.2 million, or $0.04 per diluted common share, on an after tax basis. The net loss for the year ended June 29, 2002 included asset impairment and restructuring expenses associated with closed facilities of $5.6 million, or $0.97 per diluted common share, on an after tax basis. W.F. Garrett, President and CEO, commented, "Our fourth quarter was generally consistent with the entire fiscal year of 2003. Retail activity for casual pants remains slow and we see no dramatic improvement in the near future as our inventories continue to be adjusted. Due to our focused effort on cost reductions and more attention to efficiently operating our day-to- day business in response to growing customer demand for quick response, Delta Woodside's overall performance significantly improved. By following our business plan, we expect to continue to move in the right direction." Delta Woodside Industries, Inc. -- whose corporate credit rating is currently rated at CCC by Standard & Poor's -- is headquartered in Greenville, South Carolina. Through its wholly owned subsidiary, Delta Mills, it manufactures and sells textile products for the apparel industry. The Company employs about 1,600 people and operates five plants located in South Carolina. DEVINE: Obtains C$200K Bridge Financing for Bailey Production ------------------------------------------------------------- Devine Entertainment Corporation (TSX:DVN) has arranged CDN $200,000 in bridge financing for both pre-production costs of a new feature film and the production of new DVDs based on its existing Emmy-award winning library. This bridge loan is the first step in finalizing the complete production financing of Devine's first feature film entitled "Bailey." The production is aimed at the children's market and follows the tale of a dog who inherits a fortune and becomes the CEO of an animal rights group. Pre-production has commenced with principal photography scheduled for September 8th, 2003. The board approved investor group providing the loan will be entitled to a combination of set up, stand by and interest charges equal to fifteen percent in addition to 750,000 common shares, subject to regulatory approval. David Devine, President and CEO and Richard Mozer, Vice-President and CFO of Devine Entertainment are participants in this financing. David Devine stated, "This bridge loan allows the Company to leverage its potential with our existing products while moving forward with a new project that is critical to returning Devine Entertainment to profitability." Five-time Emmy Award-winning Devine Entertainment Corporation is a developer and producer of high-quality children's and family films designed for worldwide television and cable markets and international home video markets. * * * As reported in Troubled Company Reporter's June 3, 2003 edition, Devine was negotiating a series of corporate and production related financings. The Company, the report said, has been pursuing new financing for some time and acknowledges that, if a financing is not completed in the near future, it may not be able to meet all of its ongoing obligations which could necessitate a reorganization of the Company and a change in the status of its TSX listing. DEVON MOBILE: Delaware Court to Consider Plan on September 16 ------------------------------------------------------------- On July 25, 2003, the U.S. Bankruptcy Court for the District of Delaware approved the adequacy of the Disclosure Statement prepared by Devon Mobile Communications, LP, together with its debtor-affiliates, and the Official Committee of Unsecured Creditors, to explain the First Amended Joint Chapter 11 Liquidating Plan. The Court found that the Disclosure Statement contains the right kind and amount of information, as required by Sec. 1125 of the Bankruptcy Code, to enable creditors to make informed decisions whether to accept or reject the Liquidating Plan. The Honorable Peter J. Walsh will convene a hearing on September 16, 2003, at 1:30 p.m. Eastern Time, to consider the confirmation of the Plan. Objections, if any, to the confirmation of the Plan must be received by the Bankruptcy Court on or before Sept. 9. Copies must also be sent to: 1. Counsel for the Debtors Brown Raysman Millstein Felder & Steiner LLP 900 Third Avenue New York, NY 10022 Attn: Gerard S. Catalanello, Esq. 2. Counsel for the Official Committee of Unsecured Creditors Young Conaway Stargatt & Taylor LLP PO Box 391 The Brandywine Bldg. 100 West Street 17th Floor Wilmington, DE 19801 Attn: Michael R. Nestor, Esq. 3. Office of the United States Trustee 844 King Street Suite 2313 Wilmington, DE 19801 Attn: Joseph J. McMahon, Esq. Devon Mobile Communications, L.P., a personal communications service company is owned by Aldelphia Communications by 49.09%. The Company filed for chapter 11 protection on August 19, 2002 (Bankr. Del. Case No. 02-12431). J. Kate Stickles, Esq., Norman L. Pernick, Esq., at Saul, Ewing LLP and Gerard S. Castellano, Esq., at Brown Raysman Millstein Felder & Steiner LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $142,685,814 in total assets and $64,782,532 in total debts. DIRECTV: Court Approves Stipulation with Committee and Hughes ------------------------------------------------------------- On June 3, 2003, the Court authorized DirecTV Latin America, LLC to obtain postpetition financing. The Financing Order provided that certain "Claims and Defenses" against Hughes Electronic Corporation, Surfin Ltd., certain of their designated affiliates or any of their representatives, attorney or advisors must be brought on or before certain deadlines. The intent of Hughes, the Debtor and the Creditors' Committee in agreeing to the Financing Order was that the Creditors' Committee would have standing to bring any Claims and Defenses that might be brought by the Debtor against the Hughes Affiliates. However, the Creditors Committee's standing is not as clear as it might be. Accordingly, the Creditors' Committee, Hughes and the Debtor, after due deliberation, stipulate and agree that: (a) The Creditors' Committee will have standing to bring any claims and defenses; (b) No other party-in-interest will have standing to bring any claims and defenses; provided, however, that except for the Debtor in respect of proofs of claim filed by Hughes Affiliates, nothing contained in the Stipulation or in the Financing Order will be deemed to preclude a party-in-interest from exercising a statutory right, if any, to object to a proof of claim; (c) Claims that constitute direct third party claims against the Hughes Affiliates and are not derivative of any claims of the Debtor or its estate will not constitute claims or defenses; and (d) Nothing in the Stipulation will institute or will be deemed to constitute a finding by the Court, an admission or concession by any party regarding Claims or Defenses. Raven Replies To the extent that the Proposed Order seeks to clarify that the Creditors' Committee will be the sole party with standing to assert the Debtor's Rights, Raven Media Investments LLC, as the holder of general unsecured claims of not less than $189,000,000 against DirecTV, has no objection. However, Robert Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, says, the Proposed Order goes further than that. Quoted language from the Proposed Order suggests that all Claims and Defenses, other than pure objections to claims, would be vested exclusively in the Creditors' Committee. So long as the term "Claims and Defenses" is construed to apply solely to the Debtor's Rights, i.e., rights that would belong exclusively to the Debtor absent the Creditors' Committee being authorized to assert the rights on the Debtor's behalf, Raven has no objection. Mr. Dehney notes that when Raven requested an extension of the deadline to assert Claims and Defenses to correspond to the extension granted to the Creditors' Committee, Raven was told that an extension was unnecessary because there were no Claims and Defenses that Raven might assert other than pure claims objections. If that is true, then Raven will retain the right to seek equitable subordination, recharacterization, and other rights regarding the claims of the Hughes' Affiliates not otherwise vested exclusively in the Debtor. However, if term "Claims and Defenses" includes rights that do not now belong exclusively to the Debtor and the Proposed Order would convert all Claims and Defenses into exclusive rights of the Creditors' Committee, then Raven objects to the portion of the Proposed Order that would make the previously non-exclusive rights exclusive to the Creditors' Committee. Consequently, the Proposed Order would be best clarified by making clear that the term "Claims and Defenses" includes only rights that absent the Proposed Order would belong exclusively to the Debtor. Alternatively, if something different was intended by the term "Claims and Defenses", then the Proposed Order should specify that difference and limit the Creditors Committee's exclusive right to assert Claims and Defenses solely to those Claims and Defenses that absent the Proposed Order would belong exclusively to the Debtor or its estate. Thus, Raven asks the Court to condition the approval of the Proposed Order on modifications consistent with its suggestions. * * * Judge Walsh approves the Stipulation between the Creditors' Committee, the Debtor and Hughes. (DirecTV Latin America Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) DOW CORNING: Settles EFCO Corp. Claim by Delivering More Sealant ---------------------------------------------------------------- EFCO Corporation filed a $294,339.62 proof of claim in Dow Corning Corp.'s chapter 11 on account amounts it couldn't collect from other defendants in a lawsuit styled ECFO Corporation v. Hydroseal, Inc., Case No. 390583, in the Superior Court of San Mateo, California. The California lawsuit arises out of a dispute over the use of certain sealant and primer products manufactured by Dow Corning in connection with the construction of a commercial building in Menlo Park, California, in 1993-1994. EFCO was a subcontractor on the Menlo Park Project, furnishing windows, wall panels and doors, and hiring other subcontractors to provide labor, materials, and supplies, including sealant and primer products manufactured by Dow Corning. After construction was completed, there were leaks. The Project's owner demanded that EFCO correct the problems. EFCO did and sued everybody else. EFCO says Dow Corning breached express and implied warranties and was negligent. Dow Corning denies all of EFCO's allegations and insists the products it supplied weren't defective. Dow Corning says EFCO's subcontractors didn't follow instructions. To resolve the lawsuit and EFCO's claim, Dow Corning agrees to deliver shipments of fresh Dow Corning(R) 795 Building Sealant valued at $200,000 to EFCO's facility in Monett, Missouri, and pay all shipping costs. DRS TECH.: S&P Keeps Watch Due to Proposed Acquisition of IDT ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'BB-' corporate credit rating, on DRS Technologies Inc. on CreditWatch with negative implications. At the same time, Standard & Poor's revised the CreditWatch implications on its ratings on Integrated Defense Technologies Inc., including the 'BB-' corporate credit rating, to negative from developing. "The CreditWatch actions reflect the announced acquisition of IDT by DRS for a total consideration of $550 million," said Standard & Poor's credit analyst Christopher DeNicolo. DRS will be acquiring IDT's outstanding common stock for $12.25 a share cash plus 0.1875 shares of DRS stock, subject to a collar. In addition, DRS will be repaying IDT's $175 million of outstanding net debt. The cash portion of the transaction, including repaying IDT's debt, totals $437 million and is to be financed with cash on hand, additional bank borrowings, and the issuance of debt securities. The increased debt is expected to result in weakened credit protection measures for DRS. The acquisition will improve DRS' product and program diversity, as well as expand its business with the U.S. Air Force and other government agencies. Revenues for the combined companies is expected to be around $1.2 billion in fiscal 2005 (ending March 30, 2005). The transaction is subject to regulatory and IDT shareholder approval and is expected to close by the end of 2003. Huntsville, Ala.-based IDT focuses on defense electronics, addressing niche markets for electronic test equipment, warfare simulators, communications monitoring, and specialty radars. IDT recently won a contract, teamed with Cubic Defense Applications, to supply aerial combat training equipment for U.S. Air Force, Navy, and Marine aircraft worth $535 million (70% of which will go to IDT), the largest in the company's history. Parsippany, N.J.-based DRS is a supplier of defense electronics products and systems, providing naval combat display workstations, thermal imaging devices, electronic sensor systems, mission recorders, and deployable flight incident recorders. The business environment for defense contractors is currently favorable due to increased spending for both the military and homeland security, especially electronics. However, the company faces the characteristic industry risks of program delays, potential for cost overruns, and competition from much larger defense contractors. DRS is currently somewhat narrowly focused, but serves as a sole-source contractor on a number of well-supported military programs, with incumbency spanning many years. Backlog was a healthy $894 million at June 30, 2003. Standard & Poor's will meet with DRS management to discuss the acquisition and to determine the effect on credit quality. Ratings on IDT will be withdrawn after the acquisition closes and all of its debt is repaid. ENRON CORP: Reaches Settlement Pact with Royal Bank of Canada ------------------------------------------------------------- Royal Bank of Canada has reached a settlement agreement with Enron Corporation, the Enron Creditors' Committee and Rabobank that resolves certain aspects of a structured transaction known as "Cerberus". Under the terms of the settlement, Royal Bank of Canada will receive a payment currently valued at approximately US$195 million plus interest. The settlement agreement relates to the proceeds of the sale of 11,500,000 shares of common stock of EOG Resources Inc., a publicly-traded company. These shares were the subject of the "Cerberus" transaction which closed in November 2000. A subsequent total-return swap agreement was entered into with Rabobank, under which Rabobank assumed the credit risk of the transaction and was required to pay RBC US$517 million plus interest in June 2002. A week before that payment was due, Rabobank defaulted and that matter is currently the subject of litigation between RBC and Rabobank. After Enron filed for bankruptcy, the EOG shares were the subject of a bankruptcy court-approved stipulation among RBC, Enron, the Enron Creditors' Committee and Rabobank. Under that stipulation, the EOG shares were subsequently sold in the fall of 2002, and the proceeds of approximately US$440 million were placed into a segregated escrow account pending resolution of the claims of entitlement among the parties. RBC said that the settlement announced today, representing proceeds from the underlying collateral, would reduce the principal amount of US$ 517 million plus interest involved in its dispute with Rabobank by US$195 million plus interest but would not otherwise affect the on-going litigation. The settlement agreement is subject to Court approval. Pursuant to the terms of the agreement, the parties are required to use their best efforts to obtain such approval by September 5, 2003. FEDERAL-MOGUL: Solicitation Exclusivity Extended to October 13 -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Federal-Mogul Debtors is concerned that the extension will only serve to further delay and extend the time spent before the Court. The Unsecured Creditors' Committee suggests that a two-month extension is more appropriate and will motivate all the parties to promptly resolve the cases towards confirmation. The Unsecured Creditors' Committee believes that the major constituencies to the case should be required to finalize the Disclosure Statement by mid-September and set it for hearing in late October 2003 in order to reach a confirmation of the plan by the first quarter of 2004. Importantly, the proposed two-month extension -- without prejudice to further extensions -- will keep everyone's "feet to the fire" and expedite the Debtors' emergence from bankruptcy. * * * Judge Newsome agrees with the Unsecured Creditors' Committee and extends the Exclusive Plan Solicitation Period through October 13, 2003. (Federal-Mogul Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) FIRST UNION: Fitch Affirms Low-B/Junk Ratings on 6 Note Classes --------------------------------------------------------------- First Union National Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2000-C1, is affirmed by Fitch Ratings as follows: -- $70.7 million class A-1 'AAA'; -- $480.9 million class A-2 'AAA'; -- Interest-only class IO 'AAA'; -- $38.8 million class B 'AA'; -- $34.9 million class C 'A'; -- $11.6 million class D 'A-'; -- $25.2 million class E 'BBB'; -- $11.6 million class F 'BBB-'; -- $29.1 million class G 'BB+'; -- $7.8 million class H 'BB'; -- $3.9 million class J 'BB-'; -- $7.8 million class K 'B+'; -- $5.8 million class L 'B'; -- $8.7 million class M 'CCC'. The $13.5 million class N is not rated by Fitch. The affirmations follow Fitch's annual review of the transaction, which closed in May 2000. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. The transaction has paid down 3.2% since issuance, to $750.5 million as of July 2003 from $776.3 million at issuance. Wachovia Securities, the master servicer, collected year-end 2002 financials for 83% of the pool balance. Based on the information provided the resulting YE 2002 weighted average debt service coverage ratio remained stable at 1.27 times, compared to 1.27x at issuance for the same loans. Currently, one loan (0.28%) is in special servicing. The loan is secured by an industrial property in Rochester, NY and is currently 90 days delinquent. The property is currently being marketed for sale. A loss is expected. Fitch will continue to monitor this transaction, as surveillance is ongoing. FOUNTAIN VIEW: Bows Out of Chapter 11 Reorganization Proceedings ---------------------------------------------------------------- Fountain View Inc., has successfully consummated its Plan of Reorganization, and that the Company has now emerged from Chapter 11 protection. The company also announced that its new credit facilities in an aggregate amount of approximately $150 million have been closed, and the proceeds will be used to refinance existing debt and provide additional working capital. In addition, the Company has restructured its public debt. The holders of this public debt received a $50 million payment and a note for approximately $106 million. "[Tues]day's positive outcome is first and foremost a tribute to all of our employees, who maintained their dedication and commitment throughout the entire restructuring process," stated Chief Executive Officer, Boyd Hendrickson. "I am very proud that throughout the entire restructuring process our 5,400 residents continued to receive the finest in long-term medical care and post-acute care services," Hendrickson added. "This has been a textbook Chapter 11 case," stated Dan Bussel of Klee Tuchin Bogdanoff & Stern LLP of Los Angeles, bankruptcy counsel for Fountain View. "Fountain View's case began as a challenging and contentious Chapter 11 filing, but Boyd Hendrickson and his new management team successfully built on the Company's strengths, including its tradition of providing high quality health care, while addressing operational and financial issues in a manner that won the Company the confidence of all its key constituents and the marketplace, ultimately enabling it to completely refinance and restructure its debts on a consensual basis, with shareholders retaining substantially all their ownership interests. It is a tremendously successful outcome." Fountain View along with 22 operating subsidiaries filed voluntary petitions for Chapter 11 reorganization on October 2, 2001 in the United States Bankruptcy Court for the Central District of California. On July 10, 2003, the Court confirmed the Company's Plan of Reorganization, following the solicitation of votes in which all eligible ballots submitted by the Company's creditors and shareholders were voted in favor of the plan. The Honorable Sheri Bluebond presided over the Fountain View Chapter 11 case. Collectively, the Fountain View organization is a leading operator of long-term care facilities and provider of a full continuum of post-acute care services, with a strategic emphasis on sub-acute specialty medical care. Headquartered in Foothill Ranch, California, the Company employs approximately 6,400 employees who serve approximately 5,400 residents daily in facilities throughout Southern and Central California, as well as in 18 counties in Texas, including 43 skilled nursing and five assisted living facilities. In addition to long-term care, the Company provides a variety of high-quality ancillary services such as physical, occupational and speech therapy and pharmacy services. The Company generates annual revenues in excess of $340 million. GENERAL MEDIA: Pachulski Stang Serves as Bankruptcy Attorneys ------------------------------------------------------------- General Media, Inc., and its debtor-affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC as their Counsel in their chapter 11 restructuring. The Debtors want to retain Paculski Stang as their attorneys because of the firm's extensive knowledge of their business and financial affairs, the Firm's extensive general experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under chapter 11 of the Bankruptcy Code, and because of the Firm's expertise, experience and knowledge practicing before the Bankruptcy Court. The professionals expected to provide their services in this engagement and their current hourly rates are: Robert J. Feinstein $560 per hour David J. Barton $450 per hour Julienne K. Goldfine $345 per hour Maria A. Bove $255 per hour Denise A. Harris $170 per hour Voelia Jammillo $145 per hour In their capacity as Counsel, the team will: a. provide legal advice with respect to their powers and duties as debtors in possession in the continued operation of their businesses and management of their properties; b. take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to the claims filed against the Debtors' estates; c. assist the Debtors in obtaining approval of disclosure statement(s) and confirmation of their chapter 11 plan(s) of reorganization; d. prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports and other legal papers; e. appear in Court and to protect the interests of the Debtors before the Court; and f. perform all other legal services for the Debtors which may be necessary and proper in these proceedings. General Media Inc., headquartered in New York, New York, is a subsidiary of Penthouse International, Inc., publishes Penthouse magazine and other publications and is engaged in other diversified media and entertainment businesses. The Company filed for chapter 11 protection on August 12, 2003 (Bankr. S.D.N.Y. Case No. 03-15078). When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. GENTEK INC: Court Disallows 18 Duplicative Claims Totaling $10MM ---------------------------------------------------------------- U.S. Bankruptcy Court Judge Walrath disallowed 18 duplicative claims filed in the GenTek Debtors' bankruptcy cases. The Debtors attest that some of the Claimants asserted identical claims with slight variation in names or addresses, while others filed multiple claims using the exact same names and addresses against the same Debtors, for the same liability. Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, explains that this may be the result of the Claimants having received multiple claim forms in the mail. The disallowed duplicate claims total $10,291,047. (GenTek Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL LEARNING: Files Suit vs. Makau Corp. et al. in Maryland -------------------------------------------------------------- GlobalLearningSystems.com, Inc. (GLS.com), one of the nation's leading providers of computer based training content, announced that two of its subsidiaries, Global Learning Systems, Inc. and Keystone Learning Systems Corporation, filed suit in the United States Bankruptcy court for the District of Maryland against Makau Corporation, Curt Selz, William Chipman, Shane Ferrin, Rick James, David Koller, Antonio Neyra, Lyle Schow, Bryce Roper, Darren Reed Bunker, Andrew Erdmann and Noel Thornley all of Provo, Utah, or its surrounding communities. As part of the suit, Keystone and GLS seek injunctive and monetary relief against the Defendants' based upon their misappropriation of Keystone trade secrets, copyright infringement, civil conspiracy, tortious interference with contract, tortious interference with prospective economic relations and conversion. In addition, Keystone and GLS assert numerous bankruptcy causes of action against the Defendants. "We are appalled that instead of creating a business derived from their own investment and market demand for their products, Makau Corporation and the other defendants decided instead to misappropriate Keystone's intellectual property, customer data and inventory to achieve the same end," said Donald Denbo, Chairman of GlobalLearningSystems.com, Inc., the parent company of Keystone. David Loughran, President and CEO of GLS.com, states that "We intend to use every resource at our disposal to address this wrongful conduct and to protect KeyStone's business and customer relationships." Keystone and GLS have also filed a motion requesting that the Court immediately enjoin Makau and the other defendants from inappropriately marketing and selling Keystone products and utilizing Keystone trade secrets. Keystone and GLS, as part of the lawsuit, seek a permanent injunction against Makau and monetary damages in an amount to be determined at trial. Based in Frederick, Maryland GLS.COM offers a library of over 1200 courses through its Keystone subsidiary in VHS, CDROM, DVD and server format to home and business computer users, software developers and network professionals. Keystone provides training products to more than 420 of the Fortune 500 companies. GLS.COM also develops customized learning content, enterprise knowledge management software and comprehensive training support services for corporate and government clients through GLS. Both Keystone and GLS are based in Frederick, MD. On June 6, 2003 GLS and Keystone filed a petition for relief under Chapter 11 of Title 11 of the United States Code in the Bankruptcy Court for the District of Maryland, Greenbelt Division. GLS and Keystone are debtors-in-possession, and therefore have retained control of their businesses and assets. Both companies expect to emerge as dominate players in the rapidly expanding computer and web based training arena. GREENLAND CORP: June 30 Balance Sheet Upside-Down by $3 Million --------------------------------------------------------------- Greenland Corporation (OTC Bulletin Board: GRLC) has filed its Form 10-QSB quarterly report for the period ended June 30, 2003. For the three-month period ended June 30, 2003, the Company reported revenues of $203 thousand on PEO billings of $9.3 million. For the six month period, revenues were $400 thousand on PEO billings of $10.7 million. In January 2003, Greenland established operations devoted to professional employment services through which the Company provides a broad range of services associated with staff leasing and human resources management through its wholly-owned ExpertHR(TM) subsidiary. The Company reported an operating loss of $687 thousand for the 3-month period compared to an operating loss of $783 thousand in the prior year period. Operating losses were $963 thousand for the 6-months ended June 30, 2003 compared to an operating loss of $1.6 million in 2002. Greenland had a net loss of $657 thousand for the 3-month period versus a net loss of $1 million in the second quarter of 2002. Year to date, Greenland's net loss was $912 thousand compared to a net loss of $3.4 million for the 6-month period in the prior year. Greenland Corporation's June 30, 2003 balance sheet shows a working capital deficit of about $5 million, and a total shareholders' equity deficit of about $3 million. "These results reveal our ongoing progress in building our PEO business," said Tom Beener, Greenland CEO. "We are optimistic that we will continue to achieve our objectives of continued revenue growth as we sign new customers over the next several months," he added. Greenland currently operates its PEO business from offices in California, Michigan, and Oklahoma. The Company provides outsourced human resources services to small to medium-size businesses. These include benefits and payroll administration, health and workers' compensation insurance programs, personnel records management, employer liability management, employee recruiting and selection, performance management, and training and development services. Greenland's check cashing operations are expected to be restarted as early as next year with a view toward placing MAXcash(TM) ABM(TM) units with PEO clients who may wish to provide enhanced payroll services to employees, including check cashing, money order purchases, and payday loans. Greenland Corporation, a subsidiary of Imaging Technologies Corporation (OTC Bulletin Board: IMTO), has two principal operating units: professional employment services and information technology. The Company's ExpertHR(TM)and ExpertHR-OK subsidiaries provide a variety of professional services related to human resources to small and medium-size businesses. The Company's Check Central subsidiary has developed automated check- cashing systems, including the MAXcash(TM) Automated Banking Machine(TM) (a kiosk designed to provide self-service check cashing and ATM-banking functionality. Greenland's common stock trades on the OTC Bulletin Board under the symbol GRLC. Information on the Company is available at http://www.expertHR.comand http://www.greenlandcorp.com/ Imaging Technologies Corporation (OTC Bulletin Board: IMTO) was founded in 1982. Headquartered in San Diego, California, the Company produces and distributes imaging products; and provides a variety of professional services related to human resources to businesses. Information on the Company is available at the ITEC Web site at http://www.itec.net HAYNES: Weak Performance Prompts S&P to Further Junk Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on high performance metal alloys producer Haynes International Inc. to 'CCC' from 'CCC+'. The current outlook is negative. At the same time, Standard & Poor's said that it lowered its senior unsecured debt rating on Haynes to 'CCC-' from 'CCC+', reflecting the disadvantaged position the senior unsecured debt holds in the capital structure relative to the company's priority obligations. The Kokomo, Indiana-based company has about $192 million in debt outstanding. "The downgrade reflects the company's continued liquidity erosion, potential covenant violations, and refinancing risk," said Standard & Poor's Dominick D'Ascoli. "Standard & Poor's expects Haynes' financial performance and cash flow generation to remain very weak given the high degree of uncertainty in the aerospace and chemical processing industries". Haynes produces high performance alloys composed of high temperature and corrosion resistant alloys used in aerospace, chemical processing, energy, and environmental markets. The company's modest base of operations renders its earnings and cash flows susceptible to wide economic swings. Moreover, competitive pressures in the high performance alloys industry are high and substitute products such as stainless steel are abundant. HIGH VOLTAGE ENG'G: Ratings Down to D After Interest Non-Payment ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating and senior unsecured debt rating on High Voltage Engineering Corp. to 'D' from 'CCC' following the company's failure to make $8 million in interest payments that were due August 15, 2003 on its $155 million 10.5% senior unsecured notes due in August 2004. "Standard & Poor's does not expect the interest payment will be made within the 30-day grace period," said Standard & Poor's credit analyst John Sico. High Voltage currently is negotiating with bondholders to restructure these notes and if a deal is reached, Standard & Poor's expects bondholders to be impaired. Wakefield, Massachusetts-based High Voltage is a manufacturer of diversified industrial and technology products, serving depressed industrial markets. High Voltage has experienced weak operating performance, has a heavy debt burden, and constrained liquidity. HORIZON PCS: Ratings Fall to D After Bankruptcy Filing ------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its corporate credit, bank loan, and senior unsecured debt ratings on Chillicothe, Ohio-based wireless service provider and Sprint PCS affiliate Horizon PCS Inc. to 'D' following the company's filing for bankruptcy under Chapter 11. "The company has faced operating challenges in the past two years due to intense competition and a large mix of subprime credit quality customers," said credit analyst Michael Tsao. These led to deteriorating cash flow prospects and, ultimately, a default on about $531 million in bank loan and senior unsecured debt in the second quarter of 2003. With continued operating losses and only about $58 million of cash, the company is unlikely to meet creditor demand for accelerated debt repayment to cure the default. IMPERIAL PLASTECH: Deloitte Completing Reports for May Quarter -------------------------------------------------------------- Imperial PlasTech Inc. (TSX: IPQ) continues to work with its auditors, Deloitte Touche, to complete its interim financial statements for the three months ended May 31, 2003. On July 22, 2003 Imperial PlasTech announced that it would be late in filing its interim financial statements for its second quarter. Imperial PlasTech continues to anticipate that its interim financial statements will be filed on or prior to September 30, 2003. This announcement is being made in accordance with the Alternate Information Guidelines of the Ontario Securities Commission, whereby Imperial PlasTech is required to update the market every two weeks so long as it is in default of filing its interim financial statements. The PlasTech Group is a diversified plastics manufacturer supplying a number of markets and customers in the residential, construction, industrial, oil and gas and telecommunications and cable TV markets. Currently operating out of facilities in Peterborough Ontario, Edmonton Alberta and Atlanta Georgia, the PlasTech Group intends to focus on the growth of its core businesses while assessing any non-core businesses. For more information, please access the groups Web site at http://www.implas.com INTEGRATED SURGICAL: Auditors Express Going Concern Uncertainty --------------------------------------------------------------- The reports of Integrated Surgical Systems Inc.'s independent auditors on the 2002 and 2001 consolidated financial statements included explanatory paragraphs stating that there is substantial doubt with respect to the Company's ability to continue operating as a going concern. The Company's plan to address this issue - increasing sales of products in existing markets, increasing sales of system upgrades, obtaining new equity investments and reducing operating expenses - can only be realized to the extent that the Company generates sufficient cashflow to meet obligations. In the event that the Company is unsuccessful, it is possible that the Company will cease operations or seek bankruptcy protection. The Company designs, manufactures, sells and services image- directed, computer-controlled robotic software and hardware products for use in orthopaedic and neurosurgical procedures. The Company's revenue consists of product revenue, specialized product development revenue and parts and service revenue. Product revenue consists of revenues generated from sales of the Company's principal orthopaedic product, the ROBODOC(R) Surgical Assistant System which integrates the ORTHODOC(R) Presurgical Planner with a computer-controlled robot for use in joint replacement surgeries. Also included in product revenue is revenues generated from sales of the NeuroMate(TM) System, which consists of a computer-controlled robotic arm, head stabilizer, presurgical planning workstation and proprietary software used to position and precisely hold critical tools during stereotactic brain surgery. The Company develops specialized operating software for several implant manufacturing companies. These implant manufacturers contract with the Company for the development of particular lines of new prosthesis software to be used with the ROBODOC system. INTERDENT: Delays Filing of June Quarter Results on Form 10-Q ------------------------------------------------------------- InterDent, Inc. requires additional time to complete its financial statements for the quarterly period ended June 30, 2003 as a result of management's involvement with (i) the proposed plans of reorganization recently filed in the United States Bankruptcy Court for the Central District of California and (ii) other activities relating to certain filings of voluntary petitions under Chapter 11 of the United States Code on May 9, 2003. It is anticipated that the Company's total revenue for the quarter ended June 30, 2003 will be approximately $57.7 million, or approximately $6.8 million less than total revenues for the comparable quarter ended June 30, 2002. The decrease in revenues is attributed to the effect of a very poor national economy, high unemployment in the markets served and a reduction in dental benefits offered under the Oregon Health Plan to address the budget crisis in the State of Oregon. The Company, which is engaged in the business of dental practice management, anticipates reporting a net loss for the three months ended June 30, 2003 of approximately $5.0 million compared to a net loss of approximately $3.2 million for the three months ended June 30, 2002. The increase in net loss is attributed to additional costs associated with the Company's pre arranged plan of reorganization being implemented through Chapter 11 of the Bankruptcy Code. Certain entities of the Company filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on May 9, 2003. KEYSTONE CONSOLIDATED: Fails to Beat Form 10-Q Filing Deadline -------------------------------------------------------------- Keystone Consolidated Industries, Inc. has been unable to complete the preparation of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 within the required time period, without unreasonable effort or expense, due to unanticipated delays in assembling all information required to prepare, and be included in, the Quarterly Report. Keystone currently expects to report net sales of approximately $96.7 million and a net loss of $6.2 million for the three months ended June 30, 2003. The company is a leading manufacturer and distributor of fencing and wire products, carbon steel rod, industrial wire, nails and construction products for the agricultural, industrial, construction, original equipment markets and the retail consumer. Keystone is traded on the New York Stock Exchange under the symbol KES. * * * Negative Working Capital At March 31, 2003 Keystone had negative working capital of $77.1 million, including $2.6 million of notes payable and current maturities of long-term debt, $30.3 million of long-term debt classified as current as a result of the Company's failure to comply with certain financial covenants in the Keystone Revolver as well as outstanding borrowings under the Company's revolving credit facilities of $43.6 million. The amount of available borrowings under these revolving credit facilities is based on formula-determined amounts of trade receivables and inventories, less the amount of outstanding letters of credit. At March 31, 2003, unused credit available for borrowing under Keystone's $45 million revolving credit facility, which expires in March 2005, EWP's $7 million revolving credit facility, which expires in June 2004 and Garden Zone's $4 million revolving credit facility, which expired in May 2003, were $6.5 million, $1.7 million, and $324,000, respectively. The Keystone Revolver requires daily cash receipts be used to reduce outstanding borrowings, which results in the Company maintaining zero cash balances when there are balances outstanding under this credit facility. Keystone currently intends to renew or replace the Garden Zone Revolver upon its maturity in May 2003. A wholly-owned subsidiary of Contran has agreed to loan Keystone up to an aggregate of $6 million under the terms of a revolving credit facility that matures on June 30, 2003. Through May 15, 2003, the Company had not borrowed any amounts under such facility. At March 31, 2003, the Company's financial statements reflected accrued liabilities of $15.0 million for estimated remediation costs for those environmental matters which Keystone believes are reasonably estimable. Although the Company has established an accrual for estimated future required environmental remediation costs, there is no assurance regarding the ultimate cost of remedial measures that might eventually be required by environmental authorities or that additional environmental hazards, requiring further remedial expenditures, might not be asserted by such authorities or private parties. Accordingly, the costs of remedial measures may exceed the amounts accrued. Keystone believes it is not possible to estimate the range of costs for certain sites. The upper end of range of reasonably possible costs to Keystone for sites for which the Company believes it is possible to estimate costs is approximately $20.6 million. Financial Covenant Breach At March 31, 2003, Keystone was not in compliance with certain financial covenants included in the Keystone Revolver. Under the terms of the Keystone Revolver, failure to comply with these covenants is considered an event of default and gives the lender the right to accelerate the maturity of both the Keystone Revolver and the Keystone Term Loan. The Company is currently negotiating with the Keystone Revolver and Keystone Term Loan lender to obtain waivers of such financial covenants or otherwise amend the respective loan agreements to cure the defaults. There can be no assurance Keystone will be successful in obtaining such waivers or amendments, and if Keystone is unsuccessful, there is no assurance the Company would have the liquidity or other financial resources sufficient to repay the Keystone Revolver and the Keystone Term Loan if such indebtedness is accelerated. The indenture governing Keystone's 8% Notes provides the holders of such Notes with the right to accelerate the maturity of the Notes in the event of a default by Keystone with respect to any of the Company's other secured debt. However, the Notes cannot be accelerated through December 31, 2003 because Keystone has obtained a consent from holders of more than 67% of the principal amount of the 8% Notes to forebear remedies available to them solely as a result of the Company's failure to comply with the financial covenants in the Keystone Revolver through such date. There can be no assurance Keystone will be in compliance with such financial covenants subsequent to December 31, 2003. If Keystone is not in compliance with such financial covenants subsequent to December 31, 2003, there is no assurance Keystone would be successful in obtaining an extended agreement to forebear from a sufficient amount of holders of the 8% Notes, and if Keystone is unsuccessful, there is no assurance Keystone would have the liquidity or other financial resources sufficient to repay the 8% Notes if they were accelerated. Management currently believes cash flows from operations together with funds available under the Company's credit facilities will be sufficient to fund the anticipated needs of the Company's operations and capital improvements for the year ending December 31, 2003. This belief is based upon management's assessment of various financial and operational factors, including, but not limited to, assumptions relating to product shipments, product mix and selling prices, production schedules, productivity rates, raw materials, electricity, labor, employee benefits and other fixed and variable costs, interest rates, repayments of long-term debt, capital expenditures, and available borrowings under the Company's credit facilities. However, there are many factors that could cause actual future results to differ materially from management's current assessment, and actual results could differ materially from those forecasted or expected and materially adversely affect the future liquidity, financial condition and results of operations of the Company. Additionally, significant declines in the Company's end-user markets or market share, the inability to maintain satisfactory billet and wire rod production levels, or other unanticipated costs, if significant, could result in a need for funds greater than the Company currently has available. There can be no assurance the Company would be able to obtain an adequate amount of additional financing. LEXAM EXPLORATIONS: Liquidity Insufficient to Continue Operation ---------------------------------------------------------------- Lexam Explorations Inc. recorded earnings of $22,862 during the three months ended June 30, 2003, compared to a loss of $52,005 during the corresponding period in 2002. (All amounts in this news release are expressed in Canadian dollars.) During the six months ended June 30, 2003, Lexam recorded earnings of $225,737 compared to a loss of $72,776 during the first half of 2002. Earnings during 2003 are largely the result of a gain on the sale of marketable securities of $219,718. During the quarter a decrease in the provision for exploration and development commitments was recorded, and resulted in a gain of $66,804. During the first half of 2002, the Company realized a gain on the sale of marketable securities of $11,427, partially offsetting the loss for that period. At June 30, 2003, the Company had cash of $152,872, compared with $80,240 at June 30, 2002. Greenland outstanding work commitments In 2000, Lexam recorded a charge of $750,000 related to unfulfilled work commitments in Greenland. Between 1996 and 1999, the Company held exploration licences in Greenland. The exploration licences required certain expenditures, which Lexam was unable to meet. As a result, pursuant to the laws governing mineral exploration in Greenland, the Company forfeited the licences and was required to pay 50% of the unfulfilled work commitments, which was estimated to be approximately $750,000. Discussions were held between the Company and the government in an attempt to extend the term of, or reach a settlement with respect to, the unfulfilled work commitment. An agreement was reached between the parties whereby, in exchange for $75,000, Lexam would be given a full and final release from the outstanding work commitments. The payment to the government of Greenland was made in April 2003. Financial Condition Lexam is currently not able to continue its exploration efforts and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. The Company is pursing several alternatives to address these issues, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. Lexam's June 30, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $284 million. Going Concern Uncertainty The consolidated financial statements are prepared in accordance with generally accepted accounting principles and on the assumption that Lexam Explorations Inc. will be able to realize the carrying value of its assets and discharge its liabilities in the normal course of business. The Company has a significant working capital deficiency and is not currently able to continue its exploration programs and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. There can be no assurance that the Company will be able to raise sufficient additional financing to fulfill its expenditure commitments or complete its exploration programs. During 2001, subsequent to receiving shareholder and regulatory approval, the Company issued 16,164,970 shares at $0.10 per share as part of a plan to settle outstanding payables and other liabilities. Various creditors accepted a total of 12,450,911 shares, reducing the Company's liabilities by $1,245,090, with a corresponding increase in share capital of the same amount. Goldcorp Inc. received 11,734,264 shares of Lexam in exchange for settlement of $1,173,426 in payables, which included an outstanding demand loan due to Goldcorp, along with accrued interest, totaling $1,070,337. Goldcorp's equity interest in Lexam, upon receiving shares for debt, increased from 30.8% to 47.0%. At June 30, 2003, Goldcorp had a 49.8% equity interest in the Company. Of the 16,164,970 shares issued, 3,782,678 were issued to Lexam as custodian for further distribution to additional creditors that had not yet accepted shares in exchange for payables. In 2002, the remaining undistributed shares that were being held by Lexam as custodian, totaling 3,714,059 shares, were cancelled. The Company is pursuing several alternatives to improve its financial position, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. LJM2 CO-INVESTMENT: Judge Felsenthal Confirms Chapter 11 Plan ------------------------------------------------------------- On August 18, 2003, Judge Steven A. Felsenthal, the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Northern District of Texas, signed an order confirming the Chapter 11 plan or reorganization for LJM2 Co-Investment, LP. LJM2 was represented in the bankruptcy case by King & Spaulding, LLP, and Gordon & Mott PC. LJM2 filed for chapter 11 protection in September 2002, because it faced a multitude of adverse developments, including a threat to its assets posed by certain litigation. The plan of reorganization provides for the creation of two creditor trusts to pay claims against the LJM2 estate: * One trust, to be administered by Bettina M. Whyte, a principal of AlixPartners, LLC, will include the remaining investments and certain potential litigation against third parties for the benefit of general creditors. * The second trust, to be administered by Edward N. Meyer, will be for the benefit of the bank creditors, and will hold certain potential rights of action provided for under the LJM2 partnership agreement. Bettina Whyte stated, "I am pleased that we were able to bring a resolution to this very complex case in less than a year. I believe that the confirmed plan is fair and achieves the best result for all parties." LJM2 is a limited partnership organized in late 1999 by Andrew Fastow, the former Chief Financial Officer of Enron, and Michael Kopper, previously a Managing Director of Enron. LJM2 was formed to make equity and equity-related investments in entities principally engaged in energy-related or communications-related businesses. The majority of those investments were in Enron- related entities. The original general partner was LJM2 Capital Management, L.P., which was controlled by Mr. Fastow until it was sold to Mr. Kopper in July of 2001. In January 2002, LJM2's Limited Partners removed Capital Management as general partner, replacing it with Partnership Services, LLC, an affiliate of the turnaround firm, AlixPartners, LLC. LORAL SPACE: Confirms Receipt of EchoStar Offer to Buy Assets ------------------------------------------------------------- Loral Space & Communications (OTCBB: LRLSQ) confirmed that, in addition to reaching agreement with Intelsat on July 15, 2003 for the sale of Loral's six North American satellites, Loral has received an informal offer for those assets from EchoStar Communications Corp., subject to due diligence. EchoStar also has indicated an interest in acquiring the balance of Loral's FSS fleet and its satellite manufacturing assets. Consistent with the bidding procedures approved by the Bankruptcy Court on August 18, 2003, Loral will evaluate any such bid it may receive from EchoStar in accordance with the bidding procedures. Bernard L. Schwartz said, "EchoStar's interest reconfirms the value of the assets assembled by Loral over the years. We will consider all bids received very carefully, noting that our current plan is to emerge from the bankruptcy process with a viable, ongoing satellite services and manufacturing business." Loral Space & Communications is a satellite communications company. It owns and operates a global fleet of telecommunications satellites used by television and cable networks to broadcast video entertainment programming, and by communications service providers, resellers corporate and government customers for broadband data transmission, Internet services and other value- added communications services. Loral is also a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to- home television, broadband communications, wireless telephony, weather monitoring and air traffic management. LORAL SPACE: Bringing-In Willkie Farr as Special Counsel -------------------------------------------------------- Loral Space & Communications Ltd., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to retain and employ Willkie Farr & Gallagher as special counsel to advise the Debtors and assist Weil, Gotshal & Manges LLP. Specifically, the Debtors employ Willkie Farr to: a) provide corporate and related advice for the Debtors, including, without limitation, matters concerning securities law, employee benefits, regulatory issues, antitrust issues, tax matters, asset disposition, credit agreements and board of director issues; b) represent the Debtors in specified litigation and other disputes, including, without limitation, the Alcatel Arbitration, the Securities Litigations, the Twin City Litigation, Meng Litigation, the Mabuhay Arbitration and the PanAmSat Arbitration; c) represent the Debtors in various third party chapter 11 cases or debt restructuring, including, without limitation, in the chapter 11 cases of Globalstar, LQSS, Directrix and Starband; d) represent the Debtors in matters in which WG&M may have a conflict; and e) perform such additional services within the area of corporate, litigation and related matters that may arise in connection with the chapter 11 cases, as the Debtors and Willkie Farr may agree from time to time. Tony K. Ho, Esq., a member of the firm Willkie Farr discloses that his firm's current hourly rates are: members and of counsel $495 to $735 per hour associates $295 to $490 per hour legal interns $150 to $205 per hour legal assistants $ 90 to $190 per hour 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. LTV CORP: Copperweld's New Restricted Stock Plan for Management --------------------------------------------------------------- On the Effective Date, approximately 1,000 shares or 20% of the authorized New Class B Common Stock will be reserved for issuance to certain members of senior management of Reorganized Copperweld under the terms of a "New Restricted Stock Plan." New Class B Common Stock Immediately after the Effective Date, the holders of Allowed Copperweld DIP Term Lender Claims will hold 4,000 shares of the authorized and outstanding shares of the New Class B Common Stock. However, 700 shares of the New Class B Common Stock will be issued, and an additional 300 shares will be reserved for issuance, to Reorganized Copperweld management pursuant to the New Restricted Stock Plan as an equity incentive for management whose performance is essential to the financial viability of Reorganized Copperweld. Upon a liquidation event, including a distribution following the sale of substantially all the assets of Reorganized Copperweld, and after the payment of the liquidation preference to holders of New Class A Common Stock, the holders of New Class B Common Stock will receive their pro rata portion of the balance of Reorganized Copperweld's remaining assets available for distribution to its stockholders. The holders of the New Class B Common Stock may also have certain consent rights under the New Stockholders' Agreement. On the Effective Date, Reorganized Copperweld will issue 700 shares of New Class B Common Stock to: Officer Shares ------- ------ Dennis M. McGlone 200 President and Chief Operating Officer James A. Loveland 60 Chief Restructuring Officer James R. Smith 40 Interim Chief Financial Officer David W. Seeger 100 Vice President and General Manager, Structural Tubing Business James R. Baske 100 Vice President and General Manager, Mechanical Tubing Business Steven E. Levy 100 Vice President and General Manager, Bimetallic Wire and Strip Business Douglas J. Hahn 100 Vice President and General Manager of the Automotive Business The members of senior management will hold the shares of New Class B Common Stock directly, subject to certain vesting provisions, transfer restrictions, rights of first refusal and call rights in favor of Reorganized Copperweld and the other stockholders, as applicable pursuant to the New Restricted Stock Plan and the New Stockholders' Agreement. The Board of Directors of Reorganized Copperweld will be authorized to issue, pursuant to the New Restricted Stock Plan and the New Stockholders' Agreement, the remaining 300 shares of the New Class B Common Stock to key employees or directors of Reorganized Copperweld. (LTV Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 609/392- 00900) MASSEY ENERGY: Board Declares Quarterly Cash Dividend ----------------------------------------------------- Massey Energy Company's (NYSE: MEE) Board of Directors, at a regularly scheduled meeting, declared a quarterly dividend in the amount of $.04 per share to be paid on October 14, 2003 to shareholders of record on September 30, 2003. Massey Energy Company, headquartered in Richmond, Virginia, is the fourth largest coal company in the United States based on produced coal revenue. As reported in Troubled Company Reporter's July 15, 2003 edition, Standard & Poor's Ratings Services revised its outlook on Massey Energy Company to stable from negative. At the same time, Standard & Poor's assigned its BB+ rating to Massey's $355 million secured credit facility. In addition, Standard & Poor's affirmed its existing ratings on the company. The new $355 million bank credit facility was rated 'BB+', one notch above the corporate credit rating. The new facility consists of a $250 million term loan due 2008 and a $105 million revolver due 2007 and is secured by various assets including certain account receivables, inventory, and certain property, plant & equipment. The term loan has a manageable amortization schedule of $0.6 million per quarter until maturity, and an early maturity trigger based on whether Massey's existing 6.95% senior notes are refinanced before January 1, 2007. METROMEDIA FIBER: Says Facilities Unfazed by Regional Blackout -------------------------------------------------------------- AboveNet, Inc., Metromedia Fiber Network, Inc.'s recently announced brand name and planned company name upon emergence from bankruptcy in September, announced that the company's facilities and customer service remained unaffected by the regional blackout that struck the Northeast at approximately 4:20 pm Thursday, August 14, 2003. All AboveNet facilities operated as expected with back-up generators providing continuous and reliable power to customers until commercial power was completely restored. AboveNet's Points of Presence on its fiber optic network continued to provide conditioned electrical power to the customer equipment while our emergency generators came on line to replace the failed power grid. AboveNet POPs are equipped with generators and adequate fuel and battery reserves that can continue to provide power for several days with resources to replenish fuel as long as necessary. Two of the Company's major POPs in Manhattan remained staffed 7x24 with power engineers and expert staff until all commercial power was returned and the situation stabilized. "All AboveNet facilities operated without any interruption to customers. AboveNet data centers are staffed 24 x 7 and are built with multiple redundancies and contingency plans which are tested and maintained regularly to provide our customers with a worry- free environment," said Bill LaPerch, senior vice president of operations for the Company. "It is this attention to detail and commitment to excellence that make us the first choice for our customers. I am extremely pleased to report that, once again, AboveNet has protected its customers against a potentially catastrophic event." A leader in the industry, AboveNet data centers set the highest specifications in commercial design second only to the United States government in security and fault tolerance standards. With a commitment to providing uninterrupted service to its customers, AboveNet data centers are built and operated to withstand natural disasters, security attacks (physical and cyber), power outages, fire, and networking and computing failures. Metromedia Fiber Network, Inc., which plans to change its name to AboveNet Inc. upon emergence from bankruptcy, combines the most extensive metropolitan area fiber network with a global optical IP network, state-of-the-art data centers and award winning managed services to deliver fully integrated, outsourced communications solutions for high-end enterprise companies. The all-fiber infrastructure enables AboveNet customers to share vast amounts of information internally and externally over private networks and a global IP backbone, creating collaborative businesses that communicate at the speed of light. On May 20, 2002, Metromedia Fiber Network, Inc. and most of its domestic subsidiaries commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York. The Company has requested a hearing on confirmation of its plan of reorganization on August 21. METROPOLITAN MORTGAGE: Fitch Hatchets Class M-2 Rating to BB- ------------------------------------------------------------- Fitch Ratings has affirmed and taken rating actions on the following Metropolitan Mortgage & Securities Co., Inc issue: Series 2000-A -- Classes A-3, A-4, A-IO affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BB-' from 'BBB-' and removed from Rating Watch Negative. The negative rating action taken on series 2000-A reflects the poor performance of the underlying collateral in the transaction. The level of losses incurred has been higher than expected and have resulted in the depletion of overcollateralization. As of the November 2002 distribution, series 2000-A has $0 in OC, and class B-1 has taken a total writedown of $2,577,221. Currently there is $2,628,779 balance left in class B-1. This has decreased the credit enhancement percent of class M-2 to 4.83% (vs. original CE of 5.00%). MILESTONE SCIENTIFIC: June 30 Net Capital Deficit Widens to $7MM ---------------------------------------------------------------- Milestone Scientific, Inc. (AMEX:MS) announced its results for the second quarter ended June 30, 2003. Net sales for the three months ended June 30, 2003 and 2002 were $1,008,965 and $1,160,129, respectively. The $151,164 or 13.0% decrease is primarily related to a $86,000 decrease in CompuDent(TM) sales and a $48,000 decrease in CompuMed(TM) sales. Revenue from the sale of Wand(R) handpieces decreased by $10,000. The decrease in Wand(R) handpiece sales is the result of changing the primary vendor of the Wand(R) handpiece, resulting in inconsistent inventory levels. Subsequently, the transition issues have been resolved and are resulting in improved supply chain management. Selling, general and administrative expenses for the three months ended June 30, 2003 and 2002 were $841,435 and $937,952, respectively. The $96,518 decrease is attributable primarily to an approximate $106,000 decrease in expenses associated with the sale and marketing of the Wand(R) technology. Research and development expenses for the three months ended June 30, 2003 and 2002 were $51,091 and $15,084, respectively. These costs are associated with the development of Milestone's SafetyWand(TM), which incorporates engineered safety injury sharps protection, mandated by the Federal Needlestick Safety and Prevention Act of 2000. The Company's June 30, 2003 balance sheet shows a working capital deficit of about $6 million, and a total shareholders' equity deficit of about $7 million. "Although our sales decreased slightly, primarily in the sale of units, we continue towards achieving several critical components of our strategic plan," commented Stuart Wildhorn, Milestone's Senior Vice President. "Specifically, our SafetyWand(TM) device is closer to commercialization; sales to our international distribution network have increased; we've launched the Wand(R) handpiece with Needle to our international market and we have begun rebuilding our domestic sales force, which includes in-house telemarketing. Coupled with our recent agreement with Da Vinci Systems to develop and sell a state of the art LED curing light as well as a proprietary tooth whitening system, these advances will soon allow us to provide a much stronger offering to our global distribution network." Milestone Scientific is the developer, manufacturer and marketer of CompuMed(R) and CompuDent(R) computer controlled local anesthetic delivery systems. These systems comprise a microprocessor controlled drive unit as well as The Wand(R) handpiece, a single patient use product that is held in a pen like manner for injections. In 2001, Milestone Scientific received broad United States patent protection on "CompuFlo(TM)", an enabling technology for computer controlled, pressure sensitive infusion, perfusion, suffusion and aspiration, which provides real time displays of pressures, fluid densities and flow rates, that advances the delivery and removal of a wide array of fluids. In 2002, Milestone Scientific received United States patent protection on a safety engineered sharps technology, which allows for fully automated true single-handed activation with needle anti-deflection and force-reduction capability. MIRANT CORP: Appoints Curtis A. Morgan as EVP, N.A. Operations -------------------------------------------------------------- Mirant (OTC Pink Sheets: MIRKQ) announced that Curtis A. Morgan, 43, will be joining the company as executive vice president for Mirant's North American operations, effective August 25. Mr. Morgan will replace Mirant's current EVP, Rick Pershing, who is retiring after a 33-year career with Mirant, its predecessor Southern Energy, Inc., and former parent, Southern Company. "Curt brings a valuable set of talents and experience to Mirant," said Marce Fuller, president and chief executive officer, Mirant. "His considerable energy sector background in power generation, commercial operations and strategy development will be essential in directing Mirant's extensive North American operations. His professional record demonstrates excellence in meeting customer needs, which will continue to be a priority at Mirant." Mr. Morgan joins Mirant from Reliant Resources, Inc., where he recently served as Reliant's president for the east region energy wholesale group. Mr. Morgan also served as senior vice president for corporate planning and development at Reliant Energy. Prior to working at Reliant Energy he held various strategic development roles at Amoco Corp. Mr. Morgan is a certified public accountant and holds a bachelor of business administration degree from Western Illinois University. He also holds a master's degree in business administration in finance from the University of Chicago. Mirant is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 22,000 megawatts of electric generating capacity globally. It operates an integrated asset management and energy marketing organization from our headquarters in Atlanta. For more information, please visit http://www.mirant.com MIRANT CORP: First Creditors' Meeting Rescheduled to Sept. 17 ------------------------------------------------------------- William T. Neary, the United States Trustee for Region 6, notifies all of the Mirant Debtors' Creditors that the first meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code is moved to September 17, 2003 at 2:00 p.m. The Section 341 Meeting will be held at Fritz G. Lanham Federal Building, 819 Taylor Street, Room 7A24, in Ft. Worth, Texas. (Mirant Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) MOSAIC GROUP: Canadian Court Extends CCAA Protection to Sept. 15 ---------------------------------------------------------------- Mosaic Group Inc. (TSX:MGX) has sought and obtained from the Ontario Superior Court of Justice an order granting it and certain of its Canadian subsidiaries an extension of protection under the Companies' Creditors Arrangement Act (Canada) to and including September 15, 2003. The order of the Ontario Superior Court of Justice also accepted and approved the report dated August 11, 2003 of KPMG Inc., in its capacity as monitor of the Company. A copy of the report will be filed by the Company with the Canadian securities regulators and will be available at their Web site, http://www.sedar.com In December, 2002, the Company and certain of its Canadian subsidiaries and affiliated companies obtained an order from the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) to initiate the restructuring of its debt obligations and capital structure. Additionally, certain of the Company's US Subsidiaries commenced proceedings for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas in Dallas. Pursuant to these filings, the Company and its relevant subsidiaries continue to operate under a stay of proceedings. NAT'L CENTURY: Seeks Injunctive Relief vs. Gulf Insurance et al. ---------------------------------------------------------------- The NCFE Debtors -- National Century Financial Enterprises, Inc., NPF Capital, Inc., NPF-CSL, Inc., NPF-LL, Inc., NPF VI, Inc., NPF X, Inc., National Premier Financial Services, Inc., and NPF XII, Inc. -- seek injunctive relief to prevent the Gulf Insurance Company from disbursing the proceeds of the Directors & Officers Insurance Policy, Policy No. GA0722269, purchased by the NCFE Entities, and to further prevent the Great American Insurance Company from disbursing the proceeds of an excess policy, Policy No. DFX0009369, purchased by the NCFE Entities without a prior Court determination of the proportional amount of the proceeds to which each claimant under the Policy is entitled and the procedure under which this would be determined. The insurance coverage provided by Gulf under the Policy provides for $5,000,000 in coverage, inclusive of defense costs. The Great American policy also provides for $5,000,000 in excess coverage, inclusive of defense costs. The total covered claims against the Policies will be in excess of $3,000,000,000 and in any case are in an amount that will far exceed the Policy limit. Mary E. Tait, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, relates that the NCFE Debtors are insureds under the Policy, and have filed notices of potential claims against the NCFE Entities for which the NCFE Entities intend to submit claims for insurance coverage under the Policy. The NCFE Debtors expect to present claims against the Policy in an amount exceeding $3,000,000,000. Insureds and potential claimants under the Policy include the NCFE Entities, Lance K. Poulsen, Barbara L. Poulsen, Donald H. Ayers, Rebecca S. Parrett, Harold W. Pote, Eric R. Wilkinson, Thomas G. Mendell, Roger Faulkenberry, Randy Speer, Dean Haberkamp, Sherry Gibson, John Snoble, David J. Coles, Peter Briggs, Ira Genser, Jim Dubow, Mark Russell, Luke Lonergan, Michael Lane, Ronald M. Winters, Ryan McCarthy, Mark Tomassini and John Does I-X. Many, if not all, of the Claimants either already or at some point will have covered claims against the Policy. Certain of the Claimants have already made claims under the Policy seeking immediate disbursement of defense costs. Ms. Tait points out that the NCFE Entities are entitled to defense costs as part of loss coverage under the Policy. The NCFE Entities incurred substantial defense costs during and since the Policy period, and anticipate submitting claims for these costs to Gulf. Claims for losses and defense costs that the NCFE Entities incurred are already in excess of $10,000,000. In addition, due to the operation of the automatic stay, some of the NCFE Entities' defense costs have been deferred to a later date but eventually will be incurred, and the NCFE Entities intend to submit claims for these defense costs as they arise. Absent guidance from the Court, Gulf and Great American could make disbursements under the Policy on a first-come, first-served basis, thus depleting the Policy proceeds on which the other Claimants, including the NCFE Debtors, will be able to draw and therefore depleting assets of these estates. To assure the fair and equitable apportionment of disbursements under the Policy, the Court should, upon notice to all Claimants and after all Claimants have had an opportunity to be heard, establish a procedure for determining each Claimants' proportional share of the proceeds. Once the Court has determined the Procedure, the Court should apply the Procedure, upon notice to all Claimants and after all Claimants have had the opportunity to present evidence supporting the validity and amount of their potential claims under the Policy, to arrive at a fair and equitable allocation of the right to Policy proceeds among the Claimants. Ms. Tait asserts that injunctive relief is necessary because: (1) the Policy provides for the so-called "entity" coverage, the NCFE Debtors are also claimants under the Policy and their share of the proceeds is property of the NCFE Debtors' estates; and (2) the Policy also provides coverage for the current directors and officers of the NCFE Debtors and these individuals are likewise entitled to have their share of the proceeds kept available for them to draw upon. A. First Claim for Equitable Allocation Procedure Gulf is seeking the Court's permission to begin disbursements of defense costs under the Policy. Thus, disbursements under the Policy, including the Great American excess policy, may be made on a first-come, first-served basis, leading to the inequitable treatment of the other Claimants, including the NCFE Debtors. As a result, because the likely and potential claims covered under the Policy, including the Great American excess policy, will far exceed the Policy proceeds, the claims for defense costs made by early Claimants will likely exhaust the Policy Proceeds before many of the Claimants, including especially the NCFE Debtors, have had the opportunity to present claims for payment. The Court should, upon notice to all Claimants and upon providing all Claimants an opportunity to be heard, establish the Procedure for determining the fair and equitable proportional allocation of Policy proceeds among the Claimants. B. Second Claim for Equitable Allocation of Disbursements Certain of the Claimants have filed claims for defense costs under the Policy and are seeking their prompt payment. Other Claimants, including the NCFE Debtors, have not yet submitted claims against the Policy. In particular, the NCFE Debtors have had their defense costs, covered by the Policy, deferred until a later date by operation of the automatic stay. Any disbursement by Gulf, or Great American, on a first-come, first-served basis would be inequitable to the other Claimants, and would diminish property of the Debtors' estates. Furthermore, allowing disbursement to be conducted on a first-come, first-served manner would be inequitable and prejudicial to the other Claimants because disbursements to early Claimants will likely exhaust the Policy proceeds. The Court should determine, by an appropriate Procedure, the fair and equitable allocation of Policy proceeds among all potential Claimants. C. Third Claim for Injunction Against Gulf Ms. Tait argues that absent immediate injunctive relief, the Claimants, including the NCFE Debtors, will suffer irreparable harm. By contrast, an injunction against disbursements of Policy proceeds, including the Great American excess policy proceeds, in advance of the Court determining and applying a Procedure for the fair and equitable allocation of Policy proceeds among the Claimants will: -- maximize the value of the NCFE Debtors' estates for their creditors, -- safeguard the interests of the other Claimants, and -- ensure that the other Claimants are provided with full due process regarding their interests in the Policy proceeds. Thus, the NCFE Debtors ask Judge Calhoun for: (a) a declaration of a fair and equitable procedure for determining allocation of Policy proceeds to all Claimants; (b) a declaration of the proportional share of each Claimant to the Policy proceeds; and (c) an injunction enjoining the Gulf Insurance Company and the Great American Insurance Company from making any disbursements from the Policy proceeds other than in conformance to the determination of the Court as to the proportional share of the Policy proceeds that each particular Claimant can draw upon. (National Century Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) NRG ENERGY: Inks Pact to Sell McClain Generating to Oklahoma Gas ---------------------------------------------------------------- NRG Energy, Inc.'s affiliate, NRG McClain LLC, has reached an agreement to sell its 77 percent interest in the McClain Generating Station to Oklahoma Gas & Electric Company, a subsidiary of Oklahoma City-based OGE Energy Corp. (NYSE:OGE). As part of the sales process, the project company NRG McClain LLC, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. McClain is a 520-megawatt combined-cycle, natural gas-fired facility located in Newcastle, Oklahoma, just south of Oklahoma City in McClain County. The Oklahoma Municipal Power Authority owns the remaining 23 percent interest in the facility. "We are using the voluntary Chapter 11 process as a tool to effectuate the transaction and NRG McClain will continue to operate in the ordinary course of business," said John Boken, Interim President and Chief Operating Officer. "The expected sale of this asset is a positive step in NRG's overall restructuring efforts and is consistent with our business plan to divest selected noncore assets." The total price to be paid by Oklahoma Gas & Electric for the facility will be approximately $160 million, subject to certain customary closing adjustments. Proceeds from the sale will be used to pay down project debt and cover deferred project operating costs. NRG anticipates that the proposed sale, which is subject to Bankruptcy Court approval, will be completed by early December 2003. NRG McClain LLC filed its voluntary petition in U.S. Bankruptcy Court in the Southern District of New York. In conjunction with the Chapter 11 filing, and as required under Section 363 of the Bankruptcy Code, NRG will file a motion seeking to establish bidding procedures for an auction that will allow other qualified bidders to submit higher and better offers to purchase NRG McClain. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities located primarily in the United States. Its operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. NRG ENERGY: OG&E Confirms Acquisition of Assets in McClain Power ---------------------------------------------------------------- OGE Energy Corp.'s (NYSE: OGE) subsidiary, Oklahoma Gas and Electric Company, has signed an agreement to purchase a 77 percent interest in the McClain power plant near Newcastle, Okla. for $159.9 million. NRG McClain LLC, an indirect subsidiary of NRG Energy Inc. of Minneapolis, agreed to sell its 400-megawatt interest in the 520- megawatt electric generating facility. The remaining 23 percent, or 120 megawatts of generating capacity, will continue to be owned by the Oklahoma Municipal Power Authority. "OG&E has had a longstanding working relationship with the OMPA and we look forward to strengthening our partnership as co-owners of this state-of- the-art power plant," said Steven E. Moore, chairman, president and CEO of OGE Energy. "For our customers, OG&E's acquisition of this new generating capacity represents a great opportunity for immediate cost savings and the continued reliability of their electric service." The acquisition is expected to close later this year. It is subject to Federal Energy Regulatory Commission approval and antitrust clearance under the Hart-Scott-Rodino Act. Also, since NRG McClain has filed for bankruptcy, the acquisition is subject to the approval of the bankruptcy court. OG&E sought the acquisition under a 2002 Oklahoma rate settlement agreement which recognized the need for the company to acquire at least 400 megawatts of new generation. "We look forward to working with our state regulatory officials to ensure this power plant serves Oklahoma's best interests," Moore said. OGE Energy spokesman Brian Alford said OG&E considered all options for expanding its capacity to deliver power to its Oklahoma customers. "Acquiring a 77 percent interest in the McClain plant, at the agreed-upon price, was clearly the best option," Alford said. "It is below the cost of building a new plant and compares favorably to other opportunities in the marketplace. Once we take ownership of this new, highly efficient capacity, the savings for our customers begin right away, not three years from now as would be the case if we built a plant from the ground up." As part of the 2002 rate settlement agreement, OG&E guaranteed at least $25 million in annual savings to its customers, made possible by the new generation. Alford said OG&E expects the McClain plant to enable the company to meet that requirement. Another benefit of OG&E's ownership of the McClain facility, Alford said, is increased tax revenue for local schools at a time when they need it most. "We will pay more taxes on this plant than are being paid now," he said. "We have no exemption. This means more money for Oklahoma schools." With this acquisition, OG&E is taking a major step to ensure its long-term power supply needs are met, especially in light of increasing customer demand. In five of the last six years, OG&E customers have set new records for peak power demand. The current record, 5,908 megawatts, was set July 21. "This new plant will give us an efficient means to meet the growing demand, replace expiring above-market cogeneration contracts that have been mandated by the federal government, and reduce our dependence on power- purchase contracts," Alford said. Construction of the McClain plant began in February 2000, initiated by a subsidiary of Duke Energy North America. Duke sold the 23 percent interest to the OMPA in December 2000 and its remaining 77 percent stake to NRG in June 2001, the same month the plant went into production. Using two combined-cycle General Electric generating turbines fueled by natural gas, the plant is rated at 520 megawatts. ONEOK Gas Transportation, a subsidiary of Tulsa-based ONEOK Inc., provides natural gas transportation and storage services to the McClain plant. OG&E serves approximately 720,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas. OGE Energy also is the parent company of Enogex Inc., a natural gas pipeline company with principal operations in Oklahoma and Arkansas. OMEGA HEALTHCARE: Credit Rating Upped to B+ over Better Results --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Omega Healthcare Investors Inc. to 'B+' from 'B'. At the same time, ratings are raised on the company's senior unsecured debt and preferred stock. The ratings on Omega's cumulative preferred stock are being reinstated following the Aug. 15 payment of all unpaid and previously deferred, preferred dividends. The outlook is stable. Maryland-based Omega invests in and provides financing to the long-term care industry. "The upgrades acknowledge the company's successful portfolio and balance sheet restructuring efforts, and the recent closing of a new bank facility, which has lengthened debt maturities and modestly improved liquidity. The combination of these two accomplishments has effectively enabled the reinstatement of the payment of preferred dividends and catch-up on all preferred dividends in arrears," said Standard & Poor's credit analyst George Skoufis. The company has worked through several tenant bankruptcies and lease/mortgage negotiations while successfully meeting its maturing debt obligations. Further, Omega's operating cash flow continues to improve to the point that the common dividend may be reinstated later this year. Further ratings improvement will be driven by sustained improvement in facility-level performance by replacement operators, which would strengthen the stability of Omega's rental stream and recently improved debt protection measures. OWENS CORNING: Files 3rd Amended Plan and Disclosure Statement -------------------------------------------------------------- Owens Corning presents Judge Fitzgerald its Third Amended Plan of Reorganization and Disclosure Statement dated August 8, 2003. The material modifications to the Plan include: A. Classification and Treatment of Claims Class Description Treatment ----- ------------------- -------------------------- 4 Bank Holder Claims Each holder will receive Pro Rata Share of the portion of the Combined Distribution Package equal to the Class 4 Initial Distribution Percentage: -- cash equal to the Class 4 Final Distribution Percentage of Excess Available Cash; -- excess Senior Notes equal to the Class 4 Final Distribution Percentage of the Excess Senior Notes Amount; -- shares of New OCD Common Stock equal to the Class 4 Final Distribution Percentage of the Excess New OCD Common Stock; and -- cash equal to the Class 4 Final Distribution Percentage of the Excess Litigation Trust Recoveries. 5 Bondholder Claims Each holder will receive Pro Rata Share of the portion of the Combined Distribution Package equal to the Class 5 Initial Distribution Percentage: -- Cash equal to the Class 5 Final Distribution Percentage of Excess Available Cash; -- Excess Senior Notes equal to the Class 5 Final Distribution Percentage of the Excess Senior Notes Amount; -- shares of New OCD Common Stock equal to the Class 5 Final Distribution Percentage of the Excess New OCD Common Stock; and -- Cash equal to the Class 5 Final Distribution Percentage of the Excess Litigation Trust Recoveries. 6 General Unsecured Each holder will receive Pro Rata Claims Share of the portion of the Combined Distribution Package equal to the Class 4 Initial Distribution Percentage: -- cash equal to the Class 6 Final Distribution Percentage of Excess Available Cash; -- excess Senior Notes equal to the Class 6 Final Distribution Percentage of the Excess Senior Notes Amount; -- shares of New OCD Common Stock equal to the Class 6 Final Distribution Percentage of the Excess New OCD Common Stock; and -- cash equal to the Class 6 Final Distribution Percentage of the Excess Litigation Trust Recoveries. 11 Subordinated Claims On the Effective Date, all Subordinate Claims will be deemed cancelled and extinguished. Holders will not receive any distribution on account of the Claims. 12 OCD Interests On the Effective Date, all OCD Interests will be deemed cancelled and extinguished. Holders will not receive any distribution on account of the OCD Interests. B. Estimated Recoveries of Asbestos Claims The chart details five scenarios assuming varying asbestos claim amounts, ranging from the Company's current asbestos reserve of $5,800,000,000 to $24,000,000,000. ESTIMATED AGGREGATE CLAIM AMOUNT (In Millions) ---------------------------------------------- CLASS A B C D E ----- ------- ------- ------- ------- ------- 7 3,564 6,688 10,700 13,375 16,050 8 2,310 3,312 5,300 6,625 7,950 ------- ------- ------- ------- ------- TOTAL $5,874 $10,000 $16,000 $20,000 $24,000 The estimated recovery of each of the Classes for each of the various asbestos claim assumptions, is: ESTIMATED RECOVERY ------------------------------------- CLASS CLAIM A B C D E ----- ------ ----- ----- ----- ----- ----- 4 $1,472 51.0% 34.6% 24.4% 20.5% 17.6% 5 $1,389 51.0% 34.6% 24.4% 20.5% 17.6% 6 $323 51.0% 34.6% 24.4% 20.5% 17.6% 7 See Above 53.0% 36.2% 25.6% 21.5% 18.5% 8 See Above 66.6% 46.5% 29.0% 23.2% 19.4% 9 $2 100.0% 100.0% 100.0% 100.0% 100.0% 10 $0 0.0% 0.0% 0.0% 0.0% 0.0% 11 N/A 0.0% 0.0% 0.0% 0.0% 0.0% 12 N/A 0.0% 0.0% 0.0% 0.0% 0.0% The treatment of each of the Classes is summarized in this table: ESTIMATED ALLOWED ESTIMATED CLAIMS RECOVERY CLASS DESCRIPTION TREATMENT (millions) ----- ----------- --------- ---------- --------- DIP Facility N/A $0 100% Administrative N/A 46 100% Priority Tax N/A Up to $135 100% 1 Other Priority Unimpaired 0 100% 2A Other Secured Unimpaired 5 100% Tax 2B Other Secured Unimpaired 6 100% Claims 3 Convenience Impaired 18 100% 4 Bank Holders Impaired 1,472-1,577 2nd table 5 Bondholders Impaired 1,389 2nd table 6 General Impaired 323-687 2nd table Unsecured 7 OC Asbestos Impaired 1st table 2nd table Personal Injury 8 FB Asbestos Impaired 1st table 2nd table Personal Injury 9 FB Asbestos Impaired 2-7 100% Property Injury 10 Intercompany Impaired N/A 0% 11 Subordinated Impaired N/A 0% 12 OCD Interests Impaired N/A 0% A free copy of the Third Amended Disclosure Statement is available at: http://bankrupt.com/misc/3rdOwensAmendedDisclosureStatement.pdf (Owens Corning Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS-ILLINOIS: Will Close Hayward, Calif. Glass Container Plant ---------------------------------------------------------------- Owens-Illinois, Inc., (NYSE: OI) will not rebuild its glass container manufacturing plant in Hayward, Calif. The 394,000 square foot facility located on Hathaway Avenue has been out of production since June of this year when it experienced a major leak in its only glass furnace. The plant will officially close on November 17, 2003. Company officials met Tuesday with employees and labor union officials at the plant, informing them of the decision. Approximately 170 employees will be affected. Hourly employees at the plant are represented by the Glass, Molders, Pottery, Plastics & Allied Workers International Union and the United Steelworkers of America Flint/Glass Industry Conference. Robert Smith, vice president and general manager of the company's glass container operations, said, "This has been a very difficult decision. The people at the Hayward plant have worked hard and have done a good job. However we've determined we can provide continued good service to our customers and increase investor value by consolidating operations." Glass containers formerly manufactured at the Hayward plant will be manufactured at the Oakland and Tracy, Calif., plants and in other company facilities. The company will work with the unions to help place employees in positions at other Owens-Illinois facilities and with government agencies to help employees obtain unemployment benefits and search for new jobs. After the closing of this facility, Owens-Illinois will have 24 glass container manufacturing plants in North America, 18 of which are in the U.S. The Hayward facility opened in 1949 and was acquired by Owens- Brockway, a subsidiary of Owens-Illinois, in 1997. The plant produced glass containers primarily for the wine industry. Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. Plastics packaging products manufactured by O-I include consumer products (blow molded containers, injection molded closures and dispensing systems) and prescription containers. For more information on Owens-Illinois, visit its Web site at http://www.o-i.comor at http://www.prnewswire.com As reported in Troubled Company Reporter's April 25, 2003 edition, Fitch Ratings assigned a 'BB' rating to Owens-Illinois' (NYSE: OI) $450 million senior secured notes and a 'B+' rating to its $350 million senior notes offered in a private placement. The senior secured notes are due 2011 and the senior notes are due 2013. The Rating Outlook remains Negative. P-COM INC: Taps Aidman Piser to Replace PricewaterhouseCoopers -------------------------------------------------------------- On August 7, 2003, PricewaterhouseCoopers, LLC, were dismissed as the independent accountants of P-Com, Inc., a Delaware corporation. On August 7, 2003, the Audit Committee of the Company's Board of Directors approved Aidman Piser & Company as the Company's new independent auditors. The reports of PricewaterhouseCoopers on the financial statements of the Company for the past two fiscal years contained an explanatory paragraph indicating that there was a substantial doubt about the Company's ability to continue as a going concern. P-Com, Inc. (Nasdaq:PCOM) develops, manufactures, and markets complete lines of Point-to-Multipoint, Point-to-Point and Spread Spectrum wireless access systems. Through its wholly owned subsidiary, P-Com Network Services, the company provides related installation, engineering and system maintenance services for the worldwide telecommunications market. PETROLEUM GEO-SERVICES: 2nd Quarter Net Loss Doubles to $62 Mil. ---------------------------------------------------------------- Petroleum Geo-Services ASA (a Debtor-in-possession) (OSE:PGS) (Pink Sheets:PGOGY) announced its 2nd quarter 2003 results. (In millions of dollars) Q2 2003 Q2 2002 Q1+Q2 Q1+Q2 2003 2002 ------- ------- ----- ----- Revenues $295.4 $248.0 $593.1 $475.3 Operating profit (loss) (0.5) 55.3 36.5 118.9 Net income (loss) (61.8) (30.6) (91.5) (208.9) EBITDA, as defined (A) 120.3 111.9 263.9 228.1 CAPEX (B) (16.4) (13.4) (26.6) (40.2) Investments in (23.2) (47.6) (68.6) (120.1) multi-client (C) Cash flow defined as $80.8 $50.9 $168.6 $67.9 (A+B+C) Financial Highlights: - An agreement in principle on the terms for a proposed financial restructuring achieved with a majority of the Company's banks and bondholders and its largest shareholders - Proposed restructuring involves a rightsizing of the Company's debt to a sustainable level - from approximately $2.5 billion to approximately $1.2 billion. - U.S. Chapter 11 restructuring implementation process, commenced on July 29, allow PGS operating subsidiaries to continue full operations Q2 Operations: - 48% increase in contract seismic revenues compared to Q2, 2002 - 51% reduction in multi-client investments compared to Q2, 2002 - Multi-client late sales affected by Brunei $18.1 million reversal in Q2, 2003 due to boarder dispute between Brunei and Malaysia - Continued strong combined revenues from Pertra AS and Petrojarl Varg - Unusual items include $12.9 million Isle of Man tax contingency accrual and $10.3 million in severance cost The full report including tables can be downloaded from the following link: http://reports.huginonline.com/914395/121883.pdf PETROLEUM GEO: Court OKs Arntzen de Besche as Norwegian Counsel --------------------------------------------------------------- Petroleum Geo-Services ASA sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to retain and employ Arntzen de Besche Advokatfirma as special Norwegian insolvency, corporate, tax and employment law counsel to perform the legal services. AdB has served as the Debtor's insolvency, corporate, tax and employment law counsel on matters of Norwegian law during the months leading up to the Petition Date. The Debtor continues to employ AdB to provide such necessary legal services and on those matters that AdB has been performing for the Debtor. AdB advises the Debtor on Norwegian insolvency legal issues, including challenges related to cross border insolvencies and the interplay between Norwegian insolvency laws and US chapter 11 proceedings. AdB also advises the Debtor with respect to other corporate, commercial, tax, and employment law questions under Norwegian law arising from the Debtor's financial status. Specifically, the Debtor will employ Mr. Stale Gjengset, as General Counsel. Mr. Gjengset's salary is NOK210,000 (approximately US $26,850) per month. Mr. Gjengset will devote 90% of his time assisting the Debtor and 10% of his time assisting other AdB clients. In his capacity as General Counsel, Mr. Gjengset assists the Debtor with: i) advice on Norwegian law issues related to the reorganization process; ii) management of the reorganization process; iii) coordinating with the Debtor with respect to international civil law issues arising from the various jurisdictions whereby the Debtor conducts its business and/or the jurisdictions where the Debtor is otherwise obliged to comply with applicable law; iv) coordinating with legal and financial advisors; v) negotiating with various creditors, lessors and other contract parties; vi) drafting and advising the Debtor on various documents related to the Debtor's reorganization; vii) meeting with the Board of Directors to keep them informed at all stages of the reorganization process; viii) advising the Debtor on Norwegian law issues related to the day to day business of the PGS Group; ix) producing various general corporate documents; x) managing the divestment of PGS Production Group and Atlantis Holding, former non-debtor subsidiaries; and xi) handling various legal disputes, claims and law suits. 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 CORP: Reports Slight Results Improvement for Second Quarter ---------------------------------------------------------------- PG&E Corporation (NYSE: PCG) earned $227 million in consolidated net income for the second quarter of 2003, compared with consolidated net income of $218 million for the second quarter of 2002. Second-quarter 2003 consolidated earnings from operations for PG&E Corporation and its California utility business, Pacific Gas and Electric Company, were $127 million, compared with $207 million for the second quarter last year. "PG&E Corporation delivered earnings from operations in line with the company's expectations for the second quarter," said Robert D. Glynn, Jr., PG&E Corporation Chairman of the Board, CEO and President. "The Corporation's objectives for the remainder of 2003 are to continue operating the Pacific Gas and Electric business well, to deliver earnings from operations in line with our reaffirmed 2003 guidance, and to keep the proposed settlement agreement on schedule. PG&E Corporation is on track and on schedule to achieve these objectives." PG&E Corporation's consolidated earnings from operations do not include results from NEG. Also excluded from earnings from operations are headroom at Pacific Gas and Electric Company, as well as certain non-operating income and expenses that are listed as "Items Impacting Comparability" on the attached supplemental financial table. Income from headroom (the difference between generation-related costs and generation-related revenues) was a positive $321 million, fr the quarter compared with $366 million in the second quarter of 2002. Total headroom for the first two quarters of 2003 was a positive $140 million in line with the company's expectations. Items impacting comparability at the Corporation and Pacific Gas and Electric Company included incremental interest costs of $73 million; Chapter 11 costs and costs related to the California energy crisis of $31 million, generally consisting of external legal and financial advisory fees; and charges of $14 million, associated with prior year impacts of a revised decision related to the utility's 1999 General Rate Case. The Corporation's quarterly report on Form 10-Q will disclose the earnings impact of accounting for stock options if the company were to record them as an expense. For the second quarter of 2003, accounting for stock options as an expense would have reduced earnings by $0.01 per share. PACIFIC GAS AND ELECTRIC COMPANY Pacific Gas and Electric Company contributed $130 million to earnings from operations for the quarter, compared with $201 million for the same quarter last year. As expected, the difference between second quarter 2003 and second quarter 2002 operating earnings per share at Pacific Gas and Electric Company reflected the following: the absence of a 2003 General Rate Case revenue increase to offset additional expenses associated with rate base growth, inflation, benefits and other costs; lower gas transmission revenues, as increased hydroelectric production reduced the demand for some gas-fired generation; and an increase in the average number of common shares outstanding. A final 2003 GRC decision is expected early next year. Revenues from the GRC will be retroactive for 2003. Operational performance in Pacific Gas and Electric Company's businesses remained solid. The utility continued to receive high marks from customers responding to service surveys, with nine out of 10 respondents rating the quality of the service they received as good, very good or excellent. During the quarter, Pacific Gas and Electric Company was also among the joint recipients of the 2003 ENERGY STAR(R) award for Regional, State and Community Leadership in Energy Efficiency, and the 2003 ENERGY STAR(R) Partner of the Year for New Homes award. The awards were given by the U.S. Environmental Protection Agency and the U.S. Department of Energy in recognition of the utility's strong contributions to California's efforts to reduce energy use. PG&E NATIONAL ENERGY GROUP PG&E Corporation's national wholesale energy business, PG&E National Energy Group, recorded a total net loss of $103 million, or $0.25 per share, after intercompany eliminations, for the second quarter of this year, compared with net loss of $241 million, or $0.65 per share, for the same quarter last year. As previously reported, NEG has been reviewing its second quarter presentation methods for netting certain trading and hedging revenues and expenses. NEG has adopted a net presentation approach for such transactions and has reflected this change in its second quarter results. For prior periods, the NEG continues to review this matter, which generally arises as the result of changes made in 2002 to the presentation of trading and hedging revenues and expenses to reflect the netting of certain trading activities and the reclassification of discontinued operations. Any changes that may result from this continued review are not expected to affect the Corporation's operating income, net income, balance sheets or cash flow statements. NEG and certain of its subsidiaries have filed for Chapter 11 protection in federal bankruptcy court. NEG filed a proposed plan of reorganization with the court that, if implemented, would eliminate PG&E Corporation's equity interest in NEG. For the period after July 8, 2003 -- the date of NEG's Chapter 11 filing -- PG&E Corporation will no longer report NEG results on a consolidated basis and will use the cost method of accounting for its investment in NEG, in accordance with accounting rules. PROPOSED SETTLEMENT AGREEMENT On June 19, 2003, Pacific Gas and Electric Company and PG&E Corporation announced a proposed settlement agreement with the staff of the California Public Utilities Commission to resolve Pacific Gas and Electric Company's Chapter 11 case. The proposed settlement agreement was developed through a judicially supervised settlement conference with the CPUC staff and would resolve the differences between the competing plans of reorganization put forth by the company and the CPUC. The proposed settlement agreement calls for a new plan of reorganization under which Pacific Gas and Electric Company would aim to pay creditors and emerge from Chapter 11 by the end of the first quarter of 2004. The new plan of reorganization, based on the terms of the proposed settlement agreement, has the support of the Official Committee of Unsecured Creditors. On August 15, 2003, the plan and disclosure statement were sent to creditors entitled to vote on the new plan. A proceeding is also under way at the CPUC to consider the proposed settlement agreement and allow for public comment. It is currently expected that the CPUC will vote on the proposed settlement agreement on December 18, 2003. "PG&E Corporation believes the proposed settlement agreement and new plan provide the quickest way to resolve Pacific Gas and Electric Company's Chapter 11 case in a manner that is fair to our customers and our company," said Glynn. "The agreement's approval and implementation of the new plan will allow Pacific Gas and Electric Company to emerge from Chapter 11 as an investment grade utility, pay in full or otherwise fully satisfy all valid creditor claims, and do so while providing for a reduction in customers' rates." GUIDANCE FOR 2003 AND 2004 EARNINGS FROM OPERATIONS Reaffirming its previously issued earnings guidance, the Corporation expects 2003 earnings from operations for PG&E Corporation and Pacific Gas and Electric Company will be in the range of $1.90-$2.00 per share, not including headroom. For 2004, earnings from operations is expected to be in the range of $2.00- $2.10 per share. Guidance estimates reflect forecasted consolidated results for PG&E Corporation and Pacific Gas and Electric Company; guidance does not include NEG. Among the assumptions on which current guidance is based is the expectation that Pacific Gas and Electric Company receives a timely decision on its 2003 General Rate Case, and that the GRC decision is sufficient to allow the utility to recover increased costs due to inflation, customer growth and ratebase growth. PG&E Corporation bases guidance on "earnings from operations" in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for total net income presented in accordance with generally accepted accounting principles. The estimated range for 2003 earnings on a GAAP or "reported" basis for PG&E Corporation and Pacific Gas and Electric Company is $1.26-$2.18 per share. For 2004, the estimated ranges for reported earnings for PG&E Corporation and Pacific Gas and Electric Company is $1.78-$1.93 per share. The attachment to this news release reconciles estimated earnings from operations with estimated total net income. PG&E NATIONAL: USGen Hires Winston & Strawn as Special Counsel -------------------------------------------------------------- Pursuant to Section 327(e) of the Bankruptcy Code, USGen sought and obtained the Court's authority to employ Winston & Strawn as its special regulatory counsel. USGen selected Winston & Strawn as special regulatory counsel because of the firm's expertise in Federal Energy Regulatory Commission matters and its prepetition representation of USGen. USGen relates that these Winston & Strawn members and associates are in good standing of the Bars of Washington D.C., Maryland and Virginia: -- Donald Dankner; -- William Madden; -- Leonard Belter; -- John Wittaker; -- Raymond Wuslich; -- Jeanne Dennis; -- John Dempsey; and -- Margaret Claybour. Leslie J. Polt, Esq., at Blank Rome, LLP, in Baltimore, Maryland, informs the Court that W&S will be paid on an hourly basis and reimbursed for its actual and necessary expenses. The firm's current standard hourly rates are: Partners $280 - 670 Associates 110 - 380 Legal assistants 55 - 210 "Were the Debtor required to retain attorneys other than [Winston & Strawn] in connection with the prosecution of these particular matters, the Debtor, its estate and all parties-in-interest would be unduly prejudiced by the time and expense necessarily attendant to such attorneys' familiarization with the intricacies and history of such matters," Ms. Polt says. Donald Dankner, a member of Winston & Strawn, discloses that within the past 90 days, the firm received $104,832 as payment for certain services rendered. Winston & Strawn also holds a $50,000 retainer from USGen. Prior to the Petition Date, this retainer was treated as an apply-as-you-go retainer. But after the Petition Date, this retainer will not be applied to outstanding fees and expenses until the Court approves the fees and expenses. Mr. Dankner attests that Winston & Strawn does not hold or represent an interest adverse to the estate and is a disinterested person as that term is defined under Section 101(14) of the Bankruptcy Code. (PG&E National Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX: Gets Go-Signal to Honor Workers' Compensation Claims --------------------------------------------------------------- For the policy periods of September 1, 2001 to August 31, 2002 and September 1, 2002 to August 31, 2003, Pillowtex Corporation, and its debtor-affiliates maintain a loss sensitive deductible plan workers' compensation and employers' liability insurance program with the United States Fire Insurance Company. The Deductible Program provides coverage for all of the Debtors' employees in 24 states. Under the Deductible Program, insurance coverage is provided for losses up to the applicable statutory workers' compensation obligations and up to $1,000,000 per claim for employers' liability, with the Debtors paying a $250,000 per occurrence retention payment. William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, informs Judge Walsh that the Debtors pay approximately $115,000 per month in deductibles to cover indemnity costs, medical and other expenses under the Deductible Program. As of the Petition Date, the Debtors estimate that approximately $4,300,000 in such deductible payments may have accrued but not yet been paid. The Debtors' deductible payment obligations under the Deductible Program are currently backed by a $5,625,000 "evergreen" letter of credit the Debtors' senior lenders issued for the benefit of USFIC. According to Mr. Sudell, the claims under the Deductible Program are handled and processed for the Debtors by Crawford and Company, a third party claims-adjusting company, which invoices the Debtors on a monthly basis. The Debtors pay Crawford $30,000 per month in respect to the services. After reviewing their books and records, the Debtors do not believe that there are any amounts currently owing to Crawford that accrued prepetition. However, in the event any such amounts have accrued prepetition and remain unpaid, the Debtors seek the Court's authority to honor such payment obligations to ensure that there is no disruption in the administration of the Debtors' workers' compensation arrangements. Mr. Sudell relates that the Debtors have approximately 1,200 continuing employees that require them to maintain coverage for workers' compensation claims. With the shutdown of their operations, the Debtors believe that they can obtain significant cost savings by transitioning their existing Deductible Program to a bundled, fully insured product program coverage to their continuing employees. Mr. Sudell estimates that it will take two months to implement the transition. The aggregate cost for maintaining the Deductible Program pending such transition will be $145,000 per month. In addition to the coverage provided by the Deductible Program, the Debtors are also entitled to benefits under these Pre-1997 Policies: (i) a loss portfolio transfer that was entered into by one or more of the Debtors and American International Group, Inc. or one of its affiliates; and (ii) several additional insurance polices covering claims in excess of the coverage provided by the LPT. Mr. Sudell notes that the Pre-1997 Policies that are entirely prepaid and require no future deductible or similar payments by the Debtors, provide significant benefits to the employees in respect of non-occupational disease claims arising prior to December 1997. Under the Pre-1997 Policies, the Debtors advance $14,700 per month to covered employees for such claims. Various plan administrators, including AIG, then indemnify and reimburse the Debtors 100% of such claims after they are actually paid by the Debtors. Except for the time value of money between the date on which the Debtors make payments and the date on which they are reimbursed by the relevant plan administrators, the Pre-1997 Policies do not impose any costs on the Debtors. In addition, Mr. Sudell says, the Pre-1997 Policies are not transferable, so if the Debtors do not advance the money, AIG and the other plan administrators may not be obligated to make any reimbursements, even though the policies are fully paid. Mr. Sudell asserts that it is critical that the Debtors be permitted to continue their workers' compensation programs and to pay the prepetition deductibles, pending a transition to an Insured Product Program. Otherwise, the Debtors would likely become subject to harsh and draconian remedies under applicable law for failure to comply with relevant state's workers' compensation regime. Moreover, Mr. Sudell provides, continuing the fund advances under the Pre-1997 Policies shows the Debtors' goodwill to their continuing work force. Accordingly, the Debtors sought and obtained the Court's authority, pursuant to Sections 105(a), 507(a)(3) and 363(b) of the Bankruptcy Code, to: (a) process and pay prepetition claims arising under the Deductible Program; (b) continue advancing funds under the Pre-1997 Policies; and (c) implement transition of their existing Deductible Program to an Insured Product Program, provided that the aggregate costs of the Insured Product Program will not exceed the costs of the existing Deductible Program. In addition, the Court modified the automatic stay, to the extent required, to permit various state workers' compensation agencies to draw down any remaining funds in various surety bonds the Debtors posted prior to the Petition Date. All applicable banks and other financial institutions are authorized and directed to receive, process, honor and pay any and all checks drawn on the Debtors' accounts to pay Prepetition Claims or Prepetition Administrative Fees, whether the checks were presented prior to or after the Petition Date, provided that sufficient funds are available in the applicable accounts to make the payments. (Pillowtex Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) PROTERGA INC: Section 341(a) Meeting to Convene on September 23 --------------------------------------------------------------- The United States Trustee will convene a meeting of Protarga, Inc.'s creditors on September 23, 2003, 10:00 p.m., at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, 844 King Street, Suite 2313, Lockbox 35, Wilmington, Delaware 19801. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Protarga, Inc., headquartered King of Prussia, Pennsylvania, is a clinical stage pharmaceutical company that is developing Targaceutical(R) drugs for new medical therapies. The Company filed for chapter 11 protection on August 14, 2003 (Bankr. Del. Case No. 03-12564). Raymond Howard Lemisch, Esq., at Adelman Lavine Gold and Levin, PC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and estimated debts of over $10 million. RAMTRON: Negotiates EBITDA Covenant Waivers Under Debt Agreement ---------------------------------------------------------------- U.S. semiconductor maker Ramtron International Corporation (Nasdaq:RMTR), has completed negotiations with its debenture holders for an EBITDA covenant waiver that includes provisions for periodic principal payments, an extension of the exercise period of the warrants associated with the debentures, and a lower warrant strike price. In return, the debenture holders have waived all EBITDA covenant requirements for the remainder of the year. Under the terms of the waivers, filed with the company's Form 10-Q today, Ramtron has agreed to make principal payments to the debenture holders averaging $650,000 per quarter over the next six quarters. In addition, the company will lower the exercise price of the 700,435 common stock warrants held by the debenture holders from $4.28 to $3.04 per common stock warrant and extend the exercise period one year. The conversion price of the debentures remains at the original conversion price of $3.76. As of June 30, 2003, the company was in compliance with all other covenants of the debentures. Ramtron is the world leader in ferroelectric random access memory products -- new high-performance nonvolatile memories that merge the benefits of many mainstream memory technologies into a single device. For more information on the Company, visit http://www.ramtron.com RCN CORP: Reports Results of Tender Offer for Senior Notes ---------------------------------------------------------- RCN Corporation's (Nasdaq: RCNC) cash tender offer to purchase its outstanding Senior Notes without distinguishing between the issues, closed at 5:00 p.m., New York City time, on August 18, 2003. As of that time, the principal amount of Notes tendered was approximately $75.2 million. The company paid the aggregate purchase price including accrued interest through August 19, 2003, approximately $28.4 million, to the depositary for those Notes accepted for payment yesterday. Merrill Lynch & Co., Morgan Stanley and Greenhill & Co., LLC are the dealer managers, HSBC Bank USA is the depositary and D.F. King & Co, Inc. is the Information Agent in connection with the tender offer. RCN Corporation (Nasdaq: RCNC) -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $2.4 billion -- is the nation's first and largest facilities-based competitive provider of bundled phone, cable and high-speed Internet services delivered over its own fiber-optic local network to consumers in the most densely populated markets in the U.S. RCN has more than one million customer connections and provides service in the Boston, New York, Philadelphia/Lehigh Valley, Chicago, San Francisco, Los Angeles and Washington, D.C. metropolitan markets. RUSHMORE FINANCIAL: Recurring Losses Raise Going Concern Doubt -------------------------------------------------------------- Rushmore Financial Group Inc.'s financial statements have been prepared assuming that the Company will continue as a going concern. At June 30, 2003, the Company had $3,552,588 in liabilities, and cash and accounts receivable of $20,076. Also, the Company incurred net losses from continuing operations of $2,203,896 in 2001, $3,131,636 in 2002, and $1,130,059 in the first six months of 2003. Although the Company believes that it will be able to continue to raise the necessary funds until it reaches a sustainable level of profitability, these matters raise substantial doubt about the Company's ability to continue as a going concern. The Company has taken several steps to increase cash through the use of borrowings and equity. Year to date, the Company raised $318,000 through a 12% Senior Secured Convertible Bond offering and other short term borrowings. These bonds bear interest at 12% per annum, principal and interest are due on or before December 31, 2007 and are convertible into shares of common stock at a rate of 50% of the market price of the stock at the time of conversion, but not less than $0.15 per share. The Company may force conversion if the stock trades above $2.00 per share for 10 consecutive trading days. The bonds are secured by the RushTrade software, trade names, websites, customer accounts and other assets. The Company will attempt to raise additional capital through the ongoing sales of the bonds. The Company has undergone an extensive internal reorganization and reduction of staff related to its repositioning and new business level of activity and has implemented additional steps to more closely monitor expenses. Additional marketing efforts are being implemented to increase revenues since the release of the RushTrade software products. Pending the release of the RushTrade Back Office Tool, the Company will pursue licensing agreements with other broker/dealers and institutions which is expected to produce a new revenue stream which will further increase revenue. RushTrade's marketing and sales efforts are currently underway to acquire new active trader/customer accounts that will generate transaction-based revenue. RushTrade believes that it has the low cost operational infrastructure and a relatively low threshold to reach profitability in the near future. Since December 2002 new sales representatives have been hired to generate additional sales leads. Additionally, the Company is using Internet advertising to provide leads for the sales representatives. The Company believes that it has embarked on a successful marketing strategy to generate the necessary active trader/customer accounts to capture customer assets with the trade volumes and related revenues necessary to reach a sustainable level of profitability. There can be no assurances that the steps taken by the Company will result in the Company being able to settle its liabilities as they become due or that the Company will be able to generate revenues or cash flows from financings sufficient to support its operations in the short term. SANMINA-SCI: Fitch Assigns Speculative Grade Preliminary Ratings ---------------------------------------------------------------- Fitch Ratings has initiated coverage of Sanmina-SCI Corp. The company's first-lien senior secured bank facility is rated 'BB+', the second-lien senior secured notes are rated 'BB', and senior subordinated notes are rated 'B+'. The Rating Outlook is Stable. Approximately $2.1 billion of debt is outstanding. The ratings reflect customer and industry concentration, pricing pressures including for printed circuit board fabrication, lower but improved capacity utilization levels, and execution risk relating to the company's various restructuring programs. Also considered are the company's leading position in the Electronics Manufacturing Services industry, consistent operating cash flow and free cash flow, improved capital structure and working capital metrics, and unique operating model and strong long-term management team. The Stable Rating Outlook reflects the company's consistent revenue base, stabilizing but still challenging demand environment for its end markets, and cost cutting initiatives, especially for the PCB segment, which continues to experience operating losses but is generating cash. Even though Fitch expects third quarter weakness for the European market as well continued pressure on telecommunications capital spending, Sanmina has flexibility within the current ratings for moderate operational and industry shortfalls. Similar to most Tier 1 EMS companies, Sanmina has significant exposure to the communications and computing markets, with International Business Machines Corp. and Hewlett-Packard Company contributing more than 15% and the top ten customers representing approximately 70% of total revenues as of the third quarter ending June 28, 2003. Additionally, industry concentration exists with a dependence on information technology as only 17% currently comes from growing end- markets like medical, defense, aerospace, and automotive. However, revenues for the past six quarters have been stable in the $2.4-$2.6 billion range. Fitch expects Sanmina's growth to be flat to slightly positive for the next few quarters due to a moderate industry recovery for the second half of calendar year 2003, even as telecommunications capital spending pressures continue. The company's operating model has some leverage for any volume increases which should further benefit earnings but is still dependent on product mix. As capacity utilization levels throughout the industry continue to remain low, Sanmina has started to implement a Phase II restructuring program that is expected to yield approximately $200 million per year in savings beginning in the first half of fiscal year 2004. For the third quarter the company took $19 million of restructuring charges and the majority of the $250 million Phase II restructuring charges are anticipated to occur in the next two quarters. The cash portion of these charges should be approximately $140 million and will occur over the next several quarters. The restructuring should improve Sanmina's capacity utilization levels, cost competitiveness, and could offset a difficult and fluctuating margin environment created by component pricing pressures. Fitch also recognizes Sanmina's leading position within its markets as the company's global manufacturing footprint and increasingly diverse mix of end markets and products provide it with competitive advantages. Sanmina has consistently generated operating cash flow and free cash flow, which has enabled it to internally fund debt repayments and small acquisitions. However, a significant amount of operating cash flow the last two years was generated from working capital as inventory levels were reduced significantly as revenues declined. In a moderately growing environment, Fitch would expect the company to become a user of cash for at least a couple of quarters. Sanmina continues to make progress in working capital management as highlighted by the reduction of its cash conversion cycle to a Fitch-estimated 40 days as of June 28, 2003, from 52 days one year ago. Additional improvement is expected for this metric. The company's liquidity is sufficient and consists of cash and equivalents of approximately $1.6 billion (as of June 28, 2003) and consistent quarterly free cash flow generation. Sanmina currently does not have a revolving credit facility or accounts receivables securitization program as the company's December 2002 refinancing replaced shorter-term bank credit and accounts receivable facilities with longer-term and higher interest secured debt. Total debt at June 28, 2003, was $2.4 billion but has since been reduced to $2.1 billion after the company completed the redemption of $264 million convertible subordinated notes due 2004 on August 8, 2003. Sanmina completed the redemption with cash, reducing cash and equivalents to approximately $1.3 billion. The remaining components of total debt consist of $275 million first lien senior secured credit facility due 2007, $750 million second lien senior secured notes due 2010, $633 million zero convertible subordinated notes due 2020 but puttable in 2005, and $515 million convertible subordinated debt due 2007. The company's remaining obligations for fiscal 2003 are minimal, and scheduled maturities for subsequent fiscal years are $10 million in 2004, $642 million in 2005 (assuming the zero coupon put is exercised), $37 million in 2006, $653 million in 2007, and $834 million thereafter, of which approximately $750 million are the senior secured notes due 2010. Even though profitability has held steady the last few quarters, credit protection measures have deteriorated slightly for the latest twelve months ended June 28, 2003 compared to fiscal year- end 2002 mostly as a result of the increased debt and interest associated with the refinancing in December 2002. Interest coverage fell to 3.8x from 5.3x and leverage, as measured by total debt-to-EBITDA, increased to 6.4 times from 6.2x for the same period. While revenues increased to $10.2 billion as of June 28, 2003, from $8.8 billion for fiscal year 2002, EBITDA margin fell to 3.7% from 4.1%, resulting in only a slight rebound in nominal EBITDA to $383 million from a low of $361 million for fiscal year 2002. Fitch expects Sanmina's leverage will improve slightly going forward as a result of the recently completed $264 million convertible note redemption, which will also reduce gross annual interest expense by approximately $11 million. Interest coverage, however, should remain below 4x on a rolling basis due to the higher interest expense associated with the secured debt. These ratings are based on existing public information and are provided as a service to investors. SEAVIEW VIDEO: Cash Resources Insufficient to Continue Operation ---------------------------------------------------------------- Seaview Video Technology Inc.'s financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company has incurred operating losses of $1,275,903 and $3,177,486 during the six months ended June 30, 2003 and 2002, respectively. In addition, during those quarters, the Company has used cash of $526,606 and $422,587 in its operating activities and has a net working capital deficiency of $2,449,863 at June 30, 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has devoted significant efforts in the further development and marketing of products in its Security Products Segment, which, while now showing improved revenues cannot yet be characterized as sufficient to fund operations for any period of time. The Company's ability to continue as a going concern is dependent upon (i) raising additional capital to fund operations (ii) the further development of the Security and DC Transportation Products Segment products and (iii) ultimately the achievement of profitable operations. During the six months ended June 30, 2003, the Company raised $536,000, net, from financing activities. Management is currently addressing several additional financing sources to fund operations until profitability can be achieved. However, there can be no assurance that additional financing can be obtained on conditions considered by management to be reasonable and appropriate, if at all. SEDONA CORP: June 30 Net Capital Deficit Slides-Down to $1.6MM -------------------------------------------------------------- SEDONA(R) Corporation (OTCBB:SDNA) -- http://www.sedonacorp.com-- the leading provider of web-based Customer Relationship Management solutions for small and mid-sized financial services organizations, today announced its unaudited second quarter operating results. Revenues for the quarter ended June 30, 2003 were $197,000 versus $770,000 in the year ago quarter. Revenue for the first six months of 2003 was $765,000, versus $1,493,000 a year ago. Net loss for the second quarter was $1,250,000, compared with $1,108,000 a year ago. For the first six months, net loss was $1,973,000 versus $2,910,000 in the year ago period. Accounts payable and accrued expenses were reduced to $955,000 as of June 30, 2003, compared to $2,046,000 as of December 31, 2002. While the second quarter 2003 net loss increased slightly due, in part, to a large increase in interest expense associated with recent financings, the six month reportable losses were reduced, and operating expenses and losses declined both in the quarter and first six months of 2003. Operating losses for the first six months of 2003 were $1,175,000, versus $2,722,000 in the comparable period a year ago, and total operating expenses decreased to $1,501,000 from $3,326,000 for the six months ended June 30, 2003 and 2002, respectively. The Company's June 30, 2003 balance sheet shows a working capital deficit of about $2.5 million, and a total shareholders' equity deficit of about $1.6 million. President and CEO Marco Emrich commented, "While we were disappointed with second quarter revenue, we are working through our indirect distribution model to build our revenue base. Our partners' marketing efforts are still in the early phases and additional time is needed to achieve consistent revenue growth." Mr. Emrich concluded, "The second quarter results also reflect significant investment associated with the development of new technologies, which will enable us to successfully expand our CRM solution offering into new vertical markets, domestically and internationally." SEDONA Chairman David R. Vey commented, "While the revenue in the latest quarter was disappointing it has not diminished our commitment or enthusiasm. During the last six months we have focused on improving the Company's financial position through the reduction of operating expenses, restructuring existing obligations and focusing our resources towards the development of new products and relationships. SEDONA will continue its efforts to improve its financial condition and new product development while retaining our commitment to our earlier conversion to the indirect distribution model." SEDONA(R) Corporation (OTCBB: SDNA) is the leading technology and services provider that delivers Customer Relationship Management (CRM) solutions specifically tailored for small and mid-sized financial services businesses such as community banks, credit unions, insurance companies, and brokerage firms. Utilizing SEDONA's CRM solutions, financial services companies can effectively identify, acquire, foster, and retain loyal, profitable customers. Leading financial services solution providers such as Fiserv, Inc., Open Solutions Inc., COCC, Sanchez Computer Associates, Inc., Financial Services, Inc., and AIG Technologies leverage SEDONA's CRM technology to offer best-in-market CRM to their own clients and prospects. SEDONA Corporation is an Advanced Level Business Partner of IBM(R) Corporation. For additional information, visit the SEDONA web site at http://www.sedonacorp.com SK GLOBAL AMERICA: Turning to KPMG LLC for Financial Advice ----------------------------------------------------------- SK Global America Inc., and its debtor-affiliates cannot reorganize its affairs or comply with the reporting requirements of Chapter 11 without the assistance of outside accountants. Hence, by this motion, the Debtor seek Judge Blackshear's authority to employ KPMG LLC as accountants and financial advisors, nunc pro tunc to July 21, 2003. SK Global America's Chief Executive Officer, Seung Jae Kim, asserts that KPMG is well qualified to provide the accounting and financial advisory services needed by the Debtor in its Chapter 11 case. KPMG LLP is a firm of independent public accountants. The Debtor has selected KPMG LLP as its accountants and financial advisors because of the firm's diverse experience and extensive knowledge in the fields of accounting, taxation and bankruptcy. Having participated in some of the largest bankruptcy proceedings and out-of-court restructurings in the country, the Debtor believes that KPMG is both well qualified and uniquely able to provide services in a most efficient and timely manner. In addition, the Debtor needs assistance in collecting, analyzing and presenting accounting, financial and other information in relation to the Chapter 11 case. KPMG's employment, therefore, is essential and should be approved. KPMG is expected to: a. monitor daily cash position and manage other elements of working capital to manage liquidity; b. assist in gathering and analyzing information necessary to assess the options available to the Debtor; c. assist in the preparation of the Debtor's financial projections and assumptions; d. advise and assist the Debtor in negotiations and meetings with equity holders, secured lenders, creditors and any official or informal creditor committees; e. advise the Debtor on negotiations with potential debtor- in-possession lenders; f. assist with identifying and analyzing potential cost- containment opportunities; g. assist with identifying and analyzing asset redeployment and liquidation opportunities; h. assist in the preparation and review of reports or filings as required by the Bankruptcy Court or the United States Trustee, including the preparation of the Debtor's Schedules of Assets and Liabilities, Statement of Financial Affairs and Monthly Operating Reports; i. perform other accounting services as may be necessary or desirable, including, if applicable, implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles; j. advise and assist the Debtor in connection with tax planning issues, and other tax consulting, advice, research, planning or analysis as may be requested from time to time; k. evaluate potential employee retention and severance plans; l. analyze assumption and rejection issues regarding executory contracts and leases, including the preparation of damage calculations; m. prepare liquidation analyses; and n. provide other financial analysis as may be requested. The Debtor intends to compensate KPMG the customary hourly rates charged by the firm's personnel anticipated to be assigned to the Debtor's case as: Partner $540 - 600 Managing Director/Director 450 - 510 Senior Manager/Manager 360 - 420 Senior Staff/Consultants 270 - 330 Associate 180 - 240 Paraprofessional 120 KPMG will also be reimbursed for necessary expenses incurred, which includes travel, photocopying, delivery service, postage, vendor charges and other out-of-pocket expenses incurred in providing professional services. The Debtor has informed KPMG, and KPMG is aware, that its compensation for services rendered will be fixed by the Court upon application and in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules and the Local Bankruptcy Rules for the Southern District of New York. KPMG will bill its time in increments of one-tenth of an hour. In addition to the professional fees, out-of-pocket expenses like support staff assistance, transportation, lodging, meals, telephone and report production are billed at cost. KPMG will maintain detailed records of any actual and necessary costs and expenses incurred in connection with the services to be rendered to the Debtor. Leon Szlezinger, a principal at KPMG LLP, relates that KPMG has received an advance payment retainer equal to $100,000 from the Debtor. KPMG will hold the retainer and apply it against postpetition fees and expenses, to the extent the Court allows. KPMG is not a prepetition creditor of the Debtor's estate, and has received no other payments from the Debtor in the 90 days preceding the initiation of the bankruptcy case. Mr. Szlezinger assures the Court that KPMG is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Furthermore, KPMG has no connection with, and holds no interest adverse to, the Debtor, its estate, creditors, or any other party-in-interest in the matters for which the firm is to be employed. (SK Global Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) SPIEGEL GROUP: Court Okays Miller Buckfire as Financial Advisor --------------------------------------------------------------- The Spiegel Inc., and its debtor-affiliates sought and obtained the Court's authority to employ Miller Buckfire Lewis Ying & Co., LLC as their financial advisor and investment banker, nunc pro tunc to June 1, 2003. The Debtors believe that the resources, capabilities and experience of Miller Buckfire are crucial to their restructuring. The Debtors tell the Court that an experienced financial advisor and investment banker like Miller Buckfire fulfills a critical service that complements the services provided by their other professionals. Miller Buckfire's primary services include valuation and debt capacity analysis, capital structure design, plan formulation and negotiation, as well as private equity and debt placement. In addition, Miller Buckfire has significant experience in marketing and selling companies that are in bankruptcy. Broadly speaking, Miller Buckfire will concentrate its efforts on formulating strategic alternatives and assisting the Debtors in their efforts with regard to a restructuring, financing and sale, or any combination of these tasks. The Debtors note that Miller Buckfire is intimately familiar with their businesses and financial affairs. Before the Petition Date, the Debtors engaged the firm to examine strategic alternatives, including a potential restructuring and financing. Since its engagement, Miller Buckfire has: (a) met with the Debtors' management team on numerous occasions and conducted due diligence to better understand the Debtors' business, operations, properties, financial condition and prospects; (b) spent considerable time developing and evaluating potential restructuring alternatives for the Debtors; (c) participated in numerous meetings and conference calls with the Debtors' Board of Directors regarding potential strategic alternatives; (d) met with the Debtors' other professionals to coordinate a potential restructuring and financing; (e) coordinated due diligence requests from the prepetition lenders' advisor; (f) arranged and coordinated follow-up meetings with the prepetition lenders' advisor; and (g) participated in negotiations on an out-of-court amendment to the Debtors' prepetition credit agreement. Through these prepetition activities, Miller Buckfire's professionals have worked closely with the Debtors' management, financial staff and other professionals and have become well acquainted with the Debtors' financial restructuring needs. Accordingly, the firm has developed significant relevant experience and expertise that will assist it in providing effective and efficient services in these Chapter 11 cases. Marc B. Hankin, Esq., at Shearman & Sterling, in New York, relates that the Debtors paid Miller Buckfire $2,195,000 for fees and expenses during the period from May 2002 through the Petition Date. As of the Petition Date, the Debtors paid all fees and expenses due and owing to Miller Buckfire for its prepetition services. As exclusive financial advisor and investment banker to the Debtors, Miller Buckfire will perform these services: (A) General Financial Advisory and Investment Banking Services -- Miller Buckfire will familiarize itself with the Debtors' business, operations, properties, financial condition and prospects; and -- Miller Buckfire will provide advice and assistance with respect to the business plan prepared by the Debtors' management. (B) Restructuring Services If the Debtors pursue a Restructuring, Miller Buckfire will: -- provide financial advice and assistance in developing and seeking approval of a plan of reorganization; -- provide financial advice and assistance in structuring any new securities to be issued under the Plan; -- assist the Debtors or participate in negotiations with creditors and other parties-in-interest with respect to the Plan; and -- participate in hearings before the Bankruptcy Court with respect to the matters upon which it has provided advice, including, coordinating with the Debtors' counsel. (C) Financing Services If the Debtors pursue a Financing, Miller Buckfire will: -- provide financial advice and assistance in structuring and effecting a Financing, identify potential Investors and contact these Investors; -- assist in developing and preparing a memorandum to be used in soliciting potential Investors; -- assist the Debtors and participate in negotiations with potential Investors; and -- participate in hearings before the Bankruptcy Court with respect to the matters upon which it has provided advice. (D) Sale Services If the Debtors pursue a Sale, Miller Buckfire will: -- provide financial advice and assistance to the Debtors in connection with a Sale, identify potential acquirers and contact these potential acquirers; -- assist in preparing a memorandum to be used in soliciting potential acquirers; -- assist the Debtors and participate in negotiations with potential acquirers; and -- participate in hearings before the Bankruptcy Court with respect to the matters upon which it has provided advice. Miller Buckfire will be compensated according to these terms: (a) A $300,000 monthly fee for the first five months and $200,000 thereafter; (b) Upon consummation of a Restructuring, a $5,000,000 Restructuring Transaction Fee; (c) Upon consummation of a Sale, a Sale Transaction Fee equal to: -- in the case of a Sale of all or substantially all of the Debtors' assets in one or more transactions, the greater of: (i) 1.5% of the Aggregate Consideration, subject to the aggregate fee cap of $8,000,000; and (ii) $5,000,000; or -- $5,000,000 in the case of a Sale of all or substantially all of the Debtors' assets to Dr. Michael Otto, his family or any entity affiliated to the Otto Family. Dr. Otto and family beneficially own more than 50% of Spiegel Holdings common stock. Dr. Otto is the Chairman of the Spiegel Board of Directors and is the Chief Executive Officer and Chairman of the Board of Directors of Otto GmbH; or -- in the case of a Sale of a portion of the Debtors' assets constituting a business unit, 1.5% of the Aggregate Consideration; and (d) If at any time during the Fee Period the Debtors consummate any Financing or receive and accepts written commitments for one or more Financings and the Financing is consummated, the Debtors will pay to Miller Buckfire: -- 0.5% of the gross proceeds of any indebtedness issued by the Debtors that is secured by a first lien; -- 3% of the gross proceeds of any indebtedness issued by the Debtors that is secured by a second or more junior lien, is unsecured or is subordinated; -- 5% of the gross proceeds of any equity or equity-linked securities or obligations issued by Spiegel; and -- with respect to any other securities or indebtedness issued, the underwriting discounts, placement fees or other compensation as will be customary under the circumstances and mutually agreed by both parties. Both the Debtors and Miller Buckfire have agreed that all of the Monthly Fees earned after June 1, 2003 will be credited against any Restructuring Transaction Fee, Sale Transaction Fee or Financing Fee, and that the aggregate fees payable to Miller Buckfire will not exceed $8,000,000. In addition, the Debtors will reimburse Miller Buckfire on a monthly basis for travel costs and other reasonable out-of-pocket expenses. Pursuant to an engagement letter, the Debtors agree to indemnify, hold harmless and defend Miller Buckfire under certain circumstances. Miller Buckfire's Chairman and Managing Director, Henry S. Miller, attests that the firm is a disinterested person as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a), and doesn't hold any interest adverse to the Debtors' interests. (Spiegel Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) STRUCTURED ASSET: Fitch Cuts & Pulls Class B3 Rating from Watch --------------------------------------------------------------- Fitch Ratings has affirmed 3 and downgraded 1 class of Structured Asset Mortgage Investments, Inc. residential mortgage-backed certificates, as follows: Structured Asset Mortgage Investments, Inc., mortgage pass-through certificates, series 1999-4 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 downgraded to 'B' from 'BB' and removed from Rating Watch Negative. The action is the result of a review of the level of losses incurred to date and the current high delinquencies relative to the applicable credit support levels. SAMI 1999-4 remittance information indicates that 13.73% of the pool is over 90 days delinquent, and cumulative losses are $2,631,331 or 1.07% of the initial pool. Class B3 currently has 1.64% of credit support remaining. Classes B4 and B5 have 0.0% of credit support remaining. SURGICARE INC: June 30 Working Capital Deficit Tops $9 Million -------------------------------------------------------------- SurgiCare Inc. (AMX:SRG), a Houston-based ambulatory surgery company, is announcing financial results for the second quarter and first six months of 2003. Revenues for the three months ending June 30, 2003 were $1.94 million, a decrease of 49% compared with year-ago quarterly revenues of $3.78 million. The second quarter 2003 net loss was $909,153 against a net loss of $1,557,196 for the year-earlier quarter. In the first six months of 2003, revenues were $4.22 million, a decrease of 40% compared with revenues of $7.04 million in the comparable 2002 period. The net loss was $1.59 million, compared to a net loss of $1.13 million in the first six months of 2002. The decrease in revenue is due to two primary factors. The first is an increase in the contractual allowance against revenues SurgiCare is taking compared to last year. The average contractual allowance for the quarter was 70% compared to last year's average contractual rate of 63%, which partially led to the provision for doubtful accounts of $5.4 million in the second and third quarters of last year. For the first six months of 2003, the average contractual allowance was 68% compared to 59% in the comparable 2002 period. In addition, there has been a drop in cases due to the transfer of cases from Memorial Village to Physicians Endoscopy Center in which SurgiCare sold its interest in May 2003, a temporary loss of lithotripsy cases due to reimbursement and payment issues and some transfer of cases to competitor facilities from physician partners who have not received distributions. Second quarter 2003 revenue per consolidated case of $1,120 is comparable to first quarter 2003 figure of $1,277. The drop is primarily due to the loss of the high revenue lithotripsy cases. Surgical costs per case decreased to $617 compared to $692 in the first quarter. Case volume for the second quarter 2003 grew 23.9% over the year- ago period to 4,082. Case volume was comparable to the first quarter 2003 figure of 4,064. In the first six months of 2003, case volume grew 34.8% over the year-ago period to 8,146. Please note that case volumes quoted here include all SurgiCare centers on a same store basis, regardless of SurgiCare's ownership interest. This is a reporting change from prior to the fourth quarter of 2002, which was only on a consolidated basis and not a same store comparison. To strengthen SurgiCare's capital position and provide funding sources for future growth, the company has been investigating relationships with long-term capital partners. New management has had continuous discussions with various potential partners and expects that very soon an agreement will be reached with a capital partner to provide a combination of debt and equity. Finally, SurgiCare continues to explore growth opportunities with a variety of surgery centers, imaging centers, and practice management companies. Some of these discussions have advanced to a non-binding letter of intent with ongoing due diligence. These potential acquisitions will be contingent upon securing the capital resources necessary through a capital partner. SurgiCare Inc.'s June 30, 2003 balance sheet shows that its total current liabilities outweighed its total current assets by about $9 million. "Although the case volume is not up to our expectations, continued support by the physician partners is indicative of their faith in our current strategy to restructure and stabilize the company for long term growth. The problems associated with our senior lender's bankruptcy have slowed our progress but I'm optimistic about the completion of the capital reconstruction," said SurgiCare Chief Executive Officer Keith LeBlanc. "We are close to digging out of the hole that we inherited. We expect to make an announcement within days to secure the necessary financing to complete the turn-around." SurgiCare Inc. offers licensed, freestanding ambulatory surgery centers for use by physicians and its physician partners and their patients. They are licensed, certified and Medicare approved outpatient facilities. SurgiCare's goal is to grow through mergers, acquisitions and turnkey management contracts in conjunction with physician-involved supervision and potential equity participation within a public company model. SurgiCare has assembled a team of highly qualified industry professionals that are equipped to effectively manage multiple ASCs, imaging centers, and other operating units to cut operational costs and increase profit margins. To find out more about SurgiCare Inc. (AMX:SRG), visit its Web site at http://www.surgicareinc.com * * * On July 28, 2003, SurgiCare, Inc., dismissed Weinstein & Spira LLP as its independent auditors and retained Mann Frankfort Stein & Lipp LLP as its new independent auditors. The decision to change auditors was approved by SurgiCare's Board of Directors. Weinstein & Spira's report on the Company's financial statements for the year ended December 31, 2002 was modified by the inclusion of an explanatory paragraph addressing the ability of the Company to continue as a going concern. TECHNICOIL CORP: Obtains Covenant Waiver Under Credit Pact ---------------------------------------------------------- Technicoil Corporation experienced a 29% decrease in revenue for the second quarter of 2003 compared to the second quarter of 2002 largely due to a 25% reduction in the Company's rig fleet. Technicoil recorded a net loss of $567,871 in the quarter compared to a net loss of $800,226 in the second quarter of 2002. Weather played a major role in the disappointing 2003 second quarter results as a normal spring break-up in April was followed by a month of heavy rainfall in Technicoil's main operating area of southern Alberta, causing significantly reduced utilization levels. Drilling utilization was also hampered as one of the Company's two drilling rigs was being retrofitted during the quarter. Despite a net loss, cash flow from operations was positive for the twelfth straight quarter with Technicoil earning cash flow of $569,486 compared to $6,877 in the second quarter of 2002. Technicoil's financial position continued to improve as the Company had a positive working capital ratio at June 30, 2003, with the outstanding equipment loans being reduced by 57% or $6.4 million since December 31, 2002. The Company invested $624,742 during the second quarter of 2003 enhancing its drilling equipment, with another $650,000 to be incurred in the third quarter. The investment will significantly improve the efficiency and safety of the drilling operations. Operations Technicoil operated an average of nine rigs throughout the second quarter of 2003, conducting both fracturing and drilling operations for our customers. This compares to an average of twelve rigs for the corresponding period in 2002 and thirteen rigs in the first quarter of 2003. In the first quarter of 2003 Technicoil completed the sale of four coil tubing rigs held for sale at the 2002 year end, with the sale of the fifth rig completed in April. The Company's remaining nine rigs were deployed primarily in Canada throughout the quarter, with no future contracts secured in the United States at this time. Overall fleet utilization was 21% for the quarter compared to 33% for the second quarter of 2002. Drilling utilization increased slightly from 17% in the second quarter of 2002 to 23% in the second quarter of 2003. However, the fracturing utilization of 17% this quarter is significantly below the 2002 second quarter utilization rate of 40%. Fracturing delivered 83% of revenue in the second quarter compared to 90% in the corresponding quarter of 2002 as Technicoil continues to diversify its operations. On the fracturing side, 168 wells were fractured for two customers who each have several ongoing fracturing programs, with eleven of the wells being in the United States. In April, Technicoil entered into an operating agreement with Calfrac Well Services Ltd. to provide them with five well servicing rigs on a first call basis. The agreement has an initial term to September 2004, and can be renewed annually for a one-year term. Management sees this as an important step in securing a long-term relationship with a growing Company. Despite this agreement, utilization was low in April and May due to a long spring breakup and an unusual amount of rain in Southern Alberta, Technicoil's main operating area. The May utilization rate was 11% this year compared to 65% in 2002. The fracturing utilization rates recovered in June reaching 45%, although many customers delayed fracturing operations until the third quarter as the weather caused delays to their drilling schedules. Technicoil continues to be the dominant supplier to the most active pressure pumping companies conducting coil fracturing operations. The equipment is ideally suited for this activity and the Technicoil staff is highly experienced at conducting fracturing operations using coil tubing. The low drilling utilization for the quarter is a result of several distinct factors including a long spring break up, an unusual amount of rain and retrofitting the first of two drilling rigs. The Company took advantage of the spring breakup period by enhancing the first of two drilling rigs with changes to the electrical system and doghouse. The $1.3 million total retrofit will lighten the equipment considerably and transform the once dual-purpose rigs into predominantly drilling units. Technicoil anticipates the retrofits will increase profitability through significantly improving rig reliability, safety and employee working conditions. Utilization for the one active drilling rig reached 56% in June with the rig operating for one customer with a significant project. The large-scale project has allowed Technicoil's drilling operations to reach new performance and safety accomplishments by performing consistently. Technicoil has reaped the benefits of its operating efficiencies due to the turnkey pricing. Continual improvement in drilling operations is critical as Technicoil diversifies from its historical strength in well fracturing. There were no drilling operations in the United States in the second quarter of 2003 or 2002. Management Discussion and Analysis Revenue and Net Income Revenue for the 2003 second quarter was down 29% ($0.9 million) compared to the 2002 second quarter largely due to a 25% reduction in Technicoil's rig fleet. Technicoil had an average of twelve rigs in service in the second quarter of 2002 versus nine in service in the second quarter of 2003 after the sale of five rigs earlier this year. Revenue was also negatively affected by the decrease in utilization from 33% in the second quarter of 2002 to 21% in the second quarter of 2003 as a result of poor weather conditions and the retrofitting of one drilling rig. Nevertheless, Technicoil has benefited from better contract pricing, including a turnkey contract that has benefited from efficient operations, which partially offsets the declines in the rig fleet and utilization. Technicoil increased its gross margin from $240,302 (7% of revenue) in the second quarter of 2002 to $557,500 (24% of revenue) in the second quarter of 2003. The 2003 margins reflect a return to normal levels as the second quarter 2002 margins suffered from competitive pricing in a weak drilling market and a break-even contract while a new product was being tested. The 2003 second quarter gross margin of 24% was comparable with the 2003 first quarter margin of 27% despite increased maintenance in the second quarter during the spring break up period and the allocation of fixed operating costs over lower revenue. General and Administrative expenses were 13% of revenue for the three month period ended June 30, 2003 compared to 25% for the second quarter of 2002 despite lower revenue in 2003. Management made a conscious effort to lower overhead costs in the past year, mainly through reducing administrative and managerial staff. Technicoil's current administrative structure represents a more appropriate level for the current fleet size. Amortization and interest expense have both decreased for the three months ended June 30, 2003 compared to the same period in 2002 due to sale of five rigs in 2003 with the proceeds on disposition being used to pay down the equipment loans. Second quarter earnings were negatively impacted by several non- recurring items including a $242,380 foreign exchange loss resulting from the net asset position of the Company's subsidiary, Technicoil USA Corporation, and the conversion of a portion of the rig sale proceeds to Canadian dollars. Technicoil also realized a $175,000 write down of equipment held for sale as the Company will no longer utilize numerous trailers due to the sale of five rigs and the drilling equipment enhancements. Bad debt expense of $73,744 relates to a portion of outstanding receivables from one customer. Technicoil has launched legal proceedings to recover the entire amount. A $100,000 negative adjustment was also made to current income tax expense this quarter relating to 2002. Technicoil's net income would be $23,253 or $0.00 per share if not for the ($591,124) effect of these non-recurring items. Technicoil's net income has suffered over the past year as the Company made several significant strategical decisions and streamlined its business, resulting in a myriad of non-recurring expense items. Technicoil believes that they have crossed the critical point in this process and does not expect net income to be hampered by such significant items in future quarters. Despite a net loss, the Company achieved positive cash flow from operations for the twelfth straight quarter, dating back to May 2000. Cash flow from operations increased from $6,877 in the second quarter of 2002 to $569,486 in the second quarter of 2003 as a result of the Company's extensive steps over the past year to restructure the Company, redefine its strategy and reduce costs. Assets and Liabilities Accounts receivable were down 43% at June 30, 2003 compared to December 31, 2002 as is typical in the second quarter due to spring breakup negatively affecting second quarter revenue. Technicoil has historically experienced few issues with receivable collection although $73,744 was added to the allowance for doubtful accounts to increase the reserve for one customer. The weighted average age of the receivables is 32 days at June 30, 2003 compared to 31 days at December 31, 2002. Accounts payable at June 30, 2003 were also down 31% from year-end 2002 reflecting reduced operating activity for the quarter. Capital assets under construction of $624,742 relates to the costs incurred to date to enhance the drilling equipment. The expected total cost of retrofitting both drilling rigs is $1.3 million and is being financed through cash flow from operations. The Company also determined that certain equipment valued at $351,622 will no longer be utilized due to the sale of five rigs and the drilling equipment enhancements and is in the process of being sold. The equipment was written down by $175,000 with the remaining balance of $176,622 being reclassified to current assets. Technicoil's equipment loans were considered demand loans as of June 30, 2003 with negotiated monthly repayment terms extending until December 2005. Accordingly, these loans were classified as current liabilities. In July 2003, Technicoil renegotiated the terms of the equipment loans with the lender and signed a new agreement that eliminates the demand nature of the loans and amortizes all facilities over 48 months. As of June 30, 2003 Technicoil was not in compliance with one of the loan covenants under the former agreement relating to debt service coverage. The new agreement waives the debt service covenant until the end of the year given Technicoil's loss position at this time. Working capital continues to improve as Technicoil generated $569,486 in cash from operations this quarter despite a net loss. The working capital ratio, calculated without including the capital assets held for sale and the equipment loans with negotiated payment terms greater than one year, has improved continually over the past year and reached 1.4 at June 30, 2003. The positive trend represents management's efforts towards improving the profitability of operations, collecting receivables and paying down debt. Technicoil has a $3 million operating line of credit available of which $1,234,850 was outstanding at June 30, 2003. The balance was paid in full on July 2, 2003 and has not exceeded a balance of $25,000 since that time. Outlook The outlook for the drilling operations is positive as the industry is catching up from the unusually wet spring and a weak 2002. Technicoil continues to work on a large-scale drilling project started in May and has faced few weather or operational issues to date in the third quarter. The first drilling unit completed its retrofit in mid August, with the second unit starting the retrofit process immediately after. Completion of the second retrofit is expected in early October. Technicoil has numerous agreements in place with several customers for the fall and into the winter months and anticipates being able to fully utilize both drilling rigs. The Company believes that the retrofitted rigs will result in increased margins due to lower maintenance and safety costs and more efficient operations. The fracturing operations have been slow early in the third quarter primarily due to military maneuvers being performed in the Suffield block in July and issues with third party equipment and labour. Technicoil experienced several weeks of downtime while resolving a recurring maintenance issue however this had no effect on revenue as Technicoil's rigs were not fully utilized. Utilization increased significantly in August and is expected to be strong throughout the remainder of August. Technicoil will also benefit from rate increases effective July for one of Technicoil's main fracturing customers. Technicoil realizes the importance of continuing to diversify its customer base for coil fracturing and to grow its drilling operations in order to be less susceptible to individual customer influences. Technicoil expects coal bed methane production in Western Canada to move beyond the test phase and become established as a valuable resource to our customers. Technicoil's equipment is ideally suited for both drilling and fracturing coal bed methane wells and the Company believes they are well poised to gain additional customers and projects as a result. Technicoil believes it has finally turned the corner after a year of significant change and unrest. The Company's balance sheet strong and management's attention is focused on improving operations in order to improve profitability. TERREMARK: Resources Insufficient to Meet Financial Obligations --------------------------------------------------------------- Terremark Worldwide, Inc. operates facilities at strategic locations around the world from which the Company assists users of the Internet and large communications networks in communicating with other users and networks. The Company's primary facility is the NAP of the Americas, a carrier-neutral Tier-1 network access point in Miami, Florida. The NAP provides exchange point, colocation and managed services to carriers, Internet service providers, network service providers, government entities, multinational enterprises and other end users. The Company's strategy is to leverage its concentration of connectivity and carrier-neutral status to sell services to customers within and outside of the Company's TerreNAP Data Centers. The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities and commitments in the normal course of business. From the time of its merger through June 30, 2003, the Company has incurred net operating losses of approximately $199.7 million, including approximately $82.6 million of losses related to discontinued operations. The Company's cash flows from operations for the three months ended June 30, 2003 and 2002 were negative and the working capital deficit was approximately $14.0 million and $39.0 million as of June 30, 2003 and March 31, 2003, respectively. Due to recurring losses from operations and the lack of committed sources of additional debt or equity to support working capital deficits, substantial doubt exists about the Company's ability to continue as a going concern. Historically, the Company has met its liquidity needs primarily through obtaining additional debt financing and the issuance of equity interests. Some of the debt financing was either provided by or guaranteed by Manuel D. Medina, the Company's Chief Executive Officer and Chairman of the Board of Directors. In prior periods, the Company also shut down or disposed of non-core operations and implemented expense reductions to reduce the Company's liquidity needs. Based on customer contracts signed as of July 31, 2003, the Company's monthly cash deficit from operations is approximately $1.2 million. In order to eliminate this monthly cash deficit from operations, the new monthly revenues required range from $1.8 million to $2.8 million. This range of new revenue depends on the mix of the services sold and their corresponding margin. The Company's required revenues are based on existing contracts, including those recently announced with the U.S. Government and enterprises, and expected future contracts from potential customers currently in the sales pipeline. The Company has identified potential customers, including the federal, state and local governments, and is actively offering available services to them. However, the Company's projected revenues and planned cash needs depend on several factors, some of which are beyond the Company's control, including the rate at which its services are sold, the ability to retain its customer base, the willingness and timing of potential customers outsourcing the housing and management of their technology infrastructure to the Company, the reliability and cost-effectiveness of the Company's services and the Company's ability to market its services. The majority of the Company's planned operating cash improvement is expected to come from an increase in revenues and cash collections from customers. If the Company fails to achieve planned revenues, it will require additional financing. There can be no assurances that additional financing will be available, or that, if available the financing will be obtainable on terms acceptable to the Company or that any additional financing would not be substantially dilutive to existing shareholders. If the Company needs to obtain additional financing and fails to do so, it may have a material adverse effect on the Company's ability to meet financial obligations and operate as a going concern. TIMCO AVIATION: June 30 Balance Sheet Upside-Down by $95 Million ---------------------------------------------------------------- TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS) announced its results of operations for the second quarter of 2003. Revenue for the three and six months ended June 30, 2003 was $52.1 million and $103.3 million, respectively, compared to revenue of $48.3 million and $105.8 million, respectively, for the comparable 2002 periods. Net income for the second quarter and first half of 2003 was $0.0 million ($0.00 per basic and diluted share) and $0.3 million ($0.01 per basic and diluted share), respectively, compared to a net income of $0.2 million ($0.01 per basic and diluted share) and $21.1 million ($1.01 per basic and $0.10 per diluted share), respectively, for the comparable periods of 2002. Net income for the second quarter and first half of 2003 included gains of $3.6 million from the elimination and settlement of contingencies and obligations related to discontinued operations and various legacy items and a $0.7 million benefit resulting from the IRS finalizing audits on 1996 - 1999 tax years. Net income for the first half of 2002 included: (i) a $27.3 million gain associated with the Company's restructuring, (ii) a net $6.1 million non-cash charge relating to the Company's agreement to settle a then-outstanding class action lawsuit (consisting of an $8.0 million charge taken in the first quarter of 2002 less a $1.9 million gain recognized in the second quarter of 2002 relating to revaluation of the charge at the end of the 2002 second quarter) and (iii) a $3.8 million tax benefit arising from a change in U.S. federal tax laws governing the carryback of net operating losses. Without the effects of these items, the Company would have reported 2003 second quarter and first half net losses of $4.3 million and $4.0 million, respectively, compared to net losses of $1.7 million and $3.9 million for the comparable periods in 2002. Management believes that comparison of its second quarter and first half 2003 net loss to the comparable period 2002 net loss without the effect of the above-described items provides a useful measure for investors to compare the Company's period-to-period results of operations. The Company's June 30, 2003 balance sheet shows a working capital deficit of about $13 million, and a total shareholders' equity deficit of about $95 million. Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive Officer, stated: "We continue our efforts to expand our customer base and increase our market share, despite a difficult industry environment, and we believe that this will be reflected in our results for the second half of the year. A number of factors have adversely impacted our gross profit margin for the first half of 2003, including the ramp-up of our Goodyear, Arizona maintenance facility, a higher mix of short-term and single visit maintenance programs and ongoing price competition. However, we continue to drive efficiencies and cost controls which we believe will help us achieve our profitability goals. During the quarter we also received a commitment from our principal stockholder, Lacy J. Harber, to fund an additional $6.05 million for working capital in our operations. $3.05 million of these funds were received prior to June 30, 2003 and the balance was received in July 2003." Gil West, the Company's President and Chief Operating Officer stated: "A number of recent developments have generated increased interest in TIMCO's capabilities and have resulted in opportunities for additional business in the near future. We have a major North American airline adding several "nose-to- tail" lines of maintenance to our Goodyear facility in the third quarter. We have also been awarded the seat manufacturing contracts for two major international airlines. And the successful execution of our security flight deck door program resulted in the design, engineering and installation of almost 500 enhanced security doors in time to meet the FAA's deadline." TIMCO Aviation Services, Inc. is among the world's largest providers of fully integrated aviation maintenance, repair and overhaul services for major commercial airlines, regional air carriers, aircraft leasing companies, government and military units and air cargo carriers. The Company currently operates four MR&O businesses: TIMCO, which, with its four active locations (Greensboro, NC, Macon, GA, Lake City, FL and Goodyear, AZ), is one of the largest independent providers of heavy aircraft maintenance services in the world; Aircraft Interior Design and Brice Manufacturing, which specialize in the refurbishment of aircraft interior components and the manufacture and sale of PMA parts and new aircraft seats; TIMCO Engineered Systems, which provides engineering services to both our MR&O operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines. TRENWICK GROUP: Files for Chapter 11 Protection in Delaware ----------------------------------------------------------- Trenwick Group Ltd., (OTC: TWKGF) and its affiliates, LaSalle Re Holdings Limited and Trenwick America Corporation, as a step in its previously announced restructuring and in accordance with its August 6 letter of intent with creditors, filed for protection under chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware. Additionally, Trenwick and LaSalle Re Holdings are in the process of filing proceedings in the Supreme Court of Bermuda, known under Bermudian law as "winding up", as a further step in the restructuring and in accordance with the previously announced Letter of Intent. Trenwick's insurance company subsidiaries, Trenwick America Reinsurance Corporation, The Insurance Corporation of New York, Dakota Specialty Insurance Company and LaSalle Re Limited, all of which are in runoff, and its Lloyd's operations are not subject to the proceedings in the Bankruptcy Court or the Supreme Court of Bermuda and their operations continue. Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's operations at Lloyd's, London underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis. Trenwick's United States specialty program business, specialty London market insurance company, Trenwick International Limited, and its United States reinsurance business through Trenwick America Reinsurance Corporation are now in runoff. In 2002, Trenwick sold the in-force business of LaSalle Re Limited, its Bermuda based subsidiary. TRENWICK GROUP: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Trenwick America Corporation One Canterbury Green Stamford, CT 06901 Bankruptcy Case No.: 03-12635-MFW Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Trenwick Group Ltd. 03-12636-MFW LaSalle Re Holdings Limited 03-12637-MFW Type of Business: The Debtor is a holding company for operating insurance companies in the U.S. Chapter 11 Petition Date: August 20, 2003 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: Christopher S. Sontchi, Esq. William Pierce Bowden, Esq. Ashby & Geddes 222 Delaware Avenue 17th Floor Wilmington, DE 19899 USA 302 654-1888 Fax : 302-654-2067 Email: csontchi@ashby-geddes.com Email: wbowden@ashby-geddes.com Benjamin Hoch, Esq. Irena Goldstein, Esq. Carey D. Schreiber, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019-6092 T: 212-259-8000 F: 212-259-6333 Total Assets Total Debts (As of June 30, 2003) ------------ ------------ Trenwick America Corporation $354,429,000 $288,968,000 LaSalle Re Holdings Limited $44,693,000 $5,832,685 List of Debtors' Largest Unsecured Creditors: A. Trenwick America Corporation Entity Nature Of Claim Claim Amount ------ --------------- ------------ JP Morgan Chase Bank LOC Facility issued $184,776,323 270 Park Avenue under a credit New York, NY 10172 agreement Attn: Thomas Dineen Tel: 212-270-0315 Fax: 212-270-0433 E-mail: Thomas_Dineen@chase.com HSBC Bank USA As trustee for $120,708,044 452Fifth Avenue mandatory redeemable New York, NY 10018 preferred securities Attn: Russ Paladino and for interest Tel: 212-525-1324 payments on capital Fax: 212-525-1366 securities E-mail: russ.paladino@us.hsbc.com Bank One Trust Co., N.A. Indenture $74,941,164 153 West 51st Street (principal and 5th Floor interest as trustee New York, NY 10019 for 6.70% Senior Attn: Mary Fonti Notes due August 1, Tel: 212-373-1105 2003) Fax: 212-373-1383 e-mail: mary_fonti@bankone.com MBIA Insurance Corporation Indenture $56,423,520 113 King Street (interest and principal Armonk, New York 10504 as holder of 6.70% Sr. Attn: Mr. James H. Maitland Notes due August 1, Tel: 914-765-3525 2003) Fax: 914-765-3810 E-mail: james.maitland@mbia.com Trenwick America Reinsurance Intercompany debt $33,000,000 Corporation 1 Canterbury Green Stamford< CT 06905 Attn: Alan L. Hunte Tel: 203-353-5545 Fax: 203-353-5557 E-mail: alan.hunte@trenwick.com Trenwick America Reinsurance Tax sharing agreement $2,237,130 Corporation 1 Canterbury Green Stamford< CT 06905 Attn: Alan L. Hunte Tel: 203-353-5545 Fax: 203-353-5557 E-mail: alan.hunte@trenwick.com Insurance Corporation of Intercompany debt $26,300,000 New York 1 Canterbury Green Stamford< CT 06905 Attn: Alan L. Hunte Tel: 203-353-5545 Fax: 203-353-5557 E-mail: alan.hunte@trenwick.com Trenwick (Barbados) Intercompany debt $23,187,594 Limited Chancery House High Street Bridgetown, Barbados Attn: Andrew C. Ferreira Tel: 203-353-5545 Fax: 203-352-5557 The Raptor Global Indenture $8,719,999 Portfolio Ltd. (interest and The Tudor BVI principal as Global Portfolio Ltd. holders of The Altar Rock Fund L.P. 6.70% Senior Tudor Proprietary Trading,LLC Notes due August 1, c/o Tejas Securities Group 2003) 2700 Via Fortuna, Suite 400 Austin, Texas 78746 Attn: Mr. Morris D. Weiss Tel: 512-306-5245 Fax: 212-306-9436 E-mail: mdweiss@tejassec.com Mr. John J. Gorman Indenture $3,590,588 c/o Tejas Securities Group, Inc. 2700 Via Fortuna, Suite 400 Austin, Texas 78746 Attn: Mr. Morris D. Weiss Tel: 512-306-5245 Fax: 212-306-9436 E-mail: mdweiss@tejassec.com Mr. J.C. Waterfall Indenture $3,077,647 c/o Morgen Waterfall Vintiadis Rockefeller Center 600 Fifth Avenue, 27th floor New York, NY 10020 Attn: Mr. Bruce Waterfall Tel: 212-218-4105 Fax: 212-218-4130 E-mail: bruce@mwv.com U.S. Bank Indenture (as $1,784,211 One Federal Street trustee for 8% 3rd Floor Contingent Interest Boston, MA 02110 Notes due June 30, Attn: Robert Mastracci 2006) Tel: 617-603-6585 Fax: 617-603-6669 E-mail: robert.mastracci@usbank.com Phoenix Partners, L.P. Indenture $1,828,122 c/o Morgen Waterfall Vintiadis Rockefeller Center 600 Fifth Avenue, 27th floor New York, NY 10020 Attn: Mr. Bruce Waterfall Tel: 212-218-4105 Fax: 212-218-4130 E-mail: bruce@mwv.com Phaeton International (BVI), Indenture $1.249,524 Ltd. c/o Morgen Waterfall Vintiadis Rockefeller Center 600 Fifth Avenue, 27th floor New York, NY 10020 Attn: Mr. Bruce Waterfall Tel: 212-218-4105 Fax: 212-218-4130 E-mail: bruce@mwv.com Tejas Securities Group, Inc. Indenture $1,025,882 2700 Via Fortuna Suite 400 Austin, Texas 78746 Attn: Mr. Morris D. Weiss Tel: 512-306-5245 Fax: 212-306-9436 E-mail: mdweiss@tejassec.com Mr. Arch Aplin Indenture $1,025,882 c/o Tejas Securities Group, Inc. 2700 Via Fortuna, Suite 400 Austin, Texas 78746 Attn: Mr. Morris D. Weiss Tel: 512-306-5245 Fax: 212-306-9436 E-mail: mdweiss@tejassec.com B. LaSalle Re Holdings Limited Entity Nature Of Claim Claim Amount ------ --------------- ------------ JP Morgan Chase Bank LOC Facility issued $184,776,323 270 Park Avenue under a credit New York, NY 10172 agreement Attn: Thomas Dineen Tel: 212-270-0315 Fax: 212-270-0433 E-mail: Thomas_Dineen@chase.com EquiServe-First Chicago Series A Perpetual $5,832,685 P.O. Box 2536 Preferred Shares Jersey City, NJ Attn: Julie Adams Tel: 201-222-4121 E-mail: jadams@equiserve.com UAL CORP: Has Until Dec. 15 to Make Lease-Related Decisions ----------------------------------------------------------- The Official Committee of Unsecured Creditors of United Airlines "appreciates the magnitude of the process related to the Debtors' evaluation and analysis of their unexpired leases of nonresidential property," Carole Neville, Esq., at Sonnenschein, Nath & Rosenthal, says. However, United is asking for too much time to make lease determinations. Since the Debtors have repeatedly indicated that they intend to emerge from bankruptcy in December 2003 or the first quarter of 2004, the Committee asks the Court to extend the lease decision deadline until the earlier of December 1, 2003 or the date of the Disclosure Statement Hearing. Ms. Neville explains that delaying assumption or rejection disenfranchises creditors, as their vote on any Plan may depend on whether their Leases are assumed or rejected. If given until a Plan is confirmed, creditors will not know the status of their Leases when they vote. 2) San Francisco The City and County of San Francisco, acting by and through the Airport Commission, complain that the Debtors' request is unreasonable. J. Brian Fletcher, Esq., at Jessop & Company, argues that if the open-ended extension is granted, the Authority will be forced to vote on a Plan before knowing whether the Debtors will assume or reject its Leases. 3) The Airport Consortium The Airport Consortium consists of: -- Port of Oakland; -- Columbus Regional Airport Authority; -- Metropolitan Washington Airport Authority; -- City of Austin; -- Burlington International Airport; -- Lee County Port Authority; -- City of Cleveland; -- County of Orange; -- Detroit Metropolitan Wayne County Airport; -- Clark County Department of Aviation; -- Port of Portland; -- Miami-Dade County Aviation Department; and -- Tucson Airport Authority. The Debtors assert that they have focused their resources on reducing costs and preserving assets. "Such contentions are disingenuous," David B. Goroff, Esq., at Foley & Lardner, argues. The Debtors have focused on litigation with the Consortium over the stub rent issue. Regardless of the outcome, the stub rent must be paid, either as an administrative expense or as part of the cure amount if the Debtors assume an unexpired lease. The Debtors chose to focus their resources on this litigation to achieve a pyrrhic victory and they will waste further resources if they now litigate the stub rent claims. "The Debtors' request for more time under these circumstances is like a child who, having murdered his parents, now asks for mercy because he is an orphan." The requested extension will only delay payments of millions of dollars to the Consortium Members -- payments, which the Debtors are legally obligated to make. Additionally, the delay is prejudicial to the Consortium because they cannot make critical decisions about utilization of their facilities or capital improvements until these matters are finally resolved. The Consortium asserts that the Debtors should not be given an open-ended amount of time to assume or reject leases. Should the Court grant the extension, it should be limited to not later than October 6, 2003, which is 60 days before the Debtors' exclusive period expires. 4) City of Chicago The City of Chicago agrees that some extension of time to assume or reject leases is appropriate. However, Diane M. Pezanoski, Esq., Deputy Corporation Counsel, argues that any extension should be limited to December 1, 2003, "or some other date certain, prior to the confirmation of a plan of reorganization." 5) HSBC Bank HSBC Bank USA, as Successor Indenture Trustee and Paying Agent, tells the Court that this open-ended extension is not necessary at this time. The Debtors can simply ask for another extension later if this request proves insufficient. William W. Kannel, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, in Boston, Massachusetts, argues that any extension through Confirmation would prejudice creditors eventually voting on the Chapter 11 Plan. If the extension is granted, creditors will be asked to vote on a Plan, which does not disclose the leases the Debtors intend to assume and those they intend to reject. This information is material to general unsecured creditors and lessors of non-residential real property. The Debtors should be compelled to disclose the status of all leases no later than the date on which a Disclosure Statement is approved. 6) The Bank of New York William P. Smith, Esq., at McDermott, Will & Emery, points out that the indefinite deadline proposed by the Debtors will create uncertainty for all creditors and parties-in-interest, force individual lessors to evaluate their leases and file motions to shorten the Assumption Deadline and will prejudice lessors voting for a Plan. As a result, the Bank of New York asks the Court to set the lease decision deadline for December 1, 2003 or the Disclosure Statement approval date. 7) Denver International Airport If granted, the extension of the lease decision period will create a situation that is extremely prejudicial to the Denver International Airport, according to Douglas W. Jessop, Esq., at Jessop & Company. The DIA has an immediate need to know the fate of its Lease with United. Other airlines operating at DIA have expressed an urgent need for additional gates, terminal space and other facilities on Concourse A, which United currently occupies. Mr. Jessop explains that if United rejects the Lease, the DIA could immediately accommodate other airlines by giving them the gates formerly held by the Debtors. If United assumes the Lease, DIA is potentially facing years of design and construction work for new gates and facilities to meet the other airlines' demands. 8) Frontier Airlines Frontier Airlines is a national air carrier with its primary hub located at the Denver International Airport. Frontier operates all its flights at DIA through multiple leased gates on Concourse A, alongside the Debtors. Frontier is assessing and evaluating its operational needs, including the number of gates and fleet size and how to satisfy those needs within its business plan. To make informed decisions, Frontier needs to know the resources that will be available in Concourse A at the DIA. These important decisions have been on hold since the Debtors filed for bankruptcy. Anything that prevents or delays progress is highly prejudicial to Frontier. Dennis M. Ryan, Esq., at Faegre & Benson, notes that a $300,000,000 facility expansion at DIA hangs in the balance. United Responds The Debtors point out that the Consortium and the DIA have not refuted their cause for an extension. The Consortium's critique of the Debtors focuses on one issue in which it has a vested interest -- stub rent. This posture ignores the Debtors' numerous restructuring achievements. Also, the Consortium's and the DIA's statements about stub rent are irrelevant as to whether cause exists to warrant an extension. Furthermore, the Debtors explain that the extension requested is not open-ended. Just as with the initial extension, this extension would not prejudice any lessor's right to seek reduction of the Section 365(d)(4) Deadline for its particular unexpired lease. With omnibus hearings occurring on a monthly basis, the Court and creditors will have the opportunity to track the progress of the Debtors' restructuring closely. According to the Debtors, concerns about lessors and voting are overstated. If a lessor's unexpired lease is assumed, the lessor will be unimpaired and not entitled to vote on a Plan. On the other hand, landlords whose leases may be rejected are afforded protection by Rule 3018 of the Federal Rules of Bankruptcy Procedure, allowing the estimation of contingent claims, including contingent rejection damages claims, for voting purposes on a Plan. * * * After hearing the objections and the Debtors' arguments, Judge Wedoff extends the Debtors' lease decision period through and including the earlier of: -- December 15, 2003; or -- the Disclosure Statement Hearing Date. The extension is without prejudice to the Debtors' right to seek additional extensions. (United Airlines Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITEDGLOBALCOM: Fitch Says Planned Deal Won't Change Ratings ------------------------------------------------------------- Fitch Ratings' 'BBB-' senior unsecured debt rating and Stable Outlook for Liberty Media remains unchanged following the company's announced agreement to acquire all of the outstanding shares of class B common stock of UnitedGlobalCom, Inc., from UGC's founding shareholders in exchange for series A common stock of Liberty. The transaction will raise Liberty's equity and voting stake in United to approximately 75% and 96%, respectively, and lifts restrictions on voting control by Liberty with respect to UGC. As a result, Liberty will no longer treat UGC as an equity investment but rather a consolidated subsidiary, increasing the company's consolidated debt and EBITDA by approximately $4 billion and $550 million, respectively. The proposed transaction is consistent with Liberty's intent to seek more active control over some of its existing/new holdings. UGC's largest subsidiary, United Pan-Europe Communications (UPC), is expected to emerge from bankruptcy by the end of the year with a significant reduction in debt. However, Fitch notes that even with the planned recapitalization, UGC will remain a significantly leveraged broadband operator. Fitch believes the proposed UGC transaction (post-UPC restructuring), coupled with the pending QVC transaction, will reduce Liberty's debt capacity and bring its credit profile toward the lower range of the current rating level. Fitch estimates Liberty's consolidated debt at approximately $19 billion. Pro forma EBITDA (including dividend and interest income) to interest expense reduces to the low 2 times range from the mid-2x range (pro forma for QVC only). Asset coverage to net debt is expected to reduce to the mid-3x range from the mid-4x range (pro forma for QVC only). The Stable Rating Outlook incorporates Fitch's expectation that Liberty's management will continue to use a balanced approach toward increasing its owned and managed interests, and consolidated cash flow will grow at a level commensurate with any resulting debt increases such that the company maintains a credit profile consistent with its investment-grade rating. Further, Fitch believes that if Liberty's asset coverage were to fall below 3x, a material improvement in standard credit protection measures and positive qualitative factors would be required in order to maintain a 'BBB-' rating. At June 30, 2003, Unitedglobalcom's balance sheet shows a total shareholders' equity deficit of about $2.7 billion. US AIRWAYS: Resolves Claims Disputes with Wells Fargo & Newcourt ---------------------------------------------------------------- On November 4, 2002, Wells Fargo Bank Northwest, as owner trustee, and Newcourt Capital USA, Inc. filed Claim Nos. 2967 and 2968, each for $1,895,262 against US Airways Group Inc. Wells Fargo and Newcourt asserted claims relating to two aircraft bearing registration numbers N833EX and N834EX. The Reorganized Debtors have reached a Stipulation that resolves all claims relating to Tail Nos. 833EX and N834EX. Claim Nos. 2967 and 2968 are reduced and allowed as general unsecured Class Allegheny-6 claims for $1,317,552. All other claims that relate to Tail Nos. N833EX & N834EX are disallowed. (US Airways Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) VERIDIAN: S&P Pulls-Out Low-B Ratings After Debt Repurchase ----------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB-' corporate credit and senior secured debt ratings of Alexandria, Virginia- based computer services company Veridian Corp. These ratings had been placed on CreditWatch with positive implications on June 9, 2003, following the announced acquisition of Veridian by General Dynamics Corp. (A/Negative/--). "The ratings withdrawal reflects General Dynamic Corp.'s repurchase of all of Veridian's outstanding debt," said Standard & Poor's credit analyst Philip Schrank. WEIRTON STEEL: Wants Nod to Hire D. Leonard Wise as CEO ------------------------------------------------------- Pursuant to Sections 363 and 105 of the Bankruptcy Code, Weirton Steel Corporation seeks the Court's permission to employ D. Leonard Wise as its Chief Executive Officer. On June 26, 2003, John H. Walker, President and Chief Executive Officer of Weirton, and a member of Weirton's Board of Directors, announced his resignation from the Company effective as of July 31, 2003. Weirton's Official Committee of Unsecured Creditors asked Mr. Walker to reconsider his resignation. However, Mr. Walker already made up his mind to leave the Company for good. Consequently, the Chairman of the Board, in consultation with Mr. Walker, considered numerous potential replacements, including Mark Kaplan who turned down the role of being Weirton's Chief Executive Officer. Robert G. Sable, Esq., at McGuireWoods LLP, in Pittsburgh, Pennsylvania, informs Judge Friend that several factors were taken into account in considering potential candidates to replace Mr. Walker as Chief Executive Officer, including, but not limited to: (a) scope of experience as a chief executive officer; (b) scope of experience as an operator of fully integrated steel facilities; (c) ability of candidates to work with the Independent Steelworkers Union; (d) knowledge of Weirton; (e) ability to commence full-time employment with Weirton immediately; (f) Mark Kaplan's views of potential candidates; and (g) ability to work with varying interests in order to build a broad consensus about the Company's restructuring. Additionally, the Committee, JP Morgan and the Independent Steelworkers Union each asked the Debtor to allow them to participate in the selection process. The Company complied. Accordingly, the Debtor considered and, in fact, interviewed candidates suggested by other parties-in-interest. As a result, the Debtor decided that the best replacement for the position of CEO would be D. Leonard Wise. Not only that, Mr. Wise will also replace Mr. Walker on the Board. The Debtor believes that Mr. Wise is the best candidate for the position because of his diverse experience, extensive knowledge and leadership capabilities. Moreover, Mr. Sable notes that Mr. Kaplan's continued employment with Weirton is conditioned on Mr. Wise's retention as CEO. Mr. Wise has been a member of the Board, as well as the boards of directors of other heavy manufacturing companies, and has served in capacities as chief executive officer or chief operating officer of Carolina Steel Corporation, Wheeling-Pittsburgh Steel Corporation and Slater Industries, among others. The Debtor, Fleet Bank, as agent to the Postpetition Lenders, the Creditors' Committee, JP Morgan, as indenture trustee to the exchange noteholders, the unofficial committee of noteholders, and the ISU negotiated the terms and conditions of Mr. Wise's Employment Agreement. Mr. Wise's employment as Weirton's CEO is to occur through the earlier of: (i) the closing of a sale of substantially all of Weirton's assets; (ii) the effective date of a plan of reorganization; or (iii) the termination of Mr. Wise's employment by Weirton for cause. In his role as CEO, Mr. Wise will work in conjunction with Mr. Kaplan, whose duties have been expanded beyond those of Chief Financial Officer to include his role as President of Weirton, to perform duties and responsibilities that will include all the duties and responsibilities commensurate with that role, and these business objectives: (i) retaining existing customers and revenue base while developing new business; (ii) improve efficiency and EBITDAR, through an examination of the Company's cost-structure and operations; (iii) successfully exiting from bankruptcy protection at the earliest possible time, through either a sale of substantially all assets or a stand alone plan of reorganization; and (iv) proceed to review or revise, and expedite implementation of cost-saving initiatives. The salient terms of the Wise Employment Agreement are: A. Position: Chief Executive Officer and Director B. Base Salary: $480,000 per annum effective as of July 15, 2003 C. Expense Reimbursement: Monthly reimbursement of actual and documented expenses incurred, including, but not limited to travel, temporary housing and meals. D. Immediate Bonus: $300,000 cash, payable: -- $100,000 upon Court approval of the Wise Employment Agreement; -- $100,000 on the 30th day after the Bankruptcy Court approves the Wise Employment Agreement; and -- $100,000 on the 60th day after the Bankruptcy Court approves the Wise Employment Agreement. In the event Mr. Wise ceases employment with Weirton at any time within 180 days after the entry of an order approving the Wise Employment Agreement, for reason other than (i) death or incapacity, (ii) consummation of a sale of all or substantially all assets of Weirton, (iii) the occurrence of the effective date of a plan of reorganization within this 180-day period, (iv) termination for Good Reason, or (v) in the event Weirton terminates Mr. Wise's employment without cause, Mr. Wise will repay to Weirton a ratable portion of the $300,000 received. E. Subsequent Bonus: $500,000 cash upon the earlier of: (i) the closing of a sale; or (ii) the effective date of a plan of reorganization. The Bonus can be up to an additional $550,000, determined by multiplying $550,000 times a fraction. The numerator of the fraction is the amount by which the gross sale price or going concern value of Weirton, as determined by the financial advisor or investment banker to the proponent of a confirmed plan of reorganization, exceeds the amount of the DIP loan balance at the time in which the DIP loan is paid or otherwise satisfied, and the denominator of which is $140,000,000. F. Other: Upon entry of an order approving the Wise Employment Agreement, the full amount of Bonus consideration to which Mr. Wise may be paid will be funded into escrow, with Fleet and Weirton's counsel to serve as joint escrow agents. Mr. Sable asserts that Mr. Wise's proposed compensation is fair and reasonable for the services that he will provide and is commensurate with, if not lower than, the compensation packages received by other chief executives of companies the size of the Debtor. Mr. Wise's compensation arrangement has been subject to input from and negotiations with Weirton's major creditor constituencies. With the Debtor's urgent need to retain a chief executive officer to stabilize the Company and reassure customers and employees of its financial viability on a going-forward basis, the appointment of Mr. Wise as part of the Debtor's senior management team will help Weirton move forward with its business plan and emerge successfully from Chapter 11 in a timely fashion. Thus, Mr. Sable contends, it is imperative that the Debtor's request be granted immediately. (Weirton Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHEELING-PITTSBURGH: Settles Gas Dispute with BOC Group ------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation has been working with its suppliers to determine the extent to which its existing contracts for products and services provide benefits to its estate, the extent to which such contracts require modification, and the extent to which these contracts may be assumed. One of these contracts is the Product Supply Agreement with BOC Group, Inc. dating from November 1999. The Agreement governs the purchase of oxygen, argon and nitrogen that are used in WPSC's manufacturing operations. The Disputes WPSC and BOC have engaged in extensive discussions concerning possible modifications to the Product Supply Agreement and the disputes that have arisen under the existing Agreement, together with charges and payments. The disputes have included: (a) BOC's contention that WPSC owes additional sums relating to postpetition deliveries of Products; (b) WPSC's contentions that BOC had received certain payments that were recoverable under the avoiding powers of the Bankruptcy Code, which are the subject of two pending adversary proceedings; (c) various disputes regarding BOC's claims that additional sums were owed to BOC with respect to prepetition deliveries of Products and with respect to other prepetition events -- including damages to certain pipeline facilities due to an accident; and (d) disputes relating to WPSC's contentions that certain charges were in excess of those permitted under the Product Supply Agreement. The Settlement BOC and WPSC have reached a tentative agreement on the terms on which their disputes may be resolved, the Product Supply Agreement may be modified, and the Agreement may be assumed as so modified. The salient terms of the settlement, modification and assumption are: (1) The Product Supply Agreement will be modified to: (i) eliminate language concerning early termination; (ii) permit WPSC to dismantle the entire Oxygen Plant and Storage Facilities located in Mingo Junction without any contractual repercussions; (iii) eliminate a "virtual bullet" by permitting WPSC to suspend the minimum monthly charge six times for no more than one month each; and (iv) WPSC agrees to the minimums stated in the prepetition Agreement -- $300,000 -- with revised pricing; (2) WPSC will make six monthly payments of $329,654 per month to cover all obligations totaling $1,977,925, starting retroactively to July 2003; (3) WPSC awards BOC its Yorkville hydrogen business, and the requirements of this business will be included in meeting the contractually required minimums; (4) All payments to BOC post-confirmation will be made by check; (5) WPSC will dismiss the two pending adversary complaints against BOC with prejudice; (6) The parties exchange mutual releases of obligations other than in this Stipulation and the Product Supply Agreement as modified; and (7) WPSC assumes the Product Supply Agreement as amended. By this motion, WPSC asks the Court to approve its settlement with BOC. BOC is represented by Scott A. Zuber, Esq., at Pitney Hardin Kipp & Szuch LLP, in Morristown, New Jersey, and Jean R. Robertson, Esq., at McDonald Hopkins Co. LPA, in Cleveland, Ohio. WPSC is represented by James M Lawniczak, Esq., at Calfee Halter & Griswold LLP, in Cleveland, Ohio. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392- 0900) WORLDCOM: MCI Reaffirms Fin'l Guidance and Clarifies 8-K Filing --------------------------------------------------------------- MCI (WCOEQ, MCWEQ) confirms its current financial guidance as reflected in its 8-K filing with the Securities and Exchange Commission dated July 7, 2003. To further clarify MCI's 8-K filing dated August 18, 2003 with the Securities and Exchange Commission, the reference to the KPMG internal controls review relates to a company Form 8-K filing from June 3, 2003 in which it disclosed material weaknesses identified by KPMG. The reference in the August 18, 2003 Form 8-K reporting June 2003 financial results indicate " ... all previous guidance regarding future financial performance issued by the Company is no longer in effect and should be ignored" refers to all pre-bankruptcy projections of future company performance. WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone, based on the number of company-owned POPs, and wholly- owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com WORLDCOM INC: Bloomberg Wants to Access Restricted Fee Documents ---------------------------------------------------------------- Bloomberg LP asks the Court for permission to intervene in the Debtors' cases and access the first quarter fee applications and related documents filed under seal on June 13, 2003 by Houlihan Lokey Howard & Zukin Capital and FTI Consulting, Inc. pursuant to a June 12, 2003 Court Order. Bloomberg wants to inspect and copy the documents. Bloomberg believes that the sealed Fee Applications relate to matters of manifest public concern and must therefore be published. Bloomberg operates a 24-hour global news service known as Bloomberg News. Bloomberg News is a national newsgathering organization that reports on political, business, financial and legal events. Bloomberg News provides up-to-the-minute news directly to more than 100,000 terminals that comprise the Bloomberg Network and to millions more readers via the Internet and in its more traditional role of a wire service. Houlihan Lokey is retained by the Official Committee of Unsecured Creditors as financial advisor. FTI provides forensic accounting services to the Unsecured Creditors' Committee. Thomas H. Golden, Esq., at Willkie Farr & Gallagher, in New York, contends that news reporting services like Bloomberg have standing to intervene in civil cases, including bankruptcy proceedings, to challenge protective orders and to obtain access to information or judicial proceedings. Mr. Golden cites that in Air Line Pilots Ass'n, Int'l v. American Nat'l Bank & Trust Co. (In re Ionosphere Clubs, Inc.), 156 B.R. 414, 431 n.6 (S.D.N.Y. 1993), the Ionosphere Court indicated that the press has standing to intervene in actions to petition for access to bankruptcy proceedings and records. In Kelly v. City of New York, No. 01 Civ. 8906 (AGSDF), 2003 WL 548400, at *3 (S.D.N.Y. Feb. 24, 2003), the Kelly Court noted that newspapers are entitled to intervene "in order to articulate the public interest in access to [court] records". In support of sealing the Fee Applications, the Unsecured Creditors' Committee asserted that documents "contain confidential information pertaining to the Debtors, which, if publicly disclosed, could cause holders of equity interests and debt instruments to trade such interests and instruments in reliance thereupon and (b) have a severe detrimental effect on the businesses of the Debtors." But Mr. Golden points out that the Committee did not assert that a disclosure would work a competitive disadvantage to the Debtors, or explain why it believed that disclosure of truthful information to the Debtors' securities holders would somehow be unwarranted. Mr. Golden argues that the Committee ignores the meaning of "commercial information" as defined by the Second Circuit: "Commercial information has been defined as information which would cause 'an unfair advantage to competitors by providing them information as to the commercial operations of the debtor.'" Orion, 21 F.3d at 27 (quoting In re Itel Corp., 17 B.R. 942, 944 (9th Cir. BAP 1982)). Mr. Golden explains that the Orion Court had reviewed in camera the information sought to be sealed and found that it qualified as confidential commercial information. The information in Orion consisted of a licensing agreement and other relevant material, disclosure of which would reveal the overall structure, terms and conditions of the licensing agreement and "render[] very likely a direct and adverse impairment to Orion's ability to negotiate favorable promotion agreements, thereby giving Orion's competitors an unfair advantage." "In the present instance, the Committee has not even contended that the alleged detrimental effect of the disclosure on the Debtors would be the result of any unfair advantage that the Debtors' competitors would gain based on the disclosure," Mr. Golden tells Judge Gonzalez. Bloomberg believes that the information that the Committee seeks to shield from the public is truthful. Mr. Golden asserts that the Committee fails entirely to explain why truthful information should be shielded from the Debtors' securities holders, many of whom have already been victimized by the Debtors' lack of candor. According to Mr. Golden, it would seem highly anomalous that the information should be available to the Committee and to other interested parties in this case, but not available to the Debtors' equity and debt holders or to the public at large. (Worldcom Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) * FTI Promotes Ten Professionals to Senior Managing Director ------------------------------------------------------------ FTI Consulting, Inc. (NYSE: FCN), the premier national provider of turnaround, bankruptcy and litigation-related consulting services, announced that Jim Barratt, Daniel Brandt, Chuck Carroll, Rocky Ho, Michael Levitt, Finbarr O'Connor, Dan Regard, Seth Rierson, Louis Robichaux and Marc Weinsweig have been promoted to senior managing directors, effective July 1, 2003. In addition, the firm has announced that Ednaldo Silva, PhD, has joined the firm as a director in the forensic & litigation advisory practice. Commenting on the new appointments, Stewart Kahn, president and chief operating officer, FTI Consulting said, "We are proud that these individuals are part of the FTI team, and we are pleased to recognize them for their efforts. They exemplify our commitment to building an integrated consulting practice with the most talented professionals in the country." Senior Managing Director Promotions Jim Barratt, located in Washington, DC, has utilized the experience he acquired while at the Enforcement Division of the Securities and Exchange Commission, an international public accounting firm, and the internal audit department of a major corporation to rapidly expand FTI's forensic accounting and securities litigation practice. Mr. Barratt has led a number of engagements, including the internal investigation of accounting and financial reporting irregularities at Freddie Mac, and has advised clients on accounting and audit issues in SEC enforcement proceedings. Daniel Brandt, located in Saddle Brook, NJ, specializes in turnaround and crisis management. Mr. Brandt's turnaround advisory assignments have included strategic planning, cash-flow forecasting and cash management, business plan preparation and analysis, and trade and investor relations. He has advised various constituencies, including lenders in various turnaround situations, and has acted as financial adviser to companies in troubled situations or bankruptcy. Chuck Carroll, located in Dallas, TX, has represented lender groups as well as major companies in numerous, significant financial and operational restructurings. During his 15-year career he has gained experience in a variety of industries, including retail, energy, manufacturing and healthcare. Chuck's expertise includes corporate restructuring, loan workouts, crisis management, business regeneration and merger and acquisitions. Rocky Ho, located in San Francisco, CA, has more than ten years of corporate advisory experience related to restructuring, emphasizing financial, strategic and operational issues, privatization, capital markets and other corporate finance matters. Mr. Ho's recent engagements have involved providing advisory services to public and private companies in energy, financial services and high-technology. Finbarr O'Connor, located in New York, NY, specializes in restructuring consulting services. Mr. O'Connor has advised a range of public companies, leading financial institutions and other constituencies on some of the largest financial restructurings in the United States. As a restructuring adviser, he has devised and implemented corporate-improvement strategies, negotiated many recapitalizations and reorganization plans, and undertaken numerous corporate valuations. Throughout his career, Mr. O'Connor has been engaged in a number of international restructuring matters and has practiced in both the United Kingdom and Ireland. Mr. O'Connor is expected to be an integral part of our future European practices. Michael Levitt, located in Atlanta, GA, specializes in providing turnaround advisory services and bankruptcy consulting to various constituencies, including both debtors and creditors. He has developed strategic business plans and turnaround strategies, analyzed company operations, negotiated with lenders, and served as interim manager. Mr. Levitt has over 30 years of financial and operations management experience in public and private companies. Dan Regard, located in Washington, DC, has successfully developed FTI's electronic evidence consulting practice in New York and Washington, DC. Moreover, he has built the company's initial service offering involving forensic technology and complex database analysis to complement the existing forensic accounting and complex litigation practices. Seth Rierson, located in Chicago, IL, has played a key role in the expansion of FTI's litigation technology practice over the past few years. Mr. Rierson has extended FTI's trial and digitized video offerings through the use of TrialMax(TM) (FTI's proprietary trial presentation software). He has also created a new consultative offering premised on improving litigation efficiency through centralized document management and data hosting: corporate and law firm clients alike have responded favorably to FTI's leveraged technology, know-how and experience. Louis Robichaux, located in Dallas, TX, has extensive experience in providing crisis management, corporate recovery, business regeneration and expert witness services in most sectors of the healthcare industry. His engagements have included interim management, bankruptcy reorganization, loan workouts, operational turnarounds and process reengineering. Mr. Robichaux has represented companies, lenders, creditor committees, trustees and other parties of interest. Marc Weinsweig, located in Washington, DC, has been an adviser on several of the largest bankruptcies and workouts in the United States. During the past nine years, Mr. Weinsweig has provided bankruptcy, restructuring and turnaround services to companies, lenders and other stakeholders. He develops and negotiates reorganization plans for companies and their operations by providing valuation analysis, appropriate capital structures, creation of financial models and projections. New Transfer Pricing Expert Ednaldo Silva, PhD, located in Washington, DC, has been appointed a director in the forensic & litigation advisory practice. He specializes in transfer pricing, securities valuation and damages (lost income) estimation. Dr. Silva has written and lectured widely about transfer pricing, applied statistics and input/output analysis. Prior to joining FTI, Dr. Silva was a senior economist at Shearman & Sterling, where he worked in the areas of transfer pricing, securities valuation and international trade. He was also a drafter of the Section 482 (transfer pricing) regulations, and made significant contributions to the comparable profits method, best method rule and arm's length range concept. FTI Consulting is a multi-disciplined consulting firm with leading practices in the areas of turnaround, bankruptcy and litigation- related consulting services. Modern corporations, as well as those who advise and invest in them, face growing challenges on every front. From a proliferation of "bet-the-company" litigation to increasingly complicated relationships with lenders and investors in an ever-changing global economy, U.S. companies are turning more and more to outside experts and consultants to meet these complex issues. FTI is dedicated to helping corporations, their advisers, lawyers, lenders and investors meet these challenges by providing a broad array of the highest-quality professional practices from a single source. * Kroll Zolfo Cooper Hires Daniel G. Montgomery as Sr. Director --------------------------------------------------------------- Kroll Zolfo Cooper LLC, the financial consulting subsidiary of Kroll Inc. (NASDAQ:KROL), announced that Daniel G. Montgomery has been named a senior director in its Corporate Advisory and Restructuring practice. Montgomery most recently served as the executive director of the Air Transportation Stabilization Board, authorized by Congress to issue Federal loan guarantees to air carriers that suffered losses due to September 11, 2001 terrorist attacks. Montgomery was the ATSB's principal executive responsible for the review and evaluation of air carrier loan guarantee applications. "With rare exceptions, airlines have struggled to keep their businesses operating through short-term fixes as opposed to reshaping their business models for long-term success," observed Steve Cooper, Chairman of Kroll Zolfo Cooper. "Dan's finance background and his insight into today's air transportation issues, make him uniquely qualified to help companies transform businesses that don't work into ones that can perform for the long-haul." Prior to his appointment to the ATSB in March 2002, Montgomery was a managing director in the loan structuring and syndications group at Banc of America Securities, the investment banking and brokerage arm of Bank of America. During his 11 years with Bank of America, he specialized in leveraged finance and corporate restructurings in the chemicals, business services and general industrial sectors. A 1987 graduate of Georgetown University, Montgomery earned an M.B.A. from the University of Texas in 1991. "There is no shortage of companies needing help in restructuring their businesses, whether in the airline industry or in other underperforming sectors," said Montgomery. "I am delighted to be able to put my experience to work for a world-class restructuring team." Montgomery will work out of the firm's New Jersey office. Kroll Zolfo Cooper LLC is the financial consulting subsidiary of Kroll Inc., (NASDAQ: KROL), the world's leading risk consulting company, with two primary practice areas serving leading corporations and law firms: Corporate Advisory & Restructuring and Forensic Accounting & Litigation Consulting. Kroll Zolfo Cooper's restructuring services include turnaround consulting, creditor advisory, interim and crisis management, performance improvement, cross-border restructuring, and corporate finance. The firm's national Forensic Accounting & Litigation Consulting practice specializes in forensic and investigative accounting, litigation consulting, restatement investigations, corporate advisory, and investigative and security technology consulting. More information can be found at http://www.krollzolfocooper.com * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 14.5 - 16.5 0.0 Finova Group 7.5% due 2009 43.5 - 44.5 +0.5 Freeport-McMoran 7.5% due 2006 102.5 - 103.5 0.0 Global Crossing Hldgs 9.5% due 2009 4.5 - 5.0 +0.25 Globalstar 11.375% due 2004 3.0 - 3.5 -0.5 Lucent Technologies 6.45% due 2029 68.25 - 69.25 -0.75 Polaroid Corporation 6.75% due 2002 11.0 - 12.0 0.0 Westpoint Stevens 7.875% due 2005 20.0 - 22.0 0.0 Xerox Corporation 8.0% due 2027 84.0 - 86.0 -1.5 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 ********* 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 ***