/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/030909.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 9, 2003, Vol. 7, No. 178 Headlines 8X8 INC: Names Donn R. Wilson to Company's Board of Directors ANC RENTAL: Deutsche Bank Demands Payment of $5MM Admin. Claim APARTMENT INVESTMENT: Reports August 2003 Net Rental Income ARMSTRONG: AWI Selling Excess Lancaster Land to Wolf for $1.5MM ARMSTRONG WORLDWIDE: November 24 Fixed as Admin. Claims Bar Date ASSET SECURITIZATION: S&P Drops Class A-5, A-6 Note Ratings to D ATLANTIC COAST AIRLINES: UAL Pact Prompts S&P to Affirm Ratings BIG CITY: Sells Last Remaining Radio Station to Grundy County CABLEVISION SYSTEMS: Declares Quarterly Preferred Dividends CENTERPOINT ENERGY: Fitch Assigns Rating to 7.25% Senior Notes CHAMPION ENTERPRISES: Initiates Operational Restructuring Plan CHIQUITA BRANDS: Reduces Stake in Australian Produce Company CINCINNATI BELL: Closes Sale of Broadband Assets to C III Comms. CNH GLOBAL: Unit Completes $300MM Senior Notes Private Offering COPPERWELD CORPORATION: Disclosure Statement Hearing Today CORNING: Reaffirms Quarterly Guidance & Outlines Opportunities CORRECTIONS CORP: Declares Q3 Dividends on Ser. A & B Preferreds COVANTA ENERGY: Lease Decision Period Intact Until October 31 CYPRESS SEMICON.: Sells Part of Stake in NVE Corp. for $23MM Net DAISYTEK: EMJ Raising C$14M to Fund Acquisition of Canadian Unit DAVEL COMMS: Appoints Woody McGee as New Chief Executive Officer DELTA AIR LINES: Posts Results of Exchange Offer for Two Notes DIXIE GROUP: Ratings on Watch Positive Following Asset Sale Pact DT INDUSTRIES: Fourth Quarter 2003 Loss Hits $55 Million DVI INC: Wants Court to Appoint BSI as Claims and Noticing Agent EAGLEPICHER: S&P Cuts Junk-Rated Preferred Shares to D Rating ELAN CORP: S&P Ups Junk Corp. Credit Rating after 20-F Filing ELDERTRUST: Names Michael R. Walker as Acting President and CEO EMPIRE RESORTS: Ability to Continue Operations Still Uncertain ENCOMPASS SERVICES: Claims Objection Deadline Moved Until Nov. 6 ENERGY WEST: Arranges New Credit Facility Maturing on October 15 ENRON CORPORATION: Proposes Uniform Claims Estimation Procedures EOTT ENERGY: Reduces Petrochemical Operations at Morgan's Point GENTEK INC: Asks Court to Fix Uniform Claims Trading Procedures GLOBAL CROSSING: Court Approves Microsoft Settlement Agreement HALLMARK FINANCIAL: Successfully Completes Rights Offering HAYNES INTERNATIONAL: Enters into Amendment to Credit Agreement HCA GENESIS: Case Summary & Largest Unsecured Creditors HEALTH RISK: Trustee Employs Silverman Olson as Accountants HYPERTENSION DIAGNOSTICS: Completes $2.3 Mill. Equity Financing HYTEK MICROSYSTEMS: Hires Philip Bushnell as Chief Fin'l Officer IMPATH: SEC Commences Formal Inquiry into Company's Accounting KENTUCKY ELECTRIC: Closes Sale of All Assets to KES Acquisition KRONOS ADVANCED: Hires Sherb & Co. to Replace Grant Thornton LAIDLAW INC: Asks Court to Disallow 8 Allied Waste Claims LAND O'LAKES: CTO David Hettinga to Retire on October 17, 2003 LEAP WIRELESS: Cricket Hires Butler Shine to Handle Advertising LEAR CORP: Will Hold Q3 Conference Call on October 17, 2003 LOGOATHLETIC: Disclosure Statement Hearing Slated for October 3 LTV CORP: Bank One Bucks Plan to Indemnify Officers & Directors MANDALAY RESORT: SEC Declares Form S-3 Filing Effective METROPOLITAN ASSET: Fitch Cuts Two Ratings to Low-B/Junk Levels MIRANT CORP: Pepco and FERC Seek Federal Court Intervention MOBILE COMPUTING: Enters Definitive Restructuring Agreements NAVIGATOR GAS: Signs-Up Harding Lewis as Isle of Man Accountant NAVISTAR INT'L: Will Keep Chatham, Ont., Heavy Truck Plant Open NAVISTAR INT'L: Canadian Gov't Pact Won't Affect S&P Ratings NORSKE SKOG: Completes Exchange Offer for 8-5/8% Senior Notes NORTEL: S&P Affirms & Keeps Watch on B-Rated Series 2001-1 Notes NOVA CDO 2001: S&P Keeps 4 Low-B/Junk Ratings on Watch Negative NRG ENERGY: NRZ Units Assigned New Identification Number O'SULLIVAN INDUSTRIES: Will Hold Q4 Conference Call Tomorrow OWENS-ILLINOIS: High Leverage Position Spurs Fitch's Downgrades PDC INNOVATIVE: Ragin' Ribs Agree to Extend Due Diligence Period PENN TRAFFIC: Appoints James A. Demme as New Board Chairman PG&E NATIONAL: Court Okays Sutherland Asbill as Energy Counsel PHOTOCHANNEL: Intends to Raise $3M through Private Placement PPM AMERICA: S&P Puts BB Class A-2 Note Rating on Watch Negative PRIMEDEX HEALTH: Voluntary Chapter 11 Case Summary PRIMUS KNOWLEDGE: Completes Acquisition of Broad Daylight Inc. PROPRIETARY INDUSTRIES: Red Ink Continued to Flow in Q3 2003 REGUS BUSINESS: Wants Lease Decision Period Intact Until Nov. 25 ROYAL & SUNALLIANCE: Sells US Ops. Renewal Rights to Travelers ROYAL & SUNALLIANCE: A.M. Best Puts USA Businesses Under Review SANKATY HIGH YIELD: Fitch Affirms BB Senior Secured Notes Rating SANKATY HIGH YIELD: Lower-B Ratings on Classes D & E Affirmed SIERRA HEALTH: Will Publish Third Quarter Results on October 22 SIRIUS SATELLITE: Annual Shareholders Meeting Slated for Nov. 25 SK GLOBAL: Court Approves KPMG Engagement as Financial Advisors SORRENTO NETWORKS: 2nd-Quarter Ops. Net Loss Tumbles 72% to $4MM SPIEGEL GROUP: Reports List of Reclamation Claims Deemed Valid STONE & WEBSTER: Delaware Court Approves Disclosure Statement SYSTECH RETAIL: Court Confirms First Amended Reorganization Plan TENET HEALTHCARE: Senate Finance Committee Commences Inquiry TWINLAB CORP: S&P Ratings Dive to D After Chapter 11 Filing TWINLAB CORP: Wants Schedule-Filing Deadline Moved to Oct. 19 UNITED AIRLINES: Selling One Boeing 747 to Dubai Air for $51MM UNITED PAN-EUROPE: UGC Europe Inc. Becomes Successor Issuer UNOVA INC: Completes Sale of Lamb Body & Assembly Systems Div. USG CORP: Wants Lease Decision Period Extended to March 1, 2004 VARSITY BRANDS: Extends Consent Payment Deadline re Tender Offer WEIRTON STEEL: Court Okays Houlihan Lokey as Investment Banker WESTPOINT STEVENS: Wins OK to Hire Stein Riso as Special Counsel * Buxbaum Expects to Appraise Upwards of $5 Billion of Inventories * CCFL Advisory Services Appoints Two New Managing Directors * Large Companies with Insolvent Balance Sheets ********* 8X8 INC: Names Donn R. Wilson to Company's Board of Directors ------------------------------------------------------------- 8x8, Inc., (Nasdaq: EGHT) announced that Donn R. Wilson, Executive Vice President of Franchise Services at Solidus Networks, has been named to 8x8's Board of Directors. Mr. Wilson brings more than 40 years of global franchise and consumer sales experience to the 8x8 Board. Mr. Wilson is a founder and has served as COO, CEO and a Director of Solidus Networks, Inc. He started his own consulting firm in 1988 working mostly with large restaurant and franchising companies, including McDonald's, Wendy's, Blockbuster, Marriott, Ponderosa and Perkins. Mr. Wilson served as the Director of Corporate Development for Blockbuster Video beginning in 1986, growing the chain to approximately 3,000 stores by 1990. In 1985, Mr. Wilson purchased four regional master franchises for Uniglobe Travel and brought the Canadian company to the United States, serving as Chairman, President and Director. Prior to that, Mr. Wilson joined Wendy's Canada serving as President and Director, selling the franchise to Wendy's International in 1984. Mr. Wilson was a member of the owners group of the Houston Astros and operated the lease on the Astrodome from 1979 to 1981. From 1957 to 1979, Mr. Wilson worked in various roles at McDonald's. He went to work at McDonald's Headquarters as a Field Consultant after graduating from Purdue University in 1961. Mr. Wilson helped to develop McDonald's Hamburger University and became head of Training and Operations, purchasing his first McDonald's franchise in 1966. He founded McDonald's Australia in 1970 and helped develop franchises in Japan, Hong Kong and New Zealand. He became President of the Houston Operator's Association and the McDonald's Operators' Franchise Advisory Board and the Training Advisory Committee in 1975. "We are excited to welcome Donn Wilson to our Board of Directors," said Bryan Martin, Chief Executive Officer of 8x8. "Donn's vast experience in marketing directly to consumers and the significant success he has had in developing some of the premier consumer brands today will undoubtedly contribute to the promotion of the Packet8 brand and our voice and video service offerings," he concluded. Mr. Wilson will also serve as a member of 8x8's audit and compensation committees. 8x8, Inc. offers the Packet8 broadband telephone service -- http://www.packet8.net-- consumer videophones, hosted iPBX solutions (through its subsidiary Centile, Inc.), and voice and video semiconductors and related software (through its subsidiary Netergy Microelectronics, Inc.). For more information, visit 8x8's Web site at http://www.8x8.com Launched in November 2002, Packet8 enables anyone with high-speed internet access to sign up for telephone service at http://www.packet8.net Customers can choose a direct-dial phone number from any of the rate centers offered by the service, and then use an 8x8-supplied terminal adapter to connect any telephone to a broadband internet connection and make or receive calls from a regular telephone number. All Packet8 telephone accounts come with voice mail, caller ID, call forwarding, web access to account controls, and real-time online billing. High speed, instant-on broadband videophone accounts, which use the 8x8 DV325 SIP videophone, are also available. The DV325 videophone functions as a Packet8 voice line when making or receiving voice telephone calls from regular telephone numbers. * * * Liquidity and Capital Resources In its Form 10-Q for the period ended March 31, 2003, the Company reported: The possibility that the Company will not be able to meet its obligations as and when they become due over the next twelve months raises substantial doubt about the Company's ability to continue as a going concern. Accordingly, the Company has been pursuing, and will continue to pursue, among other things, the implementation of certain cost reduction strategies and the licensing or sale of its technologies or projects. Additionally, the Company plans to seek additional financing and evaluate financing alternatives during the next twelve months in order to meet its cash requirements for the remainder of fiscal 2004. The Company has sustained net losses and negative cash flows from operations since fiscal 1999 that have been funded primarily through the issuance of equity securities and borrowings. Management expects to experience negative cash flows for the foreseeable future and such losses may be substantial. There is no assurance that the Company will be able to obtain financing on terms favorable to the Company, or at all. If the Company issues additional equity or convertible debt securities to raise funds, the ownership percentage of the Company's existing stockholders would be reduced and they may experience significant dilution. Failure to increase revenues, to manage net operating expenses and to raise additional financing through public or private equity financing or other sources of financing may result in the Company not achieving its longer term business objectives. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. In connection with efforts to improve its liquidity, in June 2003 Netergy entered into an agreement whereby it would sell certain assets and license/sell certain technology related to its next- generation video compression semiconductor product for cash. The closing of this transaction is subject to certain conditions beyond the Company's control and there can be no assurance that the transaction will close. Even if the transaction closes, additional cash resources may be necessary for the Company to sustain its operations. The Company does not expect to incur a loss on this transaction. In July 2003, the Company announced that Netergy had licensed its voice over IP Audacity-T2 and T2U semiconductor products and Veracity software. The customer obtained rights to sell T2 and T2U based semiconductor products bundled with the Veracity software, and, in return, will pay Netergy a license fee and royalties for each T2 and T2U semiconductor it sells. ANC RENTAL: Deutsche Bank Demands Payment of $5MM Admin. Claim -------------------------------------------------------------- Deutsche Bank Securities Inc. asks the Court to allow it a $5,250,000 administrative expense claim and direct ANC Rental Corp., to satisfy the Claim. Before entering into the Purchase Agreement with Cerberus, ANC and Deutsche Bank were parties to a series of postpetition securitization transactions, which were approved by various Court orders, including: 1. An April 4, 2002 Order, amended on June 28, 2002 and June 20, 2003, authorizing the Debtors to: a. enter into New Master Lease Agreements and Related Operating Leases; b. guarantee the obligations of each Lessee under the New Master Lease Agreements; c. pay certain fees associated with the Transaction; and d. enter into other agreements and documents necessary to consummate the Transaction; 2. An August 23, 2002 Order approving Amendment of Term Sheet with Deutsche Bank relating to the issuance of Medium Term Notes; and 3. A May 7, 2003 Order authorizing, inter alia, an increase in the medium term note notional amount. Deutsche Bank and the Debtors also entered into a March 29, 2002 engagement letter, which was approved by the Court. The Letter Agreement, among other things, enabled the Debtors to obtain vital funding from Deutsche Bank through the securitization transactions and benefit from Deutsche Bank's expertise in structuring and placing rental car fleet securitizations. The postpetition Letter Agreement approved by the Court provided that in the event "the Company elects to terminate [the Letter] Agreement for any reason, then the Company shall promptly pay [Deutsche Bank] 50% of the MTN Notional Amount." A May 2003 Order provides, in part, that the MTN Notional Amount is $1,050,000,000. Richard H. Cross, Jr., Esq., in Wilmington, Delaware, relates that the approval of the Purchase Agreement and the sale of the Debtors' business resulted in the termination of the Letter Agreement, since under the circumstances of the sale the Debtors will not be able to enter into any additional securitization transactions with Deutsche Bank. Therefore, the Debtors are obligated to pay Deutsche Bank the Termination Fee as a postpetition, administrative expense of the Debtors and their estate. The Termination Fee, expressed as 50% of the MTN Notional Amount, equals $5,250,000. Mr. Cross further relates that despite taking and receiving the full benefit from the Letter Agreement and related transactions, the Debtors have not promptly paid the Termination Fee as required under the Letter Agreement or made any indication that payment would be forthcoming. The Debtors' obligation on account of the Termination Fees under the Letter Agreement constitutes an administrative expense of a kind specified in Section 503(b) of the Bankruptcy Code. Liberty Objects Liberty Mutual Insurance Company is a secured, superpriority administrative creditor of the Debtors, with either first or subordinated liens and security interests in all of the Debtors' assets. Liberty is also entitled to liens and superpriority administrative expense claims in connection with its rights under the various cash collateral orders authorized by the Court. The Liberty Liens secure obligations to Liberty, which arise under numerous agreements, Court orders and by operation of law; and were granted to Liberty in conjunction with Liberty's agreement, subject to certain conditions, to continue to provide essential surety bonds to the Debtors. As the Debtors have repeatedly acknowledged, Liberty's bonding has been and continues to be critical to these Chapter 11 cases. In exchange for the Liberty Liens and certain other rights and protections granted to Liberty pursuant to the Liberty Orders, Liberty has been providing the Debtors with a continuing source of essential bonding, without which the Debtors would have had to have discontinued their operations, and the realizable value of the assets of the Debtors' business would be significantly reduced. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman LLP, in Wilmington, Delaware, argues that to grant Deutsche Bank's request, the Court would have to ignore its prior orders in order to permit Deutsche Bank to receive payment on account of its alleged administrative claim, which is subordinate in priority to the allowed secured and superpriority administrative expense claim of Liberty and other parties. The request should be denied, without prejudice, until the secured and senior in priority claims of Liberty and others, as authorized by prior Court orders, have been indefeasibly satisfied in full. Deutsche Bank contends that its right to an administrative priority claim arises out of the "April 2002 Order" and that certain "Letter Agreement" dated March 29, 2002, which Deutsche Bank asserts was approved by the Court in the April 2002 Order. Mr. Rosner points out that the April 4, 2002 Order, was entered based on the certification of counsel dated April 1, 2002. In the Certification of Counsel, the Court is advised, among other things, that the Debtors had filed a request on March 8, 2002 to enter into certain secured financing arrangements with Deutsche Bank, or related entities. But the "Term Sheets" in the proposed financing were not provided until the Certification of Counsel was filed on April 1, 2003. The Debtors disclosed only that there "is a termination fee that will be payable if the agreement is terminated prior the closing of the 2002-1VFN note". The Term Sheets, filed with the April 1, 2003 Certification of Counsel do not appear to mention a termination fee. The only mention of a termination fee is in an unsigned draft letter agreement filed with the April Certification of Counsel and identified as the "Exhibit Draft Letter to ANC Treasurer from Deutsche Bank", which is dated March 28, 2002, but was not executed. This appears to be similar to the unsigned "Letter Agreement" dated March 29, 2002, which Deutsche Bank filed together with its request. The Certification of Counsel goes on to advise that a hearing on the proposed financing was conducted on March 27, 2002, at which hearing the Debtors advised the Court "that they were in negotiations with another potential lender and anticipated reaching agreement with either Deutsche Bank or the other lender and would submit an agreed order approving the Financing Motion". Mr. Rosner relates that, contrary to Deutsche Bank's statement that the "Letter Agreement" was approved by the Court in the April 2002 Order, there is no provision of the April 2002 Order that specifically authorizes or approves the terms of the Letter Agreement, including the payment of a $5,250,000 "Termination Fee" as an administrative expense. Deutsche Bank also made reference to a subsequent order dated June 28, 2002, which "amended and supplemented" the terms of the transaction approved pursuant to the April 2002 Order. These amendments specifically addressed the fees to which Deutsche Bank would be entitled. However, Mr. Rosner maintains, there is no mention in the June Order of any entitlement by Deutsche Bank to a termination fee. In any event, Liberty is not aware of any agreement or order that permits or directs payment of the fee on a superpriority basis, or that would effectively permit a priming of creditors holding security interests in the assets of the Debtor's estate, and superpriority administrative claims. (ANC Rental Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) APARTMENT INVESTMENT: Reports August 2003 Net Rental Income ----------------------------------------------------------- Apartment Investment and Management Company (NYSE: AIV) announced Net Rental Income for its "Same Store" portfolio for the month of August 2003. "Same Store" properties include 601 communities with a total of 167,863 units in which Aimco has a weighted average ownership of 82.4%. "Same Store" properties had average occupancy of 93.5%, average rent per unit of $703 and NRI of $90.9 million. The August "Same Store" portfolio had a net reduction of five properties, with an aggregate of 1,237 units, compared with July. NRI is an operating measure calculated as the product of rental units multiplied by occupancy multiplied by average rent per unit. Concessions are considered in calculating average monthly rents. Same Store Portfolio Average Rent Occupancy per Unit NRI ($mm) --------- -------- --------- 2002 April 93.9% $714 92.8 May 93.3% 723 93.3 June 93.3% 717 92.4 July 92.9% 713 91.6 August 93.9% 710 92.2 September 93.4% 705 91.1 October 92.2% 711 90.7 November 91.3% 713 90.0 December 90.4% 714 89.3 2003 January 90.1% 715 89.1 February 90.4% 708 88.6 March 91.3% 698 88.1 April 92.3% 700 89.4 May 92.9% 699 89.8 June 92.7% 701 90.0 July 92.7% 699 89.6 August 93.5% 703 90.9 The "Same Store" portfolio represents conventional communities in which Aimco's ownership exceeds 10% and that have reached a stabilized level of occupancy during both the current and comparable prior year period. The composition of this portfolio may change each month with additions from properties held for more than one year and subtractions from properties sold or withdrawn for redevelopment. To ensure comparability, the information for all periods shown is based on current period ownership. The 11 properties acquired in New England in August 2002 are not part of the "Same Store" portfolio. These properties had occupancy of 95.6% and average rent per unit of $1,138 in August 2003 compared with 95.5% and $1,131, respectively, in July 2003. Aimco (S&P, BB+ Corporate Credit Rating, Stable) is a real estate investment trust headquartered in Denver, Colorado owning and operating a geographically diversified portfolio of apartment communities through 19 regional operating centers. Aimco, through its subsidiaries, operates approximately 1,760 properties, including approximately 313,000 apartment units, and serves approximately one million residents each year. Aimco's properties are located in 47 states, the District of Columbia and Puerto Rico. Aimco common stock is included in the S&P 500. ARMSTRONG: AWI Selling Excess Lancaster Land to Wolf for $1.5MM --------------------------------------------------------------- Armstrong World Industries, Inc. owns 14.3 acres of land located in the City of Lancaster, Lancaster County, Pennsylvania. Rebecca L. Booth, Esq., at Richards Layton & Finger, in Wilmington, Delaware, explains that AWI bought this property in 1924 with the original intention of expanding its Lancaster plant. AWI wants to sell its property located on the opposite side of railroad tracks that run across the north end of the Lancaster Plant. Although a small portion of the Property is used as a parking lot for Lancaster Plant employees, the remainder of the Property is not in use. No Use for Property Since the commencement of its Chapter 11 case, AWI has been considering its long-term strategy with regard to the Lancaster Plant, including whether it intends to expand or make improvements to that facility. As a result of this analysis AWI has determined that it has no future need for the Property. Specifically, AWI has concluded that, because the Property is located on the opposite side of railroad tracks that run across the north end of the Lancaster Plant, the Property is located in an area that is of no value to AWI even if it ultimately decides to expand the Lancaster Plant. AWI also has concluded that selling the Property may help offset the cost of any future improvements to the Lancaster Plant. Limited Use AWI believes that there is a limited market for the Property because it is situated in an industrial area and zoned only for industrial use. Notwithstanding that there has been a substantial amount of industrial acreage on the market in Lancaster County, very little industrial property has sold in the past several years. The Lancaster County market for industrial property has been depressed, in part because neighboring counties have substantially better access to highways and because those counties have promoted industrial growth more effectively than Lancaster County. In March, AWI invited three prospective brokers, including CB Richard Ellis, to provide AWI with marketing proposals for the Property. Each of the prospective brokers advised AWI that comparable properties in the Lancaster area have sold for between $60,000 to $80,000 per acre. In addition, two of the three brokers, including CB Richard Ellis, indicated that they had clients, which might be interested in purchasing the Property. Although the first prospective purchaser expressed serious interest in the Property, AWI did not enter into a transaction with this party because AWI received a better price and better terms from The Wolf Group. Accordingly, AWI seeks the Court's authority to sell the Property to The Wolf Group for $1,500,000, free and clear of liens, claims and encumbrances, and to pay a commission of 5% to CB Richard Ellis, the real estate broker. The Sale Terms * Purchase Price: $1,500,000, or approximately $104,000 per acre, payable by The Wolf Group: (a) $75,000 to be paid as a deposit at the time AWI executes the Sale Agreement; (b) $75,000 to be paid as a deposit upon The Wolf Group's completion of due diligence on the Property; and (c) the balance to be paid by The Wolf Group to AWI at closing. * Broker as Escrow Agent. All deposits paid by The Wolf Group will be paid to the Broker, who will retain those funds in an escrow account until consummation or termination of the Sale Agreement in conformity with all applicable laws and regulations. In the event of a dispute over entitlement to deposit funds, the Broker will retain the funds in escrow until the dispute is resolved. * Closing. The Closing will take place on or before October 10, 2003, or 30 days after the completion of certain items set forth on an addendum to the Sale Agreement, including: (a) Necessary Approvals. The parties' obligations under the Sale Agreement are contingent upon AWI's receipt of Bankruptcy Court approval of the transactions contemplated by the Sale Agreement within 60 days of the full execution of the Sale Agreement; and (b) Due Diligence Period. The Wolf Group will have 60 days from the date of Bankruptcy Court approval of the transactions contemplated by the Sale Agreement to: (i) perform evaluations, inspections, and a title search of the Property; and (ii) review the survey of the Property and reports and information provided by AWI with respect to the Property. The Wolf Group must provide AWI with written notice of any defects discovered during the Due Diligence Period. AWI will have 30 days to correct any stated defects. If AWI does not or cannot correct the defect, The Wolf Group may accept the defect or terminate the Sale Agreement upon written notice given to AWI before the expiration of the Due Diligence Period. * Parking Area Lease. The Sale Agreement provides that AWI has the right to lease an asphalt area at the rear of the Property that currently is being used as a parking area for AWI's employees at the Lancaster Plant, and a propane tank area located on the Property, from The Wolf Group for $1 per year for a three-year term. The parties' obligations under the Sale Agreement are contingent upon the parties' agreement on the terms of the Parking Area Lease within 30 days following the date of the Addendum. Prior to the termination of the Parking Area Lease, AWI will remove the propane tanks located on the Property at its own expense. AWI estimates that the cost of that removal will be approximately $150,000. * Fuel Storage Tank Removal and Remediation. Within 10 days following the execution of the Sale Agreement, AWI will provide The Wolf Group with copies of all material information in AWI's possession concerning the removal of three above-ground storage tanks and the environmental remediation and cleanup associated with the tank removal. If the Pennsylvania Department of Environmental Protection requires AWI to perform additional remediation or testing at the Property, The Wolf Group will provide AWI and its agents and contractors with reasonable access to the Property to complete remediation and clean-up. * Easements. At the closing, AWI will reserve easements on the Property to maintain, repair, and replace existing utility facilities located on and under the Property and which serve AWI's adjoining properties. The location and term of the easements will be determined during the Due Diligence Period. If the parties cannot agree on the location and term of the easements, either party may terminate the Sale Agreement prior to the expiration of the Due Diligence Period. * "As Is, Where Is" Sale. The Wolf Group is purchasing the Property "as is, where is" in its present condition and with all faults and, except as specifically set forth in the Sale Agreement, AWI makes no further representations or warranties with respect to the Property, whether express or implied. The Wolf Group will have the Property independently inspected and will rely fully on that inspection. The Wolf Group assumes the risk of all matters relating to conditions on the Property and, except as specifically set forth in the Sale Agreement, upon closing, releases AWI from any and all claims, damages, losses, and causes of action with respect to any condition, including, without limitation, physical and environmental conditions of the Property. * Release. The Wolf Group agrees to release, quit claim, and forever discharge AWI, all brokers, their licensees, employees, any other officer or partner of any one of them, and any other person, firm or corporation that may be liable by or through them, from any and all claims, demands or losses -- including, but not limited to, personal injuries and property damage and all of the consequences that may arise from the presence of environmental hazards, any deficiencies in the Property's on-site water, service system, or any defects or conditions in the Property. The Release will survive after closing. * Public System Contingency. The sale is contingent upon The Wolf Group obtaining municipal approval for the connection of the Property to a sewage disposal system within 60 days of the parties' execution of the Sale Agreement or, if The Wolf Group is unable to obtain such approval, The Wolf Group's agreement to accept the Property "as-is" and agree to the Release. If The Wolf Group does not agree to accept the Property "as-is" and the Release, The Wolf Group may terminate the Sale Agreement and is entitled to a return of all deposits paid under the Sale Agreement. * Connection to Off-Property Water Source Contingency. The sale is contingent upon The Wolf Group's determination that the terms of connecting the Property to an off-Property water source are acceptable to The Wolf Group or, if the terms are not acceptable to The Wolf Group, The Wolf Group's agreement to accept the Property "as-is" and to the Release. If The Wolf Group does not agree to accept the Property "as-is" and the Release, The Wolf Group may terminate the Sale Agreement and is entitled to a return of all deposits paid under the Sale Agreement. * Environmental Audit/Inspection Contingency. The sale is contingent upon the completion, to The Wolf Group's satisfaction, of certain environmental audits and inspections by a licensed or otherwise qualified professional within 60 days of the parties' execution of the Sale Agreement or, if The Wolf Group is not satisfied with the information contained in any written reports it receives as a result of such audits or inspections, The Wolf Group's agreement to accept the Property with the information stated in the reports and agree to the Release. If The Wolf Group does not agree to accept the Property with the information stated in the reports and the Release, The Wolf Group may terminate the Sale Agreement and is entitled to a return of all deposits paid under the Sale Agreement. * Maintenance. Until the Closing, AWI will maintain the Property, grounds, and fixtures in their present condition, normal wear and tear excepted. If, prior to the Closing, any system or appliance included in the sale of the Property fails and AWI does not repair or replace the item, The Wolf Group may choose to: (a) accept the Property and agree to the Release; or (b) terminate the Sale Agreement, in which case The Wolf Group is entitled to a return of all deposits paid under the Sale Agreement. * Broker's Commission. The Sale Agreement provides that AWI will pay the Broker a sales commission equal to 5% of the Purchase Price. * Default. If The Wolf Group (a) fails to make all of the payments due under the Sale Agreement; (b) furnishes false or incomplete information to AWI or the Broker concerning The Wolf Group's legal or financial status; or (c) violates or fails to fulfill and perform any other term of the Sale Agreement, AWI may elect to retain all sums paid by The Wolf Group, including all deposits, as liquidated damages. If AWI so elects, both AWI and The Wolf Group will be released from further liability or obligation under the Sale Agreement, and the Sale Agreement will be void. The Sale Should Be Approved Ms. Booth points out that the Sale Agreement provides for favorable terms for the sale of surplus property that has been sitting idle and unused in AWI's business. AWI's management has decided that, after holding the Property for possible expansion for 80 years, the Property is not located in an area that is valuable to AWI for that purpose. The Sale Agreement represents the highest and best offer that AWI has received to date. The Wolf Group is creditworthy and possesses the financial resources to close the sale. For these reasons, the sale should be approved without any requirement for bidding periods or an auction. (Armstrong Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG WORLDWIDE: November 24 Fixed as Admin. Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware schedules November 24, 2003, as the deadline by which all creditors of Armstrong World Industries, Inc., asserting certain types of administrative expense claims arising under Section 503(b)(1) of the Bankruptcy Code must be filed. All proof of claims, to be considered timely-filed must be received on or before 5:00 p.m. of the Bar Date by: i) if by hand delivery: Trumbull Services, LLC 4 Griffin Road North Windsor, Connecticut 06095 Attn: Armstrong World Industries, Inc.; or ii) if by mail: Trumbull Services LLC PO Box 1117 Windsor, Connecticut 06095 Attn: Armstrong World Industries, Inc. The Administrative Expense Bar Date applies to claims that: a) arose after December 6, 2000; b) qualify as an administrative expense under Section 503(b)(1) of the Bankruptcy Code; c) fall within any of these six categories: i) representing personal injury, property damage, or other tort claims, excluding asbestos claims; ii) arising for breach of obligation -- contractual, statutory or otherwise, including any environmental liability; iii) amounts incurred by Debtor after December 6, 2003 in the ordinary course of business if payment is overdue by 60 days; iv) incurred by Debtor outside the ordinary course of business terms; v) would not ordinarily be reflected as payable on the Debtor's books and records or as liability on the Debtor's financial statements; or vi) representing an employee claim against Debtor other than: -- a claim for wages, benefits, pension or retirement benefits or expense reimbursement by an employee employed by Debtor as of the Administrative Expense Bar Date; or -- a grievance claim under any collective bargaining agreement. Armstrong World Industries makes interior finishing building materials such as floor coverings and acoustical ceiling and grid systems. The Company filed for protection from its creditors on Dec 6, 2000 (Bankr. Del. Case No. 00-04471). Mark D. Collins, Esq., at Richards, Layton & Finger represents the Debtors in its restructuring efforts. When the Company filed for protection from its creditors, it listed $4,032,200,000 in assets and $3,296,900,000 in liabilities. ASSET SECURITIZATION: S&P Drops Class A-5, A-6 Note Ratings to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class A- 1E of Asset Securitization Corp.'s commercial mortgage pass- through certificates series 1997-D5 and placed it on CreditWatch negative. Concurrently, the ratings on classes A-2, A-3, and A-4 are lowered and remain on CreditWatch negative. At the same time, the ratings on classes A-5 and A-6 are lowered to 'D' and removed from CreditWatch. In addition, the ratings on classes A- 1A, A-1B, A-1C, and A-1D are placed on CreditWatch negative. The rating actions are due to significant interest shortfalls that will primarily result from the master servicer's (GMAC Commercial Mortgage Corp., successor to CapMark Services L.P.) recovery of non-recoverable advances related to the Doctor's Hospital loan. The non-recoverable advance, totaling $6.387 million, is expected to be recovered from the trust over the next three or four months, starting with the September 2003 distribution. Classes up to and including A-1E will experience interest shortfalls. The NRAs had accumulated over the past three years, during which time the loan has been delinquent. The NRA was evidenced by an Officer's Certificate from GMACCM dated Sept. 2, 2003. In the certificate, GMACCM states that it recognizes information and analysis provided by ORIX Capital Markets LLC, the special servicer, stating that the valuation of Doctor's Hospital is significantly lower than the most recent Member Appraisal Institute appraisal from November 2002, which valued the property at $7.3 million. ORIX's estimated valuations from August 2003 ranged from negative value to less than $1 million, after factoring in environmental remediation costs, demolition costs, and the potential redevelopment of the property. Doctor's Hospital, located in Hyde Park, a suburb of Chicago, Illinois, closed in April 2000 after the borrower declared bankruptcy. The loan has been delinquent since July 2000. It remains embroiled in litigation following a suit filed against both the depositor and loan seller in November 2000, which cited a breach of contract for failure to repurchase the loan. The suit stems from allegations made by Lend Lease Asset Management (Lend Lease), the special servicer at that time (which has since been replaced by ORIX), that the loan is not a qualified mortgage loan because of issues related to collateral valuation at issuance, and has asked the depositor to repurchase the loan. For the July 2003 distribution, such litigation costs were largely responsible for the large interest shortfalls resulting in the placement of the ratings on the A-2 to A-6 classes on CreditWatch negative on July 11, 2003. ORIX estimates that the ongoing litigation costs, which will be funded from the trust collection account on a monthly basis, will range on average of $450,000 to $500,000 per month, which will delay repayment of outstanding shortfalls. The ratings on all classes that are on CreditWatch negative will remain there at least until they are repaid past due interest in full, or in the case of the A-1A to A1-E, until GMACCM's NRA is recovered. Classes A-2 and A-3 will be repaid sometime in early- to mid-2004; and class A-4 will be repaid in early 2005. Classes A-5 and A-6 are not expected to be repaid for a number of years, resulting in the lowering of their ratings to 'D'. Standard & Poor's will continue to monitor the performance of the transaction, the ongoing litigation, and the repayment of the interest shortfalls. Further shortfalls or prolonged repayment of shortfalls could result in further negative rating actions. RATINGS PLACED ON CREDITWATCH Rating Class To From Credit Support A-1A AAA/Watch Neg AAA 29.92% A-1B AAA/Watch Neg AAA 29.92% A-1C AAA/Watch Neg AAA 29.92% A-1D AAA/Watch Neg AAA 29.92% RATING LOWERED AND PLACED ON CREDITWATCH Asset Securitization Corp. Commercial mortgage pass-thru certs series 1997-D5 Rating Class To From Credit Support A-1E AA-/Watch Neg AA+ 26.65% RATINGS LOWERED AND REMAIN ON CREDITWATCH Asset Securitization Corp. Commercial mortgage pass-thru certs series 1997-D5 Rating Class To From Credit Support A-2 BBB/Watch Neg A+/Watch Neg 21.19% A-3 BBB-/Watch Neg A-/Watch Neg 17.92% A-4 B/Watch Neg BBB+/Watch Neg 16.28% RATINGS LOWERED AND OFF CREDITWATCH Asset Securitization Corp. Commercial mortgage pass-thru certs series 1997-D5 Rating Class To From Credit Support A-5 D BBB/Watch Neg 13.83% A-6 D BBB-/Watch Neg 11.10% ATLANTIC COAST AIRLINES: UAL Pact Prompts S&P to Affirm Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Atlantic Coast Airlines Holdings Inc., including the 'B-' corporate credit rating, and removed them from CreditWatch, where they were placed March 18, 2003. The outlook is negative. "The ratings affirmation is based on the agreement the company recently reached with United Air Lines Inc., its major airline partner, regarding 2003 fee-per-departure rates," said Standard & Poor's credit analyst Betsy Snyder. "While the agreement eliminates uncertainty regarding how much Atlantic Coast will be paid by United over the near term, ratings on Atlantic Coast reflect the significant risks associated with its plan to end its relationship with United when that airline exits bankruptcy, and instead become a low-fare regional airline based at Washington Dulles Airport," the credit analyst continued. The ratings reflect Atlantic Coast Airlines Holdings Inc.'s relatively small size within the high-risk U.S. airline industry and substantial operating lease burden, mitigated to some extent by revenue stability that has been provided by fee-per-departure contracts with major airline partners. Atlantic Coast currently operates two regional airlines that offer feeder service for both United and Delta, primarily along the East Coast and in the Midwest and Canada, under fee-per-departure agreements. Fee-per-departure flying enables both United and Delta to take full control of the seats Atlantic Coast flies for them as well as responsibility for all risks, including fuel and the sale of seats. These agreements reduce operating and financial risks for a regional airline in periods of economic weakness, resulting in more stable earnings and cash flow. United and Delta have both reduced capacity in their main line operations since 2001, some of which has been replaced through their feeder partners. As a result, Atlantic Coast's operations have continued to grow even in the current adverse airline environment. In addition, Atlantic Coast, with its hub located at Dulles Airport outside Washington, D.C., has benefited from reduced flying levels at Washington's Reagan Airport, as well as the reduction of service from some competitors, such as US Airways Inc. The transition to a low-fare independent airline from a regional feeder airline for a large network carrier would entail significant risks. While the company does benefit from its large market presence at Dulles, where there is presently no low-fare competition, it could find itself competing against other low-fare carriers at relatively nearby airports (e.g., Southwest Airlines Co. at Baltimore), and potential replacement United Express partners at Dulles. In addition, there will be less stability in the company's revenues and cash flow than it enjoyed under the fee-per-departure agreement it had with United. Under bankruptcy rules, United has the option to assume the existing fee-per- departure agreement with Atlantic Coast by agreeing to honor all terms in full or to reject the agreement. Atlantic Coast expects United to reject those terms, when it emerges from bankruptcy in the first half of 2004. Atlantic Coast expects to maintain its relationship as a Delta Connection partner under its new strategy. Atlantic Coast's planned transition to an independent low-fare airline entails significant risks. Failure to execute the new strategy successfully could result in a ratings downgrade. BIG CITY: Sells Last Remaining Radio Station to Grundy County ------------------------------------------------------------- Big City Radio, Inc. (Amex:YFM) has entered into a definitive asset purchase agreement to sell its last remaining radio station, WYXX-FM, Morris, Illinois to Grundy County Broadcasters, Inc. for $426,000 of cash. The transaction is subject to closing conditions, including the initial grant of approval by the FCC. The sale of Morris, Illinois station is being undertaken in accordance with Big City Radio's previously announced auction of all of its radio stations and its recent announcement of the adoption by its board of directors of a plan of complete liquidation and dissolution. * * * In its most recent Form 10-Q filed with Securities and Exchange Commission, Big City Radio reported: "[E]vents of default exist under the Indenture governing Big City Radio's Notes and Big City Radio entered into a Forbearance Agreement with the holders of approximately $128 million principal amount at maturity of the Notes, although the Forbearance Agreement did not prevent the trustee under the Indenture or note- holders that were not parties to the Forbearance Agreement from pursuing remedies under the Indenture. "Since its inception, Big City Radio incurred substantial net operating losses primarily due to broadcast cash flow deficits associated with the start up of its radio station operations. During the quarter ended June 30, 2003, the Company completed three of four planned asset sale transactions, and also amended the fourth transaction to sell certain non-license assets. As a result of these transactions, the Company has sold the majority of its operating assets and now owns only WYXX-FM in Morris, Illinois. The Company remains a party to some contracts formerly used in the operations of the sold radio stations which were not assumed by the purchasers of its radio properties. The Company does not expect to incur material obligations under these contracts. As a further result of the completed asset sales and the realized and unrealized gains in the Entravision Class A common stock since April 16, 2003, the date the Entravision transaction was completed, the Company has reported a total estimated tax provision for Federal and State taxes of approximately $10 million. This total provision was estimated assuming the liquidation of the Entravision Class A common stock at its closing price on June 30, 2003. The Company has contractual liabilities to management under employment arrangements estimated as approximately $2.2 million. As a result, Big City expects to generate net operating losses for the foreseeable future. "Prior to completion of the asset sales described above, Big City Radio met its working capital needs primarily through borrowings, including loans from Big City Radio's principal stockholders, Stuart and Anita Subotnick, loans under credit facilities, and proceeds from the issuance of the senior notes in March 1998. From October 31, 2001 to the completion of the asset sales, Big City Radio has met its working capital needs primarily from the proceeds of the sale of Big City Radio's Phoenix radio stations which it completed on that date. "The Company failed to make the semi-annual interest payment of $9,800,000 due on the senior notes on September 15, 2002. Big City Radio's cash resources were insufficient to enable Big City Radio to make the semi-annual interest payment within the 30-day grace period provided under the indenture. The grace period expired on October 15, 2002, thereby resulting in an additional event of default under the indenture. On October 17, 2002, pursuant to the indenture, holders of the senior notes delivered an acceleration notice to Big City Radio declaring the principal and interest on all of the senior notes to be immediately due and payable. "In light of these developments, the Company evaluated its strategic alternatives and the most efficient use of its capital. On November 4, 2002, Big City Radio announced it had retained Jorgenson Broadcast Brokerage to market and conduct an auction sale of all of Big City Radio's radio stations. "On November 13, 2002, Big City Radio, and the holders of approximately $128,000,000 in principal amount of the senior notes acting through an ad hoc committee of noteholders, entered into a forbearance agreement. Under the forbearance agreement, the signatory noteholders agreed to forebear, through January 31, 2003 (later extended to March 31, 2003 and subsequently to April 30, 2003), from taking, initiating or continuing any action to enforce the Company's payment obligations under the senior notes, including, without limitation, any involuntary bankruptcy filing against the Company, or against any property, officers, directors, employees or agents of the Company to collect on or enforce payment of any indebtedness or obligations, or to otherwise assert any claims or causes of action seeking payment under the senior notes, in each case arising under or relating to the payment default or the default arising from the failure to make the required offer to repurchase senior notes or other existing defaults known to the signatory noteholders as of November 13, 2002. Under the forbearance agreement, the Company agreed to conduct the auction of its radio stations in a good faith manner designed to sell the assets as soon as practicable for net cash consideration in an amount at least sufficient to pay all principal of, and accrued and unpaid interest on, the senior notes. If the signatory noteholders reasonably believed that the Company was not conducting the auction process in good faith or was not operating or managing the business and financial affairs of the Company in good faith in the ordinary course and consistent with past practices, they could have notified the Company in writing and could have elected to terminate the forbearance agreement. The Company further agreed not to pay, discharge or satisfy any liability or obligation except for obligations reflected on the Company's balance sheet as of December 31, 2001 or incurred in the ordinary course since that date which were paid, discharged or satisfied for fair and equivalent valued in the ordinary course of business and consistent with past practices. The forbearance agreement did not prevent the trustee under the indenture or noteholders that are not parties to the forbearance agreement from pursuing remedies under the indenture. "Big City Radio and the noteholders executed an amendment to the forbearance agreement as of January 14, 2003, in which the expiration date of the forbearance period was extended from January 31, 2003 through and including March 31, 2003. The forbearance agreement was further amended to provide that: - Big City Radio would pay the noteholders the net cash proceeds of any asset sale within five business days after the completion of such asset sale, until such time as the noteholders had received cash in an amount equal to all principal of, and accrued and unpaid interest on, the senior notes; - the forbearance agreement could be terminated by either Big City Radio or the ad hoc committee upon written notice if: - any party to the forbearance agreement failed to perform any of its obligations, or breached any of its representations, covenants or warranties, under the forbearance agreement, - Big City Radio or any party to any asset purchase agreement for any asset sale which Big City Radio had publicly announced on or before January 6, 2003 breached any representation, warranty or covenant in such asset purchase agreement, and did not cure such breach within ten days, or - one or more of the asset purchase agreements was terminated or modified in any material respect; and - Big City Radio was required to immediately notify the ad hoc committee by written notice of: - any breach by Big City Radio of the forbearance agreement, - any breach by Big City Radio or any other party of any of the foregoing asset purchase agreements, whether or not such breach was curable, and - any termination by Big City Radio or any other party thereto of any such asset purchase agreements. "In addition, the forbearance agreement provided that it would automatically terminate upon the filing of a voluntary or involuntary petition under the insolvency or bankruptcy laws of the United States or any state with respect to Big City Radio, except that, upon the filing of an involuntary bankruptcy petition by unaffiliated, arm's length creditors, Big City Radio would have a period of ten days to obtain the dismissal or withdrawal of such a petition before the forbearance agreement terminated as a result of the filing. In March 2003, a second amendment to the forbearance agreement was signed extending the forbearance period through and including April 30, 2003. Although Big City Radio and the signatory noteholders discussed a further extension of the forbearance period, no such extension was executed. Accordingly, if any amounts remain to be paid under the Indenture governing the Notes, the signatory noteholders are presently able to exercise any and all remedies under the Indenture governing the Notes. "Between December 23, 2002 and January 2, 2003, Big City Radio signed asset purchase agreements to sell eleven of the twelve FCC radio stations that it owned. In May 2003, the parties amended the HBC asset purchase agreement permitting the transfer of non- license assets in exchange for an initial payment of $29.875 million with a second and final payment of $3.0 million to be made upon the transfer of the FCC license, which transfer was effected and which payment was received on July 18, 2003. Following the completion of these four asset purchase agreements, the Company has received gross cash proceeds of approximately $197.9 million and 3,766,478 shares of Entravision's Class A Common Stock. Under the senior notes forbearance agreement described above, Big City Radio is obligated to apply the net proceeds of the asset sales first to pay the principal amount of the senior notes and all accrued and unpaid interest thereon through the date of such payment. The Company has paid the trustee for the bondholders approximately $195.4 million. The Company is holding discussions with bondholders and the trustee to determine what additional amounts, if any, are required to be paid by the Company to the Trustee for the benefit of the bondholders. These discussions concern whether interest on interest was due and payable and whether interest ceased to accrue on the dates on which payments were made by the Company to the Trustee, or whether interest continued to accrue until such subsequent dates on which the Trustee made distributions to the bondholders. Depending on the outcome of these discussions, the Company could be liable to the bondholders in an additional amount of up to $1.28 million. As of June 30, 2003, the Company has recorded its interest payable consistent with its assessment of the most likely outcome of this contingency. "Big City Radio will apply the net proceeds from the sale of its sole remaining radio station asset, together with its other liquidity sources, to pay any remaining principal and interest due on the Notes and to pay expenses relating to the asset sales, including employee severance, contractual liabilities to management under employment arrangements, tax liabilities and expenses associated with termination of contracts not assumed by the buyers, as well as trade payables and other operating expenses. "If Big City Radio sells its sole remaining radio station, it will have disposed of all of its operating properties. Its principal sources of liquidity will then consist of cash on hand, amounts earned on the investment of such cash and the shares of Entravision Stock received in the sale of the Los Angeles radio stations to Entravision. During the quarter ended June 30, 2003, Big City Radio commenced a program of selling some of the shares of Entravision Stock. As of August 1, 2003, Big City Radio had sold an aggregate of 620,700 shares of Entravision Stock for total proceeds of $6,815,000. Big City Radio will continue to seek additional liquidity by selling shares of the Entravision Stock, although any such sales will be subject to numerous factors including market conditions and the timing of the Company's future cash obligations. Big City Radio believes that these liquidity sources will be sufficient to meet its short-term cash needs. "The amount and nature of Big City Radio's long-term liquidity needs will depend on, among other things, a decision by the board of directors regarding future operations, if any, of Big City Radio." CABLEVISION SYSTEMS: Declares Quarterly Preferred Dividends ----------------------------------------------------------- Cablevision Systems Corporation (NYSE:CVC) today announced quarterly dividends on CSC Holdings, Inc.'s three series of preferred stock: -- 11-3/4% Series H Redeemable Exchangeable Preferred Stock - ($2.9375 per preferred share paid in cash) -- 11-1/8% Series M Redeemable Exchangeable Preferred Stock - ($2.78125 per depositary share paid in cash) The record date for dividends on the Series H and M Preferred stock will be September 19, 2003. The payment date will be October 1, 2003. -- 10% Series A Exchangeable Participating Preferred Stock - ($25 per preferred share paid in kind) The record date for the dividend on the Series A Preferred will be September 15, 2003. The payment date will be October 1, 2003. Cablevision Systems Corporation (S&P, BB Corporate Credit Rating, Negative) is one of the nation's leading entertainment and telecommunications companies. Its cable television operations serve 3 million households located in the New York metropolitan area. The company's advanced telecommunications offerings include its Lightpath integrated business communications services; its Optimum-branded high-speed Internet service and iO: Interactive Optimum, the company's digital television offering. Cablevision's Rainbow Media Holdings, Inc. operates programming businesses including AMC, The Independent Film Channel and other national and regional services. In addition, Rainbow is a 50 percent partner in Fox Sports Net. Cablevision also owns a controlling interest and operates Madison Square Garden and its sports teams including the Knicks and Rangers. The company operates New York's famed Radio City Music Hall and owns and operates Clearview Cinemas, one of the tri-state area's leading motion picture exhibition circuits. Additional information about Cablevision Systems Corporation is available on the Web at http://www.cablevision.com CENTERPOINT ENERGY: Fitch Assigns Rating to 7.25% Senior Notes -------------------------------------------------------------- CenterPoint Energy, Inc.'s $200 million 7.25% senior notes due 2010 are rated 'BBB-' by Fitch Ratings. In addition, Fitch has assigned a 'BBB' rating to CenterPoint Energy Houston Electric, LLC's $300 million 5.75% general mortgage bonds, series M, due 2014. The Rating Outlook for both CNP and CEHE is Stable. Net proceeds from the new issues are expected to ultimately reduce borrowings under CNP's bank credit facility. CNP's rating and Outlook incorporate the cash flow stability of the company's regulated electric and gas distribution businesses, as well as the progress CNP has made toward restoring its liquidity position and reducing near-term debt refinancing risk. CNP's rating also anticipates the successful execution of planned de-leveraging events including the sale of the company's 81% interest in Texas Genco Holdings, Inc. in 2004 and the subsequent recovery of stranded costs as permitted under approved Texas restructuring legislation. It is currently estimated that CNP will issue more than $4 billion of securitization bonds in 2005, with proceeds used to retire a $1.3 billion secured term loan at CEHE, and bank debt at CNP. Any unexpected new legislation or appeals which would have the affect of amending the amount and/or delaying the ultimate timing of stranded cost recovery would be an unfavorable credit event. CEHE's rating reflects its status as a second-tier operating subsidiary of CNP, operating as a pure transmission and distribution electric utility. Fitch views the rules governing T&D utilities in Texas as favorable. Specifically, CEHE does not bear commodity or supply risk, and the responsibility of provider of last resort has not been retained by CEHE. Given the low-risk nature of CEHE's operations, key credit protection measures are expected to remain relatively stable over the near-term. However, CEHE's debt ratings remain constrained due to high debt leverage at CNP. In particular, Fitch notes that the Texas regulatory framework does not provide any general restrictions limiting CNP's ability to upstream dividends from CEHE. * * * As reported in Troubled Company Reporter's March 5, 2003 edition, Fitch Ratings affirmed the outstanding credit ratings of CenterPoint Energy, Inc., and its subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp. The Rating Outlook for all three companies remains Negative. The following ratings were affirmed by Fitch: CenterPoint Energy, Inc. -- Senior unsecured debt 'BBB-'; -- Unsecured pollution control bonds 'BBB-'; -- Trust originated preferred securities 'BB+'; -- Zero premium exchange notes 'BB+'. CenterPoint Energy Houston Electric, LLC -- First mortgage bonds 'BBB+'; -- $1.3 billion secured term loan 'BBB'. CenterPoint Energy Resources Corp. -- Senior unsecured notes and debentures 'BBB'; -- Convertible preferred securities 'BBB-'. CHAMPION ENTERPRISES: Initiates Operational Restructuring Plan -------------------------------------------------------------- Champion Enterprises, Inc. (NYSE: CHB), the nation's leading housing manufacturer, announced operational restructuring actions to accelerate its strategy to achieve sustained profitability. Following a thorough review of Champion's operations that began in early July, the company is closing four manufacturing facilities and 35 retail sales centers. Chairman, President and Chief Executive Officer, Al Koch, commented, "We are committed to a return to sustained profitability and believe today's actions, together with our previously-announced plans to exit consumer financing, are necessary steps in this strategy. Operating margins for both our manufacturing and retail segments should improve with the closing of under performing locations. These decisive steps to size operations to lower industry demand are required in light of continued tough market conditions. We also believe they will position the company with substantial operating leverage if and when the market improves, particularly with nine idle facilities that could be re-opened as opportunities arise." As a result of these actions, the company expects to record estimated pretax restructuring charges of $35 million, including non-cash asset impairment charges and other non-cash items of $26 million, primarily in its third quarter ending September 27, 2003. These restructuring charges consist of $22 million for manufacturing, $7 million for retail and $6 million for the previously-announced closing of HomePride Finance Corp. In addition to the restructuring charges, the company expects to record pretax non-cash goodwill impairment charges of approximately $39 million. An estimated 1,000 employees will be affected by these closings. "Only approximately $9 million of the total restructuring charges will result in cash outlays. When combined with anticipated proceeds from inventory liquidations and payments to extinguish certain liabilities, no net cash outflows from restructuring actions are expected. Cash flows remain an important focus as we manage through this down cycle," Koch said. Operations Manufacturing -- Champion expects to close four homebuilding facilities and relocate production at one additional plant to an idle facility to improve profitability, increase capacity utilization and reduce its cost structure. The closed facilities are located in Georgia, Kentucky, North Carolina and Texas. Manufacturing restructuring charges to be recorded primarily in the third quarter consist of non-cash asset impairments of approximately $16 million and other closing costs of an estimated $6 million. Following today's announced closings, the company will operate 30 homebuilding facilities in 14 states and two Canadian provinces. Retail -- Retail restructuring costs, excluding goodwill impairments of approximately $35 million, total an estimated $7 million, which consists of non-cash asset impairments of $5 million and lease termination and other costs of $2 million. The company expects to generate net cash of approximately $7 million from new home inventory liquidations and to reduce overhead expenses in this segment. Following the closings announced today, Champion will operate 80 stores in 22 states. Finance -- As previously announced, Champion is exiting its consumer finance business and will record related restructuring charges primarily in the third quarter. These charges, excluding goodwill impairments totaling $4 million, consist of approximately $1 million to value loans at the lower of cost or market and $5 million for other closing related expenses. The company expects to complete the closing of its finance operations by mid-October. Koch concluded, "The plans announced [Fri]day, in conjunction with other ongoing cost cutting initiatives, are expected to allow us to be profitable on a consistent basis at the low industry levels we're currently experiencing, while maintaining our ability to take advantage of opportunities if and when industry conditions improve. Short-term results, as well as long-term earnings potential, should benefit as a result of these actions. Serving our current and future customers remains a priority. Accordingly, we intend to work closely with our retailer network to achieve a seamless transition and minimize any impact from the closings. We plan to leverage our size and tap efficiencies to remain the leader in the manufactured housing industry." Champion Enterprises, Inc. (B+ Corporate Credit Rating, Negative), headquartered in Auburn Hills, Michigan, is the industry's leading manufacturer and has produced more than 1.6 million homes since the company was founded. Following the closings announced today, the company expects to operate 30 homebuilding facilities and 80 retail sales centers. Independent retailers, including approximately 650 Champion Home Center locations, and an estimated 500 builders and developers also sell Champion-built homes. Further information can be found at the company's Web site at http://www.championhomes.net CHIQUITA BRANDS: Reduces Stake in Australian Produce Company ------------------------------------------------------------ Chiquita Brands International, Inc. (NYSE: CQB) has reduced its holding in Chiquita Brands South Pacific, Ltd. The result of this action will take the company's ownership in Chiquita Brands South Pacific to approximately 10 percent from approximately 28 percent. The U.S. company will receive approximately $14 million in cash from the sale of shares and will recognize a gain on the sale. "The management team at Chiquita Brands South Pacific has done a great job restructuring and rationalizing this business, and we are pleased with the direction the company is taking," said Cyrus Freidheim, chairman and CEO of Chiquita Brands International. "This transaction allows us to continue making solid progress on our own restructuring while maintaining our long-term relationship with Chiquita Brands South Pacific through this strategic investment." Based in Melbourne, Chiquita Brands South Pacific is one of Australia's largest producers and distributors of fruits and vegetables, handling a wide range of products with strong positions in bananas, mushrooms, berries, kiwi and citrus. Chiquita Brands International (S&P, B Corporate Credit Rating, Positive) is a leading international marketer, producer and distributor of high-quality fresh and processed foods. The company's Chiquita Fresh division is one of the largest banana producers in the world and a major supplier of bananas in North America and Europe. Sold primarily under the premium Chiquita(R) brand, the company also distributes and markets a variety of other fresh fruits and vegetables. Additional information is available at http://www.chiquita.com CINCINNATI BELL: Closes Sale of Broadband Assets to C III Comms. ---------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) has obtained all the remaining regulatory approvals necessary to complete the previously announced sale of substantially all of the assets of its broadband business to privately held C III Communications, LLC. Under the terms of the sale, Cincinnati Bell Inc. has now transferred to C III Communications all remaining assets located in states where regulatory approvals had been pending. C III Communications, in turn, has now released $10.2M of the cash purchase price that had been held in escrow pending regulatory approval. These transactions conclude the process of Cincinnati Bell Inc.'s sale of its broadband assets. Cincinnati Bell will be a customer of C III Communications and will continue to market its broadband products to its business customers. Cincinnati Bell will also resell long distance services provided by C III Communications under the Cincinnati Bell Any Distance brand. Cincinnati Bell (S&P, B Corporate Credit Rating, Positive) is one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. In recent studies by J. D. Power and Associates, the company ranked highest in customer satisfaction for Long Distance Service among Mainstream Users, making it the sixth customer satisfaction award the company has received in the past three years. For more information about Cincinnati Bell visit: http://www.cincinnatibell.com CNH GLOBAL: Unit Completes $300MM Senior Notes Private Offering --------------------------------------------------------------- CNH Global N.V. (NYSE: CNH) announced the successful completion of a $300 million private offering of senior notes by its wholly owned subsidiary, Case New Holland Inc. These notes represent an add-on to the company's $750 million private offering which closed on August 1, 2003. The senior notes carry a fixed interest rate of 9.25%, will mature in 2011, and were priced above par value, yielding 8.373%. The senior notes will only be offered and sold to qualified institutional buyers in accordance with Rule 144A and Regulation S under the Securities Act. The senior notes have not been registered under the Securities Act or the securities laws of any other jurisdiction. Unless the senior notes are so registered, the notes may be offered and sold only in transactions that are exempt from the registration requirements of the Securities Act or the securities laws of any other jurisdiction. CNH (S&P, BB Corporate Credit Rating, Negative) is the number one manufacturer of agricultural tractors and combines in the world, the leader in light construction equipment, and has one of the industry's largest equipment finance operations. Revenues in 2002 totaled $10 billion. Based in the United States, CNH's network of dealers and distributors operates in over 160 countries. CNH agricultural products are sold under the Case IH, New Holland and Steyr brands. CNH construction equipment is sold under the Case, FiatAllis, Fiat Kobelco, Kobelco, New Holland, and O&K brands. COPPERWELD CORPORATION: Disclosure Statement Hearing Today ---------------------------------------------------------- Copperweld Corporation and its debtor-affiliates filed their Joint Chapter 11 Liquidating Plan and an accompanying Disclosure Statement with the U.S. Bankruptcy Court for the Northern District of Ohio on August 5, 2003. The Court will convene a hearing in Youngstown today to consider approval of the Debtors' Disclosure Statement. The Debtors ask Judge Bodoh to rule that the document contains adequate information for creditors to make decisions about whether to accept or reject the Plan. Headquartered in Pittsburgh, Copperweld Corporation is the largest producer of steel tubing in North America, with 14 plants in the United States and Canada. It is also the world's largest manufacturer of bimetallic wire products at two plants in the U.S. and the United Kingdom. David G. Heiman, Esq., and Jeffrey B. Ellman, Esq., at Jones Day represent the Debtors in their restructuring efforts. CORNING: Reaffirms Quarterly Guidance & Outlines Opportunities -------------------------------------------------------------- Long-term telecommunications infrastructure investments spurred by fiber-to-the-premises deployments, continued growth in the popularity of liquid crystal displays and the implementation of global diesel-emission standards may create future growth opportunities for Corning Incorporated (NYSE:GLW), Wendell P. Weeks, president and chief operating officer told financial analysts Friday last week. Weeks made his comments as part of a presentation at the Smith Barney Citigroup 2003 Technology Conference in New York City on Thursday, Sept. 4. During his presentation, Weeks reiterated the company's 2003 third-quarter guidance of revenues in the range of $740 million to $765 million and an earnings-per-share profit of $0.01 to $0.03, excluding restructuring charges and other non-recurring items. Growth Opportunities Looking forward, Weeks explained that the new FCC rules with regard to broadband favor fiber-to-the-premises investments, and will create the potential for significantly greater network capacity for up to 100 million homes over the next 10 to 20 years. "The benefits to the consumer will be faster broadband connections and the bundling of voice, data and video services," he said. Weeks pointed out that Corning does not expect any significant revenue impact from FTTP this year, but as the market penetration occurs in the U.S., the fiber, cable and hardware and equipment opportunities for Corning could be in the range of $80 to $200 per home. In the area of LCD glass, Corning believes that the industry will continue to experience a 30 percent to 50 percent annual unit volume growth over the next several years. "This growth will be driven by three primary industry factors. Notebook computers are expected to double in volume to 60 million units per year by 2007; flat-screen monitors are rapidly replacing traditional CRT desktop screens and could reach 80 percent penetration in four years; and LCD television is becoming increasingly popular as prices decline," Weeks will say. Accordingly, Corning believes that the total market for LCD glass could reach one billion square feet by 2007. Current annual volume is in the range of 200 million to 300 million square feet. Weeks also outlined Corning's plan to continue as the market leader of next generation, larger size glass substrates, noting that the company has the only commercially available Generation 6 LCD glass. Emergence of Diesel Global regulations calling for tighter controls on all on-road diesel engines requiring advanced emissions-control devices represents a potential $1 billion global market opportunity in the latter part of this decade, Weeks told investors. He also explained that the company's established position as the industry's technology leader in cellular ceramic substrates and filters may provide Corning with a competitive advantage in the diesel industry. "We continue to invest in new technologies and research in more efficient thin-wall ceramic filters and ceramic catalysts, designed to reduce particulate matter and remove harmful hydrocarbons, carbon monoxide and nitrous oxides from the environment," Weeks said. Established in 1851, Corning Incorporated -- http://www.corning.com-- creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable, hardware and equipment in its Telecommunications segment. Corning's Technologies segment manufactures high-performance display glass, and products for the environmental, life sciences, and semiconductor markets. CORRECTIONS CORP: Declares Q3 Dividends on Ser. A & B Preferreds ---------------------------------------------------------------- Corrections Corporation of America's (NYSE: CXW) Board of Directors has declared third quarter dividends on the Company's Series A and Series B Preferred Stock. Series A Preferred stockholders will receive $0.50 for every share held on the record date, based on a dividend rate of 8% per annum of the stock's stated value ($25.00 per share). The dividends are payable on Wednesday, October 15, 2003, to the holders of record of the Series A Preferred Stock on Tuesday, September 30, 2003. Series B Preferred stockholders will receive 3 shares of Series B Preferred Stock for every 100 shares held on the record date, based on a dividend rate of 12% per annum of the stock's stated value ($24.46 per share). The Company will pay cash in lieu of issuing fractional shares. The dividends are payable on Tuesday, September 30, 2003, to the holders of record of the Series B Preferred Stock on Tuesday, September 16, 2003. Under the terms of the Series B Preferred Stock, the Company is required to pay quarterly dividends in arrears, when and as declared by the Company's board of directors, in additional shares of Series B Preferred Stock at a rate of 12% per year for the first three years following the issuance of the shares, or through September 2003. Cash dividends are payable thereafter at a rate of 12% per year, provided all accrued and unpaid cash dividends have been made on the Series A Preferred Stock. The shares of Series B Preferred Stock currently outstanding and those to be issued as the dividend are not, and will not be, convertible at any time into shares of common stock. The Series A and Series B distributions will generally be treated as taxable dividends to the extent the Company has current or accumulated earnings or profits as of the end of the 2003 taxable year. 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. COVANTA ENERGY: Lease Decision Period Intact Until October 31 ------------------------------------------------------------- U.S. Bankruptcy Court Judge Blackshear extends the period by which Covanta Energy Corporation and its debtor-affiliates may assume, assume and assign, or reject their Unexpired Leases until October 31, 2003. (Covanta Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) CYPRESS SEMICON.: Sells Part of Stake in NVE Corp. for $23MM Net ---------------------------------------------------------------- Cypress Semiconductor (NYSE:CY) sold a portion of its investment in NVE Corp (Nasdaq: NVEC), a Minnesota-based developer of spintronics technology, a technique used to create and lock in memory values on integrated circuits with magnetic spin. Cypress disclosed the sale of 686,849 NVE shares in a Form 4 filing with the Securities and Exchange Commission. Cypress netted $23.4 million on the transaction. Cypress and NVE have collaborated to bring to market a nonvolatile magnetic random access memory based on spintronics technology. Cypress will continue to honor its partnership with NVE, including sharing MRAM intellectual property and supplying NVE with MRAM foundry wafers. Cypress also intends to maintain its NVE board seat. "Cypress MRAM development is taking slightly longer than expected, and the profit from the NVE investment will be used for continuing MRAM development and other research and development," said T.J. Rodgers, Cypress president and CEO. Cypress intends to sample a working MRAM within the next year, Rodgers said. NVE is a leader in the practical commercialization of spintronics, which many experts believe represents the next generation of microelectronics. NVE sells spintronic products including sensors and couplers to revolutionize data acquisition and transfer, and licenses its MRAM intellectual property. Cypress Semiconductor Corporation (NYSE:CY) (S&P, B+ Corporate Credit Rating, Negative) is Connecting From Last Mile to First Mile(TM) with high-performance solutions for personal, network access, enterprise, metro switch, and core communications-system applications. Cypress Connects(TM) using wireless, wireline, digital, and optical transmission standards, including USB, Fibre Channel, SONET/SDH, Gigabit Ethernet, and DWDM. Leveraging its process and system-level expertise, Cypress makes industry-leading physical layer devices, framers, and network search engines, along with a broad portfolio of high-bandwidth memories, timing technology solutions, and reconfigurable mixed-signal arrays. More information about Cypress is accessible online at http://www.cypress.com DAISYTEK: EMJ Raising C$14M to Fund Acquisition of Canadian Unit ---------------------------------------------------------------- EMJ has commenced a private placement of up to C$14,000,000 to fund the acquisition of Daisytek Canada. A syndicate led by Haywood Securities Inc., and including Griffiths McBurney & Partners and Northern Securities Inc. has been granted an option to increase the offering size by up to 40%. The offering is expected to close in late September, subject to regulatory approval. The debentures will have a 3-year term, pay annual interest at a rate of 12.0%, and will be convertible into common shares of EMJ at a price of C$8.00 per share. The preferred shares will pay an annual dividend at a rate of 8.0% for 3 years and will also be convertible into common shares at a price of C$8.00 per share. Holders of the preferred shares will have the right to put their shares back to EMJ after 3 years from closing, at the issue price. Preferred Shares not sold back to the company will be automatically converted into Common Shares immediately following the third anniversary of the closing date. Under certain conditions, EMJ may require conversion of the debentures and/or the preferred shares if EMJ trades above C$10.00/share. The offering is subject to the approval of the Toronto Stock Exchange. The debentures, the preferred shares and the common shares issuable upon the conversion thereof will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless an exemption from such registration is available. As recently announced, EMJ has received court approval from the United States bankruptcy court in Dallas, Texas to buy Daisytek Canada for approximately U.S. $20 million. Daisytek Canada, headquartered in Markham, Ontario and with locations in Montreal and Burnaby, B.C., is a distributor of computer supplies and media, specializing in toner cartridges, inks, paper, ribbons, etc. Closing of the acquisition, which is subject to approval by the Canadian Competition Tribunal, is expected to take place prior to September 30, 2003. EMJ Data Systems Ltd., headquartered in Guelph, Ontario, is a Canadian, publicly owned distributor of computer products and peripherals. EMJ specializes in niche-market products for Apple, Bar Coding/Auto-ID/Point-of-Sale, Build-To-Order, Digital Video, Networking and Security applications. EMJ has Canadian branch offices in Vancouver, Calgary, Winnipeg, Montreal, and Halifax, as well as one office in the United States. EMJ is traded on the Toronto Stock Exchange under the symbol EMJ. For more information about EMJ, visit http://www.emj.ca DAVEL COMMS: Appoints Woody McGee as New Chief Executive Officer ---------------------------------------------------------------- Davel Communications, Inc. (OTCBB:DAVL) announced that, effective August 29, 2003, Mr. Woody McGee, of McGee and Associates, LLC., replaced Mr. John Chichester as Chief Executive Officer of the Company. Mr. McGee has served Davel in a senior management capacity as a consultant since December 2002, and has become well regarded as a "turn-around" specialist, with over 30 years of experience in leading the restructuring of more than 15 different companies over that time. Mr. McGee was also elected as a member of the Board of Directors to succeed Mr. Bruce Renard, who had announced in June 2003 his intention to resign from the Board at the end of August. Mr. Renard tendered his resignation in conjunction with his assuming the Executive Director/President posts with the Florida Public Telecommunications Association and its for-profit subsidiary, FPTA-Technologies. Mr. Chichester has resigned his position as a member of the Board of Directors of the Company. Mr. Renard will continue to be available to consult with the Company on legal and regulatory affairs. Mr. James Chapman, a member of the Davel board, stated: "The independent payphone industry in general, and Davel in particular, have been confronted with numerous financial and operational challenges over these past few years. The appointment of Mr. McGee introduces an individual with significant experience outside of the industry, which the Company's board and significant stakeholders have been seeking. With Mr. McGee at the helm, Davel should now be well positioned to evolve with the rapidly changing public communications market and address the financial issues that have previously constrained the Company." Mr. McGee commented: "I am honored to have been asked to lead the Davel team and I intend to immediately begin maximizing the significant assets and market position that this Company is fortunate enough to hold. I am very familiar with the circumstance in which Davel now finds itself, having confronted similar conditions in the past, and I look forward to beginning to redirect the organization toward a more positive course. The recent Northeast U.S. power outage demonstrated the continued importance of public payphones, which worked when cellular service did not. As the leading independent provider of payphone service in the U.S., I understand the importance of what we do--and will work hard to place the business on a more solid financial and operational footing." Founded in 1979, the Company is the largest independent provider of pay telephones and related services in the United States, with operations in 48 states and the District of Columbia. The Company serves a wide array of customers operating principally in the shopping center, hospitality, health care, convenience store, university, service station, retail and restaurant markets. At June 30, 2003, the Company's balance sheet shows a working capital deficit of about $130 million, and a total shareholders' equity deficit of about $95 million. DELTA AIR LINES: Posts Results of Exchange Offer for Two Notes -------------------------------------------------------------- Delta Air Lines (NYSE: DAL) announced the expiration of its offer to exchange its 10 percent Senior Notes due 2008 for any and all of its $300 million outstanding principal amount of its 6.65 percent Medium-Term Notes, Series C due 2004, and $500 million outstanding principal amount of its 7.70 percent Senior Notes due 2005. The exchange offer commenced on July 25, 2003, and expired, after two extensions, at 5 p.m., New York City time, on Sept. 4, 2003. As of 5 p.m., New York City time, on Sept. 4, 2003, $64,071,000 principal amount of 2004 notes and $197,823,000 principal amount of 2005 notes had been tendered and not withdrawn in the exchange offer. Delta expects to accept for purchase all of its 2004 notes and its 2005 notes tendered in the exchange offer in exchange for consideration consisting of (i) with respect to each $1,000 principal amount of 2004 notes tendered in the exchange offer, $409.50 principal amount of new notes and a cash payment of $650, and (ii) with respect to each $1,000 principal amount of 2005 notes tendered in the exchange offer, $1,120 principal amount of new notes. Payment of the consideration in the exchange offer is expected to be made on Sept. 9, 2003, or promptly thereafter. After the settlement of the exchange offer there will be $235,929,000 principal amount of 2004 notes outstanding and $302,177,000 principal amount of 2005 notes outstanding. All figures in this announcement are approximate and subject to adjustment as tenders in the exchange offer are reconciled with the letters of transmittal submitted by holders of the 2004 notes and the 2005 notes. The new notes offered in the exchange offer will not be registered under the Securities Act of 1933, as amended, and will only be offered in the United States to qualified institutional buyers in a private transaction. Delta Air Lines (S&P/BB-/Negative), the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,813 flights each day to 447 destinations in 81 countries on Delta, Song, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, go to http://www.delta.com DIXIE GROUP: Ratings on Watch Positive Following Asset Sale Pact ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and 'B-' subordinated debt ratings on The Dixie Group Inc. on CreditWatch with positive implications. Positive implications means the ratings could be raised or affirmed following Standard & Poor's review. "The CreditWatch placement reflects Dixie's recent announcement that it has signed a definitive agreement to sell certain assets that support its factory-built housing, needlebond, and carpet recycling businesses," said credit analyst Martin S. Kounitz. Standard & Poor's expects that Dixie will use the net proceeds of the transaction to repay debt. Accordingly, if the transaction is completed, ratings could possibly be raised one notch. The transaction is subject to regulatory approvals. The transaction allows Dixie management to focus on its higher margin products. After the asset sale, Dixie's remaining businesses will include premium-priced residential and commercial carpet manufacturing. Standard & Poor's will meet with management to discuss its business and financial plans. DT INDUSTRIES: Fourth Quarter 2003 Loss Hits $55 Million -------------------------------------------------------- DT Industries, Inc. (Nasdaq: DTII), an engineering-driven designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, reported a fourth quarter 2003 loss to common stockholders of $54.8 million, compared with income available to common stockholders of $12.6 million for the same period a year earlier. The Company reported a loss to common stockholders in fiscal 2003 of $65.6 million, compared with a loss to common stockholders of $0.6 million in fiscal 2002. The net income (loss) available to common stockholders for both the fourth quarter and fiscal 2002 included a $16.6 million for the quarter and $1.54 per diluted share for the fiscal year, gain on conversion of trust preferred securities in conjunction with the Company's previously reported financial recapitalization. The Company adjusted its fiscal year and fourth quarter 2002 statements of operations and balance sheet to reflect a curtailment in the Assembly & Test -- United Kingdom defined benefit pension plan, which was disclosed in note 7 to our fiscal 2002 financial statements. The curtailment was caused by 18 employees, or less than 10% of the plan participants, leaving the plan during fiscal 2002 as part of the restructuring of the Assembly & Test -- United Kingdom operations. The pre-tax adjustment of $2.2 million is reflected in the restructuring charge line item on the Consolidated Statement of Operations. The Company also adjusted the June 30, 2002 balance sheet to reflect the minimum pension liability and certain other items. The continuing softness in expenditures for capital equipment during 2003 had a negative impact on the Company's operating performance and resulted in the Company assessing the realizability of certain of its long-lived assets. As a result, the Company recorded a non-cash asset impairment of $39.9 million during the fourth quarter of 2003 with $30.9 million recorded at its Precision Assembly segment and $9.0 million recorded at its Packaging Systems segment. In addition, because of the operating losses incurred during the past three years, the Company recorded a non-cash charge to income taxes of $9.9 million during the fourth quarter of fiscal 2003 to recognize a valuation allowance against its net operating loss carryforwards and other deferred tax assets. These amounts are included in fourth quarter and fiscal 2003 net loss. Fourth quarter fiscal 2003 net sales were $53.8 million compared with $77.2 million in the same period last year. The Company realized a gross margin of 16.9% on sales in the fourth quarter compared to 21.3% in the prior year period. For fiscal 2003, DTI posted net sales of $241.1 million compared with net sales of $326.3 million in the prior year, a decrease of approximately 26%. Fiscal 2003 gross margin was 17.3% compared to 20.0% in fiscal 2002. The Company's continued focus on cost containment was successful in reducing its selling, general and administrative expenses to $11.7 million in the fourth quarter compared to an average rate of $13.6 million during the first three quarters of 2003. Interest costs of $6.3 million incurred in 2003 were substantially lower than the $12.2 million incurred during 2002. This was due in part to the Company's 2002 debt restructuring and to $20.0 million of debt repayment in 2003. Dividends on the Company-obligated trust preferred securities also declined in 2003 to $1.6 million from $4.8 million in 2002, due to a 2002 restructuring of that financing instrument. Fourth quarter 2003 new order inflow was $47.7 million, down from $75.7 million in the corresponding prior year quarter. Backlog at June 29, 2003 was $88.9 million, compared with $142.8 million a year earlier. Net order inflow and net sales during the fourth quarter were negatively impacted by the previously announced order cancellation by Green Earth Packaging, Inc. Net order inflow and net sales were reduced by $15.6 million and $3.3 million, respectively, in the fourth quarter as a result of this cancellation. Segment Highlights The Material Processing Segment experienced a decrease in sales of $3.8 million, or 17.0%, to $18.4 million for the fourth quarter of fiscal 2003 while operating income on those sales was $1.5 million compared to $3.0 million in the same period last year. Backlog at the end of fiscal 2003 was $25.1 million compared to $54.8 million at the end of fiscal 2002. Sales (by the $3.3 million noted above) and ending backlog for the fourth quarter of 2003 were negatively impacted by the aforementioned Green Earth Packaging order cancellation. The Assembly and Test Segment, which primarily serves the auto, truck and heavy equipment industries, saw its sales for the fourth quarter of fiscal 2003 remain consistent with the same period a year earlier, at approximately $21.6 million. The segment posted an operating loss in the fourth quarter of fiscal 2003 of $502,000 compared to an operating loss of $2.7 million in the year earlier period. Backlog at the end of fiscal 2003 was $46.6 million compared to $48.3 million at the end of fiscal 2002. Precision Assembly Segment sales were $5.3 million for the fourth quarter of fiscal 2003 compared to $21.8 million in the same period last year, a decrease of $16.5 million or 76.0%. The segment incurred an operating loss of $33.3 million in the current quarter compared to operating income of $2.5 million in last year's quarter. Backlog at the end of fiscal 2003 stood at $9.2 million compared to $24.7 million at the end of fiscal 2002. The fourth quarter and fiscal 2003 operating results include a $30.9 million non-cash asset impairment recorded at this segment. Packaging Segment sales for the fourth quarter of fiscal 2003 were $8.6 million compared to last year's fourth quarter level of $11.6 million, a decrease of $3.0 million or 26.0%. The segment incurred an operating loss of $8.0 million in the current quarter compared to an operating loss of $20,000 in the year earlier period. Backlog in this segment stands at $8.0 million at the end of fiscal 2003 compared to $15.0 million at the end of fiscal 2002. The fourth quarter and fiscal 2003 operating results include a $9.0 million non-cash asset impairment recorded at this segment. Outlook Steve Perkins, President and Chief Executive Officer, stated, "While we noted in our third quarter report that we had hoped to see an increase in bookings, we continued to experience the impact of softness in capital goods expenditures in the fourth quarter. Despite the lower level of orders, we continue to be competitive in our bidding process, as our success rate on proposals to customers where actual orders are placed has been increasing throughout the year. We believe this bodes well for us when spending for capital goods returns to higher levels." Jack Casper, Senior Vice President and Chief Financial Officer, said, "Our previously announced cost reduction measures had a positive impact on fourth quarter 2003 results. We will continue to focus on cost and operating efficiencies to enhance our performance during 2004." Perkins continued, "We expect our previously announced consolidation of certain of our Chicago-based Precision Assembly segment operations with our Material Processing segment will further enhance our cost competitive position, once the transition is completed within the next 3-5 months. This consolidation will allow us to benefit from the lower cost manufacturing and assembly operations in our Lebanon, Missouri facility while maintaining the engineering expertise we have developed in the Chicago area. Existing customer projects are being successfully completed in Chicago and projects from new orders are being initiated in Lebanon. The transition is in process and progressing well. Initial response to this consolidation from our customers has been very positive as evidenced by the fact that we have booked over $6 million of orders since the end of fiscal 2003 from traditional Precision Assembly segment customers." Perkins concluded, "While order bookings remain soft at levels below our breakeven pre-tax income level, we are optimistic the recovery in business spending will be realized as we approach the end of the calendar year. Recently, we have seen increases in the quoting activity in our automotive-related business sector and we are encouraged by the level of sales activity in the Precision Assembly market. "We continue to fight through a very difficult marketplace with our focus on operational and cost efficiencies. Once our order intake rate improves as business spending recovers from the prolonged downturn, we expect to see improved gross margins and contribution to our bottom line across all business segments." Annual Meeting of Stockholders The Company also announced that its Annual Meeting of Stockholders will be held on Wednesday, October 29, 2003 in Dayton, Ohio. As previously announced, DT Industries, Inc., finalized an amendment to its senior credit facility that provides a permanent waiver of financial covenant defaults in the second and third quarters of fiscal 2003. The amendment also established new financial covenant levels for the remainder of the term of the facility and reduced the senior credit facility to $61 million. The company believes that cash flows from operations, together with available borrowings under the senior credit facility, will be sufficient to meet its currently anticipated working capital, capital expenditures and debt service needs up until the maturity of the credit facility on July 2, 2004. DVI INC: Wants Court to Appoint BSI as Claims and Noticing Agent ---------------------------------------------------------------- DVI, Inc., and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to appoint Bankruptcy Services LLC as the Official Noticing, Claims, Solicitation and Balloting Agent in their chapter 11 cases. The Debtors report they have in excess of one thousand creditors. Because of the administrative burden of this and other matters, the Office of the Clerk of the Bankruptcy Court will likely have difficulty docketing and maintaining the many proofs of claim that the Debtors anticipate will be filed in these cases. Authorizing the Debtors to engage BSI as the Court's noticing and claims agent will give them the ability to expedite the distribution of notices and the processing of claims and will relieve the Clerk's Office of this administrative burden. If appointed as official noticing, claims and/or solicitation and balloting agent, BSI will: a. electronically transfer the Debtors' creditor database or, if information is not available electronically, input date directly from available source files; b. assist Debtors in preparation of schedules of liabilities; c. print and mail the first day orders, 341 notices, bar date notice and proof of claim form to all potential claimants; d. docket all claims received by the Clerk's Office and by BSI, maintain the official claims register on behalf of the Clerk of the Court and provide to the Clerk a duplicate thereof as the Court requires; e. upon completion of the docketing process for all claims received by the Clerk's Office, turn over to the Clerk a copy of the claims register for the Clerk's review; f. specify in the claims register for each claim docketed: i) the claim number assigned, ii) the date received, iii) the name and address of the claimant or agent, and iv) the amount and classification of the claim asserted by each claimant; g. maintain the mailing list of all entities that have filed proofs of claim, which list shall be available upon request of any party in interest or the Clerk; h. provide services relating to the solicitation of acceptances and rejections of any plan of reorganization filed by the Debtors; and i. such other services as may be requested by the Clerk's Office or the Debtors in connection with processing claims, providing notice to known creditors, and solicitation and/or balloting activities. In addition, BSI will record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and will provide notice of any such transfer as required by such rule. BSI may also, at the Debtors' request, provide assistance with the preparation of the Debtors' respective Schedules of Assets and Liabilities and Statements of Financial Affairs. Ron Jacobs reports that BSI is a "disinterested person" which does not hold or represent any interest adverse to the Debtors' estates or to any class of creditors or equity security holders in accordance with Section 101(14) and 327 of the Bankruptcy Code, as modified by Section 1107(b). BSI's professional hourly fees are: Kathy Gerber $210 per hour Senior Consultants $185 per hour Programmer $130 to $160 per hour Associate $135 per hour Data Entry/Clerical $40 to $60 per hour Schedules Preparation $225 per hour Headquartered in Jamison, Pennsylvania, DVI, Inc. is the parent company of DVI Financial Services, Inc. and DVI Business Credit Corp. DVI Financial Services, Inc. provides lease or loan financing to healthcare providers for the acquisition or lease of sophisticated medical equipment. DVI Business Credit Corp. extends revolving lines of credit to healthcare providers. The Debtors filed for chapter 11 protection on August 25, 2003 (Bankr. Del. Case No. 03-12656). Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,866,116,300 in total assets and $1,618,751,400 in total debts. EAGLEPICHER: S&P Cuts Junk-Rated Preferred Shares to D Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on EaglePicher Holdings, Inc.'s $146 million 11.75% cumulative redeemable exchangeable preferred stock due 2008 to 'D' from 'CCC+'. All other outstanding ratings on EPH and EaglePicher Inc., a wholly owned subsidiary of EPH, were affirmed. "The rating action on the preferred stock is the result of the company's failure to make the dividend payment of $8.3 million due on Sept. 2, 2003," said Standard & Poor's credit analyst Linli Chee. EPI's senior secured credit facility prohibits the company from paying cash dividends unless total debt to EBITDA is less than 3x on a pro forma basis. If the company does not pay cash dividends, holders of the preferred stock are entitled to elect the majority of the company's board of directors. Granaria Holdings B.V., the majority owner of the company, also controls about 78% of the preferred stock. Phoenix, Arizona-based EPH is a provider of niche products to the automotive, aerospace, defense, telecommunications, and pharmaceutical end-markets. It has total debt of about $424 million and $146 million in preferred stock outstanding. ELAN CORP: S&P Ups Junk Corp. Credit Rating after 20-F Filing ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on specialty pharmaceutical company Elan Corp. PLC to 'CCC+' from 'CCC'. Standard & Poor's also raised all of its other ratings on Elan and its affiliates, and removed the ratings from CreditWatch. The rating action follows Elan's successful filing of its 20-F 2002 annual report with the SEC. The outlook is now developing. The ratings were downgraded and placed on CreditWatch on June 26, 2003, following Elan's announcement that it was not going to be able to file its 20-F report on time. This placed the company in technical default of its debt covenants and could have potentially resulted in an acceleration of all of Elan's roughly $2 billion in debt. Elan indicated that it would not have been able to meet all of its debt obligations if that scenario had occurred. "The ratings and outlook reflect Elan's significant near-to- intermediate debt maturities and expected losses and negative cash flows in the intermediate term," said Standard & Poor's credit analyst Arthur Wong. "These factors are partially offset by the company's roughly $1 billion of cash and investments on hand." While the filing of the 20-F removes the immediate threat of default, Elan continues to face significant debt maturities in the near-to-intermediate term. Specifically, nearly $500 million in LYONs securities can be put to the company at the end of 2003, and Elan Pharmaceutical Investments II and III have $840 million in securities due in 2004 and 2005. At the same time, the company currently has roughly $1 billion in cash and investments on hand and also has the option of satisfying the put on the LYONs with any combination of cash and equity. However, Elan's operations continue to generate losses and consume cash at a high rate, especially as the company spends to support its R&D program. Indeed, Elan may not be profitable until 2005. Moreover, its most promising product prospect, Antegren, which is being developed to treat Crohn's disease and multiple sclerosis, is not expected to reach the market before 2006. ELDERTRUST: Names Michael R. Walker as Acting President and CEO --------------------------------------------------------------- ElderTrust (NYSE:ETT), an equity healthcare REIT, announced that its Board of Trustees had appointed Michael R. Walker, Chairman of the Board, to the additional positions of acting President and Chief Executive Officer. Mr. Walker replaces D. Lee McCreary, Jr., who today resigned all positions with the Company and its subsidiaries, including as President and Chief Executive Officer and as a trustee of the Company. "Lee McCreary has been with the Company since its founding in 1997 as its Chief Financial Officer and later was promoted to President and Chief Executive Officer. Lee led the Company through the transformation of the long- term care industry brought about by the Balanced Budget Act of 1997," said Mr. Walker. He added, "His leadership enabled the Company's share price to recover to its current level of approximately $9.81. We very much appreciate his efforts." Mr. McCreary stated, "During the last six years, we created a new company and saw it weather turbulent events in the credit markets and in senior care. It has been challenging and personally rewarding to have been a part of this experience. However, it's time for new leadership to take the Company into the future. In parting, I wish the Board of Trustees and the Company's current management the greatest success." The Company also announced that it would recognize approximately $1.3 million of severance expense during the quarter ending September 30, 2003 relating to Mr. McCreary's departure. As previously announced on July 28, 2003, the Company has engaged Wachovia Securities to assist the Board of Trustees in analyzing the future direction of the Company. Mr. Walker said, "That process is ongoing." ElderTrust -- whose June 30, 2003 balance sheet shows a working capital deficit of about $12 million -- is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States. The Company currently owns or has interests in 31 properties. EMPIRE RESORTS: Ability to Continue Operations Still Uncertain -------------------------------------------------------------- For the year ended December 31, 2002, Empire Resorts Inc. had net cash used in operating activities of $1,389,000. The uses were the result of a net loss of $9,500,000 which includes gain on the sale of investment and management contract of $3,277,000, loss on investments of 6,934,000, minority interest of $18,000, depreciation and amortization of $77,000, stock compensation to employees of $44,000, interest amortized on loan discount $73,000, and a net decrease in working capital of $154,000. The decrease in working capital consisted of a net decrease in other current assets of $207,000, an increase in accounts payable and other accrued expenses of $1,173,000 and an increase in payroll and related liabilities of $215,000. Cash provided from investing activities of $2,583,000 consisted of 3,277,000 of payments from the sale of investments and management contract and $694,000 used in the purchase of property and equipment. Cash used by financing activities of $1,040,000 was substantially attributable to $1,751,000 of payments to related party long-term debt, proceeds from stock options amounted to $33,000 and proceeds from related party debt of $678,000. There is substantial doubt about the Company's ability to continue as a going concern. The Company currently has no operations. It has incurred an accumulated deficit and current net losses of approximately $110,445,000 and $9,500,000, respectively, and has a working capital deficit of approximately $7,591,000 at December 31, 2002. In March 2002, the Company sold its investment in GCP, along with its related supervisory management contract, for an aggregate amount of approximately $3,277,000 in cash. In April 2002, the Company used a portion of the proceeds to pay $1,250,000 of the loan payable to Bryanston, a major stockholder. The Company is seeking to restructure Casino ventures to generate working capital for the Company. In addition, the Company anticipates issuing equity securities to meet generate working capital. Although the Company is subject to continuing litigation, the ultimate outcome of which cannot presently be determined, management believes any additional liabilities that may result from pending litigation in excess of insurance coverage will not be in an amount that will materially increase the liabilities of the Company as presented in its consolidated financial statements Over the next 12 months, assuming the Company's proposed consolidation with Catskill Development is consummated, the Company will need to raise approximately $20 million from investors. If the Company is unable to timely raise these funds, it will be unable to begin building out Monticello Raceway's facilities in order to install video lottery terminals or be able to begin development of a Native American casino on the land adjacent to Monticello Raceway. Rather, the Company's business would be restricted to the operation of Monticello Raceway, a small regional harness horse racing facility located in Monticello, New York. Should the proposed consolidation with Catskill Development be abandoned, the Company will not have any meaningful cash requirements, as it has no independent operations at this time and no operations, outside of the consolidation, are planned. ENCOMPASS SERVICES: Claims Objection Deadline Moved Until Nov. 6 ---------------------------------------------------------------- Currently, the Encompass Services Debtors are reviewing nearly 5,000 proofs of claim filed in their bankruptcy cases to determine whether these claims represent bona fide liabilities or should be disallowed for any number of reasons. The Debtors are operating with a small number of essential employees who must, in conjunction with their counsel, and in addition to their other duties necessary to wind up the Debtors' operations: -- reconcile the amounts of the proofs of claim with the Debtors' books and records; -- negotiate with creditors; and -- file objections where necessary. Marcy E. Kurtz, Esq., at Bracewell & Patterson, LLP, in Houston, Texas, observes that this process is extremely time-consuming and the volume of the proofs of claim filed in the Debtors' cases requires an extension of time for filing objections to claims. Additionally, the claims review and objection process has been further complicated by the fact that a number of new administrative expense requests have recently been filed with the Court. Accordingly, Encompass' Disbursing Agent, Todd A. Matherne, sought and obtained a Court order extending the Claims Objection Deadline until November 6, 2003. (Encompass Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENERGY WEST: Arranges New Credit Facility Maturing on October 15 ---------------------------------------------------------------- Energy West, Incorporated (Nasdaq: EWST), a natural gas, propane and energy marketing company serving the Rocky Mountain states, has reached an agreement with Wells Fargo Bank Montana, National Association, on a new credit facility maturing October 15, 2003. The new credit facility replaces the Company's prior facility with Wells Fargo. The terms of the new credit facility establish a term loan of approximately $10.4 million, the proceeds of which were used to repay the prior Wells Fargo facility and to establish a reserve of approximately $2.6 million for letters of credit that remain outstanding from the prior facility. In addition, the facility establishes a revolving line of credit under which the Company may borrow up to $3 million for working capital and certain other expenses. Borrowings under the new credit facility are secured by substantially all of the assets of the Company used in its regulated operations in Arizona, and by substantially all of the assets of the Company's non-regulated subsidiaries. Also, under the terms of the Company's long-term notes and bonds, the Company's long-term note and bond holders have become secured on an equal and ratable basis with Wells Fargo in the collateral granted with the exception of the first $1.0 million of debt to Wells Fargo. The new credit facility contains numerous covenants restricting the Company's operations including prohibitions on declaring dividends on the Company's common stock and on paying the balance of the settlement with PPL Montana, LLC. The Company believes that it will have sufficient liquidity during the term of the Wells Fargo credit facility to fund its operations. The facility gives the Company additional time to seek a replacement credit facility from a new lender, including funding for payment of the PPLM settlement. Any replacement credit arrangement would be subject to the approval of the Montana and Wyoming public utility commissions. There is no assurance that Energy West will be able to obtain financing from another lender or that regulatory approval will be obtained. Energy West President and CEO Ed Bernica stated, "We are pleased to have concluded a short-term credit facility that will permit us to fund our operations and focus on securing suitable longer term arrangements with a new lender." Energy West's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $2.4 million. ENRON CORPORATION: Proposes Uniform Claims Estimation Procedures ---------------------------------------------------------------- For the 23,000 proofs of claim filed against the Enron Debtors' estates, Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Debtors divided the claims to 25 "buckets" or categories to facilitate the claims reconciliation process and enhance their ability to file omnibus objections to claims under the Bankruptcy Code. While the Debtors will be able to reconcile or eliminate as duplicate about 19,000 claims through a more customary claims reconciliation and objection process, many of the remaining 4,000 claims are unliquidated, contingent or filed in amounts the Debtors dispute. According to Mr. Rosen, some Claims relate to trading related contracts, the assertion of termination or rejection dates and alternative methods of calculation of damages. A number of these Claimants asserted Claims where the Debtors contend these contracts were, in fact, "in-the-money" for the Debtors, and not the Claimants. Thus, the Debtors believe that they are entitled to an affirmative recovery as a result of the termination or rejection. In other instances, although a Claimant may have a valid Claim against a particular Debtor, the Claimant may owe that same Debtor or other Debtors an amount that is not subject to set-off. In all of these instances, one or more of the Debtors may have counterclaims against the Claimants to collect the affirmative recovery due to the Debtors' estates -- the Counterclaims. In these instances, the Debtors assert that: (a) the most expeditious and efficient manner to resolve the differences is through the Claims Procedures, and (b) in accordance with Section 502(d) of the Bankruptcy Code, a Claimant should not be entitled to receive distributions on an allowed Claim until any Counterclaim asserted against it has been estimated and paid to the appropriate Debtor's estate. Mr. Rosen notes that the administration of the Counterclaims will streamline the judicial process, save the estates' precious resources and, thereby, expedite more significant distributions to creditors. To settle or estimate for distribution the claims at issue, the Debtors propose these Claims Procedures: Debtors' Objection and Notice to Claimants A. Notice Package The Debtors may object to Claims for the purposes of estimation and serve on the Claimants, or their attorneys, if known, with a copy to the Creditors' Committee, a Notice Package containing: (i) a hearing notice for the Estimation Objection, (ii) a copy of the relevant Estimation Objection, (iii) a form to be completed and verified by each Claimant and setting forth the elements and evidence to support the Claimant's Claim, and (iv) a copy of the Claims Procedures Order, which will constitute the Court's Rule 16 Scheduling Order in the event the Debtors file a Counterclaim. B. Service Upon Claimants Service of the Notice Package will be effectuated: (a) in accordance with Rules 2002 and 7004 of the Federal Rules of Bankruptcy Procedure, Rule 4 of the Federal Rules of Civil Procedure, and the Court's Second Amended Case Management Order; (b) to the extent an attorney for a Claimant is unknown, by first class mail, postage prepaid, upon the signatory on the Claimant's proof of claim or other representative identified in the proof of claim and any attachment thereto; or (c) by first class mail, postage prepaid, on any attorney who has entered a notice of appearance and appeared on the Claimant's behalf in the Debtors' Chapter 11 cases. C. Estimation Notice The Estimation Notice will provide the Claimant 135 days notice of the hearing on the Estimation Objection and direct the Claimant to complete and return the executed Statement of Claim within 30 days after the date of the Estimation Notice. Claimant's Response or Statement of Claim 1. Statement of Claim Within 30 days of the service date of the Estimation Notice, the Claimant will complete, execute, and serve on the Debtors, attorneys for the Debtors and attorneys for the Creditors' Committee, the Statement of Claim setting forth a detailed explanation, and, if appropriate, categorization by amount of the Claimant's Claim, not to exceed five pages in length, exclusive of documentary and statutory exhibits, including, without limitation, the elements and evidence in support of the Claim. Any Statement of Claim that fails to specify an amount greater than $0 will be deemed to be $0 for allowance and distribution purposes. The Claimant's timely filed proof of claim form and all of the documents attached thereto will remain part of the record for estimation purposes and should not be included in or attached to the Statement of Claim. 2. Default, Grace Period and Discharge The Claimant will serve the Statement of Claim on the Estate Parties in accordance with the terms of the Estimation Notice and the Case Management Order. If a Claimant fails to return timely a completed and executed Statement of Claim, so as to be received on or before the 30th day after the date of the Estimation Notice, and receives a grace period notice from the Debtors and does not complete and return the Statement of Claim so as to be received by the Estate Parties on or prior to the 15th day after the date of the grace period notice, the Claimant's Claim will be deemed forever discharged, disallowed, waived and expunged against the Debtors and the Debtors' Chapter 11 estates and the Bankruptcy Court will enter an appropriate order in connection therewith. Debtors' Reply or Statement of Position A. Statement of Position In the event that a Claimant timely serves a Statement of Claim, on or before the later to occur of 30 days after the Debtors' receipt of a Statement of Claim and 45 days after the service of the Estimation Notice, the Debtors will respond to the Statement of Claim by completing, executing, and serving on the relevant Claimant, with a copy to the attorneys for the Creditors' Committee, a statement outlining the Debtors' arguments and defenses with respect to the Claim and the elements and evidence set forth in the Statement of Claim; provided, however, that, in the event that the Debtors maintain a Counterclaim with respect to a particular Claim and Claimant, the Debtors may also set forth in the Statement of Position the elements and verified statement of evidence supporting the Counterclaim. The Debtors' Statement of Position will not exceed five pages in length, exclusive of documentary and statutory exhibits; provided, however, that the length will be enlarged to 10 pages in the event that a Counterclaim is submitted by the Debtors in the Statement of Position. B. Claimant's Response to Counterclaim In the event that the Debtors assert a Counterclaim, within 20 days thereof, the Claimant will respond to the Counterclaim by completing, executing and serving on the Estate Parties a Statement of Position outlining the Claimant's argument and defenses with respect to the Counterclaims. The Claimant's Statement of Position will not exceed five pages in length, exclusive of documentary and statutory exhibits. C. Settlement Offer At any time after receipt of a Statement of Claim, the Debtors may offer in writing to settle a particular Claim or Counterclaim, as the case may be. Subject to the proposed procedures, the Debtors may make a Settlement Offer to any Claimant who timely submits a completed and signed Statement of Claim, which fulfills the set requirements. Each Settlement Offer will constitute statements made for settlement purposes only and, pursuant to Rule 408 of the Federal Rules of Evidence, will be inadmissible in any Proceeding with respect to the Claim or a Counterclaim. D. Claimant's Acceptance of Settlement Offer Each Claimant will be required to accept or reject the Settlement Offer or submit in writing, a counteroffer within 10 days after its mailing by the Debtors or the Claimant, as the case may be. E. Acceptance or Rejection of Counteroffer If a Counteroffer is tendered, the Debtors or Claimant will be required to accept or reject the Counteroffer, in writing within 10 days of the service of the Counteroffer. F. Creditors' Committee Involvement The Debtors will consult with, and provide periodic updates to, the Creditors' Committee on the number, size and nature of the Claims and on the Debtors' general plans to resolve the Claims. The Debtors will obtain the consent of the Creditors' Committee prior to the acceptance or rejection of any Settlement Offer or Counteroffer, and prior to filing any settlement stipulation; provided, however, that in the case of De Minimis Settlements, prior approval of the Creditors' Committee will not be required and the proposed procedures will govern in the event that: (1) a settlement provides for allowance of a Claim in an amount greater than $100,000,000; (2) a settlement constitutes 20% or more of the estimated total allowed Claims against a particular Debtor and more than $1,000,000; (3) a settlement (i) provides for allowance of a Claim in an amount greater than $20,000,000 and (ii) constitutes more than 105% of the amount reflected on the Debtors' books and records; or (4) a settlement provides for allowance of a Claim of an employee or insider in an amount greater than $100,000. No Settlement Reached 1. Deemed Submission to Court If a Claimant who has completed and signed a Statement of Claim rejects a Settlement Offer and refuses to make a Counteroffer, or the Debtors reject a Claimant's Counteroffer, the Debtors will compile and file with the Bankruptcy Court the Claimant's proof of claim, the Notice Package, the Estimation Objection, the Statement of Claim, and the Statement of Position for purposes of a hearing on estimation of the Claim pursuant to Estimation the Objection and in accordance with the Claims Procedures Order. 2. Extension of Settlement Period Upon mutual written consent, the parties may exchange additional settlement offers after rejection of a Settlement Offer or a Counteroffer, as the case may be. Estimation Hearing A. Hearing An Estimation Hearing will be held on the first omnibus hearing day 10 days after submission of the Claim File. B. Oral Argument Subject to the Bankruptcy Court's discretion to increase or decrease the hearing time, each party will have 15 minutes to explain its position to the Bankruptcy Court. C. Evidentiary and Legal Record The evidentiary and legal record will be confined to the Claim File; provided, however, that the Bankruptcy Court may allow or require additions to the record when necessary or appropriate. D. Resolution Upon the Bankruptcy Court's review of the evidentiary submissions and oral argument at the Estimation Hearing, the Bankruptcy Court will estimate the relevant Claims and Counterclaims for all purposes. In accordance with Section 502(d) of the Bankruptcy Code, to the extent that the Bankruptcy Court allows a Claim and grants a Debtors' Counterclaim, the Claimant will not receive any distribution on account of the Claim until the Claimant with respect thereto has fully paid the appropriate Debtor on account of the corresponding Counterclaim. Entry of Settlement Stipulation 1. De Minimis Settlements If the Debtors and a Claimant agree to a compromise and settlement of a Claim and, in connection therewith, an allowed claim equal to or less than $20,000,000, where the settlement amount constitutes less than 20% of the estimated total allowed claims for the relevant Debtor, the Debtors will file with the Clerk of the Bankruptcy Court and send to BSI, as Claims Agent, a stipulation setting forth the agreed amount -- a De Minimis Stipulation. The De Minimis Stipulation will become effective and binding on all parties-in-interest on its filing with the Clerk and will not require the endorsement or approval of the Bankruptcy Court; provided, however, that, prior to the effective date of any joint Chapter 11 plan for the Debtors, any De Minimis Stipulation will be served on attorneys for the Creditors' Committee 10 days prior to the submission to the Clerk of the Bankruptcy Court; and, provided further, that, in the event that the Creditors' Committee serves a written objection on the Debtors prior to the expiration of the 10-day period, the Debtors will have the option of (y) withdrawing the De Minimis Stipulation and (z) treating the De Minimis Stipulation as a Settlement Stipulation; and, provided, further, that, under no circumstances will a De Minimis Stipulation provide for payment other than in accordance with the terms and conditions of a plan confirmed in the Debtors' Chapter 11 cases in accordance with Section 1129 of the Bankruptcy Code. 2. Court-Approved Settlements If the Debtors and a Claimant agree to a compromise and settlement of a Claim and, in connection therewith, an allowed claim in excess of $20,000,000, the Debtors will seek Bankruptcy Court approval of the compromise and settlement and corresponding stipulation and order -- the Settlement Stipulation -- in accordance with the terms and conditions of the Case Management Order on 10 days' notice upon the Office of the United States Trustee and the Creditors' Committee. If no objections to the Settlement Stipulation are timely filed, the Debtors will submit an order approving the Settlement Stipulation without further notice or hearing. If an objection is timely interposed, the matter will be scheduled for hearing at the next omnibus hearing date; provided, however, that, under no circumstances, will a Settlement Stipulation provide for payment other than in accordance with a confirmed plan in the Debtors' Chapter 11 cases. If the Bankruptcy Court does not approve the Stipulation Settlement, the Debtors, at their discretion, may elect to negotiate further with the Claimant or may deem settlement negotiations terminated and seek to estimate the Claim pursuant to the Estimation Procedures Order. By this motion, the Debtors seek the Court's authority, pursuant to Sections 105(a), 363(b) and 502(c) of the Bankruptcy Code and Rules 3018, 7042 and 9019 of the Federal Rules of Bankruptcy Procedure, to implement the Claims Procedures whereby the Court will estimate, for all purposes, claims filed in the Debtors' cases, inclusive of counterclaims in connection with trading contracts. The Debtors also ask the Court to fix the notice procedures for the estimation and resolution of Claims and Counterclaims. The Debtors propose to give notice of the Claims Procedures and Estimation Hearings by: -- filing them with the Court docket electronically, -- first class mail deposited as soon as possible to all parties-in-interest, and -- publication of the Claims Procedures Order twice in The Houston Chronicle and once in The New York Times (National Edition) as soon as practicable. Mr. Rosen argues that the Debtors' request is warranted since: (a) it minimizes the prejudice to the Debtors than if they are required to engage in traditional litigation to resolve the hundreds of Counterclaims they have in response to the thousands of Claims filed against them; (b) the magnitude of the administration required in respect of analyzing and resolving the Claims as well as the magnitude of coordinating and organizing the task cannot be overstated; (c) the Claims Procedures provide a streamlined method, utilizing estimation as permitted by the Bankruptcy Code, to efficiently resolve the myriad of issues attendant to the estimation and resolution of contingent, unliquidated and disputed claims; (d) the Claims Procedures permit the Debtors and the Claimants an opportunity to engage in systematic negotiations to attempt to reach a consensual settlement outside the confines of a courtroom; (e) the Claims Procedure provide the Parties guidelines to bring unresolved Claims to the Court, and to prosecute and achieve a final resolution regarding the Claims in an equitable and efficient manner; (f) the Debtors will not be able to make meaningful near-term distributions under the Plan if the 4,000 to 6,000 contingent, unliquidated or disputed claims are not estimated and resolved; (g) without the Claims Procedures, the Debtors and their estates will be unduly burdened by the massive undertaking required to administer and resolve the disputed, unliquidated and contingent claims, many of which involve complex issues entangling intercompany relationships among the Debtors and non-debtors; and (h) the Claims Procedures alleviate the massive burden being impressed on judicial resources. (Enron Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 609/392- 0900) EOTT ENERGY: Reduces Petrochemical Operations at Morgan's Point --------------------------------------------------------------- EOTT Energy LLC (OTC:EOTT) is reducing its petrochemical manufacturing operations effective Oct. 1, 2003, when it will begin to phase out its methyl tertiary-butyl ether production at the Morgan's Point complex in La Porte, Texas. The company plans to continue to operate its butane isomerization unit as well as its natural gas liquids storage and transportation system, which includes an NGL pipeline network in the Houston Ship Channel area, 10 million barrels of underground NGL storage capacity at Mont Belvieu and dock facilities at Morgan's Point. EOTT Energy also plans to continue to operate certain other liquids processing, storage and marketing facilities at its Morgan's Point complex. "We're very disappointed to have to take this action, but the time has come to end our financial exposure related to this petrochemical commodity. We've incurred a $13.6 million liquids operating loss predominantly from MTBE operations in the first six months of this year. Given the uncertain future outlook for this product, we feel we have no other viable option than to phase out MTBE production at this time," explained Tom Matthews, EOTT Energy Chairman and Chief Executive Officer. Matthews added, "With the elimination of this non-strategic commodity production, the EOTT Energy liquids business can focus on realizing returns from our liquids tolling, terminalling, transportation and storage asset capacity." EOTT Energy has been producing approximately 12,000 barrels per day of MTBE at Morgan's Point. The liquids complex also processes other petrochemical feedstocks including isobutane and isobutylene mix product. EOTT Energy's Morgan's Point and Mont Belvieu liquids business currently has approximately 112 employees and 60 contract workers. Essentially all of the contractor positions and a majority of employee positions will be eliminated by this production phase-out. The remaining employees will run EOTT Energy's continuing liquids storage, transportation and processing business once the MTBE phase-out is completed. MTBE is a gasoline additive that was included as part of the EPA mandated oxygenated standards to boost octane and reduce air pollution. Demand for MTBE is expected to decline significantly after Jan. 1, 2004 when California, New York and Connecticut impose bans on the use of MTBE. Other proposed legislation may result in an eventual outright ban nationwide. EOTT Energy LLC is a major independent marketer and transporter of crude oil in North America. EOTT Energy also processes, stores, and transports natural gas and other natural gas liquids products. EOTT Energy transports most of the lease crude oil it purchases via pipeline that includes 8,000 miles of intrastate and interstate pipeline and gathering systems and a fleet of more than 230 owned or leased trucks. For current information for EOTT Energy, visit http://www.eott.com GENTEK INC: Asks Court to Fix Uniform Claims Trading Procedures --------------------------------------------------------------- As a result of their business operations, the GenTek Debtors currently possess several valuable Tax Attributes, which may be available to offset future operating income as well as gain recognized on the disposition of certain assets, thereby reducing future federal income tax liability and significantly improving the Debtors' cash position. Thus, the Debtors ask the Court to establish notice and hearing procedures, which must be satisfied before transfers of claims against, and equity securities in, the Debtors can take effect. With the claims and equity securities transfer procedures, the Debtors will be authorized to protect and preserve these valuable tax attributes including certain unrealized built-in losses in their assets. The Debtors point out that if left unrestricted, the trading of claims could severely limit their ability to use valuable asset of their estates and could have significant negative consequences for them and the reorganization process. Specifically, trading of claims and equity securities could adversely affect the Debtors' Tax Attributes if: (a) too many 5% or greater blocks of equity securities are created, or too many shares are added to or sold from the blocks, such that an ownership change is triggered before the confirmation of the Plan; or (b) the beneficial ownership of claims against the Debtors which are currently held by "qualified creditors" under the applicable tax regulations is transferred, before consummation of the Plan, and those claims would be converted under the plan of reorganization into a greater than 50% block of reorganized GenTek stock. To obtain creditors' support for the Plan, the Debtors believe that it is essential that the Plan maximize the availability of Tax Attributes. Accordingly, the Debtors need to closely monitor certain transfers of claims and equity securities, so as to be in a position to act expeditiously to prevent the transfers if necessary to preserve their Tax Attributes. By establishing limited procedures for continuously monitoring claims trading and equity securities trading, the Debtors can preserve their ability to seek substantive relief at the appropriate time if it appears that additional trading may jeopardize the use of their Tax Attributes. Accordingly, the Debtors ask Judge Walrath to approve these procedures related to Trading in Equity Securities: (a) Any person or entity who is currently or becomes a Substantial Equityholder will file with the Court a notice of its status by the seventh business day after becoming a Substantial Equityholder; (b) No less than seven business days before the proposed effective date of any equity securities transfer which would result in an increase in the amount of GenTek Common Stock beneficially owned by a Substantial Equityholder, the person or entity will file an advanced written notice of the intended equity securities transfer; (c) No less than seven business days before the proposed effective date of any equity securities transfer which would result in a decrease in the amount of GenTek Common Stock beneficially owned by a Substantial Equityholder or would result in a person or entity ceasing to be a Substantial Equityholder, that person or entity will file an advance written notice of the intended equity securities transfer; (d) The Debtors will have seven business days after receipt of the Notice of Proposed Transfer to object on the grounds that the transfer may adversely affect their ability to utilize their Tax Attributes. If the Debtors file an objection, the transaction will not be effective unless approved by the Court. Absent the Debtors' objection, the transaction may proceed solely as set forth in the Notice; and (e) These procedures will not prohibit the settlement of any trade executed before July 22, 2003 and evidenced in the form of a written trade confirmation. The Procedures also define certain pertinent terms. A "Substantial Equityholder" is any person or entity that beneficially owns at least 4.5% by value of all issued and outstanding equity securities in GenTek. "Beneficial ownership" means ownership taking into account the applicable attribution rules in Treasury Regulations and includes direct and indirect ownership, ownership by the holder's family members and persons acting in concert with the holder to make coordinated acquisition. An "Option" to acquire stock includes any contingent purchase, warrant, convertible debt, out, stock subject to risk of forfeiture, contract to acquire stock or similar interest, regardless of whether it is contingent or otherwise not currently exercisable. The proposed procedures relating to Trading in Claims are: (a) Any person or entity who is currently or becomes a Substantial Claimholder will file a notice of this status within seven days after becoming a Substantial Claimholder; (b) No less than seven business days before the proposed effective date of (i) any acquisition of claims by a Substantial Claimholder against the Debtors, or (ii) any transfer of claims that would result in a person or entity becoming Substantial Claimholder, that person or entity will file an advance written notice of the intended claims transfer, regardless of whether the transfer would be subject to the filing, notice and hearing requirements of the Court; (c) The Debtors will have seven business days after receipt of a Notice of Proposed Transfer to object on the grounds that the transfer may adversely affect their ability to utilize their Tax Attributes. If the Debtors object, the transaction will not be effective unless approved by the Court. Absent the Debtors' objection, the transaction may proceed solely as set forth in the Notice of Proposed Transfer; and (d) These procedures will not prohibit the settlement of any trade executed before July 22, 2003 and evidenced by a written trade confirmation. Nothing in the Procedures will prohibit JP Morgan Chase Bank and Deutsche Bank from engaging in market making transactions in the ordinary course of business with respect to Existing Lender Claims, so long as these parties dispose of these claims in an amount necessary so that the principal amount of each tranche they beneficially own immediately before the effective date of the Reorganization Plan does not exceed the principal tranche amount as of the close of business on July 21, 2003. The Claims Trading Procedures define a "Substantial Claimholder" as any person or entity beneficially owning, directly or indirectly, an aggregate principal amount of Existing Lender Claims against the Debtors equal to exceeding $35,000,000. An "Existing Lender Claim" is also defined as any claim against any Debtor arising under that certain Credit Agreement dated April 30, 1999 among GenTek, Noma Company, several lenders, and other parties. The Debtors emphasize that the establishment of these procedures does not bar all claims and stock trading but will only enable them to monitor those types of stock and claim trading which pose a serious risk under the relevant ownership change. (GenTek Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Court Approves Microsoft Settlement Agreement -------------------------------------------------------------- Following extensive, arm's-length negotiations, the Global Crossing Debtors and Microsoft entered into a Settlement Agreement, which amends the Microsoft Agreement, to provide for, among other things, a reduction in the Capacity Commitment and revised payment terms. The salient terms of the Settlement Agreement are: A. The Remaining Commitment is reduced to $60,581,371, to be paid in these installments: -- $7,500,000, 31 days after the Settlement Date; -- $22,790,685, 31 days after the Effective Date; -- $15,145,343, by the later of December 31, 2003 or 31 days after the Effective Date; and -- $15,145,343, 31 days after the later of the Effective Date or successful completion of the Performance Test. B. The Reduced Commitment may be applied towards all capacity and services offered by the Debtors. C. Microsoft will receive most favored nation pricing for the Capacity and the Services, which is the lowest price paid to the Debtors for reasonably comparable Capacity and Services of reasonably similar volume and reasonably similar terms and conditions taking into account the totality of the Reduced Commitment and the payment schedule. D. Microsoft will have the right to market or resell the Services either directly or indirectly through marketing representatives. E. The Debtors will complete a satisfactory performance test on 13 private line circuits under lease by Microsoft. The Performance Test requires six consecutive months of individual circuit availability no less than 99.995%, which must be completed before December 31, 2003. Any failure in the Performance Test will result in a 25% reduction of the Reduced Commitment. F. Microsoft fully releases and forever discharges the Debtors from any claims related to the Proposed Venture. G. The Debtors will assume the Amended Microsoft Agreement as of the Effective Date. Effective Date will mean the "Closing Date" as defined in the Purchase Agreement, provided, however, that for the purposes of the Settlement Agreement, the Effective Date will be deemed not to occur unless: a) The $237,500,000 aggregate purchase price, in consideration of the issuance by the reorganized Debtors of the New Common Shares and the New Preferred Shares, as provided for in the Purchase Agreement is paid by: (i) Hutchison and STT, either jointly or severally, (ii) a purchaser that is a telecommunications provider like Hutchison or STT, to which Microsoft consents, which consent will not be unreasonably withheld, or (iii) a purchaser that is not a telecommunications provider, to which Microsoft, in its sole discretion, consents; or b) The occurrence of the Effective Date, as defined in a modified or new plan of reorganization, including a "stand-alone" plan by Global Crossing, to which Microsoft in its sole discretion consents, provided, that, if the new plan provides for the payment of $237,500,000 by a purchaser that is a telecommunications provider like Hutchison or STT, Microsoft's consent will not be unreasonably withheld. Backgrounder The Global Crossing Debtors, Microsoft, and Softbank are parties to a Subscription and Shareholders Agreement, dated September 8, 1999. Pursuant to the Shareholders Agreement, the GX Debtors transferred portions of their telecommunications network to a new company, Asia Global Crossing Ltd. The GX Debtors, Microsoft, and Softbank each acquired equity ownership in AGX, with the GX Debtors as the controlling shareholder. The GX Debtors, Microsoft, and Softbank entered into a Capacity Commitment Agreement in connection with the Shareholders Agreement, among other reasons, as consideration for Microsoft's and Softbank's purchase from Global Crossing of their interest in AGX and to facilitate the sale of network capacity by the GX Debtors to Microsoft and Softbank. Pursuant to the CCA, Microsoft and Softbank each agreed to purchase $100,000,000 in network capacity on specified portions of the Network from the GX Debtors under certain terms and conditions. Each of Microsoft and Softbank are severally liable for their own commitments. Microsoft made the first two purchases required by the Microsoft Agreement and has paid a portion of the remaining amounts due. On October 18, 2002, the GX Debtors invoiced Microsoft for amounts that were due under the Microsoft Agreement. According to the Invoice, $76,135,000 was allegedly due from Microsoft to Global Crossing under the Microsoft Agreement. Microsoft disputes the GX Debtors' allegations. Since October 2002, Microsoft has made certain payments under the Microsoft Agreement. Pursuant to the Court's Order approving procedures for assumption of contracts and unexpired leases dated October 31, 2002, the Debtors created a database with a listing of those executory contracts and unexpired non-residential real property leases that the Debtors intended to assume as of the effective date of the Plan. The Debtors listed the entirety of the CCA, along with other executory contracts with Microsoft, on the Database. Microsoft objected to the assumption of the CCA. The Objection alleged that the Debtors: (i) had failed to maintain certain minimum standards for performance availability on the Network, (ii) were incapable of performing under the CCA, and (iii) were incapable of providing adequate assurance of future performance. In addition, Microsoft asserted claims against the Debtors related to the proposed formation of a joint venture between their one time web-hosting subsidiary, GlobalCenter, and AGX, which was not consummated and was later abandoned. The Debtors dispute Microsoft's allegation that it has any claims related to the Proposed Venture. (Global Crossing Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) HALLMARK FINANCIAL: Successfully Completes Rights Offering ---------------------------------------------------------- Hallmark Financial Services, Inc. (Amex: HAF.EC), has completed its rights offering. Stockholders exercised subscription rights to purchase the entire 25 million shares offered at a subscription price of $0.40 per share, raising gross proceeds of $10.0 million. There were 18.0 million shares purchased through the exercise of basic subscription rights and an additional 7.0 million shares purchased through the over subscription privilege. The proceeds from the rights offering will be used to repay the bridge loan to Newcastle Partners, L.P. and for general corporate purposes. In aggregate, Hallmark received cash commitments for $13.5 million totaling 33.7 million shares. Hallmark has accepted all validly exercised subscription rights limited to the $10 million offering size. Hallmark's transfer agent is in the process of distributing stock certificates to stockholders exercising their subscription rights. Commenting on the rights offering, Mark E. Schwarz, Chairman and CEO, stated, "We are pleased by the wide spread participation in the rights offering by our stockholders. The rights offering proved to be a stockholder friendly and efficient mechanism to raise capital. Proceeds to the Company were maximized because no underwriter or sales agent was necessary in the process. Having completed the offering, Hallmark's capital structure is now primarily equity and better positioned to support the future growth of the company." Hallmark Financial Services, Inc. engages primarily in sale of property and casualty insurance products. The Company's business involves marketing, underwriting and premium financing of non-standard personal automobile insurance primarily in Texas, Arizona and New Mexico, marketing of commercial insurance in Texas, New Mexico, Idaho, Oregon and Washington, third party claims administration, and other insurance related services. The Company is headquartered in Dallas, Texas and its common stock is listed on the American Stock Exchange under the symbol "HAF.EC". As previously reported, Hallmark Financial Services, Inc. (Amex: HAF.EC), announced that A.M. Best upgraded the financial strength ratings of its two insurance subsidiaries. American Hallmark Insurance Company of Texas was upgraded from "C+" to "B-" and Phoenix Indemnity Insurance Company was upgraded from "D" to "B-". HAYNES INTERNATIONAL: Enters into Amendment to Credit Agreement --------------------------------------------------------------- On August 26, 2003, Haynes International, Inc. entered into Amendment No. 4 to Credit Agreement between the Company, the financial institutions party to the Credit Agreement dated November 22, 1999, and Fleet Capital Corporation, in its capacity as administrative agent. The Amendment will be effective from August 26, 2003 through January 31, 2004. The Amendment requires that the Company not permit the average daily Revolving Credit Availability (as defined in the Credit Agreement) for the thirty-day period preceding any day on which the Company makes an interest payment on the 11 5/8% Senior Notes due 2004 to be less than $4.5 million, after giving effect to the amount of the applicable interest payment. Also, beginning on August 26, 2003, and ending on January 31, 2004, the FCCR (as defined in the Credit Agreement) must be at least 0.65 to 1.0 instead of at least 0.75 to 1.0. If the FCCR falls below this limit, the Company will be in default of the Working Capital Credit Agreement. 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. As reported in Troubled Company Reporter's August 21, 2003 edition, 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 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. HCA GENESIS: Case Summary & Largest Unsecured Creditors ------------------------------------------------------- Lead Debtor: HCA Genesis, Inc. 24 Lohmaier Lane Lake Katrine, NY 12449 d/b/a Mercy Of Northern New York Bankruptcy Case No.: 03-37132 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- MGNH, Inc. 03-37133 Type of Business: Health Care Complex Chapter 11 Petition Date: September 5, 2003 Court: Southern District of New York (Poughkeepsie) Debtor's Counsel: Kenneth A. Rosen, Esq. Lowenstein Sandler, P.C. 65 Livingston Avenue Rosaland, NJ 07068 Tel: (973) 597-2548 Fax: (973) 597-2549 Total Assets: Total Debts: ------------- ------------ HCA Genesis $11,547,733 $14,837,290 MGNH, Inc. $8,355,804 $7,178,412 A. HCA Genesis' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Niagara Mohawk $2,746,850 300 Erie Blvd. East Syracuse, NY 13252 Niagara Mohawk Office of the Attorney Claims of NY Dept. $1,480,675 General of Health, NY Dept. The Capitol of Labor and IRS Albany, NY 12224-0341 against Mercy of Watertown, Inc. per assignment of promissory note under Consent Christian Dribusch, Esq., Claims of creditors $471,750 as Escrowee of Mercy of Watertown, 5 Clinton Square Inc. per assignment of Albany, NY 12207 promissory note McKesson Medical-Surgical $320,727 8121 Tenth Avenue North Golden Valley, MN 55427 HealthCare Industry $319,368 Trust of New York PO Box 10093 Albany, NY 12201-5093 Royal Care Phcy Svcs $233,538 Schwarz & Demarco $167,308 Centrex Clinical Lab $111,145 Northern Healthcare Linen Serv $104,108 Medline Industries, Inc. Promissory Note $80,929 Medicare Agreement to pay $75,000 cure amount re assumption and assignment of Provider Agreement 335001 per Amended Order authorizing sale, Compensation Risk Manager $41,642 Dade Behring $43,423 Law Offices of Donald $48,203 Snider NAEC $41,695 Otis Elevator Co. $49,869 Pinkerton $46,343 Pinto Mucenski & Watson $43,500 Sodexho, Inc. & Affiliates $47,542 Upstate Administrative Service $43,936 B. MGNH, Inc.'s 10 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Niagra Mohawk Power Corp. $2,746,850 300 Erie Boulevard East Syracuse, NY 13252 Office of the Attoney Gen. Claim of NY Dept. of $1,480,675 The Capitol Health, NY Dept. of Labor Albany, NY 12224 and IRS against Mercy of Watertown, Inc. per assignment of promissory note under Consent order Christian Dribusch, Esq., Claims of creditors $471,750 as Escrowee of Mercy of Watertown, 5 Clinton Square Inc. per assignment of Albany, NY 12207 promissory note under Consent Order Dismissing Case Medicare Cure Amount for $75,000 assumption and assignment of Medicare Provider Agreement 335001 per Amended Order authorizing Sale, dated June 8, 2001 Law Offices of Donald Snider $15,138 Bond, Schoeneck & King PLLC $4,904 Attorneys at Law One Lincoln Center Syracuse, NY 13202-1355 Green Seifter Attorneys, PLLC $3,872 Hinman, Howard & Kattell, LLP $1,315 Brown Raysman Millstein $111 Felder 900 Third Avenue New York, NY 10022 HEALTH RISK: Trustee Employs Silverman Olson as Accountants ----------------------------------------------------------- Timothy D. Moratzka, Esq., the Trustee for the estates of Health Risk Management, Inc., asks the U.S. Bankruptcy Court for the District of Minnesota to employ Silverman, Olson, Thovilson & Kaufmann, Ltd. The Trustee believes that the employment of an Accountant is necessary to represent or assist him in carrying out the his duties with regard to the 401k Termination Issues for both the year ending December 31, 2001 and for the period ended at the Plan's liquidation expected to occur in 2002 including but not limited to the services in connection with the Plan's annual reporting obligation under the Employee Retirement Income Security Action of 1974 (ERISA). This will include audit on the Statement of Net Assets Available for Benefits as of December 31, 2001 and as of the Plan's liquidation date and related Statement of Change in Net Assts Available for Benefits for the year and period then ended. Allen B. Kaufmann, John L. Thorvilson, Leah V. Yotter will be principally engaged in this retention. Their compensation will be based on actual time incurred in the project at standard hourly rates of: Shareholders $265 per hour Manager $175 per hour In-Charge $130 per hour Paraprofessional $55per hour Health Risk Management, Inc. and three subsidiaries filed for Chapter 11 Bankruptcy on August 7, 2001 in the United States Bankruptcy Court for the District of Minnesota. Through its HRM Health Plans subsidiary, the company operates one Medicaid HMO in Philadelphia and central Pennsylvania under the Oaktree and HealthMate names; this accounts for more than three-quarters of total sales. The company's 4YourCare unit offers claims administration and acute care management services to some 85 clients, including employers, unions, insurance firms, managed care companies, and government agencies. HYPERTENSION DIAGNOSTICS: Completes $2.3 Mill. Equity Financing --------------------------------------------------------------- Hypertension Diagnostics, Inc. (OTC Bulletin Board: HDII.OB), has raised $2.3 million dollars from the sale of common stock, convertible preferred stock, and common and convertible preferred stock warrants of the Company. The private placement of Securities was completed on August 28, 2003 through the sale of approximately 9.3 million shares of the Company's common stock and 586,000 shares of the Company's newly created Series A Convertible Preferred Stock (the "Preferred Stock") to private investors led by the Schwartz Group of Los Angeles. The investors also received warrants to purchase up to an additional 23.3 million shares of common stock and up to an additional 1.5 million shares of Preferred Stock. The common stock and the Preferred Stock have not been registered under the Securities Act of 1933, as amended, or state securities laws, and may not be offered or sold in the United States absent registration with the U.S. Securities and Exchange Commission under the Act, or an applicable exemption therefrom. The Company has granted certain registration rights covering all of the common stock and Preferred Stock sold in the offering to the investors. Net proceeds from the offering will be used primarily for working capital purposes and to expand the Company's sales and marketing efforts of its CardioVascular Profiling Systems. Concurrent with the closing of this offering, the Company has elected Mark Schwartz Chairman of the Board of Directors and Chief Executive Officer. Alan Stern and Larry Leitner have been appointed as additional members to the Board. Dr. Jay Cohn, Kenneth Brimmer, and Greg Guettler will continue to serve on the Board. Dr. Steven Gerber will join the Board following the Company's compliance with the requirements of Section 14(f) of the Securities Exchange Act of 1934, as amended. Simultaneously with the closing of the offering, the Company closed a transaction with its 8% Convertible Noteholders pursuant to which they have tendered their notes to the Company along with accrued interest thereon totaling $529,980 for 3,238,767 shares of the Company's common stock. Hypertension Diagnostics, Inc. designs, develops, manufactures and markets proprietary cardiovascular profiling systems for medical applications and clinical research. These systems are marketed to physicians, other health care professionals and researchers by a direct sales force throughout the world. In addition to providing blood pressure values, the systems non-invasively detect subtle changes in the compliance or elasticity of both large and small arteries, which is a unique feature of HDI's technology. * * * Liquidity and Going Concern Uncertainty As of March 31, 2003, the Company had an accumulated deficit of $20,047,351, attributable primarily to research and development and general and administrative expenses. Until it is able to generate significant revenue from its activities, the Company expects to continue to incur operating losses. As of March 31, 2003, it had cash and cash equivalents of $291,243, and anticipates that these funds, in conjunction with revenue anticipated to be earned from placements of its CVProfilor™ DO-2020 Systems, anticipated sales of our CR-2000 Research Systems, as well as anticipated operating cost reductions, are estimated to allow it to pursue its business development strategy for approximately the next four months following March 31, 2003. Because of these conditions, the Company's independent auditors, Ernst & Young LLP, have expressed substantial doubt about the Company's ability to continue as a going concern. HYTEK MICROSYSTEMS: Hires Philip Bushnell as Chief Fin'l Officer ---------------------------------------------------------------- Hytek Microsystems, Inc. (OTC Bulletin Board: HTEK) has appointed Philip Bushnell as Chief Financial Officer, replacing Ms. Sally Chapman. Prior to joining Hytek, Mr. Bushnell served as Senior Vice President, Finance and Administration for Sigma Circuits, Inc., an $85 million manufacturer of electronic interconnect products including printed circuit boards, flexible circuits and circuit assemblies. Additionally, Mr. Bushnell served as Corporate Secretary and Director. During his tenure, Mr. Bushnell financed Sigma through an IPO and ultimately participated in the sale of the Company to Tyco International Ltd. Prior to joining Sigma, Mr. Bushnell held various finance positions with Varian Associates and with Badger America, a Raytheon subsidiary. Mr. Bushnell has extensive senior management experience in manufacturing companies. Additionally, Mr. Bushnell has degrees in Engineering and Sociology from Tufts University and an MBA from Boston University Graduate School. Founded in 1974, Hytek, headquartered in Carson City, Nevada, specializes in hybrid microelectronic circuits that are used in oil exploration, military applications, satellite systems, industrial electronics, opto-electronics and other OEM applications. * * * As reported in Troubled Company Reporter's August 19, 2003 edition, the reports of Hytek Microsystems Inc.'s independent auditors in the fiscal 2002 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. At March 29, 2003, the Company had a short-term note payable of $315,000 outstanding under the renegotiated line of credit as compared to $335,000 at December 28, 2002. At March 29, 2003, the Company was not in compliance with certain covenants in relation to its tangible net worth and quick ratio per the terms of the note. On May 15, 2003, the bank converted the line of credit to a short-term note in the amount of $295,000 bearing an interest rate of 6.250% per annum with a maturity date of May 15, 2004. The Company is required to make monthly minimum payments of $13,000 beginning June 15, 2003 with a final payment in the amount of approximately $165,000 on or before the maturity date. It is management's intention to accelerate principal payments to reduce or eliminate the final balloon payment. As of June 28, 2003, the Company is in violation of its quick ratio covenants and minimum tangible net worth. The Company is required to maintain a minimum tangible net worth of not less than $4,302,000 and maintain a quick ratio of 1.10 to 1.00. Currently the Company's quick ratio is .993 and tangible net worth is $4,135,000. If the Company fails to maintain covenants, the bank reserves the right to call the note, which would adversely affect the Company's ability to continue operations. IMPATH: SEC Commences Formal Inquiry into Company's Accounting -------------------------------------------------------------- IMPATH Inc. (OTC Pink Sheets: IMPH.PK) announced that the U.S. Securities and Exchange Commission has informed the Company that it has issued a formal order of private investigation to determine whether there have been violations of the federal securities laws and regulations. IMPATH previously had announced that it would be working with the SEC in connection with the Company's previous announcement of possible accounting irregularities involving the Company's accounts receivable and discrepancies relating to the amounts capitalized to date on the Company's GeneBank(TM) asset. IMPATH will continue to fully cooperate with the SEC as it moves forward in this process. The Company also announced that it did not appeal the Nasdaq Stock Market, Inc.'s delisting of the Company's common stock from the Nasdaq Stock Market, which was effective with the opening of business on August 27, 2003. The delisting was a result of the Company's failure to file its Quarterly Report on Form 10-Q for the period ending June 30, 2003 as required by Nasdaq Market Place Rule 4310c(14). The Company's ability to provide products and services to its customers in each of its specialized businesses has been unaffected by these events and the Company continues to be committed to providing its customers with the highest level of services. IMPATH is in the business of improving outcomes for cancer patients. The Company is a leading source of cancer information and analyses with a database of over 1 million patient profiles and outcomes data on more than 2.3 million individuals. IMPATH Physician Services uses sophisticated technologies to provide patient-specific cancer diagnostic and prognostic information to more than 8,700 pathologists and oncologists in over 2,100 hospitals and 630 oncology practices. Utilizing its comprehensive resources, IMPATH Predictive Oncology serves genomics, biotechnology and pharmaceutical companies involved in developing new therapeutics targeted to specific, biological characteristics of cancer. IMPATH Information Services provides software products, including PowerPath(R) and the IMPATH Cancer Registry(TM) for the collection and management of diagnostic data and outcomes information. The Company's software products are currently being utilized in nearly 1,000 hospitals, academic centers and independent laboratories across the country. * * * As reported in Troubled Company Reporter's August 26, 2003 edition, the Company previously announced that the Company's Audit Committee intends to retain independent counsel and an independent forensic accounting firm to investigate the accounting irregularities. Retention of these experts had commenced, but had to be deferred due to the Company's limited available cash. In light of the impact recent events have had on the Company's liquidity, the Company announced that it has engaged legal and financial advisors experienced in restructurings. In addition, the Board of Directors has authorized the appointment of a chief restructuring officer to augment the Company's efforts. The Company is in discussions with its banks, and is considering all options to address its liquidity needs, including the commencement of a Chapter 11 case in order to enhance its liquidity and facilitate an orderly restructuring. The Company is currently in default under its credit agreement. The Company's ability to provide products and services to its customers in each of its specialized businesses has been unaffected by these events and the Company continues to be committed to providing its customers with the highest level of services. KENTUCKY ELECTRIC: Closes Sale of All Assets to KES Acquisition --------------------------------------------------------------- Ashland Steel Liquidating Company, formerly known as Kentucky Electric Steel, Inc., has completed the sale of substantially all of its assets to KES Acquisition Company, LLC for $2,650,000. The Bankruptcy Court entered an order approving the sale on August 20, 2003. The Company closed on the sale on September 2, 2003. The Company does not anticipate that any proceeds from the sale of its assets to KES Acquisition will be distributed to its general unsecured creditors or its stockholders. On August 12, 2003, the Company filed its proposed disclosure statement and liquidating plan of reorganization. The Bankruptcy Court will conduct a hearing on the Company's proposed disclosure statement on September 26, 2003. As previously reported, the Company shut down its production facilities and filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Kentucky on February 5, 2003, with the stated intention to facilitate the orderly sale of its assets. KRONOS ADVANCED: Hires Sherb & Co. to Replace Grant Thornton ------------------------------------------------------------ Effective August 22, 2003, Kronos Advanced Technologies, Inc., dismissed Grant Thornton LLP as its independent certified public accountants. Grant Thornton's report on the Company's financial statements for the past two fiscal years was modified to include an explanatory paragraph wherein Grant Thornton expressed substantial doubt about the Company's ability to continue as a going concern. The change of independent accountants was approved by the Company's Board of Directors on August 18, 2003. On August 22, 2003, Kronos engaged Sherb & Company, LLP as its principal accountant to audit the Company's financial statements. Kronos Advanced Technologies operates principally in one segment of business: The Company licenses, manufactures and distributes air movement and purification devices utilizing the KronosTM technology. All other segments have been disposed of or discontinued. For the nine months ended March 31, 2003, the Company operated only in the U.S. LAIDLAW INC: Asks Court to Disallow 8 Allied Waste Claims --------------------------------------------------------- Allied Waste Industries, Inc., and certain of its affiliates are parties to a Stock Purchase Agreement with Debtors Laidlaw Inc., Laidlaw Transportation, Inc. and certain of their affiliates, dated September 17, 1996. Under the 1996 Purchase Agreement, Allied Waste purchased from LINC all of its U.S. and Canadian solid waste management operations. Pursuant to the terms of the 1996 Purchase Agreement, LINC and LTI were responsible for the payment of taxes that accrued before the closing date for the sale. Moreover, LINC and LTI were to reimburse Allied Waste or its affiliates for the actual amount of the tax liability on an after-tax basis as and when paid. However, LINC and LTI did not have to make the payments if the liability for a given tax period was less than $50,000. In another Purchase Agreement dated November 30, 1997 by and among Allied Waste, ECDC Environmental, LC, Laidlaw Environmental Services of Delaware, Inc., Ract, Inc. and LINC, Allied Waste purchased the common stock ECDC from LESI and Ract. Under the 1997 Purchase Agreement, LINC, as the parent of LESI, agreed to indemnify the Allied Entities, composed of Allied Waste, ECDC Environmental and ECDC Holdings, Inc., for: (a) any breach of, misrepresentation in, untruth in or inaccuracy in the representations and warranties made by LESI or LINC in the 1997 Purchase Agreement or its associated schedules, exhibits and certificates; (b) non-fulfillment or non-performance of any agreement, covenant or condition on LINC or LESI's part made on the 1997 Purchase Agreement, a Corporate Purchase Contract among General Motors Corporation, ECDC Environmental and Safety-Kleen Corp. or certain other agreements; or (c) any claim by a third party that, if true, would result in the satisfaction of a condition for indemnification. Pursuant to the 1997 Purchase Agreement, the indemnification obligations only applied to the extent the total obligation exceeds $1,500,000 but not beyond $30,000,000. No claim will be asserted for purposes of the $1,500,000 deductible or thereafter for indemnification unless the claim exceeds $25,000. The Allied Entities have asserted eight Claims based on a range of liabilities or alleged liabilities to which they assert they are entitled to indemnification under the provisions of the 1996 Purchase Agreement and the 1997 Purchase Agreement. The Debtors have reviewed the Claims and have determined that each Claim asserts contingent, unliquidated or undocumented liabilities. Claims Nos. 646, 648, 961 and 962 Claim No. 646 was filed by Allied Waste against LTI for tax payments that Allied Waste alleged were covered by the indemnification provisions in the 1996 Purchase Agreement. In Claim No. 646, Allied Waste asserted that the current amount to which it was entitled to indemnification was $12,498, but noted that the amount was subject to change as it is believed Allied Waste would make additional payments. Claim No. 648, on the other hand, asserts an identical liability to that asserted in Claim No. 646 except it is asserted against LINC. Allied Waste subsequently filed an amendment to each of these claims -- Claim Nos. 961 and 962 -- alleging that the indemnification obligations would not be less than $4,948,693. Gary Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, contends that Claim Nos. 646 and 648 should be disallowed as they are amended by Claim Nos. 961 and 962. Furthermore, Claim No. 962 should be disallowed in its entirety because: (1) Allied Waste fails to provide sufficient supporting documentation with respect to the tax payments it allegedly made; (2) it asserts certain amounts for estimated taxes that it may pay in the future. Under the 1996 Purchase Agreement, Mr. Graber notes that LINC and LTI are only liable once Allied Waste paid taxes and only for the after-tax amount of the payment; (3) certain tax liabilities that Allied Waste claims it has paid in Claim No. 962 also are subject to disallowance as falling under the $50,000 minimum payment amount established in the 1996 Purchase Agreement. These include tax amounts of $3,200, $3,722 and $3,339, identified in the claim; and (4) Allied Waste's contention that it paid $270,000 to the State of Oklahoma should be disallowed as this payment was for multiple tax years. The lumping of multiple claims together in that payment makes it impossible to determine what portion, if any, of a particular claim was above the $50,000 threshold required for payment of claims in a particular tax year. In addition, Mr. Graber asserts, Claim No. 961 should be disallowed because this is an Allowed Secondary Liability Claim under the Plan. Claim Nos. 647 and 649 ECDC Environmental and ECDC Holdings filed Claim No. 647 against LINC for $3,745,000 for indemnification obligations arising from a lawsuit pending in the U.S. District Court for the District of New Jersey. Claim No. 647 does not: -- allege that any judgment has been entered in this action, or -- contain any explanation on how the $3,745,000 amount was calculated. Meanwhile, ECDC Environmental filed Claim No. 649 against LINC for $895,000 for indemnification based on a lawsuit in the Third Judicial Circuit for Salt Lake County, Utah. Similarly, Claim No. 649 does not: -- allege that any judgment has been issued in this action, or -- contain any calculation of how the $895,000 amount was calculated. Mr. Graber asserts that Claim Nos. 647 and 649 should be disallowed in their entirety. ECDC Environmental and ECDC Holdings have provided no documentation on the lawsuit for which it is claiming indemnification in Claim No. 647 other than its caption and the venue in which it was pending. Likewise, ECDC Environmental has provided no documentation of the lawsuit for which it is claiming indemnification in Claim No. 649. No demonstration has been made that any liability was established in either of these suits, or even that the liability is likely. Claim Nos. 650 and 960 ECDC Environmental filed Claim No. 650 against LINC for $11,027,600 as a protective proof of claim for any amounts subject to indemnification under the General Motors Contract. As the Court is aware, Mr. Graber notes, Safety-Kleen commenced its own Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware. Safety-Kleen rejected its obligations under the General Motors Contract in its bankruptcy case. Subsequently, ECDC filed Claim No. 960, as an amendment to Claim No. 650, asserting a $12,943,845 liability of the Debtors relating to the rejected General Motors Contract. Mr. Graber argues that Claim No. 650 should be disallowed as a claim amended by Claim No. 960. Likewise, Claim No. 960 should be disallowed in its entirety. ECDC Environmental calculates this $12,943,845 claim by adding three components: (a) $697,480 for unpaid amounts under the General Motors Contract; (b) closing costs of $2,032,502; and (c) a lost profits claim of $10,213,863. In the attachment to Claim No. 960, ECDC Environmental itemizes $697,480 in invoices for Safety-Kleen that it wrote off when Safety-Kleen rejected the contract. This amount is less than the $1,500,000 deductible for indemnification provided under the 1997 Purchase Agreement and thus cannot be allowed. ECDC Environmental also alleges that it experienced closing costs of the landfill that was being operated under the General Motors Contract totaling $2,032,502. Mr. Graber informs the Court that ECDC Environmental never explained why it had to close the landfill used for the General Motors Contract or why it did not renegotiate the contract with General Motors. With the rejection of the General Motors Contract, particularly given the long remaining term of the contract, Mr. Graber points out that ECDC Environmental should have attempted to mitigate its damages by renegotiating the deal with General Motors. ECDC Environmental has provided no evidence that it attempted to do this and instead seeks to charge the Debtors for closing the landfill. Therefore, the Debtors should not be liable for ECDC Environmental's costs in closing the landfill. Moreover, Mr. Graber relates that the other element of damages ECDC Environmental asserted in Claim No. 960 based on the rejection of the General Motors Contract is a speculative lost profits claim for $10,213,863. The projections of damages attached to Claim No. 960 show dramatically higher revenue for 2002 and the remaining term of the contract than the 2001 projection. These amounts, Mr. Graber contends, are highly speculative. Lost profits are not recoverable as they are remote and speculative. (Laidlaw Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAND O'LAKES: CTO David Hettinga to Retire on October 17, 2003 -------------------------------------------------------------- Land O'Lakes, Inc. announces that Dr. David H. Hettinga, vice president and chief technical officer, Corporate Research, Technology and Engineering, is retiring October 17, 2003, after 20 years of service. Hettinga joined Land O'Lakes in 1983 as vice president of Dairy Foods Research and Development. He was named vice president of Research, Technology and Engineering in 1986. Since 1990, he has served as vice president and chief technical officer for the company, managing such functions as food research and development, agricultural research and technology, corporate exploratory research, quality assurance, regulatory affairs, analytical laboratory, and engineering. Hettinga also managed Land O'Lakes(R)-TECH Laboratories, Inc. and Q.C. Inc. business units. During Hettinga's tenure, he oversaw the research that resulted in the development of Land O'Lakes dairy products such as LAND O LAKES(R) Spreadable Butter with Canola Oil, LAND O LAKES(R) No-Fat Half-and-Half, and whey fractions, and animal feed products such as Cow's Match(TM) calf milk replacer. "For the past 20 years, David Hettinga has provided innovative and insightful leadership to Land O'Lakes research and development efforts," said Land O'Lakes President and Chief Executive Officer Jack Gherty. "He has played a key role in such diverse research and technology-driven areas as new product and new process development, quality control and management, environmental health and safety, regulatory compliance and a wide range of analytical services." Hettinga is director of several public organizations and private companies. He has contributed to several books and written numerous papers, which have been published in scientific journals. Hettinga has been a featured speaker for many conferences, symposiums and meetings. He also serves as a U.S. delegate and chairman of the U.S. National Committee to the International Dairy Federation. Land O'Lakes -- http://www.landolakesinc.com-- is a national, farmer-owned food and agricultural cooperative, with sales approaching $6 billion. Land O'Lakes does business in all 50 states and more than 50 countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the U.S.; services its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As previously reported in Troubled Company Reporter, Moody's Investors Service downgraded the ratings on Land O'Lakes, Inc. Outlook is stable. Rating Action To From Land O'Lakes, Inc. * Senior implied rating B1 Ba2 * Senior secured rating B1 Ba2 * Senior unsecured issuer rating B2 Ba3 * $250 million Senior secured bank facility, due 2004 B1 Ba2 * $291 million Senior secured term loan A, due 2006 B1 Ba2 * $234 million Senior secured term loan B, due 2008 B1 Ba2 * $350 million 8.75% Senior unsecured guaranteed Notes, due 2011 B2 Ba3 Land O'Lakes Capital Trust I * $191 million 7.45% Trust preferred securities B3 Ba3 The lowered ratings reflect the company's weaker-than-expected operating performance, giving rise to a constrained financial flexibility and the deterioration of credit protection measures. LEAP WIRELESS: Cricket Hires Butler Shine to Handle Advertising --------------------------------------------------------------- Leap Wireless International, Inc. (OTCBB:LWIQE), an innovator of wireless communications services, announced that its operating subsidiary Cricket Communications, Inc. has named Butler, Shine, Stern & Partners as the agency-of-record to handle Cricket's advertising account, which is valued at $20-$25 million annually. "As we continue to expand our Cricket service offering by introducing additional value-added products to customers, we believe it is important to be working with an advertising agency that brings to the table the breadth of consumer marketing experience that will help us evolve the Cricket brand," said Harvey White, Leap's CEO. "Butler, Shine, Stern & Partners brings the level of enthusiasm, talent and experience we were looking for in an advertising agency." "We chose Butler, Shine, Stern & Partners because of the agency's disciplined and comprehensive approach to brand building and its ability to deliver fresh creative ideas," said Aimee Irwin, Director of Marketing, Cricket Communications. "We look forward to working with the agency and rolling out a series of campaigns starting in the fourth quarter to convey Cricket's unique value proposition and help continue to grow our subscriber base." "We are pleased to be on board as Cricket's advertising agency, especially as the company continues to evolve its service offerings," said Greg Stern, CEO, Butler, Shine, Stern & Partners. "Already we have several innovative ideas for the Cricket advertising campaign, which we believe will further build awareness and brand equity." As Cricket's new advertising agency-of-record, Butler, Shine, Stern & Partners will develop creative strategies that communicate what Cricket is all about -- providing a clean, simple, and predictable wireless service. In June the company began an extensive selection process, which entailed a review of more than 20 advertising agencies from across the country. With Cricket service available in 20 states stretching from New York to California, Leap's subsidiary is the ninth largest service provider in the U.S. in terms of customers. Butler, Shine, Stern & Partners is a leading independent advertising, design, interactive and direct marketing firm. BSSP is well regarded for its combination of unique creative product and fully integrated marketing communication strategies. The firm is responsible for many notable and award winning campaigns in its ten-year history. Current clients include: Anchor Blue, Diageo Chateau and Estates, Health Net, VeriSign, Pottery Barn, Good Guys, Ubi Soft, Noah's Bagels, Men's Health, SmartWool and Weider Nutrition. For more information about BSSP, please visit http://www.bsands.com With Cricket(R) service, customers can make unlimited calls over their service area for a low, flat rate. Cricket customers can call long distance anywhere for a little more -- just 8 cents per minute to anywhere in the United States and just 18 cents per minute anytime to anywhere in Mexico or Canada. The service offers text messaging, voicemail, caller ID, three-way calling and call waiting for a small additional monthly fee. Cricket also offers downloadable Ringtones. The extra value Cricket(r) Talk rate plan is $39.99 per month plus tax, which includes unlimited local calls, 500 free minutes of U.S. long distance and a three-feature package (including caller ID, call waiting and three-way calling). Cricket service is an affordable wireless alternative to traditional landline service, and appeals to people completely new to wireless -- from students to young families and local business people. For more information, visit http://www.mycricket.com Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless(r) service that lets customers make all of their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. For more information, visit http://www.leapwireless.com LEAR CORP: Will Hold Q3 Conference Call on October 17, 2003 ----------------------------------------------------------- Lear Corporation (NYSE: LEA) will hold a conference call to review the company's third-quarter 2003 financial results and related matters on Friday, October 17, 2003 at 9:00 a.m. EDT. To participate in the conference call (Conference I.D. 1943875): * Domestic calls 1-800-789-4751 * International calls 1-706-679-3323 The audio replay will be available two hours following the call at: * Domestic calls 1-800-642-1687 * International calls 1-706-645-9291 The audio replay will be available until October 24, 2003 (Replay I.D. 1943875). You may also listen to the live audio webcast of the call, in listen only mode, on our corporate Web site at http://www.lear.com * * * As reported in Troubled Company Reporter's July 30, 2003 edition, Standard & Poor's Ratings Services raised its corporate credit rating on Southfield, Michigan-based Lear Corp. to 'BBB-' from 'BB+'. In addition, Standard & Poor's raised its senior secured and senior unsecured ratings on the company to 'BBB-' from 'BB+'. Lear has total debt (including operating leases and sold accounts receivable) of about $2.6 billion. The outlook is stable. The ratings upgrade reflects Lear's reduced debt leverage, solid financial performance amid challenging industry conditions, and more disciplined growth strategy following a period of rapid consolidation. Lear is one of the world's largest suppliers of automotive seating and interior products. LOGOATHLETIC: Disclosure Statement Hearing Slated for October 3 --------------------------------------------------------------- As previously reported in the Troubled Company Reporter's September 8, 2003 issue, LogoAthletic, Inc., filed their Chapter 11 Liquidating Plan and accompanying Disclosure Statement with the Court. The U.S. Bankruptcy Court for the District of Delaware will convene a hearing to consider approval of the Disclosure Statement on October 3, 2003 at 11:00 a.m. before the Honorable Judith K. Fitzgerald, United States Bankruptcy Judge in her courtroom located at 5490 US Steel Tower, 600 Grant Street in Pittsburgh, Pennsylvania. All written objections and other responses to the approval of the Disclosure Statement must be filed on or before September 26, 2003, with the: U.S. Bankruptcy Court for the District of Delaware Marine Midland Plaza 824 Market Street, 6th Floor Wilmington, Delaware 19801 with a copy to: i) counsel for the Debtors Pachulski, Stang Ziehl, Young, Jones & Weintraub PC 919 North Market Street, 6th Floor PO Box 8705 Wilmington, Delaware 19899-8705 Attn: Laura Davis Jones, Esq., And Pachulski, Stang Ziehl, Young, Jones & Weintraub PC Three Embarcadero Square, Suite 1020 San Francisco, California 94111 Attn: Tobias S. Keller, Esq. ii) counsel for the Official Committee of Unsecured Creditors Proskauer Rose LLP 1585 Broadway New York, NY 10036-8299 Attn: Scott Rutsky, Esq., or Cozen & O-Connor PC 1201 North Market Street, Suite 1400 Wilmington, Delaware 19801 Attn: Mark Felger, Esq. iii) the Office of the Unites States Trustee J. Caleb Boggs Federal Building 844 King Street, Suite 2207 Lock Box 35 Wilmington, Delaware 19801 Attn: Mark Kenney, Esq. LogoAthletic, Inc. made NFL-, MLB-, NBA-, NCAA- and NHL-licensed sports apparel (pants, jackets, shirts, shorts, and caps). The Company filed for chapter 11 protection on November 6, 2000. Christopher James Lhulier, Esq. at Pachulski Stang Ziehl Young Jones & Weintraub PC represents the Debtors in their restructuring efforts. LTV CORP: Bank One Bucks Plan to Indemnify Officers & Directors --------------------------------------------------------------- Victoria E. Powers, Esq., at Schottenstein Zox & Dunn Co. LPA in Columbus, representing Bank One Trust Company, N.A., successor in interest to Bank One Ohio Trust Company, objects to the Motion Of the LTV Debtors for approval of a Director And Officer Indemnity Trust. The Indemnity Trust Motion seeks to create an obligation on the part of the LTV Steel estate for an immediate payment of $1,000,000 into the Indemnity Trust, and creates a potentially open-ended obligation on the part of the LTV Steel estate to replenish the Indemnity Trust in the event that monies are disbursed from it. The Collateral Trustee is the holder of secured and administrative claims against the Debtor. In particular, the Collateral Trustee held liens against the real and personal property located at LTV Steel's former Cleveland West facility in the amount of $250,000,000, for the benefit of certain LTV Steel workers and retirees. As a result of the sale of the Integrated Steel assets (which included Cleveland West) and the Allocation Hearing conducted by Judge Kendig, the Collateral Trustee's liens were valued at less than $50,000. Moreover, as a result of the Allocation Order, the LTV Steel estate received approximately $47,000,000 in unencumbered funds, due to the fact that Cleveland East and West facilities were found to have minimal value and the Indiana Harbor facilities were found to have no value. Ms. Powers reminds Judge Bodoh that the Collateral Trustee and several other parties have appealed from the Allocation Order. In addition, in November, 2002, because the valuation issues had not been resolved on appeal, the Collateral Trustee (and several other appellants) sought to prohibit the Debtor's disbursement of the proceeds of the Integrated Steel Sale. At the December 6, 2002, hearing on that motion, the Court ruled in favor of the Debtor. The Court indicated that the Collateral Trustee would have the opportunity to object to any future expenditure of the Debtor and that, in the event that the Allocation Order is reversed, funds paid to other parties would be subject to disgorgement. The expenditures proposed in the Indemnity Trust Motion are significant, and are not appropriate expenditures for a liquidating entity. If this case were proceeding as a normal liquidation, the Chapter 7 trustee would not need to spend estate assets for ongoing Director and Officer coverage. The expenditures proposed in the Indemnity Trust Motion are not necessary for the successful completion of the LTV Steel bankruptcy, and accordingly should not be made at the expense of the estate's secured and administrative creditors. The Indemnity Trust Motion should be denied -- but, to the extent relief sought in the Indemnity Trust Motion is granted, the Court should condition the relief to make clear that any funds paid or transferred from the estate pursuant the Trust are subject to disgorgement in the event the allocations so described in the Allocation Order are subsequently revised. Administrative Committee: Not Sure Yet On behalf of the Official Committee of Administrative Claimants, Michael A. VanNeil, Esq., at Baker & Hostetler LLP in Cleveland, says guardedly that, although the Debtors indicated in their Motion that they had the support of the Official Committees, the Committee is actually still in the process of reviewing the terms of the proposed indemnity trust with the Debtors and currently not in a position to support or contest the creation of the trust. The Committee reserves its position pending completion of that review. (LTV Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-00900) MANDALAY RESORT: SEC Declares Form S-3 Filing Effective ------------------------------------------------------- Mandalay Resort Group (NYSE: MBG) announced that its registration statement on Form S-3 relating to resales by securityholders of the company's issued and outstanding Floating Rate Convertible Senior Debentures due 2033, and the shares of its common stock issuable upon conversion of the debentures, was declared effective by the Securities and Exchange Commission Friday. A copy of the prospectus may be obtained from Les Martin, Mandalay Resort Group, 3950 Las Vegas Boulevard South, Las Vegas, NV 89119. Mandalay Resort Group (Fitch, BB+ Senior Debt Rating, Stable) owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. The company also owns and operates Gold Strike, a hotel/casino in Tunica County, Mississippi. The company owns a 50% interest in Silver Legacy in Reno, and owns a 50% interest in and operates Monte Carlo in Las Vegas. In addition, the company owns a 50% interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5% interest in and operates MotorCity in Detroit, Michigan. METROPOLITAN ASSET: Fitch Cuts Two Ratings to Low-B/Junk Levels --------------------------------------------------------------- Fitch Ratings has affirmed and downgraded the following Metropolitan Asset Funding issue: Series 1998-B -- Classes A5, X affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class B1 downgraded to 'BB-' from 'BBB' and removed from Rating Watch Negative; -- Class B2 is downgraded to 'CC' from 'B-'. The negative rating actions taken reflect 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. Since the last time this transaction was reviewed in April 2003, OC has decreased from $588,352 (1.09% of pool balance) to $217,526 (0.47% of pool balance). MIRANT CORP: Pepco and FERC Seek Federal Court Intervention ----------------------------------------------------------- Pepco, a unit of Pepco Holdings, Inc. (NYSE: POM), and the Federal Energy Regulatory Commission sought relief from a federal district court in Texas to block an effort by bankrupt Mirant Corp. to bar FERC from requiring Mirant to honor its power contracts with Pepco. Pepco and FERC together asked the U.S. District Court for the Northern District of Texas to remove jurisdiction to hear Mirant's motions filed Aug. 28 from the bankruptcy court in Ft. Worth. In their joint filing, Pepco and FERC said that resolving Mirant's motion will require the consideration of non-bankruptcy federal laws over which FERC has jurisdiction under the Federal Power Act. Dennis R. Wraase, Pepco Holdings' chief executive officer, called Mirant's attempt to reject the contracts an effort "to enrich Mirant's banks and bondholders at the expense of Pepco and its customers." Mirant, which filed for bankruptcy July 14, operates several power plants in the Washington, D.C. region which it purchased from Pepco in 2000 and supplies power to Pepco customers under a contract with Pepco, a Pepco Holdings subsidiary. The contract included both purchase of the assets and a commitment to honor power purchase agreements. In its Aug. 28 filing with the bankruptcy court, Mirant sought permission to reject Mirant's commitment to reimburse Pepco for the cost of electricity supplied under terms of power purchase agreements with third parties. Mirant did not seek to reject the agreements under which it supplies power to Pepco customers, but indicated that it wants to renegotiate the terms of those agreements with Pepco and implied that if Pepco did not accede to its demands it would seek to reject these agreements as well. The bankruptcy court, at Mirant's request and without hearing from Pepco or FERC, also issued a temporary restraining order barring the federal regulator from requiring Mirant to continue buying or selling power to Pepco and preventing Pepco from encouraging other parties to seek to protect their rights under the Federal Power Act. "Mirant's attempts to prevent Pepco from advocating for its customers and to circumvent FERC's jurisdiction is unprecedented," Wraase said. Wraase also noted that while there is no anticipation of interruption of power supply to Pepco customers as a result of Mirant's actions, there are other consequences that could negatively affect Pepco's customers by leading to higher rates. He said that Mirant's actions have already resulted in Pepco's debt being placed on credit watch for potential downgrade. Pepco Holdings, Inc., is a diversified energy holding company with headquarters in Washington, D.C. Its principal operating utilities, Pepco and Conectiv, deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in the District of Columbia, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers. MOBILE COMPUTING: Enters Definitive Restructuring Agreements ------------------------------------------------------------ Mobile Computing Corporation has entered into definitive agreements with respect to a series of transactions with The VenGrowth Investment Fund Inc. (holder of 20% of the common shares of the Company and $500,000 principal amount of its 10% convertible debentures) and The VenGrowth II Investment Fund Inc. (holder of $9.5 million principal amount of the Company's 10% convertible debentures) and NBC Canada West Capital Inc., for a significant restructuring of the Company. Under the terms of an asset purchase agreement between the Company and MCC Technologies Corp., a newly incorporated entity wholly- owned by VenGrowth, the Company will sell its existing business and operating assets to MCC Technologies in exchange for the cancellation of principal and accrued and unpaid interest of $7,000,000 in respect of the Company's outstanding 10% convertible debentures. In addition, VenGrowth will convert a portion of the accrued interest on the convertible debentures of the Company held by VenGrowth into 2,536,238 common shares of the Company in accordance with the terms of those debentures. MCC Technologies will assume all the liabilities of the Company, other than certain tax and other liabilities. This sale will comprise substantially all of the Company's business, including all of its intellectual property and the shares of its wholly-owned subsidiary, Mobile Computing Corporation (USA). VenGrowth will also cancel its outstanding warrants and options to acquire an aggregate of 7 million common shares of the Company. After giving effect to these transactions and the transactions with NBC West described below, VenGrowth will own approximately 16% of the outstanding common shares of the Company and no amount will be owing by the Company in respect of its outstanding convertible debentures. VenGrowth has agreed to extend the maturity date of the Company's outstanding convertible debentures due August 2003 until the earlier of the completion of these transactions, the termination of either the asset purchase agreement with MCC Technologies or the debenture purchase agreement with NBC West, and October15, 2003. Pursuant to a debenture purchase agreement between The VenGrowth II Fund Inc., NBC West and the Company, VenGrowth II will sell a portion of the Company's convertible debentures held by it to Nova, including accrued and unpaid interest thereon and related rights of conversion, for an aggregate purchase price of $125,000. Nova will convert such debentures and interest into 23,070,972 common shares of the Company in accordance with the terms of the debentures. After giving effect to such conversion and the transactions with VenGrowth described above, Nova will own approximately 33% of the outstanding common shares of the Company. Nova has agreed to advance, at closing, $125,000 to the Company by way of a demand loan, of which $50,000 will form part of the assets of the Company acquired by MCC Technologies. Nova has stated that it intends to implement a new business plan to maximize shareholder value, which will include hiring a new management team, raising additional capital and having the Company develop a merchant banking activity. Following completion of these transactions, the common shares of the Company will be de-listed from the Toronto Stock Exchange. The Company intends to make application to list its common shares on the NEX board of the TSX Venture Exchange upon completion of the transactions. VenGrowth has indicated that it intends to continue to manage its investment in the business to be acquired by MCC Technologies. "We are pleased that this transaction remains on course for closing in the fall", stated Earl Storie, Managing General Partner of VenGrowth. "The transition to MCC Technologies should be smooth for customers, suppliers and employees and the business should be well positioned for the future." The board of directors of the Company appointed an independent committee of directors to review and approve the transactions between the Company and MCC Technologies and NBC West, respectively. In the absence of the proposed transactions, the Company faced total payment obligations of approximately $12.2 million under its outstanding convertible debentures. Following extensive discussions with the holders of those debentures regarding the refinancing of that indebtedness and the consideration of various strategic alternatives, the independent committee concluded it is unlikely that the Company would be able to raise additional funds and that its cash and cash equivalents would not be sufficient to repay the debentures when due. After obtaining the advice of outside advisors, the independent committee has concluded that the terms of the transaction between the Company and MCC Technologies are reasonable in the circumstances of the Company and that such transaction and the transactions involving NBC West are in the best interests of the Company's shareholders and offer the best means of providing shareholder value. The transactions are subject to shareholder approval and the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange. The Company intends to seek shareholder approval at an annual and special meeting of shareholders, currently expected to be scheduled for mid October, 2003. Accordingly, there can be no assurance that the transactions will be completed as proposed or at all. Mobile Computing Corporation -- http://www.mobilecom.com-- is a supplier of wireless information solutions for mobile workers. These systems enable companies to communicate with, monitor and manage the activities of their vehicles and field personnel. The Company's solutions enable improved management of the movement and delivery of goods and services, improving productivity and profitability. The Company specializes in delivering fully integrated solutions that link mobile workers with corporate information systems utilizing wireless data communications services. Mobile Computing Corporation trades on the Toronto Stock Exchange under the symbol "MBL" and has approximately 45 million shares outstanding. At June 30, 2003, Mobile Computing Corporation's balance sheet shows a total shareholders' equity deficit of about $10 million. NAVIGATOR GAS: Signs-Up Harding Lewis as Isle of Man Accountant --------------------------------------------------------------- Navigator Gas Transport PLC and its debtor-affiliates are asking for approval from the U.S. Bankruptcy Court for the Southern District of New York to retain Harding Lewis of Castletown, Isle of Man, as their Isle of Man accountant and auditor to perform the independent auditing and accounting services that are required under Isle of Man law. Harding Lewis is a chartered auditing with offices located at 1 Castle Street, Castletown, Isle of Man. Prior to the commencement of these cases, the Debtors retained Harding Lewis as an auditor for a period of 3 years. The Debtors now seek to retain Harding Lewis as their Isle of Man accountant and auditor because of the firm's familiarity with the Debtors' financial and business histories as a result of its prior engagement on behalf of the Debtors, and its familiarity with the relevant law of the Isle of Man, the place of the Debtors' incorporation. The professional services that Harding Lewis will render to the Debtors include: a) auditing and reporting on the 2001 and 2002 consolidated financial statements of the Debtors pursuant to Isle of Man law; b) performing all other auditing and accounting services for the Debtors which are appropriate, necessary and proper in this Chapter 11 proceeding in connection with the Isle of Man and Isle of Man law. Andrew H. Sharpe, a member of the firm of Harding Lewis, and also a member of the Institute for Chartered Accountants in England and Wales, reports that his firm has no connection with the Debtors, their creditors, equity security holders, or any other parties-in-interest, or their respective attorneys, in any matters relating to the Debtors or their estate. The principal auditors designated to provide services to the Debtors and their current standard hourly rates range from GBP40 to GBP100. Navigator Gas Transport PLC's business consists of the transport by sea of liquefied petroleum gases and petrochemical gases between ports throughout the world. The Company filed for chapter 11 protection on January 27, 2003 (Bankr. S.D.N.Y. Case No. 03- 10471). Adam L. Shiff, Esq., at Kasowitz, Benson, Torres & Friedman LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $197,243,082 in assets and $384,314,744 in liabilities. NAVISTAR INT'L: Will Keep Chatham, Ont., Heavy Truck Plant Open --------------------------------------------------------------- International Truck and Engine Corporation, the operating company of Navistar International Corporation (NYSE:NAV) (BB-/Stable/--), will keep its Chatham, Ontario heavy truck assembly plant open. Daniel C. Ustian, Navistar president and chief executive officer, said the company is pleased to have come up with a plan that meets the combined objectives of improved profitability for its heavy truck business and continued operations in Chatham. Ustian noted that the impact of the decision to keep the plant operating would result in an adjustment to the company's existing restructuring charge recorded in the fourth quarter of 2002. He added that the company has also accelerated the sign-up period for an early retirement window program offered to certain eligible, long-service United Auto Workers union represented employees. The purpose of the window program is to enable the company to address the changing staffing needs of the business. The expected dates for retirement under the program have not been changed, but the earlier sign-up period requires the company to account for the program in the fourth quarter of 2003. According to Ustian, Navistar is in the process of quantifying the impact of these decisions and will disclose them with the release of its fourth quarter earnings. Neither of these decisions however is expected to impact the company's earning guidance issued in the third quarter earnings release on August 15, 2003. "These actions allow us to substantially complete our initial transformation strategy that we began in 1997," said Robert C. Lannert, vice chairman and chief financial officer. Lannert said Navistar's focus "now is on execution: execution of our quality and cost improvement goals with our management team dedicated to delivering bottom-line savings and continuously improving results." International Truck and Engine Corporation produces Internationalr brand commercial trucks, mid-range diesel engines and IC brand school buses and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. With the broadest distribution network in North America, the company also provides financing for customers and dealers. Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine service parts. Additional information is available at http://www.internationaldelivers.com As reported in Troubled Company Reporter's December 17, 2002 edition, Fitch Ratings assigned a 'BB' to Navistar International Corporation's $190 million senior unsecured convertible notes. The Rating Outlook is Negative. Fitch Ratings downgraded Navistar's existing securities to reflect the continuing weak industry environment in Navistar's core medium and heavy-duty truck markets in North America, recent occurrences in Navistar's joint efforts with Ford, continued headwinds in certain cost areas such as employee and retiree healthcare costs, and concerns over the impacts of substantial cash calls associated with scheduled pension contributions and restructuring charges. Mitigating these negatives were some positive factors such as the completion of Navistar's major capital expenditure program, overall product competitiveness, restructuring efforts that have positioned them for the future, and the recent conclusion of contract negotiations with the UAW. NAVISTAR INT'L: Canadian Gov't Pact Won't Affect S&P Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services said that Navistar International Corp.'s (BB-/Stable/--) recent announcement that it has reached an agreement with the Government of Canada and the Province of Ontario to keep the company's Chatham Ontario plant open has no immediate ratings impact. Navistar had previously reported that it may close the facility if it was unable to reach an agreement on cost concessions with the Canadian Auto Workers and additional incentives with the Canadian Government. This would have resulted in production being shifted to the company's Escobedo, Mexico facility. However, as a result of the incentives received, Navistar's Chatham facility will become more profitable and cost effective and will allow the company to continue producing heavy-duty trucks in Chatham. Navistar will now have open capacity at its Escobedo facility, which would allow the company to produce additional vehicle platforms there. Navistar also announced that it would adjust its previously announced restructuring charge to reflect an accelerated sign up period for early retirement; however, it should have no effect on the company's earnings guidance of $0.65-$0.75 a share in the fourth quarter. NORSKE SKOG: Completes Exchange Offer for 8-5/8% Senior Notes ------------------------------------------------------------- Norske Skog Canada Limited (TSX: NS), has completed its offer to exchange U.S.$400,000,000 aggregate principal amount of its 8-5/8% Series D Senior Notes Due 2011, which have been registered under the Securities Act of 1933, as amended, for U.S.$250,000,000 aggregate principal amount of its 8-5/8% Senior Notes Due 2011 and U.S.$150,000,000 aggregate principal amount of its 8-5/8% Series C Senior Notes Due 2011. The expiration date for the Exchange Offer was 5:00 p.m., New York City time, on September 3, 2003, at which point all of the U.S.$250,000,000 aggregate principal amount of the outstanding 8-5/8% Senior Notes Due 2011 and U.S.$150,000,000 aggregate principal amount of the outstanding 8-5/8% Series C Senior Notes Due 2011 had been tendered for exchange. * * * In February 2003, Standard & Poor's lowered its credit rating of the Company's long-term corporate and senior unsecured debt by one level, from BB+ to BB, and affirmed its existing debt on its senior secured debt as BB+. S&P's outlook for the Company's business is stable. NORTEL: S&P Affirms & Keeps Watch on B-Rated Series 2001-1 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' rating on Nortel Networks Lease Pass-Through Trust's certificates series 2001-1. Concurrently, the outlook is revised to stable from negative. The rating on the certificates is dependent upon the corporate credit rating on Nortel Networks Ltd. (Nortel), which was affirmed at 'B' Sept. 4, 2003, and at which time its outlook was revised to stable. The pass-through trust certificates reflect security interests in five single-tenant, office/research and development buildings leased to Nortel, which guarantees the payment and performance of all obligations of the tenant under the leases. Nortel Networks Lease Pass-Through Trust Pass-through trust certs series 2001-1 Rating To From Certs B/Stable B/Negative NOVA CDO 2001: S&P Keeps 4 Low-B/Junk Ratings on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class B, C-1, C-2, D-1, and D-2 notes issued by NOVA CDO 2001 Ltd., an arbitrage high-yield CBO transaction, on CreditWatch with negative implications. At the same time, the rating on the class A notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the rated notes since the last rating action in November 2002. These factors include par erosion of the collateral pool securing the rated notes, deterioration in the credit quality of the performing assets within the pool, and a reduction in the weighted average coupon generated by the performing assets within the pool. As a result of asset defaults and credit risk sales at distressed prices, the overcollateralization ratios for the transaction have deteriorated since the last rating action. As of the Aug. 5, 2003 trustee report, the class A overcollateralization ratio test was failing, with a ratio of 112.76% versus the minimum required ratio of 116.4%. The class B overcollateralization ratio test was failing, with a ratio of 104.42% versus the minimum required ratio of 111.5%. The class C overcollateralization ratio test was failing, with a ratio of 98.78% versus the minimum required ratio of 103.0%. The class D overcollateralization ratio test was failing, with a ratio of 95.15% versus the minimum required ratio of 100.0%. The credit quality of the collateral pool has also deteriorated since the transaction was originated. As of the Aug. 5, 2003 trustee report, approximately 5.2% of the performing assets in the collateral pool come from obligors whose ratings are below 'CCC+'. Furthermore, according to the August trustee report, the weighted average coupon test was failing with an average of 9.864% versus the required minimum of 10%, compared to a ratio of 9.954% at the time of the last rating action. Standard & Poor's will be reviewing the results of current cash flow runs generated for NOVA CDO 2001 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings assigned to the notes remain consistent with the credit enhancement available. RATINGS PLACED ON CREDITWATCH NEGATIVE NOVA CDO 2001 Ltd. Rating Class To From Balance ($ mil.) B BBB/Watch Neg BBB 17.134 C-1 B+/Watch Neg B+ 3.969 C-2 B+/Watch Neg B+ 10.509 D-1 CCC/Watch Neg CCC 10.810 D-2 CCC/Watch Neg CCC 3.958 RATING AFFIRMED NOVA CDO 2001 Ltd. Class Rating Balance ($ mil.) A AAA 173.561 NRG ENERGY: NRZ Units Assigned New Identification Number -------------------------------------------------------- NRG Energy, Inc. has been informed by the Depository Trust and Clearing Corporation that a new identification number, know as a "CUSIP," has been assigned to the NRZ Corporate Units which trade on the "over-the-counter" market under the symbol "NRZEQ." The new CUSIP is expected to make it easier for owners of the Corporate Units to trade them. Trading of the units is expected to continue in the "over-the-counter" market, through broker-dealers. The new CUSIP No. is 629 377 AN 2. Previously, the Corporate Units were identified by CUSIP Nos. 629 377 201 and 629 377 409. In May 2003, NRG filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court, Southern District of New York. The bankruptcy petition was a "termination event" under the terms of the Corporate Units, and investors are no longer committed to convert the Corporate Units into equity. Following the termination event, only the debenture component of the Corporate Units continues to exist, and hence the Units are expected to trade as debentures, and not as equities. The new CUSIP is appropriate for a debenture, and is expected to facilitate trading. The rights of the holders of the Corporate Units in the reorganization process are not affected by the change in the CUSIP. For complete details please refer to NRG's draft Disclosure Statement, available at http://www.kccllc.net/nrg 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. O'SULLIVAN INDUSTRIES: Will Hold Q4 Conference Call Tomorrow ------------------------------------------------------------ O'Sullivan Industries Holdings, Inc., (OTC Pink Sheets: OSULP) a leading manufacturer of ready-to-assemble furniture, will hold a conference call to review its fourth quarter and year end results for fiscal 2003. Date: September 10, 2003 Time: 9:30 A.M. Central Number: (719) 457-2600 Pass Code: 528652 Open To: Analysts, investors and all interested parties To participate in the call, please call five to ten minutes prior to the scheduled start time. The conference moderator will establish your participation on the call. For those unable to participate in the conference call, a playback is scheduled to begin at 12:30 p.m. on September 10th and will continue through midnight on September 17th. Please call (719) 457-0820 and reference the conference pass code of 528652. For your convenience, an audio webcast of the conference call will be available on the O'Sullivan Web site at http://www.osullivan.com The confirmation number is 528652 and leave the pass code field blank. O'Sullivan Industries Holdings, Inc. -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $133 million -- is a leading manufacturer of ready-to-assemble furniture. OWENS-ILLINOIS: High Leverage Position Spurs Fitch's Downgrades --------------------------------------------------------------- Fitch Ratings has downgraded Owens-Illinois' (NYSE: OI) bank debt and senior secured notes to 'BB-' from 'BB', senior unsecured notes to 'B-' from 'B+', and convertible preferred stock to 'CCC+' from 'B-'. The Rating Outlook is Stable. The downgrade reflects OI's high leverage position, increased financing costs, and steady margin deterioration, particularly at its plastics business. Also factored into the ratings are the heavy claims on the company's cash flows represented by asbestos liabilities. The backlog of asbestos cases and associated gross cash outflows continue to trend down (OI spent $221.1 million in asbestos- related payments in 2002, a 10% decline from 2001) and management anticipates asbestos payments will fall moderately over the next couple of years. However, the lack of meaningful insurance proceeds indicates that the company's near-term net cash outflows are expected to stay at historically high levels. When combined with margin erosion, free cash flow available for debt reduction is expected to remain minimal. Total debt outstanding was $5.76 billion at June 30, 2003, up from $5.35 billion at December 31, 2002 and $5.46 billion at June 30, 2002. On July 11, the company received $163 million from the sale of the Ardagh notes receivable, which was used to pay down debt. OI's glass container business (68% of 2002 net sales) has historically provided relatively stable margins. OI holds a 44% share in the North American glass container market (the North America glass business accounts for about a half of OI's overall glass business), and is characterized by long-term inflation- adjusted contracts with its major customers in North America. However, glass margins have been impacted in 2003 by cold weather, a national strike in Venezuela, higher energy costs and declining non-cash pension income. Over the long-term, margins could be restored through a reversal of these factors, along with continued productivity improvements and price increases. Consolidated margins have also suffered from the company's plastics operations (31% of 2002 sales), which remain under intense pricing pressure. While OI focuses on technology to avoid commodity-type products and continues to enjoy high margins in certain markets, overall competition has been severe, impacted by customer consolidation. Adjusted segment EBITDA margin fell to 19.6% for the last twelve months ending June 30, 2003 from 22.5% in 2002. Adjusted EBITDA margin in 2000 was 22.9%. For OI on a consolidated basis, reported EBITDA margins declined to 21.3% for LTM June, from 23.1% in 2002, 24.3% in 2001, and 25% in 2000. Without the effect of declining pension income, EBITDA margin for the first six months would have been 142 basis points higher. Deteriorating margins, combined with asbestos payments, will continue to pressure cash flow available for debt reduction. Total debt increased by $411.2 million during the first six months of 2003. Foreign currency movements have partially inflated debt as well. Total secured debt has also risen to $3.87 billion at June 30, 2003 from $3.65 billion at December 31, 2002. Total debt/EBITDA for LTM June rose to 4.64 times (the company-defined debt/EBITDA was 4.60x) from 4.08x (3.91x) in 2002 and secured LTM debt/EBITDA was 3.12x at June-end, compared with 2.78x at December-end, resulting in a deterioration of the position of unsecured creditors. 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. OI also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. PDC INNOVATIVE: Ragin' Ribs Agree to Extend Due Diligence Period ---------------------------------------------------------------- P.D.C. Innovative Industries, Inc. (OTCBB:PDCI) announced that in connection with the non-binding letter of intent with Ragin' Ribs International, Inc., the parties have informally agreed to indefinitely extend the due diligence period provided for in the non-binding letter of intent, which due diligence period expired August 28, 2003. No assurances are given that a transaction will be consummated. * * * As reported in Troubled Company Reporter's June 11, 2003 edition, P.D.C. Innovative Industries, Inc. said its financial statements had been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Management recognizes that the Company must generate capital and revenue to enable it to achieve profitable operations. The Company is planning on obtaining additional equity and/or debt financing to meet current and short term needs from one or more existing shareholders and possibly other sources, although it has no firm commitments for such funds. The realization of assets and satisfaction of liabilities in the normal course of business is dependent upon P.D.C. obtaining revenues and equity capital and ultimately achieving profitable operations. However, no assurances can be given that it will be successful in these activities. Should any of these events not occur, its financial statements will be materially affected. To the extent P.D.C. secures required funding, of which no assurances are given, it is currently estimated that laboratory testing will take approximately four to six months and that the FDA application process will take approximately 120 days from the date of submission. Assuming FDA approval, of which no assurances are given, the Company will then be reliant upon one or more third parties to manufacture or cause to be manufactured the Hypo-Pro and to commence sales and marketing efforts of such product. P.D.C. has no agreements, arrangements or understandings with any third parties to engage in any such activities and no assurances are given that it will enter into any arrangements with one or more third parties for such purposes. In view of its prior agreement with MMI to manufacture, market and sell the Hypo-Pro, which agreement was only recently terminated, the Company has not had any recent discussions with any third parties for such purposes, and does not currently know if it will be able to attract one or more qualified parties for such purposes. If third party manufacturers cannot be retained on commercially reasonable terms, the Hypo-Pro may not be able to be successfully commercialized as planned. Dependence upon third parties for the manufacture of Hypo-Pro components may adversely affect P.D.C.'s profit margins and the ability to develop and deliver the Hypo- Pro on a timely and competitive basis. The inability for whatever reason(s) to enter into arrangements with one or more third parties to successfully manufacture, market and sell such product will materially and adversely affect the Company, as such contemplated sales presently constitute its only source of anticipated meaningful revenue. Accordingly, the time required to achieve revenues from product sales and profitability, if at all, is uncertain. PENN TRAFFIC: Appoints James A. Demme as New Board Chairman ----------------------------------------------------------- The Penn Traffic Company (OTC: PNFTQ.PK) has appointed James A. Demme as its new Chairman of the Board, effective upon bankruptcy court approval, which is expected on September 16. Mr. Demme, known in the supermarket industry for guiding Bruno's Inc. and Homeland Stores through successful reorganizations, will replace Peter L. Zurkow, who will remain as a Director of the Company. "Jim Demme has a proven track record in generating positive sales growth and improving the profitability of the supermarkets he has led," said Mr. Zurkow. Syracuse-based Penn Traffic, which operates 211 supermarkets in six northeastern states, announced that for the first five months of his appointment, Mr. Demme will work on a full-time basis in Syracuse and be responsible for strategic planning, operational improvements and the business planning process; Mr. Demme will also help the Board of Directors to identify and screen candidates for a permanent CEO. "During the first phase of his work for Penn Traffic, Jim will be actively and aggressively involved in leading and shaping our Company," said Mr. Zurkow. "After that initial period, Mr. Demme will take a more traditional Chair role and work with the Company on a part-time basis." "I am excited to be joining the Penn Traffic team," said Mr. Demme. "Strong core operations, solid brand names, enviable market share in most of its markets, 17,000 dedicated employees and a seasoned management team-these are major advantages Penn Traffic enjoys as we seek to return the Company to a growth path. I am very confident that we will be able to develop and implement a business plan enabling Penn Traffic to exit reorganization as a stronger, more competitive company." Jim Demme joined Bruno's as Chairman and CEO in 1997, engineering the Alabama-based supermarket company's successful reorganization. After four years of steady growth under Mr. Demme, Bruno's was sold to Royal Ahold in 2001 and Mr. Demme retired a year later after leading a successful transition program. Since leaving Ahold, Mr. Demme has served as an Investment Principal for Sterling Capital Management, Inc., a Birmingham, Alabama-based investment management and venture capital firm. Prior to his stint at Bruno's, Mr. Demme was Chairman, Chief Executive Officer and President of Homeland Stores, Inc, an Oklahoma-based supermarket company, which he also guided through a successful reorganization. He has also held senior management positions at the Scrivner Company and served as President & Chief Operating Officer of Shaw's Supermarkets. Mr. Demme spent 20 years with the Great Atlantic and Pacific Tea Company, where he progressed through all store positions including Store Manager to the position of Division Manager. The Penn Traffic Company operates 211 supermarkets in Ohio, West Virginia, Pennsylvania, upstate New York, Vermont and New Hampshire under the Big Bear, Big Bear Plus, BiLo, P&C and Quality trade names. Penn Traffic also operates a wholesale food distribution business serving 77 licensed franchises and 53 independent operators. PG&E NATIONAL: Court Okays Sutherland Asbill as Energy Counsel -------------------------------------------------------------- The PG&E National Energy Group Debtors sought and obtained the Court's approval to employ Sutherland Asbill and Brennan as special energy counsel to assist in the winding down of their energy trading business. Sutherland Asbill has provided the NEG Debtors advice with respect to their energy trading business, including issues related to: * Swap contracts; * Forward contracts; * Futures contracts; * Derivative products and services; * Trading systems; * Netting arrangements; and * other similar products and transactions. The NEG Debtors anticipate that disputes may arise with respect to the transactions in the energy trading business. Sutherland Asbill's expertise will be invaluable in reaching negotiated resolutions and in related litigation. Sutherland Asbill is employed under a general retainer to perform the legal services required during the NEG Debtors' Chapter 11 cases in accordance with Sutherland Asbill's normal hourly rates and reimbursement policies. Sutherland Asbill maintains a $150,000 advance retainer to be applied to allowances of compensation and reimbursement of expenses. Sutherland Asbill's standard hourly rates are: Partners $350 - 635 Associates 195 - 365 Legal Assistants 100 - 220 Jacob Dweck, a partner at Sutherland Asbill's Washington office, attests that the firm does not have any connection with or any interest adverse to the NEG Debtors, their creditors, or any other party-in-interest. Sutherland is a disinterested party in accordance with Section 101(14) of the Bankruptcy Code. (PG&E National Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHOTOCHANNEL: Intends to Raise $3M through Private Placement ------------------------------------------------------------ PhotoChannel Networks Inc. (TSX-VEN: PNI), a global digital imaging network company, announced that further to its notice of non-brokered private placement financings, previously announced on August 26, 2003, and due to the recent interest of an arms length party, PhotoChannel now intends on closing on up to $3 million from its previously announced $2.75 million. The company still expects these financings to complete on or before September 16, 2003. The proposed financings are subject to the approval of the TSX Venture Exchange. The Exchange has neither approved nor disapproved of the information contained in this release. Founded in 1995, PhotoChannel -- whose December 2002 balance sheet shows a net capital deficit of about $2 million -- is a leading digital imaging technology provider for a wide variety of businesses including photofinishing retailers, professional/commercial photo processing labs, image content owners and targeted portal services. PhotoChannel has created and manages the open standard PhotoChannel Network environment whose focus is delivering digital image orders from capture to fulfillment under the control of the originating PhotoChannel Network partner. There are now over 1700 retail locations accepting print orders from the PhotoChannel system. For more information visit http://www.photochannel.com PPM AMERICA: S&P Puts BB Class A-2 Note Rating on Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1 and A-2 notes issued by PPM America High Yield CBO II (Cayman) Ltd., a CDO backed by high-yield bonds, and managed by PPM America Inc., on CreditWatch with negative implications. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the rated notes since the last rating action in June 2003. These factors include the continued par erosion of the collateral pool securing the rated notes and further deterioration in the weighted average coupon generated by the performing assets within the collateral pool. The overcollateralization ratio tests for PPM America High Yield CBO II (Cayman) Ltd. continue to be out of compliance and there has been further deterioration in the ratios since the last rating action. As per the August 2003 trustee report, the class A overcollateralization ratio was 106.38% (the minimum required is 118.90%), versus a ratio of 108.37% in June 2003, and the class B overcollateralization ratio was 95.87% (the minimum required is 111.20%), versus a ratio of 97.67% in June 2003. The weighted average coupon generated by the performing assets within the collateral pool has also trended downward since the last rating action. Currently, the weighted average coupon of the performing assets is 8.28% (the required minimum is 8.95%), as compared to 8.38% in June 2003. Standard & Poor's will be reviewing the results of current cash flow runs generated for PPM America High Yield CBO II (Cayman) Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the rated interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the transaction's current collateral pool to determine whether the ratings assigned are commensurate with the level of credit enhancement currently available. RATINGS PLACED ON CREDITWATCH NEGATIVE PPM America High Yield CBO II (Cayman) Ltd. Rating Balance ($ mil.) Class To From Orig. Current A-1 AA/Watch Neg AA 95.200 86.486 A-2 BB/Watch Neg BB 23.000 23.000 PRIMEDEX HEALTH: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Primedex Health Systems Inc. 1510 Cotner Avenue Los Angeles, California 90025 Bankruptcy Case No.: 03-33211 Type of Business: The Debtor, through its Subsidiaries, is a leading California provider of diagnostic imaging services. Chapter 11 Petition Date: September 4, 2003 Court: Central District of California, Los Angeles Judge: Alan Ahart Debtor's Counsel: Anne E. Wells, Esq. Levene, Neal, Bender, Rankin & Brill Llp 1801 Avenue Of The Stars, Suite 1120 Los Angeles, CA 90067 Tel: 310-299-1234 Total Assets: ($22,000,000) Total Debts: $17,800,000 PRIMUS KNOWLEDGE: Completes Acquisition of Broad Daylight Inc. -------------------------------------------------------------- Primus Knowledge Solutions (Nasdaq:PKSI) has completed its acquisition of Broad Daylight, Inc., a developer of enterprise self-service software, to further strengthen Primus' offerings to address the entire customer service continuum. "We're pleased to finalize our acquisition of Broad Daylight," said Michael Brochu, president and CEO of Primus. "Our combined self-service and assisted-service offerings position Primus at the forefront of the industry, providing cutting-edge technologies with a demonstrated return to our marquee customers." For more than a decade, Primus(R) (Nasdaq:PKSI) has provided knowledge management software solutions that help companies define, meet, and exceed the productivity and quality goals of their contact centers, help desks, and Web self-service environments. Businesses around the world use Primus software to increase customer satisfaction, improve employee efficiency, and lower operating costs. Primus customers include such industry leaders as 3Com, The Boeing Company, Concord Communications, EMC, Enterasys, Ericsson, Inc., Fujitsu Limited, Inc., IBM, Motorola, Novell, and VeriSign. For more information, visit http://www.primus.com Primus, Primus Knowledge Solutions, Primus Answer Engine, Primus eServer, Primus eSupport and Primus eServer iView are registered trademarks or service marks of Primus Knowledge Solutions, Inc. Other products and company names mentioned in this press release may be the trademarks of their respective owners. * * * Liquidity and Going Concern Uncertainty In its Form 10-Q for the quarter ended March 31, 2003, the Company said: "Our operations have historically been financed through issuances of common and preferred stock. For the quarter ended March 31, 2003, we incurred a net loss of approximately $1,130,000 and operating activities provided cash of approximately $224,000. At March 31, 2003, we have working capital of approximately $6.9 million. We believe we have sufficient resources to continue as a going concern through at least March 31, 2004. To reduce our cash used in operations, we put in place cost containment efforts during 2001 and restructured our operations during 2001 and 2002 by reducing headcount, exclusive of attrition, by 104 employees and eliminating excess facilities. Our plan to address our liquidity issues is to generate sufficient revenue from customer contracts or further reduce costs to provide positive cash flows from operations. There can be no assurance that we will be able to generate sufficient revenue from customer contracts, or further reduce costs sufficiently, to provide positive cash flows from operations. If we are not able to generate positive cash flows from operations, we will need to consider alternative financing sources. Alternative financing sources may not be available when and if needed by us or on favorable terms." PROPRIETARY INDUSTRIES: Red Ink Continued to Flow in Q3 2003 ------------------------------------------------------------ Proprietary Industries Inc., has released its consolidated financial statements for the quarter ended June 30, 2003. Net loss before income taxes and non-controlling interest was $2,949,884 on revenues of $13,074,830 for the quarter. This resulted in a loss of $0.05 per common share. Net loss before write-downs and losses on sales of assets and businesses was $1,755,144. This compares to a net loss for the second quarter before write-downs and gain on sale of investments of $1,810,176. Write-downs for the quarter ended June 30, 2003 reflect recognition of a demand note outstanding to SPIDA that was originally entered into in July 1999 and determined to still be outstanding, but had been recorded by previous management as having been extinguished. The statements can be viewed at http://www.sedar.com With respect to operations, the majority of the Company's operating assets currently generate adequate cash to service related debt but do not produce a return to the Company. As a result, corporate overhead costs, including significant professional fees, and the cost to service corporate debt continue to erode the Company's equity value. Notwithstanding these operational issues, many of these assets have significant equity value. Accordingly, it is management's intention to continue to pursue its current strategy of i) reducing corporate overhead and ii) converting underperforming assets into cash to reduce corporate and long-term debt. This strategy should ultimately result in the restructuring of the company's balance sheet to reflect the elimination of corporate debt and a positive cash position. This process will also provide the Company with the resources to continue its investigation of suspect historical transactions and finance the existing litigation against former officers and directors. The filing of the third quarter report finally brings the Company up to date on its reporting requirements with the regulatory authorities - a major accomplishment for current management, and the result of the significant efforts of our CFO, auditors and audit committee. Now that the company is in compliance with our reporting obligations, it expects to reach a settlement with the ASC with respect to matters related to the Notice of Hearing issued on January 31, 2002. Once this matter is settled, the Company will be in a position to make applications to the securities commissions in each of Alberta, Ontario and British Columbia to request the lifting of the cease trade orders which have been issued in each of the foregoing jurisdictions. Proprietary is based in Calgary, Alberta and listed on the Toronto and Swiss Stock Exchanges trading under the symbol PPI. Proprietary is a principal merchant bank that owns, manages and deals in a portfolio of financial, natural resource and real estate interests. The Toronto Stock Exchange and the SWX Swiss Exchange have neither approved nor disapproved the information contained herein. REGUS BUSINESS: Wants Lease Decision Period Intact Until Nov. 25 ---------------------------------------------------------------- Regus Business Centre Corp., and its debtor-affiliates ask for a further extension of time to determine whether to assume, assume and assign, or reject their remaining unexpired leases. The Debtors want through November 25, 2003, to make those decisions. The Debtors report that currently, they remain parties to about five leases that have not yet been assumed or rejected. These include office leases and other unexpired agreements for use of non-residential real property. The Leases, and the leased properties that Debtors license for use by their customers, constitute the core asset of Debtors' operating businesses and are fundamental to the successful consummation of any plan of reorganization. The Debtors submit that they must be able to continue to avail themselves of the protections of the Bankruptcy Code with respect to the assumption or rejection of the remaining Leases, because one key to their reorganization strategy is the adjustment of the amount of space leased with the Debtors' businesses can support. Moreover, Debtors must be able to continue to make efforts to renegotiate their rent obligations under the Leases in accordance with market rates. Debtors anticipate that they will be filing a motion to approve a proposed disclosure statement in the very near future. Debtors further anticipate that the proposed plan will address the status of the remaining leases. The Debtors tell the Court that they are still negotiating and documenting business deals with landlords concerning these remaining Leases. Hence, they Debtors must have adequate time either to complete these negotiations or to determine whether to assume or reject such Leases through the plan. Regus Business Centre Corp., filed for chapter 11 protection on January 14, 2003 (Bankr. S.D.N.Y. Case No. 03-20026). Karen Dine, Esq., at Pillsbury Winthrop LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed debts and assets of: Total Assets: Total Debts: ------------- ------------ Regus Business Centre Corp. $161,619,000 $277,559,000 Regus Business Centre BV $157,292,000 $160,193,000 Regus PLC $568,383,000 $27,961,000 Stratis Business Centers Inc. $245,000 $2,327,000 ROYAL & SUNALLIANCE: Sells US Ops. Renewal Rights to Travelers -------------------------------------------------------------- Royal & SunAlliance (NYSE:RSA) (LSE:RSA) announced a definitive agreement to sell the renewal rights for the majority of its US businesses to Travelers Property Casualty Corp. Business lines included in the sale are the company's Standard & Preferred Personal Lines, Risk Management casualty & domestic property, Marine and Middle Market Segments. In 2002, net written premiums for these businesses were $1.5 billion. The sale is part of a strategic shift by Royal & SunAlliance worldwide to refocus operations on those markets and businesses where it has a leading position, primarily the United Kingdom, Scandinavia and Canada. Royal & SunAlliance USA business lines not included in the sale are Non Standard Auto Personal Lines, DPIC, Grocers Insurance, Risk Management global property, Asia Branch and SJA Agency. The company is considering a range of options with respect to these businesses, including further renewal rights transactions and disposals. "This transaction represents a good opportunity for our businesses and customers, given Travelers' strong capital position and well- known service orientation," said Steve Mulready, Royal & SunAlliance USA president and CEO. "Yet, this is a difficult announcement to make. Royal & SunAlliance has a proud heritage in the US insurance market -- but now our presence will significantly change. "Our restricted capital position has challenged us over the past two years. Nevertheless, our employees stepped up to that challenge and brought our company back to a level of success that makes this sale possible. We now have the opportunity to work with our counterparts at Travelers to ensure a smooth transition for our customers and producers. And we will continue to support those businesses remaining with Royal & SunAlliance." Royal & SunAlliance will retain current policies in force until renewal as well as all liabilities associated with expired policies. The company will maintain a US operation to support and service these policies and pursue options for its remaining US businesses. An unspecified number of positions are also expected to transfer to Travelers. Global Redirection The actions announced by Royal & SunAlliance are the result of an extensive business and capital review launched by Group Chief Executive Andy Haste in May. Worldwide, the company is creating a more focused business, with commercial operations being weighted toward property coverages and personal lines focusing on direct distribution and selected intermediated lines. The company also announced a rights issue today as part of a process to further strengthen its balance sheet. "The components of a winning business exist, but much more needs to be done for that potential to be realized," said Group Chief Executive Andy Haste. "The rights issue we are announcing today will allow us to grow the profitable parts of our business identified by our review. We believe that, consistent with our overall strategy, the restructuring of our US operations will allow us to allocate capital and management resources more effectively to our chosen markets." Half-Year Results Royal & Sun Alliance Insurance Group plc, the parent of Royal & SunAlliance USA, today reported a six-month operating result of $579 million, up from $496 million for the corresponding period in 2002 (351 million pounds and 301 million pounds, respectively, on a UK reporting basis with an exchange-constant rate of 1.65). Globally, the company reported net written premiums of $6,029 million (3,654 million pounds) and a combined operating ratio of 99.3%, vs. $7,042 million (4,268 million pounds) and 104.6% for half-year 2002. Royal & SunAlliance USA also improved its half-year combined ratio (the ratio of expenses plus claims payments to premiums) to 107.4% from 111.2% for the first six months of 2002. The US operation increased 2003 net written premiums to $1,639 million vs. $1,524 million for the corresponding period in 2002. Royal & SunAlliance USA -- http://www.royalsunalliance-usa.com-- provides risk management and insurance solutions through two divisions focusing on property & casualty business and personal insurance. The company is part of London-based Royal & Sun Alliance Insurance Group plc (LSE: RSA; NYSE: RSA), one of the world's leading multi-line insurers. As reported in Troubled Company Reporter's Monday Edition, Fitch Ratings downgraded the insurer financial strength ratings of the Royal & SunAlliance USA insurance subsidiaries to 'BB-' from 'BBB+'. The companies represent the U.S. insurance operations of Royal & Sun Alliance Insurance Group plc. The ratings were also placed on Rating Watch Negative. The rating action follows various announcements related to RSA USA including likely reserve strengthening in third quarter 2003 in the range of $900 million and RSA USA's announcement that it has sold the renewal rights for its commercial and standard personal lines businesses, effectively placing a majority of the RSA USA book of business into run-off. Additionally, RSA has indicated that it will infuse capital into RSA USA only to the extent needed to maintain minimum statutory requirements from the proceeds of a fully underwritten rights offering of GBP 960 million ($1.5 billion). ROYAL & SUNALLIANCE: A.M. Best Puts USA Businesses Under Review --------------------------------------------------------------- A.M. Best Co. has placed the financial strength ratings of A- (Excellent) of the Royal & SunAlliance USA Insurance Pool (Charlotte, NC) and the Royal Surplus Lines Insurance Company (Connecticut), under review with negative implications. These actions follow the announcement by RS&A USA's UK parent, Royal & SunAlliance Insurance Group plc, of its restructuring of the U.S. business, which will likely include a substantial charge for loss reserves as well as disposition of a sizable portion of RS&A USA's commercial business and personal lines business. While the proposed restructuring in the U.S. will reduce RS&A's global consolidated risk capital requirements, A.M. Best remains concerned that the restructuring will negatively impact the business profile of RS&A USA operations and may significantly erode the capital position of the U.S. insurance entities. A.M. Best is currently assessing the impact of this restructuring on the U.S. companies' pro forma operating performance, capitalization and reserve adequacy and expects to conclude on the U.S. ratings by the time RS&A announces its third quarter results in November. For a comprehensive list of Royal & SunAlliance USA Insurance Pool's financial strength ratings please visit www.ambest.com/press/090405royalsunallianceusa.pdf A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com * * * As reported in Troubled Company Reporter's Monday Edition, Fitch Ratings downgraded the insurer financial strength ratings of the Royal & SunAlliance USA insurance subsidiaries to 'BB-' from 'BBB+'. The companies represent the U.S. insurance operations of Royal & Sun Alliance Insurance Group plc. The ratings were also placed on Rating Watch Negative. SANKATY HIGH YIELD: Fitch Affirms BB Senior Secured Notes Rating ---------------------------------------------------------------- Fitch Ratings affirms all of the rated notes issued by Sankaty High Yield Asset Partners, L.P. The affirmation of these notes is a result of Fitch's annual rating review process. The following rating actions are effective immediately: -- $30,000,000 senior secured revolving credit facility due Dec. 30, 2005 'A'; -- $85,000,000 senior secured notes due Jan. 31, 2006 'A'; -- $67,500,000 senior subordinated secured notes due Jan. 31, 2006 'BBB'; -- $22,500,000 subordinated secured notes due Jan. 31, 2006 'BB'. Sankaty, a market value collateralized debt obligation that closed on Jan. 15, 1998, is managed by Sankaty Advisors, LLC. The fund was established to invest in a portfolio of senior secured bank loans, high yield bonds, mezzanine and special situation investments. Over the last two years, Sankaty has significantly de-levered its capital structure, with current capital commitments of approximately 33% of the fund's original committed amounts. As the collateral portfolio has been reduced to redeem the fund's liabilities, semi-liquid and illiquid investments have become a larger percentage of the fund's total market value. At the July 24, 2003 valuation date semi-liquid and illiquid assets represented approximately 60% of the current market value of the portfolio. Most of these assets were classified in lower-advance rate categories reflecting their less liquid nature. Even with the reduced advanced amount of a significant percentage of the portfolio, the rated debt outstanding is well covered by the discounted collateral value of the portfolio assets. According to the July 24, 2003 valuation report, the senior overcollateralization test, the senior subordinated OC test and the subordinated OC test were 178.7%, 124.9% and 115.8%, respectively, relative to test levels of 100% each. It is important to note that due to the significant de-leveraging of the structure, roughly 47% of the fund's market value at July 24, 2003, consisted of Sankaty-affiliated CDO positions. Fitch is satisfied with the manner in which Sankaty Advisors, LLC is monitoring and managing these exposures. In addition, the fund's equity covers the market value of the Sankaty-affiliated CDO positions at a ratio of 147%. Based on the cushion of the OC tests, the conservative valuation of the semi-liquid and illiquid investments and the track record and experience of Sankaty Advisors LLC in the high-yield loan, mezzanine and special situation asset classes, Fitch has affirmed all of the rated liabilities issued by Sankaty High Yield Asset Partners, L.P. SANKATY HIGH YIELD: Lower-B Ratings on Classes D & E Affirmed ------------------------------------------------------------- Fitch Ratings affirms all of the rated notes issued by Sankaty High Yield Partners II, L.P. The affirmation of these notes is a result of Fitch's annual rating review process. The following rating actions are effective immediately: -- $435,000,000 senior secured revolving credit facility due Dec. 30, 2005 'AA'; -- $237,000,000 class A first senior secured notes due Nov. 30, 2007 'AAA'; -- $57,000,000 class B second senior secured notes due Nov. 30, 2007 'A'; -- $77,000,000 class C senior subordinated secured notes due Nov. 30, 2007 'BBB'; -- $37,500,000 class D subordinated secured notes due Nov. 30, 2007 'BB'; -- $22,500,000 class E junior subordinated secured notes due Nov. 30, 2007 'B'. Sankaty II, a market value collateralized debt obligation that closed on Nov. 23, 1999, is managed by Sankaty Advisors, LLC. The fund was established to invest in a portfolio of senior secured bank loans, high yield bonds, mezzanine and special situation investments, and structured product transactions. The class A notes benefit from an insurance policy provided by Financial Security Assurance Inc. Without giving effect to this policy, the rating of the class A notes would be affirmed at 'AA'. At the July 24, 2003 valuation date, the fund's portfolio was well diversified by issuer and asset category. The largest three issuers, which are classified as liquid investments, represent approximately 10% of the total market value of the fund's assets. Performing bank loans priced at or above 90% of par represented approximately 46% of the market value of the Sankaty II portfolio. Other bank loans and high yield securities accounted for an additional 19% of the fund's market value. Semi-liquid and illiquid assets represented approximately 17% of the market value of the portfolio at the July 24, 2003 valuation date. Most of these assets were classified in lower-advance rate categories reflecting their less liquid nature. Even with the reduced advanced amount of a significant percentage of the portfolio, the rated debt outstanding is well covered by the discounted collateral value of the portfolio assets. According to the July 24, 2003 valuation report, the class A, B, C, D and E overcollateralization tests were 135.9%, 125.9%, 115.5%, 111.2% and 110.7%, respectively, relative to test levels of 100% each. It is important to note that a small portion of the fund's market value at July 24, 2003 consisted of Sankaty-affiliated CDO positions. Fitch is satisfied with the manner in which Sankaty Advisors, LLC is monitoring and managing these exposures. Based on the diversity of the fund's portfolio, the cushion of the OC tests, the conservative valuation of the semi-liquid and illiquid investments and the track record and experience of Sankaty Advisors LLC in the high-yield loan, mezzanine and special situation asset classes, Fitch has affirmed all of the rated liabilities issued by Sankaty High Yield Partners II, L.P. SIERRA HEALTH: Will Publish Third Quarter Results on October 22 --------------------------------------------------------------- Sierra Health Services Inc. (NYSE:SIE) will release its third quarter financial results after market close on Wednesday, Oct. 22, 2003. A conference call with investors, analysts and the general public is scheduled for 11 a.m. (Eastern time) on Thursday, Oct. 23, 2003. Listeners in the United States may access the conference call by dialing 888-425-9978. Listeners overseas may access the call by dialing 773-756-4602. The passcode for both numbers is EARNINGS. Individuals who dial in to listen to the call will be asked to identify themselves and their affiliations. Listeners may also access the conference call free over the Internet by visiting the investor relations page of Sierra's Web site at http://www.sierrahealth.com To listen to the live call on the Web site, please visit the Sierra site at least 20 minutes early (to download and install any necessary audio software). In order to facilitate a better understanding of the call, Sierra is asking listeners to review its Annual Report on Form 10-K/A for the year ended Dec. 31, 2002, and Quarterly Report on Form 10-Q for the three months ended June 30, 2003. Listeners should review cautionary statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations." Sierra Health Services Inc., based in Las Vegas, is a diversified healthcare services company that operates health maintenance organizations, indemnity and workers' compensation insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. For more information, visit the company's Web site at http://www.sierrahealth.com Sierra Health Services, Inc. -- Long-term issuer 'BB'/Stable; -- Senior debt 'BB'/Stable. Health Plan of Nevada Sierra Health & Life Insurance Company -- Insurer financial strength 'BBB'/Positive. California Indemnity Insurance Co. Commercial Casualty Insurance Co. CII Insurance Co. Sierra Insurance Company of Texas -- Insurer financial strength 'BBB'/Evolving. SIRIUS SATELLITE: Annual Shareholders Meeting Slated for Nov. 25 ---------------------------------------------------------------- SIRIUS Satellite Radio (Nasdaq: SIRI), known for delivering the very best in commercial-free music and premium audio entertainment to cars and homes across the country, announced that its annual meeting of stockholders will be held on Tuesday, November 25, 2003 at 10:30 a.m. at The McGraw-Hill Building, in the auditorium, 2nd Floor, 1221 Avenue of the Americas, New York, New York 10020. Proposals for inclusion by stockholders in the SIRIUS Proxy Statement for the 2003 Annual Meeting of Stockholders must be received by the company by September 19, 2003. SIRIUS (S&P, CCC Corporate Credit Rating, Stable) is the only satellite radio service bringing listeners more than 100 streams of the best music and entertainment coast-to-coast. SIRIUS offers 60 music streams with no commercials, along with over 40 world- class sports, news and entertainment streams for a monthly subscription fee of only $12.95, with greater savings for upfront payments of multiple months or a year or more. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Satellite radio products bringing SIRIUS to listeners in the car, truck, home, RV and boat are manufactured by Kenwood, Panasonic, Clarion and Audiovox, and are available at major retailers including Circuit City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is the leading OEM satellite radio provider, with exclusive partnerships with DaimlerChrysler, Ford and BMW. Automotive brands currently offering SIRIUS radios in select new car models include BMW, MINI, Chrysler, Dodge, Jeep(R), Nissan, Infiniti, Mazda and Audi. Automotive brands that have announced plans to offer SIRIUS in select models include Ford, Lincoln, Mercury, Mercedes-Benz, Jaguar, Volvo, Volkswagen, Land Rover and Aston Martin. SK GLOBAL: Court Approves KPMG Engagement as Financial Advisors --------------------------------------------------------------- SK Global America Inc., and its debtor-affiliates obtained Judge Blackshear's permission to employ KPMG LLC as accountants and financial advisors, nunc pro tunc to July 21, 2003. With the Court's approval, 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 will 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 (SK Global Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) SORRENTO NETWORKS: 2nd-Quarter Ops. Net Loss Tumbles 72% to $4MM ---------------------------------------------------------------- Sorrento Networks Corp. (Nasdaq NM: FIBR), a supplier of optical networking equipment for carriers and enterprises worldwide, announced financial results for its second quarter of fiscal year 2004. For the quarter ended July 31, 2003, the company reported revenues of $4.5 million, a 14% decrease from revenues of $5.2 million in the second quarter of fiscal 2003. For the six months ended July 31, 2003, the company reported revenues of $12.4 million, a 10% increase from revenues of $11.2 million in the first six months of the prior fiscal year. Gross margin in the second quarter of fiscal 2004 improved to 30% as compared to gross margin of 25% in the first quarter of fiscal 2004. The improvement can be primarily attributed to the continued focus on operations overhead reductions. Operating expenses for the quarter declined to $5.5 million, a 2% improvement over $5.6 million in the previous quarter and a 55% improvement over $12.1 million in the second quarter of fiscal 2003. The company completed its $81 million capital restructuring program during the quarter with its Series A Preferred Shareholders and Senior Convertible Debenture Holders. The capital restructuring successfully converted existing debt obligations into common stock and an extended $13.1 million convertible debenture due in August 2007. Capital restructuring costs, primarily legal expenses, continued to be incurred in the second quarter. Net loss from operations for the second quarter of fiscal year 2004 improved by 72% to $4.1 million compared to $14.4 million for the same quarter of fiscal 2003. For the six months ended July 31, 2003, the company reported net loss from operations of $7.7 million, a 63% improvement from a net loss of $20.9 million in the first six months of the prior fiscal year. The company reported net income applicable to common shares of $12.5 million for the second quarter, primarily the result of other income recognized on the retirement of the company's old debentures in its restructuring and $4.0 million in gain on sale of marketable securities. This compares to a net loss of $15.8 million in the second quarter of fiscal 2003. Another significant improvement during the quarter was the increase in stockholders' equity to $13.1 million as compared to negative stockholders' equity of $39.6 million for the period ending April 30, 2003. "We had major achievements in this quarter, including the completion of our capital restructuring, our acquisition of LuxN and our continued control of expenses," said Phil Arneson, chairman and chief executive of Sorrento Networks. "Sales were down from the first quarter as the telecom business remains difficult, but we are excited about the potential from the addition of the LuxN product line and the forthcoming introduction of VOD products." Major Second Quarter Developments 1) Capital Restructuring On June 5, 2003, the company completed the capital restructuring that converted $81 million in debt obligations from the company's balance sheet into common shares of the company and into $13.1 million in secured convertible debentures maturing in August 2007. This capital restructuring provides the following benefits: -- Eliminates significant debt from the company's balance sheet; -- Provides financial flexibility and opportunity for raising additional capital; -- Satisfies the stockholders' equity requirements for Nasdaq listing; and -- Simplifies Sorrento's corporate structure and streamlines operations for greater efficiencies. 2) Acquisition of LuxN Inc. On June 26, 2003, Sorrento announced its plan to acquire LuxN. The acquisition was completed shortly after the close of the second quarter on Aug. 8, 2003. LuxN supplies optical access equipment for the network edge using coarse and dense wavelength division multiplexing (CWDM and DWDM) technology. LuxN's OSMINE-certified products enable delivery of high-bandwidth data, storage, video and voice services for service providers, cable MSOs and enterprises. The acquisition expands Sorrento's addressable market by adding "best-of-breed" optical access products to Sorrento's metro/regional portfolio and enhances the company's edge-to-core network offerings. It also broadens Sorrento's 30-plus blue-chip customer base by adding over 20 new customers including Time Warner Telecom, Hawaii I-Net, Yipes Enterprise Services and numerous universities, and expands Sorrento's installed base to over 2,000 nodes. 3) Product Introductions The company continues to add market-driven products and product enhancements to its portfolio. -- The addition of the access CWDM and DWDM products from the LuxN acquisition round out the company's optical transport product family and open up complementary market opportunities in access and enterprise applications. -- The company recently announced the addition of a 10-port Gigabit Ethernet multiplexer for VOD transport and metro- Ethernet applications. This product, the first of a series, is scheduled for release in October 2003. 4) Business Development During the second quarter, the company achieved IBM's "TotalStorage(TM) Proven" status. The IBM TotalStorage Proven program promotes storage network customer confidence and facilitates the sales process by pre-testing product combinations for interoperability. Sorrento also earned "RUS Acceptance" for GigaMux and JumpStart from the Rural Utilities Service branch of the United States Department of Agriculture. Being listed with the RUS expands Sorrento's addressable market by allowing rural telephone and utility companies to purchase and deploy Sorrento's products with funds obtained through low-interest RUS loans. Earlier this year, the USDA committed to financing $1.4 billion of such loans and loan guarantees for the enhancement of rural telecommunications services. Sorrento Networks, with headquarters in San Diego makes optical networking equipment for carriers and enterprises worldwide. Sorrento's products help customers increase profitability by improving transport efficiency and expanding the addressable market of their fiber networks. Sorrento's customer base and market focus includes cable TV operators, telecom carriers, and service providers. Sorrento's products are also used for storage area networking and enterprise private networking. Sorrento Networks' GigaMux is a metro and regional DWDM system designed for high-performance, multi-protocol transport. GigaMux is a compact, flexible, and cost-effective system based on a "pay- as-you-grow" architecture that allows carriers and enterprises to start small and expand their networks in conjunction with customer demand. Sorrento also offers cost-effective coarse wavelength division multiplexing products that are ideal for optical access and transport applications. Sorrento Networks' July 31, 2003 balance sheet shows a total shareholders' equity of about $13 million, as compared to a net capital deficit of about $39 million three months ago. SPIEGEL GROUP: Reports List of Reclamation Claims Deemed Valid -------------------------------------------------------------- Pursuant to the Court order establishing procedures for the treatment of reclamation claims, all parties-in-interest have the right and opportunity to object to the inclusion or omission of any asserted reclamation claim in the Spiegel Debtors' report. Any reclamation claim that is not subject to an objection within 20 days after service will be deemed valid. Furthermore, all allowed reclamation claims will be treated as administrative expenses of the Debtors' estates pursuant to Section 503(b) of the Bankruptcy Code, which the Debtors are authorized to pay before the confirmation of a reorganization plan. In accordance with the Reclamation Order, these individual Debtors list the reclamation claims they consider valid: 1. Spiegel, Inc.: Claimant Amount Amount Deemed Valid -------- ------ ------------------- Dell Marketing, L.P. $1,456 $1,430 2. Spiegel Catalog, Inc.: Claimant Amount Amount Deemed Valid -------- ------ ------------------- Boise Cascade $5,792 $4,198 Levi Strauss 12,837 12,838 Otto International Ltd. 5,663,917 513,972 Reebok International LTD 49,109 45,553 S. Lichtenberg & Co., Inc. 57,382 24,380 3. Spiegel Publishing Co. Claimant Amount Amount Deemed Valid -------- ------ ------------------- International Paper $1,158,671 $1,041,931 4. Eddie Bauer, Inc. Claimant Amount Amount Deemed Valid -------- ------ ------------------- Boise Cascade $2,883 $2,883 CMG Equipment 33,563 2,348 Corrales Designs, Inc. Not provided 5,336 D' Clase Apparel Int'l. 18,044 18,044 Imperial Schrade 54,815 48,240 Kentucky Apparel, LLP 1,728,749 122,405 Otto International Ltd. 16,644,058 1,976,118 Ross Display 3,475 161 Tainan Enterprises Corp. 379,670 47,203 Textill San Cristobal S.A. 30,275 4,598 Tracon Export Services 8,503 8,503 Universal Apparel Int'l. 254,354 77,118 Wallace Computer Services 3,613 3,555 5. Newport News, Inc. and Spiegel Group Teleservices, Inc. Claimant Amount Amount Deemed Valid -------- ------ ------------------- Boise Cascade (NNI) $2,542 $1,760 Boise Cascade (SGTS) 2,837 2,296 Otto International Ltd. 1,548,687 269,968 Transco 80,779 80,779 6. Distribution Fulfillment Services, Inc. Claimant Amount Amount Deemed Valid -------- ------ ------------------- Inland Paperboard & Packaging $41,190 $37,367 Tecumseh Corrugated 880 880 (Spiegel Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) STONE & WEBSTER: Delaware Court Approves Disclosure Statement ------------------------------------------------------------- Stone & Webster, Incorporated (OTC: SWBIQ.PK) and Stone & Webster Engineers and Constructors, Inc., announced that the United States Bankruptcy Court for the District of Delaware entered an order approving the Disclosure Statement relating to the companies' Third Amended Joint Plan of Reorganization. The Amended Plan, which was filed with the Bankruptcy Court on August 12, 2003, has the support of Federal Insurance Company and Maine Yankee Atomic Power Company, the companies' two largest unsecured creditors, as well as the Official Committee of Unsecured Creditors and the Official Committee of Equity Holders of Stone & Webster, Incorporated. The Amended Plan provides for the creation of separate consolidated estates for Stone & Webster, Incorporated and certain of its debtor subsidiaries and Stone & Webster Engineers and Constructors, Inc. and certain of its debtor subsidiaries, with each estate to be separately funded and administered. Equity holders as of the August 27, 2003 record date who vote to accept the Amended Plan and tender their shares may receive an initial distribution on the effective date of up to $.62 per share in cash, $.50 of which is contingent upon Federal Insurance Company first receiving a distribution of $25 million, which is expected to be available on the effective date of the Amended Plan. Equity holders who become record holders after the August 27th record date or who do not vote to accept the Amended Plan will not be entitled to participate in the initial distribution to equity holders, but would receive their pro rata share of any residual distributions made to equity holders after creditors of the consolidated estate of Stone & Webster, Incorporated are paid in full, subject to the risks discussed in the Disclosure Statement. Voting and solicitation materials with appropriate instructions are projected to be mailed to creditors and equity holders in early to mid-September 2003. The confirmation hearing on the Amended Plan is scheduled for October 31, 2003. The Amended Plan, which remains subject to confirmation by the Bankruptcy Court and is subject to a number of other conditions, is expected to become effective during the fourth quarter of 2003 or the first quarter of 2004. Interested parties are urged to read the Amended Plan and the related Disclosure Statement, copies of which have been filed with the Bankruptcy Court and the Securities and Exchange Commission. More information is available on the companies' Web site at http://www.stonewebinc.com SYSTECH RETAIL: Court Confirms First Amended Reorganization Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina confirmed Systech Retail Systems (U.S.A.), Inc.'s Plan of Reorganization, as amended, after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) all regulatory approvals that are necessary have been obtained or are respected; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Plan provides for the continuation of all retiree benefits in compliance with 11 U.S.C. Sec. 1114. The Plan provides for the substantive consolidation of the Debtors. The parent company will emerge as a reorganized Debtor and the ultimate parent company of the reorganized Debtors. New Financing The Debtors propose to enter into the Exit Financing with Argosys Bridge Fund LP, I on the Effective Date in the amount of CDN5 million. Systech Retail Systems (USA) Inc., along with two other affiliates filed for chapter 11 protection on January 13, 2003, (Bankr. E.D.N.C. Case No. 03-00142). Systech, headquartered in Raleigh, North Carolina, is an independent developer and integrator of retail technology, including software, systems and services to supermarket, general retail and hospitality chains throughout North America. N. Hunter Wyche, Esq., at Smith Debnam Narron Wyche & Story represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million. TENET HEALTHCARE: Senate Finance Committee Commences Inquiry ------------------------------------------------------------ Tenet Healthcare Corporation (NYSE:THC) said it received a letter Friday from Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, notifying the company that the committee has begun an investigation of Tenet's "corporate governance practices with respect to federal health care programs." The committee has asked the company to supply it with numerous documents principally relating to Redding Medical Center, physician relationships, alleged unnecessary medical procedures and Medicare outlier payments. The company said it would cooperate with the committee. Tenet said it takes such matters extremely seriously and is working diligently to address all the challenges it faces. To date, the company's new leadership has, among other things: -- Appointed three new independent directors and implemented sweeping governance changes, including the election of a new non-executive chairman. -- Significantly enhanced and broadened its compliance efforts, promoted a new chief compliance officer who reports directly to the Ethics, Quality and Compliance Committee of the board of directors, and brought in a former chief counsel in the Office of Inspector General of the Department of Health and Human Services to assist in strengthening Tenet's compliance efforts. -- Named a nationally recognized cardiologist to lead the cardiac services team at Redding Medical Center and agreed to name a physician as director of medical affairs and to have unaffiliated physicians perform random reviews of cardiac procedures at that hospital. -- Implemented a new policy regarding outlier payments and voluntarily reduced the amount of such payments it receives. -- Appointed a physician to lead a broad array of clinical quality improvement initiatives that Tenet is implementing at its hospitals. -- Implemented a series of initiatives to enhance the practice and leadership of nursing in its hospitals and named a nurse executive to lead the effort. -- Promoted its top hospital operators to the senior executive management team and placed a seasoned hospital executive who is also a medical doctor in charge of its large California market. Tenet Healthcare Corporation, through its subsidiaries, owns and operates 113 acute care hospitals with 27,674 beds and numerous related health care services. Tenet and its subsidiaries employ approximately 114,061 people serving communities in 16 states. Tenet's name reflects its core business philosophy: the importance of shared values among partners -- including employees, physicians, insurers and communities -- in providing a full spectrum of health care. Tenet can be found on the World Wide Web at http://www.tenethealth.com At June 30, 2003, Tenet Healthcare's balance sheet shows a total shareholders' equity deficit of about $5.5 billion. TWINLAB CORP: S&P Ratings Dive to D After Chapter 11 Filing ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on vitamin manufacturer Twinlab Corp. to 'D' from 'CCC-'. At the same time, the company's senior subordinated notes rating has been lowered to 'D' from 'CC'. The rating action follows Twinlab's voluntary filing of a Chapter 11 petition in the U.S. Bankruptcy Court on Sept. 4, 2003. The company reported $70.6 million in total debt as of March 31, 2003. Hauppauge, New York-based Twinlab is a manufacturer and marketer of vitamins and nutritional supplements sold in health food stores as well as through mass merchants and direct-to-consumer channels. TWINLAB CORP: Wants Schedule-Filing Deadline Moved to Oct. 19 ------------------------------------------------------------- Twinlab Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend the time period within which they must file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases as required by 11 U.S.C. Sec. 521(1). Due to the complexity and diversity of their operations, the Debtors anticipate that they will be unable to complete their Schedules and Statements in the time required under Bankruptcy Rule 1007(c). To prepare their required Schedules and Statements, the Debtors must compile information from books, records, and documents relating to a multitude of transactions at several locations in the United States and the United Kingdom. Collection of the necessary information will require a heavy expenditure of time and effort on the part of the Debtors and their employees. While the Debtors, with the help of their professional advisors, are mobilizing their employees to work diligently and expeditiously on the preparation of the Schedules and Statements, resources are strained. Unavoidably, the primary focus thus far has been on getting these cases filed and reacting to the trauma of filing. In view of the amount of work entailed in completing the Schedules and Statements and the competing demands upon the Debtors' employees and professionals to assist in efforts to stabilize the business operations during the initial postpetition period, the Debtors will not be able to properly and accurately complete the Schedules and Statements within the 15 day time period imposed by the Bankruptcy Code. At the present time, the Debtors anticipate that they will require at least 30 additional days to complete their Schedules and Statements. The Debtors therefore request that the Court afford them until October 19, 2003 to complete and file their Schedules and Statements. Headquartered in Hauppauge, New York, Twinlab Corporation manufactures and markets high quality, science-based, nutritional supplements. The Company filed for chapter 11 protection on September 4, 2003 (Bankr. S.D.N.Y. Case No. 03-15564). Michael P. Kessler, Esq., at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. UNITED AIRLINES: Selling One Boeing 747 to Dubai Air for $51MM -------------------------------------------------------------- With the Court's permission, the United Airlines Debtors will sell one used Boeing 747-422 aircraft, bearing manufacturer serial number 26903 and U.S. registration number N108UA to Dubai Air Wing. The Debtors determined that the aircraft was no longer essential to their fleet plan. The aircraft will be sold for $51,000,000, free and clear of liens, claims, and encumbrances. The war in Iraq, declining passenger demand for travel, in particular, international travel, and an inability to predict when customers will resume flying prompted the Debtors' decision to sell the aircraft. These factors made the Debtors' overcapacity burdensome to their operations. There is also a small market for widebody aircraft. By removing the aircraft from their fleet, the Debtors will eliminate a needless drain on their cash resources. They will also do away with future maintenance and storage costs for the aircraft. The Debtors have extensively marketed the aircraft for more than two years now but have received only three offers for the property. The Debtors accepted Dubai Air's offer as it will result in over $50,000,000 in net proceeds. Under the terms of an asset purchase agreement recently finalized by the parties, the Debtors will also sell to Dubai Air two spare engines for $2,000,000. As soon as the Debtors deliver the aircraft, the parties will use their best efforts to negotiate a maintenance service agreement wherein the Debtors will provide engine repair services. The Debtors will deliver the aircraft to Dubai Air by September 15, 2003. James H.M. Sprayregen, Esq., at Kirkland & Ellis, relates that 40% of the sale's net proceeds -- over $20,000,000 -- will be applied to prepay the outstanding balance on the Debtors' term loan. The rest of the proceeds will be applied to the Debtors' revolving credit loan. Dubai Air is not an "insider" of any of the Debtors within the meaning of Section 101(31) of the Bankruptcy Code and is not currently controlled by, or acting on behalf of, any insider. (United Airlines Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED PAN-EUROPE: UGC Europe Inc. Becomes Successor Issuer ----------------------------------------------------------- On September 3, 2003, UGC Europe, Inc., a Delaware corporation (f/k/a New UPC, Inc.), became the successor issuer to United Pan- Europe Communications N.V., as a result of the consummation of the transactions contemplated by the Second Amended Chapter 11 Plan of Reorganization, as modified, of United Pan-Europe Communications N.V. and UGC Europe, Inc., under Chapter 11 of the U.S. Bankruptcy Code, as confirmed by the U.S. Bankruptcy Court for the Southern District of New York on February 20, 2003. As a result of the consummation of the transactions contemplated by the Plan, UGC Europe, Inc. became the successor issuer to United Pan-Europe Communications N.V. The shares of common stock, par value $.01 per share, of UGC Europe, Inc. issued in connection with the consummation of the Plan are deemed registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, under clause (a) of Rule 12g-3 of the Exchange Act, and UGC Europe, Inc. is thereby subject to the informational requirements of the Exchange Act and the rules and regulations promulgated thereunder. UNOVA INC: Completes Sale of Lamb Body & Assembly Systems Div. -------------------------------------------------------------- UNOVA, Inc. (NYSE:UNA) has sold principally all the assets and existing backlog of its Lamb Body & Assembly Systems division to Utica Body & Assembly, Inc., a subsidiary of Utica Enterprises, Inc. (Shelby Township, Mich.), for approximately the net book value of the assets sold. Lamb Body & Assembly Systems designs, integrates and builds vehicle body and assembly equipment including robotic welding and hemming systems. The transaction also includes Lamb's J.S. McNamara Company, an engineering services organization that supplies body-in-white process engineering and tool design to automotive customers and suppliers. UNOVA is a leading supplier of wireless networking, mobile computing and RFID technology for the supply-chain management and e-commerce fulfillment markets and is also a leading supplier of manufacturing technologies to the global automotive and aerospace industries. For more information on the Company, visit http://www.unova.com As reported in Troubled Company Reporter's July 4, 2003 edition, Fitch Ratings upgraded UNOVA Inc.'s senior unsecured rating to 'B-' from 'CCC'. The Rating Outlook is Stable. The change in the rating reflects UNA's strengthening its balance sheet by reducing debt levels through a pension reversion, asset sales, reduction of net working assets, and a series of patent settlements. Also, high level of liquidity and improved operating performance support the rating. USG CORP: Wants Lease Decision Period Extended to March 1, 2004 --------------------------------------------------------------- USG Corporation and its debtor-affiliates ask the Court to extend the period within which they may assume or reject any prepetition unexpired non-residential real property lease until March 1, 2004. The Debtors inform the Court that they have 195 Real Property Leases. Given the importance of these Leases to their ongoing operations and the number of leases at issue, the Debtors assert that it would be imprudent to require them to decide whether to assume or reject the Real Property Leases at this stage in their Chapter 11 cases. Unless they are granted additional time to make their election regarding the Real Property Leases, the Debtors are at risk of prematurely and improvidently assuming or rejecting the leases without necessary evaluations, determinations, negotiations and discussions with the relevant landlords and their creditor constituencies. The Debtors assure the Court that pending their election to assume or reject the Real Property Leases, they will timely perform all their obligations arising from and after the Petition Date, as required by Section 365(d)(3) of the Bankruptcy Code. The Debtors believe that as a result, there will be little or no prejudice to the landlords under the leases. The Debtors also inform that, in fact, the aggregate amount of prepetition arrearages under the Real Property Leases is relatively small, as rent under many of these leases is paid in advance. Judge Newsome will hold a hearing on September 30, 2003 to consider the Debtors' request. Pursuant to Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the Delaware Bankruptcy Court, the Debtors' lease decision deadline is extended until the conclusion of that hearing. (USG Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 609/392- 0900) VARSITY BRANDS: Extends Consent Payment Deadline re Tender Offer ---------------------------------------------------------------- Varsity Brands, Inc. (Amex: VBR) announced that in connection with the cash tender offer for all of its outstanding 10-1/2% Senior Notes due 2007 and the related solicitation of consents to certain proposed amendments to the Indenture under which the Securities were issued, it has extended to 5:00 P.M., New York City time, on September 5, 2003, the "consent payment deadline." All conditions to consummation of the tender offer and consent solicitation continue to apply. Varsity Brands, Inc. will purchase outstanding Securities at a purchase price of $1,037.50 per $1,000 principal amount at maturity. The purchase price payment includes a consent fee paid only for Securities validly tendered prior to the consent payment deadline, which has been extended to be 5:00 P.M., New York City time, on September 5, 2003. The consent fee will be an amount equal to 0.25% of the principal amount of the Securities that are validly tendered by the consent payment deadline. Holders who have previously tendered their Securities need not take any further action as a result of this extension. Holders who have not previously tendered their Securities may do so by following the directions in the letter of transmittal and consent previously sent to holders. Holders who tender their Securities after the consent payment deadline will only receive $1,035 per $1,000 principal amount at maturity. The offer will expire at 12:00 midnight, New York City time, on September 12, 2003, unless extended or earlier terminated. Payment for tendered Securities will be made in same day funds on the first business day following expiration of the offer, or as soon thereafter as practicable. Jefferies & Company, Inc. is acting as Dealer Manager and Information Agent for the offer. The Depositary is HSBC Bank USA. The Company's obligation to purchase tendered Securities is conditioned upon, among other things, the consummation of the merger between the Company and VB Merger Corporation, a wholly owned subsidiary of VBR Holding Corporation, pursuant to an Agreement and Plan of Merger by and among the Company, VB Merger Corporation and VBR Holding Corporation, dated April 21, 2003. VB Merger Corporation and VBR Holding Corporation were formed by Green Equity Investors IV, L.P., a private investment fund formed by Leonard Green & Partners for the purpose of acquiring majority ownership of the Company. Simultaneously with the mailing of the Offer to Purchase and Consent Solicitation Statement, the Company mailed a Proxy Statement in connection with a special meeting of stockholders of the Company to be held on September 15, 2003 for the purpose of adopting the merger agreement. Varsity Brands, Inc. (S&P, B Long-Term Corporate Credit Rating, Negative) is a leading provider of goods and services to the school spirit industry. The Company designs, markets and manufactures cheerleading and dance team uniforms and accessories, as well as dance and recital apparel for the studio dance market; operates cheerleading and dance team instruction camps throughout the United States; produces nationally televised cheerleading and dance team championships and other special events; and operates studio dance competitions and conventions. The Company markets its proprietary products and services to schools, recreational organizations, coaches and participants in the extra-curricular market using its own nationwide sales force, as well as websites that are targeted to specific audiences and specific activities. WEIRTON STEEL: Court Okays Houlihan Lokey as Investment Banker -------------------------------------------------------------- Weirton Steel Corporation obtained permission from the Court to employ Houlihan Lokey Howard & Zukin Capital as investment banker during this Chapter 11 case. Judge Friend makes it clear that Houlihan Lokey will be subject to any general order entered by the Court relating to limitations upon the scope of indemnification. Houlihan Lokey will provide investment banking services in connection with: (a) the assessment of Weirton's financial restructuring or other strategic alternatives, and (b) a possible financial restructuring transaction of the Debtor; a possible merger or other transaction involving the sale of all or substantially all of the business, assets or equity interests of Weirton in one or more transactions; or a possible private placement of equity and debt securities. Specifically, Houlihan Key will be: (a) reviewing the Company's financial condition, operations, competitive environment, business plans, historical and projected financial results, and forecasted capital requirements; (b) analyzing the Company's restructuring or other strategic alternatives and presenting findings to the Company's board of directors; (c) evaluating indications of interest and proposals regarding a Transaction; (d) assisting in the drafting, preparation and distribution of selected information and other related documentation describing the Company and the terms of a potential Transaction; (e) advising the Company as to the financial terms of the Transaction; (f) negotiating the financial aspects, and facilitating the consummation, of any Transaction; and (g) providing other investment banking services reasonably necessary to accomplish the foregoing. Pursuant to the Engagement Letter, Houlihan Lokey is entitled to receive compensation generally summarized as: (a) Commencing as of April 17, 2003, and ending on the termination of the Engagement Letter, and whether or not a Transaction is proposed or consummated, a monthly cash advisory fee equal to $150,000 per month. The Advisory Fee will be payable by Weirton in advance on the 17th day of each month without notice or invoice; (b) In the event a Restructuring Transaction entails any modification, repayment or refinancing of any outstanding indebtedness of Weirton, Weirton will pay Houlihan Lokey a fee equal to $3,000,000, less 50% of all Advisory Fees received by Houlihan Lokey after the first six payments of Advisory Fees hereunder. For purposes of this application, Indebtedness will include any bank debt, mortgage debt, capital leases, notes, bonds, or any other liabilities outstanding as of the consummation of the Restructuring Transaction. The Restructuring Transaction Fee will be payable in cash upon: (1) the effective date of an out-of-court restructuring through an exchange or tender offer, refinancing or other mechanism, (2) obtaining the requisite consents to a "pre-packaged" Chapter 11 plan of reorganization solicited pursuant to Section 1126(b) of the Bankruptcy Code, or (3) the confirmation of a Chapter 11 plan of reorganization. A Restructuring Transaction Fee will not be payable if a Chapter 11 case is converted to a Chapter 7 liquidation; (c) Upon consummation of a Sale Transaction, a fee equal to 1% of the Transaction Value, less 50% of all Advisory Fees received by Houlihan Lokey after the first 12 payments of Advisory Fees; and (d) Upon the consummation of a Financing Transaction, a fee equal to the sum of: (1) 7% of the aggregate amount of all equity or common stock placed or committed, (2) 5% of the aggregate amount of all preferred stock and convertible debt securities placed or committed, and (3) 3.5% of the aggregate principal amount of all unsecured, non-senior and subordinated debt securities placed or committed. In the event that both a Restructuring Transaction Fee and a Sale Transaction Fee are due, Houlihan Lokey will be entitled to only one Transaction Fee equal to the greater Transaction Fee or the Sale Transaction Fee. (Weirton Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPOINT STEVENS: Wins OK to Hire Stein Riso as Special Counsel ---------------------------------------------------------------- WestPoint Stevens Inc. and its debtor-affiliates obtained the Court's authority to employ Stein Riso Mantel, LLP as special conflicts counsel in connection with claims, litigation or other matters now pending or which may arise as to which Weil, Gotshal and Manges LLP, is or becomes unable to represent the Debtors due to an actual or potential conflict of interest. Stein Riso will to charge the Debtors for its legal services in accordance with its ordinary and customary hourly rates in effect on the date such services are rendered. The hourly billing rates currently charged by Stein Riso for legal services rendered by its professionals are: Partners $300 - 500 Of Counsel 325 Associates 250 - 300 Paralegals 100 - 125 (WestPoint Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Buxbaum Expects to Appraise Upwards of $5 Billion of Inventories ------------------------------------------------------------------ Buxbaum Group's appraisal division is on track to appraise upwards of $5.0 billion of consumer products inventories at cost value during 2003, having already exceeded the $2.0 billion mark during the first half of the year. The firm's appraisals are executed on behalf of lending institutions at manufacturing, wholesale and retail companies. Through the first half of 2003, approximately 55% of Buxbaum's appraisal activity has been on wholesale distribution inventories, around 15% has been in the manufacturing sector and the remaining 30% has been on retail inventories. By contrast, during 2002 the retail segment accounted for 45.7% of the inventories appraised by the firm; wholesale distribution represented 43.2%; and the remaining 11.1% was derived from projects at a variety of combined manufacturing/wholesale distribution and/or wholesale distribution/retail operations. "So far this year we've seen our appraisal business shift more into the wholesale distribution sector," said Buxbaum Group vice president Jim Siebersma, who directs the appraisal unit. "While our reputation over the years has always been as 'retail experts,' which we maintain as a core strength, our lender clients have come to realize that the breadth of our expertise extends far beyond retailing and into the manufacturing and wholesale distribution arenas." In addition to the firm's efforts to educate lenders on its capabilities in the manufacturing and wholesale arenas, Siebersma attributed the shift in its appraisal business mix to general trends in lending activity across the three sectors. "It appears that lending in the manufacturing and wholesale distribution industries has outpaced retail lending," he noted. "We believe this is largely due to the fact that the number of companies in the wholesale and manufacturing sectors has not contracted to the same extent as in the retail industry." While Buxbaum Group continues to aggressively pursue inventory appraisal and liquidation projects in the retail area, its efforts to gain a bigger share in the wholesale and manufacturing sectors will soon take another turn with the launch of seminars for lenders aimed specifically at addressing the issues associated with appraising and liquidating wholesale inventories. "We are very knowledgeable of the idiosyncrasies related to liquidating retail inventories, and the mechanics of most retail liquidations are similar," Siebersma explained. "The characteristics and nuances of liquidation in the wholesale industry are quite different from retail, and we've experienced these differences first hand. To that end, our liquidation team has provided our appraisal group with invaluable insights on the varying criteria related to the liquidation of wholesale inventories. Those factors are incorporated into our appraisal projects, enhancing our ability to provide the most accurate assessments of inventory value." Buxbaum Group, together with affiliate Buxbaum/Century, has built its reputation for over 30 years as one of the largest liquidators and appraisers of retail and wholesale inventories, as well as machinery and industrial equipment, across North America. A subsidiary, Pathway Strategic Partners, LLC, provides turnaround, expansion and/or downsizing strategies, in conjunction with other advisory consulting and management services. * CCFL Advisory Services Appoints Two New Managing Directors ------------------------------------------------------------ Eric A Demirian, President and Chief Executive Officer of CCFL Advisory Services Inc., announced the appointments of David E. Bacon and Ari Yakobson to the positions of Managing Director effective September 2, 2003. Collectively, Mr. Bacon and Mr. Yakobson bring more than 20 years of experience in corporate finance, mergers, acquisitions, strategic planning and operations. Prior to joining CCFL Advisory, Mr. Bacon was Vice President, Corporate Development at Group Telecom Inc., where he was responsible for acquisitions, integration and strategic planning and was a member of the senior management team responsible for the successful operational and balance sheet restructuring of Group Telecom. Previously, Mr. Bacon was Vice President, Finance for a Toronto-based private merchant bank and prior thereto he was with PricewaterhouseCoopers where he provided assurance and business advisory services to clients in the telecommunications, consumer goods, media, entertainment and financial services sectors. Mr. Bacon holds a BA from the University of Western Ontario and an MBA from York University. He is also a Chartered Accountant and Certified Public Accountant. Prior to joining CCFL Advisory, Mr. Yakobson was a partner and a Vice President of Investment Banking at Succession Capital Corporation, where he was responsible for targeting and structuring acquisitions as a principal on behalf of the corporation as well as leading the transaction services group. Previously, Mr. Yakobson was Vice President, Business Development for a Toronto-based software company where he managed the non- technical operations and prior thereto he was a proprietary equity trader at Scotia McLeod. In addition, Mr. Yakobson has successfully founded, financed and operated numerous start-ups in the retail/service and technology sectors. Mr. Yakobson holds a BA (Hon.) from York University, an LL.B. from the University of Western Ontario and an MBA from Queen's University. Mr. Demirian states "I am pleased to have David and Ari join CCFL Advisory. They will both bring a unique combination of corporate finance and operational experience to our clients and will be key contributors to the continued growth of the firm." Since 1979, CCFL has been structuring sophisticated and complex financial transactions. The firm is wholly owned and operated by its senior management and is independent of any financial organization or intermediary. CCFL Advisory specializes in corporate finance and investment banking activities involving mid- market transactions. Our services include mergers, acquisitions, divestitures, debt and equity financings, business strategy development, strategic alliances, management buy-outs, going public and private transactions, business reorganizations and restructurings, development of optimal capital structures and succession planning. Our professionals are experienced in a variety of industries and have significant transactional and operating experience. CCFL Advisory has offices in Toronto and Montreal. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Aphton Corp APHT (11) 16 (5) Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (44) 295 18 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Caraco Pharm Lab CARA (20) 20 (2) Cincinnati Bell CBB (2,104) 1,467 (327) Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Caraco Pharm Labs CPD (20) 20 (2) Centennial Comm CYCL (470) 1,607 (95) Echostar Comm DISH (1,206) 6,210 1,674 D&B Corp DNB (19) 1,528 (104) Graftech International GTI (351) 859 108 Hollywood Casino HWD (92) 553 89 Hexcel Corp HXL (127) 708 (531) Integrated Alarm IASG (11) 46 (8) Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (186) 484 139 Gartner Inc. IT (29) 827 1 Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Lodgenet Entertainment LNET (101) 298 (5) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 631 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 Maguire Properti MPG (159) 622 N.A. MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) ON Semiconductor ONNN (525) 1,243 195 Petco Animal PETC (11) 555 113 Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp RAD (93) 6,133 1,676 Revlon Inc. REV (1,641) 939 44 Ribapharm Inc RNA (363) 199 92 Sepracor Inc SEPR (392) 727 413 St. John Knits Int'l SJKI (76) 236 86 Solutia Inc. SOI (249) 3,342 (231) I-Stat Corporation STAT 0 64 33 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) Thermadyne Holding THMD (665) 297 139 TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (36) 1,617 172 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Tech VLNC (17) 36 4 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***