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/raid1/www/Hosts/bankrupt/TCR_Public/030915.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 15, 2003, Vol. 7, No. 182 Headlines 8X8 INC: Regains Compliance with Nasdaq Listing Requirements ADVANSTAR COMMS: Prices $70-Mill. 10.75% Notes Private Placement ADVANSTAR COMMS: Improved Credit Profile Spurs Outlook Revision AES CORP: Fitch Monitoring Impact of Banco Nacional Agreement AGWAY: State Street Suit Alleges "Overpayment" of Securities ALLIANCE GAMING: $78 Million of Series B Senior Notes Tendered APPLIED DIGITAL: Prepares Prospectus Reselling Up to 13MM Shares APPLIED DIGITAL: Shareholders Approve 1-For-25 Reverse Split ARGONAUT GROUP: S&P Rates Series A Convertible Preferreds at B+ ARTISOFT INC: Raises $4MM from Conv. Preferred Share Offering AVALON DIGITAL: Files for Chap. 11 Bankruptcy Protection in Utah AVALON DIGITAL: Case Summary & 20 Largest Unsecured Creditors AVNET: Fitch Initiates Coverage with BB Sr. Unsecured Debt Rating BANC OF AMERICA: Fitch Affirms Ratings on Series 2001-1 Notes BCF LLC: Fitch Takes Rating Actions on Three Securitizations BION ENVIRONMENTAL: Unit Obtains New $1.1 Million Financing BRITISH ENERGY: FPL Energy Agrees to Buy 50% Stake in AmerGen CABLE SATISFACTION: Director Dave Brochet Steps Down from Board CAMPBELL SOUP: Positive Earnings Restore Balance Sheet Solvency CANWEST MEDIA: S&P Rates C$940 Million Sr. Sec. Term Loan at B+ CENTENNIAL COMMS: Selling 30 Million Shares in Public Offering CENTENNIAL COMMS: Carmen Culpeper Resigns from Company's Board CHEVY CHASE BANK: S&P Ups Long-Term Counterparty Rating to BB+ CONSECO INC: S&P Takes Various Rating Actions on Subsidiaries CONSECO INC: A.M. Best Affirms B FSR on Insurance Subsidiaries COVANTA ENERGY: Files Joint Plan of Reorganization & Liquidation DOBSON COMMS: S&P Gives Junk Rating to $600 Million Senior Notes DIRECTV LATIN: Continues Deloitte's Engagement as Auditor DT IND.: Weak Operating Results Prompt S&P's Watch on B- Rating DVI INC: Court Approves Uniform Asset Sale Bidding Procedures EAGLE FOOD: Receives Court Approval for Sale of Certain Stores EES COKE: S&P Affirms Junk Senior Notes Rating & Revises Outlook EMMIS COMMS: Will Present at Banc of America Conference Tomorrow ENRON CORP: Wants Court to Disallow & Expunge Employee Claims EQUITY INNS: Underwriters Exercise Over-Allotment Option FHC HEALTH: S&P Withdraws B Debt Rating After Nixed Transaction GALEN HLDGS: S&P's Outlook on Low-B Ratings Changed to Positive GENESIS HEALTH: Inks Definitive Master Agreement with ElderTrust GLIMCHER REALTY: Board of Trustees Declares Q3 2003 Dividends GRUPO IUSACELL: Noteholders Accelerate $150MM of Defaulted Notes HEALTHSOUTH CORP: Appoints Lee S. Hillman as New Board Member HINES HORTICULTURE: S&P Rates Planned Credit Facilities at BB-/B HMP EQUITY: S&P Keeps Watch on Lower-B Corporate Credit Rating HORSESHOE GAMING: On Watch Pos over Planned Sell-Out to Harrah's HUGHES ELECTRONICS: IRS Rules Transaction with GM Tax-Free IT GROUP: Moves for Court Okay on Settlement Pact with Kaiser KMART CORP: Court Fixes Tort Claims Settlement Protocol LEGACY HOTELS: Suspends Distribution Due to Operation Concerns MAGELLAN HEALTH: Asks Court to Stretch Exclusivity Until Nov. 7 MCGREGOR MARINE: Four Charged Under Canadian Bankruptcy Act MERA PHARMA: Ex-Auditor Buttke Bersch Airs Going Concern Doubts MERRILL LYNCH: Fitch Affirms Low-B Ratings on Four Note Classes MIDWEST EXPRESS: Posts Increased Revenue Passenger Miles for Aug MIRANT: Obtains Clearance to Hire Ordinary Course Professionals MOHEGAN TRIBAL: Commences Solicitation of Noteholders' Consents MONTGOMERY WARD: Committee Extracts $88 Million from GE Capital MORGAN STANLEY: Fitch Ups & Affirms Series 1999-RM1 Note Ratings NATIONAL BENEVOLENT: Fitch Keeps B- Rating on Fixed-Rate Debt NAT'L STEEL: Seeks Court Nod for IUBAC Memorandum of Agreement NRG ENERGY: Asks Court to Okay Proposed Solicitation Procedures NVIDIA CORP: Reaches Agreement to Resolve SEC Investigation OWENS: Commercial Panel Balks at 75% Claim Wipe-Out Under Plan OWENS-BROCKWAY: Completes Exchange Offer for 8-1/4% Senior Notes PACIFIC LUMBER: Cash Flow & Legal Concerns Prompt Rating Cuts PARK PLACE ENTERTAINMENT: Corp. Credit Rating Slides Down to BB+ PERRY ELLIS: S&P Assigns B- Rating to $150M Senior Sub. Notes PETROLEUM GEO-SERVICES: Court Approves Disclosure Statement PG&E NATIONAL: USGen Wants to Reject 9 Gas Transportation Deals PG&E NATIONAL: Seeks Court Approval of Proposed Name Change PILLOWTEX: Engages Services of Ordinary Course Professionals PMA CAPITAL CORP: Senior Debt Gets Fitch's BB+ Rating POLAROID: Files Amended Plan & Disclosure Statement in Delaware POLYPHALT INC: Has Until October 27 to File Proposal Under BIA PRIMEDIA INC: Elects Timothy Dattels to Board of Directors QUINTILES TRANSNATIONAL: S&P Rates $385-Mil. Bank Loans at BB- RAYOVAC CORP: Proposes $300MM Senior Subordinated Note Offering RUSSELL CORP: S&P Changes Outlook on Low-B Ratings to Negative SAFETY-KLEEN: Asks Court to Clear American Home Settlement Pact SCHUFF INT'L: S&P Affirms B- Corp. Credit Rating over New Loan SK GLOBAL AMERICA: Signs-Up Bankruptcy Services as Claims Agent SNYDER'S DRUG STORES: Files for Chapter 11 Protection in Ohio SNYDER'S DRUG STORES: Case Summary & Largest Unsecured Creditors SOLECTRON: Will Publish Q4 & Fiscal Year 2003 Results on Sept 25 SOUTH STREET: S&P Takes Rating Actions on Various Note Classes SPECIAL METALS: Steelworkers Ratify New 5-Year Labor Agreement SYSTECH RETAIL: Emerges from Creditor Protection in Canada TECO ENERGY: Agrees to Sell 11 Million Shares of Common Stock TELESYSTEM INT'L: Files Secondary Offering Prelim. Prospectus TESORO PETROLEUM: Will Repay $125 Million of Term Loan TRINITY IND.: Declares Quarterly Dividend Payable on October 31 TYCO INT'L: Names Fruzsina Harsanyi as VP for Public Affairs UNIFAB: Names Larry Verzwyvelt President, Universal Fabricators UNITED AIRLINES: Suntrust Seeks Stay Lift to Access Trust Fund VALEO: Class A-2 Rating Downgraded to Speculative Grade Level VICWEST CORP: Magnatrax Creditors' Committee Withdraws Claim VICWEST CORP: TSX Knocks-Off Senior Sub. Notes from Trading WEIRTON STEEL: Wants Excusive Filing Period Stretched to Dec. 15 WESTERN WIRELESS: Files Amended Reports for Q1 and Q2 of 2003 WORKFLOW MANAGEMENT: Look for First Quarter 2004 Results Today WORLDCOM INC: Wants Court Nod for Focal Setoff Agreement XM SATELLITE: Completes Placement of $150 Million in Securities * Libra Sets-Up Restructuring Unit Headed by Daniel Harrow * BOND PRICING: For the week of September 15 - 19, 2003 ********* 8X8 INC: Regains Compliance with Nasdaq Listing Requirements ------------------------------------------------------------ 8x8, Inc. (Nasdaq: EGHT) received a letter from the Nasdaq Listing Qualifications Panel determining that the Company has fully regained compliance with the Nasdaq SmallCap Market's continued listing requirements. In the letter dated September 10, 2003, the Panel based its conclusion upon the fact that 8x8 has, for the past twelve (12) trading days, maintained a closing bid price of $1.00 per share, as required by Marketplace Rule 4310(c)(4), as well as a $35,000,000 market value of listed securities, as set forth in Marketplace Rule 4310(c)(2)(B). The Panel also noted that the September 5, 2003 appointment of Mr. Donn Wilson to 8x8's Board of Directors and Audit Committee appears to satisfy the independent directors and audit committee composition requirements, so long as the Nasdaq Staff does not subsequently determine that Mr. Wilson should not be considered independent for purposes of Marketplace Rule 4200(a)(14). The Company is confident that Mr. Wilson meets all Nasdaq criteria for director independence. 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. ADVANSTAR COMMS: Prices $70-Mill. 10.75% Notes Private Placement ---------------------------------------------------------------- Advanstar Communications Inc., has priced a private placement of $70,000,000 of 10.75% second priority senior secured notes due 2010 at a price per note of 101.50% of par plus accrued interest from August 18, 2003. The notes will be secured by second priority liens on substantially all the collateral securing Advanstar's credit facility (other than the capital stock of certain of its subsidiaries and assets of its parent companies), which collateral also secures its second priority senior secured notes issued in August 2003. Advanstar plans to use the net proceeds from the private placement to repay all amounts borrowed under its revolving credit facility (approximately $12 million) and will invest the remaining net proceeds, along with a $50 million equity contribution to be provided by DLJ Merchant Banking Partners III, L.P. and related funds on the closing date of the private placement, in short-term investments pending completion of Advanstar's acquisition of a portfolio of healthcare industry-specific magazines and related custom project services from subsidiaries of The Thomson Corporation (as announced on August 25, 2003). If the acquisition closes, Advanstar will use the remaining net proceeds of the private placement, proceeds of the $50 million equity contribution made on the closing date of the private placement, an additional $10 million equity contribution to be made on the closing date of the acquisition and revolver borrowings of approximately $20 million to finance the acquisition. The notes will be subject to mandatory redemption if the Thomson acquisition does not close by December 31, 2003. The notes will not be registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. Advanstar Communications Inc. (S&P, B Corporate Credit Rating, Negative) is a worldwide business information company serving specialized markets with high quality information resources and integrated marketing solutions. Advanstar has 100 business magazines and directories, 77 tradeshows and conferences, numerous Web sites, and a wide range of direct marketing, database and reference products and services. Advanstar serves targeted market sectors in such industries as art, automotive, beauty, collaboration/e-learning, CRM/call center, digital media, entertainment/marketing, fashion & apparel, healthcare, manufacturing and processing, pharmaceutical, powersports, science, telecommunications and travel/hospitality. The Company has over 1,200 employees and currently operates from multiple offices in North America, Latin America, Europe and Asia. For more information, visit http://www.advanstar.com ADVANSTAR COMMS: Improved Credit Profile Spurs Outlook Revision --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Advanstar Communications Inc. to stable from negative, reflecting a slight improvement in Advanstar's credit profile as a result of its pending acquisition of 15 healthcare industry trade magazines and related custom project services business from Thomson Corp. At the same time, Standard & Poor's affirmed its existing ratings, including its 'B' corporate credit rating, on the company. In addition, Standard & Poor's assigned its 'B-' rating to Advanstar's proposed Rule 144A $50 million add-on to its second priority senior secured notes due 2010. Proceeds plus a $60 million common equity injection and a $25 million drawdown from its $60 million revolving credit facility will be used to fund the $135 million acquisition. On a pro forma basis, the Boston, Massachusetts-based business-to-business media firm, which is analyzed on a consolidated basis with its parent company, Advanstar Inc., will have about $750 million in debt. "The use of equity to partially fund the purchase will modestly lower Advanstar's debt leverage and should slightly boost its discretionary cash flow," according to Standard & Poor's credit analyst Steve Wilkinson. He added, "The acquired businesses will complement and expand Advanstar's existing portfolio of healthcare, science, and pharmaceutical magazines and should increase EBITDA about 22%. Expanding the healthcare cluster will also mildly reduce its reliance on its fashion industry business cluster. On a pro forma basis, the EBITDA contribution, before corporate expenses, from the company's fashion and apparel cluster will decline to about 32% from 37%, while the contribution from the healthcare cluster will almost double to 24%. In addition, Advanstar expects the combination of the healthcare portfolios will yield moderate cost savings, and also provide cross-marketing and cross-selling opportunities." The ratings on Advanstar reflect its high debt leverage and thin coverage ratios and the still difficult, but stabilizing, operating environment. These risks are tempered by the good competitive positions of Advanstar's niche trade show and publishing businesses and the company's good sector diversity, notwithstanding the heavy reliance on the cash flow from its fashion industry businesses. AES CORP: Fitch Monitoring Impact of Banco Nacional Agreement ------------------------------------------------------------- Fitch Ratings continues to monitor the impact on the AES Tiete Certificates Grantor Trust of the recently announced memorandum of understanding between The AES Corporation (AES, senior unsecured debt rated 'B' by Fitch) and Banco Nacional de Desenvolvimento Economico. The MOU proposes the restructuring of US$1.2 billion of debt owed to BNDES by AES's Brazilian electricity distributor, Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A. As part of the proposed restructuring, AES intends to include its ownership stakes in other Brazilian assets, which may include the holding companies of AES Tiete S.A. As proposed in the MOU, this transaction would have no impact on the flow of funds for debt service on the certificates. The 'BB-' rating of certificates remains on Ratings Watch Negative. The terms and conditions contained in the MOU are expected to be documented and closed by Dec. 15, 2003. The closing of the transaction is subject to the negotiation and execution of definitive documentation and certain lender and regulatory approvals. Separately, Fitch remains concerned regarding the AES IHB Cayman, Ltd.'s (IHB, the issuer of the certificates) ability to meet all of its financial obligations scheduled in December 2003, which include the replenishment of the debt service reserve account (DSRA) of approximately US$22 million, the repayment of approximately BRL70 million of intercompany debt with the Tiete operating company and scheduled interest and principal of US$22 million due under the certificates. Although recent monthly inflation has returned to manageable levels, Tiete is unlikely to generate sufficient funds to pay all of its financial obligations in their entirety. To resolve this situation, the company is expected to negotiate with the bondholders prior to the December debt service payment due date. The rating and Rating Watch Negative status of the certificates is based on the credit quality of Tiete and its ability to distribute sufficient dividends to meet semiannual debt service. Due to high inflation levels during 2002 and the first quarter of 2003, which has negatively affected net income results, Tiete has been temporarily unable to make sufficient dividend payments and utilized an intercompany loan to pay interest and principal on the notes in December 2002. The shortage of cash at the holding company led IHB to draw on its DSRA to meet debt service and file a claim with Overseas Private Investment Corporation to recover part of the deficit, as a result of an Exchange Rate Shortfall Event which was covered by the OPIC foreign exchange liquidity facility, discussed below. Fitch estimates the claim amount to be approximately US$5 million, which would be used to partially replenish the DSRA. The certificates benefit from an OPIC foreign exchange liquidity facility that covers up to US$30 million of debt service shortfalls when the shortfall is caused by devaluation. Tiete's net income levels and its holding companies' liquidity situation should improve over time as they receive greater dividends from the growth in net earnings as the new purchase power agreement with Eletropaulo at higher prices ramps up through 2006. The PPA provides additional cushion in the out years, while the minimum coverage is projected to be in the first three years of the transaction. The rating of the Grantor Trust certificates remains higher than the current 'DDD' rating of Eletropaulo, given that Eletropaulo represents only a portion of Tiete's revenues. The rating also reflects Tiete's ability to directly access the receivables accounts of its off-takers, including Eletropaulo, in the event the distributor does not pay under the terms of the power supply contracts. Eletropaulo has made timely payments to Tiete under its supply contract, and the underlying operating fundamentals and receivables collections at Eletropaulo do not appear to be stressed to a point that would materially affect collection by Tiete. However, as the initial power supply contracts with the other distributors roll off and Eletropaulo becomes a greater percentage of Tiete's revenues, the rating of Eletropaulo should have a greater effect on the certificates' rating. Fitch believes that despite current problems plaguing Eletropaulo, its rating is likely to improve in the coming months as the company restructures its debt to a more manageable profile. Tiete is a low-cost electric generating company that benefits from a portfolio of hydroelectric assets and a base of contracted revenues. Tiete is centrally dispatched by the independent system operator to optimize system operation. Strong projected revenue growth, stable operating costs, manageable hydrology and regulatory risks, limited refinancing needs and experienced ownership support Tiete's credit quality. AGWAY: State Street Suit Alleges "Overpayment" of Securities ------------------------------------------------------------ On or about August 2002, Agway's Thrift Plan Committee engaged State Street Bank & Trust Company to serve as independent fiduciary for the Company Security Fund, an investment option under the Agway Inc. Employees' 401(k) Thrift Investment Plan. In February 2003, State Street communicated with Thrift Plan Participants that State Street and its advisors were evaluating potential claims that could be pursued on behalf of the Fund, including legal claims. On August 26, 2003, State Street filed a civil Complaint in the United States District Court for the Northern District of New York against certain former and current members of the Employee Benefit Plans Administration Committee, the Employee Benefit Plans Investment Committee and Agway's Board of Directors. Also named as defendants are Boston Safe Deposit & Trust Company (the Plan Trustee) and PricewaterhouseCoopers LLP (the Plan's auditors). State Street alleges among other things that Agway securities were improperly purchased and held by the Company Security Fund at face value, that the "fair market value" of the Agway securities was substantially lower, that the resulting "overpayment" by the Thrift Plan for these Agway securities thereby constituted a prohibited transaction under ERISA, and that the Thrift Plan fiduciaries should not have continued to purchase and hold Agway securities in the Fund at or after some unspecified point in time when, State Street alleges, Agway's financial condition rendered these securities an unreasonable and imprudent investment option for the Thrift Plan. The Company believes that the actions taken by EBPAC, EBPIC and the Board of Directors have been reasonable and prudent and such actions will be vigorously defended in this case. On September 8, 2003, Agway CEO Michael Hopsicker provided an update and progress report to all employees regarding several issues related to Agway's Chapter 11 proceeding, including the status of the potential disposition of certain of Agway's businesses. Agway filed for Chapter 11 protection on October 1, 2002, in the U.S. Bankruptcy Court for the Northern District of New York (Utica) (Bankr. Case No. 02-65872). ALLIANCE GAMING: $78 Million of Series B Senior Notes Tendered -------------------------------------------------------------- Alliance Gaming Corp.'s (NYSE: AGI) tender offer to purchase all outstanding Series B 10% Senior Subordinated Notes due 2007 expired at Midnight, New York Time, on Sept. 10, 2003. As of the expiration of the tender offer, a total of $78,565,000 in aggregate principal amount of notes had been tendered for purchase, $788,000 is subject to notices of guaranteed delivery. The Company also is calling for redemption all outstanding Series A and Series B 10% Senior Subordinated Notes due 2007 at a price of $1,033.33 per $1,000 in principal amount redeemed, plus interest to but excluding the redemption date. The redemption date is Sept. 16, 2003, and redemption notices containing relevant information regarding the redemption are being distributed to note holders today. Note holders also may contact Innisfree at (888) 750-5834 to obtain information regarding the redemption. Alliance also announced that it recently retired and replaced its senior bank facility with a new bank facility totaling $400 million, consisting of a $275 million term loan with a 6-year term and an initial interest rate of LIBOR + 2.75% and a $125 million revolver with a 5-year term and an initial interest rate of LIBOR + 2.50%. The proceeds from the new facility will be used to repay all outstanding existing bank debt under the company's old senior credit facility, to fund the purchase of all outstanding 10% Senior Subordinated Notes purchased pursuant to the tender offer and the pending redemption, and to pay certain related transaction costs and expenses. Alliance Gaming (S&P, BB- Senior Secured Credit Facility Rating) is a diversified gaming company with headquarters in Las Vegas. The Company is engaged in the design, manufacture, operation and distribution of advanced gaming devices and systems worldwide, and is the nation's largest gaming machine route operator and operates two casinos. Additional information about the Company can be found at http://www.alliancegaming.com APPLIED DIGITAL: Prepares Prospectus Reselling Up to 13MM Shares ---------------------------------------------------------------- Applied Digital Solutions, Inc. has prepared a prospectus relating to resales of up to 13,313,782 shares of its common stock, par value $.001 per share, which may be sold at various times by the selling shareholders listed in the prospectus. The selling shareholders identified in the prospectus or their transferees may sell the shares of common stock from time to time in accordance with the plan of distribution described in the prospectus. The Company's shares are included in the Nasdaq SmallCap Market under the symbol "ADSX." On August 28, 2003, the last reported sale price of the common stock was $0.39 per share. Currently, an aggregate of 9,212,512 shares of Applied Digital's common stock are being offered under the prospectus relating to the Company's Registration Statement on Form S-1 (File no. 333- 98799), an aggregate of up to 30,000,000 are being offered under the prospectus relating to the Company's Registration Statement on Form S-1 (File No. 333-106300) (subject to shareholder approval), and an aggregate of up to 58,154,644 shares are being offered under the prospectus relating to the Company's Registration Statement on Form S-1 (File No. 333-108338) (subject to shareholder approval). * * * As reported in Troubled Company Reporter's June 9, 2003 edition, Applied Digital Solutions signed Securities Purchase Agreements to sell an additional 12.5 million previously registered shares to the same investors who have already agreed to purchase 37.5 million shares as announced on May 9, 2003, and May 23, 2003. The Company said it will use the proceeds from this sale towards the satisfaction of its debt obligation to its senior lender, IBM Credit LLC. Under the Forbearance Agreement with IBM Credit (announced on March 27, 2003), the Company has the right to purchase all of its debt of approximately $95 million (including accrued interest) with a payment of $30 million by June 30, 2003, subject to continued compliance with the terms of the Forbearance Agreement. If this payment is made on or before June 30, 2003, Applied Digital would satisfy its full obligation to IBM Credit. As of this date, the Company is in compliance with all terms of the Forbearance Agreement. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Technology Group, the Company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is the beneficial owner of a majority position in Digital Angel Corporation (AMEX: DOC). For more information, visit the Company's Web site at http://www.adsx.com APPLIED DIGITAL: Shareholders Approve 1-For-25 Reverse Split ------------------------------------------------------------ Applied Digital Solutions, Inc. (Nasdaq: ADSX), an advanced technology development company, announced that its shareholders voted to approve each of the items considered by shareholders at the special meeting that occurred on September 10, 2003. Shareholders granted the Company's Board of Directors discretionary authority to effect a reverse stock split, at any time before September 10, 2004, in a ratio of up to 1-for-25 as determined by the Board to be in the best interests of the Company's shareholders at the time of implementation, or to decide not to take such action if the Board determines that a reverse stock split will not be beneficial for any reason. One of the reasons that shareholders were asked to approve granting the Board this authority is to enable the Company to maintain its listing on the Nasdaq SmallCap Market. The traded price of the Company's common stock is currently below the minimum $1.00 per share continued listing requirement applicable to its Nasdaq listing. Under Nasdaq's existing rules, the Company has been afforded several "grace periods" to regain compliance with Nasdaq's minimum bid price requirement. The last of these grace periods is scheduled to expire on October 27, 2003. However, Nasdaq has proposed rules that, if adopted by the Securities and Exchange Commission, would provide Nasdaq-listed companies with additional time to come into compliance with the minimum bid price requirement. How the SEC will respond to the proposed rules is uncertain, as is the timing of the SEC's action. In light of the uncertainty surrounding Nasdaq's proposed rules and the SEC's response, as well as other considerations directly bearing on the implementation of its business strategy, the Company has no current plans to effect a reverse stock split prior to October 27, 2003. If, at that time, the trading price of the Company's stock remains below $1.00 and the SEC has not taken action with respect to the proposed rules, the Company expects that it will receive notice from the Nasdaq staff as to the staff's intended delisting of the Company's stock. In accordance with Nasdaq rules, the Company will then have the opportunity to appeal the staff's delisting determination to a Nasdaq Listing Qualifications Panel, with the delisting being stayed pending the decision of the Panel. With shareholder approval of the reverse stock split in hand, the Company is confident that, if business conditions, listing requirements or strategic considerations warrant, the Company can implement a reverse stock split and regain compliance with Nasdaq's minimum bid price requirement within a time period that will be acceptable to the Panel. The shareholder approval also allows the Company the discretion not to effect a reverse split if conditions do not warrant doing one. Shareholders also approved the potential issuance of up to approximately 26,200,000 shares of the Company's common stock in connection with the Company's recent offering and sale of convertible exchangeable debentures, as well as the issuance of up to 30 million shares of the Company's common stock covered by the Company's registration statement on Form S-1 filed with the SEC on June 20, 2003. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Technology Group, the company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is majority owner of Digital Angel Corporation (AMEX: DOC - News). For more information, visit the company's Web site at http://www.adsx.com * * * As reported in Troubled Company Reporter's June 9, 2003 edition, Applied Digital Solutions signed Securities Purchase Agreements to sell an additional 12.5 million previously registered shares to the same investors who have already agreed to purchase 37.5 million shares as announced on May 9, 2003, and May 23, 2003. The Company said it would use the proceeds from this sale towards the satisfaction of its debt obligation to its senior lender, IBM Credit LLC. Under the Forbearance Agreement with IBM Credit (announced on March 27, 2003), the Company has the right to purchase all of its debt of approximately $95 million (including accrued interest) with a payment of $30 million by June 30, 2003, subject to continued compliance with the terms of the Forbearance Agreement. If this payment is made on or before June 30, 2003, Applied Digital would satisfy its full obligation to IBM Credit. As of this date, the Company is in compliance with all terms of the Forbearance Agreement. ARGONAUT GROUP: S&P Rates Series A Convertible Preferreds at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' preferred stock rating to Argonaut Group Inc.'s (Argonaut; NASDAQ:AGII) Series A Mandatory Convertible Preferred Stock. The registration statement for this issue was filed with the Securities and Exchange Commission on Aug. 26, 2003. These securities, totaling $35.4 million, were sold earlier in 2003 by Argonaut in private transactions to HCC Holdings Inc. and to another investor. The ratings on Argonaut were affirmed and removed from CreditWatch on Aug. 8, 2003. ARTISOFT INC: Raises $4MM from Conv. Preferred Share Offering ------------------------------------------------------------- Artisoft(R), Inc. (NASDAQ: ASFTC), developer of the first software-based phone system, announced the closing of its financing previously announced on June 30, 2003. In the financing, Artisoft sold an aggregate of 2,627,002 shares of its Series C Convertible Preferred Stock to investors in a private placement at a per share price equal to $1.50. The investors also received warrants to purchase up to 2,627,002 shares of Artisoft's Common Stock at a per share exercise price equal to $1.88. Gross proceeds from the financing were $4 million. The issuance and sale of the preferred stock and warrants was authorized by Artisoft's stockholders at a Special Meeting of Stockholders held on September 9, 2003. The shares of Series C Preferred Stock are initially convertible into a like number of shares of common stock, subject to adjustment. Each share of Series C Preferred Stock will generally receive .8152 of a vote, subject to adjustment, when voting on matters presented for the approval of Artisoft's stockholders. The holders of the Series C Preferred Stock, as a class, are also entitled to elect a director of the Company. Artisoft expects the holders of the Series C Preferred Stock will elect Steven C. Zahnow as an Artisoft director pursuant to these class voting rights. Mr. Zahnow has served as the managing member of Zahnow Group, LLC, the general partner of Zahnow Partners LP, a hedge fund, since 1997. In addition, Mr. Zahnow is a partner of RRS & Company, an investment firm. An affiliate of Mr. Zahnow was the majority investor in the financing. Following the financing, Mr. Zahnow beneficially owns approximately 9.9% of Artisoft's Common Stock and 53.3% of its Series C Preferred Stock. The warrants will expire on June 27, 2010. The expiration date, the per share exercise price and the number of shares issuable upon exercise of the warrants are subject to adjustment in certain events. "The PBX industry's shift away from proprietary hardware to open systems software is gaining momentum and we continue to see strong growth in demand for our TeleVantage software," said Steve Manson, Artisoft's president and CEO. "This financing will allow Artisoft to focus on the tremendous opportunities before us." This financing resulted in a purchase price adjustment to the shares of Common Stock issued in Artisoft's September 2002 financing, an antidilution adjustment to Artisoft's Series B Convertible Preferred Stock and an exercise price adjustment to the common stock purchase warrants issued by Artisoft in 2001. As a result of the financing, Artisoft will issue an additional 660,328 shares of Common Stock to the investors in its September 2002 financing. In addition, each share of Series B Convertible Preferred Stock is now convertible into approximately 1.22 shares of Common Stock and the exercise price of the warrants issued in 2001 is now $1.50 per share. As a result of these effects, Austin W. Marxe and David M. Greenhouse are now the beneficial holders of approximately 65.6% of Artisoft's Common Stock. Artisoft is required to register for resale by the investors the common stock issuable upon the conversion or exercise, as the case may be, of the Series C Preferred Stock and the warrants issued in this financing under the Securities Act. Artisoft, Inc. -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $320,000 -- is a leading developer of open, standards-based telephone systems that bring together voice and data for more powerful and productive communications. Artisoft's TeleVantage delivers greater functionality, flexibility, and value than proprietary PBXs to a variety of customers, from small offices to large enterprise organizations with sophisticated call centers. Artisoft's innovative software products have consistently garnered industry recognition, winning more than 30 awards for technical excellence. The company distributes its products and services worldwide through a dedicated and growing channel of authorized resellers. For more information, visit http://www.artisoft.com AVALON DIGITAL: Files for Chap. 11 Bankruptcy Protection in Utah ---------------------------------------------------------------- On September 5, 2003, Avalon Digital Marketing Systems, Inc., a Delaware corporation filed a voluntary petition under Chapter 11 of the United State Bankruptcy Code and an order for relief was entered on that date, commencing the case, In re Avalon Digital Marketing Systems, Inc., Case No. 03-35180, pending before the United States Bankruptcy Court for the District of Utah. Avalon will continue to manage its business operations as a "debtor-in- possession" subject to the provisions and requirements of the Bankruptcy Code and Bankruptcy Court. AVALON DIGITAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Avalon Digital Marketing Systems 5255 N. Edgewood Drive Suite 250 Provo, Utah 84604 Bankruptcy Case No.: 03-35180 Type of Business: Digital marketing Chapter 11 Petition Date: September 5, 2003 Court: District of Utah (Salt Lake City) Judge: Glen E. Clark Debtor's Counsel: Penrod W. Keith, Esq. Ryan L. Jensen, Esq. Durham Jones and Pinegar 111 East Broadway Suite 900 Salt Lake City, UT 84111 Tel: (801) 415-3000 Fax: (801) 415-3500 Total Assets: $3,327,496 Total Debts: $10,773,111 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Radical Communication Unsecured Sub. $800,000 Liquidating Trust Promissory Note c/o Thau & Associates 1158 26th Street, Suite 468 Santa Monica, CA 40403 Attn: LJ Thau Tel: 310-459-6761 American Express CC Credit Card $767,575 Suite 0001 Chicago, IL 60679-0001 Attn: Jaffe and Asher Tel: 212-657-3000 OTR Office Lease $698,000 State Teachers Retirement Systems of OH 44 Montgomery Street, Suite 2388 San Francisco, CA 98104 Attn: Julia Viskanta Snell & Wilmer LLP Legal Services $530,414 15 West South Temple Suite 1200 Gateway Tower West Salt Lake City, UT 84101 Attn: David Evans & Shari Ulwelling Michael Friedl Past Wages and Severance $363,577 33 Monroe Irvine, CA 92620-000 IBM Corporation Computer Equipment Lease $230,378 Pliant Corporation Office Lease $177,948 Oracle Corp. $168,328 Bowne of Los Angeles Inc. Printing Services $158,077 O'Melveny & Myers, LLP Legal Services $155,883 Genuity Hunting & Co-Location $143,307 Services Sunrise Leasing Corp. Computer Equipment Lease $136,757 Naviant, Inc./cDirect.com Services $125,830 EMC Corp. Computer Services $117,526 Theodore Swindells Unsecured Bridge $107,326 Promissory Note Ogham Holdings, LP Unsecured Bridge $107,326 Promissory Note J.M. Hull Asscoiates, LP Unsecured Bridge $96,648 Promissory Note Nasdaq Stock Market Stock Listing Fees $91,875 Nathanson Telecom Partners Unsecured Bridge $88,585 LP Promissory Note Hostetler Limited Unsecured Bridge $86,275 Partnership Promissory Note AVNET: Fitch Initiates Coverage with BB Sr. Unsecured Debt Rating ----------------------------------------------------------------- Fitch Ratings has initiated coverage of Avnet, Inc. and assigned a 'BB' rating to the company's senior unsecured debt. The Rating Outlook is Stable. Approximately $1.4 billion in debt securities are outstanding. The ratings reflect concerns regarding Avnet's strained credit protection measures, high debt levels, lower but improved capacity utilization levels along with the pricing pressures and demand variability and lower growth characteristics of the technology distribution industry. Also embedded into the ratings is reduced liquidity from the company's decision to cancel its bank facility due to the effects of rating triggers. Positively, Fitch recognizes the company's stabilizing revenue stream, adequate liquidity, and leading industry position. Profitability expansion is possible from on-going cost cutting initiatives and the anticipated growth for semiconductors. The stable outlook reflects Avnet's stabilizing revenue base and cash flows in an improving but still challenging demand environment. Avnet has flexibility within the current rating for moderate operational and industry shortfalls, even though minimal sequential quarterly revenue improvement is expected. The company's operations have been negatively affected the last few years by the economic downturn and the cyclical declines of the semiconductor industry and overall information technology market. Total revenue in fiscal year 2003 ending June 27, 2003 was $9.0 billion, versus $8.9 billion in 2002 and $12.8 billion in 2001. Revenue levels have been stable for the past eight quarters in the $2.1-$2.3 billion range but with EBITDA margins at historically low levels of approximately 2.5%. Fitch believes the demand environment for IT, especially for Europe, remains uncertain but a moderate industry recovery is expected, especially for semiconductors. As a result, Avnet's credit protection metrics have weakened substantially since fiscal year 2001 driven by lower profitability. Fitch estimates interest coverage (measured by EBITDA/interest incurred) was slightly more than 2 times as of June 30, 2003 which has improved moderately the last few quarters. Positively, the company's interest coverage could improve further in the next few quarters as a result of the company entering into interest rate swaps which should reduce annual interest expense by approximately $7 million starting in the December quarter. In February 2003 Avnet completed the sale of $475 million 9.75% senior notes due February 2008. Proceeds from the debt offering were used to redeem approximately $380 million of senior notes due August 2003 and October 2003. As a result, total debt has remained consistent at the $1.45 billion level for the last few quarters, compared to $1.6 billion at fiscal year 2002 and $2.2 billion in 2001. As of fiscal year 2003 leverage (measured by total debt/EBITDA) was more than 7 times, an improvement from 9x in fiscal year 2002. EBITDA has been stabilizing and should improve moderately the next few quarters as the company begins to see the benefits of its cost cutting initiatives. Fitch anticipates the company may choose to implement additional cost cutting measures as it continues to rationalize expenses. As a result, Fitch expects leverage to improve to approximately 5x by the end of fiscal 2004. Fitch still believes Avnet's liquidity is adequate although reduced and is supported by nearly $400 million in cash and equivalents (approximately $320 million is unrestricted) as of June 27, 2003, and a $350 million undrawn accounts receivable securitization program. The company also recently filed a $1.5 billion universal shelf registration and cancelled its undrawn $350 million three-year revolving credit facility due to a potential rating trigger of a springing lien provision where the banks would have become secured, subordinating the senior unsecured bondholders. The company's current resources are sufficient to meet its near-term debt obligations with $100 million due in February 2004. However, Fitch believes it is likely that company will have to access the capital markets in the intermediate term with debt maturities of $360 million in February 2005 and $400 million in November 2006. This rating is based on existing public information and is provided as a service to investors. BANC OF AMERICA: Fitch Affirms Ratings on Series 2001-1 Notes ------------------------------------------------------------- Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1 are affirmed by Fitch Ratings as follows: -- $142.3 million class A-1 'AAA'; -- $527.8 million class A-2 'AAA'; -- $50 million class A-2F 'AAA'; -- Interest-only class X 'AAA'; -- $35.6 million class B 'AA'; -- $21.3 million class C 'A+'; -- $19 million class D 'A'; -- $9.5 million class E 'A-'; -- $9.5 million class F 'BBB+'; -- $19 million class G 'BBB'; -- $14.2 million class H 'BBB-'; -- $13.3 million class J 'BB+'; -- $23.5 million class K 'BB'; -- $2.1 million class L 'BB-'; -- $5.5 million class M 'B+'; -- $6.8 million class N 'B'; -- $5.9 million class O 'B-'. Fitch does not rate the $23.5 million class P certificates. The affirmations follow Fitch's annual review of the transaction, which closed in June 2001. As of the August 2003 distribution date, the pool's aggregate balance has decreased by 1.9% to $929.6 million from $948.1 million at issuance. GMAC Commercial Mortgage Corporation, the master servicer, collected year-end 2002 operating statements for 80% of the pool balance. The YE 2002 weighted average debt service coverage ratio is 1.42 times, from 1.40x at issuance for the same loans. Currently, there are seven loans (4%) that are in special servicing, three (1.5%) of which are real estate owned (REO). The largest loan in special servicing is a retail property located in Marlboro, MD. A major tenant, has rejected their lease, however the borrower has found a buyer who wants to assume the loan. While the 315 Park Avenue loan (9.3% of the pool), secured by a 319,776 square foot office building located in Manhattan, New York, maintains an investment grade credit assessment, Fitch is concerned with and will continue to monitor the leasing activity due to the decline in occupancy to 91% compared to 99% at issuance. Fitch will continue to monitor this transaction, as surveillance is ongoing. BCF LLC: Fitch Takes Rating Actions on Three Securitizations ------------------------------------------------------------ Fitch has taken rating actions on the following BCF L.L.C. mortgage pass-through certificates. BCF L.L.C., mortgage pass-through certificates, series 1997-R1 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 downgraded to 'BB+' from 'BBB+'. BCF L.L.C., mortgage pass-through certificates, series 1997-R2 Group 1 -- Class 1A affirmed at 'AAA'; -- Class 1-B1 affirmed at 'AA'; -- Class 1-B2 affirmed at 'A'; -- Class 1-B3 affirmed at 'BBB'; -- Class 1-B4 affirmed at 'BB'; -- Class 1-B5 affirmed at 'B'. BCF L.L.C., mortgage pass-through certificates, series 1997-R2 Group 2 -- Class 2A affirmed at 'AAA'; -- Class 2-B1 affirmed at 'AA'; -- Class 2-B2 affirmed at 'A'; -- Class 2-B3 affirmed at 'BBB'; -- Class 2-B4 rated 'B' placed on Rating Watch Negative; -- Class 2-B5 remains at 'C'. BCF L.L.C., mortgage pass-through certificates, series 1997-R2 Group 3 -- Class 3A affirmed at 'AAA'; -- Class 3-B1 affirmed at 'AA'; -- Class 3-B2 affirmed at 'A'; -- Class 3-B3 affirmed at 'BBB'; -- Class 3-B4 rated 'BB' placed on Rating Watch Negative; -- Class 3-B5 downgraded to 'C' from 'CCC'. BCF L.L.C., mortgage pass-through certificates, series 1997-R3 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 downgraded to 'BB' from 'BBB'. These actions are taken due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the Aug. 25, 2003 distribution. BION ENVIRONMENTAL: Unit Obtains New $1.1 Million Financing ----------------------------------------------------------- On August 25, 2003 Bion Environmental Technologies' wholly-owned subsidiary (Bion owns all 4 million shares that are currently issued and outstanding), Bion Dairy Corporation, closed an initial stage of financing totaling $1,117,500 (including $600,000 of prior advances from Bright Capital, Ltd. and $65,000 of prior advances from affiliates of David Mitchell, (Bion's former CEO) of secured convertible debt. The Notes are secured by: a) all of the intellectual property of Bion (and its subsidiaries) (which previously secured outstanding obligations to Brightcap), b) all of the outstanding shares of Dairy, and c) all of the shares of Centerpoint Corporation owned by Bion. The Notes are convertible into the common stock of Dairy at a price of $1.00 (principal and accrued interest on the Notes) under various conditions specified in the financing documentation. The material details of the transaction are set forth at paragraph 1 of the Note Purchase Agreement (and the schedules/exhibits thereto) included therein, one or more of which conditions may never be met. Under additional specified conditions (which also have no assurance of being met), the Notes (or Dairy common stock received pursuant to the conversion thereof) may in the future be exchanged for shares of the common stock of Bion. If conversion of the Notes into the common stock of Dairy takes place, all of Bion's business opportunity in the dairy industry world-wide will be conducted through Dairy. The financing restricts the use of its proceeds and, unless Dairy raises substantially greater funds, there will be no substantial funds available for Bion to pay its creditors and carry out its business. Effective as of August 31, 2003, the terms of an existing month- to-month consulting arrangement with David Mager were amended to reduce the maximum number of options to be granted to 133,333. Bion has agreed that accrued deferred compensation to Mark A. Smith, its President, and Bright Capital, Ltd./Dominic Bassani for their services commencing during March 2003 shall be converted into Bion common stock at market price with a cap on the conversion price of $3.00 per share, provided, however, that once, if ever, Bion informs Mark A. Smith and/or Brightcap of its intent to pay for such services in cash, the prior outstanding balances shall be immediately convertible into Bion common stock at the election of Mark A. Smith and/or Brightcap, as applicable. As of August 31, 2003, Bion still owes approximately $900,000 to unsecured creditors (in addition to $487,500 that it currently owes to The Trust Under Deferred Compensation Plan for D2CO, LLC) for past management services, and amounts to be owed/accrued for services of Mark A. Smith, President, and Bright Capital, Ltd./Dominic Bassani for their services. It should be noted, however, that the amounts currently owed by the Company to the D2 Trust will be converted into shares of Bion common stock unless otherwise agreed in writing, upon the earlier to occur of (a) a $5 million or greater equity financing(s) by Bion, in which case the amount payable will be converted into shares of Bion common stock at the equity price of the financing (or, in the event that the $5 million in equity financing is obtained in a series of more than one financing, the price of the equity financing which pushes the aggregate total of the financings above $5 million), or (b) March 31, 2005, at the then current market price of Bion's common stock. Although Dairy, Bion's subsidiary, recently received the financing described above (which financing was not large enough to repay Bion creditors and is subject to a limiting "Use of Proceeds" which does not permit significant payment to Bion's existing creditors) and Bion is currently seeking other outside sources of capital, as of this date the Company has not been able to secure the level of financing that is necessary for its current and future operations and/or to repay its existing indebtedness and there can be no assurance that sufficient funds will be available from external sources. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on Bion's existing shareholders. Since the Company does not yet have the ability to generate cash flow from operations, it has substantially curtailed its current business activities and states that it may need to cease operations if unable to raise capital from outside sources. This would have a material adverse effect on its business and its shareholders. CENTERPOINT SHAREHOLDERS MEETING/REMOVAL OF CONTRACTUAL PROBLEMS A meeting of the Centerpoint Corporation stockholders which commenced on July 31,2003 was concluded on August 25, 2003. Centerpoint stockholder ratification of the Amended Centerpoint Agreement was overwhelmingly approved (96% of the shares present at the meeting voted in favor, including shares owned by Bion). It should be noted that 85% (1,179,405 shares) of the shares present at the meeting other than the shares owned by Bion voted in favor of the ratification and only 1,490 shares voted against the ratification (with the balance of such shares abstaining). On August 27, 2003, Bion paid the sum of $90,000 to OAM, S.p.A. (and its designees) to complete the transaction described in its current report to the SEC dated April 12, 2003, as a result of the favorable vote by Centerpoint's stockholders. As a result, the contractual impediments to future financing described in its current report dated April 12, 2003 have now been removed. TEXAS INSTALLATION During the second half of May 2003 Bion Environmental Technologies commenced construction of a second generation Bion Nutrient Management System on the Devries Dairy in Texas (which milks approximately 1150 cows) as a retrofit of the dairy's existing lagoon. Start-up occurred early in July 2003. Bion anticipatess the biology of this installation will be mature by approximately mid-September 2003. The purpose of this installation is to demonstrate the capacity of the Company's second generation NMS to remove nutrients (primarily nitrogen and phosphorus) from the waste stream. Results are anticipated during the Fall of 2003. Bion considers the success of this system at the Devries Dairy in Texas to be extremely important in demonstrating the effectiveness of the Bion NMS. Success of this installation is one of the conditions for the conversion of the Notes into common stock of Bion Dairy Corporation. * * * As previously reported, there is substantial doubt about the Company's ability to continue as a going concern. In connection with their report on Bion's Consolidated Financial Statements as of, and for the year ended, June 30, 2002, BDO Seidman, LLP, the Company's independent certified public accountants, expressed substantial doubt about the ability of Bion to continue as a going concern because of recurring net losses and negative cash flow from operations. BRITISH ENERGY: FPL Energy Agrees to Buy 50% Stake in AmerGen ------------------------------------------------------------- FPL Energy, LLC, a subsidiary of FPL Group, Inc. (NYSE:FPL) has reached an agreement to buy British Energy's 50 percent ownership in AmerGen Energy Company, LLC for $276.5 million. AmerGen currently owns three nuclear power plants in the United States representing approximately 2,480 megawatts. Under the terms of the agreement, an affiliate of FPL Energy will purchase 100 percent of the outstanding stock in British Energy US Holdings Inc., which owns a 50 percent interest in AmerGen Energy Company, LLC. AmerGen Energy Company is a partnership formed in 1997 between PECO Energy Company and British Energy. In 2000 PECO merged with Unicom to form Exelon. AmerGen currently owns and operates the Clinton Power Station, Three Mile Island Unit 1 and the Oyster Creek Generating Station. Under the terms of the partnership agreement and associated power purchase agreements, Exelon is obligated to purchase 100 percent of the output not already under contract from the AmerGen plants through the expiration of their current operating licenses. Exelon has a 30-day right of first refusal to elect to purchase British Energy's 50 percent interest in AmerGen, at the same price and on the same terms and conditions as specified in the agreement with FPL Energy. If Exelon exercises its right of first refusal and purchases the British Energy shares, FPL Energy will receive a transaction fee. In addition, under the partnership agreement, Exelon has the right to elect to participate in the sale of British Energy's interest in AmerGen on the same timetable and terms and conditions as the right of first refusal. If Exelon were to exercise its Tag-along Right, the consideration offered by FPL Energy for a 50 percent interest in AmerGen would be applied pro rata to the interests of British Energy and Exelon, leaving each with a 25 percent interest in AmerGen. Subject to Exelon's right of first refusal, FPL Energy expects to close the acquisition in the first quarter 2004 as soon as all regulatory approvals have been obtained. The company expects the transaction to be immediately accretive to earnings per share. "This transaction will further diversify our generating fleet and supports our strategy of building a moderate risk, well-hedged portfolio," said Jim Robo, president of FPL Energy. "Our investment in AmerGen will be financially attractive and provide a stable revenue stream. We look forward to working closely with Exelon in identifying opportunities for additional value creation." All of the plants will continue to be operated by Exelon. However, according to the terms of the partnership agreement, FPL Energy will have the right to appoint three of the six representatives of the Management Committee of AmerGen that oversees the affairs of the company. The Clinton Power Station is a 1,017-megawatt boiling water reactor located near Clinton in Central Illinois. The plant began commercial operation in 1987 and was sold to AmerGen in late 1999. Its current operating license expires in 2026. Three Mile Island Unit 1 is a 837-megawatt pressurized water reactor located near Harrisburg, Pennsylvania. The plant began commercial operation in 1974 and was sold to AmerGen in late 1999. Its current operating license expires in 2014. The Oyster Creek Generating Station is a 627-megawatt boiling water reactor located in Lacey Township, near the New Jersey shore. The plant began commercial operation in 1969 as the first large-scale commercial nuclear power plant in the United States and was sold to AmerGen in 2000. Its current operating license expires in 2009. The transaction is subject to various regulatory approvals including the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission, as well as U.S. antitrust agency review. In addition, the transaction is subject to approval by British Energy shareholders, if required, and the Secretary of State for Trade and Industry of the United Kingdom. Merrill Lynch & Company acted as financial advisor to FPL Energy and Shaw Pittman LLP acted as legal advisor to the company. FPL Group, with annual revenues of more than $8 billion, is nationally known as a high-quality, efficient, and customer-driven organization focused on energy-related products and services. With a growing presence in 26 states, it is widely recognized as one of the country's premier power companies. Its principal subsidiary, Florida Power & Light Company, serves more than 4 million customer accounts in Florida. FPL Energy, LLC, an FPL Group energy- generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at http://www.FPLGroup.com http://www.FPL.comand http://www.FPLEnergy.com * * * As reported in Troubled Company Reporter's April 9, 2003 edition, following the announcement by British Energy that it had entered into formal standstill agreements with a number of its creditors and postponed principal repayment on guaranteed bonds due 25 March 2003, 25 March 2006 and 25 March 2016, Fitch Ratings has re- examined the CDO transactions it rates for exposures to the debt issued by British Energy. The postponement of principal repayment legitimizes the calling of a Restructuring credit event under the terms of the standard credit default swap agreement. The agency's current Senior Unsecured rating for British Energy is 'C' Rating Watch Negative. The timing of any future downgrade of British Energy's Senior Unsecured rating would be dependent upon creditors' formal agreement to a final form of restructuring or cancellation of the standstill agreement and resultant formal insolvency procedures. CABLE SATISFACTION: Director Dave Brochet Steps Down from Board --------------------------------------------------------------- Cable Satisfaction International Inc. (TSX: CSQ.A) announced the resignation of Dave Brochet, a director since 2001, from the Board of Directors. Mr. Brochet is a manager with Capital Communications CDPQ Inc. Csii builds and operates large bandwidth (750 Mhz) hybrid fibre coaxial networks and, through its subsidiary Cabovisao - Televisao por Cabo, S.A. provides cable television services, high-speed Internet access, telephony and high-speed data transmission services to homes and businesses in Portugal through a single network connection. The subordinate voting shares of Csii are listed on the Toronto Stock Exchange under the trading symbol "CSQ.A". * * * SIGNIFICANT EVENTS Since December 31, 2002, Cabovisao is in default of certain financial and operational covenants under its credit facility. The credit facility consisted of a fully drawn Secured Term Loan of euro 100 million ($155.9 million as of June 30, 2003) that matured on December 31, 2002 and undrawn Secured Revolving Advances of euro 260 million ($405.4 million as of June 30, 2003). On the maturity date, the credit facility allowed the Secured Term Loan to be converted into Secured Revolving Advances, the availability of which was subject to certain financial covenants and conditions. The Secured Revolving Advances were cancelled on December 19, 2002 and such conversion did not occur. The Company has obtained waivers with respect to Cabovisao's non- compliance and successive extensions of the maturity date of the Secured Term Loan until October 31, 2003, subject to certain conditions. On March 1, 2003, the Company did not make the semi-annual interest payment on its US$155 million ($210.1 million as of June 30, 2003) Senior Notes. The grace period with respect to such payment expired on March 31, 2003 without such payment having been made. On June 13, 2003, the Company announced that it had received a commitment from Capital Communications CDPQ Inc., in connection with a proposed recapitalization and restructuring plan. Under the CDP Plan, euro 45 million (approximately $71 million) of new common equity will be injected into Csii upon the effective date of the Plan, including a minimum investment of euro 27 million by CDP and any co-investors designated by CDP. The balance will be raised by providing existing holders of its outstanding US$155 million Senior Notes the opportunity to subscribe for up to euro 14 million in new equity and existing Csii shareholders (including CDP) the opportunity to subscribe for up to euro 4 million in new equity. CDP has undertaken to increase its minimum investment up to euro 45 million to cover any shortfall in such balance which is not subscribed by the noteholders or shareholders. The ownership structure of Csii following the proposed recapitalization and restructuring would be as follows (before the exercise of any warrants or stock options): - 70% of the equity of the recapitalized Csii, represented by the euro 45 million investment; - 26% of the equity owned by noteholders in exchange for the complete equitization of the Senior Notes; - 4% of the equity owned by Csii's shareholders in exchange for the shares held by them. Assuming the Backstop Commitment is not called upon and all noteholders and shareholders exercise their rights to subscribe for equity of Csii, the existing shareholders of Csii (including CDP) will own 10% of the equity of the recapitalized Csii and the noteholders will own 48%. The remaining 42% would represent the euro 27 million of new equity invested by CDP and any co- investors designated by CDP. According to the Special Committee of the Board of Directors formed to review and evaluate the alternatives of the Company, the CDP Plan was the most attractive offer received by the Company following the extensive solicitation of potential investors and evaluation of bids by Rothschild, the Company's financial advisor. On June 27, 2003, the Company voluntarily filed for and obtained an order from Quebec Superior Court for protection under the Companies' Creditors Arrangement Act for an initial 30-day period. As part of the court order, the Company's annual meeting scheduled for June 30, 2003 has been postponed up to November 30, 2003. This court protection was subsequently extended to October 15, 2003. While Csii is under court protection, the Company's subsidiary in Portugal, Cabovisao, is not subject to this court order and will continue to provide normal service to customers. On July 25, 2003, the Company filed a plan of arrangement and reorganization with Quebec Superior Court, which is similar in all material respects to the CDP Plan. In order for the plan of arrangement and reorganization to become effective, a court-supervised vote will be required to obtain consent from Csii's unsecured creditors as prescribed by Canadian law. In addition, implementation of any court-sanctioned plan will require or be subject to the approval of Cabovisao's bank syndicate, satisfactory agreements with Cabovisao's trade creditors, the execution of definitive documentation and the satisfaction of other customary conditions. There can be no assurance that the plan of arrangement and reorganization will be completed successfully or on the terms announced. Furthermore, one holder of approximately 34% of the outstanding unsecured Senior Notes has indicated that it will not vote in favour of the proposed plan of arrangement and restructuring and that it may propose an alternate plan. The Company continues discussions with such holder and, until a credible superior proposal is presented, continues to believe that the CDP Plan is the best alternative available for the Company and its stakeholders. Given this context, there is significant uncertainty regarding the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments to the amounts and classifications of the assets and liabilities that might be necessary should the Company be unable to continue as a going concern. CAMPBELL SOUP: Positive Earnings Restore Balance Sheet Solvency --------------------------------------------------------------- Campbell Soup Company (NYSE:CPB) reported diluted earnings per share for the fourth quarter ended August 3, 2003 of $.18, compared to $.13 recorded in the year-ago quarter. Earnings per share in the year-ago quarter included amortization expense of approximately $.04, since eliminated under SFAS No. 142, which the company adopted at the start of fiscal 2003, and approximately $.01 for costs related to the Australian manufacturing reconfiguration. For the quarter, net sales increased 19 percent to $1,455 million. The following factors drove the increase: -- Volume and mix increased 6 percent -- Price added 2 percent -- Reduced promotional spending added 3 percent -- Currency added 5 percent -- Acquisitions contributed 3 percent -- The fourth quarter included 14 weeks compared to 13 weeks in the year-ago period, with the additional week accounting for approximately 7 - 8 percentage points of the sales increase. For the fourth quarter of fiscal 2003, wet soup shipments compared to a year ago were up 7 percent in the U.S. and 3 percent outside the U.S., resulting in a 6 percent increase worldwide. In the U.S., ready-to-serve shipments rose 29 percent, broth shipments increased 22 percent, and condensed soup shipments declined 5 percent. Total marketing investment for the quarter increased 17 percent. Currency and acquisitions accounted for 7 percentage points of the increase. Net earnings were $74 million versus $55 million a year earlier. Earnings for the year-ago quarter included amortization expense of $14 million, since eliminated under SFAS No. 142, and $4 million for costs related to the Australian manufacturing reconfiguration. For the fiscal 2003 year, the company reported diluted earnings per share, before the cumulative effect of the accounting change, of $1.52 compared to $1.28 for the prior year. Earnings per share for fiscal 2002 included amortization expense of approximately $.13 per share, since eliminated under SFAS No. 142, and approximately $.03 per share of costs related to the Australian manufacturing reconfiguration. For the year, net sales increased 9 percent to $6,678 million. The following factors drove the increase: -- Volume and mix increased 3 percent -- Price added 1 percent -- Currency added 3 percent -- Acquisitions contributed 2 percent -- The fiscal year included 53 weeks compared to 52 weeks in the prior year, with the additional week accounting for approximately 1 - 2 percentage points of the sales increase. For fiscal year 2003, wet soup shipments compared to a year ago were up 2 percent in the U.S. and 2 percent outside the U.S., resulting in a 2 percent increase worldwide. In the U.S., ready- to-serve soup shipments rose 8 percent, broth shipments increased 13 percent, and condensed soup shipments declined 6 percent. Total marketing investment was up 7 percent with currency and acquisitions accounting for 5 percentage points of the increase. Net earnings, before the cumulative effect of the accounting change for fiscal 2003, were $626 million versus $525 million for the prior year. Net earnings in fiscal 2002 included amortization expense of $54 million, since eliminated upon the adoption of SFAS No. 142, and costs of $14 million related to the Australian manufacturing reconfiguration. In addition, the company reported cash flow from operations of $873 million compared with $1,017 million last year. The year-ago result benefited from a significant reduction in working capital to record low levels, which have been maintained in fiscal 2003. Capital expenditures for fiscal 2003 were $283 million, slightly higher than the $269 million of a year ago. Douglas R. Conant, Campbell's President and Chief Executive Officer, said, "We have now delivered two years of top-line growth and we are positioned to build on this performance in fiscal 2004. Our results in fiscal 2003 demonstrate that our investments in quality, new products and packaging, and improved marketing are taking hold. In our North America Soup business, we have continued to deliver strong growth in our ready-to-serve soups and broths and we have laid the foundation for more growth with the introduction of our 'M'm! M'm! Good! To Go' convenience line. In our condensed soup business, we are taking steps to profitably improve trends through continued product and packaging improvements, the rollout of our innovative gravity fed shelving system, and by focusing on those segments with the most competitive advantages, including kids and cooking. We have just launched our new advertising campaign, 'Make It Campbell's Instead,' which covers both ready-to-serve and condensed varieties." Conant continued, "In our North America Sauces and Beverages segment, we are also seeing the positive impact of increased investments behind such brands as 'Pace' Mexican sauces, 'Prego' pasta sauces and 'V8' vegetable juices. In our Biscuits and Confectionery segment, Pepperidge Farm and Arnotts delivered strong performances. We have gained share in several of these businesses and we are continuing to fill the innovation pipeline with convenient, on-trend products. As we begin our new fiscal year, we are clearly a much more competitive company, far better positioned to win with our customers and our consumers. The table is set for stronger performance." For fiscal year 2004, the company expects earnings per share to be approximately $1.58. This fiscal 2004 projection includes approximately $.03 for incremental pension and post-retirement medical expense and reflects the company's continued commitment to maintaining a significant level of marketing investment. In addition, fiscal 2003 had the benefit from the 53rd week of approximately $.02. For the first quarter of fiscal year 2004, the company expects earnings to be between $.48 - $.50 per share. At August 3, 2003, Campbell Soup's total current liabilities exceeded its total current assets by about $1.5 billion. At January 26, 2003, the Company's balance sheet shows a net capital deficit of about $100 million. North America Soup and Away From Home Sales for North America Soup and Away From Home were $2,606 million, a 3 percent increase compared with a year ago. Operating earnings of $632 million were flat compared to a year earlier. U.S. soup shipments were up 2 percent over the prior year. Further details include: -- Ready-to-serve soup shipments increased 8 percent behind the launch of Campbell's "Soup At Hand" sippable soups and strong shipment growth of "Campbell's Chunky" and "Campbell's Select" soups. -- New Campbell's "Soup At Hand" sippable soups finished the year with strong results, as sales exceeded expectations. As previously announced, Campbell is now shipping 7 new varieties of "Soup At Hand" as part of its "M'm! M'm! Good! To Go" convenience platform. -- Both "Campbell's Chunky" and "Campbell's Select" soups in microwavable bowls are now shipping as part of the "M'm! M'm! Good! To Go" convenience platform. Initial customer and consumer acceptance behind this initiative have been strong. -- Condensed soups declined 6 percent for the year. In the fourth quarter, the company began shipping condensed soups with new easy-open lids and improved chicken varieties. -- "Swanson" broth shipments were up 13 percent as consumers continued to respond to advertising and promotion supporting broth as an everyday ingredient for cooking. -- Away From Home soup sales were up with good growth in all soup formats. Stockpot had an especially strong year. These results were offset by volume reductions in low margin, non-soup products. -- Canadian soup sales showed good growth, helped by the regional introduction of new "Campbell's Gardennay" soups in aseptic packages. North America Sauces and Beverages North America Sauces and Beverages sales were up 5 percent to $1,246 million and operating earnings increased 12 percent to $289 million. These results were achieved behind strong gains in "Pace" Mexican sauces, "V8" vegetable juices, "Campbell's" tomato juice and the introduction of new "V8 Splash" Smoothies and "Pace Mexican Creations." Additional highlights include: -- "Prego" Hearty Meat Sauces were introduced during the fourth quarter. Retail acceptance and initial consumer purchases have been strong. -- "Pace Mexican Creations" sauces are the largest single "Pace" brand initiative since Campbell's acquisition of the company. "Pace," the only brand of Mexican sauce advertising coast-to- coast, is the market share leader west of the Mississippi. -- Consumer demand for "V8" vegetable juices continued to respond favorably to advertising support in fiscal 2003. The "V8 Splash" juice drink brand generated sales growth for the year behind the successful introduction of "V8 Splash" Smoothies. Biscuits and Confectionery Sales for Biscuits and Confectionery increased 18 percent to $1,774 million compared to last year. The Snack Foods Limited acquisition in Australia accounted for 8 percentage points of the sales increase and currency contributed 4 percentage points. Operating earnings increased 14 percent to $212 million, with currency translation accounting for 4 percentage points of the growth. Operating earnings included $1 million of costs related to the Australian manufacturing reconfiguration compared to $20 million in fiscal year 2002. In fiscal year 2003, the company recorded transitional expenses of $10 million related to the closure of the Pepperidge Farm bakery in Norwalk, CT and the startup expenses of the new bakery in Bloomfield, CT. Additional details include: -- Pepperidge Farm delivered strong sales performance in its cookies, crackers and bakery segments. New "Goldfish" Colors crackers, introduced in the first quarter of fiscal 2003, and Pepperidge Farm Mini Distinctive cookie varieties, introduced in the fourth quarter, have delivered strong sales. -- At Arnotts, sales expanded on growth in core cookie lines and the addition of Snack Foods Limited. Following the close of the fiscal year, Arnotts signed an agreement to purchase three chocolate biscuit brands, subject to regulatory approval. These brands are expected to complement Arnotts existing biscuit business. -- Godiva Chocolatier's worldwide sales grew despite an uncertain global economic environment. In fiscal 2003, Godiva opened 25 new stores worldwide while closing 15 unprofitable stores. Same stores sales declined in North America, but rose in Japan and Europe. International Soup and Sauces International Soup and Sauces sales increased 14 percent to $1,052 million. Favorable currency translations and the acquisition of Erin Foods accounted for the sales increase. Operating earnings increased 7 percent to $128 million, due primarily to favorable currency translation, partially offset by $8 million in costs related to the discontinuance of certain European co-packing contracts. Strong performance of instant dry soups across Europe was offset by weakness in the wet soup and sauces businesses in the UK, France and Germany. Further details include: -- The UK shortfall reflects declines in "Homepride" sauces and "Campbell's" branded soups. -- In Germany, a significant portion of the private-label soup business is being discontinued. The dry soup brand, "Heisse Tasse," performed strongly. -- In France, volume declined in the fourth quarter, driven by unusually warm weather conditions and aggressive competitive pressures. -- In Australia and Asia, both soups and sauces delivered solid top and bottom line growth. Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverage, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include "Campbell's" soups worldwide, "Erasco" soups in Germany and "Liebig" soups in France, "Pepperidge Farm" cookies and crackers, "V8" vegetable juices, "V8 Splash" juice beverages, "Pace" Mexican sauces, "Prego" pasta sauces, "Franco-American" canned pastas and gravies, "Swanson" broths, "Homepride" sauces in the United Kingdom, "Arnott's" biscuits in Australia and "Godiva" chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the "Batchelors," "Oxo," "Lesieur," "Royco," "Liebig," "Heisse Tasse," "Bla Band" and "McDonnells" brands. The company is ably supported by 25,000 employees worldwide. For more information on the company, visit Campbell's Web site on the Internet at http://www.campbellsoup.com In late 2002, shareholder equity on Campbell Soup's balance sheet dipped below zero following year-to-year declined in net sales. Positive earnings each quarter this past year have restored the company's balance sheet to a solvent state. Today, Campbell's bonds carry an A rating and trade above par. Campbell's stock has climbed to $26+ per share. CANWEST MEDIA: S&P Rates C$940 Million Sr. Sec. Term Loan at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B+' rating to CanWest Media Inc.'s C$940 million senior secured tranche D term loan bank facility due May 2009. In addition, Standard & Poor's has withdrawn its ratings on the company's B and C term loan tranches. At the same time, the ratings outstanding on Winnipeg, Manitoba-based CanWest Media, including the 'B+' long- term corporate credit rating, were affirmed. The outlook is stable. The tranche D term loan refinanced the B and C term loan tranches of the company's credit facility. CanWest Media estimates that the transaction will yield C$8.0 million of interest savings annually. The company had C$3.4 billion lease-adjusted debt outstanding at the end of the period (including C$755.0 million of pay-in-kind holding company notes). "The ratings on CanWest Media largely reflect the company's high debt level, relatively weak credit measures, and limited financial flexibility," said Standard & Poor's credit analyst Barbara Komjathy. The ratings are supported by the company's leading Canadian market position and the business diversity afforded by its newspaper publishing and television broadcasting assets, which help to mitigate the affect of the advertising-revenue and newsprint-cost cycles. Also factored into the ratings is the favorable regulatory environment that limits foreign competition and ownership. CanWest Media's solid results in the first three quarters of 2003 (Aug. 31 year-end) reflect improving advertising market conditions, albeit growth has slowed somewhat in the third quarter due to a number of temporary external factors, such as the war in Iraq. The company has sold certain newspaper assets in August 2002 and in January 2003, thus actual revenue and EBITDA in the first three quarters of 2003 are below that of 2002. On a pro forma basis, however, revenues and EBITDA have increased by 5.5% and 11.4% in the first nine months of 2003. CanWest's domestic television broadcast operations continue to receive strong ratings, ranking first in prime time for the 18-49 years old demographic in Toronto, Ontario, and Vancouver, B.C. Newspaper results on a pro forma basis in the period were supported by national advertising sales growth, particularly for the auto and technology sectors, although a strike at the company's Victoria, B.C.-based newspapers and SARS-related advertising cuts have dampened overall segment performance. CanWest Media's international operations, including Network Ten, have shown strong growth and also benefited from exchange rate gains. Network Ten made a C$30 million interim distribution to CanWest Media, with additional distributions expected in December 2003. The stable outlook reflects the expectation that CanWest Media will maintain its strong business profile, particularly its broadcast television audience and newspaper readership and circulation market shares, and will continue to reduce losses at the National Post newspaper. In addition, the company is expected to lower debt levels to offset accretion in holding company indebtedness. Total debt (including holding company notes) to adjusted EBITDA should improve to 5.5x, and gross adjusted EBITDA interest coverage to close to 2.0x, by the end of 2004. CENTENNIAL COMMS: Selling 30 Million Shares in Public Offering -------------------------------------------------------------- Centennial Communications Corp. (Nasdaq: CYCL) announced today intends to offer for sale 30 million shares of common stock in a public offering, not including shares to be sold pursuant to an over-allotment option to be granted to the underwriters. The common stock will be offered under Centennial's existing shelf registration statement. Centennial intends to use all of the net proceeds from the offering to repay its unsecured subordinated notes due 2009, all of which may not get repaid. The Mezzanine Debt is currently accruing pay-in-kind interest at a rate of 13%. Affiliates of The Blackstone Group will grant the underwriters in connection with the offering an option to purchase additional shares of Centennial common stock to cover over-allotments, if any, up to an additional 15% of the shares sold by the Company in the offering. Currently, affiliates of The Blackstone Group collectively own approximately 29% of Centennial's outstanding common stock. Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated are acting as joint book-running managers for the offering. Centennial (S&P, B- Corporate Credit Rating, Negative) is one of the largest independent wireless telecommunications service providers in the United States and the Caribbean with approximately 17.1 million Net Pops and approximately 929,700 wireless subscribers. Centennial's U.S. operations have approximately 6.0 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.1 million Net Pops in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks in the region. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, visit its Web sites at http://www.centennialcom.comand http://www.centennialpr.com CENTENNIAL COMMS: Carmen Culpeper Resigns from Company's Board -------------------------------------------------------------- Centennial Communications Corp. (NASDAQ: CYCL) announced that Carmen A. Culpeper has resigned from the Company's board of directors. Ms. Culpeper, a former president of the Puerto Rico Telephone Company and Secretary of Treasury of Puerto Rico, will now serve as a consultant to the Company and assist the Company in its marketing and regulatory affairs in Puerto Rico. "On behalf of the management team, I would like to thank Carmen for her many contributions to the Centennial board over the past three years, particularly with respect to her service on our audit committee and her extensive knowledge of the Puerto Rico market," said Michael J. Small, chief executive officer of Centennial. "Given new rules applicable to audit committee members, Carmen was effectively prohibited from assisting the Company in its regulatory affairs. Her new role as a consultant to the Company will allow us to fully leverage Carmen's extensive knowledge of the Puerto Rico market." James P. Pellow has been named to serve the remainder of Ms. Culpeper's term and will join the Company's audit committee. Mr. Pellow has served as executive vice president and treasurer of St. John's University since 1999 and has served in other senior capacities with St. Johns University since 1991. Mr. Pellow has also worked at Coopers & Lybrand and at Chapdelaine & Co., a New York City municipal bond brokerage firm. Mr. Pellow is a certified public accountant and received a B.B.A and an M.B.A. from Niagara University. "We are pleased to welcome Jim Pellow to the Centennial board," said Mr. Small. "His strong finance and accounting background will serve Centennial well as we continue to grow our businesses." Centennial (S&P, B- Corporate Credit Rating, Negative) is one of the largest independent wireless telecommunications service providers in the United States and the Caribbean with approximately 17.3 million Net Pops and approximately 939,500 wireless subscribers. Centennial's U.S. operations have approximately 6.1 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.2 million Net Pops in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks in the region. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, visit its Web sites at http://www.centennialwireless.com http://www.centennialpr.comor http://www.centennialrd.com CHEVY CHASE BANK: S&P Ups Long-Term Counterparty Rating to BB+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit ratings on Chevy Chase Bank FSB to 'BB+' from 'BB'. At the same time, the outlook was revised to stable from positive. The long-term counterparty credit ratings on the bank's parent company, B.F Saul Real Estate Investment Trust were also raised to 'B' from 'B-'. "The ratings revision is the result of a decreased risk profile in its loan portfolio, improved funding, and acceptable profitability given the current rating level," said Standard & Poor's credit analyst Baylor A. Lancaster. Chevy Chase's loan portfolio is now more than 60% residential mortgages and home equity loans. Indirect auto loans and leases, which had comprised a significant component of the loan book, are no longer being originated and have begun to decline as a proportion of total loans. Asset quality metrics have shown steady improvement as well. Chevy Chase Bank is an $11.7 billion-asset federal savings bank based in Maryland, with a steadily expanding footprint throughout suburban Washington D.C. The bank is majority-owned by the B.F. Saul REIT, which operates hotel and office properties primarily in the mid-Atlantic states. Chevy Chase's continued growth has led to an improved funding profile, with core deposits having risen substantially in recent years. Capital measures remain low on a reported basis, but are seen as having improved on a risk-adjusted basis given the decreased risk profile of the bank. CONSECO INC: S&P Takes Various Rating Actions on Subsidiaries ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' counterparty credit and financial strength ratings on Bankers Life & Casualty Co., Colonial Penn Life Insurance Co., Conseco Annuity Assurance Co., Conseco Health Insurance Co., Conseco Life Insurance Co., and Conseco Life Insurance Co. of NY (collectively, Conseco Life Group; CLG) on CreditWatch with positive implications. In addition, Standard & Poor's placed its 'B+' counterparty credit and financial strength ratings on Conseco Senior Health Insurance Co. on CreditWatch developing. Standard & Poor's also withdrew its 'B+' counterparty credit and financial strength ratings on Pioneer Life Insurance Co. and Conseco Medical Insurance Co. due to the companies' merger into a nonrated sister subsidiary. In addition, Standard & Poor's assigned its 'CCC-' rating to Conseco Inc.'s (OTC BB:CNCEQ) $860 million convertible preferred stock issue reflecting its deeply subordinated position within the capital structure. This rating is not on CreditWatch. The 'B+' ratings on CLG largely reflect the weak operating capital of the units. As of June 30, 2003, the combined NAIC risk-based capital ratio was 173%. The positive CreditWatch reflects the expected proceeds from the sale of the GM Building, reported in the press at $1.4 billion, which could result in an operating capital increase of about $380 million. The ultimate ratings level for CLG will incorporate the capital strength of the operating units on actual receipt of the GM Building proceeds, as well as the new capital structure of the holding company after its emergence from bankruptcy and the expected fixed-charge coverage. On emergence from bankruptcy, Conseco Inc. will prepare a balance sheet in accordance with fresh start accounting as required by AICPA Statement of Position 90-7. Once Standard & Poor's has reviewed the fresh start balance sheet and related financial materials, a counterparty credit rating will be assigned to Conseco Inc., and a rating will be assigned to the $1.3 billion of bank debt issued in conjunction with the holding company's emergence from bankruptcy. If the ratings on CLG are raised, they will likely be in the 'BB' category. The placement of Conseco Senior Health Insurance Co. (CSH) on CreditWatch developing reflects the excessive losses this company has experienced on its long-term care business. Management is currently investigating possible solutions. If a solution is forthcoming, the ratings on CSH could be aligned with CLG. If not, the ratings will likely be lowered, possibly to the 'CCC' category. CONSECO INC: A.M. Best Affirms B FSR on Insurance Subsidiaries -------------------------------------------------------------- A.M. Best Co. has affirmed the financial strength rating of B (Fair) of Conseco, Inc's (NYSE: CNC) insurance subsidiaries and has removed the ratings from under review. The rating outlook is positive. This change reflects the Northern District of Illinois Bankruptcy Court's decision to approve CNC's plan of reorganization on September 9, 2003 and CNC's subsequent emergence from bankruptcy on September 10, 2003. CNC filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy code in December 2002. The bankruptcy filing was necessitated as a result of indebtedness amassed from a corporate-wide acquisition strategy during the 1990's and the significant reduction in shareholder's equity, which was primarily caused by losses in its consumer finance business and investment portfolio and the write-off of substantially all of the balance of goodwill and deferred tax assets from its balance sheet. The company has formally emerged from the bankruptcy reorganization administrative process and is now an insurance only entity with a simplified debt and operating structure and a restructured balance sheet which will reflect a "fresh start" accounting valuation. The maintenance of the financial strength rating reflects A.M. Best's view that the bankruptcy restructuring has resolved some of the risk of uncertainty surrounding the company's ability to emerge successfully from bankruptcy and to move forward with its restructuring plan, although it is unclear at this time how much business risk still remains in the organization. The removal of the under review status and the assignment of a positive outlook reflects the emerging nature of CNC as a new legal and insurance operating entity. A.M. Best views positively management initiatives to recapitalize the company and restore its financial and operating viability. These initiatives include the sale of the company's ownership of the GM building in New York at a significant statutory gain, the sale of Conseco Finance, reducing or discontinuing products which are more capital intensive, ongoing operating expense reductions, merging of some subsidiaries and the restructuring of the company's investment portfolio toward less risky, less volatile investments that more appropriately match the liabilities of its insurance operations. In addition, it is A.M. Best's opinion that the insurance companies will continue to stabilize and rebuild their overall capitalization levels and operating profiles in the near term. A.M. Best also notes the ongoing regulatory oversight and the protective order ("Order to Maintain Financial Condition and To Protect Policyholders") issued by the Texas Department of Insurance which is the lead domiciliary regulator. Despite these positive developments, there still exists significant execution risk to CNC as it implements it reorganization plan, a diminished capital position on both an absolute and risk adjusted basis, ongoing uncertainty regarding the viability of the company's independent distribution systems, significant investment risk within its portfolios and a moderately high debt to capital ratio on a post bankruptcy basis. In addition, A.M. Best believes CNC will be challenged as it "right- sizes" its expense levels to meet its new operating profile. These factors, coupled with the general macro environmental challenges facing the industry as a whole, create formidable challenges to CNC's future success. A.M. Best will continue to closely monitor the company's financial and operational performance and the related impact on its ability to meet its obligations to its policyholders. A.M. Best has affirmed the financial strength ratings of B (Fair) of the following CNC subsidiaries. -- Conseco Annuity Assurance Company -- Conseco Life Insurance Company -- Conseco Senior Health Insurance Company -- Conseco Health Insurance Company -- Conseco Life Insurance Company of New York -- Washington National Insurance Company -- Colonial Penn Life Insurance Company -- Bankers Life and Casualty Company COVANTA ENERGY: Files Joint Plan of Reorganization & Liquidation ---------------------------------------------------------------- On September 8, 2003, Covanta Energy Corporation and its affiliated reorganizing debtors and liquidating debtors filed a draft Joint Plan of Reorganization, a draft Joint Plan of Liquidation and a related draft Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York. Bankruptcy law does not permit solicitation of acceptances of the Plans until the Bankruptcy Court approves the final Disclosure Statement as providing adequate information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holder of claims or interests of the relevant class to make an informed judgment about the Plans. Accordingly, this announcement is not intended to be, nor should it be construed as, a solicitation for a vote on the Plans. The Company will emerge from Chapter 11 if and when the Plans receive the requisite creditor approval and are confirmed by the Bankruptcy Court. Additionally, on September 5, 2003, Covanta and certain of its subsidiaries entered into an agreement to sell their interests in Heber Geothermal Company, Heber Field Company, Second Imperial Geothermal Co., Mammoth-Pacific L.P. and certain related holding companies to affiliates of ArcLight Energy Partners Fund I, L.P. and Caithness Energy, L.L.C. for a purchase price of $170,000,000, subject to adjustments. Overview of Reorganization Plan Scott G. Mackin, President and Chief Executive Officer of Covanta Energy Corporation and President of Ogden New York Services, Inc., relates that the Reorganization Plan is premised on the economic benefits to be derived from a framework for a restructuring of the Debtors built around the establishment and implementation of an Employee Stock Ownership Plan. By establishing an ESOP to which Reorganized Covanta will contribute all of its stock, the employees of the Reorganized Debtors, as ESOP participants, will receive an equity interest in Reorganized Covanta that provides employees an opportunity to profit from the value of Reorganized Covanta Common Stock. In addition, the implementation of the ESOP and Reorganization Plan is intended to result in the Debtors realizing a significant increase in available after-tax cash flow through a substantial reduction in federal income tax liabilities that will permit the Debtors to pay down their Allowable Claims. Thereby, permitting the Reorganizing Debtors to emerge from bankruptcy and permitting the Reorganizing Debtors to benefit the employees participating in the ESOP. Furthermore, the feasibility of the Reorganization Plan is further premised upon an ability to implement the Business Plan for the Reorganizing Debtors. The Business Plan and accompanying financial projections through December 31, 2007 include the preliminary estimated effects of the required adoption of "fresh start" accounting. While the Debtors believe that the Business Plan and Projections are reasonable and appropriate, they include a number of assumptions that may differ from actual results and are subject to a number of risk factors. The Debtors expect to sell their interests in certain geothermal energy projects in Heber, California. The Debtors expect to effect the sale pursuant to either Section 363 of the Bankruptcy Code or through a plan of reorganization for the Heber Debtors to be filed with respect to the Debtor entities to be sold, in either event contemplating selling the Geothermal Debtor Equity on substantially similar economic terms. The Debtors expect to file a Section 363 sale motion and reserve the right to file the Heber Plan based on substantially similar economic terms to the proposed Section 363 sale. Consummation of the sale of Geothermal Debtor Equity under either a Section 363 sale or the Heber Plan would result in the transfer of ownership of certain Reorganizing Debtors and Heber Debtors that own or lease the Geothermal Projects to certain buyers. The Reorganization Plan is premised on the consummation of the Geothermal Sale, as the proceeds of the Geothermal Sale will provide the Reorganized Debtors with funds necessary to emerge from Chapter 11 protection. Overview of Liquidation Plan The Liquidation Plan, on the other hand, provides for the complete liquidation of the Liquidating Debtors. Substantially all of the Liquidation Assets of the Liquidating Debtors have already been sold. The Debtors have proposed that the Secured Bank Lenders and 9.25% Debenture Holders contribute their Distributions, to which they would otherwise be entitled under the Liquidation Plan to Reorganized Covanta. The Distributions consists of: (i) the proceeds of certain postpetition asset sales, and (ii) certain other Claims of the Liquidating Debtors upon which the Secured Bank Lenders and 9.25% Debenture Holders have a first priority secured lien. The Debtors further propose that up to $500,000 of the Cash subject to the transfers be transferred to the Operating Reserve, which will be used by the Liquidating Trustee to fund the implementation of the Liquidation Plan. The transfers will assist the Reorganized Debtors in their reorganization. Furthermore, to the extent that there are Liquidation Assets that have not been sold or transferred to Reorganized Covanta -- the "Residual Liquidation Assets", the Liquidation Plan provides for the complete liquidation and monetization of the Residual Liquidation Assets and the complete dissolution of the Liquidating Debtors pursuant to applicable state law. (Covanta Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) DOBSON COMMS: S&P Gives Junk Rating to $600 Million Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to Dobson Communications Corp.'s $600 million senior notes due 2013, issued under Rule 144A with registration rights, and its 'B-' to Dobson Cellular Systems, Inc.'s new $700 million secured credit facility based on preliminary documentation. DCS is a wholly owned subsidiary of Dobson Communications. Prior to the completion of the new credit facility, Dobson/Sygnet Communications and its subsidiaries will be merged into DCS as part of Dobson Communications' recapitalization. The 'B-' corporate credit rating for Dobson Communications and Dobson Operating Company LLC was affirmed, and Dobson Operating Company's 'B-' bank loan rating was also affirmed. The outlook is stable. Upon completion of the new credit facility, Dobson Operating Company's bank loan rating will be withdrawn. Simultaneously, Standard & Poor's assigned its 'B-' corporate credit rating to American Cellular Corp. following the completion of its restructuring. Proceeds from the $900 million unsecured notes held in escrow and issued under ACC Escrow Corp. have been released to repay American Cellular's previous outstanding bank debt. These notes are now unsecured debt obligations of American Cellular and are assigned a 'B-' rating. These notes are rated the same as American Cellular's corporate credit rating because of the minimal amount of priority obligations anticipated in American Cellular's capital structure. The ratings under ACC Escrow Corp. have been withdrawn. American Cellular is now a wholly owned unrestricted subsidiary of Dobson Communications and is analyzed on a consolidated basis with Dobson Communications. In addition, Standard & Poor's raised the senior unsecured debt rating for Dobson Communications to 'CCC+' from 'CCC' because the ratio of priority obligations relative to asset value has improved, primarily as a result of the increased asset base from the American Cellular restructuring, while secured debt has been reduced. The new $700 million credit facility is rated the same as the corporate credit rating. Under a stressed scenario simulated by Standard & Poor's based on Dobson Cellular Systems' enterprise value, there is a strong likelihood of substantial, but not full recovery of principal. The credit facility is secured by a perfected first priority security interest in all the assets of Dobson Cellular Systems', Dobson Operating Company and its subsidiaries, and a pledge of the capital stock of the subsidiaries that hold the FCC licenses. The credit facility is also guaranteed by Dobson Communications, Dobson Operating Company, and each of Dobson Operating Company's subsidiaries. Proceeds of the new $600 million notes and $700 million credit facility will be used to refinance approximately $751 million outstanding under the Dobson Operating Company and Dobson/Sygnet credit facilities, to tender for 12.25% Sygnet senior notes ($203 million including premium), and tender for a portion of the 12.25% exchangeable preferred stock ($265 million including premium). Pro forma for this transaction, consolidated debt for Dobson Communications and American Cellular is about $2.4 billion. "The ratings on Dobson Communications reflect the weakened fundamentals of the rural wireless industry, including continued declines in roaming yield, and the potential for increased competition when wireless number portability is implemented, particularly from the national carriers," said Standard & Poor's credit analyst Rosemarie Kalinowski. Roaming revenue is about 30% of total revenue. These factors are somewhat offset by Dobson Communications' 1.5% and American Cellular's 1.7% better-than-average churn rate and above-average EBITDA margin in the mid-40% area. The refinancing transaction incrementally helps Dobson Communications' adequate liquidity position by reducing debt maturities in the 2004-2008 time frame. The earliest significant debt maturity is in 2008. Pro forma for American Cellular's restructuring and this refinancing transaction, consolidated Dobson Communications liquidity consists of an approximate $133 million cash balance and $150 million available under the new credit facility, representing the untapped revolver. DIRECTV LATIN: Continues Deloitte's Engagement as Auditor --------------------------------------------------------- DirecTV Latin America LLC sought and obtained the Court's permission to continue the employment of Deloitte & Touche LLP as an ordinary course professional to perform tax and auditing services. On April 14, 2003, the Court authorized the Debtor to employ Deloitte as an Ordinary Course Professional to audit the DirecTV Latin America Employee Savings Plan. Deloitte was tasked to work on the Savings Plan for the year ended December 31, 2001. While Deloitte has begun working on the 2001 Savings Plan Audit before the Petition Date, $19,000 worth of work remains incomplete. The Debtor wants to continue Deloitte's services to audit the Savings Plan for the year ended December 31, 2002. Joel A. Waite, Esq., at Young Conway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that Deloitte's continued employment in no way violates the OCP Order since Deloitte will only be auditing the Plan, not DirecTV's books and records. The Plan Audits are not related to the Chapter 11 case. For the 2002 Savings Plan Audit, the Debtor estimate Deloitte's fees to be $37,000, plus actual expenses for typing, travel and telecommunication and technology charges, among others. In this regard, the Debtor is concerned that, since Deloitte is already performing services, its fees may exceed the fee limits imposed by the OCP Order. The Order imposes a $25,000 monthly fee cap and up to a $150,000 cap during the pendency of this Chapter 11 Case for each Ordinary Course Professional. DirecTV cannot pay more than the cap without further Court order. However, Judge Walsh rules that any amount the Debtor pays Deloitte on account of the Savings Plan Audits will not count against the fee limits imposed by the OCP Order. (DirecTV Latin America Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) DT IND.: Weak Operating Results Prompt S&P's Watch on B- Rating --------------------------------------------------------------- Standard & Poor's Ratings Services placed it 'B-' corporate credit rating on DT Industries Inc. on CreditWatch with negative implications because of the company's very weak operating results amid a challenging industry environment. Dayton, Ohio-based DT Industries, a supplier of automated production and equipment and systems, has total balance sheet debt of about $40 million. DT Industries has suffered from falling sales and poor profitability during the past few years, primarily because of the weak U.S. manufacturing sector and low industrial capital investment. The company's equipment is used to manufacture, test, or package a variety of industrial and consumer products. DT Industries recently announced steps to reduce costs, including the closure and consolidation of several facilities. "Although these measures are expected to improve efficiency and reduce the company's break-even point, a meaningful turnaround in profitability and cash flow generation will not occur until demand increases," said Standard & Poor's credit analyst Martin King. "While industrial capital spending is expected to improve in late 2003, the increase is expected to be modest." DT Industries' order bookings in its fiscal fourth quarter were only $48 million, compared to an average of $57 million during the first three quarters and $75 million during the fourth quarter of fiscal 2002. Standard & Poor's will evaluate DT Industries' near-term prospects for improvement, liquidity, and financial flexibility before taking a rating action. DVI INC: Court Approves Uniform Asset Sale Bidding Procedures ------------------------------------------------------------- DVI, Inc. (OTC:DVIXQ) received bankruptcy court approval to implement bidding procedures and sell its assets to the highest bidder at an auction, free of liens and claims against the assets, pursuant to sections 363 and 365 of the United States Bankruptcy Code. "We are pleased that the Court approved our motion, as it brings us a step closer to the objective of our reorganization - selling our asset portfolio to maximize recovery to our creditors," said Mark E. Toney, CEO, DVI, Inc. Mark E. Toney is a Principal with AlixPartners, LLC. The Company recently announced that it has obtained $20 million in debtor-in-possession financing from Ableco Finance LLC, of which $11 million is available on an interim order basis. DVI will utilize the DIP funds to help sustain ongoing operations while it works to sell its assets. The case numbers for the Company's filings in the U.S. Bankruptcy Court for the District of Delaware are: DVI, Inc. 03-12656 DVI Financial Services 03-12657 DVI Business Credit 03-12658 DVI is an independent specialty finance company for healthcare providers worldwide with $2.8 billion of managed assets. DVI extends loans and leases to finance the purchase of diagnostic imaging and other therapeutic medical equipment directly and through vendor programs throughout the world. DVI also offers lines of credit for working capital backed by healthcare receivables in the United States. EAGLE FOOD: Receives Court Approval for Sale of Certain Stores -------------------------------------------------------------- Eagle Food Centers, Inc., which owns and operates supermarkets in Illinois and Iowa, announced that the U.S. Bankruptcy Court for the Northern District of Illinois confirmed the sale of certain Eagle stores. The Court approved separate purchase agreements for certain assets related to the following locations: Anticipated Transaction Purchaser Store Location Closing Date --------- -------------- ------------ Albertsons, Inc. Dixon, IL September 29, 2003 Geneseo, IL Morris, IL New Lenox, IL Peru, IL Butera Finer Foods, Inc. Lindenhurst,IL September 19, 2003 Naperville, IL (Chicago Avenue) St. Charles, IL The Kroger Company. Decatur, IL Sept. 22, 2003 Lincoln, IL Sept. 29, 2003 Ottawa, IL Sept. 29, 2003 Rockford, IL #(316) Sept. 22, 2003 Rockford, IL #(136) Sept. 29, 2003 Sterling, IL Sept. 22, 2003 J.B. Sullivan, Inc. Freeport, IL September 12, 2003 Supermercado El Guero De Aurora, Inc. Aurora, IL September 16, 2003 (Farnsworth Avenue) SVT LLC Kankakee, IL Sept. 29, 2003 Watseka, IL Sept. 17, 2003 Harold E. Wisted Woodstock, IL Sept. 30, 2003 The Company has extended the bid deadline for its remaining 21 stores and its infrastructure to September 17, 2003. EES COKE: S&P Affirms Junk Senior Notes Rating & Revises Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' rating on EES Coke Battery LLC's series B $75 million senior secured notes due 2007 and revised the outlook to positive from negative. "The outlook revision follows our review of the credit and conclusion that the combination of the May 2003 purchase of National Steel's assets by United States Steel Corp. (BB- /Negative/--), improved facility operations, and current pricing in coke markets make the rating more likely to increase than decrease or stay the same over the next 12 months," said Standard & Poor's credit analyst Scott Taylor. "The positive outlook reflects the potential for an upgrade depending on the terms and conditions of any new contract with U.S. Steel, given that the project still derives substantial cash flow from tax sharing with the partners," added Mr. Taylor. The project has been generating cash that is adequate to make its future debt service payments, though coverage has been tight due to the loss of $27 million in payments, which were not recovered in the National Steel bankruptcy, and operating problems in 2002. These problems appear to have been resolved, and the project has been operating at capacity as of June 2003. EMMIS COMMS: Will Present at Banc of America Conference Tomorrow ---------------------------------------------------------------- Walter Berger, Emmis Communications Corporation (Nasdaq: EMMS) Executive Vice President and CFO, will be speaking at the 33rd Annual Banc of America Securities Investment Conference next week. Emmis is scheduled to present at 3:30 p.m. Pacific time on Tuesday, Sept. 16, 2003. You can listen LIVE by visiting the Emmis homepage, http://www.emmis.com Emmis Communications (S&P, B- Corporate Credit Rating, Stable) is an Indianapolis based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis' 23 FM and 4 AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, 16 television stations, regional and specialty magazines, and ancillary businesses in broadcast sales and book publishing. ENRON CORP: Wants Court to Disallow & Expunge Employee Claims ------------------------------------------------------------- Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that of the 23,000 proofs of claim filed against the Enron Debtors' estate, 7,000 of them were filed by current and former Enron employees. The Debtors have begun the process of conducting a comprehensive review and reconciliation of these claims. So far, the Debtors identified 74 proofs of claim totaling $22,001,605 that were amended and therefore superseded by subsequent proofs of claim. Ms. Gray contends that the Debtors should not be required to pay twice the same obligation. Moreover, elimination of redundant claims will enable the Debtors to maintain a claims register that more accurately reflects the claims that have been asserted against the Debtors. Accordingly, the Debtors ask the Court to expunge and disallow the 74 Amended Claims. Among them are: Amended Remaining Claimant Claim Claim Amount -------- ------- --------- ------ Richard Bergsieker 743000 867100 $631,830 Nigel Carling 21300 632600 462,532 James Bernhart 207400 1217900 2,135,254 Arthur Fried 666500 666400 397,543 Sheila Glover 13000 885200 342,169 Kevin Hannon 88500 1990800 8,000,250 Gregoire Hermans 224000 836100 866,367 Andrew Kelemen 1824200 2017700 519,677 Davis Maxey 268900 1393000 1,323,050 Janine Ostrander 2202600 2190400 486,534 Mark Robert Milano 107500 2204500 527,610 Mark Papa 34800 1623600 2,592,769 Mark Peterson 1659100 1659200 1,169,147 Bradley Petzold 1680200 1680500 1,779,849 Louis Potempa 589900 588700 438,735 Mark Schroeder 1615400 1604700 790,601 Richard Shafer 34600 1063500 542,684 Traci Warner 42200 1167700 879,645 The Debtors also identified 10 Claims, totaling $2,822,581, to be duplicates of claims already filed by the same claimant but with a different classification. Accordingly, the Debtors ask Judge Gonzalez to disallow and expunge these Duplicate Claims: Duplicate Remaining Claimant Claim Claim Amount -------- --------- --------- ------ Michael Bacon 466300 2035800 $14,850 Paul Bieniawski 37700 785000 18,334 Mario Brunasso 764300 1855000 0 Willard Darrow 15000 418500 24,556 Thomas Hirt 87900 578800 8,533 Keith Kern 131000 516200 514,650 Michael Lindert 731500 797500 1,036,352 Wesley Perry, Jr. 1516000 1516100 358,703 Georgina Sheldon 84500 563700 108,303 Charles Truby 55000 406600 738,300 Furthermore, the Debtors object to 70 Claims totaling $30,538,325 that are duplicate of claims already filed against another Debtor. Thus, the Debtors ask the Court to disallow and expunge the 70 Duplicate Claims, among which are: Duplicate Remaining Claimant Claim Claim Amount -------- --------- --------- ------ Phyllis Anzalone 1453500 1455000 $787,942 Eufard Cooper 1522700 1522600 464,343 Mark Fillinger 2009700 2009600 337,700 Douglas Friedman 1389700 1389600 1,201,875 James Gilbert 1822800 1849700 384,655 Kevin Hannon 1991000 1990800 8,000,250 Gregoire Hermans 716000 836100 866,366 Robert Hurt, III 1637700 1959700 2,243,747 Douglas Leach 1479100 1479000 1,027,887 Michael Lindert 797500 797800 1,036,352 Kathleen Magruder 89400 1965000 1,000,000 Thea Marino 1759500 1763100 456,066 Gary Odland 918800 941000 1,490,276 Bradley Petzold 1680500 1783800 1,779,848 Mark Schroeder 1578900 1604700 790,601 Judith Townsend 1908000 1907900 828,189 According to Ms. Gray, there are 18 Claims identified to be duplicate proofs of claim filed against the Debtors totaling $17,729,781. Some of these Duplicate Claims are: Duplicate Remaining Claimant Claim Claim Amount -------- --------- --------- ------ Greg Curran 1730300 1785900 $490,998 Joseph Doherty 1169200 1169500 300,000 James E. Durbin 610600 391300 649,462 Kevin Hannon 1325400 1991000 8,000,250 Piloo Ilavia 2241600 1239900 1,643,708 Moreover, 30 Claims asserting $17,827,679 in the aggregate are identified to be exact duplicates of another claim. Among them are: Duplicate Remaining Claimant Claim Claim Amount -------- --------- --------- ------ Kevin Hannon 1326800 1990800 $8,000,250 Richard Kinder 763600 1835100 3,638,982 Rose Kokas 437100 437200 555,903 Davis Maxey 269100 1393000 1,323,050 The Debtors ask the Court to disallow and expunge the duplicate claims in their entirety. Ms. Gray contends that eliminating the redundant claims will enable the Debtors to maintain a claims register that more accurately reflects the claims that have been asserted against the Debtors. (Enron Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 609/392-0900) EQUITY INNS: Underwriters Exercise Over-Allotment Option -------------------------------------------------------- Equity Inns, Inc. (NYSE: ENN) announced that its underwriters have exercised an over-allotment option to purchase an additional $4.1 million of Equity Inns' 8.75% Series B Cumulative Preferred Stock (liquidation preference of $25 per share), bringing the total gross proceeds to $79.1 million. The Company granted this option in connection with its recently announced Preferred Stock offering of 3 million shares. The exercise and closing of the over-allotment option results in net proceeds to Equity Inns from the offering of approximately $76.6 million. The Company used approximately $68.8 million to redeem the Company's 9-1/2% Series A Cumulative Preferred Stock and the balance to repay a portion of outstanding borrowings under the Company's line of credit. The Series B Preferred Stock will trade on the New York Stock Exchange under the symbol ENN PrB. Equity Inns, Inc. (S&P, B+ Corporate Credit Rating, Negative) is a self-advised REIT that focuses on the upscale extended stay, all- suite and midscale limited-service segments of the hotel industry. The company owns 94 hotels with 12,100 rooms located in 34 states. For more information about Equity Inns, visit the company's Web site at http://www.equityinns.com FHC HEALTH: S&P Withdraws B Debt Rating After Nixed Transaction ---------------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its 'B' debt rating on FHC Health Systems Inc.'s senior secured revolving credit facility and its $250 million senior unsecured redeemable debentures in response to the company's decision not to proceed with the transaction at this time. At the same time, Standard & Poor's affirmed its 'B' counterparty credit rating on the company. The outlook is stable. "The rating action reflects improved earnings and the expected fourth quarter 2003 refinancing of a significant portion of the present debt currently due between 2003 and 2006. Offsetting factors include the reduced financial flexibility and additional cash flow strain from the servicing of current debt and redeemable preferred stock compared with the withdrawn senior secured revolving credit facility and the withdrawn $250 million senior unsecured redeemable debenture," explained Standard & Poor's credit analyst Steven Ader. Pretax earnings, after debt servicing, are projected to be about $50 million and $25 million in 2003 and 2004, respectively. The decline in 2004 earnings is the result of Standard & Poor's expectation that the renewal terms on the large public sector contract constituting 29% of consolidated revenue in 2002 will result in reduced profitability. Fixed-charge coverage is expected to exceed 1.3x. Debt to capital is expected to remain near current levels. The company is expected to refinance a significant portion of the present debt currently due between 2003 and 2006 in the fourth quarter of 2003. GALEN HLDGS: S&P's Outlook on Low-B Ratings Changed to Positive --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Galen Holdings PLC to positive from stable. At the same time, Standard & Poor's lowered its senior unsecured rating to 'B' from 'B+' and affirmed the 'B+' corporate credit rating on the company. The senior unsecured rating is being lowered solely to reflect the priority position of the increased senior secured debt resulting from the company's credit facility and is not indicative of deterioration in corporate credit quality. "The ratings on Northern Ireland-based Galen reflect its aggressive use of debt to fund product acquisitions and the possible threat of generic competition to several of its key products," said Standard & Poor's credit analyst Arthur Wong. "These factors are partially offset by the growing diversity of the company's portfolio of drugs and its sizable 340-person sales force." Galen is a specialty pharmaceutical company focused on the development and commercialization of branded pharmaceuticals in the areas of women's health care and dermatology. The company seeks to acquire mature products and revive their sales through line extensions and increased promotion. Galen is headquartered in Ireland but roughly 85% of its sales come from its Rockaway, New Jersey-based Warner Chilcott Inc. unit. Galen's portfolio has grown substantially in the past year, given the acquisition of several new products. The women's oral contraceptives Estrostep and Loestrin, as well as the combination hormone replacement therapy femhrt, were acquired from Pfizer Inc. in March 2003 for an initial cash payment of $359 million (Estrostep and femhrt are patent protected until 2008 and 2010, respectively. A maximum contingent payment of $125 million will become payable if femhrt and Estrostep retain market exclusivity during the lives of their respective patents.) Estrostep, Loestrin, and femhrt contributed $37 million to Galen's $136 million in total revenues for the three months ended June 2003. Other products acquired by Galen include Sarafem, purchased from Eli Lilly & Co in January 2003 for approximately $295 million in cash. Sarafem is a repackaged form of Prozac (fluoxetine) prescribed to treat premenstrual dysphoric disorder, a severe form of premenstrual syndrome. The product generated $22 million of sales for the three months ended June 2003. Generic competition is a major uncertainty for several of Galen's products in the near term. Sarafem is protected until 2008 for the treatment of PMDD. Nevertheless, Teva Pharmaceutical Industries Ltd is challenging the patent, and generic Prozac is already being substituted for use in PMDD, causing Sarafem sales to decline. Galen hopes to reverse this trend through increased promotion. Meanwhile, Galen has entered into a proposed agreement with Barr Laboratories Inc. to remove some of the near-term concerns regarding generic competition to femhrt, Estrostep and Ovcon. Nevertheless, while Galen has effectively extended the timeline of its marketing exclusivity on these products, Ovcon is not patented, and other generic companies may choose to challenge its patents on femhrt and Estrostep. GENESIS HEALTH: Inks Definitive Master Agreement with ElderTrust ---------------------------------------------------------------- ElderTrust (NYSE:ETT), an equity healthcare REIT, has entered into a definitive Master Agreement with Genesis Health Ventures, Inc. (NASDAQ:GHVI). As previously announced, Genesis intends to spin-off its ElderCare division, which will be known as Genesis HealthCare Corporation. Operations of ElderTrust assets that are leased to Genesis would be spun off to HealthCare as part of the transaction and, as a result, ElderTrust has certain approval rights with respect to the Spin-Off. The Genesis Agreement sets forth the terms of the restructuring of the Company's current transactions with Genesis and approval of the Spin-Off. Under the terms of the Genesis Agreement: -- Five properties (Liberty Court, Willowbrook, Phillipsburg, Riverview Ridge and Pleasant View) would be sold to HealthCare; -- HealthCare would purchase the ownership interest in the subsidiary of the Company that is the prime lessee on seven properties currently subleased to Genesis and accounted for by the Company as capital leases; -- Rents on two properties (Heritage Woods and Sanatoga Court) would be reduced in exchange for a cash payment; and -- The Company would change the guarantor from Genesis to HealthCare on the six remaining leases with Genesis, including Heritage Woods and Sanatoga Court, and make certain other modifications to those leases. Total consideration for the above transactions would be approximately $133.1 million, of which approximately $50.5 million would be paid in cash and $82.6 million through the transfer of existing debt and capitalized lease obligations. Of these amounts, $5 million would be allocable to the guarantor change and related lease modifications. Consummation of the restructuring transactions is subject to various closing conditions, including the receipt of any necessary lender and other third party consents. The parties have agreed to complete the proposed transactions as soon as possible but in any event no later than October 15, 2003 (with respect to the sale of Liberty Court and Meridian 7 to Genesis) and March 31, 2004 (with respect to the sale of Willowbrook, Phillipsburg, Riverview Ridge and Pleasant View to Genesis), unless extended by the parties. The Company also announced that Wachovia Securities had acted as the Company's financial advisor in the transaction and had furnished the Company with its written opinion to the effect that the transaction consideration to be received by the Company pursuant to the Master Agreement is fair, from a financial point of view, to the Company. In addition, ElderTrust also announced it has entered into a purchase and sale agreement with Genesis ElderCare Partnership of New England, Limited Partnership, which is 90% owned by Genesis Health Ventures, Inc. (NASDAQ:GHVI), and Benchmark Assisted Living, LLC pursuant to which Benchmark would become the lessee of four properties currently leased to ElderCare. Under the terms of the Benchmark Agreement: -- New England would assign their leasehold interests in the Cabot Park, Cleveland Circle, North Andover and Vernon Court properties to Benchmark; -- Annual rent under the leases would be reduced by $1,385,000 per year; -- The terms of the leases would be extended to ten years from closing; -- Benchmark would have the option to acquire each property, except Vernon Court, on the fifth and tenth lease anniversary date; -- Benchmark would have an option to acquire Vernon Court at any time during the lease term; and -- The leases would have limited guarantees equal to one year's rent provided by AEW Partners IV, a significant investor in Benchmark. The Company will receive $5 million as consideration for the above transaction. Completion of the proposed transaction is subject to customary closing conditions, including lender consent. The Company currently expects to close this transaction at the end of the third quarter of 2003. If the Benchmark Agreement does not close by September 30, 2003, Genesis has the right to terminate the Agreement subject to certain exceptions. Commenting on the proposed transactions, Michael R. Walker, ElderTrust's Chairman, Acting President and Chief Executive Officer, said, "The impact of these agreements on ElderTrust is as significant as Genesis' emergence from bankruptcy. Upon completion of the proposed transactions, ElderTrust will have a fee simple interest in all of its portfolio and debt as a percent of total assets will improve from 68% to 50%." ElderTrust 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. Since commencing operations in January 1998, the Company has acquired interests in 30 properties. For more information on ElderTrust visit ElderTrust's Web site at http://www.eldertrust.com GLIMCHER REALTY: Board of Trustees Declares Q3 2003 Dividends ------------------------------------------------------------- Glimcher Realty Trust's (NYSE: GRT) Board of Trustees has declared a cash dividend of $0.4808 per common share for the third quarter of 2003. The cash dividend is payable on October 15, 2003, to shareholders of record on September 30, 2003. On an annualized basis, this is the equivalent of $1.9232 per share. In addition, the Company declared a cash dividend of $0.578125 per Series B preferred share of beneficial interest for the third quarter of 2003. The cash dividend is payable on October 15, 2003, to shareholders of record on September 30, 2003. On an annualized basis, this is the equivalent of $2.3125 per preferred share. Finally, the Company declared a cash dividend of $0.224826 per Series F preferred share of beneficial interest prorated for the period from August 25, 2003 to September 30, 2003. The cash dividend is payable on October 15, 2003, to shareholders of record on September 30, 2003. On an annualized basis, this is the equivalent of $2.1875 per preferred share. Glimcher Realty Trust -- a real estate investment trust whose corporate credit and preferred stock ratings are rated by Standard & Poor's at BB and B, respectively -- is a recognized leader in the ownership, management, acquisition and development of enclosed regional and super-regional malls, and community shopping centers. Glimcher Realty Trust's common shares are listed on the New York Stock Exchange under the symbol "GRT." Glimcher Realty Trust is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. Visit Glimcher at: http://www.glimcher.com GRUPO IUSACELL: Noteholders Accelerate $150MM of Defaulted Notes ---------------------------------------------------------------- An informal committee of noteholders has accelerated US$150 million of Grupo Iusacell Celular S.A. de C.V., 10% Senior Secured Notes due 2004. Iusacell is a wholly-owned subsidiary of Grupo Iusacell, S.A. de C.V., which is listed on the Bolsa Mexicana de Valores and the New York Stock Exchange (BMV:CEL) (NYSE:CEL). Iusacell's continuing failure to make a scheduled US$7.5 million interest payment due under the 2004 Notes on July 15, 2003 led to the acceleration. Members of the informal committee, which is comprised of several institutional fund managers, as holders of US$77.0 million or 51.3% of the 2004 Notes, declared through notice given today to Iusacell management and Wachovia Bank N.A., trustee for the 2004 Notes, that the entire unpaid principal balance and all accrued but unpaid interest, including default interest, was immediately due and payable. Such an acceleration notice required no less than 25% of holders in order to be valid. Alan M. Feld, an attorney with Manatt, Phelps & Phillips, as spokesperson for the Committee, said, "The holders of the 2004 Notes are concerned by Iusacell's ongoing failure to present any plan to meet its obligations to its stakeholders. Furthermore, we understand that Iusacell has made debt service payments to certain other of its creditors while in default under the notes. Although it remains the goal of the Committee to establish a constructive dialogue which will lead to a fair outcome for all stakeholders, members felt these actions compelled them to begin to pursue other remedies to protect their interests." HEALTHSOUTH CORP: Appoints Lee S. Hillman as New Board Member ------------------------------------------------------------- HealthSouth Corporation (OTC Pink Sheets: HLSH) has appointed Lee S. Hillman, 47, as a new independent member to the company's Board of Directors. Hillman's appointment was approved and recommended to the Special Committee of the Board of Directors by HealthSouth's Nominating/Corporate Governance Committee, consisting of three independent directors and two corporate governance advisors. Hillman, President of Liberation Investment Advisory Group, will serve as Chairman of the Board's Audit Committee, as well as a member of the Compensation Committee. Hillman is former Chairman of the Board and Chief Executive Officer of Bally Total Fitness Holding Corp. and former Executive Vice President and Chief Financial Officer of Bally Entertainment Corp. , which merged with Hilton Hotels Corp. in December of 1996. Prior to the merger, he also served as director of many of Bally Entertainment's subsidiaries in a regulated industry. With previous experience as an audit partner with an international accounting firm and a recognized corporate turnaround expert, Hillman has served as a director of Bally Total Fitness Holding Corp., Holmes Place PLC, Continucare Corp., and Heartland Alliance for Human Needs and Human Rights. Hillman has been instrumental in the restructurings of two $1 billion New York Stock Exchange-listed companies. "Lee Hillman is a business professional with extensive experience in running a successful corporation," said Joel C. Gordon, Interim Chairman of the Board of HealthSouth. "His financial background makes him an asset to HealthSouth's Board." Hillman is a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. He serves as a member of the National Association of Corporate Directors and the Chicagoland Chamber of Commerce. Hillman was honored with the 2001 Torch of Liberty Award for his work with the Anti-Defamation League. He is a member of the Graduate School of Business Advisory Council at the University of Chicago and regularly serves as a guest lecturer at the graduate schools of business at the University of Chicago and Northwestern University. HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations in all 50 states, the United Kingdom, Australia, Canada, Saudi Arabia and Puerto Rico. HealthSouth can be found on the Web at http://www.healthsouth.com * * * As reported in Troubled Company Reporter's September 1, 2003 edition, HealthSouth Corporation said its lending banks had waived a payment blockage to allow past due interest to be paid to the holders of the Company's subordinated indebtedness. The banks had previously issued a payment blockage notice with respect to the Company's subordinated indebtedness, which blockage would have precluded holders of those instruments from receiving past due interest. The Company also announced that it will transfer sufficient funds to the trustees for holders of all of its outstanding notes to permit payment of interest on past due interest owed to these holders in accordance with the terms of the relevant indentures. It is expected that payment of the past due interest will be made to the holders of Company's notes shortly after the record date of August 29, 2003. HINES HORTICULTURE: S&P Rates Planned Credit Facilities at BB-/B ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Hines Horticulture Inc., the parent guarantor of ornamental shrubs and plants producer Hines Nurseries Inc. The outlook on Hines Horticulture was revised to stable from positive. At the same time, Standard & Poor's assigned its 'BB-' rating to Hines Nurseries Inc.'s proposed $185 million senior secured credit facility and its 'B' rating to Hines Nurseries' proposed $175 million senior unsecured notes due 2011. The majority of the proceeds will be used to refinance existing senior secured credit facilities and other indebtedness at Hines Horticulture. The outlook on the Irvine, California-based company is stable. The lease-adjusted total debt outstanding is expected to be about $275 million at the closing of the transaction, which is expected in late September of 2003. The senior secured credit facility comprises a $145 million, five- year revolving credit facility maturing in 2008, which includes a $10 million sublimit for letters of credit and a $40 million term loan maturing in 2008. "The ratings reflect Hines' leveraged financial profile, a high level of customer concentration risk, and vulnerability to unfavorable weather conditions," said Standard & Poor's credit analyst Ronald Neysmith. "These factors are mitigated by Hines' leading market position in the consolidating, though still highly fragmented, color plants and nursery product lines." Hines is the largest North American supplier of a wide variety of horticulture products. By achieving critical mass in the color sites through a series of acquisitions, Hines is taking a more focused approach to managing the production, distribution, and sale of its color and nursery product lines. Still, weather conditions can dramatically change consumer-purchasing patterns during the key spring selling season, which can hurt earnings in this highly seasonal business. With its broad national distribution capabilities, the company is well positioned to service large mass merchandisers and home improvement chains, which are taking an increasing share of the growing seasonal lawn and garden markets. However, customer concentration risk is a rating concern. The company's top five customers accounted for about 73% of 2002 sales, and Home Depot itself accounted for 47% of sales in fiscal 2002. HMP EQUITY: S&P Keeps Watch on Lower-B Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on HMP Equity Holdings Corp. and its subsidiaries Huntsman International Holdings LLC and Huntsman LLC to 'B' from 'B+'. The current outlooks on the companies are negative. Salt Lake City, Utah-based HMP is a wholly owned subsidiary of Huntsman Holdings LLC, a holding company with chemical operations conducted through subsidiaries, Huntsman LLC, Huntsman International Holdings LLC, and Huntsman Advanced Materials LLC. Total reported debt is more than $5.5 billion (excluding Huntsman Advanced Materials LLC). Standard & Poor's noted that it has affirmed its 'B' corporate credit rating on Huntsman Advanced Materials. The outlook remains negative. Standard & Poor's said that at the same time it assigned its 'B' rating to Huntsman LLC's proposed $375 million senior secured notes due 2010. The successful completion of the notes issue is contingent upon an amendment to the company's existing bank facilities that would allow the sale of the notes. "The downgrade follows disappointing first half operating results and reflects increasing concern that cash flow generation for the second half 2003 will fall substantially short of earlier expectations, particularly given the still-uncertain business outlook and potential for additional raw material pressures in the petrochemical industry," said Standard & Poor's credit analyst Kyle Loughlin. "Standard & Poor's has become increasingly concerned that second half 2003 results could place additional pressure on liquidity levels, despite the potential for an improved debt maturity schedule following the sale of the proposed notes." Standard & Poor's said that it is also clear that adverse business conditions facing the Huntsman companies have eroded prospects for any near-term reduction of its onerous debt burden and may result in bank loan covenant violations at both Huntsman LLC and Huntsman International Holdings LLC within the next several quarters. Near- term debt maturities at Huntsman LLC will remain a concern in the absence of the successful sale of the proposed notes and the ratings could be lowered again if the notes are not refinanced as expected. The ratings reflect Huntsman LLC's below-average business risk profile, the credit position of its parent, HMP Equity Holdings Corp, and a highly aggressive financial profile. With approximately $3 billion in annual revenues, Huntsman LLC is among the largest privately held chemical companies in North America. HORSESHOE GAMING: On Watch Pos over Planned Sell-Out to Harrah's ---------------------------------------------------------------- Standard & Poor's Ratings Services placed all its ratings on Horseshoe Gaming Holding Corp., including its 'BB' corporate credit rating, on CreditWatch with positive implications following the announcement that the company had agreed to be acquired by Harrah's Entertainment Inc. for approximately $1.45 billion in an all-cash transaction. The proposed transaction is expected to close during the first part of 2004, subject to shareholder and regulatory approval. Las Vegas, Nevada-based Horseshoe Gaming owns and operates riverboat casino properties in Bossier City, Louisiana; Tunica, Mississippi; and Hammond, Indiana. "Standard & Poor's expects Horseshoe's existing bank facility to be cancelled upon closure of the transaction, with the rating on this facility being withdrawn," said Standard & Poor's credit analyst Michael Scerbo. Horseshoe's subordinated notes carry a change-of-control provision requiring Harrah's to initiate a tender offer. If any of the notes remain outstanding, Standard & Poor's expects to equalize the ratings on these notes with the existing subordinated debt rating on Harrah's. Although Horseshoe's outstanding bond issues are not expected to be supported by a guarantee, Standard & Poor's is taking a consolidated approach to the credits, given the economic and strategic importance of the acquisition. HUGHES ELECTRONICS: IRS Rules Transaction with GM Tax-Free ---------------------------------------------------------- General Motors Corp. (NYSE: GM, GMH) has received a private-letter ruling from the U.S. Internal Revenue Service confirming that the distribution of Hughes Electronics common stock to the holders of GM Class H common stock, in connection with the split-off of Hughes, would be tax-free to GM and its Class H stockholders for federal income tax purposes. As previously announced, GM intends to sell its 19.8 percent economic interest in Hughes to News Corp. (NYSE: NWS, NWS.A). News Corp. would then acquire from the former GM Class H common stockholders an additional 14.2 percent of the outstanding shares of Hughes common stock in exchange for News Corp. Preferred American Depositary Shares and/or cash in a taxable transaction for U.S. federal income tax purposes. The transactions remain subject to stockholder approval and regulatory clearances under the Hart-Scott-Rodino Act and by the U.S. Federal Communications Commission. In connection with the proposed transactions, on August 21, 2003, GM, Hughes, and News Corp. filed definitive materials with the SEC, including a definitive GM Proxy Statement on Schedule 14A; a Hughes Registration Statement on Form S-4; and a News Corp. Registration Statement on Form F-4 -- each containing a consent solicitation statement of GM, a prospectus of Hughes, and a prospectus of News Corp. Investors and security holders are urged to read these materials, as well as any other relevant documents filed or that may be filed with the SEC, as they become available, because these documents contain or will contain important information. The materials filed on August 21, 2003 and other relevant materials (when they become available) and any other documents filed by GM, Hughes or News Corp. with the SEC, may be obtained without charge at the SEC's Web site at http://www.sec.gov In addition, the definitive consent solicitation statement contains information about how GM stockholders may obtain transaction- related documents without charge directly from GM. GM and its directors and executive officers, and Hughes and its directors and executive officers, may be deemed to be participants in the solicitation of proxies or consents from the holders of GM $1-2/3 par value common stock and GM Class H common stock in connection with the proposed transactions. Information about the directors and executive officers of GM and their ownership of GM stock is set forth in the proxy statement for GM's 2003 annual meeting of shareholders. Participants in GM's solicitation may also be deemed to include certain persons whose interests in GM or Hughes are not described in the proxy statement for GM's 2003 annual meeting. Information regarding these persons and their interests in GM and/or Hughes was filed pursuant to Rule 425 with the SEC by each of GM and Hughes on April 10, 2003. Investors may obtain additional information regarding the interests of such participants by reading the definitive consent solicitation statement of GM / prospectus of Hughes / prospectus of News filed with the SEC on August 21, 2003. * * * As reported in Troubled Company Reporter's April 11, 2003 edition, Standard & Poor's Ratings Services revised its CreditWatch listing on Hughes Electronics Corp. and related entities to positive from developing following the company's announcement that News Corp. Ltd., (BBB-/Stable/--) will acquire 34% of the company. The ratings had been on CreditWatch developing, reflecting uncertainty regarding Hughes' future ownership. Following a review of Hughes' operating and financial prospects under its new ownership structure, a ratings upgrade could occur once the deal is completed. However, the magnitude of a potential upgrade may be constrained in light of News Corp.'s minority stake. Ratings List: To From Hughes Electronics Corp. Corporate credit B+/Watch Pos/-- B+/Watch Dev/-- DirecTV Holdings LLC Senior secured debt BB-/Watch Pos/-- Senior unsecured debt B/Watch Pos/-- PanAmSat Corp. Corporate credit B+/Watch Pos/-- B+/Watch Dev/-- Senior secured debt BB-/Watch Pos/-- BB-/Watch Dev/-- Senior unsecured debt B-/Watch Pos/-- B-/Watch Dev- IT GROUP: Moves for Court Okay on Settlement Pact with Kaiser ------------------------------------------------------------- The IT Group Debtors filed claims against Kaiser Group International, Inc., including a proof of claim, a cure claim and an administrative claim recorded on Kaiser's claims register as Claim Nos. 1664, 3191 and 3397. The Debtors' claims arise, in part, under an asset purchase agreement between Kaiser and the Debtors dated March 8, 1999, whereby the Debtors purchased certain assets of Kaiser. The total amount of the Debtors' claims is $9,000,000 consisting of, among other things, litigation indemnification and accounts receivable owed by Kaiser. Kaiser objected to the Debtors' Claims in part, on the basis that any claims of the Debtors should be reduced in amount and are not entitled to priority status. The parties agreed to resolve the Debtors' Claims through the Alternative Dispute Resolution Procedures established in Kaiser's own Chapter 11 cases. The Court confirmed Kaiser's Second Amended Plan of Reorganization on December 5, 2000. On April 28, 2003, after submitting mediation briefs, the Parties met before Judge Vincent Bifferato in Wilmington, Delaware to mediate the Debtors' Claims. After mediation, the Debtors and Kaiser reached a tentative agreement regarding the Debtors' Claims. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware relates that the parties continued to negotiate regarding the release provisions of any settlement agreement. Accordingly, the Debtors sought and obtained Judge Walrath's approval of a settlement agreement and release with Kaiser, which represents a fair and reasonable compromise of the dispute and provides a result that is beneficial to the interests of the Debtors' estate by providing immediate cash infusion. The salient terms of the Settlement Agreement are: (a) Kaiser's estate will pay the Debtors $190,000; and (b) The parties exchange mutual releases. (IT Group Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Court Fixes Tort Claims Settlement Protocol ------------------------------------------------------- At the Kmart Debtors' request, the Court establishes procedures for: -- liquidating and settling postpetition personal injury claims through direct negotiation or dispute resolution; and -- modifying the Plan Injunction to allow the orderly liquidation of the personal injury claims upon exhaustion of the Claims Resolution Procedures. Trumbull Services Company LLC, the Debtors' claims agent, reports that there are 4,138 requests for administrative claims payment filed by personal injury claimants. The Claimants asserted $4,900,000,000 in aggregate claims, excluding those in unliquidated amounts. Many of the Claims seek relatively small amounts. In fact, 60% of all Claims are estimated to be less than $50,000. The principal features of the claims settlement procedures are: (1) Claims for Less than or Equal to $5,000 Settlement through telephone will start September 1, 2003 and end by November 31, 2003. If not resolved, a Questionnaire will be sent and should be accomplished by the Claimant by February 15, 2004 or 45 days from the date it was mailed. The Debtors must respond within 90 days upon receipt of the Questionnaire and the Claimant must reply also within 90 days of the Response Date. (2) Claims Between $5,000 and $50,000 There would be no telephone settlement and Claimant must proceed directly to the Questionnaire. The same deadlines as those for Claims less than or equal $5,000 will be followed. (3) Claims greater than $50,000 The same procedures and deadlines for Claims between $5,000 and $50,000 are applied. However, in this case, the Claimant may decide to forego filing a Reply and request mediation or arbitration. In all three cases, once all procedures are exhausted and still the parties do not agree, the Plan Injunction may be modified. Supplemental Administrative Claim Bar Dates The Debtors are aware of numerous valid postpetition personal injury claims that did not receive notice of the June 20, 2003 deadline for filing administrative claims. The Debtors have considered regularly filing motions to establish supplemental administrative expense bar date. However, this approach is costly and time-consuming. Instead, the Debtors will send a revised Effective Date Notice to claimholders that allows them 45 days from the mailing date to file an administrative expense claim form. After the filing, the Debtors and the claimant will be free to pursue the Claims Resolution Procedures. Plan Injunction Relief The Injunction provided under the Plan remains in effect with respect to Personal Injury Claims. Each claimholder is barred from continuing any action to recover the Claim. This is pending exhaustion of the Claims Resolution Procedures. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom in Chicago, Illinois, relates that giving the Debtors authority to compromise and settle the Personal Injury Claims will allow an expedited and cost-efficient process. Moreover, the settlement procedures will eliminate unnecessary judicial and administrative expense if the Debtors were required to separately seek approval of each settlement of a Personal Injury Claim. (Kmart Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEGACY HOTELS: Suspends Distribution Due to Operation Concerns -------------------------------------------------------------- Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) announced that it will not pay a third quarter distribution. Legacy suspended distributions in the second quarter given the challenging operating environment. For each of the previous four quarters, Legacy paid distributions of $0.185 per unit. "While we are encouraged by early signs of a recovery in the travel industry, our current earnings continue to be below historical levels, primarily as a result of the significant impact of SARS on our business," commented Neil J. Labatte, Legacy's President and Chief Executive Officer. "As a result, the Board of Trustees felt it was prudent not to make a third quarter distribution." "We recognize the importance of regular distributions to our unitholders and will continue to evaluate our distributions on a quarterly basis, as we have in the past," said Mr. Labatte. "We believe that Legacy's strategy and long-term asset value are fundamentally sound and it is our intention to resume an appropriate distribution level as soon as operating performance permits." "Notwithstanding the recent challenges we have faced this year, we are cautiously optimistic with the booking pace for 2004 group business. This important customer segment is currently on pace for a strong recovery next year, providing our hotel portfolio with a solid base of business from which to grow," continued Mr. Labatte. Legacy will release its third quarter results on October 20, 2003. At that time, Legacy will provide additional information on recent trends and its outlook for the year. Fourth quarter distributions will be reviewed in December 2003. Legacy is Canada's premier hotel real estate investment trust with 22 luxury and first-class hotels and resorts in Canada and two in the United States, consisting of over 10,000 guestrooms. The portfolio includes landmark properties such as Fairmont Le Chfteau Frontenac, The Fairmont Royal York, The Fairmont Empress, The Fairmont Washington, D.C. and The Fairmont Olympic Hotel, Seattle. * * * As previously reported, Standard & Poor's Ratings Services downgraded its ratings on Legacy Hotels Real Estate Investment Trust (Legacy REIT or the trust) to 'BB-'. At the same time, the senior unsecured debt rating was lowered to 'B+' from 'BB+'. The outlook is negative. The 'BB-' long-term corporate credit rating on Legacy REIT reflects the deterioration of its business risk profile and financial risk profile. Legacy REIT's credit strengths include a portfolio of good quality real estate assets and its prominent market position. Legacy REIT's credit weaknesses include the aggressive business and financial policies of management, weak and deteriorating credit measures, liquidity concerns, and uncertainty in the lodging sector in general. Standard & Poor's is concerned with Legacy REIT's business and financial strategies given a challenging lodging environment when it is experiencing weakening credit measures. MAGELLAN HEALTH: Asks Court to Stretch Exclusivity Until Nov. 7 --------------------------------------------------------------- The Magellan Health Debtors' exclusive period to solicit acceptances of their Third Amended Plan expires before the scheduled confirmation hearing of the Plan. By this motion, and out of an abundance of caution, the Debtors ask the Court to extend their Solicitation Period through and including November 7, 2003. The Debtors have worked very hard with the other major parties- in-interest in these cases to propose the Plan. The Debtors seek an extension to complete the solicitation of votes on the Plan and proceed towards confirmation of the Plan along the timetable established by the Court. The Confirmation Hearing is set for October 8, 2003. Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York, explains that the Court only needs to look at the size and extent of the Debtors' business operations, their thousands of customers, providers and employees, the number of claims against them, the numerous executory contracts, and the complex and varied issues involved to conclude that ample cause exists for the requested extension of the Solicitation Period. The Debtors are the largest providers of behavioral managed healthcare services in the country. The maintenance of the highest value and viability of the Debtors' businesses requires the continuation of the stabilization process instituted by the Debtors both before and immediately subsequent to the commencement of their Chapter 11 cases. By extending the Solicitation Period and ensuring that the Chapter 11 process will not be disrupted at this stage, the Debtors will be able to preserve and maximize the value of their assets for the benefit of all constituencies, Mr. Karotkin says. The Exclusive Periods are designed to provide a debtor with a full and fair opportunity to rehabilitate its business and negotiate, develop, propose, confirm and consummate a consensual reorganization plan. The Debtors believe that extending the Solicitation Period is warranted, realistic and justifiable in light of the complex issues that must be addressed in these cases and the progress already made. Since the Petition Date, the Debtors and their professionals have continued to make significant progress in their reorganizations, including inter alia: (a) negotiating and filing of the Plan and Disclosure Statement; (b) reviewing their executory contracts and unexpired leases to determine whether they should be assumed or rejected; (c) addressing a multitude of creditor inquiries and requests for information made by vendors, customers and other parties-in-interest; (d) gathering information necessary for the filing of the Debtors' schedules of assets and liabilities and statements of financial affairs; (e) continuing to run their businesses in the ordinary course; (f) completing their annual audit; (g) evaluating the effects of the current economy and other factors on their long-range business plan; and (h) evaluating offers and selecting an equity investor. The Debtors, with the assistance of their financial and legal advisors, have also made significant progress in their effort to review and analyze the proofs of claim filed by creditors in these cases. The Debtors have entered into several stipulations with numerous claimholders resolving claims disputes and expect to enter into several others in the upcoming months. Mr. Karotkin also notes that the Debtors have sufficient resources to meet all required postpetition payment obligations. The Debtors obtained Court authority to use Cash Collateral to fund their operations. * * * Judge Beatty will convene a hearing today to consider the Debtors' request. Accordingly, the Court extends the Debtors' Exclusive Solicitation Period until the conclusion the hearing. Magellan Bankruptcy News, Issue No. 13: Bankruptcy Creditors' Service, Inc., 609/392-0900) MCGREGOR MARINE: Four Charged Under Canadian Bankruptcy Act ----------------------------------------------------------- Wednesday last week, members of the Toronto North Commercial Crime Section of the RCMP laid a total of 38 charges under the Bankruptcy & Insolvency Act and the Criminal Code of Canada, in Orillia, Ontario. The offences relate to the approximate four million dollar shortfall reported in McGregor Marine's Bankruptcy and the Personal Bankruptcies of the principals of the company. During their extensive investigation, police uncovered a number of fraud related activities whereby both corporations and individuals were allegedly defrauded. McGregor Marine, was an established business which operated out of Orillia and was petitioned into bankruptcy on August 15, 2001. Charged are: Scott Csumrik, 49, of Orillia Marci Cusmirk, 45, of Orillia Doug Csumrik, 41, of Washago, Ontario Linda Csumrik, 42, of Washago, Ontario All accused individuals will be appearing in court in Orillia, Ontario at 9:30 AM today. The Royal Canadian Mounted Police is the investigative arm of the Office of the Superintendent of Bankruptcy. MERA PHARMA: Ex-Auditor Buttke Bersch Airs Going Concern Doubts --------------------------------------------------------------- On September 2, 2003 Mera Pharmaceuticals, Inc. engaged Jewett, Schwartz & Associates to audit its financial statements. The decision to engage Jewett Schwartz was approved by the audit committee of the Company's Board of Directors and ratified by the full Board. Prior to its engaging Jewett Schwartz, the Company's financial statements were audited by Buttke, Bersch and Wanzek, PC. Buttke Bersch was initially engaged by the Company on January 16, 2002 to audit its financial statements for the fiscal year ended October 31, 2001. Under a series of successive engagements, Buttke Bersch reviewed the Company's periodic filings and its current filings through May 31, 2003 and audited the Company's financial statements for the fiscal year ended October 31, 2002. The Company decided not to extend the engagement of Buttke Bersch, which the Company confirmed in writing on September 5, 2003. In connection with its engagement by the Company, Buttke Bersch did express uncertainties about the Company's ability to continue as a going concern and provided comments and suggestions on the effectiveness of the Company's controls and procedures. MERRILL LYNCH: Fitch Affirms Low-B Ratings on Four Note Classes --------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc.'s series 1997-C2 certificates are upgraded as follows: -- $27.5 million class B to 'AAA' from 'AA'; -- $41.2 million class C to 'AA-' from 'A'; -- $34.3 million class D to 'BBB+' from 'BBB'. In addition the following classes are affirmed: --$46.8 million class A-1 at 'AAA'; -- $372.5 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $37.7 million class F at 'BB'; -- $6.9 million class G at 'BB-'; -- $12.0 million class H at 'B'; -- $6.9 million class J at 'B-'. The $12.0 million class E and $10.4 million class K certificates are not rated by Fitch Ratings. The rating actions follow Fitch's review of the transaction, which closed in December 1997. The upgrades are due to loan amortization and payoffs which have resulted in increased credit support to the investment grade Fitch rated classes. GEMSA Loan Services, L.P., the master servicer, collected year-end 2002 financials for 94% of the pool balance as of August 2003. Based on the information provided the resulting YE 2002 weighted average debt service coverage ratio is 1.54 times compared to 1.37x at issuance for the same loans. Seven loans (3.4%) are currently in special servicing and losses are expected on three. The largest specially serviced loan (0.9%) is a multifamily property located in Dallas, Texas and is 90 days delinquent. The property has suffered from declines in occupancy as a result of the current economic conditions facing the Dallas apartment market. The next largest specially serviced loan (0.5%) is a retail property located in Franklin Township, New Jersey and is 30 days delinquent. The primary tenant who occupied 60% net rentable area and was on a month-to-month lease vacated their space in May 2003. In addition, there are several tenants with upcoming lease expirations within the next twelve months. Ten loans (3.9%) reported YE 2002 DSCRs less than 1.0x. MIDWEST EXPRESS: Posts Increased Revenue Passenger Miles for Aug ---------------------------------------------------------------- Midwest Express Holdings, Inc. (NYSE: MEH) reported August performance data for Midwest Airlines and Midwest Connect. Compared with August 2002, both airlines reported increases in traffic, decreases in capacity, increases in load factor and decreases in yield. Midwest Airlines -- In August, Midwest Airlines' traffic (measured in scheduled service revenue passenger miles) increased 1.0% on an 18.7% decrease in capacity (measured in scheduled service available seat miles). Year to date, traffic was down 3.9% on a 9.8% decrease in capacity. Midwest Airlines expects to decrease capacity 14-16% in the third quarter compared with third quarter 2002 -- part of its previously announced capacity reduction plan. -- Load factor for the month was 74.4%, compared with 59.8% in August 2002; year to date, load factor was 66.1%, compared with 62.0% last year. -- Revenue yield declined 15.9% from August 2002 and 14.2% year to date. -- Revenue per scheduled service available seat mile increased 5.3% in August -- the result of higher load factor offsetting lower revenue yield, and decreased 8.0% year to date. -- Fuel prices were 17.4% higher in August than a year ago, and 30.0% higher in the first eight months of 2003 than 2002. Midwest Connect -- In August, Midwest Connect's traffic increased 17.7% on an 8.5% decrease in capacity. Year to date, traffic was up 15.5% on a 3.3% increase in capacity. Midwest Connect expects to decrease capacity 8-10% in the third quarter compared with third quarter 2002. -- Load factor for the month was 61.5%, compared with 47.8% in August last year; year to date, load factor was 52.5%, compared with 46.9% last year. -- Revenue yield declined 18.8% from August 2002 and 19.6% year to date. -- Revenue per scheduled service available seat mile increased 6.7% in August -- the result of higher load factor offsetting lower revenue yield, and decreased 8.2% year to date. -- Fuel prices were 15.0% higher in August than a year ago, and 25.3% higher in the first eight months of 2003 than 2002. Midwest Airlines features nonstop jet service to major destinations throughout the United States. Skyway Airlines, Inc. - - its wholly owned subsidiary -- operates Midwest Connect, which offers connections to Midwest Airlines as well as point-to-point service between select markets on regional jet and turboprop aircraft. Together, the airlines offer service to 50 cities. More information is available at http://www.midwestairlines.com * * * As reported in Troubled Company Reporter's August 26, 2003 edition, Midwest Express Holdings reached labor and aircraft financing restructuring agreements with its unions and aircraft lessors and lenders have been fully documented and finalized on terms that the company had anticipated. The company expects these restructuring measures to reduce costs by approximately $20 million annually going forward. The negotiation of these agreements enabled the company to avert the necessity of filing for reorganization under Chapter 11 of the Bankruptcy Code. Outlining the next step for the company, Robert S. Bahlman, Midwest's chief financial officer, noted, "Now we are in a better position to secure additional financing to complete our restructuring program." MIRANT: Obtains Clearance to Hire Ordinary Course Professionals --------------------------------------------------------------- The Mirant Corp. Debtors sought and obtained the Court's authority to employ professionals in the ordinary course of their business. The Debtors got the Court's permission to pay each Ordinary Course Professional, without a prior application to the Court by each professional, the full amount of the fees and disbursements billed, upon the submission to and approval by the Debtors of an appropriate invoice setting forth in reasonable detail the nature of the services rendered and disbursements actually incurred and calculated in accordance with such Ordinary Course Professional's standard billing practices without prejudice to the Debtors' right to dispute any invoices. However, if any Ordinary Course Professional's fees and disbursements exceed $50,000 per month, then the payments to that Ordinary Course Professional for the excess amounts will be subject to the Court's prior approval in accordance with Sections 330 and 331 of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Rules and Orders of the Court and the Fee Guidelines promulgated by the Executive Office of the United States Trustee. (Mirant Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) MOHEGAN TRIBAL: Commences Solicitation of Noteholders' Consents --------------------------------------------------------------- The Mohegan Tribal Gaming Authority (S&P, BB+ Corporate Credit Rating, Stable) has commenced a solicitation of consents from holders of its outstanding $200,000,000 principal amount of 8-1/8% Senior Notes due 2006, $150,000,000 principal amount of 8-3/8% Senior Subordinated Notes due 2011 and $250,000,000 principal amount of 8% Senior Subordinated Notes due 2012 to amend the indentures for the Notes. The purpose of the proposed amendments is to conform certain provisions of the indentures governing the Notes to the applicable provisions of the Authority's most recent indenture entered into in July 2003 in connection with the issuance of its 6-3/8% Senior Subordinated Notes due 2009. The fee to be paid for each consent properly delivered and not revoked prior to the expiration of the Consent Solicitation is $5.00 in cash for each $1,000 principal amount of Notes. The Consent Solicitation will expire at 5:00 P.M., New York City time, on Tuesday, September 23, 2003, unless extended. The proposed amendments generally require the consent of holders of a majority in aggregate principal amount of each series of outstanding Notes. The terms and conditions of the Consent Solicitation are described in the Consent Solicitation Statement dated September 11, 2003, copies of which may be obtained from Global Bondholders Services Corporation. The Authority has engaged Banc of America Securities LLC and Citigroup Global Markets Inc. to act as solicitation agents in connection with the Consent Solicitation. Questions regarding the Consent Solicitation should be directed to Banc of America Securities LLC, High Yield Special Products, at (888) 292-0070 (US toll-free) and (704) 388-4813 (collect) or Citigroup Global Markets Inc., Liability Management at (800) 558-3745 (US toll- free) and (212) 723-6106 (collect). Requests for documentation may be directed to Global Bondholders Services Corporation, the information agent for the Offer, at (866) 470-4200 (US toll free) and (212) 430-3774 (collect). The Authority is an instrumentality of the Tribe, a federally recognized Indian tribe with an approximately 405-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. The Authority has been granted the exclusive power to conduct and regulate gaming activities on the existing reservation of the Tribe, including the operation of Mohegan Sun, a gaming and entertainment complex that is situated on a 240-acre site on the Tribe's reservation. The Tribe's gaming operation is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games. Mohegan Sun currently operates in an approximately 3.0 million square foot facility, which includes the Casino of the Earth, Casino of the Sky, the Shops at Mohegan Sun, a 10,000-seat Arena, a 300-seat Cabaret, meeting and convention space and an approximately 1,200-room luxury hotel. More information about Mohegan Sun and the Authority can be obtained by visiting http://www.mohegansun.com MONTGOMERY WARD: Committee Extracts $88 Million from GE Capital --------------------------------------------------------------- General Electric Capital Corporation agreed to settle, for total consideration of more than $80 million, the lawsuit brought by the official creditors' committee of Montgomery Ward that asserted a long litany of misdeeds reaching from the leadership of the beleaguered retailer to the office of Jack Welch, ex-CEO of General Electric Company. "This significant settlement should be a wake up call to companies that think they can try to secure economic benefits for themselves at the expense of unsecured creditors," said Lawrence Gottlieb, a lawyer from Kronish Lieb Weiner & Hellman LLP and lead counsel for the creditors' committee. The committee's complaint detailed a wide range of misconduct by GE's leadership and outlined their approach for building creditor confidence by manipulating the financial structure of Wards and inducing creditors to continue to extend credit, even though GE management knew that Wards would not ultimately survive. "In June of 2000, the GE Capital executive in charge of the Montgomery Ward investment wrote a memo to executives at the highest levels of GE clearly acknowledging that liquidation was the only realistic option for Montgomery Ward," said Gottlieb. "He went so far as to say that any other approach was like 'rearranging the deck chairs on the Titanic.'" Nevertheless, GE Capital, formerly Wards' parent company, chose to manipulate the timing of Wards' inevitable demise by misrepresenting to creditors the company's financial situation and GE Capital's intentions for long-term support of Wards. "By the summer of 2000, GE Capital knew that Montgomery Ward needed between $400 and $500 million in equity to survive," said Gottlieb. "They also realized that, if the truth were known, suppliers would stop providing goods and services to Wards on credit. Instead of allowing creditors to understand the truth about the urgent need for an equity infusion, GE Capital assured them that it would continue to strongly support Wards. Creditors were duped into advancing millions of dollars that GE Capital knew the creditors would never see again." The settlement agreement, which was submitted for approval today to the bankruptcy court hearing Wards' chapter 11 liquidation case, represents a significant victory for the unsecured creditors of Wards. The settlement includes a $58 million cash payment from GE Capital that is more than 100% higher than the payment GE Capital offered Wards' creditors in a proposed settlement plan that creditors resoundingly rejected last year. The remaining settlement consideration consists of waivers of certain of GE's claims against Wards. Kronish Lieb Weiner & Hellman LLP is a full-service, New York- based law firm which has provided counsel to an increasingly broad array of institutional and private clients from around the world since 1958. For more information about the Firm visit http://www.kronishlieb.com/ MORGAN STANLEY: Fitch Ups & Affirms Series 1999-RM1 Note Ratings ---------------------------------------------------------------- Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1999-RM1, are upgraded by Fitch Ratings as follows: -- $43 million class B to 'AAA' from 'AA'; -- $45.1 million class C to 'AA' from 'A'; -- $12.9 million class D to 'A+' from 'A-'; -- $34.4 million class E to 'BBB+' from 'BBB'; -- $17.2 million class F to 'BBB' from 'BBB-'; -- $10.7 million class G to 'BBB-' from 'BB+'; -- $23.6 million class H to 'BB+' from 'BB'; -- $8.6 million class J to 'BB' from 'BB-'. Fitch also affirms the following classes: -- $100.9 million class A-1 'AAA'; -- $429.3 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $12.9 million class K 'B+'; -- $6.5 million class L 'B'; -- $8.6 million class M 'B-'; -- $8.6 million class N 'CCC'. Fitch does not rate the $15 million class O certificates. The rating upgrades and affirmations follow Fitch's annual review of the transaction, which closed in March 1999. The rating upgrades reflect the consistent loan performance combined with the reduction of the pool's collateral balance, which has resulted in increased subordination levels. As of the August 2003 distribution date, the transaction's aggregate principal balance has decreased 9.6% to $777.2 million from $859.7 million at closing. CapMark Services, LP, the master servicer, collected year-end 2002 financials for 96.8% of the pool balance. Based on the information provided, the resulting YE 2002 weighted average debt service coverage ratio is 1.65 times, compared to 1.69x at YE 2001 and 1.43x at issuance for the same loans. The pool has minimal loans of concern. Currently, two loans (0.98%) are in special servicing. The largest loan is secured by a retail property in Kernersville, North Carolina and is currently real estate owned. The anchor tenant, Kmart, rejected their lease and vacated in March 2002. The property is currently 23% occupied and the operator is currently in marketing the vacant space. The other specially serviced loan is secured by an office property in Salt Lake City, Utah and is also REO. The loan transferred to the special servicer in June, 2001 due to payment default. The property is 82% occupied and the cash flow is insufficient to meet debt service obligations. Fitch anticipates losses for both of the REO loans. All of the other loans in the deal remain current. Fitch will continue to monitor this transaction, as surveillance is ongoing. NATIONAL BENEVOLENT: Fitch Keeps B- Rating on Fixed-Rate Debt ------------------------------------------------------------- Fitch Ratings maintains the 'B-' rating on National Benevolent Association's approximately $149 million in outstanding fixed-rate debt. NBA's total outstanding debt is approximately $212 million, of which approximately $63 million are variable rate demand bonds, backed by letter of credits from KBC Bank (Fitch does not rate this debt). The bonds remain on Rating Watch Negative. On Sept. 9, 2003, NBA announced that its letters of credit from KBC Bank, which were scheduled to expire on Sept. 15, 2003, have been extended for 30 days until Oct. 15, 2003. This extension did not prevent the bonds from being tendered yesterday, but does provide more flexibility in negotiating and formulating a substitution plan. Exact terms of the extension are unknown, but NBA has confirmed that it has successfully entered into a confidentiality agreement with KBC Bank (similar to those reached with bond trustees and certain fixed-rate bondholders). It is still uncertain whether KBC will remarket or hold the bonds. Although this extension provides a slight cushion for NBA, major credit concerns still exist without a substitution, renewal, or further extension of the LOCs past Oct. 15, 2003. Fitch has reviewed the six-month interim financial statements, dated June 30, 2003, and notes that liquidity has continued to decline, but bottom line performance has slightly improved. Through the six-month interim period, NBA's unrestricted liquidity totaled $79.8 million or 202 days cash on hand, which represents a $1.9 million decline since March 31, 2003 and $8.8 million since Dec. 31, 2002. However, NBA reported a bottom line loss of $5.6 million (negative 7.7%) through the first half of 2003, which is an improvement from the $3.4 million loss in the first quarter (negative 9.7%) and $21 million loss in 2002 (negative 15.3%). The primary reason for this improvement is higher revenue, due to increased investment income, combined with relatively good expense controls. Additional factors include the divestitures or closings of some unprofitable facilities and service lines over the past 18 months. Despite this slight improvement, NBA is still in technical default and in violation of its rate covenant as debt service coverage remains weak at 0.5x. Fitch will continue to monitor NBA as information becomes available. NAT'L STEEL: Seeks Court Nod for IUBAC Memorandum of Agreement -------------------------------------------------------------- The National Steel Corporation Debtors and the International Union of Bricklayers and Allied Craftsmen have been parties to numerous collective bargaining agreements for decades. The Debtors and IUBAC have previously agreed that if a sale with a new collective bargaining agreement with U.S. Steel were accomplished, the unions would agree to a consensual termination of their existing Collective Bargaining Agreements. Yet, despite entry into a new agreement with U.S. Steel, IUBAC and its represented workers and retirees continued to have significant administrative and prepetition claims against the Debtors' estates. To resolve all remaining issues, the Debtors entered into negotiations with IUBC. By this motion, the Debtors ask the Court to approve their Memorandum of Agreement. The terms of the MOA include: (1) termination of all Collective Bargaining Agreements, any obligations related to these Agreements, and a mutual release of claims; (2) transition to U.S. Steel of certain benefits and benefit programs, like workers' compensation and conversion privileges for life insurance, and parties' cooperation in this process, including with respect to transfer of 401(k) plan assets and a pro-rata share of the National Voluntary Employee Beneficiary Association; (3) treatment of claims incurred by employees or their eligible dependents before the date of the U.S. Steel sale closing for medical, vision or dental services, sickness and accident benefits and life insurance; (4) payment of life insurance benefits for retirees through August 31, 2003 with the VEBA paying for the period from August 1, 2003 through August 31, 2003; (5) COBRA continuation rights with premium costs covered by retirees and former employees for the period from September 1, 2003 through December 31, 2003, with the VEBA covering a percentage of certain costs; (6) IUBAC's retention of a general of a general unsecured claim against the Debtors amounting $4,500,000 relating to Other Post-Employment Benefit liabilities; and (7) payment of certain actual costs and expenses incurred by IUBAC during the cases in the aggregate of $15,000. (National Steel Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) NRG ENERGY: Asks Court to Okay Proposed Solicitation Procedures --------------------------------------------------------------- Michael A. Cohen, Esq., at Kirkland & Ellis, in New York, relates that on July 2, 2003, NRG Energy, Inc., and its debtor-affiliates filed their Third Amended Disclosure Statement for their Joint Plan of Reorganization. At the July 24, 2003 hearing, the Court approved the Third Amended Disclosure Statement for purposes of submission to the Securities Exchange Commission. The Debtors are currently awaiting the SEC's completion of its Public Utilities Holding Company Act review. Mr. Cohen notes that the Third Amended Disclosure Statement contains ample information to allow parties-in-interest to make informed judgments about the Plan, including, but not limited to information regarding: (a) the Debtors, their assets and liabilities, and their businesses, (b) general economic conditions preceding the Debtors' decision to commence the instant Chapter 11 proceedings, (c) prepetition negotiations and agreements among the Debtors and their principal creditor constituencies, (d) significant events that have occurred in these Chapter 11 cases since the Petition Date, (e) classification and treatment of claims under the Plan, (f) other material terms of the Plan and its implementation, and (g) information concerning the projected financial performance of the reorganized Debtors. By this motion, the Debtors ask the Court to: (1) approve the form of the Ballots and the Master Ballot, (2) approve the Voting Procedures and Tabulation Procedures, (3) approve the Revised Confirmation Hearing Notice, (4) establish the Voting Deadline, (5) set the date and establish notice procedures for the Confirmation Hearing, (6) establish a Voting Record Date, and (7) approve the Third Amended Disclosure Statement. Approval of Form of Ballots The Ballots are based on Official Form No. 14, but have been modified to address the particular terms of the Plan. The Debtors propose that the appropriate form of Ballot will be distributed to holders of Claims in these classes: Class Type Description ---------- ----------- Class 2 Convenience Claims Class 3 Secured Claims Against Non-continuing Debtor Subsidiaries Class 4 Miscellaneous Secured Claims Class 5 (Form A) NRG Unsecured Claims (Other Than Note Claims or NRG Bank Group Claims) Class 5 (Form B) NRG Unsecured Claims (NRG Bank Group Claims) Class 5 (Form C) NRG Unsecured Claims (Note Claims) Class 5 (Form D) Master Ballot (Note Claims) Class 6 PMI Unsecured Claims The Debtors propose to deliver Ballots to Class 5 Note Claims record holders, including brokers, bank, dealers, other agents or nominees. Each Nominee would be entitled to receive the Solicitation Packages to be distributed to creditors and other parties-in-interest. The Nominee will forward the Solicitation Package to each beneficial owner of the Notes for voting and include a return envelope addressed to the Nominee so that the beneficial owner may return the completed beneficial owner ballot to the Nominee. The Nominee will then summarize the individual votes of its beneficial owners from their Beneficial Owner Ballots on the appropriate master ballot, and then return the Master Ballot to Innisfree M&A Incorporated. A. Release Election Class 5 Claim Holders will have the opportunity to elect on their Ballot to grant certain releases to Xcel Energy Inc. and other related entities and to receive their pro rata share of the "Release-Based Amount." Thus, the Debtors propose that certain procedures be implemented which require that Ballots of Class 5 Claim Holders be made available to Xcel for review. B. Reallocation Election Class 5 and Class 6 Claim Holders will have the opportunity to elect to alter the composition of the distribution they would receive under the Plan. The Ballots proposed by the Debtors provide sufficient instructions regarding the "Reallocation Election." C. Notice of Non-Voting Status to Claim Holders Deemed to Accept the Plan Accordingly, the Debtors propose to send to holders of unimpaired claims in Class 1 Unsecured Priority Claims, Class 8B NRG Reinstated Intercompany Claims and unimpaired interests in Class 10 PMI Old Common Stock a notice of non- voting status, which identifies the classes designated as unimpaired and provides an explanation of their status. D. Notice of Non-Voting Status to Claim Holders Deemed to Reject the Plan Class 7 Unsecured Non-continuing Debtor Subsidiary Claims, Class 8A NRG Cancelled Intercompany Claims, Class 9 NRG Old Common Stock, Class 11 Securities Litigation Claims, and Class 12 Non-continuing Debtor Subsidiary Common Stock will not receive any distributions under the Plan. Thus, the Debtors propose to mail a notice of non-voting status to the holders of claims and interests in these classes. Approval of Solicitation Package Distribution Procedures The Debtors propose that the Solicitation Packages will be mailed not more than the later of three business days after the Voting Record Date and five business days after the Disclosure Statement approval on: (a) all persons or entities that have filed proofs of claim or equity interests on or before the Voting Record Date; (b) all persons or entities listed in the Schedules; (c) all other known holders of potential claims against or equity interests in the Debtors, if any, as of the Voting Record Date; (d) all parties-in-interest that filed requests for notice in accordance with Rule 2002 of the Federal Rules of Bankruptcy Procedure in the Debtors' Chapter 11 cases on or before the Voting Record Date; (e) the indenture trustees under the Debtors' indentures; and (f) the entities filing a timely proof of claim after the Voting Record Date. Each Solicitation Package will contain: -- a Copy of the Revised Confirmation Hearing Notice; -- the Third Amended Disclosure Statement; -- at the Debtors' discretion, a letter from the Committee expressing its views with respect to the Plan; -- any SEC order approving the Plan; -- a Copy of the Disclosure Statement Order; and -- either a Ballot and a return envelope or the appropriate Notice of Non-Voting Status. Special Procedures for Distribution of Solicitation Packages with Respect to Note Claims (a) The Debtors will mail a Solicitation Package to each holder of record of Notes that holds such instruments in their own name and each Nominee for distribution to Beneficial Owners as of the Voting Record Date; (b) After the Voting Record Date, the Debtors will obtain a list containing the names, addresses and holdings of the respective Individual Record Holders as of the Voting Record Date -- the Record Holder Register; and a list containing the names and addresses of the Nominees and, for each Nominee, the aggregate holdings of the Beneficial Owners for whom the Nominee provides services -- the Nominee Register; (c) The Debtors will send each Individual Record Holder a Solicitation Package. The Individual Record Holder Ballot must be completed and returned prior to the Voting Deadline by the Noteholder and the Credit Facility Balloting Agent; (d) The Noteholder and Credit Facility Balloting Agent will then deliver to each Nominee the requisite number of Solicitation Packages with the appropriate Ballots; and (e) The Nominees will be required to distribute the Solicitation Packages they receive promptly to the Beneficial Owners for whom they provide services. Voting Deadline The Debtors propose that each Ballot must be properly executed, completed, and delivered to the Balloting Agent or the Noteholder and Credit Facility Balloting Agent as applicable, so as to be received no later than a date to be determined which will be at least 25 days after the Solicitation Date. The Debtors also propose that they be permitted to extend the Voting Deadline for all creditors from time to time without further Court Order by giving notice of extension to all parties on the Debtors' creditor matrix and the parties requesting notice pursuant to Bankruptcy Rule 2002 and filing the notice with the Court, as well as issuing a press release to the Dow Jones Newswire and publishing notice in The Wall Street Journal; provided, however, that the extension will not place the Voting Deadline less than 10 days prior to the Confirmation Hearing. Tabulation Rules The Debtors propose that each claim holder within a claim class entitled to vote on the Plan be entitled to vote the amount of the claim as set forth in the Schedules. The general procedure will be subject to these exceptions: (a) if a timely filed claim is not listed on the Schedules and no objection has been filed on or before the Voting Deadline, the claim will be temporarily allowed for voting purposes; (b) if a timely filed claim is contingent, unliquidated, or disputed, the claim will be temporarily allowed for voting purposes for $1; (c) if a claim is listed as contingent, unliquidated or disputed, in the Schedules or in a proof of claim, the claim will be temporarily allowed for voting purposes only for $1; (d) if a claim is deemed allowed in accordance with the Plan, the claim will be allowed for voting purposes; (e) if the Debtors served and filed an objection to a claim at least 10 days prior to the expiration of the period during which claim holders may vote to accept or reject the Plan, the claim will be temporarily allowed for voting purposes in an amount equal to the greater of $1 or the undisputed claim amount; (f) if a claim is listed in the Schedules as being a non- priority claim or is not listed in the Schedules and a proof of claim is filed as a priority claim, the claim will be temporarily allowed for voting purposes as a non-priority claim in an amount that the claim would have been so allowed in accordance with the other Tabulation Rules had the proof of claim been filed as a non-priority claim; (g) if a claim is listed in the Schedules as being an unsecured claim or is not listed in the Schedules and a proof of claim is filed as a secured claim, the claim will be temporarily allowed for voting purposes as an unsecured claim; (h) if a claim has been estimated or allowed for voting purposes by Court Order, the claim will be temporarily allowed for voting purposes; (i) if a claim relates to rejection damages under an executory contract or unexpired lease that has not been rejected as of the Voting Record Deadline, to the extent the claim is for rejection damages, the claim will be temporarily disallowed by the Court for voting purposes and, to the extent the claim is solely for rejection damages, the Ballot will not be counted as having voted for or against the Plan; and (j) if a claim holder identifies a claim amount on its Ballot that is less than the amount otherwise calculated in accordance with the Tabulation Rules, the claim will be temporarily allowed for voting purposes in the lesser amount identified on the Ballot. If any claimant seeks to challenge the allowance of its claim for voting purposes in accordance with the Tabulation Rules, the claimant may file a motion, pursuant to Bankruptcy Rule 3018(a), to temporarily allow the claim in a different amount or classification for voting purposes and serve the request on the Debtors' counsel so that it is received no more than 20 days after the date of service of the Confirmation Hearing Notice. Tabulation and Voting Procedures The Debtors seek to implement Tabulation and Voting Procedures similar to those indicated in their request to approve the First Amended Disclosure Statement. Master Ballot Tabulation In the tabulation of the Master Ballots, the amount that will be used to tabulate acceptance or rejection of the Plan will be the principal amount held as of the Voting Record Date. The Debtors propose that these additional rules apply to the Master Ballot Tabulation: (a) The Debtors will compare the votes cast and elections made by the Individual Record Holders and the Nominees to the Record Holder Register and the Nominee Register. Votes submitted by an Individual Record Holder on an Individual Record Holder Ballot will not be counted in excess of the record position in the Notes for that particular Individual Record Holder, as identified on the Record Holder Register. Votes submitted by a Nominee on a Master Ballot will not be counted in excess of the aggregate position in the Notes of the Beneficial Owners for whom the Nominee provides services, as identified in the Nominee Register. The submission of an Individual Record Holder Ballot or a Master Ballot reflecting an aggregate amount of voting and non-voting claims that exceeds the record position as identified on the Record Holder Register or the aggregate position identified on the Nominee Register is referred to as an "overvote." (b) To the extent that an Individual Record Holder Ballot conflicts with the Record Holder Register, the Debtors will tabulate the Individual Record Holder's Vote based on information contained in the Record Holder Register. (c) To the extent that a Master Ballot conflicts with the Nominee Register, the Debtors will attempt to resolve the conflicting vote prior to the vote certification. (d) To the extent that an overvote or a conflicting Vote on a Master Ballot is not reconciled prior to the vote certification, the Debtors will: -- calculate the percentage of the total stated amount of the Master Ballots voted by each Beneficial Owner, -- multiply the percentage for each Beneficial Owner by the amount of aggregate holdings for the applicable Nominee identified on the Nominee Register, and -- tabulate Votes to accept or reject the Plan based on the result of this calculation. (e) The Release Election to release the Released Parties will be valid only to the extent that: (1) the Notes of the Beneficial Owners making the election are actually tendered by the Beneficial Owners or the Nominees, and (2) Xcel has received copies of the Ballots of the Beneficial Owners making the Release Election to release the Released Parties. (f) A single Nominee may complete and deliver to the Noteholder and Credit Facility Balloting Agent multiple Master Ballots summarizing the votes of Beneficial Owners of the Notes. If two or more Master Ballots are inconsistent, the latest dated Master Ballot received prior to the Voting Deadline will supersede and revoke any prior Master Ballot. Confirmation Hearing Date The Debtors want a hearing scheduled for the confirmation of the Plan, subject to the Court's calendar. The Confirmation Hearing may be continued from time to time by the Court or the Debtors without further notice other than adjournments announced in open court. Notice of the Confirmation Hearing The Debtors propose to serve, through the Balloting Agent, a copy of a notice setting forth the: (1) Voting Deadline for the submission of ballots; (2) time fixed for filing objections to confirmation of the Plan and the manner in which objections will be filed; and (3) time, date and place of the Confirmation Hearing, on all creditors and equity security holders. In addition, the Debtors will publish the Revised Confirmation Hearing Notice in the national edition of The New York Times, The Wall Street Journal, The Star Tribune (Minneapolis-St. Paul), The St. Paul Pioneer Press and The Financial Times. Procedures for the Filing Plan Confirmation Objections Objections to confirmation of the Plan must: (1) be in writing; (2) state the name and address of the objecting party and the nature of the claim or interest of the party; (3) state with particularity the basis and nature of any objection to the confirmation of the Plan; and (4) be filed with the Court and served on these Notice Parties so that it is received no later than the Confirmation Objection Deadline: * NRG Energy, Inc.; * Kirkland & Ellis -- the Debtors' attorneys; * Bingham McCutchen -- the Committee's attorneys; * Jones Day -- Xcel's attorneys; * Simpson Thacher & Bartlett -- the Bank Lenders' attorneys; and * Office of the U.S. Trustee. Voting Record Date The Debtors propose that the Court establish the Voting Record Date at the hearing held to consider approval of these Solicitation Procedures, for purposes of determining the creditors that are entitled to vote on the Plan or, in the case of the classes not entitled to vote, for purposes of determining the creditors and interest holders entitled to receive Notices of Non-Voting Status. Transferred Claims With respect to a transferred claim, the Debtors propose that the transferee will be entitled to receive a Solicitation Package and cast a Ballot on account of the claim only if: (a) all actions necessary to effect the transfer of the claim pursuant to Bankruptcy Rule 3001(e) have been completed by the Voting Record Date, or (b) the transferee files by the Voting Record Date the documentation required by Bankruptcy Rule 3001(e) to evidence the transfer and a sworn statement of the transferor supporting the validity of the transfer. In the event a claim is transferred after the Voting Deadline, the transferee of the claim will also be bound by any election, including the Release Election, made on the Ballot by the holder as of the Voting Record Date of the transferred claim. (NRG Energy Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) NVIDIA CORP: Reaches Agreement to Resolve SEC Investigation ----------------------------------------------------------- NVIDIA Corporation (Nasdaq: NVDA), the worldwide leader in visual processing solutions, announced that the Securities and Exchange Commission has concluded its investigation of NVIDIA. The SEC and NVIDIA have reached a final agreement resolving an investigation undertaken by the SEC's staff. That investigation was disclosed by NVIDIA in February 2002. As announced by NVIDIA earlier this year, NVIDIA and the SEC staff had reached an agreement in principle to end the investigation, subject to review and approval by the SEC. Under the final agreement NVIDIA, while neither admitting nor denying any wrongdoing, agreed to entry of an administrative cease and desist order prohibiting any future violations of certain non-fraud financial reporting, books and records, and internal control provisions of the federal securities laws. The order has no impact on NVIDIA's reported financial results, and no penalty or fine has been assessed against the Company. This order arose out of an inquiry by the SEC regarding certain accounting matters. That inquiry was announced by NVIDIA on February 14, 2002. In accordance with the suggestion and advice of the SEC staff, NVIDIA at that time launched an internal review of the accounting matters. On April 29, 2002, the Company announced that the Audit Committee of its Board of Directors had, with assistance from outside legal counsel and outside forensic auditors, concluded its review and determined that it was appropriate to restate NVIDIA's financial statements for fiscal 2000, 2001 and the first three quarters of fiscal 2002. NVIDIA cooperated with the SEC throughout this process. NVIDIA Corporation, whose corporate credit rating is rated at B+ by Standard & Poor's, is a visual computing technology and market leader dedicated to creating products that enhance the interactive experience on consumer and professional computing platforms. Its graphics and communications processors have broad market reach and are incorporated into a wide variety of computing platforms, including consumer digital-media PCs, enterprise PCs, professional workstations, digital content creation systems, notebook PCs, military navigation systems and video game consoles. NVIDIA is headquartered in Santa Clara, California and employs more than 1,500 people worldwide. For more information, visit the company's Web site at http://www.nvidia.com OWENS: Commercial Panel Balks at 75% Claim Wipe-Out Under Plan -------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Owens Corning says the proposed plan will cost commercial creditors a whooping $2,841,000,000, wiping out 75% of their claims. Commercial Creditors will recover $916,952,000 of the total $3,758,000,000 commercial creditor claims. In short, the Committee says, the Plan stinks and the Committee will do what it can to derail the plan process unless commercial creditor recoveries improve. William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, explains that the Plan funnels the benefit of this unprecedented loss to asbestos attorneys, who get 40% of the money in "contingent fees". The staggering size of the proposed diversion, Mr. Sudell argues, compels the most careful scrutiny by the Court of the quality of the disclosure and the compliance of the Plan with the requirements of the Bankruptcy Code. The Committee complains that the "unlawful" plan -- proposed by "lawless raiding party", the asbestos lawyers and the managers appointed by the Debtors' board who in turn is elected by holders of "worthless" stock -- is "unfair, discriminatory and fatally flawed" without serious effort to achieve consensus. Accordingly, the Committee asks the Court not to approve the Disclosure Statement based on the determination that it would be wasteful to solicit acceptances of an unconfirmable Plan. If the Court determines to approve the distribution of some version of the Proposed Disclosure Statement, it should order the Debtors to remedy all the defects in the Disclosure Statement and to provide a complete, fair and balanced presentation of various points of view regarding the Plan, to disseminate to voters various material defects of "adequate information" in the Disclosure Statement and to cut cost, by ordering the Debtors to: -- attach and make a part of it the "Official Committee Supplement to the Disclosure Statement"; and -- transmit the separate memoranda annexed to the Supplement to the identified recipients. Mr. Sudell asserts that the Plan is not confirmable because of the $16,000,000,000 liability precondition to the confirmation of the Plan. This precondition cannot purport to nullify a judicial determination. Additionally, it has no factual foundation. There is no known data or conceivable methodology that would support a determination that the Debtors' asbestos liabilities total at least $16,000,000,000. The Debtors, by their management and board of directors, have made public statements in reports filed with the Securities and Exchange Commission about forecasts of their asbestos liabilities. The most recent published estimate is $5,900,000,000. Mr. Sudell contends that the facial implausibility of the Debtors having asbestos liabilities of $16,000,000,000 is buttressed by three factors -- numerosity, causation and compensability. The Committee wants the Debtors and the Official Committee of Asbestos Claimants, as Plan Proponents, to make an offer to the Court of the factual bases that the estate has at least $16,000,000,000 in "asbestos liabilities" before a complex and expensive voting and confirmation process is commenced. Mr. Sudell asserts that the Plan flunks the "best-interests" test because it unlawfully proposes distributions to future claimants. Future claimants have no "claims" under established Third Circuit law. In Schweitzer v. Consol Rail Corp and Zulkowski v. Consol. Rail Corp, the Third Circuit held that asbestos claims that had not manifested symptoms of an asbestos disease or condition as of the confirmation date were not discharged because their claims had not yet "arisen". This decision is consistent with the Third Circuit Court's definition of "claim" in In re Frenville Co., 744 F. 2d 332 (3rd Cir, 1984). The Frenville Court defined "claim" as a "right to payment". Since there is no statement in the Bankruptcy Code or the legislative history from Congress about when claims "arise", the Court deferred to state law, holding that state law determines when a claim "arises". Mr. Sudell also notes that in Jones v. Chemetron Corp., 212 F.3d 199 (3d Cir. 2000), several adults and a child sued the debtor four years after the bar date and two years after the consummation of the debtor's Chapter 11 plan for injuries caused by exposure to radioactive and other toxic materials occurring many years before the Petition Date. The Chemetron Court held that all claims were barred from suing, except for the infant plaintiff who was unborn at the time of plan confirmation. The Court held that the adult plaintiffs knew or should have known about their claims in time to sue. As to the unborn child, the Court found that no one in the bankruptcy proceeding asked the Court to appoint people to represent unborn persons and that the Court had no duty to do so sua sponte. Hence, due to the lack of notice and representation, the unborn infant's claim was not discharged. The Plan further flunks the "best-interests" test by 13.8 cents on the dollar. Mr. Sudell indicates that the recovery of eligible claimants in liquidation is 38.2 cents according to an analysis the Committee prepared. The Commercial Committee's best-interests analysis shows that a Frenville-following liquidation of the Debtors which paid only present asbestos claimants would deliver 38.207% on the claims of all present creditors. The best-interests analysis establishes that the value of the Reorganized Debtors would have to come in a hair under $7,000,000,000 to meet the Best-Interests Test in order for the Plan to pass the Best-Interests Test. The Debtors' own financial advisors place the value of the Reorganized Debtors somewhere between $3,300,000,000 to $3,700,000,000. In other words, the enterprise value of the Debtors falls $3,262,000,000 short of the amount needed. Commercial Committee's Best-Interests Analysis Following Applicable Third Circuit Law Recovery in Liquidation (No Payment to Future Claimants) Amount ------------------------------- ------ Distributable proceeds in event of Chapter 7 liquidation $2,734,000,000 Claims of Classes 4, 5 and 6 (bank, bond and general unsecured claims) 3,758,000,000 Total estimated number of asbestos claimants 850,000 Less: estimated number of present asbestos claimants (200,000) Number of estimated future asbestos claimants 650,000 Amount due per asbestos claimant 16,988 Gross amount due resent asbestos claimants 3,397,647,059 Total due to present asbestos and Commercial claimants 7,155,647,059 Recovery of Committee Constituencies Under Proposed Plan 0.244000000 Recovery of eligible claimants in Liquidation under Third Circuit law 0.382075859 Shortage Compared With Recovery Needed to Pass Best-Interests Test (0.138075859) Reorganization Value Needed to Beat Liquidation if Future Claims Participate ---------------------------------------- Amount allegedly due future asbestos claimants 11,042,352,941 Amount allegedly due present asbestos claimants 3,397,647,059 Total allegedly due all asbestos claimants 14,440,000,000 Add: due to Classes 4, 5 and 6 (bank, bond and general unsecured claims 3,758,000,000 Total allegedly due all claimants if Future claimants are improperly included 18,198,000,000 Enterprise value found by Debtors' exerts 3,700,000,000 Enterprise value of Debtors needed to Deliver a recovery of $0.3825759 6,962,115,490 Non-existent, missing enterprise value needed to pass Best-Interests Test (3,262,115,490) In preparing the Chart, the Committee used the Debtors' own high- end-of-the-range numbers on their liquidation analysis: (1) amount due to banks, bonds and other general unsecureds -- $3,758,000,000; (2) as the Debtors have represented to the Court, an aggregate pool of 850,000 present and future asbestos claimants would receive distributions under the Plan; (3) "Present claimants" numbering 200,000; (4) net distributable proceeds of the Debtors in liquidation available to unsecured creditors -- 2,734,000,000; (5) average amount due each asbestos claimant -- $16,988; Mr. Sudell adds that the Proposed Disclosure Statement provides no rationale for providing Fibreboard Asbestos Personal Injury Claimants with a greater recovery than that to be paid to others. Moreover, the Disclosure Statement fails to describe the management stock plan adequately. Mr. Sudell argues that the Asbestos-Channeling Injunction will not be valid because the Future Representative cannot properly represent so many conflicting future "demands". The improper conflicts are fundamental elements of the Plan. Precedent establishes that one Future Representative, no matter how able, is inadequate to represent all the "demands" created by the Plan, therefore, an injunction will not bind the holders of these "demands". Mr. Sudell also observes that the Plan does not comply with Section 524(g) of the Bankruptcy Code because of these structural problems: (1) The PI Trust will value and pay liquated asbestos "claims" differently than unliquidated asbestos "claims"; (2) There is no assurance of continuity and permanence of the PI Trust's mechanisms; (3) There is "unlawful unfettered discretion: standardless, unlimited and secret valuations"; and (4) Unprecedented and unjustified claims payment ratio channels funding away from the most deserving claimants and perpetuates the failures of the tort system and other asbestos trusts. Mr. Sudell also notes that the discussion of "scheduled values" of various asbestos claims omits material information needed to evaluate the numbers. Critical information about the Senior Notes is also omitted. There is inadequate discussion of the possible effects on creditors of the Hatch legislation pending in Congress. While the Plan contains various releases of Owens Corning Insiders and Owens Corning's claims against them, the Disclosure Statement gives inadequate information about the claims released and whether the releases are valid to begin with. Moreover, the Disclosure Statement fails to explain: (1) why the Asbestos Trust get stock registration rights but other constituencies do not; (2) why reorganized Owens Corning is waiving Delaware takeover protection; and (3) whether the board of directors of the reorganized company will comply with the Sarbanes-Oxley Statute. (Owens Corning Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS-BROCKWAY: Completes Exchange Offer for 8-1/4% Senior Notes ---------------------------------------------------------------- Owens-Brockway Glass Container Inc. (S&P, BB Corporate Credit Rating), an indirect wholly owned subsidiary of Owens-Illinois, Inc. (NYSE: OI), has completed its offer to exchange any and all of its outstanding 8-1/4% Senior Notes due 2013 for 8-1/4% Senior Notes due 2013 that have been registered under the Securities Act of 1933, as amended. All of the $450,000,000 aggregate principal amount of the Old Notes were tendered and received prior to expiration of the Exchange Offer at 5:00 p.m., New York City time, on Sept. 10, 2003. The Exchange Offer was made solely by the prospectus dated Aug. 7, 2003. PACIFIC LUMBER: Cash Flow & Legal Concerns Prompt Rating Cuts ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Scotia, California-based lumber producer Pacific Lumber Co. to 'B-' from 'B'. The current outlook is negative. "The downgrade was prompted by Pacific Lumber's continued standalone negative earnings and operating cash flow, as well as concerns regarding the ongoing legal challenges facing its primary log supplier and wholly owned subsidiary, Scotia Pacific Co. LLC regarding its ability to harvest sufficient timber volumes needed to service its debt over the intermediate term," said Standard & Poor's credit analyst Cynthia Werneth. Pacific Lumber is an indirect subsidiary of unrated MAXXAM Inc. Standard & Poor's lowered its ratings on all classes of Scotia Pacific's timber collateralized notes on Aug. 12, 2003, and those ratings remain on CreditWatch with negative implications, according to the analyst. She added, "The lowered ratings on Scotia Pacific reflect the negative impact that depressed timber prices, lower-than-expected harvest levels, and higher-than- expected capital and operating expenses have had on the cash flow the company has available to service its debt." Standard & Poor's said that its ratings on Pacific Lumber reflect the company's modest-sized operations, narrow product mix, industry cyclicality, and its reliance for logs on Scotia Pacific. PARK PLACE ENTERTAINMENT: Corp. Credit Rating Slides Down to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Park Place Entertainment Corp., including its corporate credit rating to 'BB+' from 'BBB-'. At the same time, the ratings were removed from CreditWatch where they were placed on Aug. 5, 2003. Las Vegas, Nevada-based Park Place is a casino operator. The outlook is stable. Total debt outstanding at June 30, 2003, was approximately $4.7 billion. "The rating actions follow the company's announcement that it plans on proceeding with an approximately $376 million expansion project at its Caesars Las Vegas property at such a time when credit measures have not improved to levels more consistent with the previous ratings, despite the company's efforts during the past few quarters to reduce overall debt balances," said Standard & Poor's credit analyst Michael Scerbo. To this end, the company has repaid approximately $170 million in debt through June 30, 2003, while refraining from share repurchases. Standard & Poor's had expected Park Place's debt leverage, as measured by total debt to EBITDA, to improve to much closer to 4x by the end of 2003 compared to 4.5x at Dec. 31, 2002. However, the lower- than-expected EBITDA during the first six months of 2003, in addition to newly announced capital spending plans, will likely extend the timing for reducing debt leverage beyond Standard & Poor's previous expectations, despite the likelihood for improved operating performance in the gaming sector during the next several quarters. The ratings for Park Place reflect its diversified asset and cash flow base, which includes a few well-known and recognizable brand names. These factors are offset by a portfolio that includes several older assets, some of which are not market leaders. The ratings also consider that the combination of increased near-term capital spending, and other potential growth opportunities, will utilize a significant portion of free cash flow that would otherwise be available for debt reduction. While Standard & Poor's expects that the gaming environment in 2004 will improve from current levels, Park Place faces a number of near-term challenges in some of its markets, specifically Atlantic City and many riverboat jurisdictions. However, sufficient debt capacity exists within the new rating to both mitigate any weakness in operating performance and fund potential growth opportunities, including the planned expansion at Caesars Las Vegas. PERRY ELLIS: S&P Assigns B- Rating to $150M Senior Sub. Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to sportswear designer Perry Ellis International Inc.'s proposed $150 million senior subordinated notes due 2013. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and senior secured debt ratings on Perry Ellis International Inc. The outlook is stable. Miami, Florida-based PEI had about $214 million of total debt at July 31, 2003. Proceeds from the sale of the proposed notes will be used to repay about $99 million of its existing senior subordinated notes due 2006, as well as a portion of the company's outstanding borrowings under its $110 million revolving credit facility. The rating on the notes is based on preliminary terms and conditions and is subject to review once final documentation is received. "The ratings on PEI incorporate its narrow product portfolio, relatively high debt leverage, and aggressive acquisition strategy," said Standard & Poor's credit analyst Lori Harris. "These factors are partially mitigated by the company's diverse portfolio of nationally recognized brand names, primarily in men's apparel, and its channel diversity." PEI is a designer and marketer of sportswear, golf wear, and other casual wear. Most of the company's revenues are derived from men's shirts, a relatively narrow category within the apparel industry. However, men's apparel tends to be less fashion-sensitive, somewhat offsetting this portfolio concentration. The company has built a broad portfolio of owned and licensed brands through a combination of acquisitions and internal development. Nationally recognized brand names include Perry Ellis, Crossings, John Henry, and Ping, among others. Multiple brands at different price points allow the company to access a broad array of retail distribution channels, including department stores, chain stores, mass merchandisers, and specialty shops. In addition, PEI licenses its own brands to expand into other product categories, thereby enhancing its brand visibility in the marketplace. PEI pursues an acquisition strategy in an effort to build the business and expand its existing portfolio. In June 2003, the company acquired Salant Corporation, PEI's largest licensee of Perry Ellis branded apparel with 2002 sales of about $250 million, of which $170 million was from Perry Ellis products. Last year, PEI acquired the Jantzen business from VF Corp., which consists of women's swimwear and sportswear. While Jantzen was only a small part of VF's overall sales, it is expected to be a significant contributor at PEI. PETROLEUM GEO-SERVICES: Court Approves Disclosure Statement ----------------------------------------------------------- Petroleum Geo-Services ASA (debtor in possession) (OSE:PGS) (Pink Sheets:PGOGY) announced that its ongoing restructuring efforts are progressing as planned. As previously announced, the Company voluntarily filed a petition for protection under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on July 29, 2003. In a hearing in the US Court the proposed Disclosure Statement for the Company's First Amended Plan of Reorganization was approved in the form submitted and an order confirming court approval of the Disclosure Statement is expected to be entered shortly. As previously announced, the Disclosure Statement includes, among other things, background information regarding the Company and the circumstances giving rise to its Chapter 11 filing, a description of the terms and conditions of the Plan (including the treatment proposed for holders of claims and interests) and relevant valuation analyses and financial projections which are updated from the analyses and projections previously disclosed on June 18, 2003. PGS intends to make available copies of the co documents on its Web site at http://www.pgs.com The Company anticipates the following timetable for completion of the restructuring: September 15 Distribution of disclosure material to creditors and shareholders, including Disclosure Statement, the First Amended Plan of Reorganization for the Company, a calling notice for the extraordinary shareholder meeting to be held in October and a prospectus as required by Norwegian law October 14, 2003 Creditor voting deadline October 16, 2003 Extraordinary General Meeting of PGS ASA for shareholder approval of restructuring October 21, 2003 Confirmation Hearing at the US Court October 22 to November 5, 2003 Offer Period for the offering of new PSG shares for purchase by existing PGS shareholders November 5, 2003 Anticipated date for consummation of the Plan of Reorganization November 6, 2003 Anticipated date of registration of the New Shares to Existing Shareholders pursuant to the Plan of Reorganization on subscribing shareholders' accounts at the VPS The Company believes that the offering of shares for purchase by its existing shareholders will qualify for an exemption from registration under the Securities Act pursuant to section 1145 of the United States Bankruptcy Code. If approval has not been obtained under section 1145, the offering will have to be made on a registered basis, implying that the Offer Period (both start date and end date) and the settlement of the Offering will be delayed. The board of PGS has approved the calling of the EGM to be held on 16 October and the Norwegian prospectus that will be distributed to shareholders with the calling notice. PGS is pleased with the reception the proposed restructuring has had, and encourages all stakeholders to support the process which is intended to maximize recovery to stakeholders of the Company. PGS believes the proposed restructuring will provide it with a solid capital structure to support the Company's future business development. As previously announced, the proposed restructuring involves a reduction of the PGS Group's total debt to a sustainable level, from approximately US$2.5 billion to approximately US$1.3 billion. This will be achieved through conversion of the existing bank and bond debt into new debt and a majority of PGS's post-restructuring equity. The PGS Chapter 11 case affects the parent company (PGS ASA) level only and does not involve the Company's operating subsidiaries, which will continue full operations, leaving current and future customers, lessors, vendors, employees and subsidiary creditors unimpaired. None of the Company's subsidiaries are involved in the Chapter 11 case. The Company intends for the restructuring to be completed before the year-end 2003 following creditor and shareholder approval in accordance with the above timetable. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com PG&E NATIONAL: USGen Wants to Reject 9 Gas Transportation Deals --------------------------------------------------------------- On August 1, 1007, USGen acquired and operated the non-nuclear generating business of New England Electric System. Along with the acquisition, USGen also assumed from NEES several gas transportation agreements, which obligated USGen to pay certain fixed costs related to the gas transportation services. USGen has determined that the inherited Gas Transportation Agreements are economically burdensome because of the above- market costs. Moreover, the agreements are not necessary for continued operations because other transportation arrangements can be entered into, at a lower cost. Accordingly, USGen wants to reject these nine existing Gas Transportation Agreements: (1) TransCanada USGen is the successor-in-interest to New England Power Company under a Firm Service Contract for Firm Transportation Service with TransCanada Pipelines Limited dated January 6, 1999. Under the agreement, USGen is obligated to pay a $1,350,000 fixed fee per month to TransCanada through October 31, 2006 in connection with the transportation of natural gas in the maximum daily quantity of 51,000 dekatherms from Empress, Alberta to Waddington, New York. (2) Iroquois (a) USGen is a successor-in-interest to NEP under a Gas Transportation Contract for Firm Reserved Service with Iroquois dated June 5, 1991. Under the agreement, USGen is obligated to pay fixed fees to Iroquois through November 1, 2012 in connection with the transportation of a maximum daily quantity of 40,000 dekatherms of natural gas from Waddington, New York to Wright, New York; and (b) USGen is also a party to a Gas Transportation Contract for Firm Reserved Service with Iroquois dated March 31, 2003. Under the Agreement, USGen is obligated to pay fixed fees to Iroquois through April 1, 2018 in connection with the transportation of a maximum daily quantity of 12,000 dekatherms of natural gas from Waddington, New York to South Commack, New York. The fixed fees imposed upon USGen under the Iroquois Contracts aggregate $460,000 per month. (3) Tennessee USGen is a party in two Gas Transportation Agreements with Tennessee Gas Pipeline Company, each dated August 1, 2002, pursuant to which USGen is obligated to pay fixed fees to Tennessee through October 31, 2013 in connection with the transportation of natural gas in the maximum daily quantities of 7,000 and 53,000 dekatherms from Wright, New York to Mendon, Massachusetts. The fixed fees imposed upon USGen under the agreements aggregates to $295,000 per month. (4) ANR USGen is a successor-in-interest to NEP under: (a) an FTS-1 Service Agreement with ANR Pipeline Company dated November 12, 1993. Under the agreement, USGen is obligated to pay fixed fees to ANR through October 31, 2014 in connection with the transportation of natural gas in the maximum daily quantity of 42,000 dekatherms from SW Headstation, Oklahoma to Monclova, Ohio; and (b) an FTS-1 Service Agreement with ANR dated February 27, 1997. Under the agreement, USGen is obligated to pay fixed fees to ANR through October 31, 2014 in connection with the transportation of natural gas in the maximum daily quantity of 18,000 dekatherms from SW Headstation, Oklahoma to Paulding, Ohio. The fixed fees imposed upon USGen under the agreements aggregate $575,000 per month. (5) Algonquin USGen is a party to: (a) a Service Agreement with Algonquin Gas Transmission Company dated May 1, 1999. Under the agreement, USGen is obligated to pay fixed fees to Algonquin through January 22, 2015 in connection with the transportation of natural gas in the maximum daily quantity of 95,000 dekatherms from Mendon, Massachusetts and Hanover, New Jersey to USGen's Manchester Street Station; and (b) a Service Agreement with Algonquin dated January 16, 2001, wherein USGen is obligated to pay fixed fees to Algonquin through December 15, 2011 in connection with the transportation of natural gas in the maximum daily quantity of 120,000 dekatherms from Dighton, Massachusetts to USGen's Brayton Point Station. The fixed fees imposed upon USGen under the agreements aggregate $1,100,000 per month. John Lucian, Esq., at Blank Rome LLP, in Baltimore, Maryland, states that upon review and analysis of USGen's various obligations under the adverse Gas Transportation Agreements, USGen has concluded that the elimination of the payment obligations will alleviate significant economic burdens, as USGen will avoid incurring unnecessary administrative costs. (PG&E National Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) PG&E NATIONAL: Seeks Court Approval of Proposed Name Change ----------------------------------------------------------- PG&E National Energy Group, Inc. (PG&E NEG) plans to change its name to National Energy & Gas Transmission, Inc., pending authorization of the U.S. Bankruptcy Court for the District of Maryland. The change reflects PG&E NEG's pending separation from its parent, PG&E Corporation (NYSE: PCG). The new name request is expected to be heard by the court in early October with the change becoming effective immediately upon court approval. While the name change will probably take effect next month, the company will not become legally separated from PG&E Corporation until PG&E NEG's Plan of Reorganization is effective. The company's subsidiaries also will change their names accordingly to delete references to PG&E. This includes PG&E Gas Transmission, Northwest Corporation, which did not file for Chapter 11 protection. It will become Gas Transmission Northwest Corporation. The company's other major subsidiary, USGen New England, Inc. will not change its name. USGenNE filed Chapter 11 in July and its case is being separately administered. Headquartered in Bethesda, Md., the company has more than 7,300 megawatts of generation including a mix of natural gas, coal/oil, hydroelectric, waste coal and wind power at numerous facilities across the country. With more than 1,350 miles of gas pipelines, the company's Pacific Northwest system has the ability to transport 2.9 billion cubic feet of natural gas per day from cost- competitive abundant supplies in Western Canada to markets in California, Nevada and the Pacific Northwest. The company also owns the 80-mile North Baja pipeline in Southern California, which has capacity to ship 500 million cubic feet of natural gas from U.S. producing regions to markets in Northern Mexico and Southern California. PILLOWTEX: Engages Services of Ordinary Course Professionals ------------------------------------------------------------ Pursuant to Sections 105(a), 327, and 328 of the Bankruptcy Code, the Pillowtex Corporation Debtors seek the Court's authority to: (a) employ ordinary course professionals without the need to file a separate formal employment application to the Court for each ordinary course professional; and (b) compensate the ordinary course professional for postpetition services rendered without the necessity for additional Court approval. Michael R. Harmon, President and Chief Financial Officer of Pillowtex, relates that the Ordinary Course Professionals consist of various attorneys, consultants, and other professionals whose nature of work is indirectly related to the Debtors' businesses. These professionals will not be involved in the administration of the Chapter 11 cases but will provide services in connection the Debtors' ongoing administrative functions. The Debtors believe that the Ordinary Course Professionals are not "professionals" within the meaning of Section 327 of the Bankruptcy Code whose retention must be approved by the Court. However, out of abundance of caution, the Debtors seek the Court's authority to avoid further controversy regarding the employment and payment of the Ordinary Course Professionals during the pendency of these Chapter 11 cases. The Debtors propose to pay each of the Ordinary Course Professional 100% of its fees and disbursements, upon submission to, and approval by, the Debtors of an invoice setting forth in reasonable detail the nature of postpetition services rendered and the disbursements actually incurred; provided that, if any Ordinary Course Professional's fees and disbursements exceed an average of $35,000 per month over a four-month period, the payment to the professional will be subject to the Court's approval. The Debtors recognize the importance of providing information regarding each Ordinary Course Professional, who is an attorney, to the Court and the United State Trustee. Thus, the Debtors propose that each Ordinary Course Professional who is an attorney be required to file with the Court and serve on the United States Trustee, counsel for any statutory committee appointed in these cases, counsel for the agent of the revolving loan and term loan lenders, counsel for the agent of the postpetition lenders and the Debtors' counsel -- the Noticed Parties, an Affidavit of Proposed Professional and Disclosure Statement. The Debtors also propose that the Noticed Parties have 20 days from the date of service of an Ordinary Course Professional's Affidavit to object to the retention of the Professionals. Any objections will be served on the Ordinary Course Professional and the Noticed Parties on or before the Objection Deadline. If objections cannot be resolved within 20 days of service, the matter would be scheduled for hearing before the Court at the next regularly scheduled omnibus hearing or at other date agreed upon by the applicable Ordinary Course Professional and the objecting party. Employment, retention and compensation of the Ordinary Course Professional would be deemed approved without further Court objection, if no objection is submitted on or before the Objection Deadline, or if any timely objection submitted is resolved. The Debtors also seek the Court's authority to employ additional Ordinary Course Professionals, as necessary without the need to file individual retention applications and without the need for any further hearing or notice to any other party, by filing to the Court a supplement to the Professionals List. The Debtors also propose that timing requirements for Additional Ordinary Course Professionals who are attorneys to file and serve an Affidavit of Proposed Professional and Disclosure Statement run from the date of the Debtors' filing of the Supplement. Finally, the Debtors propose that approximately every 120 days or at other period as the Court will order, the Debtors will file a statement with the Court and serve the statement on the Noticed Parties. The statement will include: (a) the name of the Ordinary Course Professional; (b) the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred during the 120-day period; and (c) the general description of the services rendered. Although the Ordinary Course Professionals have indicated willingness to provide services on an ongoing basis, many might be unwilling to do so if they can be paid only through a cumbersome, formal application process, Mr. Harmon relates. Furthermore, if the expertise and background knowledge of these professionals were lost, the estates would incur substantial and unnecessary expenses because the Debtors would be forced to retain other professionals without their background and expertise. The Debtors believe that although some of these Professionals may hold unsecured claims on account of prepetition services rendered, none of them have an interest materially adverse to the Debtors, their estates, their creditors or other parties-in- interest. (Pillowtex Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 609/392-0900) PMA CAPITAL CORP: Senior Debt Gets Fitch's BB+ Rating ----------------------------------------------------- Fitch Ratings has assigned insurer financial strength ratings of 'BBB+' to the primary insurance and reinsurance underwriting subsidiaries of PMA Capital Corp. including lead reinsurance underwriter PMA Capital Insurance Company, as well as primary insurance underwriters Pennsylvania Manufacturers Association Insurance Co., Pennsylvania Manufacturers Indemnity Co. and Manufacturers Alliance Ins. Co. Additionally, Fitch has assigned a 'BB+' senior debt rating to PMA Capital Corp. The Rating Outlook on all ratings is Stable. The ratings reflect a solid position in an improving reinsurance and workers' compensation marketplace, adequate capitalization and financial flexibility, and improving operating results. Ratings also reflect recent disappointing operating performance, adverse reserve development, and a heavy use of reinsurance. PMA Capital Corp. significantly improved its capital base and its financial flexibility through the issuance of $32.5 million in privately placed trust preferred securities in May 2003 and $57.5 million in senior notes issued in June 2003. The proceeds from these issuances were used to pay off PMA Capital Corp.'s relatively restrictive credit facility as well as bolster the capital position of the group's operating subsidiaries. Additional financing can be accessed through a universal shelf registration which PMA Capital Corp. filed for in 2002 that has $106.3 million available for issuance. Fitch believes that the organization's capital base and financial flexibility are sufficient to support the current or higher ratings. Recent operating performance has improved both at the primary insurance subsidiaries as well as at PMA Capital as evidenced by an improvement in the combined ratio through the first half of 2003. Through the first six months of 2003, the combined ratio at the primary insurance subsidiaries further improved to 101.6%. The primary insurance subsidiaries posted a combined ratio of 103.2% in 2002 versus 105.5% in 2001. Similar experience has been seen at the reinsurance subsidiary. PMA Capital recorded combined ratios of 106.4% and 114.2% in 2002 and 2001, respectively. Through the first six months of 2003, the combined ratio at PMA Capital declined further to 98.5%. PMA Capital Corp is an insurance holding company focused on specialty insurance markets. Through their operating subsidiaries, PMA Capital Corp. is a leading provider of property and casualty reinsurance and a regionally focused provider of commercial property and casualty insurance. The primary insurance business has been in operation since 1915 and the reinsurance operations began writing business in 1969. At June 30, 2003, PMA Capital Corp. had total assets of approximately $4.5 billion and shareholders' equity of approximately $618 million. PMA Capital Insurance Company -- Insurer financial strength Assign 'BBB+'/Stable. Manufacturers Alliance Insurance Co. -- Insurer financial strength Assign 'BBB+'/Stable. Pennsylvania Mfrs. Association Insurance Co. -- Insurer financial strength Assign 'BBB+'/Stable. Pennsylvania Manufacturers Indemnity Co. -- Insurer financial strength Assign 'BBB+'/Stable. PMA Capital Corp. -- Senior Debt Assign 'BB+'/Stable. POLAROID: Files Amended Plan & Disclosure Statement in Delaware --------------------------------------------------------------- The Polaroid Debtors and the Official Committee of Unsecured Creditors delivered to the Court their Third Amended Joint Plan of Reorganization on September 11, 2003. The Third Amended Plan includes these modifications: A. Treatment of Claims and Interests Under the Plan The Third Amended Plan classifies five Classes of Claims. The Class for Convenience Claims is deleted. Class 3 General Unsecured Claims now has an estimated percentage recovery of 14% to 18%. Class 4 is reclassified as the Intercompany Claims while Class 5 is reclassified as the Polaroid Interests and Subordinated Claims. B. Confirmation Hearing Pursuant to Section 1128 of the Bankruptcy Code and Rule 3017(c) of the Federal Rules of Bankruptcy Procedure, the Confirmation Hearing will begin on November 14, 2003 at 10:00 a.m., prevailing Eastern Time, before Honorable Peter J. Walsh. C. Injunction Except as otherwise provided in the Plan, the Confirmation Order will provide that from and after the Confirmation Date, all Persons who have held, hold or may hold Claims against or Interests in the Debtors are preliminary and permanently enjoined from taking any of these actions against the Estate, the Debtors, Reorganized Polaroid, the Plan Administrator, the DIP Agent, the DIP Lenders, the Indenture Trustee, the Prepetition Agent, the Prepetition Lenders, the Creditors' Committee or the members, the Plan Committee or the members or any of their property on account of the Claims or Interests: (a) commencing or continuing, in any manner or in any place, any action or other proceeding; (b) enforcing attaching, collecting or recovering in any manner any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance; (d) asserting a set-off, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors; and (e) commencing or continuing in any manner or in any place, any action that does not comply with or is inconsistent with the provisions of the Plan However, nothing will preclude creditors from exercising their rights pursuant to and consistent with the terms of the Plan, and the preliminary injunction of actions against the Debtors, Reorganized Polaroid, the Plan Administrator, the Creditors' committee and its members and the Plan Committee and its members and their property will be dissolved and terminate one day after the termination of the Plan Administration Agreement in accordance with the terms. By accepting distributions pursuant to the Plan, each Holder of an Allowed Claim receiving distributions pursuant to the Plan will be deemed to have specifically consented to the injunctions set forth in the Plan. D. Terms of Bankruptcy Injunction or Stays All injunctions or stays provided for in these Chapter 11 Cases under Sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, will remain in full force and effect until all property of the Estates of Reorganized Polaroid and the other Debtors has been distributed and Reorganized Polaroid has been dissolved. Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Wilmington, Delaware, relates that the Disclosure Statement Hearing will be held at 10:00 a.m. prevailing Eastern Time on October 8, 2003. Any objections to the Disclosure Statement must be filed on or before October 1, 2003. (Polaroid Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLYPHALT INC: Has Until October 27 to File Proposal Under BIA -------------------------------------------------------------- Polyphalt Inc. announced that it has obtained a 45-day extension of the time period to file its proposal to its creditors pursuant to the Bankruptcy and Insolvency Act. This also extends the Company's protection from its creditors in order to permit the Company to continue its restructuring process. The extension will provide the Company with protection from its creditors until October 27, 2003 (subject to further extension with court approval) while it considers its restructuring alternatives. TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release. PRIMEDIA INC: Elects Timothy Dattels to Board of Directors ---------------------------------------------------------- PRIMEDIA Inc. (NYSE: PRM), the leading targeted media company, has expanded its Board of Directors to eleven members and elected Timothy Dattels (45) as its newest Board member. Mr. Dattels, who is currently a Senior Advisor to Newbridge Capital, joins as an independent member of the Board of Directors and a member of the company's Audit Committee. Mr. Dattels has a strong understanding of strategy and finance gained through more than 15 years of investment banking experience. Until his retirement earlier this year, Mr. Dattels had been a Partner at Goldman Sachs (NYSE: GS) and served as the Head of Goldman Sachs' Menlo Park office, the firm's global technology hub. Prior to that, he was based in Hong Kong, serving as Goldman Sachs' Head of Investment Banking in Asia, serving on the firm's Management Committee in Asia and advising several of Asia's leading entrepreneurs and governments. "PRIMEDIA is focused on strengthening our company by simplifying our operations and better executing our strategy as a targeted media company," said Dean Nelson, Chairman of the Board of Directors for PRIMEDIA. "Tim will offer our Board his significant experience, independent perspective and extensive relationships which we believe will be of immediate benefit to our company. We are pleased that he has decided to join us." "Tim's extensive experience in developing and advising on strategy for some of the world's leading technology and media-related companies will enhance PRIMEDIA's position and help us further our leadership in providing targeted content to business-to-business and consumer audiences," said Charles McCurdy, Interim Chief Executive Officer of PRIMEDIA. "We look forward to working closely with Tim in the months and years ahead." Mr. Dattels, who currently resides in San Francisco, is a Director of Global China, a Hong Kong based media enterprise. In addition, he is a Trustee of the Asian Art Museum in San Francisco and the San Francisco Ballet. He holds a BA from the University of Western Ontario and an MBA from Harvard University. PRIMEDIA (S&P, B Corporate Credit Rating, Stable) is the leading targeted media company in the United States, with positions in consumer and business-to-business markets. Our properties deliver content via print as well as video, the Internet and live events and offer highly effective advertising and marketing solutions in some of the most sought after niche markets. With 2002 sales from continuing businesses of $1.5 billion, PRIMEDIA is the #1 special interest magazine publisher in the U.S. with more than 250 titles. Our well known brands include Motor Trend, Automobile, New York, Fly Fisherman, Power & Motoryacht, Creating Keepsakes, Ward's Auto World, and Registered Rep. The company is also the #1 publisher and distributor of free consumer guides, including Apartment Guides. PRIMEDIA Television's leading brand is the Channel One Network and About is one of the largest sources of original content on the Internet. PRIMEDIA's stock symbol is: NYSE: PRM. QUINTILES TRANSNATIONAL: S&P Rates $385-Mil. Bank Loans at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating to pharmaceutical research and marketing firm Quintiles Transnational Corp.'s proposed $310 million term loan B and $75 million revolving credit facility. The corporate credit rating remains on CreditWatch with negative implications, where it was placed April 11, 2003, following the company's agreement to be sold to a group headed by its chairman and founder for about $1.7 billion. At the close of the transaction, expected Sept. 25., the corporate credit rating will be lowered to 'BB-'. The bank loan is rated the same as the anticipated corporate credit rating, reflecting only a marginal likelihood of full recovery of principal in event of default or bankruptcy. Standard & Poor's also assigned a 'B' subordinated debt rating to Quintiles' proposed $450 million senior subordinated notes due 2013 subject to Rule 144a. "The mid-speculative grade ratings on Research Triangle Park, North Carolina-based Quintiles reflect the large financial burden the company has assumed to fund its management-led leveraged buyout, as well as customers' inconstant appetite for Quintiles' services," said Standard & Poor's credit analyst David Lugg. "However, the ratings also reflect the company's leading position as a service provider to wealthy pharmaceutical companies." Recognizing a preferred stock held by equity investors as a potentially significant call on financial resources, the largely debt-financed buyout weakens lease-adjusted credit measures dramatically. With this preferred stock included as debt, total debt to EBITDA will rise to more than 7.0x from 1.0x, and funds from operations to total debt will fall to about 10% from 85%. Accordingly, the credit profile is dominated by financial concerns. Quintiles' role as the leading provider of contract research and sales services to mainly pharmaceutical customers remains undiminished. However, a slowdown in research productivity has led to slackening new product introductions, reducing demand for contract sales services sharply, and slowed the growth of contract research services. Contract renewal risk, inherent in Quintiles' business model, is heightened given the company's strategic relationship with Aventis S.A. (A+/positive/A-1), which accounts for 11% of net service revenues. Still, longer term prospects are promising. With an increasing number of drug candidates in the middle stages of development, it seems likely that demand for Quintiles' services will improve in the next few years. Moreover, the company appears to be well positioned to capitalize on changes in the Japanese marketplace. RAYOVAC CORP: Proposes $300MM Senior Subordinated Note Offering --------------------------------------------------------------- Rayovac Corporation (NYSE: ROV) intends to offer through a private placement up to $300 million aggregate principal amount of new Senior Subordinated Notes due 2013. The expected net proceeds of the private placement will be used to finance Rayovac's acquisition of Remington Products Company, retire Remington's existing indebtedness and pay related fees and expenses. Rayovac previously announced that it has entered into an agreement to purchase Remington for approximately $322 million, including its assumption of debt. The offering will be conditioned upon the closing of the Remington acquisition, as well as subject to market and other conditions. Rayovac's obligations under the Senior Subordinated Notes will be fully and unconditionally guaranteed on a senior subordinated basis by all of its domestic subsidiaries. The private placement is expected to close by early October 2003. The Senior Subordinated Notes have not and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act. Rayovac expects to enter into an amendment to its senior credit facilities, conditioned upon the sale of the Senior Subordinated Notes. Among other things, the amendment will permit the acquisition of Remington, the issuance of the Senior Subordinated Notes and provide for an additional $50 million available borrowings under the term loan portion of such facilities. In connection with the acquisition of Remington, Rayovac also announced today that it has commenced an offer to purchase for cash all $180 million principal amount of 11% Series B and Series D Senior Subordinated Notes due 2006 issued by Remington Products Company, L.L.C. and Remington Capital Corp. Rayovac is also soliciting consents from the holders of the notes to approve certain amendments to the indentures under which the notes were issued. The tender offer is contingent on, among other things, the receipt of contents necessary to approve such amendments to the indentures governing the notes, the closing of the acquisition of Remington, the closing of the offering of the Senior Subordinated Notes and the amendments to Rayovac's senior credit facilities. The tender offer will expire at 5:00 p.m., New York City time, on October 9, 2003, unless extended or earlier terminated. The total consideration to be paid to holders that tender their notes and deliver their consents prior to 5:00 p.m., New York City time, on September 24, 2003 will be equal to $1,020.83 per $1,000 principal amount of the notes, which includes a consent payment of $2.50 per $1,000 principal amount. Holders that tender their notes after 5:00 p.m., New York City time, on September 24, 2003 and prior to the expiration of the tender offer will receive $1,018.33 per $1,000 principal amount of the notes. The consents being solicited will eliminate substantially all of the covenants and certain events of default in the indentures governing the notes. Promptly after the acquisition of Remington Products is completed, Rayovac intends to redeem all of the notes which are not tendered pursuant to the tender offer. Information regarding the pricing, tender and delivery procedures and conditions of the tender offer and consent solicitation is contained in the Offer to Purchase and Consent Solicitation dated September 11, 2003, and related documents. Copies of these documents can be obtained by contacting D.F. King & Co., Inc., the information agent for the tender offer and consent solicitation at 800-269-6427 (toll free) or 212-269-5550 (collect). Banc of America Securities LLC is the exclusive dealer manager and solicitation agent. Additional information concerning the terms and conditions of the tender offer and consent solicitation may be obtained by contacting Banc of America Securities LLC at 888-292- 0070 (toll free) or 704-388-4807 (collect). With close to $1 billion in sales, Rayovac (S&P, BB- Corporate Credit and Senior Secured Debt Ratings, Negative) has more than doubled its revenues over the last six years and has evolved from a predominantly North American company into a global organization with approximately 60 percent of its sales generated from outside the U.S. In 1999, Rayovac acquired ROV Ltd., a Latin American battery company that held the rights to the Rayovac name in Latin America (except Brazil) and certain countries in the Middle East and Africa. This acquisition consolidated Rayovac's rights to the Rayovac brand around the world (except Brazil), gave the Company a powerful market presence in Latin America and opened the doors to new distribution. In October 2002, Rayovac further expanded its global presence by acquiring the worldwide consumer battery business of VARTA AG, a German company with significant market positions throughout Europe and in Latin America. Today, Rayovac is one of the world's leading battery and lighting device companies. The Company also markets the number one selling rechargeable brand of battery in the U.S. and Europe and is the world leader in hearing aid batteries. Rayovac trades on the New York Stock Exchange under the ROV symbol. Remington (S&P, B- Corporate Credit Rating and CCC Subordinated Debt Rating, Positive) products are sold in more than 20,000 retail outlets in the United States. More than 70 percent of Remington's sales are in North America. Remington's core North American shaving and grooming products business has grown 18 percent per year from 1998 through 2002. Internationally, Remington products are sold through a network of subsidiaries and distributors in more than 85 countries. The Remington product line includes electric rotary and foil dry shavers for men and women, beard and moustache trimmers and haircut kits. They also offer personal grooming products for men and women and small electronic appliances such as hair dryers, stylers, hot rollers and lighted mirrors. Remington branded products are sold in the U.S. and internationally through mass merchandisers, catalog showrooms, drug stores, department stores, television direct to consumers, online retailing and through the company's network of service stores. RUSSELL CORP: S&P Changes Outlook on Low-B Ratings to Negative -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on apparel manufacturer Russell Corp. to negative from stable. At the same time, the company's 'BB+' corporate credit rating and its 'BB' senior unsecured debt rating were affirmed. The outlook revision follows Russell's recent downward revision of its third quarter 2003 and full-year earnings expectations. The expected decline in sales and profitability is due to a very competitive pricing environment within Russell's Artwear and mass retail channels, excess industry capacity within Artwear, as well higher raw material costs, and the weak economy. Given that Russell's cash flows are seasonally higher in the second half of the year, Standard & Poor's is concerned that credit measures for the full year will be below expectations. Moreover, barring an improvement in current business conditions, Russell may find it necessary to take additional restructuring charges, and it is uncertain when credit measures will recover. Total debt outstanding at July 6, 2003, was about $392 million. "The ratings reflect Atlanta, Ga.-based Russell's participation in the highly competitive and volatile apparel industry, which is subject to changing consumer preferences and a consolidating retailer base," said Standard & Poor's credit analyst Jean C. Stout. "Somewhat mitigating these factors are the company's well- known brand name, its strong market position, and its moderate financial profile." Russell Corp. is a manufacturer and marketer primarily of men's active wear, including sweatshirts, sweatpants, sports uniforms, and basic "blank" items for imprinting. In its core segments, the company competes with larger and financially stronger players such as NIKE Inc. and Sara Lee Corp.'s apparel division. Suppliers in the apparel industry are facing increased pricing pressure as retailers such as Wal-Mart Stores Inc. grow larger and gain significant leverage over their vendors. Although apparel companies are lowering costs by shifting production to areas such as the Far East and Latin America, margin pressure is still intense, particularly in non-branded goods. To compete effectively, Russell must continually differentiate itself with superior service, competitive pricing, and brand appeal to maintain its relevance with retailers and consumers. However, Standard & Poor's Ratings Services believes that there is little fashion risk associated with Russell's overall product portfolio. To offset some of the competitive business risks, Standard & Poor's expects that the company's credit protection measures should be above those for the rating median. Although credit measures are expected to weaken for the full-year 2003, Russell's credit protection measures to date have benefited from its completed multiyear restructuring and reorganization program and to a lesser extent from acquisitions of Spalding, Bike Athletic, and Moving Comfort. SAFETY-KLEEN: Asks Court to Clear American Home Settlement Pact --------------------------------------------------------------- In mid-1997, ECDC Environmental LC successfully bid on, was awarded, and entered into two contracts with the United States Army Corps of Engineers, pursuant to which ECDC Environmental was to perform certain environmental dredging and disposal services in and around the waters of Newark Bay and Arthur Kill, New Jersey. ECDC Environmental subsequently subcontracted certain aspects of the Dredging Projects to The Dutra Group, a provider of dredging and dredging-related services. American Home Assurance Company executed payment and performance bonds for and on behalf of ECDC Environmental in connection with the Dredging Projects. On March 16, 1999, Dutra, the subcontractor under the Dutra Subcontracts, filed a complaint in the United States District Court for the District of New Jersey captioned "The United States of America For The Use And Benefit Of The Dutra Group, The Dutra Group v. ECDC Environmental, L.C., SK Services (East), L.C., and American Home Assurance Company." In the Dutra Litigation, Dutra seeks to recover approximately $3.7 million from ECDC Environmental and/or SK Services for damages Dutra allegedly incurred in connection with its work pursuant to the Dutra Subcontracts. On February 20, 2001, ECDC Environmental filed an Answer, Counterclaims, Cross-Claims and Third-Party Complaint asserting various cross-claims and third-party claims against, among others, the SK Entities. Shortly thereafter, on March 23, 2001, ECDC Environmental sought relief from the automatic stay to pursue its third-party claims against the SK Entities. As a result of the Lift Stay Motion, ECDC Environmental and the Debtors entered into an agreement dated April 30, 2001, under which the SK Entities agreed to defend and hold ECDC Environmental harmless for any claims arising out of the Dutra Litigation. Pursuant to the ECDC Settlement Agreement, any amounts owing to or for the account of ECDC Environmental as a consequence of the Dutra Litigation would be treated as administrative expense claims in the SK Entities' Chapter 11 cases. The Court approved the settlement by an order dated May 16, 2001. Resolution of American Home's Claims As a consequence of the Dutra Litigation, American Home incurred and paid certain costs, including attorneys' fees, in conjunction with its defense of the Dutra Litigation subsequent to the Petition Date, amounting to $150,000. American Home will continue to incur costs in connection with the Dutra Litigation. American Home has asserted cross-claims against ECDC Environmental for indemnification, including for attorneys' fees, in the Dutra Litigation pursuant to agreement and common law. ECDC Environmental previously disputed its liability to American Home, both under the contractual and common law theories. ECDC Environmental has since decided not contest its potential liability to American Home. The settlement is premised on ECDC Environmental's conclusion of the liabilities and the risks it faces in continuing to litigate with American Home. As part of the settlement, ECDC Environmental will no longer contest its liability to American Home and has agreed to indemnify American Home with regard to any liability under the Dutra Litigation. The Debtors believe that any liability of ECDC Environmental to American Home will ultimately be an administrative expense liability of the SK Entities by virtue of the ECDC Settlement Agreement, whereby the SK Entities previously agreed to treat certain liabilities of ECDC Environmental in connection with the Dutra Litigation as administrative expenses in the Chapter 11 cases. The Settlement Agreement By this motion, the Safety-Kleen Debtors ask Judge Walsh to approve the settlement and release between Safety-Kleen Corporation and SK Services (East) LC, Reorganized Debtors, on the one hand, and the American International Group of Companies, comprised of AIG Insurance Company, American Fidelity Company, Granite State Insurance Company, Illinois National Insurance Company, The Insurance Company of the State of Pennsylvania, National Union Fire Insurance Company of Pittsburgh, Pa., New Hampshire Insurance Company, and American Home Assurance Company, and ECDC Environmental LC, on the other hand. The salient terms and conditions of the Settlement Agreement are: (a) Indemnification. ECDC Environmental will assume the defense of American Home in the Dutra Litigation and will hold American Home harmless and indemnify American Home from any award or judgment entered in favor of the Dutra; provided, however, that American Home will continue to actively and progressively participate in the Dutra Litigation with regard to the pending motions of American Home for summary judgment in that suit; (b) Administrative Expense Claim. American Home agrees that the sole liability of ECDC Environmental and the SK Entities for past or future costs incurred by American Home with regard to the Dutra Litigation will be $50,000. American Home releases any claim for counsel fees or defense costs beyond $50,000 which it may have against ECDC Environmental or the SK Entities. The Administrative Claim will be paid by the SK Entities in accordance with the provisions of the Plan. ECDC Environmental and the SK Entities are jointly and severally liable for the Administrative Claim; (c) Release. Other than as provided in the Settlement Agreement, American Home agrees to release any and all claims of any kind or character relating to the Dredging Projects, the Bonds, the indemnity obligations or the Dutra Litigation that it has or may have against ECDC Environmental or the SK Entities. The release provided in the Settlement Agreement will not effect the Settlement Agreement and Release between the same parties dated April 3, 2003, pertaining to the claims of the Hudson County Improvement Authority and New Jersey Meadowlands Commission; and (d) Withdrawal of Bankruptcy Claims. American Home will be deemed to have withdrawn all of its Proofs of Claim filed in these Chapter 11 cases. Michael W. Yurkewicz, Esq., at Skadden Arps, in Wilmington, Delaware, emphasizes that the terms and conditions of the Settlement Agreement were reached only after arm's-length negotiations between the Parties. The settlement merely confirms the understanding among the parties that the SK Entities are ultimately responsible to Dutra for any judgment in connection with the Dutra Litigation -- if any liability is found to exist -- without the need for future litigation to apportion liability. Furthermore, the Settlement Agreement resolves actual and potential disputes and controversies that, if permitted to continue, could involve time-consuming and expensive legal proceedings for the Debtors as a result of having to satisfy indemnification claims of ECDC Environmental. Any liability or costs incurred by ECDC Environmental in connection with the Dutra Litigation already will be an administrative liability of the SK Entities by virtue of the ECDC Settlement Agreement. Therefore, it is in the Debtors' best interests for ECDC Environmental and American Home to resolve their litigation expeditiously as the costs incurred in resolving such a dispute ultimately become administrative costs of the SK Entities.(Safety-Kleen Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392- 0900) SCHUFF INT'L: S&P Affirms B- Corp. Credit Rating over New Loan -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Schuff International Inc., including its 'B-' corporate credit rating, and removed them from CreditWatch, where they had been placed on July 31, 2003. The outlook is negative. At June 30, 2003, Phoenix, Arizona-based Schuff had approximately $90 million in debt outstanding. The rating affirmation follows the construction company's recent 8-k filing announcing that it has obtained a new, three-year bank credit facility. "The bank facility's $15 million borrowing capacity, along with $9 million of unrestricted cash (at June 30, 2003), should provide Schuff with enough liquidity to meet its near-term needs," said Standard & Poor's credit analyst Joel Levington. Near-term liquidity concerns have been somewhat tempered by the recent bank agreement, should business conditions in the commercial and industrial construction markets that Schuff competes in remain depressed for a protracted period, or should surety requirements become more restrictive, the firm's ability to meet its financial obligations in 2004 could be impaired further. SK GLOBAL AMERICA: Signs-Up Bankruptcy Services as Claims Agent --------------------------------------------------------------- SK Global America Inc. sought and obtained the Court's authority to employ Bankruptcy Services, LLC, as the Court's noticing agent and the Debtor's claims and balloting agent pursuant to the terms and conditions of BSI's Standard Bankruptcy Services Agreement. At the Debtor's or the Clerk's Office's request, BSI will: (a) relieve the clerk's office of all noticing under any applicable bankruptcy rule and processing of claims; (b) at any time, upon request, satisfy the Court that BSI has the capability to efficiently and effectively notice, docket and maintain the proofs of claim; (c) notify all creditors of the filing of the bankruptcy petition and of the setting of the first meeting of creditors, pursuant to 11 U.S.C. Section 341(a), under the proper provision of the Bankruptcy Code; (d) provide notice of a last date for the filing of a proof of claim and a form for filing a proof of claim to each creditor notified of the filing; (e) maintain an up-to-date copy of the Debtor's schedules which lists all creditors and amounts owed; (f) provide the creditor with the scheduled amount and classification of its claim; (g) file with the clerk a certificate of service within 10 days, which includes a copy of the notice, a list of persons to whom it was mailed, and the date mailed; (h) microfilm, or by some similar electronic means, reproduce the first page of any proof of claim; (i) after reproducing, remove all proofs of claim from the office of the clerk to the outside claims agent; (j) maintain all proofs of claim filed; (k) maintain an official claims register by docketing all proofs of claim on a claims register; (l) maintain all original proofs of claim in correct claim number order, in an environmentally secure area and protect the integrity of these original documents from theft and alteration; (m) transmit to the clerk an official copy of the claims register on a weekly basis, unless authorized by the clerk on a different schedule; (n) maintain an up-to-date official mailing list for all entities, which will be available upon request of a party- in-interest or the clerk; (o) be open to the public for examination of the original proofs of claim, without charge, during regular business hours; (p) maintain a telephone staff to handle the inquiries as related to procedures in filing proofs of claim; (q) make any necessary changes to the claims register pursuant to Court order; (r) make all original documents available to the clerk on an expedited and immediate basis; (s) provide notices to any entities, not limited to creditors, that the Debtor or the Court deem necessary for an orderly administration of the bankruptcy case; and (t) at the close of the case, box and ship all original documents in proper format, as provided by the clerk's office, to the Federal Archives and Record Administration located at Central Plains Region, 200 Space Center Drive, Lee's Summit, MO 64064. SK Global will pay all of BSI's customary fees and expenses: As Claims Agent Set-Up Fee WAIVED Claims Docketing: Document Handling WAIVED Document Storage WIAVED Input Records: Tape/Diskette $0.10/each Other Data Formats $125/hour Input Filed Claims $0.95/claim + hourly rates Database Maintenance and Claims Tracking $250 + $0.10/creditor/month As Balloting Agent Per check or Form 1099 $1.50/each Per record $0.25/each Special reports $0.10/page Database Maintenance WAIVED For Mailing/Noticing Services First Page Print & Mail $0.20/page Additional Pages $0.10/page Single Page (Duplex) $0.24/each Change of Address input $0.46/each E-mail service Priced by volume Reports $0.10/page Photocopies $0.15/page Labels $0.05/each Fax $0.50/page Document Imaging $0.40/image Fees for Professional Kathy Gerber $210 per hour Senior Consultants $185 per hour Programmer $130 - $160 per hour Associate $135 per hour Data Entry/Clerical $40 - $60 per hour Schedule Preparation $225 per hour (SK Global Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) SNYDER'S DRUG STORES: Files for Chapter 11 Protection in Ohio ------------------------------------------------------------- Snyder's Drug Stores, Inc., will sell or close its Drug Emporium subsidiary and recapitalize its Snyder's Drug Stores chain as a strong and going concern. The decisions are part of a voluntary reorganization proceeding filed Friday before Judge William Bodah in US Bankruptcy Court for the Northern District of Ohio in Youngstown, under Chapter 11 of the U.S. Bankruptcy Code. The filing has the full support of Snyder's major creditors and the company's largest supplier. "The actions we are taking at Drug Emporium are difficult, but necessary," said Gordon Barker, Snyder's Drug Stores President. "Despite significant capital infusions and the best efforts of our employees, Drug Emporium's performance has failed to improve since we acquired it out of bankruptcy in September 2001." "[Fri]day's filing recognizes that unfortunate fact and sets a decisive course of action to exit the Drug Emporium business and dedicate our full resources to the continued growth of the Snyder's Drug Stores chain. Snyder's expects to emerge from the restructuring process as a stronger and better- capitalized company committed to growing our enterprise and building on our reputation for customer service with personal attention and a focus on pharmacist consultation." Snyder's has arranged for financing from its principal lender to help Snyder's fulfill obligations associated with operating its business in the normal course, including payment to suppliers and other business partners for goods and services provided after today's filing. Snyder's Drug Stores will remain fully staffed, stocked and open during the restructuring process. Employees will continue to receive their current wages and benefits, and suppliers will be paid in full for all post-petition goods and services. For customers it will be business as usual at independent Snyder's retailers, which are not involved in the reorganization, and at corporately-owned Snyder's Drug Stores. Snyder's said its principal supplier has agreed to continue to supply the company through the restructuring process, and that the two parties are in the process of concluding long-term supply agreements to produce benefits for Snyder's and its network of independent retailers. "We are committed to raising the level of support we provide to our independent retailers, and ensuring that we retain constructive relationships with our suppliers going forward," said Mr. Barker. At Drug Emporium, employees and customers will be advised about store sales and closings as they occur. Until such time, stores will continue to operate, employees will continue to receive their wages and benefits, and prescriptions will continue to be filled. "We are disappointed that we were unable to bring Drug Emporium back to financial health, but proud of the employment and service we have brought to Drug Emporium's communities over the past two years," said Mr. Barker. The 77 corporately owned and operated Drug Emporium stores affected by the reorganization plan are located in Pennsylvania, New Jersey, New York, Michigan, Ohio, Missouri, Oklahoma, Kentucky and Wisconsin. Not affected are several independently owned and operated Drug Emporium stores in Texas and West Virginia. Founded in 1928, Snyder's Drug Stores has 78 corporate and 53 independent retail outlets and enjoys a strong brand and community awareness throughout the upper Midwest. Snyder's is the nation's number three pharmacy chain for speed of service, customer satisfaction and information. The ranking, in the October 2003 issue of Consumer Reports magazine, was based on responses from 32,000 pharmacy customers of 31 national and regional retail chains. SNYDER'S DRUG STORES: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Snyders Drug Stores, Inc. 14525 Highway 7 Minnetonka, Minnesota 55345 Bankruptcy Case No.: 03-44577 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- DE Of Northeastern Ohio, Inc. 03-44567 Drug Emporium, Inc. 03-44568 DE Holding Company, Inc. 03-44569 Houston Venture, Inc. 03-44570 Emporium Venture, Inc. 03-44571 RJR Drug Distributors, Inc. 03-44572 Drug Emporium Of Michigan, Inc. 03-44573 DE Michigan Management Co., Inc. 03-44574 Drug Emporium Of Maryland, Inc. 03-44575 Drug Emporium Express, Inc. 03-44576 Western Drug 03-44578 Type of Business: Drugstore chain Chapter 11 Petition Date: September 11, 2003 Court: Northern District of Ohio (Youngstown) Judge: William T. Bodoh Debtors' Counsel: Jordan A. Kroop, Esq. Squire Sanders & Dempsey LLP 40 North Central #2700 Phoenix, AZ 85004 Tel: 602-528-4000 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million A. Snyders Drug and Western Drug's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Harvard Drug Group $2,793,112 PO Boc 32532 Detroit, MI 48232-0532 United Hardware Distribut $1,206,264 5005 Nathan Lane Minneapolis, MN 55442 Heil Brice Retail ADV $1,181,016 4 Corporate Plaza Newport Beach, CA 92660 Forget Me Not ENA Cards $713,021 PO Box 640782 Pittsburgh, BA 15264-0782 Rita-Ann Distributors $548,608 8410B kelso Drive Baltimore, MD 21221 Tanning Research Labs $450,642 Kentucky Division PO Box 116342 Atlanta, GA 30368-6342 United Hardware IR Stores $434,181 5005 Nathan Lane Minneapolis, MN 55442 Omega Construction Inc. $431,557 5421 Feltl Road Suite #160 Eden Prairie, MN 55347 Redtagbiz Inc. $351,120 4400 Baker Road Minnetonka, MN 55343 Fritz Company $343,845 1912 Hastings Avenue Newport, MN 55055 Fujicolor Processing Inc. $338,880 Dept. CH 17066 Palatine, IL 60055-7066 Gannett Offset $324,561 8775 Zachary Lane North Maple Grove, MN 55369-4526 Mead Corporation $358,208 2028 Collections Center Drive Chicago, IL 60693 Minnesota Dept. of Revenue $261,741 Mail Station 6330 St. Paul, MN 55146-6330 Quality King Dist $220,219 Division Sales Inc. $218,790 Clorox Sales Company $192,201 Forget Me Not $194,589 Quickie Manufacturing Corporation $187,723 Steel City Products $200,088 B. Drug Emporium and its debtor-subsidiaries' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Harvard Drug group $2,950,131 PO Box 32532 Detroit, MI 48232-0532 Forget Me Not EDS Cards $1,793,391 PO Box 640782 Pittsburgh, PA 15264-0782 Rita-Ann Distributors $1,295,030 84108 Kelso Drive Baltimore, MD 21221 NYS Promptax - Sales Tax $708,248 Church Street Station PO Box 1506 New York, NY 10008-1506 Damian Christopher $562,524 PO Box 271430 Tampa, FL 33688-1430 Straders Garden Center $463,616 2623 Londpon Groveport Rd. Grove City. PH 43123 Great Midwest News LLC $342,026 The News Group 2571 Saradan Drive Jackson, MI 49202 Direct Fragrances Inc. $334,407 PO Box 18525 Newark, NJ 07191-8525 Accessory Network Group $150,834 Allen Bros Wholesale Dist. $110,796 Dart Distributing LLC $187,733 33116 Treasury Center Chicago, IL 60694 Forrester & VOS Company $200,616 L&W Plants Inc. $113,976 Law The Florist Inc. $113,207 M. Demaio Development $101,368 Michigan Dept. of Treasury $117,066 Ohio Dept. of Taxation $139,490 PA Department of Taxation $117,630 TY Inc. $106,738 US Postal Service/SOC $187,804 SOLECTRON: Will Publish Q4 & Fiscal Year 2003 Results on Sept 25 ---------------------------------------------------------------- Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and supply-chain management services, will announce its fourth quarter and fiscal year 2003 earnings shortly after 1:01 p.m. PT/4:01 p.m. ET on Sept. 25, after the market closes. The news release and market-specific information about the company's earnings will be posted by 1:15 p.m. PT/4:15 p.m. ET on the company's Web site at http://www.solectron.com/investor You are invited to listen to the company's regularly scheduled conference call at 2 p.m. PT/5 p.m. ET, live on the Internet. What: Solectron Corporation Q4 and Fiscal Year 2003 Earnings Webcast When: Thursday, Sept. 25 - 2 p.m. PT/5 p.m. ET Web address: http://www.solectron.com/investor How: Log on via the Web address above to access the Webcast. You may register for the call on this Web site anytime prior to Thursday, Sept. 25 - 2 p.m. PT/5 p.m. ET. Playback: If you are unable to participate during the live Webcast, the call will be archived at http://www.solectron.com/investor A taped replay will also be available Sept. 25, two hours after the conclusion of the call, through Oct. 2. To access the replay, call (800) 642-1687 from within the United States, or (706) 645-9291 from outside the United States, and specify password 2495671. Solectron (Fitch, BB- Corporate Credit Rating, Negative) -- http://www.solectron.com-- provides a full range of global manufacturing and supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, Calif., and had sales of $12.3 billion in fiscal 2002. SOUTH STREET: S&P Takes Rating Actions on Various Note Classes -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-3L, A-3, A-4L, A-4A, and A-4C notes issued by South Street CBO 2000-1 Ltd., a high-yield arbitrage CBO transaction managed by Colonial Management Inc., and removed them from CreditWatch with negative implications. Concurrently, the rating on the class A-2L is affirmed and removed from CreditWatch. At the same time, the rating on the class A-1L notes is affirmed. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the notes. These factors include par erosion of the collateral pool securing the rated notes, and a downward migration in the credit quality of the assets within the pool. The affirmed rating reflects the sufficient level of credit enhancement currently available to support the class A-1L and class A-2L notes. As a result of asset defaults and credit risk sales at distressed prices, the par value ratio for the transaction has deteriorated since the class A-3L, A-3, A-4L, A-4A, A-4C, and B-2 notes were lowered Jan. 31, 2003. The class A and class B overcollateralization ratio tests remain out of compliance and the senior class A overcollateralization ratio has migrated down to its required minimum. As of the Aug. 18, 2003 monthly trustee report, the senior class A overcollateralization ratio was 120.05% (the minimum required is 120%), versus a ratio of 121.65% at the January 2003 rating action. The class A overcollateralization ratio was 100.63% (the minimum required is 110.00%), versus a ratio of 102.26% in January 2003. The class B overcollateralization ratio was 91.13% (the minimum required is 103.00%), versus a ratio of 93.13% in January 2003. The credit quality of the assets in the collateral pool has also deteriorated since the last rating action. Currently, $18.72 million (or approximately 7% of the collateral pool) is defaulted. In addition, $11.50 million (or approximately 5%) of the performing assets in the collateral pool come from obligors with Standard & Poor's ratings currently in the 'CCC' range. In addition, Standard & Poor's notes that South Street CBO 2000-1 Ltd. triggered a technical event of default May 19, 2003, as per section 5.1(e) of the indenture, by failing to maintain the class B overcollateralization ratio at an amount at least equal to 90% of the class B overcollateralization percentage. Standard & Poor's has reviewed current cash flow runs generated for South Street CBO 2000-1 Ltd. to determine the level of future defaults the transaction can withstand under various stressed default timing scenarios while still paying all of the rated interest and principal due on the class A-3L, A-3, A-4L, A-4A, and A-4C notes. After comparing the results of these cash flow runs with the projected default performance of the current collateral pool, Standard & Poor's has determined that the ratings previously assigned to the class A-3L, A-3, A-4L, A-4A, and A-4C notes were no longer consistent with the credit enhancement currently available, resulting in the lowered ratings. Standard & Poor's will continue to monitor the performance of the transaction to ensure the ratings assigned to all the notes remains consistent with the credit enhancement available. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE South Street CBO 2000-1 Ltd. Rating Balance ($ mil.) Class To From Orig. Current A-3L BBB- BBB+/Watch Neg 15.000 15.000 A-3 BBB- BBB+/Watch Neg 30.000 30.000 A-4L CCC- CCC/Watch Neg 20.000 20.000 A-4A CCC- CCC/Watch Neg 8.000 8.000 A-4C CCC- CCC/Watch Neg 10.000 10.000 RATING AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE South Street CBO 2000-1 Ltd. Rating Balance ($ mil.) Class To From Orig. Current A-2L AAA AAA/Watch Neg 95.000 95.000 RATING AFFIRMED South Street CBO 2000-1 Ltd. Balance ($ mil.) Class Rating Orig. Current A-1L AAA 76.000 61.700 OTHER OUTSTANDING RATING South Street CBO 2000-1 Ltd. Balance ($ mil.) Class Rating Orig. Current B-2 CC 4.915 4.770 SPECIAL METALS: Steelworkers Ratify New 5-Year Labor Agreement -------------------------------------------------------------- Special Metals Corporation (SMCXQ.PK) announced that the United Steelworkers of America Local No. 40 membership voted in favor of a new five-year labor agreement for the Company's largest manufacturing facility located in Huntington, West Virginia. "I want to thank the men and women of Special Metals for supporting the Company's efforts to emerge from bankruptcy, particularly when this involves difficult but necessary cost reduction measures that will result in personal sacrifice," said Dennis L. Wanlass, Special Metals' Chief Operating and Restructuring Officer. "In addition to our employees, the Company appreciates the continued support of our customers, suppliers, and lenders, as well as other parties that have been impacted by Special Metals' reorganization process. We remain committed to quickly moving through the final stages of the reorganization and meeting our targeted goal of emerging from Chapter 11 in mid- October 2003 as a viable, competitive entity." The ratification of the new collective bargaining agreement for the Huntington facility is one of the final significant steps the Company needed to achieve to move forward with its plan of reorganization. Previously, five of the six collective bargaining agreements for the Company's U.S.-based manufacturing facilities had been approved at various times during the month of August. In light of the ratification vote, it will not be necessary for the Company to invoke its right to reject the existing contract as authorized by the Bankruptcy Court's ruling in the Company's 1113 motion. Special Metals is the world's largest and most-diversified producer of high-performance nickel-based alloys. Its specialty metals are used in some of the world's most technically demanding industries and applications, including: aerospace, power generation, chemical processing, and oil exploration. Through its 10 U.S. and European production facilities and a global distribution network, Special Metals supplies over 5,000 customers and every major world market for high-performance nickel-based alloys. SYSTECH RETAIL: Emerges from Creditor Protection in Canada ---------------------------------------------------------- Systech Retail Systems Corp., a leading provider of technology solutions for the retail industry, announced that the Ontario Superior Court of Justice sanctioned and approved the Company's amended plan of compromise and arrangement under the Companies' Creditors Arrangement Act on September 9, 2003. The Company's consolidated amended plan of reorganization, as modified, was previously confirmed on August 28, 2003 by the United States Bankruptcy Court for the Eastern District of North Carolina - Raleigh Division. In accordance with the terms of the Plan, the Company has also concluded its exit financing arrangements. Proceeds from the exit financing totaling CDN$5.0 million are now available to the Company providing it with additional resources to compete in the marketplace. In connection with the exit financing, 69,630,123 warrants of Systech were issued to the lender. All conditions precedent to the implementation of the Plan have now been satisfied. The Plan is effective today and the Company and its subsidiaries' have emerged successfully from Chapter 11 and CCAA protection. "In just under eight months, Systech has successfully restructured the Company's infrastructure and financial affairs. We are appreciative of the support of our clients, employees and all other stakeholders throughout this period," said Randy W. Harris, President and Chief Operating Officer of the Company. As required under the Plan, the Company will be issuing an additional 1,908,329,606 common shares and 136,148,285 warrants to the creditors and shareholders of the Company entitled thereto in accordance with the terms and conditions of the Plan. Certificates representing the common shares and warrants will be mailed to such creditors and shareholders within the next few weeks. The Company expects that the warrants of Systech will begin trading on the Toronto Stock Exchange under the symbol "SYS.WT" next week. Systech is the retail industry's premier independent developer and integrator of retail technology, including software, systems and services to supermarket, general retail and hospitality chains throughout North America. Its open architecture solutions enable e-commerce and other powerful new technology to be applied in the retail environment. The Company's significant cross-platform capability and considerable technical service force allow it to address any in-store systems requirements regardless of project size or scope. The common shares and warrants of Systech Retail Systems Corp. are traded on the Toronto Stock Exchange under the symbols "SYS" and "SYS.WT", respectively. TECO ENERGY: Agrees to Sell 11 Million Shares of Common Stock ------------------------------------------------------------- TECO Energy (NYSE: TE) has entered into an agreement for the sale of 11 million shares of its common stock directly to funds managed by Franklin Advisers, Inc. of San Mateo, California at a price of $11.76 per share, based on a discount from the September 9, 2003 closing price. Net proceeds from the sale are expected to be about $129 million and will be used to repay short-term indebtedness and for general corporate purposes. The offering was made to the purchasers by means of a prospectus, a copy of which may be obtained from the Company. An electronic copy of the prospectus will be available from the Securities and Exchange Commission's web site at http://www.sec.gov TECO Energy -- http://www.tecoenergy.com-- is a diversified, energy-related holding company headquartered in Tampa. Its principal businesses are Tampa Electric, Peoples Gas, TECO Power Services, TECO Transport, TECO Coal and TECO Solutions. * * * As reported in Troubled Company Reporter's April 29, 2003 edition, Fitch Ratings downgraded the outstanding ratings of TECO Energy, Inc. and Tampa Electric Company as shown below. The Rating Outlook for both issuers has been revised to Negative from Stable. TECO Energy, Inc.: -- Senior unsecured debt lowered to 'BB+' from 'BBB'; -- Preferred stock lowered to 'BB' from 'BBB-'. TECO Finance (guaranteed by TECO) -- Medium term notes lowered to 'BB+' from 'BBB'; -- Commercial paper withdrawn. Tampa Electric Company: -- First mortgage bonds lowered to 'A-' from 'A'; -- Senior unsecured debt lowered to 'BBB+' from 'A-'; -- Unsecured pollution control revenue bonds (Hillsborough County, Florida IDA for Tampa Electric) lowered to 'BBB+' from 'A-'; -- Commercial paper unchanged at 'F2'; -- Variable rate mode unsecured pollution control revenue bonds (Hillsborough County, Florida IDA for Tampa Electric) unchanged at 'F2'. The downgrade of TECO Energy's ratings reflect the higher-than- expected debt leverage on a cash flow basis (gross debt measured against earnings before interest taxes depreciation and amortization), and the negative impact on earnings and cash flow measures from increased interest expense, weaker projected earnings and higher-than-anticipated capital expenditures. TELESYSTEM INT'L: Files Secondary Offering Prelim. Prospectus ------------------------------------------------------------- Telesystem International Wireless Inc. announces that it has filed a preliminary short form prospectus with the securities regulatory authorities in Canada to qualify the sale of 12,960,128 Common Shares of TIW owned by Capital Communications CDPQ Inc. ("CDPQ"). The Common Shares are being sold by CDPQ on a bought deal basis pursuant to an underwriting agreement entered into among BMO Nesbitt Burns Inc., TIW and CDPQ, at a price of CDN$ 6.40 per share, representing aggregate gross proceeds to CDPQ of CDN$ 82,944,819. TIW will not receive any proceeds from the sale of the Common Shares. The Common Shares may not be sold nor may offers to buy be accepted prior to the time the prospectus becomes final. The closing is expected to take place on or about September 25, 2003. The Common Shares offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer solicitation or sale would be unlawful. TIW is a leading cellular operator in Central and Eastern Europe with almost 4.2 million managed subscribers. TIW is the market leader in Romania through MobiFon S.A. and is active in the Czech Republic through Cesky Mobil a.s. The Company's shares are listed on the Toronto Stock Exchange ("TIW") and NASDAQ ("TIWI"). * * * As previously reported, Standard & Poor's Ratings Services raised its long-term corporate credit rating on Montreal, Quebec-based Telesystem International Wireless Inc. to 'B-' from 'CCC+'. The rating has been removed from CreditWatch, where it was placed June 18, 2003. The outlook is stable. TESORO PETROLEUM: Will Repay $125 Million of Term Loan ------------------------------------------------------ Tesoro Petroleum Corporation (NYSE:TSO) has given notification to the administration agent that it is repaying the term loan portion of its credit facility. The amount of debt to be repaid is approximately $125 million and will be completed within three business days. "As a result of this debt repayment, we have substantially met our $500 million debt reduction goal that was established after the acquisition of the Golden Eagle refinery," said Bruce A. Smith, Chairman, President and CEO of Tesoro. "Continued debt reduction remains our top financial priority." Tesoro Petroleum Corporation (S&P, BB- Corporate Credit Rating, Stable), a Fortune 500 Company, is an independent refiner and marketer of petroleum products and provider of marine logistics services. Tesoro operates six refineries in the western United States with a combined capacity of nearly 560,000 barrels per day. Tesoro's retail marketing system includes approximately 575 branded retail stations, of which over 200 are company operated under the Tesoro(R) and Mirastar(R) brands. TRINITY IND.: Declares Quarterly Dividend Payable on October 31 --------------------------------------------------------------- Trinity Industries, Inc. (NYSE: TRN) declared a quarterly dividend of 6 cents a share on its $1 par value common stock. The quarterly cash dividend, Trinity's 158th consecutive, is payable October 31, 2003 to stockholders of record October 15, 2003. Trinity Industries, Inc. (S&P/BB/Stable/), with headquarters in Dallas, Texas, is one of the nation's leading diversified industrial companies. Trinity reports five principal business segments: the Trinity Rail Group, Trinity Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group and the Industrial Products Group. Trinity's Web site may be accessed at http://www.trin.net TYCO INT'L: Names Fruzsina Harsanyi as VP for Public Affairs ------------------------------------------------------------ Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced the appointment of Fruzsina M. Harsanyi as Vice President, Public Affairs. Dr. Harsanyi will report to Tim Flanigan, General Counsel, Corporate and International Law, from Tyco's offices in Washington D.C. She joins Tyco from ABB Inc., where she served as Senior Vice President, Public Affairs and Corporate Communications. Working closely with senior management and with Tyco divisions around the world, Dr. Harsanyi will hold primary responsibility for managing the Company's government affairs and advocacy initiatives at the state, federal and international levels. She will also serve as a primary representative for Tyco on public policy issues affecting the Company's businesses and interests worldwide. Tyco Chairman and Chief Executive Officer Ed Breen said: "Fruzsina Harsanyi will play a crucial role in managing our governmental relationships from the international to the local level, and I am happy to welcome such a well-regarded and highly-experienced leader in government affairs to the Tyco team." Mr. Flanigan, General Counsel, Corporate and International Law, said: "The appointment of Fruzsina Harsanyi is a substantial step forward in our efforts to build a strong leadership team, reinvigorate Tyco's reputation and establish a substantive and respected presence in the Washington community. I am delighted she is joining Tyco and know she will add an important dimension to our legislative and regulatory efforts." Dr. Harsanyi said: "Representing Tyco's new leadership team and its best-in-class, global operations at the government level is an exciting opportunity, as is helping re-introduce the company to the legislative and regulatory communities. I look forward to working with my new colleagues on this very promising chapter in the company's history." While serving at ABB (Asea Brown Boveri) Inc., Dr. Harsanyi managed all aspects of U.S. government relations and corporate communications for the $23 billion global technology company, which is headquartered in Switzerland with 133,000 employees and operations in 100 countries. Having joined ABB in 1991, Harsanyi was responsible for advocacy on key public policy issues and complex, multi-million dollar international and commercial projects. A member of ABB's U.S. Management Committee and global executive team, she also played a key role in establishing and strengthening the ABB brand in North America. Prior to joining ABB, Dr. Harsanyi was Vice President for Government Affairs for Combustion Engineering, where she established and built the company's international government affairs function and was a key player in managing the transition following ABB's acquisition of the company. She has also been Director of Government Relations at The Continental Group and served as a Special Assistant in the Office of Legislation and Intergovernmental Relations at the Department of Housing and Urban Development. She holds a Ph.D. and M.A. in political science and a B.A in international relations from American University. Dr. Harsanyi currently serves on the Board of Directors of the National Foreign Trade Council, the Public Affairs Council, the Executive Council on Diplomacy, the Bryce Harlow Foundation, and Meridian International. She is also a member of the Women's Forum, the Business-Government Relations Council, the Georgetown University Landegger Program on International Diplomacy and the Board of Trustees of Arena Stage. Additionally, she is presently a faculty member of the Corporate Public Affairs Institute in Melbourne, Australia. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. * * * As previously reported, Fitch Ratings affirmed its ratings on the senior unsecured debt and commercial paper of Tyco International Ltd., as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A., at 'BB'/'B', respectively. The Rating Outlook has been changed to Stable from Negative. The ratings affect approximately $21 billion of debt securities. The change to Outlook Stable reflects Tyco's progress with respect to reestablishing access to capital, addressing its liability structure, implementing steps to improve operating performance, and demonstrating cash generation despite a difficult economic environment in a number of key end-markets. The impact of fundamental favorable changes in Tyco's financial policies and profile since late fiscal 2002 is constrained by economic weakness in its markets, potential legal liabilities related to shareholder lawsuits and SEC investigations, and the possibility, although reduced, of further accounting charges and adjustments. The ratings could improve over time as Tyco demonstrates more consistent results and that it has put behind it the accounting concerns that have obscured the transparency of its financial reporting in the past. UNIFAB: Names Larry Verzwyvelt President, Universal Fabricators --------------------------------------------------------------- UNIFAB International, Inc. (Nasdaq: UFAB) announced the appointment of Larry Verzwyvelt as president of Universal Fabricators, LLC, the Company's largest operating subsidiary. Mr. Verzwyvelt will report to the Company's principal executive officer, William A. Hines. Universal Fabricators' previous president, William A. Downey, will continue in service to the Company in the role of executive vice president and as a director and will concentrate his efforts on special projects, business development and marketing for the Company's various operating subsidiaries. "The experience Larry has obtained in the last 25 years in the fabrication industry makes him uniquely qualified to lead our Company in meeting the challenges we currently face," said William A. Hines, Chairman and principal executive officer of Unifab International, Inc. "Larry is well known in the industry and will build strength and confidence in our business operations. He is excellent with business systems, is knowledgeable in all aspects of our business and relates well to the workforce. He was in charge of one of the largest fabrication operations on the Gulf Coast and is perfectly suited to continue the development of Universal Fabricators in the marketplace. I look forward to working with Larry and welcome him to our team. Bill Downey has done an excellent job at Universal Fabricators stabilizing the business, improving the efficiency of the business processes and reestablishing Unifab's name in the marketplace. I am happy to say that he will continue to assist the Company in its marketing and strategic business development efforts as well as support special projects in the future." Prior to joining Universal Fabricators, Mr. Verzwyvelt was the Operations Manager, Fabrication - North America, for J. Ray McDermott, Inc., a position he held since 1999. Before joining J. Ray McDermott in 1995, Mr. Verzwyvelt was the Fabrication Division Manager for OPI International, Inc., where he was responsible for all domestic and international fabrication operations. He also held various operational and project management positions with OPI, Gulf Marine Fabricators, Inc. and Service Marine Group, Inc. UNIFAB International, Inc. is a custom fabricator of topside facilities, equipment modules and other structures used in the development and production of oil and gas reserves. In addition, the Company designs and manufactures specialized process systems, refurbishes and retrofits existing jackets and decks and provides design, repair, refurbishment and conversion services for oil and gas drilling rigs. * * * As previously reported in the Troubled Company Reporter, revenue levels for the Company's structural fabrication, process system design and fabrication and international project management and design services are approximately forty percent of those in the same period last year. During the first nine months of the year, the Company has experienced reduced opportunities to bid on projects and was eliminated from bidding on various projects as a result of the substantial deterioration of the Company's financial condition and results of operations experienced during the 2001 fiscal year. Further, the Company was unable to post sufficient collateral to secure performance bonds and as a result was unable to qualify to bid on various contracts. At September 30, 2002, backlog was approximately $4.2 million. On August 13, 2002 the Company completed a debt restructuring and recapitalization transaction with Midland substantially improving the financial position, working capital and liquidity of the Company. Since August 13, 2002, there has been a substantial increase in proposal activity in the Company's main fabrication and process equipment markets. In addition, the Company's capacity to provide performance bonds on projects has improved significantly. As a result, backlog at December 17, 2002 was approximately $24.2 million. UNITED AIRLINES: Suntrust Seeks Stay Lift to Access Trust Fund -------------------------------------------------------------- On February 1, 2001, the City of Chicago issued $102,570,000 O'Hare International Airport Special Facility Revenue Bonds Series 2001A-1. The Bonds were issued to pay a portion of the construction of certain airport improvements and related facilities at O'Hare International Airport. On the issuance date, Chicago deposited the proceeds in accounts established by the Trustee, including a Capitalized Interest Fund and a Construction Fund. The Construction Fund is on deposit at SunTrust Bank. In the Project Certificate, United Airlines Inc. certified that the Projects would be owned by Chicago and leased to United. SunTrust Bank, as successor indenture trustee, asks Judge Wedoff for permission to disburse funds held in trust pursuant to a Trust Agreement between the City of Chicago and Bank One Trust Company. David L. Dubrow, Esq., at Arent, Fox, Kintner, Plotkin & Kahn, notes that a previous Court Order authorized SunTrust to disburse monies in the Capitalized Interest Fund. However, the amount of money in the Fund was "significantly less" than the amount United owed for its May 1, 2003 interest payment. Mr. Dubrow explains that upon a bankruptcy filing, the Trustee is entitled to declare the entire outstanding principal amount of the Series 2001A-1 Bonds due and payable. At the Petition Date, the entire $102,570,000 principal amount was outstanding and the balance in the Construction Fund was $29,796,401. On May 20, 2003, United sent a letter to the Trustee seeking to withdraw $5,767,533 from the Construction Fund. The Trustee declined to honor this request. (United Airlines Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) VALEO: Class A-2 Rating Downgraded to Speculative Grade Level ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class A-2 notes issued by Valeo Investment Grade CDO II Ltd. to 'BB+' from 'BBB-'. Concurrently, the rating is removed from CreditWatch, where it was placed June 30, 2003. At the same time, the 'AAA' rating on the class A-1 notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The lowered rating and CreditWatch removal reflects factors that have negatively affected the credit enhancement available to support the notes since the class A-2 notes were downgraded in December 2002. These factors include continuing par erosion of the collateral pool securing the rated notes and a negative migration in the credit quality of the assets within the collateral pool. Valeo Investment Grade CDO II has experienced defaults totaling $25.68 million since the December 2002 rating action, and is currently carrying $18.15 million of defaulted assets within its collateral pool. As a result of these asset defaults, the overcollateralization ratios for the transaction have suffered since the last rating action. As of the most recently available monthly trustee report (Aug. 22, 2003), the class A overcollateralization ratio was 104.68%, compared to a ratio of 105.62% at the time of the December 2002 rating action, and an effective date overcollateralization ratio of 108.45%. The minimum class A overcollateralization ratio is 104.2%. Standard & Poor's noted that Valeo Investment Grade CDO II would experience an event of default if the class A overcollateralization ratio falls below 103%. In the case of an event of default, the controlling class will have the right to declare the notes immediately due and payable and direct the trustee to liquidate the collateral. As a part of its analysis, Standard & Poor's reviewed the results of recent cash flow model runs. These runs stressed various parameters that are instrumental in the performance of this transaction, and are used to determine its ability to withstand various levels of default. When the stressed performance of the transaction was compared to the projected default performance of the current collateral pool, Standard & Poor's found that the projected performance of the class A-2 notes was not consistent with the prior ratings, given the current quality of the collateral pool. Consequently, Standard & Poor's is lowering its rating on these notes to the new level. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned to the rated classes continue to reflect the credit enhancement available to support the notes. RATING LOWERED AND OFF CREDITWATCH Valeo Investment Grade CDO II Ltd. Rating Class To From Balance ($ mil.) A-2 BB+ BBB-/Watch Neg 18.50 RATING AFFIRMED Valeo Investment Grade CDO II Ltd. Class Rating Balance ($ mil.) A-1 AAA 441.82 VICWEST CORP: Magnatrax Creditors' Committee Withdraws Claim ------------------------------------------------------------ As previously announced, Vicwest Corporation and certain of its Canadian subsidiaries obtained an order on May 12, 2003 to begin Vicwest's restructuring under the Companies' Creditors Arrangement Act. Vicwest has been advised that the Official Committee of Unsecured Creditors of Magnatrax Corp. et al. has agreed to withdraw the claim that it had asserted in the CCAA proceedings of Vicwest. Vicwest, with corporate offices in Oakville, Ontario, is Canada's leading manufacturer of metal roofing, siding and other metal building products. VICWEST CORP: TSX Knocks-Off Senior Sub. Notes from Trading ----------------------------------------------------------- The senior subordinated notes of Vicwest Corporation, which are listed on the TSX Venture Exchange under the symbol MGT.DB, ceased trading at the close of business on Sept. 11. Vicwest, with corporate offices in Oakville, Ontario, is Canada's leading manufacturer of metal roofing, siding and other metal building products. The Debtor and certain of its Canadian subsidiaries obtained an order on May 12, 2003 to begin Vicwest's restructuring under the Companies' Creditors Arrangement Act. Vicwest's plan of compromise and reorganization pursuant to the CCAA, which was approved by the Ontario Superior Court of Justice on August 14, 2003, was implemented on September 12, 2003. WEIRTON STEEL: Wants Excusive Filing Period Stretched to Dec. 15 ---------------------------------------------------------------- In its efforts to emerge from its Chapter 11 proceeding as quickly as possible, Weirton Steel Corporation is considering various operating configurations and restructuring alternatives. On a stand-alone basis, the Debtor must analyze the viability of multiple operating configurations, including a two blast furnace operation, a single blast furnace operation and a tin-only operation. In addition, the Debtor is exploring sale or strategic merger opportunities. According to James H. Joseph, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, any stand-alone scenario will depend on three factors: (a) the Debtor's ability to obtain a sufficient amount of exit financing, including, but not limited to, financing pursuant to the Byrd Bill; (b) the negotiation of a new collective bargaining agreement with the Independent Steelworkers' Union; and (3) the negotiation of modifications to the Debtor's retiree benefits. With respect to any sale or merger, the Debtor's management and professionals will continue to engage in discussions with interested parties, ranging from responding to preliminary information requests to facilitating detailed due diligence, and negotiating the terms of any sale or merger. The evaluation process will permit the Debtor to determine the best means for restructuring its business. Once a decision is made, the Debtor must then finalize a plan of reorganization that implements the most beneficial operating configuration, and addresses the treatment of various creditor constituencies including the Debtor's secured lenders, the Committee, the Debtor's collective bargaining units and the Pension Benefit Guaranty Corporation. The Debtor recognizes that the development, negotiation, and implementation of a Plan will require substantial time and effort. Pursuant to Section 1121(b) of the Bankruptcy Code, a debtor has the exclusive right to file a plan during the first 120 days after the commencement of a Chapter 11 case. If a debtor files a plan during this exclusive filing period, Section 1121(c)(3) grants the debtor an additional 60 days during which the debtor may solicit acceptances of that plan, and no other party-in- interest may file a competing plan. Section 1121(d) provides that the Court may extend the exclusive periods for "cause: "On request of a party in interest . . . and after notice and a hearing, the court may for cause reduce or increase the 120- day period or the 180-day period referred to in this section." Accordingly, the Debtor asks the Court to: (a) enter a Bridge Order extending the Exclusive Filing Period through the hearing on its request and extending the Exclusive Solicitation Period by 60 days after the Hearing date; and (b) extend the: (1) Exclusive Filing Period through and including December 15, 2003; and (2) Exclusive Solicitation Period through and including February 13, 2004. Mr. Joseph asserts that the requested extension is warranted on these grounds: A. Extension of the exclusive periods is justified by size and complexity of Weirton's case. The Debtor is the second largest private employer in the State of West Virginia and the sixth largest integrated domestic producer of steel products. The Debtor had sales in excess of $1,000,000,000 in year 2002. On the Petition Date, the Debtor employed over 3,500 individuals. The Debtor has thousands of potential creditors and is a party to hundreds of executory contracts and unexpired leases. The Debtor has more than 10,000 retirees and dependents. B. The Debtor's progress warrants an extension of the exclusive periods. The Debtor has made substantial progress in addressing certain of the major issues facing its estate as of the Petition Date, including the need for additional liquidity, stabilizing its workforce and preserving vital customer, vendor and service provider relationships. The Debtor's achievements in addressing key restructuring issues to date include: (a) negotiating, documenting and obtaining Court approval of the Postpetition Credit Agreement, which addressed the Debtor's liquidity requirements; (b) implementing the various forms of relief granted by the Court in "first-day orders" to minimize the disruption to its business operations resulting from its Chapter 11 case; (c) filing of complete Bankruptcy Schedules and Statements of Financial Affairs and the filing of a Motion to Establish Claims Bar Date in order for the claims reconciliation process to begin; (d) establishing effective lines of communication with the Debtor's secured lenders, the Committee and other parties-in-interest; (e) modeling of various potential means of restructuring and business analysis; (f) implementing a key employee retention program and stabilizing the Debtor's senior management, including the selection and appointment of a new Chief Executive Officer; and (g) implementing a procedure to administer and resolve all reclamation claims filed against the Debtor. C. The requested extension of the exclusive periods will not harm the Debtor's creditors or other parties-in-interest. In light of the size and complexity of the Debtor's Chapter 11 case, neither the Debtor's creditors nor any other party-in- interest would likely be in a position to propose a Plan prior to December 15, 2003. Thus, the requested extension will not result in a delay of the Plan process. To the contrary, the requested extension of the Exclusive Periods will permit the Plan process to move forward in an orderly fashion. (Weirton Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTERN WIRELESS: Files Amended Reports for Q1 and Q2 of 2003 ------------------------------------------------------------- Western Wireless Corporation (Nasdaq:WWCA), a leading provider of wireless communications services to rural America, has filed amended quarterly reports for the first and second quarters of 2003 on Forms 10-Q/A with the Securities and Exchange Commission. Western Wireless filed the amendments in response to comments received from the SEC regarding its Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. The amended reports filed today revise the disclosures pertaining to Western Wireless's adoption of Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143") and restate the financial statements to reflect such revisions. The amended report for the first quarter also conforms the disclosures regarding the non-GAAP financial measure "EBITDA" to the disclosures regarding "Adjusted EBITDA", which Western Wireless began using in connection with its quarterly report for the second quarter of 2003. SFAS No. 143 relates to the costs of closing facilities and removing assets, and requires entities to record the fair value of a legal liability for an asset retirement obligation in the period it is incurred if a reasonable estimate of fair value can be made. Western Wireless believed it could not estimate the fair value of its asset retirement obligations based on specific facts and circumstances with respect to the timing of the settlement of the underlying leases and the probability of enforcement of any contractual remediation obligations. As a result, the original Forms 10-Q for the quarters ended March 31 and June 30, 2003, did not record an asset retirement obligation. Western Wireless has prepared an estimate and recorded an asset retirement obligation and a non-cash cumulative change in accounting principle in its financial statements (see tables below). The effects of today's filings on the financial statements do not change Adjusted EBITDA for the periods ended March 31, 2003, and June 30, 2003, nor do they impact Western Wireless's financial position as of Dec. 31, 2002, or results of operations for cash flows for the periods ended March 31, 2002, and June 30, 2002. The Company's restated March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $508 million, while its restated June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $465 million. Western Wireless Corporation, located in Bellevue, Washington, was formed in 1994 through the merger of previously unrelated rural wireless companies. Following the merger, Western Wireless continued to invest in rural cellular licenses, acquired six PCS licenses in the original auction of PCS spectrum in 1995 through its VoiceStream subsidiary, and made its first international investment in 1996. Western Wireless went public later in 1996 and completed the spin-off of VoiceStream in 1999. Western Wireless now serves over 1.2 million subscribers in 19 western states under the Cellular One(R) and Western Wireless(R) brand names. Through its subsidiaries and operating joint ventures, Western Wireless is licensed to offer service in eight foreign countries. WORKFLOW MANAGEMENT: Look for First Quarter 2004 Results Today -------------------------------------------------------------- Workflow Management, Inc. (Nasdaq:WORK), will be releasing its fiscal 2004 first quarter earnings for the three months ended July 31, 2003 today, in the evening. A conference call to discuss the results will be held tomorrow, September 16, 2003 at 11:00 a.m. EDT. Hosting the call will be Gary W. Ampulski, Chief Executive Officer, and Michael L. Schmickle, Chief Financial Officer. The conference call number is (877) 375-2162. International callers should dial (973) 582-2737. The call will be broadcast live over the Internet and can be accessed at http://www.workflowmanagement.com A replay of the conference call will be available approximately one hour after the conclusion of the conference call. The replay may be accessed by telephone by calling (877) 519-4471 for calls originating within the United States or (973) 341-3080 for international calls. The password is 4174794 and the replay will be available through 5:00 p.m. EDT, on October 7, 2003. Workflow Management, Inc. is a leading provider of end-to-end print outsourcing solutions. Workflow services, from production of logo-imprinted promotional items to multi-color annual reports, have a reputation for reliability and innovation. Workflow's complete set of solutions includes document design and production consulting; full-service print manufacturing; warehousing and fulfillment; and iGetSmart(TM) -- the industry's most comprehensive e-procurement, management and logistics system. Through custom combinations of these services, the Company delivers substantial savings to its customers -- eliminating much of the hidden cost in the print supply chain. By outsourcing print-related business processes to Workflow, customers streamline their operations and focus on their core business objectives. For more information, go to http://www.workflowmanagement.com * * * Credit Facility Amendment Workflow Management has entered into a definitive agreement with its senior lenders that amends the Company's credit facility. Under the terms of the amendment, the $50 million term loan originally due on December 31, 2003 now matures on May 1, 2004. The $16.8 million term loan and the approximately $100 million in availability asset-based revolver, both of which were originally due on June 30, 2005, now mature on August 1, 2004. In addition to modifying the maturity dates of the Company's senior debt, the credit facility amendment also provides the Company with improved advance rates under the asset-based revolver on eligible accounts receivable and inventory. As previously announced, at April 30, 2003, the Company had exceeded certain covenants in the credit facility that limited capital expenditures and the incurrence of restructuring costs. As part of the credit facility amendment, the Company's senior lenders have waived these defaults. The amendment also modifies the calculation of EBITDA for credit facility covenant purposes to exclude the impact of the goodwill impairment and the results of discontinued operations and amends certain financial covenants for future periods in a manner consistent with the Company's current business plan and forecasts. As part of the credit facility amendment, the Company also changed the conditions under which its lenders may exercise warrants to purchase the Company's common stock and agreed to modify the exercise schedule of the warrants. In addition, the Company agreed to increase the number of shares of its common stock potentially issuable upon exercise of these warrants. Sale of Discontinued Operations The Company also reported the successful divestiture of certain non-core print manufacturing operations. The assets and liabilities of the divested businesses, which have been excluded from the Company's historical operating results and classified as discontinued operations, were sold to a financial buyer for $5.0 million in gross proceeds. After payment of expenses, the transaction generated net cash proceeds of approximately $4.9 million. Under the terms of the credit facility amendment discussed above, the Company will use these net proceeds to make certain earn-out payments that were due in May 2003 under purchase agreements for prior acquisitions and to reduce outstanding indebtedness under the credit facility. WORLDCOM INC: Wants Court Nod for Focal Setoff Agreement -------------------------------------------------------- Worldcom Inc., and its debtor-affiliates are parties to various prepetition agreements with Focal Communications Corporation and certain of its affiliates wherein each party purchases certain telecommunications services from the other. Particularly, the Debtors and Focal entered into various Private Line Service Agreements which require Focal to pay certain rates to purchase private lines from the Debtors to be used in connection with its provision of telecommunications services. In connection with this relationship, Focal alleges that in early 2002, the Debtors demanded payment rates that were significantly higher than the rates provided for in the Service Agreements. Nevertheless, Focal continued paying the rates provided for in the Service Agreements and requested that the Debtors continue providing the service at such rates. Subsequently, Focal filed billing disputes with the Debtors and sought credits for allegedly incorrect billing rates on certain accounts. On November 5, 2002, the Debtors sent a letter denying Focal's request for credits in connection with the rate dispute and demanding payment of all outstanding amounts due. After Focal allegedly refused to pay the higher rates, the Debtors sent a letter to Focal on November 19, 2002 demanding the payment of $1,704,513 for postpetition services rendered pursuant to the Agreements. The Debtors threatened to terminate its services if such payment was not received by November 29, 2002. Focal filed a complaint on November 22, 2002 to force the Debtors to abide by the terms of the Service Agreements. Focal also sought injunctive relief preventing the Debtors from terminating Focal's services before the resolution of the declaratory judgment claim. Pursuant to a Court order, on December 5, 2002, Focal deposited $1,700,000 with an escrow agent pending resolution of the billing disputes. On December 19, 2002, Focal filed for bankruptcy before the U.S. Bankruptcy Court for the District of Delaware. Shortly after the Focal Petition Date, the Debtors requested that Focal provide adequate assurance of payment for services pursuant to Section 366 of the Bankruptcy Code. However, Focal did not respond to the request. In addition to the foregoing billing disputes, there are several ongoing disputes between the parties regarding debts owed pursuant to the Agreements. The Debtors allege that Focal owes a $21,460,000 outstanding balance through February 28, 2003 while Focal alleges that the Debtors owe a $18,380,000 outstanding balance through the same date. Consequently, the Debtors and Focal agreed to talk things over. On August 22, 2003, the parties' discussions translated into a stipulation to resolve the disputes. The Settlement Agreement provides that: (a) after the application of certain credits and payments, the Focal Debt will be reduced to $13,900,000 and the WorldCom Debt will be reduced to $11,770,000; (b) after the parties set off their debts, the Focal Debt will be reduced to $2,130,000 and the WorldCom Debt will be completely absolved; (c) Focal will: (i) pay WorldCom $1,000,000, by wire transfer, for unpaid services which WorldCom rendered postpetition pursuant to the Agreements through and including February 28, 2003; (ii) instruct to the escrow agent for the release of the Escrow Balance to WorldCom for a payment to WorldCom of $1,700,000; and (iii) dismiss the complaint without prejudice; (d) the automatic stay in effect in the Focal bankruptcy cases will be modified to permit the parties to setoff their undisputed balances due as of February 28, 2003 and WorldCom will waive any and all claims it may have against Focal with respect to the remaining $1,130,000 balance due as of February 28, 2003 after Focal's $1,000,000 payment to WorldCom; (e) Focal will assume a Fourth Amended Master Services Agreement, which the parties executed in conjunction with the Settlement. "[T]he Settlement Agreement is fair and reasonable under the circumstances and in no way unjustly enriches any of the parties," Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Gonzalez. "In addition to recovering $2,700,000 of the Focal Debt, the WorldCom Debt will be completely absolved through mutual setoffs and the Adversary Proceeding against the Debtors will be dismissed. Furthermore, as Focal will assume the Amended MSA, the Debtors will continue to receive significant revenue from Focal and the Parties will maintain their business relationship." Without the Settlement, Ms. Goldstein points out that the parties might require extensive judicial intervention to resolve their disputes. It is uncertain which of the parties would emerge with a favorable and successful resolution of its claims. Any litigation would also be costly, time consuming, and distracting to management and employees alike. By this motion, the Debtors ask the Court to approve the Focal Agreement. (Worldcom Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) XM SATELLITE: Completes Placement of $150 Million in Securities --------------------------------------------------------------- XM Satellite Radio Holdings, Inc. (Nasdaq: XMSR) completed a public offering of 11,320,755 shares of its Class A Common Stock to Legg Mason Funds Management, Inc., Legg Mason Capital Management, Inc. and another large institutional investor, each on behalf of its investment advisory clients. Net proceeds are approximately $150 million. A copy of the prospectus relating to the offering can be obtained from the company. All of the securities were offered by the company. XM expects that all or a significant portion of the net proceeds may be used for funding for the construction of XM-4, its new ground spare satellite, if insurance proceeds are not received in a timely manner. XM expects to otherwise use the proceeds for working capital and general corporate purposes, which may include the repurchase or pre-payment of outstanding debt. XM provides satellite radio service to more than 692,000 subscribers as of June 30 and is on pace to have more than one million subscribers later this year. Whether in the car, home, office or on the go, XM's listeners enjoy 101 digital channels of choice: 70 music channels, more than 35 of them commercial-free, from hip hop to opera, classical to country, bluegrass to blues; and 31 channels of premiere sports, talk, comedy, kid's and entertainment programming. For more information about XM, visit http://www.xmradio.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit ratings on satellite radio provider XM Satellite Radio Inc., and its parent company XM Satellite Radio Holdings Inc. (which are analyzed on a consolidated basis) to 'SD' from 'CCC-'. At the same time, Standard & Poor's lowered its rating on the company's $325 million 14% senior secured notes due 2010 to 'D' from 'CCC-'. These actions follow XM's completion of its exchange offer on the senior secured notes, at par, for new 14% senior secured notes due 2009. All ratings were removed from CreditWatch with negative implications where they were placed on Nov. 18, 2002. * Libra Sets-Up Restructuring Unit Headed by Daniel Harrow ---------------------------------------------------------- Libra Securities, a leading middle-market investment bank, announced the formation of a new Restructuring Division to be headed by industry veteran Daniel Harrow. The unit will focus on advising board members, private equity investors and fund managers, banks and other creditors, as well as the management of distressed middle-market companies on issues related to in- and out-of-court restructurings, recapitalizations, distressed mergers and acquisitions, along with raising capital for troubled companies. The group will also perform diagnostic analyses for boards, investors and creditors to evaluate a company's financial health and market competitiveness, identifying the critical issues that should be acted upon by stakeholders. Libra Securities President and Chief Executive Officer Jess Ravich said, "Restructuring advisory services is a perfect fit for our firm. Libra has built a strong reputation for providing exceptional financial advisory services to and raising debt and equity for middle-market companies. By offering these services to distressed companies and their boards, creditors and investors, we are capitalizing on our strength of understanding distressed securities and Harrow's ability to devise innovative solutions in difficult financial situations. "Dan Harrow's outstanding reputation and experience in the restructuring arena, combined with our extensive Wall Street contacts in distressed capital sources, provides middle-market companies and their stakeholders with credible advice and alternatives. We expect Dan to become a valuable resource to our clients." Daniel Harrow, appointed as managing director, has more than 20 years of restructuring advisory and investment banking experience. Harrow has participated in restructuring and workout assignments exceeding $4 billion in value throughout his career including: Fantastic Sams, Orange County Bankruptcy, Greyhound Lines, Carter Hawley Hale Stores, Inc. (The Broadway Stores), C & R Clothiers, Inc., Hamburger Hamlet Restaurants Inc., Media Vision, Reddi Brake Supply Company, Inc., Retama Park Horse Racing and Carolco Pictures, Inc Mr. Harrow's experience includes serving as a Managing Director/Partner with Chanin & Company, an investment bank specializing in advisory projects for financially distressed situations. Mr. Harrow, a CPA, began his career at Price Waterhouse. He is a licensed real estate broker and serves as a member of the AICPA. Harrow is also a member of California Receivers Forum and the Bankruptcy Mediation Panel for the United States Bankruptcy Court-Central District of California. Harrow said, "The Libra Restructuring Group will assist both private and public companies confronting potential or impending insolvency issues and ensure that these companies are aware of all capital market remedies at the same time maximizing their value during a distressed buyout, change of control, asset sale or litigious situation, for the benefit of all company stakeholders. I am pleased to be joining a firm with a distinguished reputation in the capital markets and a deep understanding of the distressed investment arena" Libra Securities is a leading middle-market investment bank providing financial advisory and capital raising services including senior debt, mezzanine debt and equity, high yield debt, investment grade debt and private equity for healthy and distressed companies. Affiliates of Libra Securities also manage private equity and mezzanine investment funds dedicated to financing middle-market companies, buyouts and recapitalizations. Headquartered in Los Angeles, the firm also has offices in New York, Texas and Colorado. * BOND PRICING: For the week of September 15 - 19, 2003 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 9.875% 03/01/07 68 Adelphia Communications 10.875% 10/01/10 68 Advantica Restaurant 11.250% 01/15/08 46 American & Foreign Power 5.000% 03/01/30 65 American Airline 10.850% 03/15/08 65 American Airline 10.850% 03/15/08 64 AMR Corp. 9.000% 08/01/12 74 AMR Corp. 9.000% 09/15/16 73 AnnTaylor Stores 0.550% 06/18/19 68 Aurora Foods 9.875% 02/15/07 55 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 Calpine Corp. 7.875% 04/01/08 74 Cincinnati Bell Telephone 6.300% 12/01/28 74 Coastal Corp. 6.950% 06/01/28 71 Coastal Corp. 7.420% 02/15/37 74 Collins & Aikman 11.500% 04/15/06 74 Comcast Corp. 2.000% 10/15/29 30 Conseco Inc. 8.500% 10/15/49 42 Conseco Inc. 9.000% 10/15/06 43 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 33 Crown Cork & Seal 7.500% 12/15/96 74 Cummins Engine 5.650% 03/01/98 66 DDI Corp. 5.250% 03/01/08 6 Delta Air Lines 8.300% 12/15/29 67 Elwood Energy 8.159% 07/05/26 70 GB Property Funding 11.000% 09/29/05 66 Greyhound Lines 11.500% 04/15/07 69 Gulf Mobile Ohio 5.000% 12/01/56 64 IMC Global Inc. 7.300% 01/15/28 74 International Wire Group 11.750% 06/01/05 55 JL French Auto 11.500% 06/01/09 52 Level 3 Communications Inc. 6.000% 09/15/09 60 Level 3 Communications Inc. 6.000% 03/15/10 58 Liberty Media 3.500% 01/15/31 72 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 60 Lucent Technologies 6.450% 03/15/29 68 Lucent Technologies 6.500% 01/15/28 68 Mirant Americas 8.300% 05/01/11 74 Mirant Corp. 5.750% 07/15/07 46 Mission Energy 13.500% 07/15/08 58 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 70 Missouri Pacific Railroad 5.000% 01/01/45 62 NGC Corporation 7.125% 05/15/18 72 Northern Pacific Railway 3.000% 01/01/47 50 Northwest Airlines 7.875% 03/15/08 75 NTL Communications Corp. 7.000% 12/15/08 19 Redback Networks 5.000% 04/01/07 34 Salomon SB Holdings 0.250% 02/18/10 74 Spacehab Inc. 8.000% 10/15/07 62 US Timberlands 9.625% 11/15/07 57 US West Capital Funding 6.875% 07/15/28 74 Worldcom Inc. 6.400% 08/15/05 30 Worldcom Inc. 7.750% 04/01/07 29 Xerox Corp. 0.570% 04/21/18 65 ********* 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 ***