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/raid1/www/Hosts/bankrupt/TCR_Public/030929.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 29, 2003, Vol. 7, No. 192 Headlines ACTERNA CORP: S.D.N.Y. Court Confirms Plan of Reorganization ADVANCED GLASSFIBER: Court Approves Amended Disclosure Statement AIRGATE: S&P Further Junks & Places Credit Rating on Watch Neg. AKORN INC: Inks $40M Preferred Share and Note Purchase Agreement ALLEGHENY ENERGY: PwC Expresses Going Concern Doubt ALLIANCE COMMUNICATIONS: Elzufon Austin Serves as Local Counsel ALLIED HOLDINGS: S&P Revises Ratings Outlook to Stable from Neg. AMERICAN GREETINGS: Second-Quarter Net Loss Narrows to $9.7 Mil. AMERICAN MARKETING: Secures Okay to Pay UPS's Prepetition Claims ARMSTRONG: Court Okays April 2 Plan Filing Exclusivity Extension AVAYA: Inks Pact to Acquire Certain VISTA Information Businesses BAY VIEW CAPITAL: Will Publish Third-Quarter Results on Oct. 21 BRILLIANT DIGITAL: Gets Time Extension to Meet AMEX Requirements BUDGET GROUP: Court Expunges Various Duplicate & Amended Claims CALPINE CORP: Unit Prices $300-Million Secured Notes Offering CALPINE: Closes $50M of Additional CCFC I Secured Notes Offering CELL-LOC: Investor Group Will Inject Capital & Reorganize Co. COMM SOUTH: US Trustee Sets Section 341(a) Meeting for Oct. 28 CONE MILLS: Shareholder Committee Nominees Win Board Seats CONSECO FIN: S&P Takes Ratings Cuts on Two Related Transactions CONSECO: S&P Initiates Various Rating Actions on Related Trusts CORAM: Plan Confirmation Hearing Convening on Sept. 30, 2003 COVANTA ENERGY: Settlement of Loss Sharing Litigation Under Plan DELTA FINANCIAL: Prices $434 Million Asset-Backed Securitization DRUG EMPORIUM: Taps DJM Asset Mgt. to Market 77 Stores Locations DVI INC: Wins Interim Approval for $148MM in New DIP Financing ENRON CORP: Operating Entities and Trusts Upon Plan Effectivity EXIDE: Exploring New Market Opportunities with Electrovaya FERRELLGAS PARTNERS: Reports Improved Fiscal Year 2003 Results FLEMING: Sells Kansas Property to Spartan Real Estate for $1.8M FLEXTRONICS: Will Take Action to Contest California Jury Verdict GE HOME EQUITY: Fitch Cuts Class B-1 & B-2 Note Ratings to BB-/C GLOBAL CROSSING: Seeks Okay for Alcatel Deferred Payment Pact GLOBAL GOLD: Ex-Auditor's Report Airs Going Concern Uncertainty GOODYEAR: Fitch's Low-B Debt Ratings Plucked from Watch Negative HARVEST NATURAL: Closes Sale of 34% Interest in LLC Geoilbent ICOA INC: Reaches Pact to Restructure $1.5-Mil. Conv. Debentures IMCO RECYCLING: Proposes $200-Mill. Senior Secured Note Offering INT'L MULTIFOODS: 2nd Quarter 2004 Results Enter Positive Zone INVESPRINT: Violates Technical Covenant Under Equipment Lease ISLE OF CAPRI CASINOS: Will Buy President Casino in St. Louis IVACO INC: Slashing 115 Jobs at Sivaco Quebec Division KAISER: Court Clears Prof. McGovern's Engagement as Mediator LABRANCHE: S&P Affirms Ratings & Revises Outlook to Negative LEAP WIRELESS: Cricket Wants to Up Deloitte's Fee as Tax Advisor LEVI STRAUSS: Closing Remaining Manufacturing & Finishing Plants LEVI STRAUSS: Canada Unit Closing Remaining Manufacturing Plants LEVI STRAUSS: Fitch Says Plant Closure Will Not Affect Ratings MAJESTIC STAR: Gets Requisite Consents from 11.653% Noteholders MAJESTIC STAR: Receives Consents from 10-7/8% Senior Noteholders METROMEDIAL INT'L: Nasdaq Delists Equity Securities from OTCBB MICRON TECHNOLOGY: S&P Revises Low-B Ratings Outlook to Stable NAT'L CENTURY: Plan Provides for Formation of Litigation Trust NEXTERA ENT.: Enters Pact to Sell Lexecon for $130MM + Debts NEXTERA ENTERPRISES: FTI Consulting Confirms Lexecon Acquisition NORTEL NETWORKS: Preferred Share Dividends Payable on Nov. 12 NOVA CHEMS: Q3 Earnings Release & Conference Call on Oct. 22 NRG ENERGY: Wants Disclosure Statement Hearing Set for Oct. 28 NUCENTRIX BROADBAND: Wants Nod to Hire KBA Group as Accountants PACIFIC GAS: Seeks Approval to Enter into Hedging Transactions PARTNERS MORTGAGE: Case Summary & 2 Largest Unsecured Creditors P-COM INC: Renews Credit Facility with Silicon Valley for 1 Year PILGRIM AMERICA: S&P Places BB+ Class A Rating on Watch Positive PILLOWTEX: Seeks Court Nod for Key Employee Retention Program PINNACLE ENTERTAINMENT: Closes $135MM Senior Sub. Notes Offering PLAINS ALL AMERICAN: Acquires ArkLaTex Pipeline System from EOTT POGO PRODUCING: S&P Affirms BB Rating on Improved Credit Quality PORTOLA: Tech Industries Planned Buy-Out Spurs Negative Outlook PRESIDENT CASINOS: Selling St. Louis Ops. to Nextera for $50MM QUINTILES TRANSNATIONAL: Completes Merger with Pharma Services REAL ESTATE SYNTHETIC: S&P Assigns Rating to Series 2003-C Notes RESI SECURITIES: S&P Assigns Low-B Ratings to Five Note Classes RITE AID: August 30 Net Capital Deficit Swells to $142 Million RIVERSTONE NETWORKS: Reports Preliminary Q2 Fiscal 2004 Results SALEM COMMS: S&P Affirms B+ Long-Term Corporate Credit Rating SLMSOFT INC: Sues Insight and UBS Capital for $150+ Mil. Damages SMITHFIELD: Inks Definitive Pact to Sell Schneider to Maple Leaf SOLECTRON CORP: Narrows Fourth-Quarter Net Loss to $179 Million SPECIAL METALS: Judge Howard Confirms Plan of Reorganization STARWOOD HOTELS: Selling Sheraton North Charleston Hotel SUN HEALTHCARE: Highland Capital Discloses 4.96% Equity Stake UNIVERSAL HOSPITAL: Commences Tender Offer for 10-1/4% Sr. Notes US AIRWAYS: Sec. 1110 Modification Deadline Extended to Oct. 23 USG CORP: Court Stretches Lease Decision Period to March 4, 2004 TYCO: Brings-In Robert W. Frantz as VP, Environment and Health VARSITY BRANDS: S&P Withdraws Ratings Following Acquisition WCI STEEL: Appoints Trumbull Group as Notice and Claims Agent WESTPOINT: Unsecured Panel Turns to Lehman for Financial Advice WESTPORT RESOURCES: Appoints Beatty, Dole and Semmens to Board XCEL ENERGY: Delays Preferred Share Dividend Declaration * Susan Barnes de Resendiz Joins Gardner Carton's Chicago Practice * BOND PRICING: For the week of September 29 - October 5, 2003 ********* ACTERNA CORP: S.D.N.Y. Court Confirms Plan of Reorganization ------------------------------------------------------------ Acterna Corporation announced that the U.S. Bankruptcy Court for the Southern District of New York has confirmed its Plan of Reorganization. Confirmation of the plan, which received overwhelming support through a vote of its creditors earlier this week, clears the way for the company's emergence from chapter 11 within 10 days. "After completing a debt restructuring in only five months -- a truly remarkable achievement and a testament to the focused dedication of our employees -- Acterna is ready to move forward as a re-energized company with a stronger balance sheet," said John Peeler, Acterna's president and chief executive officer. "We appreciate the trust and support we enjoyed from our customers and suppliers throughout this process and look forward to building on Acterna's long heritage as an innovative provider of communications test solutions around the globe." "Acterna's focus is on delivering test solutions that enable our customers to reduce network operating expenses and achieve greater productivity," added Peeler. "We are committed to a robust product development program to help our customers achieve these objectives and will introduce 12 new products and enhancements over the next three months alone." Based in Germantown, Maryland, Acterna Corporation (OTCBB:ACTRQ.OB) is the holding company for Acterna and da Vinci Systems. Acterna is the world's second largest communications test and measurement company. The company offers instruments, systems, software and services used by service providers, equipment manufacturers and enterprise users to test and optimize performance of their optical transport, access, cable, data/IP and wireless networks and services. da Vinci Systems designs and markets video color correction systems to the video postproduction industry. Additional information on Acterna is available at http://www.acterna.com. ADVANCED GLASSFIBER: Court Approves Amended Disclosure Statement ---------------------------------------------------------------- Advanced Glassfiber Yarns LLC announced that on September 22, 2003, the U.S. Bankruptcy Court for the District of Delaware approved its First Amended Disclosure Statement, paving the way for the Company to commence solicitation of votes for approval of its First Amended Joint Chapter 11 Plan of Reorganization and complete its Chapter 11 restructuring. The Reorganization Plan is supported by the Company's Senior Secured Lenders and the official committee of unsecured creditors appointed in the Company's reorganization case. The amended Reorganization Plan contemplates, among other things, that approximately $184 million in claims of the Company's senior secured lenders will be satisfied through a combination of $120 million in new secured notes, cash, and a substantial majority interest of the common stock of the reorganized company. General unsecured creditors of the Company and holders of the Company's approximately $163 million of 9-7/8% senior subordinated notes will collectively receive their pro rata share of 15% of the common stock of the reorganized company prior to dilution, plus warrants that will entitle such holders to receive additional distributions in certain circumstances in satisfaction of their claims. No distributions will be made to the Company's equity holders for their existing equity interests under the Reorganization plan, and all such equity interests in the Company will be canceled. The Court has scheduled a hearing on November 17, 2003 to consider confirmation of the Reorganization Plan. If confirmed at that time, the Company would expect to emerge from Chapter 11 by the end of 2003. Marc L. Pfefferle, the Company's Chief Restructuring Officer, stated: "With the Court's approval of our Disclosure Statement, the timetable for our projected year-end emergence from Chapter 11 remains intact. We are gratified that our Reorganization Plan has the support of both our senior secured lenders and the official unsecured creditors committee. Such support should provide the momentum for a successful solicitation and plan confirmation process." Advanced Glassfiber Yarns, headquartered in Aiken, SC, is one of the largest global suppliers of glass yarns, which are a critical material used in a variety of electronic, industrial construction and specialty applications. AIRGATE: S&P Further Junks & Places Credit Rating on Watch Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Atlanta, Georgia-based wireless service provider AirGate PCS, Inc. and placed them on CreditWatch with negative implications. The corporate credit rating is now CC/Watch Neg/--. The company is a Sprint PCS affiliate that primarily operates in Southeastern U.S. and had over 364,000 subscribers at June 30, 2003. The actions are based on AirGate's proposed financial restructuring plan, which includes an offer to exchange all of its outstanding $300 million 13.5% senior subordinated discount notes due 2009 (which has currently accreted to about $260 million) for $160 million of new 9.375% senior subordinated secured notes due 2009 and new shares of AirGate PCS common stock estimated to be about $35 million based on closing-day pricing at Sep. 24, 2003. The deal also proposes a prepackaged Chapter 11 reorganization plan that would be executed if at least 98% of bondholders do not consent to the exchange offer. "Because the consideration being offered by the company in exchange for the existing debt represents a discount to its accreted value, Standard & Poor's would view completion of the deal as a distressed exchange and tantamount to a default on the original debt issue terms," explained credit analyst Michael Tsao. The company's intent to execute a prepackaged Chapter 11 reorganization in order to effect the exchange offer increases the distressed characteristics of the transaction. Upon completion of the exchange offering, the corporate credit rating on AirGate PCS will be lowered to 'SD', denoting a selective default, and the subordinated debt rating will be lowered to 'D'. Post restructuring, it may be challenging for AirGate's corporate credit rating to be rated higher than the 'CCC' category for several reasons. First, despite the modest deleveraging effect of the exchange offer, the company is expected to continue having a weak financial risk profile characterized by aggressive leverage and limited liquidity. Second, there are still substantial execution challenges relating to a subscriber base that has about 30% sub-prime credit customers and longer-term competition from better-capitalized competitors. Third, AirGate does not own spectrum licenses. In conjunction with the announced restructuring, AirGate PCS has reached an agreement with its bank lenders to amend its senior secured credit facility and obtain needed consent. At Aug. 8, 2003, the unrated $153.5 million facility was fully drawn. The amendment eliminates the minimum subscriber covenant and provides greater flexibility in financial and certain other covenants. The maturity, principal amount, and interest on the credit facility will remain unchanged. The amendment is conditioned, in part, on the consummation of the restructuring plan. AKORN INC: Inks $40M Preferred Share and Note Purchase Agreement ---------------------------------------------------------------- Akorn, Inc. has entered into a Preferred Stock and Note Purchase Agreement with a group of insider and outsider investors, including Dr. John Kapoor and Arjun Waney. As part of the purchase agreement, Akorn expects to receive an infusion of up to $40.5 million in new capital consisting of $25.7 million in Series A 6% Participating Convertible Preferred Stock and Warrants, a $2.8 million subordinated promissory note and up to $12.0 million in senior secured debt from LaSalle Bank National Association. The new capital will be used to retire Akorn's outstanding senior bank debt and provide the Company with up to $6.0 million in working capital. The consummation of the transactions contemplated by the purchase agreement would result in the investors owning approximately 76% of Akorn's common stock on a fully-diluted basis. If all of the conditions to the consummation of the transaction are satisfied, the closing is expected to occur on or before October 10, 2003. At the closing of this transaction, the investors would purchase for cash all of Akorn's outstanding senior debt from The Northern Trust Company. Immediately after such purchase, the investors would exchange all of the senior debt for (i) 257,172 shares of Akorn's Series A 6% Participating Convertible Preferred Stock, a new series of preferred stock that will be convertible into shares of Akorn common stock at $.75 per share, (ii) subordinated notes of Akorn in the principal amount of approximately $2.8 million, (iii) warrants to purchase an aggregate of 8,572,400 shares of Akorn's common stock, with an exercise price of $1.00 per share, and (iv) $6,000,000 in cash. Akorn will also issue to the holders of the Notes warrants to purchase 100,000 shares of common stock of Akorn for every $1.0 million of principal amount of the Notes, with an exercise price of $1.10 per share. Under the terms of the purchase agreement, at the closing of this transaction, Akorn would engage LaSalle Bank as Akorn's new senior secured lender, providing Akorn with a $7.0 million term loan and a revolving line of credit of up to $5.0 million to provide for working capital needs. This new debt would be guaranteed by certain investors. In exchange for this guaranty, Akorn would pay a guarantee fee to the guarantors in the form of additional warrants to purchase 960,000 shares of Akorn's common stock on the closing date and annually thereafter an additional 80,000 shares of Akorn's common stock for every $1.0 million of principal amount guaranteed under this new debt facility, with an exercise price of $1.10 per share. Akorn believes that this new line of credit and cash flow from operations will be sufficient to operate its business. However, if the new line of credit and cash flow from operations are not sufficient to fund the operation and growth of Akorn's business, Akorn will be required to seek additional financing. Such additional financing may not be available when needed or on terms favorable to Akorn and its shareholders. Any such additional financing, if obtained, will likely require the granting of rights, preferences or privileges senior to those of the common stock and result in additional dilution of the existing ownership interests of the common stockholders. The closing of the transactions contemplated by the purchase agreement is subject to (i) the satisfactory completion of due diligence by LaSalle Bank, (ii) consents from Akorn's subordinated lenders, and (iii) such other conditions to closing as are set forth in the purchase agreement. Failure to meet any of these requirements may result in a termination of the purchase agreement. If the purchase agreement is terminated, Akorn may need to seek relief from its creditors in bankruptcy. ABOUT AKORN, INC. Akorn, Inc. manufactures and markets sterile specialty pharmaceuticals, and markets and distributes an extensive line of pharmaceuticals and ophthalmic surgical supplies and related products. Additional information is available on the Company's Web site at http://www.akorn.com * * * Going Concern Uncertainty In Akorn's most recent Form 10-Q filed with SEC, the Company reported: "The [Company's] financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company experienced losses from operations in 2002, 2001 and 2000 and has a working capital deficiency of $29.4 million as of March 31, 2003. The Company also is in default under its existing credit agreement and is a party to governmental proceedings and potential claims by the Food and Drug Administration that could have a material adverse effect on the Company. Although the Company has entered into a Forbearance Agreeement with its senior lenders, is working with the FDA to favorably resolve such proceeding, has appointed a new interim chief executive officer and implemented other management changes and has taken steps to return to profitability, there is substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to (i) continue to finance it current cash needs, (ii) continue to obtain extensions of the Forbearance Agreement, (iii) successfully resolve the ongoing governmental proceeding with the FDA and (iv) ultimately refinance its senior bank debt and obtain new financing for future operations and capital expenditures. If it is unable to do so, it may be required to seek protection from its creditors under the federal bankruptcy code. "While there can be no guarantee that the Company will be able to continue to generate sufficient revenues and cash flow from operations to finance its current cash needs, the Company generated positive cash flow from operations in 2002 and for the period from January 1 through April 30, 2003. As of April 30, 2003, the Company had approximately $400,000 in cash and equivalents and approximately $1.4 million of undrawn availability under its second line of credit described below. "There can also be no guarantee that the Company will successfully resolve the ongoing governmental proceedings with the FDA. However, the Company has submitted to the FDA and begun to implement a plan for comprehensive corrective actions at its Decatur, Illinois facility. "Moreover, there can be no guarantee that the Company will be successful in obtaining further extensions of the Forbearance Agreement or in refinancing the senior debt and obtaining new financing for future operations. However, the Company is current on its interest payment obligations to its senior lenders, management believes that the Company has a good relationship with its senior lenders and, as required, the Company has retained a consulting firm, submitted a restructuring plan and engaged an investment banker to assist in raising additional financing and explore other strategic alternatives for repaying the senior bank debt. The Company has also added key management personnel, including the appointment of a new interim chief executive officer and vice president of operations, and additional personnel in critical areas, such as quality assurance. Management has reduced the Company's cost structure, improved the Company's processes and systems and implemented strict controls over capital spending. Management believes these activities have improved the Company's profitability and cash flow from operations and improve its prospects for refinancing its senior debt and obtaining additional financing for future operations. "As a result of all of the factors cited in the preceeding paragraphs, management of the Company believes that the Company should be able to sustain its operations and continue as a going concern. However, the ultimate outcome of this uncertainty cannot be presently determined and, accordingly, there remains substantial doubt as to whether the Company will be able to continue as a going concern. Further, even if the Company's efforts to raise additional financing and explore other strategic alternatives result in a transaction that repays the senior bank debt, there can be no assurance that the current common stock will have any value following such a transaction. In particular, if any new financing is obtained, it likely will require the granting of rights, preferences or privileges senior to those of the common stock and result in substantial dilution of the existing ownership interests of the common stockholders." ALLEGHENY ENERGY: PwC Expresses Going Concern Doubt --------------------------------------------------- Allegheny Energy, Inc. (NYSE: AYE) has completed its comprehensive financial review and has filed its 2002 Form 10-K. Financial Results The Company reported a consolidated net loss of $632.7 million for 2002, compared with net income of $417.8 million for 2001. The Company's results of operations for 2002 were reduced by $130.5 million (net of income taxes), reflecting the cumulative effect of the accounting change associated with the adoption of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." The results for 2001 were reduced by $31.1 million (net of income taxes), reflecting the cumulative effect of the accounting change associated with the adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." Before the cumulative effect of an accounting change, the consolidated loss for 2002 was $502.2 million, as compared with consolidated income before the cumulative effect of an accounting change of $448.9 million for 2001. The decrease in 2002 earnings was primarily due to lower net revenues of $1,029.8 million in excess generation and trading, resulting primarily from weak wholesale energy markets and unrealized losses in 2002 versus unrealized gains in 2001 from energy trading activities. Certain other items which affected 2002 income included: -- Charges related to impairment of generation projects - $244.0 million ($149.2 million net of tax); -- Charges related to workforce reduction - $107.6 million ($64.8 million net of tax); -- Charges related to impairment of unregulated investments - $44.7 million ($26.5 million net of tax); -- An increase to loss from adjustments related to prior years' accounting errors - $29.5 million ($20.1 million net of tax); -- Loss on sale of business before effect of minority interest - $31.5 million ($18.8 million net of tax); -- Charges related to restructuring and related asset impairment - $28.9 million ($17.8 million net of tax); and -- Gains on Canaan Valley land sales - $22.4 million ($18.2 million net of tax). At December 31, 2002, the Company's restated balance sheet shows that its total current liabilities exceeded its total current assets by about $5 billion. Since the Company and certain of its subsidiaries are not current with their financial reporting, they are not in compliance with certain reporting covenants in certain debt agreements. This non- compliance has resulted in the reclassification of approximately $3.7 billion of long-term debt to current debt on the Company's consolidated balance sheet for 2002. As a result, the Company has received a modified opinion from PricewaterhouseCoopers LLP, the Company's independent auditors, that indicates there is substantial doubt about the Company's ability to continue as a going concern. Since the Company expects to file its Form 10-Q quarterly financial reports for 2003 during the fourth quarter of this year, it would, therefore, expect at such time to be in compliance with its financial reporting covenants. At this time, the Company believes that its cash-on-hand and cash flows will be adequate to meet its payment obligations under debt agreements and to fund other working capital needs in 2003. Paul J. Evanson, Chairman, President, and Chief Executive Officer of Allegheny Energy, said, "While 2002 was a difficult year for the Company, we have already taken a number of actions to improve Allegheny's situation. We have made substantial management changes, completed key financing transactions, largely exited from Western energy markets, sold certain assets, undertaken restructuring and cost-cutting initiatives, and began improving internal controls. While this is meaningful progress, we still have major challenges ahead of us. "Our focus today is on returning to the fundamentals of our business," added Evanson. "Our top priorities are clear - strengthen liquidity, improve internal controls, establish an outstanding management team, reduce debt, and build on the strengths of our core energy supply and delivery businesses. We are working intensely on each of these areas." Comprehensive Financial Review Since the third quarter of 2002, the Company has undertaken a comprehensive and extended review of its financial information and internal controls and procedures. This review included continuous efforts by the Company's management and directors and extensive involvement of its independent auditors, as well as other outside services firms. Based upon the results of this review and the performance of additional procedures, the Company and its auditors were able to complete the 2002 audit and, in that connection, determine that no restatement of prior years' earnings was necessary. Errors related to prior years that were identified as part of this review, aggregating approximately $20.1 million (net of income taxes), have been recorded as an increase to net loss in the first quarter of 2002. Allegheny Energy has implemented corrective actions to improve internal controls and to strengthen disclosure and reporting processes as further described in its 2002 Form 10-K. Allegheny Energy will continue to institute changes in its financial reporting policies and procedures and improve its internal controls structure. Generation and Marketing Segment The Generation and Marketing segment reported a loss before the cumulative effect of an accounting change for 2002 of $586.3 million, as compared with income before the cumulative effect of an accounting change of $261.4 million for 2001. The decrease in 2002 earnings was primarily due to lower net revenues of $1,029.8 million in excess generation and trading, resulting primarily from weak wholesale energy markets and unrealized losses in 2002 versus unrealized gains in 2001 from energy trading activities. The Generation and Marketing segment also recorded asset impairment charges of $149.2 million (net of income taxes) for the impairment of generation projects during 2002. This segment also included a charge of $34.4 million (net of income taxes) for workforce reduction costs, as well as $17.4 million (net of income taxes) for restructuring charges and related asset impairment. Delivery and Services Segment The Delivery and Services segment reported income before the cumulative effect of an accounting change for 2002 of $84.1 million, as compared with income before the cumulative effect of an accounting change of $187.5 million for 2001. The Delivery and Services segment recorded charges of $26.5 million (net of income taxes) for impairment writedowns of certain unregulated investments and $18.8 million (net of income taxes) for the loss on the sales of Fellon-McCord & Associates, Inc. and Alliance Energy Services, LLC. The segment also recorded a charge of $30.4 million (net of income taxes) for workforce reduction costs. With headquarters in Hagerstown, Md., Allegheny Energy (Fitch, BB- 11-7/8% Convertible Debt and Preferred Share Ratings) is an integrated energy company with a balanced portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities and supplies energy and energy- related commodities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. More information about the Company is available at http://www.alleghenyenergy.com ALLIANCE COMMUNICATIONS: Elzufon Austin Serves as Local Counsel --------------------------------------------------------------- Alliance Communications, LLC and its debtor-affiliates are seeking for the U.S. Bankruptcy Court for the District of Delaware's approval of the application to employ Elzufon Austin Reardon Tarlov & Mondell, PA as local counsel because of the Firm's knowledge in the field of debtors' and creditors' rights under Chapter 11 of the Bankruptcy Code. In preparing for these Chapter 11 cases, the Firm has become familiar with the Debtors' business and affairs as well as many of the potential legal issues that may arise in their cages. Accordingly, the Debtors believe that the Firm is both well- qualified and uniquely able to represent them in this Chapter 11 case in an efficient and timely manner. As local counsel, Elzufon Austin is expected to: a) provide legal advice with respect to the Debtors' powers and duties as debtors and debtors-in-possession in the continued operation of their business and management of their assets; b) assist the Debtors in maximizing the value of their assets for the benefit of all creditors and other parties in interest; c) commence and prosecute any and all necessary and appropriate actions and/or proceedings on behalf of he Debtors and their assets; d) prepare, on behalf of the Debtors, all necessary applications, motions, answers, orders, reports and other legal papers; e) appear in Court to represent and protect the interests of the Debtors and their estates; and f) perform all other legal services for the Debtors that may be necessary and proper in these Chapter 11 proceedings. The professionals who will be responsible in this engagement and their current hourly rates are: William D. Sullivan $240 per hour Charles J. Brown III $210 per hour Renee D. Veney $135 per hour Michael P. Young $ 75 per hour Headquartered in Denver, Colorado, Alliance Communications, LLC is a cable television operator. The Company filed for chapter 11 protection on September 8, 2003 (Bankr. Del. Case No. 03-12776). William David Sullivan, Esq., at Elzufon Austin Reardon Tarlov & Mondell PA represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of more than $50 million and debts of over $100 million. ALLIED HOLDINGS: S&P Revises Ratings Outlook to Stable from Neg. ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Allied Holdings Inc. to stable from negative. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the company and raised its senior unsecured rating to 'B-' from 'CCC+'. "The outlook revision reflects recent favorable developments including implementation of various cost reduction initiatives, ratification of labor agreements with the U.S. and Canadian Teamsters unions, and amendment of its bank agreement, which improved liquidity," said Standard & Poor's credit analyst Kenneth L. Farer. "The upgrade on the company's $150 million senior unsecured notes to one notch below the company's corporate credit rating reflects the decrease in the outstanding secured debt that would rank ahead of senior unsecured creditors in the event of bankruptcy," he continued. The ratings reflect Decatur, Georgia-based Allied Holdings Inc.'s weak financial flexibility, aggressively leveraged capital structure, and concentrated end customer base. Allied's dominant position as the largest North American motor carrier of new vehicles and improving operating performance partially offsets these negative credit aspects. Although Allied's specialized fleet delivers approximately 60% of new vehicles in North America, it faces intense competitive pressure on the rates it charges because of competition from other specialty carriers for short-distance trips and major railroads for long-distance trips. The company also faces continued pricing pressure from the large auto manufacturers, which represented 87% of 2002 revenues. In addition, revenues for 2003 have been negatively affected by reduced automobile production levels, a shift in mix toward larger vehicles, and higher fuel prices. Since 2001, the company has reduced its operating costs through the closure of unprofitable terminals and worker productivity initiatives, including reductions in cargo damage, injuries, and traffic accidents, which have more than offset the decline in revenue. In March 2003, the company entered into a new three-year agreement with the Teamster Union in Canada, including provisions to keep wages frozen for the first two years of the agreement. In June, the company began operating under a new five-year agreement with the Teamsters in the U.S., which also includes provisions to keep wages frozen for the first two years of the agreement. Health, welfare, and pension contributions under the contracts will increase. As a result of these initiatives, operating margins have improved to approximately 8% for the first six months of 2003, compared with about 4% in 2001, with further modest improvements expected. AMERICAN GREETINGS: Second-Quarter Net Loss Narrows to $9.7 Mil. ---------------------------------------------------------------- American Greetings Corporation (NYSE: AM) reported results in line with its estimate for the second quarter of fiscal 2004. American Greetings realized a net loss of $9.7 million on net sales of $403.5 million, for the fiscal 2004 second quarter ended Aug. 31, 2003. These results compare to a net loss of $15.8 million on net sales of $396.9 million in the second quarter last year. The Corporation historically realizes a net loss in its second quarter because of the seasonal nature of its business. The Corporation reported net income of $10.0 million on net sales of $857.9 million, for the first half of fiscal 2004. This compares to net income of $28.7 million on net sales of $881.1 million, for the same period last year. Last year's first-half results include a $12 million pretax gain from the sale of an equity investment. EBITDA for the second quarter of fiscal 2004 was $17.6 million, compared to $10.3 million in the second quarter of fiscal 2003. EBITDA for the trailing four quarters ended Aug. 31, 2003, was $313.1 million, compared to EBITDA for the year-ago trailing four quarters of $339.1 million. EBITDA represents a non-GAAP financial measure, and is presented because certain of the Corporation's credit agreement covenants incorporate EBITDA as a component of their calculations. A table reconciling EBITDA to the appropriate GAAP measure is included in the notes to this release. Management Comments and Outlook "Our second-quarter performance is in line with our projections," said Chief Executive Officer Zev Weiss. "We had a meaningful improvement in our second-quarter results, due in part to our focus on cost management. Our cost management efforts included supply chain benefits that offset their related costs within the quarter. We are pleased with the progress of the supply chain initiative to date. We are also pleased with the progress we are making in the conversion of 1,400 stores for a major account, a project that is on budget and on schedule for completion before calendar year end due to the exceptional effort of our associates." American Greetings projects earnings per share of 68 cents to 73 cents for the third quarter of fiscal 2004. The Corporation realized earnings per share of 62 cents for the third quarter of fiscal 2003. American Greetings Corporation (NYSE: AM) (S&P, BB+ Subordinated Debt Rating, Stable) is one of the world's largest manufacturers of social expression products. Along with greeting cards, its product lines include gift wrap, party goods, reading glasses, candles, stationery, calendars, educational products, ornaments and electronic greetings. Located in Cleveland, Ohio, American Greetings generates annual net sales of approximately $2 billion. For more information on the Corporation, visit http://corporate.americangreetings.com AMERICAN MARKETING: Secures Okay to Pay UPS's Prepetition Claims ---------------------------------------------------------------- American Marketing Industries, Inc., is seeking permission from the U.S. Bankruptcy Court for the Western District of Missouri to pay the prepetition claim of United Parcel Service and UPS Freight Services/UPS Supply Chain Solutions, Inc., because the carrier is a critical service provider. In the ordinary course of its business, the Debtor must transport almost all of its apparel inventory from overseas and across the country using UPS' services. UPS coordinates and transports inventory from overseas. As part of its freight forwarding services, UPS advances, on behalf of the Debtor, tariffs, duties, and other expenses associated with international shipments. As of the Petition Date, Debtor's goods valued in excess of $330,000 were either on the water, landed and in bond, or otherwise in transit on UPS' paper and subject to UPS' freight or warehouseman's liens. As of the Petition Date, the Debtor owed UPS $205,391 and the UPS small packages division approximately $12,200. The Debtor contends that if that payment of UPS' claim is necessary. Otherwise, UPS will discontinue providing services to the Debtor on Customary Trade Terms which will undoubtedly interrupt the functioning of the Debtor's business operations and the ongoing restructuring. The Debtor points out that it would be more expensive if the Debtor was to look for an alternative freight forwarding services and is impossible to replace on such short notice without significant disruption to the Debtor's business operations. Furthermore, it is unlikely the Debtor will be able to obtain as favorable rates as previously negotiated with UPS. To continue the services with UPS, the Debtor asks the Court to allow them to pay UPS' prepetition claims in the ordinary course of its business. Headquartered in Independence, Missouri, American Marketing Industries, Inc., is a specialized apparel company. The Company filed for chapter 11 protection on September 17, 2003 (Bankr. W.D. Mo. Case No. 03-62333). Laurence M. Frazen, Esq., and Michelle M. Masoner, Esq., at Bryan Cave LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and estimated debts of more than $100 million. ARMSTRONG: Court Okays April 2 Plan Filing Exclusivity Extension ---------------------------------------------------------------- Armstrong Holdings, Inc., and its debtor-affiliates sought and obtained Judge Newsome's approval to extend the Debtors' exclusive right to file a plan to and including April 2, 2004, and the Debtors' exclusive right to solicit acceptances of that plan to and including June 4, 2004. (Armstrong Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVAYA: Inks Pact to Acquire Certain VISTA Information Businesses ---------------------------------------------------------------- Avaya Inc. (NYSE: AV), a leading global provider of communications networks and services for business, announced an agreement with VISTA Information Technologies Inc., a leading provider of enterprise customer interaction solutions, to acquire VISTA's Professional Services and Managed Services business units and purchase selected service delivery technology assets. These acquisitions will enhance Avaya Global Services' delivery of end- to-end design, implementation and management services for converged, multi-vendor networks. Financial terms of the agreement were not disclosed and completion of the transaction is subject to customary conditions. Under the agreement, Avaya will acquire software tools that streamline integration of complex multi-channel, multi-vendor contact center networks and enhance remote network management capabilities. Consultants from the VISTA Professional Services, Network Management and the Technology Research and Development teams will join similar groups within Avaya. The consultants who join the Avaya Professional Services organization carry industry certifications and qualifications from major technology providers including Avaya, Cisco, Microsoft and Nortel, and have significant experience integrating multi-vendor contact centers and converged voice and data networks. "Expanding the depth and capacity of our services skill-set and adding new service delivery tools enhances Avaya's ability to help companies take advantage of business-transforming technologies, such as converged voice and data networks and multi-media contact centers," said Lou D'Ambrosio, group vice president of Avaya Global Services. "This delivers on our strategy to increase Avaya's multi-vendor service capabilities and augments the reach of our professional consulting and managed services groups." The transaction is expected to be complete in early October. Avaya Inc., whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $25 million, designs, builds and manages communications networks for more than 1 million businesses worldwide, including 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol (IP) telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya Web site: http://www.avaya.com Avaya Global Services includes more than 7,000 consultants, professionals and research and development experts, 23 network operations and 13 technical centers worldwide. The Avaya Services team can assess, plan, design, manage and maintain converged voice and data networks, including multi-vendor local area and wide area networks. For more information about all offerings from Avaya Global Services, please visit: http://www1.avaya.com/services VISTA Information Technologies, Inc. (VISTA) is a leader in the emerging field of Customer Interaction Solutions, and an expert in convergence services that unify and build customer relationships across multiple communications channels -- voice, voice over IP, interactive voice recognition, email, Web, fax, speech recognition, wireless, imaging, and e-commerce systems -- while reducing costs and increasing revenues. VISTA is headquartered in Herndon, Virginia, and can be found on the Web at www.vistait.com BAY VIEW CAPITAL: Will Publish Third-Quarter Results on Oct. 21 --------------------------------------------------------------- Bay View Capital Corporation (NYSE: BVC) plans to release its third quarter 2003 results after the close of market on Tuesday, October 21, 2003. The Company will host a conference call at 2:00 p.m. PDT on Wednesday, October 22, 2003 to discuss its financial results. Analysts, media representatives and the public are invited to listen to this discussion by calling 1-888-793-6954 and referencing the password "BVC." An audio replay of this conference call will be available through Friday, November 21, 2003 and can be accessed by dialing 1-800-937-5157. Bay View Capital Corporation (S&P, B- Preferred Share Rating) is a financial services company headquartered in San Mateo, California and is listed on the NYSE: BVC. For more information, visit http://www.bayviewcapital.com BRILLIANT DIGITAL: Gets Time Extension to Meet AMEX Requirements ---------------------------------------------------------------- Brilliant Digital Entertainment, Inc. (AMEX: BDE) announced that on September 17, 2003, the American Stock Exchange has accepted the plan of compliance submitted by the Company on August 19, 2003, and granted the Company an extension of time through November 2003 to regain compliance with the AMEX continued listing requirements. As previously announced, the Company is not in compliance with certain continued listing requirements of the American Stock Exchange, including maintaining a sales price for its common stock above $1.00 per share, and at least $6,000,000 in shareholder equity, having incurred losses from continuing operations and/or net losses in its five most recent fiscal years. The Company was afforded the opportunity to submit a plan of compliance to the exchange, which it did on April 30, 2002. On June 19, 2002, the exchange notified the Company that the exchange accepted the Company's plan of compliance and granted an informal extension, the length of which was at the discretion of the exchange, to regain compliance with the continued listing standards. The Company has been subject to periodic reviews by the exchange staff during the extension period, the most recent of which occurred following disclosure by the Company of its results for the quarter ended June 30, 2003. The Company will be subject to periodic review by the AMEX staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from AMEX. Brilliant Digital Entertainment, Inc. (AMEX: BDE) is the parent company of Altnet Inc. and a developer of 3D rich media advertising and content creation technologies for the Internet. The b3d rich media format is used to produce entertainment, advertising and music content for consumers distributed over the Internet. Find out more at http://www.brilliantdigital.com * * * Liquidity and Going Concern Uncertainty Brilliant Digital's June 30, 2003 balance sheet shows a working capital deficit of about $4 million, while its total net capitalization is down to $700,000., In its Form 10-QSB recently filed with the Securities and Exchange Commission, the Company reported: "The [Company's] consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not purport to represent realizable or settlement values. However, the Company has suffered recurring operating losses and at June 30, 2003, had negative working capital of approximately $4,199,000. These factors raise substantial doubt about the Company's ability to continue as a going concern. "The Company is seeking additional funding and believes this will result in improved working capital. There can be no assurance, however, that the Company will be able to secure additional funding or that if such funding is available, whether the terms or conditions would be acceptable to the Company." BUDGET GROUP: Court Expunges Various Duplicate & Amended Claims --------------------------------------------------------------- Judge Walrath disallows and expunges 289 Duplicate Claims amounting to $106,462,925 as well as 186 Amended and Superceded Claims amounting to $18,645,096 in the Chapter 11 cases of the Budget Group Debtors. The dispute on Drusella Felix's claim is adjourned until October 8, 2003. The dispute on the claim filed by Kemper Insurance Companies is adjourned until November 23, 2003 to allow Kemper to liquidate its claim. The Debtors' objection to these claims is withdrawn: Claimant Claim No. Amount -------- --------- ------ Harvey & Harvey 2298 unliquidated Harvey & Harvey 2302 unliquidated Harvey & Harvey 2363 unliquidated (Budget Group Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALPINE CORP: Unit Prices $300-Million Secured Notes Offering ------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, announced that Gilroy Energy Center, LLC, a wholly owned, stand-alone subsidiary of the Calpine subsidiary GEC Holdings, LLC, has priced its $301,658,000 of 4% Senior Secured Notes Due 2011. The senior secured notes will be secured by GEC's and its subsidiaries' 11 peaking units located at nine power- generating sites in northern California. The notes will also be secured by a long-term power sales agreement for 495 megawatts of peaking capacity with the State of California Department of Water Resources, which is being served by the 11 peaking units. In addition, payment of the principal of, and interest on, the notes when due will be insured by an unconditional and irrevocable financial guaranty insurance policy to be issued simultaneously with the delivery of the notes. The transaction is expected to close on September 30, 2003. Proceeds of the notes offering (after payment of transaction expenses, including payment of the financial guaranty insurance premium) will be used to reimburse costs incurred in connection with the development and construction of the peaker projects. The noteholders' recourse will be limited to the financial guaranty insurance policy and, insofar as payment has not been made under such policy, to the assets of GEC and its subsidiaries. Calpine will not provide a guarantee of the notes. In connection with this offering, GEC expects to finalize with a third party a preferred equity investment in GEC totaling approximately $74 million. If the preferred equity investment is not completed at the time of closing of the offering of the 4% Senior Secured Notes Due 2011, the net proceeds from the offering will be held in escrow pending completion of the preferred equity investment. If the preferred equity investment is not completed within 90 days of the closing of the offering, the 4% Senior Secured Notes Due 2011 will be subject to a mandatory redemption at a price of 101%, plus accrued interest. The 4% Senior Secured Notes Due 2011 will be offered in a private placement under Rule 144A, have not been and will not be registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. * * * As previously reported, Standard & Poor's Ratings Services assigned its 'B' rating to Calpine Corp.'s $3.3 billion second- priority senior debt. The $3.3 billion includes: a $750 million term loan due 2007, $500 million floating rates notes due 2007, $1.15 billion 8.5% secured notes due 2010, and $900 million secured notes due 2013. The notes carry the same rating as other Calpine senior secured debt and are rated two notches higher than the 'CCC+' rated senior unsecured debt. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on Calpine, its 'B' rating on Calpine's secured debt, its 'CCC+' rating on Calpine's senior unsecured bonds, and its 'CCC' rating on Calpine's preferred stock. The 'BB-' rating on the existing $950 million secured term loan and the $950 million secured revolver are withdrawn, as this debt was refinanced with the proceeds of the recent $3.8 billion financing. CALPINE: Closes $50M of Additional CCFC I Secured Notes Offering ---------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, announced that its wholly owned subsidiary, Calpine Construction Finance Company, L.P., has received funding on a $50 million secured notes offering. This financing represents an add- on to the $750 million CCFC I offering completed on August 14, 2003. The additional financing was comprised of $50 million of Second Priority Senior Secured Floating Rate Notes Due 2011 offered at 99% of par and priced at Libor plus 850 basis points, with a Libor floor of 125 basis points. The noteholders' recourse will be limited to CCFC I's seven natural gas-fired electric generating facilities located in various power markets in the United States, and related assets and contracts. Net proceeds from the offering will go to reimburse Calpine for cash used to refinance a portion of CCFC I's existing indebtedness that was refinanced on August 14, 2003. The Second Priority Senior Secured Floating Rate Notes Due 2011 were offered in a private placement under Rule 144A, have not been and will not be registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy. Securities laws applicable to private placements under Rule 144A limit the extent of information that can be provided at this time. CELL-LOC: Investor Group Will Inject Capital & Reorganize Co. ------------------------------------------------------------- Cell-Loc Inc. (TSX: CLQ) has entered into an agreement with an investor group led by Grant Billing to recapitalize and reorganize its business. Pursuant to the agreement, Cell-Loc's existing technology assets will be transferred to a subsidiary company, all of the shares of which will then be distributed to Cell-Loc's existing shareholders (on a share-for-share basis), all pursuant to a statutory Plan of Arrangement. As part of the transaction, Techco will seek a public listing on the TSX Venture Exchange. Existing shareholders of Cell-Loc will thereby receive shares of a new entity that will own all of the existing technology assets on a debt-free basis. The Company will be transformed into an oil and gas exploration and development company to be called Capitol Energy Resources Ltd. It is expected that Capitol Energy will make the appropriate applications to have its listing move from the TSX to the TSX Venture Exchange, as part of this transaction. The investment group will provide $4.9 million to pay existing liabilities of Cell-Loc and to recapitalize Techco and Capitol Energy going forward. By way of this transaction, Cell-Loc shareholders will not only retain their current ownership positions in the technology enterprise but will also obtain a significant interest in Capitol Energy's equity. In this fashion, Cell-Loc's shareholders will be able to participate in the value realized from Cell-Loc's existing tax pools, a value Cell-Loc could not itself capture. This restructuring will be accomplished through a Plan of Arrangement to be approved by the Court of Queen's Bench of Alberta and Cell-Loc securityholders (by a majority of at least two-thirds of the securityholders voting). The transaction is also subject to all necessary regulatory approvals and the receipt by the Independent Committee of the Board of Directors of the Company of a favorable fairness opinion to be provided by an independent third party financial advisor. Subject to those conditions, the Independent Committee has recommended the transaction as being in the best interests of the Company and its shareholders, and the full Board of Cell-Loc has unanimously approved the transaction. In addition to receiving Cell-Loc's existing technology assets, Techco will receive a cash injection of an estimated $2.5 million after all existing current trade payables related to the Company's technology business have been retired using the proceeds designated for that purpose from the capital raised in the transaction. Following the restructuring, Techco will therefore enjoy a fresh start, owning all of Cell-Loc's existing technology assets, having no debt and being funded with an estimated $2.5 million of cash to implement its business plan. The current Directors of Cell-Loc will form the new Board of Directors for Techco. It is also anticipated that the existing senior management of Cell-Loc will comprise the management team of Techco. Don Romaniuk, current Chairman of Cell-Loc, commented, "This is a tremendous opportunity for Cell-Loc shareholders. Having an interest in the newly formed oil and gas company as well as maintaining our current share structure in a new publicly listed entity, with no debt, and significant working capital creates immediate shareholder value and at the same time allows the Company to accelerate the commercialization of its promising technology." Upon closing, Techco will substantially maintain the capital structure which Cell-Loc currently has, being approximately 33 million common shares (on a non-diluted basis), while the continuing company, Capitol Energy, will have its capital structure reorganized in this transaction by way of the issuance of approximately 114 million new voting and non-voting shares in consideration of the $4.9 million of new capital at a subscription price of $0.0429 per share. The Company will retain an estimated $1 million of these funds for working capital. After the restructuring Capitol Energy will then have approximately 60 million voting shares and 90 million non-voting shares outstanding. The proposed new Board of Directors for Capitol Energy is Grant Billing (Chairman), John Brussa, John Budreski, Jim MacDonald and Sheldon Reid. Mr. Reid, the current CEO of Cell-Loc, will join the Board of Capitol Energy, which is intended to assure protection of Cell-Loc's shareholder interest in the new entity. Capitol Energy will therefore commence business with a working capital surplus of $1 million of cash and approximately $70 million of tax pools. The Board of Directors intends to recruit a new management team for Capitol Energy in conjunction with reviewing potential acquisitions of suitable oil and gas assets to initiate operations. Grant Billing, prospective Chairman of Capitol Energy, stated, "This is an exciting opportunity for the new company as well as for Cell-Loc's existing shareholders. We have a committed Board who are investing a substantial portion of the new capital to launch the restructuring and have a wealth of knowledge in the oil and gas exploration and production business as well as expertise in raising capital and securing investment opportunities. Opportunities for growth in the oil and gas business are favorable as the industry continues to evolve with the realignment of assets within the sector. Our tax position will certainly provide us with a competitive advantage. We are confident that we can attract a high caliber of experienced personnel capable of developing Capitol Energy as a successful oil and gas company." A Special Meeting of the shareholders of Cell-Loc will be convened to approve the Plan of Arrangement. The Information Circular and proxy materials for this meeting are expected to be mailed to shareholders during the week of October 20, 2003, with the shareholder meeting to approve the Arrangement being scheduled for the week of November 24, 2003. Interested parties are invited to contact Tammy Yamkowy, Director, Investor Relations of Cell-Loc, at 403.569.5748. Cell-Loc Inc. -- http://www.cell-loc.com-- a leader in the wireless location industry, is the developer of Cellocate(TM), a family of network-based wireless location products that enable location-based services. Located in Calgary, Alberta, Cell-Loc currently develops, markets and supports its patented wireless location technology in Asia as well as North and South America, with a view to expanding globally. Cell-Loc is listed on the Toronto Stock Exchange (TSX) under the trading symbol: "CLQ." * * * As reported previously, the company's December 31, 2002 total cash balance of $562,000 represents a $1.0 million, or 63 percent, decrease from the first quarter cash balance of $1.5 million. The working capital balance has increased to $307,000 from a working capital deficiency of $2.47 million for the period ended September 2002. The increase in working capital for the period ended December 31, 2002 is a direct result of de-consolidating TimesThree Inc. Subsequent to the quarter end, the Company received $970,400 from the January 2003 private placement. The Company has entered into contracts to sell a portion of the assets formerly classified as available for deployment, the proceeds from which will be a source of near term cash. In the absence of the Company selling the network equipment contracted for sale or the Company generating cash by licensing its technology to third parties, the Company will deplete its cash reserves at the end of March 2003. The Company's monthly use of cash continues to be scrutinized to ensure optimal use of cash resources. COMM SOUTH: US Trustee Sets Section 341(a) Meeting for Oct. 28 -------------------------------------------------------------- The United States Trustee will convene a meeting of Comm South Companies, Inc.'s creditors on October 28, 2003, 2:00 p.m., at Office of the U.S. Trustee, 1100 Commerce Street, Room 976, Dallas, Texas 75242. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Dallas, Texas, Comm South Companies, Inc., is a telecommunications company providing local and long distance telephone service for both residential and commercial users. The Company filed for chapter 11 protection on September 19, 2003 (Bankr. N.D. Tex. Case No. 03-39496). Terrance Ponsford, Esq., at Sheppard Mullin Richter and Hampton, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and debts of more than $50 million. CONE MILLS: Shareholder Committee Nominees Win Board Seats ---------------------------------------------------------- The Cone Mills Shareholders' Committee announced an overwhelming victory in the election of directors at the Cone Mills Corporation Annual Meeting held Thursday. The Committee received votes for its nominees representing more than 50% of Cone's outstanding shares. Commenting on the results, Committee member and current Cone director Marc Kozberg stated, "This is a clear message to the Cone Board -- Cone shareholders want to see the Company reorganized, not sold to WL Ross. We are confident that superior alternatives are available and intend to explore them fully." Cone Mills Corp. is one of the leading denim manufacturers in North America. The Debtor also produces fabrics and operates a commission finishing business. See the company's Web site at http://www.cone.com Cone Mills Corp., and its 4 subsidiaries filed for Chapter 11 protection on September 24, 2003 in the U.S. Bankruptcy Court for the District of Delaware (Lead Bankr. Case No. 03-12944). CONSECO FIN: S&P Takes Ratings Cuts on Two Related Transactions --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on nine classes from two Conseco Finance Corp.-related manufactured housing transactions issued in 2002 and removed them from CreditWatch with negative implications, where they were placed Oct. 21, 2002. At the same time, the rating on class A-IO from Conseco-related Manufactured Housing Contract Senior/Sub Pass- Through Certificates Series 2002-2 is affirmed and removed from CreditWatch, where it was placed Oct. 21, 2002. The lowered ratings reflect the poor performance of the underlying pools of manufactured housing contracts and the resulting deterioration of credit enhancement. The class A-IO certificates benefit from the senior position of A- IO interest in the transaction's cash flow allocation, the fact that the class A-IO's notional balance is not tied to a class, and the absence of a remedy allowing for the liquidation of the receivables following a monetary or nonmonetary event of default. With pool factors of 81.5% and 85%, series 2002-1 and 2002-2 display cumulative net loss rates of 3.69% and 2.37% of the respective original pool balances. In addition, more than 5.5% of the collateral pool for series 2002-1 is currently more than 30 days delinquent, and 2.2% of the current pool balance is in repossession inventory. Comparatively, approximately 4.78% of the current collateral pool is more than 30 days delinquent for series 2002-2, while repossession inventory is 1.79% of the current collateral balance. Furthermore, since Conseco has been more reliant on a wholesale liquidation strategy after suspending its manufactured home financing business in November 2002 and filing for bankruptcy in December 2002, recovery rates on liquidated collateral have plummeted for both transactions, with lifetime recovery rates currently at approximately 20%. Standard & Poor's has taken rating actions on Conseco-related manufactured housing transactions on several occasions during the past year. Recently, Standard & Poor's raised its ratings on 10 classes, affirmed its ratings on 72 classes, and lowered its ratings on 134 classes from Conseco-related manufactured housing transactions. RATINGS LOWERED AND REMOVED FROM CREDITWATCH Manufactured Housing Contract Sr/Sub Pass-Through Certificates Series 2002-1 Rating Class To From A A+ AAA/Watch Neg M-1-A BBB AA-/Watch Neg M-1-F BBB AA-/Watch Neg M-2 BB A-/Watch Neg B-1 B+ BBB/Watch Neg Manufactured Housing Contract Sr/Sub Pass-Through Certificates Series 2002-2 Rating Class To From A-2 A+ AAA/Watch Neg M-1 A- AA/Watch Neg M-2 BBB- A/Watch Neg B-1 BB- BBB/Watch Neg RATING AFFIRMED AND REMOVED FROM CREDITWATCH Manufactured Housing Contract Sr/Sub Pass-Through Certificates Series 2002-2 Rating Class To From A-IO AAA AAA/Watch Neg CONSECO: S&P Initiates Various Rating Actions on Related Trusts --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on seven classes and affirmed its ratings on 30 classes of various Green Tree Recreational, Equipment & Consumer Trusts and Conseco Finance Recreational Enthusiast Consumer Trusts originally issued by Green Tree Financial Corp., or its successor, Conseco Finance Corp. At the same time, the ratings on four classes from the aforementioned transactions are lowered. The raised ratings reflect the increased credit enhancement levels relative to expected remaining losses. Although projected lifetime cumulative net losses for certain transactions exceed original expectations, credit enhancement levels have grown and continue to provide adequate protection to investors in order to maintain ratings at their original levels. In some cases, credit enhancement levels as a multiple of expected net losses over the remaining life of the transactions have increased to levels sufficient to support raised ratings. Despite higher projected losses, the buildup of credit enhancement in these transactions was either achieved through the sequential pay structure of the deals (in which subordination levels supporting the senior classes continue to build as the collateral pools and the senior classes pay down) or through the non-amortizing nature of the respective reserve accounts. The amounts on deposit in the reserve accounts as a percentage of the respective current pool balances continue to grow as the collateral pools pay down. The lowered ratings on Conseco Finance Recreational Enthusiast Consumer Trust 2001-A reflect the worse-than-expected performance of the underlying pool and the depletion of credit enhancement in the transaction. With a pool factor of 49.23%, the trust displays a cumulative net loss rate of 5.46% of the original pool balance and repossession inventory of 1.83% as a percentage of the current pool balance. In addition, approximately 3.55% of the current collateral pool is more than 30 days delinquent. Standard & Poor's lowered its ratings on other corporate- guaranteed subordinated classes to 'D' Dec. 23, 2002 and March 26, 2003 due to interest shortfalls experienced by these classes. RATINGS RAISED Green Tree Recreational, Equipment & Consumer Trust 1998-B Rating Class To From A-6 AAA AA A-7 AA A Green Tree Recreational, Equipment & Consumer Trust 1998-C Rating Class To From A-6 AAA AA A-7 AA A B-1 BBB+ BBB Green Tree Recreational, Equipment & Consumer Trust 1999-A Rating Class To From M-1 AAA AA M-2 A+ A RATINGS LOWERED Conseco Finance Recreational Enthusiast Consumer Trust 2001-A Rating Class To From A-4 AA+ AAA M-1 AA- AA M-2 A- A B BB+ BBB- RATINGS AFFIRMED Green Tree Recreational, Equipment & Consumer Trust 1997-B Class Rating A-1 AAA A-2 AA A-3 A A-4 BBB B CCC- Green Tree Recreational, Equipment & Consumer Trust 1997-C Class Rating A-1 AAA A-2 AA A-3 A A-4 BBB B CCC- Green Tree Recreational, Equipment & Consumer Trust 1997-D Class Rating A-1HE/HI AAA Green Tree Recreational, Equipment & Consumer Trust 1998-A Class Rating A-1C AAA A-2C AA A-3C A A-4C BBB A-1H AAA A-2H AA A-3H A A-4H BBB Green Tree Recreational, Equipment & Consumer Trust 1998-B Class Rating B-1 BBB Green Tree Recreational, Equipment & Consumer Trust 1998-C Class Rating A-5 AAA Green Tree Recreational, Equipment & Consumer Trust 1999-A Class Rating A-6 AAA B-1 BBB Conseco Finance Recreational Enthusiast Consumer Trust 2000-A Class Rating A-2 AAA A-3 AAA M-1 AA M-2 A B BBB Conseco Finance Recreational Enthusiast Consumer Trust 2001-A Class Rating APPIO AAA A-3 AAA CORAM: Plan Confirmation Hearing Convening on Sept. 30, 2003 ------------------------------------------------------------ On September 8, 2003, Arlin M. Adams, Esquire, the Chapter 11 trustee for the bankruptcy estates of Coram Healthcare Corporation and its wholly-owned subsidiary, Coram, Inc., filed a Modification to the Chapter 11 Trustee's Amended Joint Plan of Reorganization in the United States Bankruptcy Court for the District of Delaware in the Debtors' jointly administered bankruptcy cases. As previously reported on Coram Healthcare Corporation's Current Report dated July 11, 2003, two competing proposed plans of reorganization were filed in the Debtors' jointly administered bankruptcy cases. The plans of reorganization were proposed by (i) the Chapter 11 trustee and (ii) the Official Committee of Equity Security Holders of Coram Healthcare Corporation. The Chapter 11 trustee's proposed plan of reorganization, which was subsequently modified by the Modification, and the Chapter 11 trustee's disclosure statement were filed in the Bankruptcy Court on June 17, 2003 and June 24, 2003, respectively. The Equity Committee's proposed plan of reorganization and the Equity Committee's disclosure statement were filed in the Bankruptcy Court on June 17, 2003 and June 26, 2003, respectively. Certain creditors and interest holders have voted on each and, in some cases, both of the proposed plans of reorganization. The Chapter 11 trustee's proposed plan of reorganization, as modified, and the Equity Committee's proposed plan of reorganization remain subject to confirmation by the Bankruptcy Court. The hearing to consider confirmation of each of the Chapter 11 trustee's and the Equity Committee's proposed plans of reorganization and any objections thereto is scheduled to commence at 10:30 a.m. Eastern Daylight Savings Time on September 30, 2003. The deadline to object to confirmation of either the Chapter 11 trustee's plan of reorganization or the Equity Committee's plan of reorganization was August 7, 2003 and, in connection therewith, certain objections have been filed against each of the proposed plans of reorganization. No assurances can be given that either proposed plan of reorganization will be confirmed by the Bankruptcy Court. COVANTA ENERGY: Settlement of Loss Sharing Litigation Under Plan ---------------------------------------------------------------- The Covanta Energy Debtors' Reorganization Plan incorporates in full the proposed compromise and settlement of all issues relating to or arising under the Loss Sharing Litigation. This litigation refers to the Motion filed by the Canadian Imperial Bank of Commerce, as agent for the Canadian Loss Sharing Lenders, for an Order (1) Interpreting and Enforcing the Final DIP Order and (2) Confirming the Amount of the Tranche C Loans to the Debtors, dated June 25, 2002, pending before the Court. In consideration for the distribution and other benefits under the proposed compromise and settlement and the Reorganization Plan, the Loss Sharing Litigation will be deemed settled on the Effective Date without further action by any person and all parties will be permanently enjoined from asserting or continuing in any manner the Loss Sharing Litigation or any claims relating. A. Interim Reductions Ernst & Young Corporate Finance LLC will calculate the Realized Percentages immediately prior to: (i) the effective date of a plan of reorganization for Covanta and its debtor subsidiaries in the jointly administered voluntary bankruptcy proceedings under the Bankruptcy Code, and (ii) giving effect to the pooling transaction. On or about the Plan Effective Date, the Pooled Facility Lenders and the Canadian Loss Sharing Lenders will make loss sharing payments required under Section 5.3 of the Inter-creditor Agreement based on any adjustments to the Realized Percentage that occur during the period from June 25, 2003 to the time of the calculation. For the avoidance of doubt, all calculations contemplated of claim amounts and permanent reductions will be determined based solely on the principal amounts of the claims. B. Exercise of Put/Realization on Collateral On the Plan Effective Date, CIBC, as administrative agent for the holders of the Class B Palladium Preferred Shares, will be deemed to exercise, and Company will be deemed on that date to accept the put to Company under the Class B Palladium Put Agreement, as a result of which: (a) Company will receive the 72,000,000 of outstanding Class B Palladium Preferred Shares and all rights related thereto; (b) The Canadian Loss Sharing Lenders will have an allowed claim -- the CLSL Claim -- against Company for CND62,000,000 in respect of 62,000,000 of the Class B Palladium Preferred Shares; and (c) Separate and apart from its claim as one of the Canadian Loss Sharing Lenders, CIBC will reserve its rights against Company with respect to the approximately CND10,000,000 of cash collateral held by CIBC and with respect to the 10,000,0000 Class B Palladium Preferred Shares that are not included in the Class B Canadian Facility. On the Plan Effective Date, the Canadian Loss Sharing Lenders will apply the amount of all payments received prior to the Plan Effective Date pursuant to Section 5.3 of the Inter-creditor Agreement to reduce on a dollar-for-dollar basis the principal amount of the CLSL Claim. C. Exit Facility Pooling On the Plan Effective Date, after giving effect to all adjustments to the Realized Percentages that are calculated immediately prior to the Debtors' emergence from the Chapter 11 Cases and distribution of any securities of the Debtors in the Plan of Reorganization to Non-Priority Prepetition Secured Claim Holders: (a) each participant in the Tranche B Letters of Credit and each Canadian Loss Sharing Lender -- the Pool Participant -- at that time will irrevocably purchase, from each Pool Participant that is the issuer of a letter of credit -- a Pooled Exit L/C -- that replaces, renews or extends on the Plan Effective Date a Tranche B Letter of Credit outstanding immediately prior to the Plan Effective Date, a participation in the Pooled Exit L/C in an amount equal to the Pool Participant's Pro Rata Share thereof, and (b) each Pool Participant that is a participant in the Tranche B Letters of Credit at that time will irrevocably purchase in cash, in U.S. Dollars, from each Pool Participant that is a Canadian Loss Sharing Lender, a portion of the Pooled Funded Claim held by the Canadian Loss Sharing Lender in an amount equal to the Pool Participant's Pro Rata Share. The effect of the "pooling" arrangement would be that the Pooled Facility Lenders would purchase in cash from the Canadian Loss Sharing Lenders their Pro Rata Shares of the Pooled Funded Claim, and the Canadian Loss Sharing Lenders and Pooled Facility Lenders would: (a) all become lenders and Participants with respect to the Pooled Exit L/Cs, (b) would be entitled to vote as lenders with respect to the credit facility for the Pooled Exit L/Cs, (c) would be obligated to fund their ratable shares of any honored drawings under the Pooled Exit L/Cs, and (d) would receive their ratable shares of any fees with respect to the Pooled Exit L/Cs and any interest on any drawn amounts, all in U.S. Dollars. The Company will be required to "gross up" the Canadian Loss Sharing Lenders for any applicable withholding tax on payments made to them after the "pooling". The purchase of the relevant portion of the Pooled Funded Claim by the Pooled Facility Lenders would be funded with the proceeds of "Tranche C Loans" under the DIP Credit Agreement, and upon the funding all claims of the Canadian Loss Sharing Lenders to the portion of the Pooled Funded Claim purchased with the Tranche C Loans would be released and waived, with the Tranche C Loans being substituted. D. Treatment of Pooled Funded Claim On the Plan Effective Date, after the purchase of the participations, Pool Participants will be entitled to have Tranche C Loans made and any portion of the Pooled Funded Claim not purchased with the proceeds of Tranche C Loans treated in the Plan of Reorganization on the same status as Non-Priority Prepetition Secured Claims and to receive, in consideration of the Tranche C Loans and the portion of the Pooled Funded Claim, a ratable portion of any Plan Paper. E. Treatment of Remaining CLSL Claim On the Plan Effective Date, Canadian Loss Sharing Lenders will be entitled to have the portion of the principal amount of their CLSL Claim not constituting the Pooled Funded Claim treated in the Plan of Reorganization on the same status as Non-Priority Prepetition Secured Claims and to receive, in consideration of the portion of their CLSL Claim, a ratable portion of any Plan Paper. F. Termination of Loss Sharing On the Plan Effective Date, after giving effect to consummation of the transactions described: (1) Section 5.3 of the Inter-creditor Agreement and all other provisions of the Inter-creditor Agreement relating to the loss sharing obligations of the Pooled Facility Lenders and the Canadian Loss Sharing Lenders will terminate, (2) each of the Pooled Facility Lenders, on the one hand, and the Canadian Loss Sharing Lenders, on the other hand, will release any further existing or future claims against the other Group or against the Agents arising under or with respect to the provisions, (3) the motion made in the Chapter 11 Cases by CIBC relating to the claims of the Canadian Loss Sharing Lenders will be deemed dismissed with prejudice, and (4) any "Tranche C Commitments" as defined in the DIP Credit Agreement will be terminated. (Covanta Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392- 0900) DELTA FINANCIAL: Prices $434 Million Asset-Backed Securitization ---------------------------------------------------------------- Delta Financial Corporation (Amex: DFC), a specialty consumer finance company that originates, securitizes and sells non- conforming mortgage loans, has priced a $434 million public offering of residential closed-end home equity loan-backed certificates through its subsidiary, Renaissance Mortgage Acceptance Csrp. The securitization was lead-managed by Citicorp Global Markets and co-managed by RBS Greenwich Capital brkets, Inc. The Renaissance Home Equity Loan Trust 2003-3 is a senior subordinate structure, with fully-funded over-collateralization (credit enhancement) at closing. Standard & Poor's, Fitch IBCA, and Moody's Investors Service, Inc. rated the securities. The Company anticipates utilizing a pre-funding feature and delivering - and recognizing revenues and expenses on - approximately $350 million of mortgage loans to the securitization trust by September 30, 2003. The Company further anticipates delivering the remaining mortgage loans from the third quarter securitization in October as new loans are originated, with those revenues and expenses recognized in our 2003 fourth quarter results. In addition, Delta will recognize revenues and expenses in the third quarter on $98 million of mortgage loans that it delivered in July 2003 relating to the second quarter's securitization. "We set an all time mortgage loan production record in August, on the heels of extremely strong loan originations in July," said Hugh Miller, President and Chief Executive Officer. "Our quarter- to-date production, coupled with a strong pipeline of loans for September, lead us to believe that we are well positioned to set record mortgage loan production volume for the third quarter. Our robust loan origination volume, during a quarter in which interest rates were generally higher than in prior quarters, is testament to our ability to grow in a changing interest rate environment," Miller said. Founded in 1982, Delta Financial Corporation is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. Delta's loans are primarily secured by first mortgages on one- to four-family residential properties. Delta originates home equity loans primarily in 26 states. Loans are originated through a network of approximately 1,500 independent brokers and the Company's retail offices. Since 1991, Delta has sold approximately $8.9 billion of its mortgages through 37 securitizations. * * * In February 2001, DFC proposed an exchange offer in order to deal with its financial difficulties at that time. Three of DFC's bondholders - among the most prominent institutional investors in the marketplace, who together held the majority of DFC's bonds - hired a leading financial advisor with specific expertise in these situations, to advise them with regard to protecting their investment. The bondholders' expert reviewed DFC's financials, discussed the possibility of DFC filing for bankruptcy or attempting a workout, and ultimately recommended that the bondholders enter into the proposed exchange offer with DFC, as a preferable alternative to forcing DFC into bankruptcy. DFC provided full disclosure in the exchange offer prospectus filed with the SEC and the assets were valued as accurately as possible by Delta as of the date Delta estimated their value, using the same assumptions that it used to value other similar assets it owned. Following the overwhelming acceptance of the exchange offer, intervening market conditions which were out of the Company's control - including the events of September 11th, a precipitous drop in interest rates (to levels not seen in over 40 years), recession, threat of war and other geopolitical risks - dramatically lowered the value of interest-rate and credit- sensitive assets (like those transferred to the LLC in the exchange offer). In response, in November 2001, DFC lowered its estimates of the value of the excess cashflow certificates it held, as it was required to do in accordance with generally accepted accounting principals (GAAP). Similar write-downs were taken by many of DFC's competitors for the same reason and, indeed, by countless other companies outside our sector which also held interest-rate and credit- sensitive assets, to account for these virtually unprecedented events. DRUG EMPORIUM: Taps DJM Asset Mgt. to Market 77 Stores Locations ---------------------------------------------------------------- DJM Asset Management, LLC has been retained as real estate advisor to dispose of leases in the Drug Emporium bankruptcy case. On Friday, September 12, 2003, Drug Emporium, F& M and VIX stores filed for protection under Chapter 11 of the U.S. Bankruptcy Code. DJM will market approximately 77 retail leases in 9 states with most of the stores being available by November 1, 2003 or earlier. "The locations that we are marketing include properties of between 7,975 s.f. to 41,278 s.f. in both free standing and strip center locations," said Emilio Amendola, Principal of DJM. "These are high profile locations with below market lease terms, mostly single digit rents, and should generate a lot of interest. Due to the fast nature of this bankruptcy case, all offers will be due no later than October 21, 2003. We welcome any and all inquiries." The leases available include properties 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. To obtain information on specific Drug Emporium, F&M or VIX locations contact Jim Avallone or Joe DiMitrio at 631-752-1100. Detailed lease information, demographics, store plans and site plans will be available on DJM's Web site at http://www.djmasset.com Based in Melville, New York, DJM Asset Management, LLC, assists retailers nationwide with the disposition of unwanted locations, leasehold evaluations and lease mitigation. DJM has been retained by over 100 different retailers and has handled more than 10,000 locations nationwide. DVI INC: Wins Interim Approval for $148MM in New DIP Financing -------------------------------------------------------------- DVI, Inc. (OTCBB:DVIX) announced that, at a hearing held Thursday, the United States Bankruptcy Court for the District of Delaware granted the Company and its two debtor subsidiaries interim approval for up to $148 million in debtor-in-possession financing from Goldman Sachs Credit Partners L.P. and Ableco Finance LLC. The facility will refinance and replace the exiting $20 million DIP facility from Ableco Finance and enable DVI to fund a settlement with Fleet National Bank and its co-lender under the $150 million Fourth Amended and Restated Loan Agreement dated March 29, 2002. Pursuant to that agreement, DVI will pay approximately $100 million to and release all claims against Fleet and its co-lenders in exchange for a release by Fleet and its co- lenders of all claims against DVI, resulting in a benefit to DVI of approximately $50 million. In addition, the new financing will enable DVI to make investments of up to $20 million in its special purpose vehicle subsidiaries. The Court also approved a series of other motions including authorizing the use of cash collateral; providing adequate protection to certain pre-petition secured creditors; and authorizing DVI Business Credit Corporation to continue performing under agreements with DVI Business Credit Receivables Corporation. "We are very pleased by the Court's approval of our motions," said Mark E. Toney, CEO of DVI. "[Thurs]day's decisions will help us to maximize our enterprise value by ensuring sufficient liquidity and enabling us to continue to stabilize the organization as we work through the sale process." Mark E. Toney is a Principal with AlixPartners, LLC, an international crisis management and turnaround firm. DVI filed for Chapter 11 protection on August 25, 2003. 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. ENRON CORP: Operating Entities and Trusts Upon Plan Effectivity --------------------------------------------------------------- Pursuant to the Amended Plan, as of the Effective Date, the Reorganized Enron Debtors will assist the Reorganized Debtor Plan Administrator in performing these activities: (a) holding the Operating Entities for the benefit of the Creditors and providing certain transition services to these entities; (b) liquidating the Remaining Assets; (c) making distributions to Creditors pursuant to the terms of the Plan; (d) prosecuting Claims objections and litigation; (e) winding up the Debtors' business affairs; and (f) otherwise implementing and effectuating the terms and provisions of the Plan. According to Stephen F. Cooper, Acting President, Chief Executive Officer and Chief Restructuring Officer of Enron Corporation, on the Effective Date of the Plan, there will be three operating entities: (a) Portland General Electric Company, (b) CrossCountry, and (c) Prisma Energy International, Inc. Portland General Electric The Existing PGE Common Stock ENE held will be cancelled and the PGE Common Stock will be issued and distributed to the creditors of the Debtors, or to an Operating Trust, in accordance with the terms of the Plan. Upon issuance, the preferred stock of PGE will remain outstanding. In connection with the consummation of the Plan, PGE and ENE expect to agree to certain separation agreements that would govern the relationship between ENE and PGE on a transitional basis, including the provision of various corporate and administrative services. The existing relationship between ENE and PGE is governed by the PGE MSA and a tax allocation agreement. Notwithstanding the foregoing, ENE is continuing its previously announced sales process with respect to its interest in PGE and reserves the right, at any time prior to the satisfaction of the conditions for a distribution of the PGE Common Stock to the Creditors under the Plan to enter into an agreement to sell the interest. If PGE is sold, ENE's sale proceeds will be distributed to the creditors of the Debtors in accordance with the terms of the Plan. The Plan provides for PGE Common Stock to be distributed to Creditors in accordance with the Plan or the sale of PGE as a going concern. A break-up of PGE is not an option under the Plan. Unless PGE is sold to a third party, the Reorganized Debtors will hold common stock in PGE until: (i) the common stock shares are cancelled and newly issued PGE Common Stock shares are issued and distributed to the Creditors or an Operating Trust, or (ii) the shares are assigned to a holding company and the holding company's shares are issued and distributed to the Creditors, each in accordance with the Plan. Based on the Blackstone Model methodology, PGE has an estimated equity value of $1,278,000,000 at June 30, 2003. Therefore, assuming 62.5 million shares of new PGE Common Stock will be issued and distributed to or on behalf of Creditors pursuant to the Plan, the value of the stock is estimated to be $20.45 per share. After the effectiveness of the Plan, in order to attract, retain and motivate highly competent persons as key employees and non- employee directors of PGE, PGE expects to adopt a long-term equity incentive compensation plan providing for awards to those individuals over the 10-year term of the equity plan. The award percentage of PGE Common Stock, on a fully diluted basis, is expected to be determined after consultation with the Creditors' Committee. CrossCountry Unless CrossCountry is sold to a third party, the Reorganized Debtors will hold common stock in CrossCountry until: (i) the shares are cancelled and shares of CrossCountry Common Stock are issued to the Creditors or an Operating Trust, or (ii) the shares are assigned to a holding company and the holding company's shares are issued to the Creditors, each in accordance with the Plan. CrossCountry's principal assets will, upon closing of the formation transactions, consist of: (i) a 100% ownership interest in Transwerstern Holding Company, Inc. -- 800 shares of common stock having a par value of $0.01 per share; (ii) a 50% ownership interest in Citrus Corporation -- 500 shares of Class B common stock having a par value of $1 per share; (iii) a 100% interest in Northern Plains Natural Gas Company -- 400 shares of common stock having a par value of $1 per share; (iv) 1,000 shares of common stock of CGNN Holding Company, Inc., having a par value of $0.01 per share; and (v) 1,000 shares of common stock of NBP Services Corporation, having a par value of $1 per share. Based on the methodology the Blackstone Model utilizes, CrossCountry's estimated equity value is $1,490,000,000, as the mid-point within a valuation range of 1,409,000,000 to 1,571,000,000 for CrossCountry at December 31, 2003. Therefore, assuming 75,000,000 shares of new CrossCountry Common Stock will be issued and distributed to or on behalf of Creditors pursuant to the Plan, the value of that stock is estimated to range from $18.79 to $20.95 per share. On the Effective Date, CrossCountry's board of directors will likely consists of: -- Raymond S. Troubh, -- Corbin A. McNeill, Jr., -- James J. Gaffney, and -- Gary L. Rosenthal. After the effectiveness of the Plan, in order to attract, retain and motivate highly competent persons as key employees and non- employee directors of CrossCountry, CrossCountry expects to adopt a long-term equity incentive compensation plan providing for awards to those individuals over the 10-year term of the equity plan. The percentage of CrossCountry Common Stock award, on a fully diluted basis, is expected to be determined after consultation with the Creditors' Committee. Prisma Unless Prisma is sold to a third party, the Reorganized Debtors will hold common stock in Prisma until the shares of Common Stock are cancelled and newly issued shares of Prisma Common Stock are distributed to the Creditors or an Operating Trust in accordance with the Plan. Based on the methodology the Blackstone Model utilizes, Prisma has an estimated equity value of $815,000,000, as the mid-point within a valuation range of $713,000,000 to $918,000,000 for Prisma at December 31, 2003. Therefore, assuming 40,000,000 shares of new Prisma Common Stock will be issued and distributed to or on behalf of Creditors pursuant to the Plan, the value of that stock is estimated to range from $17.83 to $22.95 per share. On the Effective Date, Prima's board of directors will likely consists of: -- Ron W. Haddock, -- John W. Ballantine, -- Philippe A. Bodson, -- Lawrence S. Coben, and -- Dr. Paul K. Freeman. After the effectiveness of the Plan, in order to attract, retain and motivate highly competent persons as its key employees and non-employee directors, Prisma expects to adopt a long-term equity incentive compensation plan providing for awards to those individuals over the 10-year term of the equity plan. The percentage of such awards of Prisma Common Stock, on a fully diluted basis, is expected to be determined after consultation with the Creditors' Committee. Operating Trusts In addition, upon joint determination of the Debtors and the Creditors' Committee, the shares of PGE Common Stock, CrossCountry Common Stock and Prisma Common Stock will be transferred to the holders of certain Allowed Claims, which the Debtors will hold, acting on their behalf. Immediately thereafter, on behalf of the holders of the Allowed Claims, the Debtors will transfer the shares, subject to the Operating Trust Agreements, to the Operating Trusts for the benefit of the holders of Allowed Claims in accordance with the Plan. The Operating Trusts will be established for the sole purpose of holding and liquidating the respective assets in the PGE Trust, the CrossCountry Trust and the Prisma Trust in accordance with Treasury Regulation Section 301.7701-4(d) and the terms and provisions of the Operating Trust Agreements. Without limitation, the Operating Trust Agreements will each provide that the applicable Operating Trust will not distribute any of the PGE Common Stock, CrossCountry Common Stock or Prisma Common Stock, as the case may be, prior to the date referred to in Sections 29.1(c)(i), (ii) and (iii) of the Plan. The Trusts to be created are: (a) Litigation Trust, (b) Special Litigation Trust, (c) Preferred Equity Trust, (d) Common Equity Trust, (e) Severance Settlement Fund Trust, and (f) Operating Trusts. Remaining Assets It is anticipated that the Reorganized Debtors will retain all assets that will not be transferred to the Trusts. These Remaining Assets may include, but are not limited to, Cash, claims and causes of action against third parties on behalf of the Debtors' estates, proceeds of liquidated assets, the Debtors' stock in the Enron Companies, trading contracts, equity investments, inventory, real property, and other miscellaneous assets. Specifically: (a) Creditor Cash. The Enron Companies have received a significant amount of Cash as a result of asset sales and the liquidation of the wholesale and retail trading books during the Chapter 11 Cases. The postpetition Cash collected to date plus the Cash collected by the Reorganized Debtors as part of their future liquidation efforts will be distributed by the Reorganized Debtor Plan Administrator in accordance with the Plan after the Satisfaction of certain obligations, including Administrative Expense Claims, Priority Non-Tax Claims, Priority Tax Claims, Convenience Claims, Secured Claims, funds necessary to operate the Litigation Trust and Special Litigation Trust, funds necessary to make pro rata distributions to holders of Disputed Claims as if the Disputed Claims were, at that time, Allowed Claims, and funds necessary for the ongoing operations of the Reorganized Debtors from the Effective Date until the later date as reasonably determined by the Reorganized Debtor Plan Administrator; (b) Trading Contracts. The Wholesale Services Debtors and certain of their non-Debtor Wholesale Services affiliates have undertaken efforts to perform, sell, or settle a significant number of non-terminated and terminated positions arising out of Wholesale Contracts. As of June 30, 2003, the Wholesale Services Debtors and certain of their non-Debtor Wholesale Services affiliates had Wholesale Contracts with at least 1,400 counterparty groups totaling $1,235,000,000 of expected recoverable value. Substantially all of the collections and cash settlements of Wholesale Contracts are expected to be resolved prior to the Effective Date. Those Wholesale Contracts that cannot be settled are either currently in or may require litigation in order to collect outstanding balances. Any recovery from the litigation involving a Debtor will be included in the Remaining Assets available for subsequent distribution; (c) Other Recoveries: (1) Recoveries in PG&E Bankruptcy: A significant portion of the balances owed in retail trading involves claims that ENE has in PG&E's bankruptcy. There is uncertainty around the collection of these claims. However, ENE has undertaken settlement negotiations with PG&E; and (2) Recoveries from European Estates. A significant amount of money is due from the sale of assets of ENE's direct and indirect European subsidiaries under UK administration. The administrator in the UK process is responsible for selling assets and, under a Scheme of Arrangement, will make distributions to creditors and, when applicable, equity security holders. There is uncertainty regarding the amount, timing and frequency of any distributions to be made to the Debtors or the Reorganized Debtors. (d) Remaining Assets Currently Available For Sale. As of June 30, 2003, the Debtors and certain of their non-Debtor affiliates identified about 220 assets available for sale with an expected recovery to the Debtors' estates totaling approximately $1,100,000,000. These assets include direct or indirect ownership and operation of businesses and investments related to a variety of industries, including paper production, oil and gas exploration and production, power generation, intrastate natural gas pipeline operations, natural gas pipeline compression services and energy and telecommunications-related technology businesses. The balance of the assets is made up of miscellaneous assets, including: contingent receivables, inventory, real property, insurance and emissions credits. The Reorganized Debtor Plan Administrator, with supervision from the board of directors of the Reorganized Debtors, will continue to monitor market conditions and identify when there is sufficient interest in a particular asset to pursue a sale. Priority will be given to the assets with the greatest potential recoverable value. However, many of these sales efforts may be delayed due to regulatory issues, ownership through SPEs, or litigation. The Reorganized Debtor Plan Administrator, with assistance from the Reorganized Debtors, will collect and liquidate the Remaining Assets and distribute the proceeds to Creditors pursuant to the terms of the Plan. The Reorganized Debtors' board of directors will supervise this process. Poor market conditions, litigation, and complex ownership structures may result in the retention of certain assets for an extended period of time. As a result, the Reorganized Debtors and the Reorganized Debtor Plan Administrator will continue to manage and operate these assets until a favorable sale or resolution of each of the Remaining Assets is finalized. (Enron Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE: Exploring New Market Opportunities with Electrovaya ---------------------------------------------------------- Electrovaya Inc. (TSX:EFL) -- http://www.electrovaya.com-- a world leader in lithium ion SuperPolymer(R) battery technology and systems, and Exide Technologies (OTCBB: EXDTQ_ -- http://www.exide.com-- a global leader in stored electrical- energy solutions, have signed a non-binding Memorandum of Understanding to collaborate to develop products and application solutions incorporating Electrovaya's lithium ion battery technology. According to the terms of the MOU, Electrovaya and Exide will work together to explore and identify new market opportunities for Electrovaya's lithium ion SuperPolymer(R) battery technology, initially in some specific applications in Network Power for the telecommunications industry. Exide will determine unique market needs, define the product offerings and assist in product packaging and systems integration; Electrovaya will determine technical and manufacturing feasibility and develop products from the initial concept stage through full production. "As a leader in lithium ion SuperPolymer(R) battery technology, we are well positioned to assist Exide with profitable new energy solutions," said Dr. Sankar Das Gupta, CEO of Electrovaya. "This relationship leverages our significant intellectual property and manufacturing resources and should yield new markets and exciting new energy storage products specific to the needs of the telecommunications industry. Exide's significant experience in this market makes them an ideal partner." After completion of a joint development program, Electrovaya will manufacture and develop cells to be integrated into finished products from initial concept through full production; Exide will market and distribute the products worldwide. "In today's dynamic business environment, our customers' energy storage needs are constantly evolving and growing. As we work to transform the Company from a basic battery manufacturer to an integrated global supplier of batteries and associated equipment and services, our focus is to deliver a product portfolio that maximizes value for our customers," added Mitchell S. Bregman, Exide Technologies President - Industrial Energy Group Americas. "We firmly believe that this collaboration with Electrovaya will deliver industry-leading energy storage solutions that meet and exceed our customers' needs." Exide Technologies, with operations in 89 countries and fiscal 2003 net sales of approximately $2.4 billion, is one of the world's largest producers and recyclers of lead-acid batteries. The company's two global business groups - industrial energy and transportation - provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications. The company filed for Chapter 11 protection on April 14, 2002, (Bankr. Del. Case No. 02-11125). Industrial uses include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply; and motive-power applications for a broad range of equipment uses, including lift trucks, mining vehicles and commercial vehicles. Transportation applications include automotive, heavy-duty truck, agricultural and marine, as well as new technologies being developed for hybrid vehicles and new 42-volt automotive applications. The company supplies both aftermarket and original- equipment transportation customers. Further information about Exide Technologies, its financial results and other information can be found at http://www.exide.com Electrovaya's goal is to become the leading provider of tablet PC's, portable power for the notebook computer and wireless sectors, and to apply its technology to a broad spectrum of alternative energy applications including UPS, stand-by power and zero-emission vehicles. It develops, manufactures and sells high value products globally using award winning patented proprietary lithium ion SuperPolymer(R) rechargeable battery technology, which delivers the highest energy density of any battery technology on the market today. Electrovaya has designed, developed and markets the SCRIBBLER Tablet PC which offers significantly longer run time than any other Tablet PC currently available. The Company's shares trade on the Toronto Stock Exchange under the symbol EFL. For more information about the Company and its products, visit http://www.electrovaya.com FERRELLGAS PARTNERS: Reports Improved Fiscal Year 2003 Results -------------------------------------------------------------- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest retail marketers of propane, reported net earnings of $56.7 million for the fiscal year ended July 31, 2003. "We are extremely pleased to once again deliver strong financial results to our investors," said James E. Ferrell, Chairman and Chief Executive Officer. "Investors continue to benefit from our consistent annual performance, the security of our quarterly distributions and a total return in excess of 30 percent from our common units this fiscal year." Retail propane sales volumes for the fiscal year were 899 million gallons, an increase of 8 percent as compared to 832 million retail gallons sold in fiscal year 2002. This increased sales volume reflects the impact of more normal winter heating season temperatures this fiscal year and, to a lesser extent, acquisitions, partially offset by the continued effects of a sluggish economy and customer conservation stemming from higher wholesale propane product costs. Gross profit and operating expense for the fiscal year were $530.7 million and $298.0 million, respectively, increases of $29.3 million and $18.3 million, respectively, compared to the prior year. These increases were primarily attributable to this year's increase in retail propane sales volumes. General and administrative expense was $28.0 million, up slightly from $27.2 million in the prior fiscal year. Equipment lease expense was $20.6 million, down $3.9 million from the prior fiscal year, partially reflecting the Partnership's fiscal year 2003 second quarter refinancing of certain operating lease obligations. The resulting Adjusted EBITDA for fiscal year 2003 was $184.0 million, an increase of 8 percent compared to $170.0 million in the prior fiscal year. Net earnings were $56.7 million, compared to the prior fiscal year's near record performance of $60.0 million. The net earnings this fiscal year included special charges of $7.1 million related to the early extinguishment of debt and $2.8 million related to a cumulative effect of a change in accounting principle. Excluding these special charges, net earnings for this fiscal year would have exceeded the Partnership's fiscal year 2001 record net earnings by over $2.0 million. At July 31, 2003, Ferrallgas Partners' balance sheet shows that its total current liabilities outweighed its total current assets by about $4 million. "We continue our focus on improving operations and effectively managing our business for the long-term," Ferrell added. "I am proud of this year's financial results and of our employees, whose hard work and dedication made this past year a success." The partnership historically experiences losses during the fourth quarter, as sales volumes typically represent less than 15 percent of annual sales, causing fixed costs to exceed off-season cash flow. Retail propane sales volumes and gross profit for the fourth quarter of fiscal year 2003 were 116 million gallons and $66.8 million, respectively. Operating and general and administrative expenses were $70.7 million and $6.2 million, respectively. Equipment lease expense was $4.1 million. These seasonal results produced an expected Adjusted EBITDA loss of $14.2 million and net loss of $44.8 million for the fourth quarter. The extraordinary performance experienced during the same quarter last year was not expected to be repeated this fiscal year. The fourth quarter results this fiscal year were consistent with recent fiscal years and consistent with the Partnership's expectations. Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., currently serves more than one million customers in 45 states. Ferrellgas employees indirectly own more than 17 million common units of the partnership through an employee stock ownership plan. FLEMING: Sells Kansas Property to Spartan Real Estate for $1.8M --------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates intend to sell a real estate property in Kenneth Parkway and Highway 101 in Leawood, Kansas. The property was marketed for several years by WCM Investment Company with little success. Spartan Real Estate LLC will buy the property for $1,800,000. Spartan is a Kansas limited liability company not affiliated with any of the Debtors. Marjon Ghasemi, Esq., at Kirkland & Ellis, in Los Angeles, California, tells the Court that the sale will generate the highest and best value for the Debtors' estates. (Fleming Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEXTRONICS: Will Take Action to Contest California Jury Verdict ---------------------------------------------------------------- Flextronics International Ltd. (Nasdaq: FLEX) announced that it is appalled that a jury in Orange County, California, Thursday returned a verdict against Flextronics, in favor of Beckman Coulter, that totals $934 million, including $931 million in punitive damages, in a case that began as a $2.2 million contract dispute relating to a manufacturing relationship between the companies. "We believe that the verdict is clearly unsupported by either the law or the facts and that the award of punitive damages is excessive and unwarranted, since the jury found only $3.0 million of actual contract and tort damages to Beckman," said Michael Marks, Chief Executive Officer of Flextronics. Flextronics believes that this verdict should be overturned because it violates California law and Flextronics' right to due process under state and federal constitutions. U.S. Supreme Court rulings as applied in California establish that punitive damages generally must be limited to four times the amount of actual compensatory damages caused by tortious conduct. In this case, the jury found only $800,000 of actual tort damages, meaning punitive damages, if any, should be limited to no more than $3.2 million instead of the $931 million awarded. "We intend to mount a vigorous challenge of this run-away jury verdict, and are fully confident that this award will be almost entirely eliminated in subsequent legal proceedings," said Marks. The judge presiding over the case has not yet entered a judgment on the jury's verdict, and Flextronics expects to file appropriate post trial motions to correct the jury's decision and will appeal if necessary. This award was particularly surprising in light of the testimony by Beckman witnesses that Flextronics did nothing intentionally wrong in the business relationship, which amounted to less than $20 million of revenue over 3 years. During the trial, the court made a number of errors of law that Flextronics believes will require a reversal of this award on appeal, preventing Flextronics from presenting key evidence that would have negated Beckman's tort claims (which gave rise to all of the punitive damages), and erroneously instructing the jury regarding the law. "That this irrational verdict could be rendered, even if subsequently corrected, exemplifies the need for reform of a legal system in which juries are allowed to impose absurd punitive damages," noted Marks. Headquartered in Singapore, Flextronics (S&P, BB+ Corporate Credit Rating, Stable) is the leading Electronics Manufacturing Services provider focused on delivering supply chain services to technology companies. Flextronics provides design, engineering, manufacturing, and logistics operations in 29 countries and five continents. This global presence allows for supply chain excellence through a network of facilities situated in key markets and geographies that provide customers with the resources, technology, and capacity to optimize their operations. Flextronics' ability to provide end-to-end services that include innovative product design, test solutions, manufacturing, IT expertise, network services, and logistics has established the Company as the leading EMS provider with revenues of $13.4 billion in its fiscal year ended March 31, 2003. For more information, visit http://www.flextronics.com GE HOME EQUITY: Fitch Cuts Class B-1 & B-2 Note Ratings to BB-/C ---------------------------------------------------------------- Fitch Ratings has taken rating action on the following GE Home equity issue: GE Home Equity 1997-HE 3: -- Class A5 - A6 affirmed at 'AAA'; -- Class M, rated 'AA', remains on Rating Watch Negative; -- Class B-1 downgraded to 'BB-' from 'BBB-'; -- Class B-2 downgraded to 'C' from 'CC'. The credit support for the class B-2 has been depleted due to the amount of losses. On Aug. 25, 2003, the bond took a principal writedown. Although the transaction's structure allows for the writedown amount to be repaid from future recoveries, the structure does not allow for interest on the written down amount to be repaid. The negative rating actions for the B-1 and M class are taken due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the August 2003 distribution date. GLOBAL CROSSING: Seeks Okay for Alcatel Deferred Payment Pact ------------------------------------------------------------- Paul M. Basta, Esq., at Weil Gotshal & Manges, LLP, in New York, relates that the Global Crossing Debtors are a party to a MAC Project Development and Construction Contract, dated June 2, 1998, with Alcatel Submarine Networks, and Alcatel Submarine Networks, Inc. The Debtors and Alcatel agreed to the deferment of payments due under the MAC Contract. This agreement is embodied in that certain Deferred Payment Agreement dated as of July 1, 2003. Pursuant to the MAC Contract, Alcatel agreed to develop and construct a subsea ring configuration system for the Debtors that contains three of the Debtors' landing and cable stations at various locations on the United States and the United States Virgin Islands and is connected by submersible fiber optic cables. The MAC Contract was amended to provide for upgrades to the MAC System not originally contemplated under the contract. The purchase price of the Upgrades is $21,700,000 and the final payment for the Upgrades is due December 1, 2003. Due to the prolonged time they have spent in Chapter 11 and their available liquidity, the Debtors commenced negotiations with Alcatel to defer a portion of the payment due under the MAC Contract. After extensive arm's-length negotiations, Alcatel agreed, pursuant to certain conditions, to allow the Debtors to defer a portion of the Final Payment. The salient conditions are: (1) Written notice by the Debtors to Alcatel seven days before the Final Payment Date of their intent to defer a portion of the amount, subject to a $2,500,000 cap; (2) Payment in full of all invoices issued under the MAC Contract, including that portion of the Final Payment not being deferred, that are due on or before the Final Payment Date; (3) Court approval of the Deferral Agreement prior to the Final Payment Date; (4) Effectiveness, on or before the Final Payment Date, of a GX Chapter 11 plan of reorganization, which Plan will be either the Plan or another plan of reorganization with respect to the Debtors, the terms and conditions of which are not less favorable to Alcatel than those of the Plan; and (5) Delivery to Alcatel, on the Final Payment Date, of a promissory note substantially in the form and substance of the Deferral Agreement, the salient terms of which are: (a) The Deferred Amount and all other outstanding amounts under the Note will be due and payable in full on September 1, 2004; (b) The unpaid principal balance will bear interest at one-year LIBOR from the date of execution of the Note, except that, from and after an Event of Default, the unpaid principal balance will bear interest at LIBOR plus 2%; (c) Interest will be calculated daily on the unpaid daily principal balance outstanding from time to time, on the basis of a 360-day year; and (d) Upon the occurrence of any of these events, which will constitute an Event of Default, all liabilities of the Debtors, including the entire unpaid principal of the Note and accrued interest, will immediately become due and payable, at Alcatel's option: -- failure of the Debtors to perform any obligation, liability, or claim to Alcatel, or to pay principal or interest when due; -- the dissolution, merger, or consolidation of the Debtors or any guarantor; -- the filing of a petition in bankruptcy or similar proceeding by or against the Debtors; -- the issuing of any attachment or the filing of any lien against any property of the Debtors or any guarantor; -- the taking of possession of any substantial part of the property of the Debtors or any guarantor at the instance of governmental authority; or -- the breach of any representation or warranty of the Debtors in connection with the Note. The conditions precedent required to allow the Debtors to exercise the deferral are not onerous. Furthermore, the ability to defer the payment of up to $2,500,000 is beneficial to the Debtors' estates because it outweighs the interest the Debtors are required to pay under the Note. The interest under the Note, calculated at one-year LIBOR, is reasonable, and, in the Debtors' business judgment, less than the Debtors would likely be required to pay should they attempt to finance the Final Payment through a third party. Thus, the Debtors ask the Court to approve their Deferred Payment Agreement with Alcatel. (Global Crossing Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL GOLD: Ex-Auditor's Report Airs Going Concern Uncertainty --------------------------------------------------------------- Effective May 1, 2003, Global Gold Corporation, a Delaware corporation, dismissed Grassi & Co. CPAs, P.C. as its independent accountants, which action was approved by the Company's Board of Directors on May 1, 2003. Feldman Sherb & Co., P.C., a professional corporation of certified public accountants was the independent accounting firm for Global Gold, for the year ended December 31, 2001 and through the period ended April 17, 2002. Feldman was merged into Grassi on April 17, 2002 with Grassi as the successor firm. The report of Grassi on the financial statements of Global Gold for the year ended December 31, 2002 and the report of Feldman on the financial statements of the Company for the fiscal year ended December 31, 2001 contains an expression of substantial doubt regarding Global Gold's ability to continue as a going concern. On May 1, 2003 Marcum & Kliegman LLP was engaged as the Company's new independent accountants, commencing with the review of its financial statements for the quarter ended March 31, 2003. GOODYEAR: Fitch's Low-B Debt Ratings Plucked from Watch Negative ---------------------------------------------------------------- Fitch Ratings has removed the Rating Watch Negative on the 'B+' for the senior secured debt and 'B' for the senior unsecured debt ratings of Goodyear Tire & Rubber Company. The Rating Outlook is Negative. Approximately $5 billion of debt is affected. The United Steelworkers of America union which represents workers at nearly all of Goodyear's North American tire plants recently ratified a new 3 year contract after several months of negotiations. Forging a new contract with greater flexibility for cost reduction was crucial in Goodyear's plan to effect a turnaround in its struggling North American Tire operations. While the contract does incorporate some much needed cost reduction measures, particularly in the area of pensions and healthcare, the majority of the company's near term projected impact is represented in cost avoidance. Actual reduction in structural costs may be limited in the short term and as a result, can only serve as one element of the turnaround in North American Tire operations. Of equal or greater importance now are the company's plans to increase productivity and utilization, improvement in market share, rebuilding brands and pricing integrity, and restoring distribution channels. While the new contract allows the company to import tires from offshore sources based upon various conditions which must be satisfied concerning production levels in the protected union plants, in the near term, the company may not be able to significantly increase the sale of imported tires which was to make them more competitive in the low end of the market. The new labor agreement also requires that Goodyear raise $325 million of new financing ($250 million of debt and $75 million of equity or equity linked securities) by December 2003 and launch a refinancing of the U.S. bank facilities by December 2004, months in advance of the April 2005 maturity date. These requirements could result in further increases in financing costs and further compresses the tight timeframe under which Goodyear will need to show improvement in its operations. Over the next 6 to 12 months, Fitch expects that industry demand for replacement tires will rebound to more historical norms in North America. However, Goodyear's North American Tire operating performance will continue to face cost headwinds, including high raw material costs and pension and healthcare cost burdens. However, progress in the company's restructuring program, combined with any reversal of recent raw material price spikes and higher utilization rates from capacity rationalizations and higher end demand could serve to expand margins over the near term. The company's margin performance also remains exposed to price competition from more efficient competitors. Margin expansion will need to occur in order to generate cash available for debt reduction and pension obligations. At June 30, 2003, Goodyear's consolidated balance sheet debt amounted to just over $5.0 billion, a substantial increase over $3.8 billion at March 31, 2003, largely reflecting the migration of receivables financing back on to the balance sheet, and higher cash balances. Debt also increased due to the negative cashflow from operations with seasonal usage of working capital and poor consolidated operating profitability. Goodyear remained compliant with bank financial covenants at June 30, 2003. Liquidity at June 30, 2003 was provided by $1.2 billion of cash and equivalents and $167 million of availability under committed bank lines. Substantial cash commitments come due over the next 12 months with pension funding requirements in the range of $400 million due in 2004 along with about $167 million of retiring debt. The company will continue to require access to external capital markets in the latter part of 2004 and into 2005 as it faces the bank refinancing requirement, further pension contributions and 2005 long-term maturities approaching $500 million. Continued access to funding and liquidity will largely depend on its demonstration of turnaround in the core North American Tire operations. Liquidity could be supplemented in the event of a sale of the company's chemicals operations or other non-core assets. HARVEST NATURAL: Closes Sale of 34% Interest in LLC Geoilbent ------------------------------------------------------------- Harvest Natural Resources, Inc. (NYSE: HNR) has closed the sale of its 34 percent interest in LLC Geoilbent to a subsidiary of the YUKOS Oil Company for $69.5 million. Harvest also received $5.5 million for the outstanding intercompany loans and payables owed to Harvest by Geoilbent. Net cash proceeds after payment of expenses will be approximately $73 million. Harvest President and Chief Executive Officer, Dr. Peter J. Hill, said, "The closing of the Geoilbent sale positions our balance sheet with approximately $150 million of cash available to actively pursue various growth opportunities in both Russia and Venezuela." Harvest Natural Resources, Inc. (S&P, B- Corporate Credit Rating, Stable), headquartered in Houston, Texas, is an independent oil and gas exploration and development company with principal operations in Venezuela. For more information visit the Company's Web site at http://www.harvestnr.com ICOA INC: Reaches Pact to Restructure $1.5-Mil. Conv. Debentures ---------------------------------------------------------------- ICOA, Inc. (OTCBB:ICOA - News) has reached a restructuring agreement with institutional investors holding over $1.56 million worth of convertible debt, accrued interest and warrants. The restructuring is in exchange for a payment of $508,000 in cash in the first Quarter of 2004 along with $337,000 of preferred stock and $225,000 of common stock - Both the preferred and common stock are based on an agreed share price, carry lock-up provisions, and eliminate future conversions. "We believe this financial restructuring will benefit the shareholders of ICOA by allowing the market to reflect the true value of our business," commented Erwin Vahlsing, Jr., CFO of ICOA, Inc. "We feel that this restructuring places ICOA on a strong foundation for growth, by not only saving us $500,000 in cash but strengthening the balance sheet by over $1.0 million. Additional steps are underway that we think we will further improve our balance sheet and strengthen the company," concluded Mr. Vahlsing. ICOA, Inc., located in Warwick, RI, deploys and operates an automated network of self-service Internet payphone kiosks, through its wholly owned WebCenter Technologies subsidiary. The Company deploys a managed network capable of providing telecommunication, business, and e-commerce services via these kiosks. These include broadband communication services such as telephone, e-mail, and e-fax; business services such as printing; and e-commerce services including shopping and bill paying; and advertising. It operates networks in airports, heavily trafficked public facilities, and hotels. It currently has installations at the San Francisco International Airport, the Greater Baton Rouge Louisiana Airport and a New York City Hotel. At June 30, 2003, ICOA Inc.'s balance sheet shows a working capital deficit of about $5 million, and a total shareholders' equity deficit of about $4 million. IMCO RECYCLING: Proposes $200-Mill. Senior Secured Note Offering ---------------------------------------------------------------- IMCO Recycling Inc. (NYSE: IMR) plans a private offering of approximately $200 million of senior secured notes due 2010. The net proceeds from the offering, along with borrowings under a proposed new senior secured credit facility, will be used to refinance substantially all of the company's outstanding indebtedness. IMCO Recycling Inc. (S&P, B Corporate Credit Rating, Stable) is one of the world's largest recyclers of aluminum and zinc. The company has 22 U.S. production plants and five international facilities located in Brazil, Germany, Mexico and Wales. IMCO Recycling's headquarters office is in Irving, Texas. INT'L MULTIFOODS: 2nd Quarter 2004 Results Enter Positive Zone -------------------------------------------------------------- International Multifoods Corp. (NYSE:IMC) reported second-quarter fiscal 2004 net earnings of $900,000. This compares with a net loss of $28.1 million in the second quarter of fiscal 2003. Reported results in this year's second quarter include previously announced unusual and one-time items totaling $3.1 million. Second-quarter fiscal 2003 results include a loss from discontinued operations of $32.4 million. Excluding unusual and one-time items, second-quarter fiscal 2004 earnings from continuing operations were $4 million compared with $4.3 million in the same period a year earlier. Results in the current quarter reflect higher commodity costs, lower pension income and continued softness in the company's U.S. and Canadian foodservice products businesses. Higher commodity costs net of pricing and lower pension income reduced earnings in the quarter by about 6 cents per share. Net sales for the quarter ended Aug. 30 were $208.4 million, compared with $210.1 million last year. Multifoods Chairman and Chief Executive Officer Gary E. Costley said, "Results in the second quarter met our expectations and keep us on track to achieve our earnings and cash-flow targets for fiscal 2004. As expected, year-over-year improvements in our consumer businesses during the quarter helped offset ongoing weakness in foodservice. "We continue to see solid demand and share gains in the marketplace for our consumer brands, including Pillsbury and Martha White baking products and Bick's pickles in Canada," Costley said. "Our attention remains focused on our strategic priorities of product innovation, brand-building, distribution expansion and margin improvement. These strategies will allow us to drive growth, strengthen our businesses and achieve strong results for our shareholders going forward." During the quarter, the company refinanced some of its debt under more favorable terms and completed the previously announced sale of its foodservice pie business. As a result of the debt refinancing, the company expects interest-expense savings of approximately $2 million, or 7 cents per share, over the next 12 months. Capital expenditures in the quarter were $3.3 million, and depreciation and amortization totaled $5.2 million. Debt at quarter end was $386.5 million, down from $529 million a year ago. Debt increased $10.6 million from the end of the first quarter due to the planned build-up of inventory in advance of the key fall and winter seasons. This was in line with the company's forecasts. As a result of the final purchase of working capital from General Mills in the first quarter and the seasonal increase in working capital levels in the second quarter, Multifoods used $26.5 million of cash for operations year-to-date. For its fiscal year ending Feb. 28, 2004, the company continues to expect free cash flow in the range of $20 million to $25 million (cash flows from continuing operations of $60 million to $65 million less capital expenditures of approximately $40 million). Debt reduction remains the company's top priority for the use of its excess cash. Net interest expense from continuing operations for the quarter was $6.2 million, down from $6.3 million in the year-earlier period. The effective tax rate for continuing operations before unusual and one-time items was 34 percent for the first half of fiscal 2004. On a reported basis including unusual and one-time items, the company recorded a tax benefit of approximately $300,000 in the first half. Discussion of Second-Quarter Operating Results Following is a review of the company's second-quarter operating results by segment: U.S. Consumer Products. Net sales for the second quarter were $80.1 million, essentially even with a year ago. Operating earnings increased 10 percent to $11.3 million, up from $10.3 million in the second quarter of fiscal 2003. The increase in earnings was driven by higher average selling prices, which offset lower shipment volume and higher commodity costs. Total shipments in the quarter were down about 4.5 percent, due to the planned rationalization of some low-margin business and a reduction in trade inventory, resulting primarily from the bankruptcy of Fleming Companies. For the 13 weeks ending Aug. 30, consumer take-away as measured by dollar volume was up 3 percent versus a year ago, driven by the strong performance of Pillsbury and Martha White baking products and Hungry Jack breakfast items. "We are pleased with the second-quarter results in our U.S. Consumer Products business and the growing demand for our products in the marketplace," Costley said. "This performance clearly demonstrates the benefits of efforts to expand distribution, accelerate product innovation and build on the inherent equity in our core brands. We have solid plans in place and feel good about our prospects as we enter the holiday baking season, our biggest volume and earnings period of the year." Costley noted that overall distribution for U.S. Consumer Products was up nearly 11 percent, compared with the second quarter a year ago. During the quarter, the company completed the launch of several new items, including Hungry Jack Easy Mash'd flavored potatoes, Pillsbury SnackBatch baking mixes and Martha White Cornbread Creations. The company also continues to build on the Pillsbury brand's strong appeal among families with young children through its "Pillsbury Kids Bake It Fun" consumer promotion. Foodservice Products. Second-quarter net sales in Foodservice Products declined 14 percent to $50 million, down from $58.3 million in the prior year. The decline in sales was primarily driven by the planned rationalization of low-margin accounts and product lines, and lower volumes in foodservice baking mixes. Excluding unusual items, operating earnings were $600,000, down from $1.4 million in the second quarter of fiscal 2003. These results reflect lower volumes, higher commodity costs and competitive pressures related to the ongoing softness in the foodservice industry. Including unusual items, Foodservice Products reported a loss of $300,000 in this year's second quarter. "Our Foodservice Products business is operating in a difficult environment," Costley said. "We continue to take steps to improve performance, including exiting non-core, under-performing platforms and properly sizing our operations to current market conditions. During the quarter, we completed the sale of the foodservice pie business and eliminated an additional 50 slow-moving SKUs. At the same time, we are investing in new value-added products and focusing on targeted segments that we believe offer future growth potential." Canadian Foods. Net sales for the second quarter of fiscal 2004 rose about 9 percent to $78.3 million, due to the impact of a stronger Canadian dollar on currency translation. Unit volume for Canadian Foods was essentially flat, as gains in commercial flour, export, consumer ethnic foods and consumer condiments were offset by declines in foodservice baking mixes, commercial condiments, and consumer flour and baking mixes. During the quarter, the company concluded its five-year agreement with Aurora Foods, Inc., to manufacture, sell and distribute Duncan Hines products in Canada. Operating earnings were $3.7 million, down from $5.3 million in the second quarter a year ago. This decline was attributable to lower returns on U.S. dollar-denominated sales as a result of a stronger Canadian dollar, an unfavorable product mix and higher commodity costs. Currency effects reduced earnings by about $800,000. "As anticipated, this was a challenging period for our Canadian Foods business as softness in our foodservice products businesses and external factors, such as currency, had a short-term impact on performance," Costley said. "We remain focused on increasing the value of our Canadian brands and enhancing our ability to serve customers and consumers in Canada. Because of the organizational changes we made in Canada earlier this year, we are better positioned to maximize the potential of our Canadian Foods business long term." During the quarter, the company expanded its Golden Temple brand with the introduction of a new frozen bread product. Golden Temple is a leading brand of Indian foods. The company gained share in the pickle category as a result of volume growth and the success of new products under the Bick's brand. Robin Hood consumer flour take-away for the 12 weeks ended Aug. 9 was up 5 percent on strong category performance. Summary of Second-Quarter Unusual and One-Time Items The company's second-quarter fiscal 2004 results include the following: -- pre-tax unusual items totaling $900,000, $400,000 after tax or 2 cents per share, for exit costs related to the sale of selected assets of the company's foodservice pie business. The $2 million in cash from the sale, which was completed in August, was used to reduce debt. The company expects to recognize additional charges of up to $700,000 pre tax, $400,000 after tax or 2 cents per share, over the balance of the year in connection with this sale and the resulting closure of its Simcoe, Ontario, plant. -- a non-cash pre-tax charge of $4.4 million, $2.7 million after tax or 14 cents per share, for the write-off of the unamortized portion of bank fees on a former credit facility that was replaced with a new senior secured credit agreement in August. This charge is recorded in "Other income (expense), net" in the attached financial tables. The new agreement reduces the company's overall borrowing costs and provides greater financial flexibility. Six-Month Summary Earnings on a reported basis for the six months ended Aug. 30 were $600,000, compared with a net loss of $64.5 million for the same period a year ago. Excluding unusual and one-time items, earnings from continuing operations were $6 million, compared with $7.6 million in the first six months of the prior year. This was in line with the company's previous guidance. Net sales for the first half of fiscal 2004 were $422.3 million, compared with $420.5 million in fiscal 2003. Outlook For fiscal year 2004 ending Feb. 28, 2004, Multifoods continues to expect earnings per diluted share before unusual items of $1.70 to $1.75. Including unusual items, reported earnings are expected to be in the range of $1.40 to $1.45 per share. These estimates assume continued investments in marketing and R&D; higher commodity costs, which principally affected first-half comparisons; higher depreciation expense; lower interest expense; and lower income from the company's primary pension plans, which were fully funded at the end of fiscal 2003. In addition, the company now expects its full-year tax rate to be between 33 percent and 35 percent. Multifoods' annualized financial targets for the three-year period beginning this fiscal year include: net sales growth of 3 percent to 5 percent; operating earnings growth of 5 percent to 7 percent; and earnings per share growth of 9 percent to 11 percent. The company also said that it expects to exceed $100 million in free cash flow (cash flows from operations less capital expenditures of $90 million to $100 million) over the same three-year period. "For the second half, we expect the strong performance of our consumer businesses, the savings associated with our debt refinancing and a lower-than-anticipated tax rate to offset continued weakness in foodservice products," Costley said. "Multifoods today has strong brands and talented people focused on executing clear growth strategies. This gives us confidence in our ability to achieve our annual and three-year financial goals." Multifoods (S&P, BB Corporate Credit Rating, Stable) is a manufacturer and marketer of branded consumer foods and foodservice products in North America. The company's food manufacturing businesses have combined annual net sales of nearly $940 million. Multifoods' brands include Pillsbury(R) baking mixes for items such as cakes, muffins, brownies and quick breads; Pillsbury(R) ready-to-spread frostings; Hungry Jack(R) pancake mixes, syrup and potato side dishes; Martha White(R) baking mixes and ingredients; Robin Hood(R) flour and baking mixes; Pet(R) evaporated milk and dry creamer; Farmhouse(R) rice and pasta side dishes; Bick's(R) pickles and condiments in Canada; Softasilk(R) premium cake flour; Red River(R) hot flax cereal; and Golden Temple(R) Indian foods. Further information about Multifoods is available on the Internet at http://www.multifoods.com INVESPRINT: Violates Technical Covenant Under Equipment Lease ------------------------------------------------------------- Invesprint Corporation of Toronto reported financial results for its first quarter ended July 31, 2003. Sales from continuing operations for the first quarter of fiscal 2004 were $6.8 million compared to $8.7 million in the first quarter of fiscal 2003. On November 20, 2002, the Company announced that its largest label customer had chosen alternate suppliers for its label needs. While significant progress has been made to replace this business, the loss of this customer adversely impacted sales in the first quarter of this year. Consolidated gross margin was 7.5% of sales compared to 26.8% in the first quarter last year. Lower sales combined with increased capacity at Jonergin Pacific that came on-stream late in fiscal 2003 and was not fully utilized, resulted in substantially lower margins. Selling, general and administrative expenses were slightly lower than in the first quarter last year. Administrative expenses for the first quarter of fiscal 2004 included severance expense of $74,000 related to the closing of the corporate office in Toronto. The loss from discontinued operations for the first quarter of fiscal 2004 was $308,000 compared to net earnings of $191,000 in the first quarter last year. The loss in the first quarter of fiscal 2004 included a foreign exchange loss of $300,000 reflecting the appreciation of the Canadian dollar from the Company's year-end to the closing date of the Company's disposition of its interest in Jay Packaging Group, Inc. The loss from continuing operations for the first quarter was $853,000 compared to earnings of $279,000 for the first quarter of fiscal 2003. The net loss for the period was $1,161,000 compared to net earnings of $470,000 in the same period last year. The Company has been advised by one of its lessors that it believes that the Company may have technically breached a covenant under its equipment leases due to the sale of its interests in Kree Technologies Inc. and Jay Packaging earlier in the year, despite the fact that these sales generated substantial cash and improved the financial position of the Company. The Company does not believe it breached this covenant under the lease in question and believes that it will be able to resolve the covenant issue with the lessor. "When announcing our fiscal 2003 results, I said we had significant work ahead of us," stated Vince Hockett, President and Chief Executive Officer. "This work began in earnest in out first quarter when we identified and accounted for most of our problems. While the resulting performance remains unacceptable, I am confident that we are effectively addressing our operating and strategic issues. We will continue this work for the next few quarters." Hockett continued, "Today, our main issue is to grow revenues. In the last 60 days I have visited many customers; I am happy to report that Jonergin and Jonergin Pacific have excellent reputations and over the next few months will have opportunities to increase volume. Hockett also stated that, "While we are focusing on revenue generating activities, we have not lost sight of cost control imperatives. Between our two operating locations and our corporate office, we have eliminated almost $1,000,000 in annual expenses. These reductions are significant steps on our path to profitability and will help us remain competitive in the marketplace." Through its Jonergin operations in Montreal, Quebec and Napa, California, Invesprint manufactures prime labels for the wine & spirits, pharmaceutical and petrochemical markets. ISLE OF CAPRI CASINOS: Will Buy President Casino in St. Louis ------------------------------------------------------------- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) has entered into an agreement to purchase The Admiral casino riverboat in St. Louis Missouri from The President Riverboat Casino-Missouri, Inc. The agreement is subject to general conditions including the approval of the Missouri Gaming Commission, the satisfactory completion of the due diligence by the Isle of Capri, as well as the approval of the Federal Bankruptcy Court, located in St. Louis. The purchase price is approximately $50 million, which will be paid from excess cash and the company's revolver. Isle of Capri Casinos, Inc. (S&P, B+ Corporate Credit Rating, Stable) owns and operates 15 riverboat, dockside and land-based casinos at 14 locations, including Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City and Lake Charles (two riverboats), Louisiana; Black Hawk (two land-based casinos) and Cripple Creek, Colorado; Bettendorf, Davenport and Marquette, Iowa; and Kansas City and Boonville, Missouri. The company also operates Pompano Park Harness Racing Track in Pompano Beach, Florida. IVACO INC: Slashing 115 Jobs at Sivaco Quebec Division ------------------------------------------------------ Ivaco Inc., said its Sivaco Quebec division in Marieville, Quebec will eliminate approximately 115 jobs as part of Ivaco's restructuring under CCAA (Companies' Creditors Arrangement Act) that was announced the other week. The process will begin immediately with about half of the job reductions achieved through attrition as some employees elect retirement under the Company's pension plan. The plant, which today has 380 employees, will also convert from a 7 days-per-week, 24 hours-per-day operation to a 5 days-per-week, 24 hours-per-day production schedule. Annual production output will be reduced to 150,000 tons from 180,000 tons. The reduced capacity reflects Sivaco Quebec's systematic elimination of low margin, commodity-type products. These products, which were destined for customers in the United States, had become uncompetitive in light of market conditions and the rapid rise of the Canadian dollar. The Marieville plant produces wire, galvanized wire and nails. "We are committed to successfully restructuring under CCAA, maintaining our competitive position and returning to profitability," said Gordon Silverman, Chief Restructuring Officer of Ivaco. "As we announced last week, we are looking closely at all facets of our business and acting where we can to achieve a successful restructuring. Sometimes that means making difficult decisions in the best interests of all our stakeholders. Today is one of those days," added Mr. Silverman. Ivaco filed for protection under the CCAA on September 16, 2003, citing difficult market conditions for the entire North American steel industry, which included the high Canadian dollar, U.S. anti-dumping duty deposits and higher input, energy and transportation costs. Ivaco's restructuring plan consists of the following key components: - the consolidation of the Canadian operations in order to create a more efficient corporate structure; - continuing the program for the sale of non-core assets; - the renegotiation of various operating and labour agreements; - the settlement of debts, including trade liabilities and legal obligations; - continuing sales and distribution operations in the United States; and - the discontinuance and sale or liquidation of all of the Company's United States manufacturing operations. Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, Ivaco's fabricated steel products operations have a rated production capacity in the area of 350,000 tons per annum of wire, wire products and processed rod, and over 175,000 tons per annum of fastener products. Shares of Ivaco are traded on The Toronto Stock Exchange (IVA). KAISER: Court Clears Prof. McGovern's Engagement as Mediator ------------------------------------------------------------ Kaiser Aluminum Corporation and its debtor-affiliates sought and obtained the Court's approval to appoint Francis McGovern as mediator with respect to plan-related negotiations between asbestos claimants and other creditor constituencies, nunc pro tunc to June 1, 2003. Francis McGovern, a professor at Duke University School of Law, has written and spoken extensively on the use of alternative dispute resolution techniques to avoid or to improve the litigation process. Institutions like the federal judiciary, many state courts, and the United Nations have sought Mr. McGovern's services in addressing the practical and conceptual issues involved in dispute resolution. Mr. McGovern will mediate any disputes among the Existing Claimants, the Future Claimants and the Debtors' other stakeholders with respect to the treatment of asbestos liabilities in any proposed reorganization plan. He will exercise independent professional judgment as a Mediator and have no financial interest in the outcome of the case. Mr. McGovern affirmed that he is a disinterested person as defined in Section 101(14) of the Bankruptcy Code. The Debtors will compensate Mr. McGovern at $10,000 per day, inclusive of all expenses, for any day during which Mr. McGovern attends a meeting directly relating to the negotiation of reorganization plans. (Kaiser Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) LABRANCHE: S&P Affirms Ratings & Revises Outlook to Negative ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB+/B' counterparty credit ratings on LaBranche & Co. Inc., the leading NYSE specialist firm. At the same time, the outlook on the ratings was revised to negative from stable. An outlook reflects Standard & Poor's assessment of the potential direction of a rating over the intermediate term. The outlook revision reflects concern over the possibility for continuation of negative trends in profitability. "If profitability were to remain under pressure, cash flow generation could be impaired and ratings could be lowered," said Standard & Poor's credit analyst Baylor A. Lancaster. Standard & Poor's will continue to monitor the progress of the NYSE investigation into the role and conduct of several specialist firms. If the investigation results in additional regulations or fines to LaBranche, the firm's ability to conduct principal trading could be negatively affected. Standard & Poor's will also monitor any changes in the NYSE market structure and will address their impact on LaBranche as they develop. LEAP WIRELESS: Cricket Wants to Up Deloitte's Fee as Tax Advisor ---------------------------------------------------------------- Cricket Communications, Inc., employs Deloitte & Touche LLP to investigate potential tax savings on real and personal property tax assessments for their properties. Deloitte receives a 30% contingent fee on any realized savings. The firm is solely responsible for all of its costs and expenses. Thus, it receives no payment until a tax savings is received. To recall, the Court authorized the Debtors to employ and compensate ordinary course professional provided that the compensation does not exceed $15,000 per month. Deloitte was one of these professionals. The OCP Order further provided that the Debtors may seek the Court's authority to increase the limitation of monthly payments. Because of the firm's success in its efforts, Cricket wants to expand Deloitte's services. Cricket estimates that Deloitte's fees will be $125,000 to $400,000 per month. Cricket further estimates that Deloitte's services will earn them tax savings of $420,000 to $1,300,000 per month. By this motion, Cricket seeks the Court's authority to pay Deloitte for tax services in the ordinary course of business. Accordingly, the Court should amend the OCP Order to supplement the estimated billing rates for Deloitte. (Leap Wireless Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEVI STRAUSS: Closing Remaining Manufacturing & Finishing Plants ---------------------------------------------------------------- Levi Strauss & Co., will close its remaining manufacturing and finishing plants in North America as part of the shift away from owned-and-operated manufacturing that the company began several years ago. The company plans to close its sewing and finishing operations in San Antonio by year-end, displacing approximately 800 workers. Its three Canadian facilities -- two sewing plants in Edmonton, Alberta and Stoney Creek, Ontario, and a finishing center in Brantford, Ontario -- are expected to close in March 2004, displacing approximately 1,180 employees. "Regrettably, these closures will affect workers who have done a tremendous job for the company over the years," said chief executive officer Phil Marineau. "We understand the impact this change will have on them, their families and communities. As we have done in the past, our intent is to provide a comprehensive separation package for employees, along with support for the local communities through philanthropic grants. "We're in a highly competitive industry where few apparel brands own and operate manufacturing facilities in North America. In fact, we are one of the last companies to do so," said Marineau. "In order to remain competitive, we need to focus our resources on product design and development, sales and marketing and our retail customer relationships." The company intends to offer a comprehensive separation package to help employees transition successfully to new opportunities. The details of the separation packages for both Canadian and U.S. employees will be determined through upcoming discussions with the unions. "The Levi Strauss Foundation intends to partner with government agencies and community organizations to leverage our resources collaboratively to address the unique needs of the local displaced workers," said Theresa Fay-Bustillos, executive director of the Levi Strauss Foundation and vice president of community affairs for LS&CO. "We have established a Community Transition Fund to provide grants that will help strengthen the economic base in San Antonio and affected Canadian communities and help employees gain access to a wide array of economic and educational opportunities." Production from the San Antonio and Canadian facilities will be shifted to LS&CO.'s global sourcing network, in adherence with the company's comprehensive code of conduct. As the first multinational company to develop a code of conduct, LS&CO. is committed to ensuring that individuals making its products anywhere in the world do so in safe and healthy working conditions and are treated with dignity and respect. Levi Strauss & Co. (S&P, B Corporate Credit Rating, Stable) is one of the world's leading branded apparel companies, marketing its products in more than 100 countries worldwide. The company designs and markets jeans and jeans-related pants, casual and dress pants, shirts, jackets and related accessories for men, women and children under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. LEVI STRAUSS: Canada Unit Closing Remaining Manufacturing Plants ---------------------------------------------------------------- Levi Strauss & Co. (Canada) Inc., will close its three remaining manufacturing plants in Canada in 2004. This is the continuation of a shift away from owned-and-operated manufacturing begun in the late 1990s. The closure of the three Canadian plants - sewing facilities in Edmonton, Alberta, and Stoney Creek, Ontario, and a finishing centre in Brantford, Ontario - will result in the displacement of 1,180 employees. These closures are expected to occur in March 2004. "Our employees have done a tremendous job and these closures are in no way a reflection on their good work," said Julie Klee, General Manager of Levi Strauss & Co. (Canada) Inc. "As painful as they are, however, the closures are an absolutely necessary part of ensuring the long-term competitiveness of our business. "Moving away from owned-and-operated manufacturing to a broader sourcing base will strengthen our business by giving us much more flexibility. It will allow us to use the right sources - with the capabilities and cost-competitiveness that we need - to get a wider range of products to market faster. "The company has been making great strides in its business turnaround despite the economic conditions that the apparel industry has faced recently," Klee said. "This shift allows us to continue that by focusing on product design, marketing and sales." The company intends to offer a comprehensive separation package designed to help employees transition successfully to new opportunities. Meetings with the unions will take place in the coming weeks to discuss the severance package and other transition measures to assist employees. The Levi Strauss Foundation has established a US$700,000 Community Transition Fund to provide grants that will help the three affected communities respond effectively to the needs of displaced workers and strengthen the local economic base. The Foundation will work with the communities to identify appropriate programs for funding. Levi Strauss & Co. (Canada) Inc. is the wholly owned subsidiary of Levi Strauss & Co. (S&P, B Corporate Credit Rating, Stable), one of the world's leading branded apparel marketers. In Canada, the company markets and sells jeans, casual wear and accessories under the Levi's(R), Dockers(R), GWG(R) and Levi Strauss Signature(R) brands. Levi Strauss & Co. (Canada) Inc. is headquartered in Richmond Hill, Ontario. LEVI STRAUSS: Fitch Says Plant Closure Will Not Affect Ratings -------------------------------------------------------------- Levi Strauss & Co.'s announcement to close its remaining five North American manufacturing plants and reduce headcount by approximately 2,000 does not have rating implications, according to Fitch Ratings. While the announced plans are expected to require restructuring charges, these charges, combined with its previously announced headcount reduction in the U.S. and Europe, are expected to generate significant cost savings as well. The restructuring plans and cost savings were factored into Fitch's affirmation of the senior unsecured debt and assignment of new bank facility ratings on Sept. 12, 2003. Fitch rates Levi's $1.7 billion senior unsecured debt 'B', its $650 million asset-based loan 'BB' and its $500 million term loan 'BB-'. The 'BB-' rating on the company's previous bank credit facility ($375 million revolver and $368 million term loan) is withdrawn as the facility has been replaced. MAJESTIC STAR: Gets Requisite Consents from 11.653% Noteholders --------------------------------------------------------------- Majestic Investor Holdings, LLC and Majestic Investor Capital Corp., have received the requisite tenders and consents from holders of its 11.653% Senior Secured Notes due 2007. On August 26, 2003, the Issuer commenced a cash tender offer and consent solicitation relating to the Notes. The consent date relating to the consent solicitation expired at 5:00 p.m., New York City time, on Thursday, September 25, 2003. As of 5:00 p.m., New York City time, on Thursday, September 25, 2003, $135,477,000 of the aggregate outstanding principal amount of Notes had been tendered in the offer to purchase and consent solicitation related to the Notes, which amounts to approximately 89.3% of the outstanding principal amount of the Notes. The Issuer intends to enter into a supplemental indenture relating to the Notes that effectuates the proposed amendments described in the Offer to Purchase and Consent Solicitation Statement dated August 26, 2003, as amended. The proposed amendments will not become operative, however, unless and until the Notes are accepted and paid for pursuant to the terms of the offer to purchase, as more fully described in the Statement. When the proposed amendments become operative, holders of all the Notes then outstanding will be bound thereby. A consent payment of $30.00 per $1,000 principal amount of the Notes will be paid only to holders of Notes who validly tendered such Notes on or prior to the expiration of the consent solicitation, if such Notes are accepted for payment. Holders whose valid tenders are received after the expiration of the consent solicitation, but prior to the expiration of the offer to purchase, which is 5:00 p.m., New York City time, on Monday, October 6, 2003, will receive the purchase price of $1,060.00 per $1,000 principal amount of the Notes, but will not be eligible to receive the Consent Payment. The Majestic Star Casino, LLC (S&P, B Corporate Credit Rating, Positive) is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana and, pursuant to a 2001 acquisition through its unrestricted subsidiary, Majestic Investor Holdings, LLC, owns and operates three Fitzgeralds brand casinos located in Tunica, Mississippi, Black Hawk, Colorado and downtown Las Vegas, Nevada. For more information about the Company, please visit its Web sites at http://www.majesticstar.comor http://www.fitzgeralds.com The Majestic Star Casino, LLC and Majestic Investor Holdings, LLC make available free of charge their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. You may obtain a copy of such filings at http://www.sec.govor from its applicable Web sites. MAJESTIC STAR: Receives Consents from 10-7/8% Senior Noteholders ---------------------------------------------------------------- The Majestic Star Casino, LLC and The Majestic Star Capital Corp. have received the requisite tenders and consents from holders of its 10-7/8% Senior Secured Notes due 2006. On August 26, 2003, the Issuer commenced a cash tender offer and consent solicitation relating to the Notes. The consent date relating to the consent solicitation expired at 5:00 p.m., New York City time, on Thursday, September 25, 2003. As of 5:00 p.m., New York City time, on Thursday, September 25, 2003, $74,639,000 of the aggregate outstanding principal amount of Notes had been tendered in the offer to purchase and consent solicitation related to the Notes, which amounts to approximately 57.4% of the outstanding principal amount of the Notes. The Issuer intends to enter into a supplemental indenture relating to the Notes that effectuates the proposed amendments described in the Offer to Purchase and Consent Solicitation Statement dated August 26, 2003, as amended. The proposed amendments will not become operative, however, unless and until the Notes are accepted and paid for pursuant to the terms of the offer to purchase, as more fully described in the Statement. When the proposed amendments become operative, holders of all the Notes then outstanding will be bound thereby. A consent payment of $5.00 per $1,000 principal amount of the Notes will be paid only to holders of Notes who validly tendered such Notes on or prior to the expiration of the consent solicitation, if such Notes are accepted for payment. Holders whose valid tenders are received after the expiration of the consent solicitation, but prior to the expiration of the offer to purchase, which is 5:00 p.m., New York City time, on Monday, October 6, 2003, will receive the purchase price of $1,049.38 per $1,000 principal amount of the Notes, but will not be eligible to receive the Consent Payment. The Majestic Star Casino, LLC (S&P, B Corporate Credit Rating, Positive) is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana and, pursuant to a 2001 acquisition through its unrestricted subsidiary, Majestic Investor Holdings, LLC, owns and operates three Fitzgeralds brand casinos located in Tunica, Mississippi, Black Hawk, Colorado and downtown Las Vegas, Nevada. For more information about the Company, please visit its Web sites at http://www.majesticstar.comor http://www.fitzgeralds.com The Majestic Star Casino, LLC and Majestic Investor Holdings, LLC make available free of charge their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. You may obtain a copy of such filings at http://www.sec.govor from its applicable Web sites. METROMEDIAL INT'L: Nasdaq Delists Equity Securities from OTCBB -------------------------------------------------------------- Metromedia International Group, Inc. (currently traded as: OTCPK:MTRM - Common Stock and OTCPK:MTRMP - Preferred Stock), the owner of interests in various communications and media businesses in Russia, Eastern Europe and Georgia, announced the following: -- The quotation of the Company's equity securities on the OTC Bulletin Board trading system was removed on September 24, 2003 because the Company was not then in compliance with NASD Rule 6530. Under Rule 6530 the Company was required to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 with the United States Securities and Exchange Commission by September 23, 2003. The Company anticipates that it will file its Form 10-Q within the next 12 business days and thus again be in compliance with OTCBB trading eligibility requirements. -- As part of its continuing corporate restructuring initiatives, the Company has undertaken to move its corporate headquarters from New York City to Charlotte, North Carolina. A much downsized, Charlotte-based, accounting and financial reporting work force has been successfully recruited and, in October, will commence operations in newly leased office space in Charlotte. Although this action has contributed to the delay in the filing of the Company's current Form 10-Q, its immediate effect will be a substantial reduction in continuing overhead expenditures. The Company expects to close its New York City office before the end of 2003. -- The Company remitted Thursday $7.98 million to U.S. Bank Corporate Trust Services, the trustee of its $152.0 million 10-1/2 % Senior Discount Notes due 2007, thereby effecting the required semi-annual interest payment prior to the September 30, 2003 due date. -- To conserve cash in anticipation of further business development opportunities and potential refinancing of the Company's Senior Discount Notes, the Company has elected to not declare a dividend on its 7-1/4% cumulative convertible preferred stock for the quarterly dividend period ending on September 15, 2003. Accordingly, as of the September 15, 2003 due date for such dividend, aggregated dividends in arrears is $37.5 million. In making these announcements, Mark Hauf, Chairman and Chief Executive Officer of the Company, commented: "Our delay in filing the second quarter Form 10-Q is an unfortunate, but unavoidable consequence of the otherwise very positive corporate restructuring initiatives we began in the first quarter of 2003. We recognized an acute need to promptly and substantially downsize and reorganize the Company's support forces as part of our commitment to resolve the significant liquidity issues that the Company had long faced. Such actions unavoidably disrupt internal corporate work flow processes and, given the scale of restructuring required to adequately address our situation, the disruption has been significant. These actions have limited our ability to file timely public financial statements; but, in broader terms, the restructuring and other initiatives we have taken in the Company have substantially contributed to resolving the liquidity issues we faced at the start of the year. Upon completing the move of our much-streamlined US support operations to Charlotte later this year, we expect that any further adverse effects of the restructuring program will end and the Company will be positioned to enjoy the long term benefits intended when we began this work in March 2003." With respect to the removal of quotation of the Company's equity securities on the OTCBB trading system, Ernie Pyle, Senior Vice President and Chief Financial Officer of the Company commented: "We regret that our tardiness in filing a second quarter Form 10-Q has had this unfortunate consequence and any temporary inconvenience that may result for investors of our equity securities. Work leading to filing of the second quarter Form 10-Q commenced with urgency after the Company filed its 2002 Form 10-K and first quarter 2003 Form 10-Q in July, but was much encumbered by the significant reduction in corporate accounting and finance personnel that we had sustained and the timing of such departures in relation to the recruitment of replacement personnel from Charlotte. Nonetheless, I am confident that the accounting and finance personnel that are currently engaged and work flow processes that are currently in place are sufficient to ensure that we will complete the filing of the second quarter Form 10-Q within the next 12 business days. Once the Company has filed this Form 10-Q with the SEC and is again in compliance with SEC filing requirements, the equity securities of the Company can only resume trading on the OTCBB system if one of the Company's OTCBB's market makers files a petition with the OTCBB (Form 211) and the OTCBB then determines that the Company's equity securities can be quoted on the OTCBB trading system." Regarding the move of the Company's headquarters to Charlotte, NC, Mr. Pyle further commented: "The Company's decision to move its corporate headquarters operation from New York City was principally driven by our commitment to substantially reduce corporate overhead expenditures. Upon completing this move, the Company will benefit from significant reductions in continuing office-related, personnel and professional service costs. Furthermore, this new headquarters operation and its counterpart in Moscow, Russia are being sized and organized specifically to fit the much streamlined corporate structure that will result upon the Company's divestiture of all but its core foreign business operations." In summarizing matters announced Thursday, Mr. Hauf, commented: "These announcements, with the exception of that concerning prompt payment of our current interest obligations, unfortunately do not demonstrate the significant progress that we have made in the past two quarters to fundamentally restructure the Company and prepare it for the future. Although this work has had several disruptive consequences, I remain convinced that the course we are pursuing will yield best long-run results for our stakeholders. We are currently finalizing preparations for our 2003 annual shareholder meeting, the date of which will be announced shortly. We look forward to meeting with our shareholders at that time to review events of this volatile year and discuss future opportunities that we are certain have been created through this year's efforts." Through its wholly owned subsidiaries, the Company owns communications and media businesses in Russia, Eastern Europe and Georgia. These include mobile and fixed line telephony businesses, wireless and wired cable television networks and radio broadcast stations. The Company has focused its principal attentions on continued development of its core telephony businesses in Russia and Georgia, while undertaking a program of gradual divestiture of its non-core media businesses. The Company's non-core media businesses are comprised of seven cable television networks, including operations in Russia, Romania, Belarus, Moldova, Lithuania and Georgia. The Company also owns interests in seventeen radio businesses operating in Finland, Hungary, Bulgaria, Estonia, Latvia and the Czech Republic. The Company's core telephony businesses include Peterstar, the leading competitive local exchange carrier in St. Petersburg, Russia, and Magticom, the leading mobile telephony operator in Georgia. Visit the Company's Web site at http://www.metromedia-group.com * * * As previously reported, the Company commented that the "completion and filing of these public reports presented a tremendous challenge to the Company, due principally to the considerable restructuring underway at the Company since late February 2003." The Company further said, "In an effort to address liquidity concerns facing the Company for more than a year, we undertook substantial work force and professional service cutbacks. Although these measures have contributed to a material improvement in our liquidity outlook, they made production of financial statements and reports considerably more difficult." The Company will return its attention to growth and development of its core business and the further execution of initiatives to resolve liquidity issues. MICRON TECHNOLOGY: S&P Revises Low-B Ratings Outlook to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Micron Technology Inc. to stable from negative, reflecting increased liquidity following the sale of about $450 million in common stock rights to Intel Corp. (A+/Stable/A-1+) The transaction has eased concerns about the company's near-term liquidity. The Intel agreement included requirements for Micron to meet certain technological milestones over the next few years. Micron also announced earnings for the August quarter and fiscal year 2003. All outstanding ratings on Micron, including the 'B+' corporate credit rating, were affirmed. At Aug. 31, 2003, Micron had about $1.3 billion of debt and capitalized operating leases outstanding. "Ratings on Micron reflect the challenges of supplying technologically intensive products subject to severe price pressures, tempered by the company's conservative financial policies," said Standard & Poor's credit analyst Bruce Hyman. Micron (S&P, B+ Corporate Credit) is the second-largest supplier of dynamic random access memories, holding about a 20% share of the global market. Korea-based Samsung Electronics Co. Ltd. (A- /Stable/A-2) holds the leadership position, with about a 31% share on a revenue basis. Micron is expected to retain its strong position in the industry through the course of the business cycle. Because of volatile profitability, Micron's debt-protection measures vary widely through the business cycle, although capitalization has remained conservative. Debt, including capitalized operating leases, was 21% of capital at Aug. 31, 2003. Micron had about $1.3 billion of unrestricted cash at Aug. 1, 2003, pro forma for the Intel transaction, while debt and capitalized leases also totaled $1.3 billion. Capital expenditures were $1.06 billion in the fiscal year ending August 2003. Micron does not have a revolving credit agreement. NAT'L CENTURY: Plan Provides for Formation of Litigation Trust -------------------------------------------------------------- As of the Effective Date, the National Century Debtors will execute a Litigation Trust Agreement, which will designate and identify a Litigation Trustee. The Litigation Trustee will be authorized to take all other steps necessary to complete the formation of a Litigation Trust. The Litigation Trust will leave all duties, powers, standing and authority necessary to implement the Plan and to administer and liquidate the Assets of the Litigation Trust for the benefit of the holders of beneficial interests in the Litigation Trust. David J. Coles, NCFE President, Secretary and Treasurer, relates that there will be two classes of beneficial interests in the Litigation Trust: I. Class A Holders of Class A beneficial interests will have the beneficial interests in the Assets of the Litigation Trust other than the CSFB Claim and the proceeds of the Assets. II. Class B Holders of Class B Beneficial interests will have the beneficial interest in the CSFB Claim and the proceeds. The CSFB Claim refers to any and all Causes of Action that the Debtors hold against Credit Suisse First Boston and its affiliates under Chapter 5 of the Bankruptcy Code and other applicable laws for the avoidance and recovery of payments made prior to the Petition Date to CSFB. On the Effective Date, and in accordance with the Restructuring Transactions, the Debtors will assign and transfer to the Litigation Trust all of their rights, title and interest in and to all Causes of Action other than the Excluded Claims and a $10,000,000 Litigation Trust Restricted SPV Funds Holdback, for the benefit of holders of beneficial interests in the Litigation Trust. The transfers of Assets to the Litigation Trust will be free and clear of any liens, claims or encumbrances, and no other entity will otherwise have any interest, legal, beneficial or otherwise, in any Assets upon their assignment and transfer to the Litigation Trust. All Assets will be transferred to the Litigation Trust subject to the liabilities and obligations and the Litigation Trust will be responsible for satisfying all liabilities and fulfilling all obligations: (a) any expenses incurred for the benefit or in connection with the operation of the Litigation Trust, and (b) any other obligations of the Litigation Trust expressly set forth in the Plan. Litigation Trust Agreement The Litigation Trust Agreement will provide for: (a) payment of reasonable compensation to the Litigation Trustee, (b) payment of other Litigation Trust expenses, including the cost of pursuing certain Unresolved Recovery Actions, (c) the Litigation Trust's retention of counsel, accountants, financial advisors or other professionals and their compensation, (d) valuation of the Causes of Action transferred to the Litigation Trust on the Effective Date, (e) preparation of tax returns and other reports of the Litigation Trust, (f) the prosecution of the Causes of Action assigned to the Litigation Trust which may include the litigation, settlement, abandonment or dismissal of any clams, rights or causes of action included in an Unresolved Recovery Action. To comply with federal income tax requirements, Mr. Coles says, the Litigation Trust will be subject to the same limitations as the Liquidation Trust. Distribution of the Litigation Trust's Assets All distributions from the Litigation Trust to the holders of interests in the Litigation Trust will be made in accordance with the claimant's Pro Rata share of the classes of beneficial interests held at the time and in amounts as will be determined by the Litigation Trustee pursuant to the applicable Litigation Trust Agreement. The Litigation Trustee will cause the Litigation Trust to retain sufficient funds as reasonably necessary for the Litigation Trust to: (a) meet contingent liabilities and maintain the value of the Assets during liquidation; (b) pay reasonable expenses of administering the Litigation Trust that have been incurred; and (c) satisfy other liabilities incurred by the Litigation Trust in accordance with the Plan. (National Century Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXTERA ENT.: Enters Pact to Sell Lexecon for $130MM + Debts ------------------------------------------------------------ Nextera Enterprises, Inc. (Nasdaq: NXRA) and its direct and indirect subsidiaries Lexecon Inc., CE Acquisition Corp. and ERG Acquisition Corp. have entered into a definitive asset purchase agreement with FTI Consulting, Inc. and LI Acquisition Company, LLC, a wholly owned subsidiary of FTI, under which LI Acquisition Company will purchase all of the assets Lexecon and its subsidiaries use in their economic consulting business. The terms of the asset purchase agreement provide that FTI Consulting will pay cash in the amount of $130 million, plus additional consideration, including the assumption of certain operating liabilities, in exchange for the Lexecon assets. The Boards of Directors of all companies have approved the transaction. The asset sale is subject to filings by the parties and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, receipt of the approval of Nextera's shareholders at a special meeting and other customary closing conditions. The asset sale is expected to close during the fourth quarter of 2003. In connection with the asset purchase agreement, FTI has entered into a voting agreement with shareholders of Nextera that control approximately 71.5% of the voting power of the Company, which obligates these shareholders to vote to approve the transaction. Lexecon is one of the nation's leading economics consulting firms. The company provides legal, corporate and government clients with analyses of complex economic issues for use in legal and regulatory proceedings, strategic decisions, and public policy debates. Lexecon has three offices: one in Chicago, Illinois and two in Cambridge, Massachusetts. Nextera plans to use the proceeds from the sale to repay existing debt obligations, make required non-compete payments to certain Lexecon key employees, satisfy other unassumed liabilities and pay expenses related to the sale. After payment of those obligations, liabilities and expenses, the Company expects to have approximately $15-$17 million of cash remaining from the transaction. The Company also anticipates having approximately $30 million of net operating loss carryforwards subsequent to the utilization of net operating loss carryforwards to offset the taxable gain from the sale of the Lexecon assets. Currently, Nextera has approximately $4.2 million of preferred stock outstanding and approximately 33.9 million shares of Class A and B Common Stock outstanding. Lexecon is Nextera's sole operating subsidiary. Following the divestiture of the Lexecon business, Nextera said it intends to review a variety of strategic alternatives aimed at maximizing its resources and increasing shareholder value including, but not limited to, the acquisition of one or more ongoing operations or businesses. To evaluate its strategic alternatives, the Company intends to form a special committee of the board of directors and retain the services of an investment banking firm to provide related advice. Nextera Enterprises Inc., through its wholly owned subsidiary, Lexecon, provides a broad range of economic analysis, litigation support, and regulatory and business consulting services. One of the nation's leading economics consulting firms, Lexecon assists its corporate, law firm and government clients reach decisions and defend positions with rigorous, objective and independent examinations of complex business issues that often possess regulatory implications. Lexecon has offices in Cambridge and Chicago. More information can be found at http://www.nextera.com and http://www.lexecon.com FTI is a multi-disciplined consulting firm with leading practices in financial restructuring and litigation support. The company is headquartered in Annapolis, Maryland. * * * Liquidity and Capital Resources In its SEC Form 10-Q for the quarter ended March 31, 2003, Nextera Enterprises reported: "Consolidated working capital was $6.1 million on March 31, 2003, compared to a working capital of $5.2 million on December 31, 2002. Included in working capital were cash and cash equivalents of $0.6 million and $1.6 million on March 31, 2003 and December 31, 2002, respectively. "Net cash used in operating activities was $8.4 million for the three months ended March 31, 2003. The primary components of net cash used in operating activities was an increase of $5.0 million of prepaid and other assets (relating to Messrs. Fischel and Carlton's non-compete agreements), an increase of $4.4 million of accounts receivable, a $1.6 million decrease of accounts payables and accrued expenses (primarily bonus payments), and a net loss of $3.1 million. These cash outflows were offset in part by $5.2 million of non-cash items relating to depreciation, provision for doubtful accounts, amortization of non-compete agreements, non- cash compensation charges, and interest paid-in-kind. "Net cash provided by investing activities was $2.6 million for the three months ended March 31, 2003, almost entirely representing decreases in restricted cash. "Net cash provided by financing activities was $4.8 million for the three months ended March 31, 2003. The primary component of net cash provided by financing activities was $5.0 million of borrowings under the Company's Senior Credit Facility. The Company's primary sources of liquidity are cash on hand, restricted cash (for bonus payments only) and cash flow from operations. The Company believes that if it is successful in reducing its current days sales outstanding level and achieving its forecasted profitability, it will have sufficient cash to meet its operating and capital requirements for the next twelve months. However, there can be no assurances that the Company's actual cash needs will not exceed anticipated levels, that the Company will generate sufficient operating cash flows, by reducing its current days sales outstanding level and achieving its forecasted profitability, to fund its operations in the absence of other sources or that acquisition opportunities will not arise requiring resources in excess of those currently available. In particular, the Company has the option of extending the employment and non- compete agreements with Messrs. Fischel and Carlton from their current expiration of July 16, 2003 to January 15, 2004. In order to exercise such option, the Company must pay Messrs. Fischel and Carlton an aggregate amount of approximately $3.5 million, including interest, on or before July 15, 2003 and an aggregate amount of approximately $1.6 million, plus interest at 3.5% per annum from January 15, 2003 through the date paid, within five days of collection of a specified receivable but in no case later than December 31, 2003, whether or not the receivable is collected by that date. The Company hopes to exercise such option from cash flows from operations, however, such funding from operations is dependent upon reducing current days sales outstanding and achieving forecasted profitability. To the extent that cash flows from operations are not sufficient, the Company will need to obtain alternative financing sources. In order for the Company to further extend these agreements from January 16, 2004 through December 31, 2008, the Company will need to make aggregate payments to Messrs. Fischel and Carlton of $20.0 million by January 15, 2004. We will require additional financing in amounts that we cannot determine at this time in order to make all of the payments required to extend these agreements to December 31, 2008. We expect that we will need to raise funds through one or more public or private financing transactions. "Effective December 31, 2002, the Company entered into a Second Amended and Restated Credit Agreement, which amended the Prior Credit Agreement. As part of the Senior Credit Facility, Knowledge Universe, Inc. purchased a $5.0 million junior participation in the Senior Credit Facility. On January 7, 2003, the Company borrowed $5.0 million under the Senior Credit Facility to fund the first payment required under the employment and non-compete agreements entered into with Messrs. Fischel and Carlton. The Company's outstanding liability under the Senior Credit Facility after the borrowing of the above mentioned $5.0 million was $32.2 million. The Senior Credit Facility requires that $4.7 million of outstanding borrowings be permanently reduced in each of 2003 and 2004. The maturity of the Senior Credit Facility was extended to January 1, 2005. Borrowings bear interest at the lender's base rate plus 1.5%. The Company will continue to pay annual administrative fees of $0.3 million, payable monthly, and the $0.9 million in aggregate back-end fees will continue to be payable upon the maturity of the Senior Credit Facility. The back-end fees can be waived if the Company repays the Senior Credit Facility prior to maturity. All administrative fees paid to the senior lenders are recorded by the Company as interest expense. An affiliate of Knowledge Universe has agreed to continue to guarantee $2.5 million of the Company's obligations under the Senior Credit Facility. The Senior Credit Facility contains covenants related to the maintenance of financial ratios, operating restrictions, restrictions on the payment of dividends and disposition of assets. The covenants are measured quarterly and have been set at varying rates, the most restrictive at approximately 15% below the Company's projected operating results. If the results of operations significantly decline below projected results and we are unable to obtain a waiver from the Company's senior lenders, the Company's debt would be in default and callable by the senior lenders. If our projections of future operating results are not achieved and our debt is placed in default, we would experience a material adverse impact on our reported financial position and results of operations." NEXTERA ENTERPRISES: FTI Consulting Confirms Lexecon Acquisition ---------------------------------------------------------------- FTI Consulting, Inc. (NYSE: FCN), the premier national provider of turnaround, bankruptcy and litigation-related consulting services, has reached an agreement to acquire the assets of Lexecon from its parent company, Nextera Enterprises, Inc. (Nasdaq: NXRA). Lexecon is one of the leading economic consulting firms in the United States. Its clients include major law firms and the corporations that they represent, government and regulatory agencies, public and private utilities, and national and multinational corporations. Lexecon's services involve the application of economic, financial and public policy principles to marketplace issues in a large variety of industries. Its services fall into three broad areas: litigation support, public policy studies and business consulting. Lexecon provides expert witness testimony, economic analyses, and other litigation-related services in adversarial proceedings in courts and before regulatory bodies, arbitrators and international trade organizations. Located in Chicago, Illinois and Cambridge, Massachusetts, Lexecon has approximately 200 employees. For the trailing 12 months ended June 30, 2003, Lexecon had preliminary unaudited annual revenues exceeding $72.0 million and pro forma EBITDA on a separate company basis of approximately $15.0 million. The acquisition of Lexecon is subject to customary conditions, including Nextera Enterprises shareholder approval and Hart-Scott- Rodino review. In connection with the asset purchase agreement, Knowledge Universe, Inc. and Nextera Enterprises Holdings, Inc. entered into a voting agreement in which they agreed to vote shares representing approximately 71 percent of the voting power of Nextera in favor of the transactions contemplated by the purchase agreement. The transaction is expected to close late in the fourth quarter of 2003. The purchase price is approximately $130.0 million of cash, which will be financed by FTI from a combination of its cash resources, existing credit lines or new credit facilities. The effect of the acquisition is expected to be slightly accretive to FTI's earnings per share in 2003, assuming completion before the end of the fourth quarter of 2003, and accretive to earnings per share in 2004. The senior leadership of Lexecon, Mr. Daniel R. Fischel and Dr. Dennis Carlton, as well as certain other members of Lexecon management, will enter into five-year employment agreements and become senior managing directors of FTI Consulting. Mr. Fischel's areas of expertise are securities, corporation law, regulation of financial markets, and the application of the economics of corporate finance to problems in these areas. Mr. Fischel has published widely in books and scholarly journals and is the Lee and Brena Freeman Professor of Law and Business at the University of Chicago. Dr. Carlton, Professor of Economics at the Graduate School of Business at the University of Chicago, specializes in the economics of industrial organization, which is the study of individual markets and includes the study of antitrust and regulatory issues. Mr. Carlton is co-author of a leading text in the field of industrial organization, has authored numerous articles in books and academic journals, and is co-editor of The Journal of Law and Economics. Mr. Fischel stated, "Dr. Carlton and I, as well as all of the other Lexecon management and staff, look forward to joining FTI and contributing to its continued growth and practice diversification. We believe that the FTI vision and environment are consistent with our clients' needs and welcome the opportunity to be a part of this evolving organization." Commenting on the acquisition, Jack Dunn, FTI's chairman and chief executive officer, said, "We believe that Lexecon is the premier name in the field of economic consulting. The acquisition of Lexecon is totally consistent with our core value to provide our clients with the very best services. Not only is this transaction an exceptional value for us in establishing our presence in the economic consulting field, it should also provide an excellent platform for growth as well as many collateral benefits. On an organic basis, Lexecon has been resource constrained under its existing parent. Combining its reputation and deep reservoir of human capital with our financial capacity should create a strong base from which to recruit and expand. On a purely cyclical basis, Lexecon should enjoy a significant opportunity for growth as the economy improves and antitrust review and merger and acquisition activity increases. This is a major step forward for us." Stewart Kahn, president and chief operating officer of FTI, commented, "The acquisition of Lexecon continues our diversification and significantly strengthens our forensic accounting and litigation-related consulting business. From a cross-selling perspective, we believe the deep client relationships that Lexecon's fine professionals enjoy could also lead to increased activity for our forensic accounting, transaction support, merger and acquisition and electronic evidence professionals." FTI Consulting is a multi-disciplined consulting firm with leading practices in the areas of turnaround, bankruptcy and litigation- related consulting services. Modern corporations, as well as those who advise and invest in them, face growing challenges on every front. From a proliferation of "bet-the-company" litigation to increasingly complicated relationships with lenders and investors in an ever-changing global economy, U.S. companies are turning more and more to outside experts and consultants to meet these complex issues. FTI is dedicated to helping corporations, their advisors, lawyers, lenders and investors meet these challenges by providing a broad array of the highest quality professional practices from a single source. FTI is on the Internet at http://www.fticonsulting.com Nextera Enterprises Inc., through its wholly owned subsidiary, Lexecon, provides a broad range of economic analysis, litigation support, and regulatory and business consulting services. One of the nation's leading economics consulting firms, Lexecon assists its corporate, law firm and government clients reach decisions and defend positions with rigorous, objective and independent examinations of complex business issues that often possess regulatory implications. Lexecon has offices in Cambridge and Chicago. More information can be found at http://www.nextera.com and http://www.lexecon.com * * * Liquidity and Capital Resources In its SEC Form 10-Q for the quarter ended March 31, 2003, Nextera Enterprises reported: "Consolidated working capital was $6.1 million on March 31, 2003, compared to a working capital of $5.2 million on December 31, 2002. Included in working capital were cash and cash equivalents of $0.6 million and $1.6 million on March 31, 2003 and December 31, 2002, respectively. "Net cash used in operating activities was $8.4 million for the three months ended March 31, 2003. The primary components of net cash used in operating activities was an increase of $5.0 million of prepaid and other assets (relating to Messrs. Fischel and Carlton's non-compete agreements), an increase of $4.4 million of accounts receivable, a $1.6 million decrease of accounts payables and accrued expenses (primarily bonus payments), and a net loss of $3.1 million. These cash outflows were offset in part by $5.2 million of non-cash items relating to depreciation, provision for doubtful accounts, amortization of non-compete agreements, non- cash compensation charges, and interest paid-in-kind. "Net cash provided by investing activities was $2.6 million for the three months ended March 31, 2003, almost entirely representing decreases in restricted cash. "Net cash provided by financing activities was $4.8 million for the three months ended March 31, 2003. The primary component of net cash provided by financing activities was $5.0 million of borrowings under the Company's Senior Credit Facility. The Company's primary sources of liquidity are cash on hand, restricted cash (for bonus payments only) and cash flow from operations. The Company believes that if it is successful in reducing its current days sales outstanding level and achieving its forecasted profitability, it will have sufficient cash to meet its operating and capital requirements for the next twelve months. However, there can be no assurances that the Company's actual cash needs will not exceed anticipated levels, that the Company will generate sufficient operating cash flows, by reducing its current days sales outstanding level and achieving its forecasted profitability, to fund its operations in the absence of other sources or that acquisition opportunities will not arise requiring resources in excess of those currently available. In particular, the Company has the option of extending the employment and non- compete agreements with Messrs. Fischel and Carlton from their current expiration of July 16, 2003 to January 15, 2004. In order to exercise such option, the Company must pay Messrs. Fischel and Carlton an aggregate amount of approximately $3.5 million, including interest, on or before July 15, 2003 and an aggregate amount of approximately $1.6 million, plus interest at 3.5% per annum from January 15, 2003 through the date paid, within five days of collection of a specified receivable but in no case later than December 31, 2003, whether or not the receivable is collected by that date. The Company hopes to exercise such option from cash flows from operations, however, such funding from operations is dependent upon reducing current days sales outstanding and achieving forecasted profitability. To the extent that cash flows from operations are not sufficient, the Company will need to obtain alternative financing sources. In order for the Company to further extend these agreements from January 16, 2004 through December 31, 2008, the Company will need to make aggregate payments to Messrs. Fischel and Carlton of $20.0 million by January 15, 2004. We will require additional financing in amounts that we cannot determine at this time in order to make all of the payments required to extend these agreements to December 31, 2008. We expect that we will need to raise funds through one or more public or private financing transactions. "Effective December 31, 2002, the Company entered into a Second Amended and Restated Credit Agreement, which amended the Prior Credit Agreement. As part of the Senior Credit Facility, Knowledge Universe, Inc. purchased a $5.0 million junior participation in the Senior Credit Facility. On January 7, 2003, the Company borrowed $5.0 million under the Senior Credit Facility to fund the first payment required under the employment and non-compete agreements entered into with Messrs. Fischel and Carlton. The Company's outstanding liability under the Senior Credit Facility after the borrowing of the above mentioned $5.0 million was $32.2 million. The Senior Credit Facility requires that $4.7 million of outstanding borrowings be permanently reduced in each of 2003 and 2004. The maturity of the Senior Credit Facility was extended to January 1, 2005. Borrowings bear interest at the lender's base rate plus 1.5%. The Company will continue to pay annual administrative fees of $0.3 million, payable monthly, and the $0.9 million in aggregate back-end fees will continue to be payable upon the maturity of the Senior Credit Facility. The back-end fees can be waived if the Company repays the Senior Credit Facility prior to maturity. All administrative fees paid to the senior lenders are recorded by the Company as interest expense. An affiliate of Knowledge Universe has agreed to continue to guarantee $2.5 million of the Company's obligations under the Senior Credit Facility. The Senior Credit Facility contains covenants related to the maintenance of financial ratios, operating restrictions, restrictions on the payment of dividends and disposition of assets. The covenants are measured quarterly and have been set at varying rates, the most restrictive at approximately 15% below the Company's projected operating results. If the results of operations significantly decline below projected results and we are unable to obtain a waiver from the Company's senior lenders, the Company's debt would be in default and callable by the senior lenders. If our projections of future operating results are not achieved and our debt is placed in default, we would experience a material adverse impact on our reported financial position and results of operations." NORTEL NETWORKS: Preferred Share Dividends Payable on Nov. 12 ------------------------------------------------------------- The board of directors of Nortel Networks Limited declared a dividend on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding Non- cumulative Redeemable Class A Preferred Shares Series 7 (TSX:NTL.PR.G). The dividend amount for each series is calculated in accordance with the terms and conditions applicable to each respective series, as set out in the Company's articles. The annual dividend rate for each series floats in relation to changes in the average of the prime rate of Royal Bank of Canada and The Toronto-Dominion Bank during the preceding month ("Prime") and is adjusted upwards or downwards on a monthly basis by an adjustment factor which is based on the weighted average daily trading price of each of the series for the preceding month, respectively. The maximum monthly adjustment for changes in the weighted average daily trading price of each of the series will be plus or minus 4.0% of Prime. The annual floating dividend rate applicable for a month will in no event be less than 50% of Prime or greater than Prime. The dividend on each series is payable on November 12, 2003 to shareholders of record of such series at the close of business on October 31, 2003. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com. * * * Standard & Poor's Ratings Services affirmed its 'B' rating on Nortel Networks Lease Pass-Through Trust's certificates series 2001-1. Concurrently, the outlook is revised to stable from negative. The rating on the certificates is dependent upon the corporate credit rating on Nortel Networks Ltd. (Nortel), which was affirmed at 'B' Sept. 4, 2003, and at which time its outlook was revised to stable. NOVA CHEMS: Q3 Earnings Release & Conference Call on Oct. 22 ------------------------------------------------------------ NOVA Chemicals (NYSE:NCX)(TSX:NCX) announced these earnings release and conference call details: Earnings Release: Wednesday, October 22, 2003 7:30 a.m. EDT (6:30 a.m. CDT; 5:30 a.m. MDT; 4:30 a.m. PDT) Conference Call: Wednesday, October 22, 2003 1:00 p.m. EDT (12:00 p.m. CDT; 11:00 a.m. MDT; 10:00 a.m. PDT) Dial-In Number: 416.695.5806 Live Web Cast: The web cast can be accessed live at http://www.vcall.com (ticker symbol NCX). Instant Replay: A replay of the conference call will be available at 416.695.5800 (passcode #1463957) through Wednesday, October 29, 2003. Upcoming Earnings Release Dates: -- 4th Quarter 2003 - January 28, 2004 -- 1st Quarter 2004 - April 21, 2004 -- 2nd Quarter 2004 - July 21, 2004 -- 3rd Quarter 2004 - October 20, 2004 Dates are subject to change. Conference calls and live internet web casts to discuss quarterly earnings are held at 1:00 p.m. Eastern Time on the day of the earnings release. Earnings are released at 7:30 a.m. on the day indicated. The news release will contain the necessary instructions for accessing the call. NOVA Chemicals (S&P, BB+ Long-Term Corporate Credit Rating, Positive) is a focused, commodity chemical company producing olefins/polyolefins and styrenics at 18 locations in the United States, Canada, France, the Netherlands and the United Kingdom. NOVA Chemicals Corporation shares trade on the Toronto and New York exchanges under the trading symbol NCX. Visit NOVA Chemicals on the Internet at http://www.novachemicals.com NRG ENERGY: Wants Disclosure Statement Hearing Set for Oct. 28 -------------------------------------------------------------- According to Matthew A. Cantor, Esq., at Kirkland & Ellis, in New York, all the creditors and equity security holders of the Debtors are treated as unimpaired under the Plan dated September 17, 2003. As a result, pursuant to Section 1126(f) of the Bankruptcy Code, the creditors and equity security holders are conclusively presumed to have accepted the Plan and no solicitation of their votes is required. Accordingly, NRG Energy, Inc., and its debtor-affiliates ask the Court to schedule: (a) the Disclosure Statement Hearing on or before October 28, 2003, and (b) the Confirmation Hearing on or before November 21, 2003, pursuant to Section 1128 of the Bankruptcy Code and Rule 3017 of the Federal Rules of Bankruptcy Procedure. The Disclosure Statement Hearing and 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. Hearing Notices Rule 3017(a) of the Federal Rules of Bankruptcy Procedure requires not less than 25 days' notice to all creditors and equity security holders of the time fixed for filing objections and the hearing to consider the adequacy of the disclosure statement. In addition, Rules 2002(6) and (d) of the Federal Rules of Bankruptcy Procedure require notice by mail to all creditors and equity security holders of the time set for filing objections to, and the hearing to consider the approval of, a disclosure statement. Accordingly, the Debtors propose: (a) to mail a copy of the notice by overnight mail to all its creditors and equity security holders on October 1, 2003; (b) to publish the Disclosure Statement and Confirmation Notice, not less than 25 days before the deadline to file objections to the Disclosure Statement, in The Wall Street Journal and The New York Times; (c) to publish the Disclosure Statement and Confirmation Notice at http://wwww.kccllc.net/nrg Mr. Cantor asserts that the publication of the Disclosure Statement and Confirmation Notice will provide sufficient notice of the time fixed for filing objections to the Disclosure Statement and the time, date, and place of the Disclosure Statement Hearing to persons who do not otherwise receive notice by mail. Rule 3017(a) further require that a debtor mail the plan and the disclosure statement together with the notice of the disclosure statement hearing to any trustee or committee appointed under the Code, the Securities and Exchange Commission and any party-in interest who requests in writing a copy of the statement or plan. Accordingly, the Debtors will send a copy of the Disclosure Statement and the Plan to these parties: (a) Bingham McCutchen LLP, the Committee's counsel, (b) Simpson Thacher & Bartlett, counsel for the Global Steering Committee, (c) Akin, Gump, Strauss, Hauer & Feld, counsel for the South Central Bondholders Committee and the Northeast Bondholders Committee, LLP, (d) the Office of the United States Trustee, (e) Paul, Hastings, Janofsky & Walker LLP, counsel for the Debtors' postpetition lenders, (f) all those parties which have filed notices of appearance pursuant to Rule 2002 of the Bankruptcy Rules; (g) the Securities and Exchange Commission; and (h) any party-in-interest who specifically requests it in the manner specified in the Disclosure Statement and Confirmation Notice. Procedures for the Filing of Objections The Disclosure Statement and Confirmation Notice will provide that objections or responses to the Disclosure Statement, if any, must: (a) be in writing, (b) state the name and address of the objecting or responding party and the nature of the claim or interest of the party, (c) state with particularity the basis and nature of any objection or response and include, where appropriate, proposed language to be inserted in the Disclosure Statement to resolve any objection or response, and (d) be filed, together with proof of service, with the Court and served so that they are received on or before 4:00 p.m., prevailing Eastern Time, on October 27, 2003, by these parties: (a) Kirkland & Ellis, counsel for the Debtors, (b) Bingham McCutchen, counsel for the Committee; (c) Simpson Thacher & Bartlett, counsel for the Global Steering Committee, (d) Akin, Gump, Strauss, Hauer & Feld, LLP, counsel for the South Central Bondholders Committee and the Northeast Bondholders Committee, (e) the Office of the United States Trustee, and (f) Paul, Hastings, Janofsky & Walker LLP, counsel for the Debtors' postpetition lenders. Accordingly, the Debtors ask the Court to approve the procedure and timing for filing objections to the Disclosure Statement, as set forth in the Disclosure Statement and Confirmation Notice. Notice of Non-Voting Status Pursuant to Rule 3017(d) of the Federal Rules of Bankruptcy Procedure, the Debtors also propose to include in the Disclosure Statement and Confirmation Notice to be mailed to all their creditors and equity security holders a notice of non-voting status which: (a) identifies the recipient of the Disclosure Statement and Confirmation Notice as the member of a class designated as unimpaired under the Plan, and (b) provides the name and address of the person from whom copies of the Disclosure Statement and Plan may be obtained upon request at the Debtors' expense. Adequacy of the Disclosure Statement Mr. Cantor notes that the Disclosure Statement addresses each of the salient types of information in a manner that provides the creditors and equity security holders of the Debtors with adequate information. The Disclosure Statement includes: (a) the circumstances that gave rise to the filing of the bankruptcy petitions; (b) a description of the Debtors' business, assets and existing capital structure; (c) the anticipated future of the Debtors; (d) a description of the Debtors' indebtedness and liquidity issues; (e) a disclaimer indicating that no statements or information concerning the Debtors or securities are authorized, other than those set forth in the Disclosure Statement; (f) a summary of the Plan; and (g) information relevant to the risks being taken by the creditors and interest holders. Because the creditors and equity security holders of the Debtors are unimpaired and are deemed to accept the Plan, the Debtors arguably are not required to transmit a disclosure statement in the first instance. Section 1125(b) of the Bankruptcy Code can be interpreted to impose the disclosure requirement as a precondition to solicitation, and not as an independent requirement applicable to situations where solicitation is unnecessary. Nevertheless, out of the abundance of caution and in the interest of facilitating the Plan confirmation process, the Debtors opted to transmit a disclosure statement. Accordingly, the Debtors ask the Court to approve the Disclosure Statement. Notice Procedures of the Confirmation Hearing Pursuant to Rules 2002 and 3017(d) of the Federal Rules of Bankruptcy Procedures, the Debtors propose to provide to all creditors and equity security holders a copy of the Disclosure Statement and Confirmation Notice setting forth: (a) the date and time fixed for filing objections to confirmation of the Plan, and (b) the date, time and place for the Confirmation Hearing. In addition to mailing the Disclosure Statement and Confirmation Notice, the Debtors will publish the Disclosure Statement and Confirmation Notice in two major national newspapers and electronically on http://www.kccllc.net/nrg. The Debtors believe that publication of the Disclosure Statement and Confirmation Notice will provide sufficient notice of the time fixed for filing objections to confirmation of the Plan and the time, date, and place of the Confirmation Hearing to persons who do not otherwise receive notice by mail. Procedures for the Filing of Objections Furthermore, the Debtors ask the Court to approve the procedure and timing for filing objections to the Plan, as set forth in the Disclosure Statement and Confirmation Notice, which provides that objections to the confirmation of the Plan or proposed modifications to the Plan must: (a) be in writing, (b) state the name and address of the objecting party and the amount and nature of the claim or interest of the party, (c) state with particularity the basis and nature of any objection to the Plan, and (d) be filed, together with proof of service, with the Court and served so that they are received no later than 4:00 p.m., Eastern Time on the date that is 10 days prior to the date of the Confirmation Hearing on the Interested Parties. (NRG Energy Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) NUCENTRIX BROADBAND: Wants Nod to Hire KBA Group as Accountants --------------------------------------------------------------- Nucentrix Broadband Networks, Inc., and its debtor-affiliates are seeking permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ KBA Group LLP as accountants. In its capacity, KBA is expected to: a) serve as corporate accountants for the Debtors in these Cases; b) consult with the Debtors, any statutory creditors' committee, any trustee, and the United States Trustee concerning financial and accounting matters in administration of these Cases; c) provide financial and accounting assistance in the formulation and confirmation of a Chapter 11 plan of reorganization (or liquidation) and disclosure statement for the Debtors; d) assist counsel for the Debtors to provide testimony in relation to financial and accounting matters; e) assist the Debtors in the preparation of the Debtors' schedules and statement of financial affairs; and f) assist the Debtors in preparation of its monthly operating reports and other reports required by the United States Trustee. Barry Adamson, partner at KBA Group discloses that his firm will bill the Debtors in its current hourly rates that range from: Partners/Principals $250 per hour Managers $160 per hour Senior Accountants $125 per hour Staff Accountants $110 per hour Headquartered in Carrollton, Texas, Nucentrix Broadband Networks, Inc., provides broadband wireless Internet and subscription television services using radio spectrum. The Company, together with its 18 affiliates, filed for chapter 11 protection on September 5, 2003 (Bankr. N.D. Tex. Case No. 03-39123). John E. Mitchell, Esq., Josiah M. Daniel, III, Esq., and Todd C. Crosby, Esq., at Vinson and Elkins, LLP represent the Debtors in their restructuring efforts. As of March 31, 2003, the Debtors, listed $69,452,000 in total assets and $31,676,000 in total debts. PACIFIC GAS: Seeks Approval to Enter into Hedging Transactions -------------------------------------------------------------- Pacific Gas and Electric Company seeks the Court's authority to enter into certain interest rate hedging transactions in connection with the financing under the Settlement Plan and to incur secured debt in relation to the Settlement Plan. PG&E intends to enter into interest-rate swaps, caps, collars, forward rate agreement, options and floors -- Interest Rate Hedges -- in connection with the debt that PG&E contemplates issuing to implement the Settlement Plan. PG&E also wants to enter into hedge agreements with counterparties to the Interest Rate Hedges, subject to a certain aggregate liability limitation amount. PG&E contemplates entering and performing its obligations under the Interest Rate Hedges and Hedge Agreements with settlement and expiration dates through June 30, 2004, provided that the aggregate amount of all liabilities does not exceed $90,000,000. PG&E also seeks the Court's permission to post collateral and grant a senior lien on collateral consisting of cash, up to a maximum of $90,000,000 in favor of the applicable hedge counterparties. Under virtually any reorganization plan that will resolve its Chapter 11 case, PG&E will be required to issue or reinstate significant amounts of long-term debt as part of its implementation financing. PG&E anticipates that the long-term debt aggregates to $8,800,000,000, although contingencies could increase the amount to $10,500,000,000. Of the $8,800,000,000, $7,700,000,000 is estimated to be new long-term debt, of which $7,400,000,000 is anticipated to be fixed-rate, long-term debt. Entering into agreements to preserve the benefits of the currently low market interest rates is anticipated to provide long-lasting benefits to the estate and interested parties. Because the window of opportunity to secure the benefits of current low forward interest rates is uncertain, PG&E decided to enter into Interest Rate Hedges and Hedge Agreements. Interest Rates and Risk The attractiveness of current market interest rates is exemplified by the closing yields on five-year and 10-year U.S. Treasury Notes, which were 3.35% and 4.48% per annum as of August 26, 2003. These U.S. Treasury notes rates, which are illustrative of similar trends in other interest rate benchmarks, are at levels close to the lowest rates seen in decades. On August 26, 2003, the 30-year U.S. Treasury bonds yield was 5.27% per annum, which again is among the lowest rates prevailing since the United States Treasury began issuing 30-year bonds on a regular basis. As is typical with corporate long-term debt, the interest rate on PG&E's anticipated long-term debt issuances under the Plan will be based on a combination of the yield on a comparable maturity U.S. Treasury note or bond, which reflects time-value of money, referred to as the "risk-free" rate, and a credit spread, which reflects a premium for PG&E's credit risk. The financial markets offer various mechanisms for PG&E to hedge the U.S. Treasury yield portion of the interest rate on its future long-term debt. However, these markets do not offer instruments that would allow PG&E to hedge the credit-spread portion of the debt. As a result, PG&E could only hedge for the impact of changes on a component of the interest rates on debt to be issued in the future. Appropriate financial market instruments are needed that would enable PG&E to hedge rates related to U.S. Treasury yields in the future called the "forward yield", although it is not possible to lock in today's current yields or "spot yield" for debt that will be issued in the future. Under most circumstances, forward U.S. Treasury yields are higher than current spot U.S. Treasury yields. As of August 26, 2003, the market's expectation of the yield of a 10-year U.S. Treasury note on March 31, 2004 was 0.35% above the current spot yield, and for January 1, 2005, the market expectation of the yield was 0.75% above the current spot yield. The expected rates could change dramatically if market rates and expectations of future U.S. Treasury rates change. Although it would be difficult to project with any certainty the movement of U.S. Treasury yields in the next year, the current levels are among the lowest in decades. Since there is a general belief that interest rates normally increase in a growing or recovering economy, should the U.S. economy rebound from its current slump, interest rates are likely to increase further. Hedging interest rates at or near levels expected in the near term will partially reduce the exposure to higher debt costs faced by PG&E's estate and its constituents at the time that the long-term debt is anticipated to be issued. Interest Rate Hedges To minimize its exposure to potential future interest rate increases, PG&E wants to use the Interest Rate Hedges to hedge, in part, its cost of long-term debt financing upon implementation of a confirmed Plan. With respect to the hedge agreements, and consistent with the Settlement Agreement that is the basis for the Plan, PG&E relates that UBS Securities LLC and Lehman Brothers Inc., together with their affiliates, will act as exclusive book runners, lead managers and hedging providers of all financings, with equal economics for 80% of the aggregate total fees and commissions payable on the financings. In addition, PG&E anticipates that one of the Counterparties will function as "Calculation Agent". The Calculation Agent will be responsible for the calculation of certain settlement amounts with respect to interest rate hedges, in good faith and in a commercially reasonable manner. PG&E may enter into hedge agreements with any other institutional counterparties for the remaining 20% of the hedging transactions. Pursuant to certain relief granted by BNY Western Trust Company, as Indenture Trustee, regarding the use of cash collateral, PG&E and the Counterparties will mutually post collateral to secure their potential payment obligations with respect to the Interest Rate Hedge based on market movements. These are the types of Interest Rate Hedges: (a) Interest Rate Swaps An interest rate swap is an agreement between two parties in which one party agrees to pay the other a certain fixed rate of interest, and the other party agrees to pay the first party a certain variable or "floating" rate of interest, for a specified time period. Depending on the increase or decrease of the interest rates, PG&E will make or receive cash payments that reflect the difference between the fixed and floating rates for the applicable time period. (b) Interest Rate Caps, Floor and Collars An interest rate cap is a financial instrument that sets a maximum rate of interest on variable-rate obligations. An interest rate floor sets a minimum rate of interest on variable- rate obligations. An interest rate collar is a financial instrument that sets both minimum and maximum rates of interest on variable-rate obligations. (c) Forward Rate Agreements A forward contract with respect to U.S. Treasury securities in an agreement between two parties to buy and sell a specific U.S. Treasury note or bond at a specified price on a forward basis. On the settlement date, PG&E would either make or receive a cash payment that reflects the difference between the expectation of rates at the time of the agreement -- the contractual rate -- and the actual levels of rates on the date of settlement -- the market rate. If PG&E agrees to sell a specified U.S. Treasury security and the market price for the particular security is below the specified contractual price on the settlement date, then the Counterparties would pay PG&E the difference. Conversely, if PG&E agrees to sell a specified U.S. Treasury security and the applicable U.S. Treasury security market price on the settlement date is above the specified contractual price, then PG&E would pay the Counterparties the difference. A forward interest rate swap is an agreement between two parties to enter into an interest rate swap at a later settlement date. As with a forward contract with respect to U.S. Treasury securities, on the settlement date, the parties cash settle the difference between the contractual rate and the actual market interest rate, instead of actually entering into the interest rate swap. If the swap provided for PG&E to pay a fixed interest rate and receive a floating rate from the Counterparties and the applicable market interest rate is above the fixed contractual rate, then the Counterparties and the applicable market interest rate is above the fixed contractual rate, then the Counterparties would pay PG&E the difference. On the other hand, if the applicable market interest rate is below the fixed contractual rate, then PG&E would pay the Counterparties the difference. In either of the forward rate agreements, a payment to PG&E would offset the higher interest expense resulting from an increase in the risk-free rate component of the long-term debt to be issued under the Plan, and a payment by PG&E to the Counterparties would be offset by the lower interest expense resulting from a decrease in the risk-free rate component of the long-term debt. The net result under either arrangement is management of the risk-free rate applicable to the portion of PG&E's anticipated debt issuance that is hedged. (d) Option Contracts An option contract is an agreement giving the purchaser the right, but not the obligation, to buy/call or sell/put an asset at a given price or the "strike price". The option's strike price and maturity date is determined when the contract is entered into, and an "upfront premium" is established for payment from the purchaser to the seller. PG&E may choose to purchase a floor or a cap, which may be in the form of a single put or call option or a series of put or call options on a specified financial instrument, such as a U.S. Treasury security of an interest rate swap. Used in this way, an option may be thought of as analogous to an insurance policy, in that an upfront premium is paid in order to limit total payments. In the case of a put option, PG&E would be purchasing the right to sell the underlying asset to the Counterparties at the strike price. Therefore, if interest rates increase, thereby decreasing the price of the asset below the put option's strike price, PG&E would exercise the put option and receive from the Counterparties a payment based on the difference between the market price and the strike price. Conversely, if interest rates decrease, thereby increasing the market price of the asset above the strike price, PG&E would not exercise the put option and no payment would be exchanged. In such a case, PG&E would have paid the upfront premium but would receive no offsetting payment. Call options offer analogous protection against falling interest rates and rising asset prices. The purchase of only an option hedging device where PG&E pays the purchase price upfront at the time of purchase and has no future payment obligations to the Counterparties, is referred to as a "Straight Option Transaction", and the product so purchased is referred to as a "Straight Option". Combination, Notional Amount and Timing of Interest Rate Hedges PG&E may choose a combination of the different types of Interest Rate Hedges, in which case, it may purchase a floor in combination with a forward rate agreement to limit to a defined dollar amount any potential settlement payment to a Counterparties that would be required. If interest rates were to decrease, the floor would protect against the significant settlement payment that would otherwise be required as a result of a precipitous interest rate drop. The premium on the floor would either be paid upfront or embedded into the forward rate agreement by increasing its fixed contractual rate. PG&E might also utilize a combination of floors and caps to create a collar -- a limitation on interest costs to a pre-defined range. PG&E intends to transact up to $7,400,000,000 in notional amount of Interest Rate Hedges, although the notional amount of the actual Interest Rate Hedges may be less. The maximum $7,400,000,000 in notional amount would cover all or a substantial portion of the principal amount of a long-term fixed rate debt anticipated to be issued under the Plan. Other than a Straight Option Transaction, for all other types of Interest Rate Hedges -- Performance Interest Rate Hedges -- a payment may be due from either party to the other upon the settlement or maturity date of the transactions. To maximize the benefits from any Performance Interest Rate Hedges, the ending date should be selected with reference to the anticipated time of issuance of the implementation financing for the Plan, but with some reasonable flexibility for slippage in the Effective Date of the Plan. While the precise date of the financing implementation is uncertain, Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, relates that PG&E's intention to enter into any Performance Interest Rate Hedges and corresponding Hedge Agreements is justifiable on account of the low forward interest rates available today with respect to the period PG&E expects to implement financing under its Plan. Mr. Schaffer explains that if the implementation financing occurs before a Performance Interest Rate Hedge's settlement date, it can be unwound early or sold. In the case of a forward rate agreement, the settlement amount would then be based upon the difference between the Performance Interest Rate Hedge's contractual interest rate and the then-effective forward rate as determined by the capital markets. Sensitivity Analysis Based on Changes in Market Rates If the market interest rate falls below the Performance Interest Rate Hedge contract rate, PG&E will make an appropriate payment to the Counterparties out of cash on hand and issue additional debt pursuant to the Plan. The lower interest rate on the long- term debt is expected to offset the cost of the additional debt. Conversely, if the market interest rate increases above an Interest Rate Hedge contract rate, including either a Performance Interest Rate Hedge or a Straight Option, the Counterparties will make appropriate payment to PG&E, thereby increasing PG&E's cash on hand and presumably decreasing the amount of debt to be issued under the Plan. PG&E expects that the issued debt at the then- applicable market rate will reduce the overall interest expense. PG&E's potential risk and liability with respect to any Performance Interest Rate Hedges and Hedge Agreements will necessarily be based on current forward interest rates and volatility at the time that the Performance Interest Rate Hedge is commenced. Under recent market conditions, Mr. Schaffer reports that for a $1,000,000,000 forward contract on a 10-year interest rate swap at a fixed contractual rate of 5.27%, a decline in the swap rate to 4.27% will result in PG&E paying $80,700,000 to the Counterparties. Conversely, an increase of in the swap rate to 6.27% will result in the Counterparties paying $73,500,000 to PG&E. PG&E intends only to engage in transactions that would limit its potential liabilities under any and all Interest Rate Hedges to not more than $90,000,000 in the aggregate and notional amount of up to $7,400,000,000 outstanding at one time. Mr. Schaffer notes that the $90,000,000 maximum liability amount will enable PG&E to carry out a reasonable hedging program. (Pacific Gas Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 609/392- 0900) PARTNERS MORTGAGE: Case Summary & 2 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Partners Mortgage Corporation 7900 SE 28th Street Suite 401 Mercer Island, Washington 98040 Bankruptcy Case No.: 03-22404 Type of Business: Partners Mortgage Corp. is a high-yield mortgage backed income fund. Chapter 11 Petition Date: September 26, 2003 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Shelly Crocker, Esq. Crocker Kuno LLC 1325 4th Ave Suite 940 Seattle, WA 98101-2509 Tel: 206-624-9894 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Perkins Coie $44,049 Lasher Holzapfel Sperry & Ebberson PLLC $13,037 P-COM INC: Renews Credit Facility with Silicon Valley for 1 Year ---------------------------------------------------------------- P-Com, Inc. (OTC Bulletin Board: PCOM), a worldwide provider of wireless telecom products and services, announced that Silicon Valley Bank has renewed its credit facility for an additional year. The credit facility allows for maximum borrowings up to $4 million. P-Com initially entered into a 364-day credit facility with Silicon Valley Bank (Nasdaq: SIVB) in September 2002 for working capital purposes. The facility was renewed by Silicon Valley Bank upon expiration of the existing credit facility. Borrowings under the facility are secured by P-Com's tangible and intangible assets. "The renewal of P-Com's line of credit with Silicon Valley Bank further demonstrates the success of our financial restructuring plan over the past year, and reflects the confidence of Silicon Valley Bank in P-Com's ability to return to profitability," said P-Com Acting CFO Daniel Rumsey. "We look forward to strengthening our relationship with Silicon Valley Bank to meet our business objectives." As part of its plan to strengthen its balance sheet, P-Com in August announced a restructuring of its 7% convertible subordinated notes due 2007, resulting in the conversion of $21.1 million in debt into preferred stock. The renewal of the credit facility is a further step in P-Com's restructuring plan. Silicon Valley Bank provides diversified financial services to emerging growth and mature companies in the technology and life sciences markets, as well as the premium wine industry. Through its focus on specialized markets and extensive knowledge of the people and business issues driving them, Silicon Valley Bank provides a level of service and partnership that measurably impacts its clients' success. Founded in 1983 and headquartered in Santa Clara, Calif., the company serves more than 9,500 clients across the country through 27 regional offices. More information on the company can be found at http://www.svb.com P-Com, Inc. develops, manufactures, and markets point-to-point, spread spectrum and point-to-multipoint, wireless access systems to the worldwide telecommunications market. P-Com broadband wireless access systems are designed to satisfy the high-speed, integrated network requirements of Internet access associated with Business to Business and E-Commerce business processes. Cellular and personal communications service providers utilize P-Com point- to-point systems to provide backhaul between base stations and mobile switching centers. Government, utility, and business entities use P-Com systems in public and private network applications. For more information visit http://www.p-com.com * * * On August 7, 2003, PricewaterhouseCoopers, LLC, were dismissed as the independent accountants of P-Com, Inc., a Delaware corporation. On August 7, 2003, the Audit Committee of the Company's Board of Directors approved Aidman Piser & Company as the Company's new independent auditors. The reports of PricewaterhouseCoopers on the financial statements of the Company for the past two fiscal years contained an explanatory paragraph indicating that there was a substantial doubt about the Company's ability to continue as a going concern. PILGRIM AMERICA: S&P Places BB+ Class A Rating on Watch Positive ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class A notes issued by Pilgrim America CBO I Ltd., a high-yield arbitrage CBO transaction managed by Prudential Investment Management Inc., on CreditWatch with positive implications. Prudential Investment Management Inc. assumed management of the transaction July 2001. The CreditWatch placement reflects factors that have positively affected the credit enhancement available to support the notes since the previous rating action Aug. 20, 2002. These factors mainly include an increase in the level of overcollateralization available to support the rated notes (see transaction data below). Following the redemption of $39.65 million to the class A notes on the Sept. 20, 2003 payment date (mandated by the failure of the transaction's class A overcollateralization ratio), the class A ratio increased to approximately 128.9% following the pay down, up from 116.18% prior to the pay down. Standard & Poor's will be reviewing the results of current cash flow runs generated for Pilgrim America CBO I, Ltd. to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared to the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the amount of credit enhancement available. RATING PLACED ON CREDITWATCH POSITIVE Pilgrim America CBO I Ltd. Rating To From Class A BB+/Watch Pos BB+ OTHER OUTSTANDING RATING Pilgrim America CBO I Ltd. Rating Class B CC TRANSACTION INFORMATION Issuer: Pilgrim America CBO I Ltd. Co-issuer: Pilgrim America CBO I Corp. Current Manager: Prudential Investment Management Inc. July 2001 to present Prior Manager: Pilgrim America Investment Inc. July 1998 to July 2001 Underwriter: Bank Of America Trustee: US Bank Transaction type: Cash flow arbitrage high-yield CBO TRANCHE INFORMATION INITIAL LAST ACTION CURRENT* Date (MM/YYYY) 7/1998 7/2002 9/2003 Class A Note Rtg. AA- BB+ BB+/Watch Pos Class A OC Ratio 151.5% 118.63% 128.91% Class A OC Ratio Min 135.0% 135.0% 135.0% Class A Note Bal $207.00mm $165.64 $101.06 Class B Note Rtg. A CC CC Class B OC Ratio 126.5% 95.09% 91.70% Class B OC Ratio Min 118.0% 118.0% 118.0% Class B Note Bal $41.00mm $41.00mm $41.00mm PORTFOLIO BENCHMARKS CURRENT S&P Wtd. Avg. Rtg.(excl. defaulted) B S&P Default Measure(excl. defaulted) 5.54% S&P Variability Measure (excl. defaulted) 3.68% S&P Correlation Measure (excl. defaulted) 1.06 Wtd. Avg. Coupon (excl. defaulted) 9.50% Wtd. Avg. Spread (excl. defaulted) N/A Oblig. Rtd. 'BBB-' and Above 7.76% Oblig. Rtd. 'BB-' and Above 30.04% Oblig. Rtd. 'B-' and Above 58.37% Oblig. Rtd. in 'CCC' Range 15.07% Oblig. Rtd. 'CC', 'SD' or 'D' 26.55% Obligors on Watch Neg (excl. defaulted) 12.46% S&P RATED OC (ROC) CURRENT* Class A Notes 116.36% (BB+/Watch Pos) * Following $39.65 million mandatory redemption on Sept. 20, 2003 pay date. PILLOWTEX: Seeks Court Nod for Key Employee Retention Program ------------------------------------------------------------- Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, the Pillowtex Debtors ask the Court to approve a key employee retention and incentive program to encourage the retention of certain of the salaried Continuing Employees, whom the Debtors believe are essential to the efficient administration of the estates and the Debtors' efforts to maximize distribution to their creditors. The terms and conditions of the KERP have been developed based on the input of the Debtors' revolver and term lenders. The Debtors have spent a considerable amount of time to ensure that the KERP is acceptable to the Lenders. The Debtors want to implement a set of severance incentive benefits through the KERP, which applies to 143 salaried Continuing Employees. The Debtors believe that the continued retention and employment of each Eligible Employee is critical to the efficient administration of their Chapter 11 cases. The severance and incentive benefits payable under KERP are in lieu of any other severance benefits any Continuing Employee may otherwise be entitled to, under an existing employment agreement with the Debtors or pursuant to the Debtors' existing policy. The Debtors emphasize that they do not seek authority to honor the severance terms of any employment agreements as they relate to any Continuing Employee or the payment of any severance benefits under the existing severance policy. Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, relates that the proposed KERP would provide for these payments: A. Retention Award -- a retention payment to each Eligible Employee, which payment is based on a specified percentage of the employee's base salary and payable upon termination of employment for other than cause or voluntary resignation; B. Incentive Award -- an incentive payment to 29 of the Eligible Employees, which payment is based on a specified percentage of the employee's base salary and payable upon the achievement of a threshold level of cash distributions made to prepetition creditors; and C. Variable Award -- a variable incentive payment to the Incentive Participants, which payment is based on achievement of certain targets of cash distributions made to prepetition creditors. The Retention Awards Each Eligible Employee entitled to a Retention Award will receive as severance a certain number of weeks of regular base salary upon termination of employment other than for cause or voluntary resignation. The Debtors determine the appropriate amount of severance incentives for Eligible Employees by considering: (a) the centrality of the employee's role in the success of the orderly liquidation of the Debtors' estates, including the nature of the employee's job requirements and the individual's unique capability to perform relevant tasks; (b) the length of service that the Debtors believe will be required to effect the orderly liquidation; and (c) the Debtors' estimation of the risk that the employee will discontinue employment without appropriate incentives to continue providing services to the Debtors. The Retention Award payable to an Eligible Employee will equal either 6, 12, 13, 26 or 52 weeks' regular salary. Ms. Harris notes that while each of the Incentive Participants is entitled to receive either 12, 13, 26 or 52 weeks' regular salary, generally only 64.6% of each Incentive Participant's severance is a fixed payment made pursuant to a Retention Award. The remaining 35.4% of the Incentive Participant's severance is payable as an incentive payment pursuant to an Incentive Award and subject to the achievement of certain performance objectives. The Incentive Awards Each Incentive Participant entitled to an Incentive Award will receive, as an incentive payment, a certain amount of weeks of his or her regular base salary, upon the actual distribution of cash to prepetition creditors of at least $168,499,000 -- the Incentive Threshold. As soon as practicable after the Incentive Threshold is met or exceeded, each Incentive Participant who is either still employed by the Debtors or whose payment was terminated other than for cause of voluntary resignation will receive a payment in respect of his or her Incentive Award. The payment will equal either 4.2, 4.6, 9.2, or 18.4 weeks' regular salary. The Variable Awards Each eligible Incentive Participant entitled to receive a Variable Award will receive as a variable payment an allocable percentage of a variable award pool. Amounts are allocated to the Variable Pool based on the achievement of six targets of actual cash distributions made to prepetition creditors: Actual Cash Distribution Allocated Amount --------------------- ---------------- Target 1: less than $168,500 $0 Target 2: exceeds $168,500,000 but 5% of ACDs over less than $173,500,000 $165,500,000 Target 3: equals or exceeds $173,500,000 6% of ACDs over but less than $178,500,000 $165,000,000 Target 4: equals or exceeds $ 178,500,000 7% of ACDs over but less than $180,500,000 $165,000,000 Target 5: equals or exceeds $180,500,000 9% of ACDs over but less than $183,500,000 $165,500,000 Target 6: equals or exceeds $183,500,000 11% of ACDs over $165,500,000 Once the amount allocated to the Variable Pool is determined, the amount will be reduced by the aggregate amount of the Debtors' employee benefits related costs, taxes and other expenses through the applicable cash distribution date. The actual payment amount of an Incentive Participant's Variable Award is equal to the product of the (i) Variable Pool amount reduced by any employee benefits-related costs and the (ii) Incentive Participant's Allocable Percentage. After a Target is met or exceeded, each Incentive Participant who is either still employed by the Debtors or whose employment was terminated other than for cause or voluntary resignation will receive a payment of the Variable Award. Payments in respect of Variable Awards will be made from time to time as cash is distributed to prepetition creditors. Thus, it is possible that the Debtors may achieve multiple Targets of actual cash distributed to prepetition creditors. An Incentive Participant who becomes entitled to receive Variable Award payment upon achievement of a higher Target, will receive the excess of his or her Allocable Percentage of the greater Variable Pool over any previous payment due or made to the Incentive Participant in respect of Variable Awards. KERP Should Be Approved The Debtors fear that without the incentives, a large number of the Eligible Employees may immediately seek alternative employment, leaving them without a skilled and knowledgeable management force to preserve their assets and effect the liquidation in an orderly and efficient fashion. Thus, Ms. Harris asserts that the costs associated with the Debtors' request are more than justified as a business matter when weighed against the potential loss of value that could result from mass departures of the qualifying Eligible Employees. The Debtors estimate that they will be paying approximately $4,106,000 for Retention Award payments and $1,203,000 for Incentive Awards. With regards to Variable Awards, the amount of payments depend on whether and to what extent the Debtors are successful in achieving the performance Targets. (Pillowtex Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 609/392-0900) PINNACLE ENTERTAINMENT: Closes $135MM Senior Sub. Notes Offering ---------------------------------------------------------------- Pinnacle Entertainment, Inc. (NYSE: PNK) has completed a public offering of $135 million aggregate principal amount of 8.75% Senior Subordinated Notes due 2013. The notes were issued at a price of 98.369% of par. The net proceeds of the offering will be used to fund the Company's purchase of all of its outstanding 9.50% Senior Subordinated Notes due August 2007 through a cash tender offer that was commenced on September 8, 2003 and a redemption of the 9.50% Notes that are not tendered and accepted for purchase in the tender offer, and to pay costs and expenses associated therewith. Pinnacle Entertainment (S&P - B Corporate Credit Rating - Stable) owns and operates seven casinos (four with hotels) in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is also developing a major casino resort in Lake Charles, Louisiana, subject to continued compliance with the conditions of the Louisiana Gaming Control Board. PLAINS ALL AMERICAN: Acquires ArkLaTex Pipeline System from EOTT ---------------------------------------------------------------- Plains All American Pipeline, L.P. (NYSE: PAA) has reached definitive agreement to acquire the ArkLaTex Pipeline System and related marketing business from EOTT Energy (OTC Bulletin Board: EOTT) for aggregate consideration of approximately $15.0 million, including transaction and closing costs, plus linefill requirements. The transaction is scheduled to close and will be effective October 1, 2003. The ArkLaTex Pipeline System consists of 337 miles of crude oil gathering and mainline pipelines that originate in North Louisiana and traverse west into Texas where they deliver crude oil to markets in the Longview area. The system has the ability to deliver crude oil to the local refining market, the Mid Valley Pipeline System and the McMurrey Pipeline System. In addition, the ArkLaTex system is connected to Plains All American's Red River Pipeline System, which the Partnership acquired in February 2003. The ArkLaTex system currently transports approximately 18,000 barrels per day of predominantly sweet crude oil. The transaction includes approximately 590,000 barrels of crude oil storage capacity located along the system. The transaction also includes the assignment of EOTT Energy's crude oil supply contracts in the area of the pipeline operations. "We are pleased to continue to build and expand our presence in East Texas," said Greg L. Armstrong, Chairman & Chief Executive Officer of the Partnership. "The ArkLaTex Pipeline System interconnects near Sabine, Texas, with our Red River Pipeline System, which we acquired earlier this year from BP, and is another solid bolt-on transaction that will complement our existing footprint in East Texas. By integrating this asset with our other assets in the area, we hope to provide better service to our producer and refinery customers." Armstrong noted that the planned interconnect of the Red River Pipeline System to Plains All American's Cushing Terminal was completed in early August. Plains All American Pipeline, L.P., (S&P, BB+ Senior Unsecured Debt Rating, Stable) is engaged in interstate and intrastate crude oil transportation, terminalling and storage, as well as crude oil and LPG gathering and marketing activities, primarily in Texas, California, Oklahoma, Louisiana and the Canadian Provinces of Alberta and Saskatchewan. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA". The Partnership is headquartered in Houston, Texas. POGO PRODUCING: S&P Affirms BB Rating on Improved Credit Quality ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Pogo Producing Co. At the same time, Standard & Poor's revised its outlook on the company to positive from stable. Houston, Texas-based Pogo had $565 million of debt as of June 30, 2003. The revised outlook on Pogo reflects expectations for continued improvement in credit quality as the company benefits from elevated oil and natural gas prices and production volumes. "An upgrade could occur with further expected deleveraging, which would provide the company with a substantial financial cushion for weathering periods of adverse pricing and for likely investments that will strengthen the company's business risk profile," said Standard & Poor's credit analyst Brian Janiak. Pogo has positioned itself well in 2003 with nearly $350 million of debt reduction largely funded from excess cash flow. As a result, the company now has an average financial profile. "Nevertheless, we remain hesitant about assigning an investment- grade rating to Pogo's debt until the company makes further progress deleveraging and lengthens its short reserve life," added Mr. Janiak. Catalysts to achieving investment-grade ratings include reaching Standard & Poor's leverage target of about 20% total debt to total capital, the prudent financing of any potential sizable acquisitions that would also improve the quality of the company's operations, and improving the company's cost structure and reserve life through internal means. Pogo operates in North America (Gulf of Mexico, onshore Gulf Coast, Permian Basin, the Rocky Mountains, and Canada) and the Gulf of Thailand (25% of year-end 2002 reserves), where it has a 46% interest in an important 30-year oil and gas concession. PORTOLA: Tech Industries Planned Buy-Out Spurs Negative Outlook --------------------------------------------------------------- Standard and Poor's Ratings Services revised its outlook on San Jose, California-based Portola Packaging Inc. to negative from stable following the company's announced acquisition of Tech Industries Inc. and the expected decline in the company's liquidity position that will likely result. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating and 'B' senior unsecured debt ratings on Portola. Total debt outstanding was about $120 million at May 31, 2003. "The outlook revision reflects Standard & Poor's concerns related to the decreased financial flexibility following the acquisition, and integration challenges that will be faced by management," said Standard & Poor's credit analyst Paul Blake. "These factors more than offset the improved business profile and earnings contribution associated with the addition of Tech Industries". Tech Industries is a manufacturer of plastic closures for the personal care and cosmetic industries in the U.S. with annual sales of about $30 million. The acquisition provides a complementary addition to Portola's existing closures business, and diversifies its end markets and customer base. "A key to the success of the acquisition," said Mr. Blake, "will be Portola's ability to leverage its international operations across Tech Industries' high volume customers which will allow the combined company to benefit from increased economies of scale and target new markets." The ratings on Portola reflect the company's defensible niche positions in mostly stable end markets, and favorable geographic diversity, offset by aggressive debt leverage, modest size of operations, and a narrow product line. With annual sales of about $210 million, Portola produces tamper-evident plastic closures for packaging applications in dairy, fruit juices, water, and other non-carbonated beverage and food products. PRESIDENT CASINOS: Selling St. Louis Ops. to Nextera for $50MM -------------------------------------------------------------- President Casinos, Inc. (OTC:PREZ) has entered into an agreement with Isle of Capri Casinos, Inc., to sell the assets of its St. Louis operations for approximately $50 million. The agreement will be submitted to the United States Bankruptcy Court for the Eastern District of Missouri and will be subject to a potential overbid. Contingent upon licensing by the Missouri Gaming Commission, the closing is anticipated to occur in the Spring of 2004. It is anticipated that the operation will continue in St. Louis with the new owners. Libra Securities, LLC acted as advisor to President Casinos, Inc. in this transaction. President Casinos, Inc. owns and operates dockside gaming facilities in Biloxi, Mississippi and downtown St. Louis, Missouri, north of the Gateway Arch. QUINTILES TRANSNATIONAL: Completes Merger with Pharma Services -------------------------------------------------------------- Quintiles Transnational Corp. (Nasdaq: QTRN) has completed its merger with Pharma Services Acquisition Corp., a subsidiary of Pharma Services Holding, Inc., the company formed for the acquisition of Quintiles by Dennis B. Gillings, Ph.D., Chairman and founder of Quintiles, and One Equity Partners LLC, the private equity arm of Bank One Corporation. Other equity investors in Pharma Services include Temasek Holdings, Texas Pacific Group, Perseus-Soros BioPharmaceutical Fund and Mitsui & Co. Completion followed the Quintiles shareholder meeting today at which Quintiles shareholders approved the proposed merger. Under the terms of the merger each share of Quintiles common stock outstanding (other than those shares owned by any subsidiary of Quintiles, or held by Pharma Services or Merger Sub) has been converted into the right to receive $14.50 in cash, without interest. Quintiles has appointed Wachovia Bank, N.A. as the exchange agent for payment of the merger consideration. Quintiles anticipates that the exchange agent will contact shareholders soon with instructions on how to receive payment for the shares. Shareholders do not need to take any action regarding their shares until contacted by the exchange agent. "This transaction is a momentous occasion for Quintiles and we are excited about the long-term advantages for the company," Gillings said. "As a privately held company, Quintiles will be better positioned to serve customers and achieve its growth and earnings potential." "We are pleased to have the chance to invest behind Dennis Gillings and his management team," said Richard M. Cashin, Managing Partner of One Equity Partners. "We are convinced that Quintiles under his leadership will consolidate its position as a leading partner to pharmaceutical and biotech companies worldwide." Quintiles, which will continue to operate under that name, is now a wholly owned subsidiary of Pharma Services. As a result of the merger, Quintiles' common stock will no longer be publicly traded and, effective at the close of business on Sept. 25, 2003, Quintiles common stock will be delisted from Nasdaq. Quintiles (S&P, BB- Bank Loan/Corporate Credit and B Subordinated Debt Ratings, Negative) helps improve healthcare worldwide by providing a broad range of professional services, information and partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Headquartered near Research Triangle Park, North Carolina, and with offices in more than 40 countries, Quintiles is a leading global pharmaceutical services organization and a member of the Fortune 1000. For more information visit the company's Web site at http://www.quintiles.com REAL ESTATE SYNTHETIC: S&P Assigns Rating to Series 2003-C Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Real Estate Synthetic Investment Securities Series 2003-C's $263.76 million certificates. The ratings are based on a level of credit enhancement that meets Standard & Poor's requirements given the quality of the loans, distribution of the mortgaged properties, and a legal structure designed to minimize potential losses to certificateholders caused by the insolvency of the issuer. RATINGS ASSIGNED Real Estate Synthetic Investment Securities Series 2003-C Class Rating Amount (mil $) B3 A 98.910 B4 A- 32.970 B5 BBB 43.960 B6 BBB- 17.584 B7 BB 21.980 B8 BB- 8.792 B9 B+ 17.584 B10 B 10.990 B11 B- 10.990 RESI SECURITIES: S&P Assigns Low-B Ratings to Five Note Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Real Estate Synthetic Investment Securities Series 2003-C's $263.76 million certificates. The ratings are based on a level of credit enhancement that meets Standard & Poor's requirements given the quality of the loans, distribution of the mortgaged properties, and a legal structure designed to minimize potential losses to certificateholders caused by the insolvency of the issuer. RATINGS ASSIGNED Real Estate Synthetic Investment Securities Series 2003-C Class Rating Amount (mil $) B3 A 98.910 B4 A- 32.970 B5 BBB 43.960 B6 BBB- 17.584 B7 BB 21.980 B8 BB- 8.792 B9 B+ 17.584 B10 B 10.990 B11 B- 10.990 RITE AID: August 30 Net Capital Deficit Swells to $142 Million -------------------------------------------------------------- Rite Aid Corporation (NYSE, PCX: RAD) announced financial results for its second quarter, ended August 30, 2003. Revenues for the 13-week second quarter increased 5.1 percent to $4.052 billion versus revenues of $3.857 billion in the prior year second quarter. Same store sales increased 5.9 percent during the second quarter as compared to the year-ago like period, consisting of a 6.8 percent pharmacy same store sales increase and a 4.3 percent increase in front-end same store sales. Prescription sales accounted for 63.8 percent of total sales, and third party prescription sales represented 93.2 percent of pharmacy sales. Net loss for the quarter was $10.6 million or a loss of $.04 per common share compared to last year's second quarter loss of $105.3 million or a loss of $.21 per common share. The reduced loss is due primarily to a reduction in store closing and impairment charges and a 22 percent increase in adjusted EBITDA (which is reconciled to the net loss on the attached table), partially offset by an increase in stock based compensation. The current year quarter included a store closing and impairment credit of $9.0 million offset by an $8.8 million charge for stock based compensation. The prior year quarter included a $58.2 million charge for store closing and impairment and a $6.7 million credit for stock-based compensation, which combined to impact the prior year quarter net loss by $.10 per common share. Reduced expense for LIFO charges, interest expense and depreciation and amortization also benefited the current year quarter. Adjusted EBITDA, which is reconciled to the net loss on the attached table, amounted to $152.9 million or 3.8 percent of revenues compared to $125.4 million or 3.3 percent of revenues last year. At August 30, 2003, Rite Aid's balance sheet shows a total shareholders' equity deficit of about $142 million. "We're very pleased with our second quarter as operating performance improved substantially over last year with a 22 percent increase in adjusted EBITDA. Our team did an excellent job of leveraging our significant increase in same store sales." said Mary Sammons, Rite Aid president and CEO. "We expect this very positive momentum to continue as we move into the busiest selling season of the year." In the second quarter, the company remodeled 49 stores, relocated one store and closed 11 stores. Stores in operation at the end of the quarter totaled 3,386. Certain reclassifications have been made to prior years' amounts on the attached tables to conform to the current year classifications. Guidance for Fiscal 2004 Updated Based on current trends, Rite Aid said it expects sales of $16.5 billion to $16.7 billion in fiscal 2004 which ends February 28, 2004, with same store sales improving 5.5 percent to 6.5 percent over fiscal 2003. Results for the fifty-two weeks ending February 28, 2004 are expected to be between $4.0 million net income and $27.0 million net loss as compared to previous guidance of a net loss between zero to $63.0 million. The company also updated its adjusted EBITDA guidance for the year, as reconciled on the attached table, to be between $700.0 million and $725.0 million compared to the prior range of $675.0 million to $725.0 million. Capital expenditures are expected to be between $170.0 million to $190.0 million in fiscal 2004. Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of nearly $16 billion and approximately 3,400 stores in 28 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through the company's Web site at http://www.riteaid.com RIVERSTONE NETWORKS: Reports Preliminary Q2 Fiscal 2004 Results --------------------------------------------------------------- Riverstone Networks, Inc. (RSTN.PK) reported preliminary quarter results for the period ended August 30, 2003. All statements herein represent current expectations and are based on preliminary, unaudited results which are subject to change as a result of the Company's ongoing restatement process and its accounting practices review. The Company believes that, taking into account the impact of the restatement, revenues for the second quarter of fiscal 2004 will be between $10.0 million and $12.0 million. Additionally, the Company's net cash position, defined as cash equivalents and short-term and long-term marketable investments net of the face value of the Company's convertible subordinated notes due 2006, was $155.4 million. As previously disclosed, the review of Riverstone's accounting practices by a special committee of the board of directors is ongoing. Riverstone is attempting to conclude its review and the restatement process, file its Form 10-K and Form 10-Q and issue any restatements promptly, but it presently cannot state with any certainty when this will occur. There can be no assurance that the restatement process and/or the accounting practices review will not result in a determination to revise the preliminary estimates provided in this release or the previously announced preliminary results of the review, or to further restate the Company's financial statements. As previously disclosed, the trustee for the Company's 3.75% convertible subordinated notes due 2006 has asserted that an event of default has occurred under the Indenture and purported to declare all amounts owing on the notes and under the Indenture to be immediately due and payable. Riverstone disputes the trustee's position and has notified the trustee that the trustee failed to provide proper notice to commence the 60-day period, and that therefore an event of default has not occurred and the trustee is not entitled to declare any amounts to be immediately due and payable. There can be no assurances that the Company will be able to avoid accelerated repayment under the terms of the Indenture. Riverstone Networks, Inc. (RSTN.PK) provides carrier class switches and routers for mission critical networks. From the metropolitan edge to the campus network, Riverstone's advanced technology delivers the control and reliability carriers, government organizations, educational institutions and large corporations require. Worldwide, operators of mission critical networks trust Riverstone. For more information, visit http://www.riverstonenet.com SALEM COMMS: S&P Affirms B+ Long-Term Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B+' long-term corporate credit rating, on Salem Communications Corp. At the same time, the ratings were removed from CreditWatch, where they were placed on July 21, 2003. Camarillo, California-based radio operator Salem had approximately $323.4 million in debt outstanding at June 30, 2003. "The rating actions incorporate expectations that Salem will maintain covenant compliance in the near term, due to the less restrictive leverage covenant included in its proposed credit agreement," said Standard & Poor's credit analyst Alyse Michaelson. She added that, "Although pending acquisitions could cause leverage to modestly increase, proposed covenants incorporate a narrow cushion to absorb station acquisitions and related start-up losses." Liquidity is based on limited borrowing capacity under a revolving credit facility. While Salem has reversed its historical discretionary cash flow deficits for the first six months of 2003, meaningful free cash flow for debt repayment is not likely in the near term. Credit ratios are somewhat weak for the rating, and cannot accommodate the historical pace of debt-financed acquisitions. Still, Salem benefits from the relative stability afforded by its block programming time sales, which helps shield its revenues from lingering war-related softness in advertising. A large portion of Salem's revenue is derived from the sale of block programming time, which contributes to relative cash flow stability. Block time sales and local advertising revenues enable Salem to be less dependent on more traditional advertising. Salem's high-single digit revenue growth, which is above the rate of the industry, is being driven by national block time sales and audience growth at its contemporary Christian radio stations, notwithstanding a soft economic environment. Although demand appears fairly steady due to the considerable number of programmers who have been long-term purchasers of airtime from the company, there is some concern that Christian religious radio remains a niche format that may not have the broad appeal of a general market radio format. Salem's financial policy remains aggressive and proposed covenants still provide only modest cushion to absorb acquisitions or revenue softness. Debt-financed acquisitions that impede the company's ability to generate positive discretionary cash flow or reduce its cushion of covenant compliance, could place downward pressure on ratings. SLMSOFT INC: Sues Insight and UBS Capital for $150+ Mil. Damages ---------------------------------------------------------------- SLMsoft Inc. (TSX: ESP.a, ESP.b) has filed an action for damages against multi-billion dollar investment houses, Insight Venture Capital LLC, UBS Capital LLC and other partners, and personally Mr. Jeff Horing, in the Ontario Superior Court. This action follows a favorable result received from the Honorable Justice Ground of the Commercial Court on September 19, 2003 in which the Court held that the Defendants were not creditors of the Plaintiff with respect to their convertible debentures. The complaint alleges that Defendants issued wrongful notices of default in January and March of 2002, knowing these notices would have a material impact on SLM. Mr. Horing, at the time was a Director of SLM, party to confidential information concerning the financial structure of the organization and knew that SLM would be forced to disclose these allegations to the public and the consequences thereof. The complaint further alleges that the Defendants conspired to cause economic harm to the Company and ultimately take control, engaging in a disparaged practice known as "debt spiralling". Upon the issuance of these Notices and public disclosure thereafter, the complaint alleges that existing customers and potential customers panicked resulting in major contracts being delayed or terminated, and eventually caused losses in revenue of more than $77 million dollars. SLM asks the Court to award over $150 million damages, for contractual and tortuous breaches and that all such losses be set-off against any debt or equity held by Defendants currently. As reported in Troubled Company Reporter's September 23, 2003 edition, SLMsoft Inc. announced that Court denied Insight Venture Capital's debt claim and ruled in SLM's favor. The Honourable Justice Ground ruled that as of July 21, 1999, the $24 million dollar convertible debentures held by Insight were converted into convertible preferred shares and from that date Insight was not a creditor of SLM and does not, in respect of the convertible debentures held by it, qualify as a creditor of SLM for the purposes of CCAA. In January and March of 2002, Insight, a U.S. based investment firm sent notices of default claiming that a $24 million debentures was never converted to equity and remained debt. SLM has always maintained that this investment was equity in nature and that the debentures were converted into preferred shares in 1999. On September 19, 2003, this was confirmed by the Court. These Notices and the action of Insight ultimately led SLM to seek protection under the Companies Creditors Arrangement Act in May 2003. SMITHFIELD: Inks Definitive Pact to Sell Schneider to Maple Leaf ---------------------------------------------------------------- Smithfield Foods, Inc. (NYSE: SFD) announced a definitive agreement to sell its wholly-owned Canadian subsidiary, Schneider Corporation, to Maple Leaf Foods, Inc. (TSX: MFI) for $378 million, including the assumption of Schneiders' outstanding debt. Schneider Corporation, based in Kitchener, Ontario, Canada, is a food processing company that had sales in fiscal 2003 of $770 million. Maple Leaf Foods is a leading global food processing company based in Toronto, Canada. The purchase price represents nine times Schneider's EBITDA (earnings before interest, taxes, depreciation and amortization) in fiscal 2003. Smithfield acquired a 63 percent interest in Schneider in November of 1998 in a share exchange valued at $70 million, plus the assumption of $57 million in debt. In November of 2001 the company completed the acquisition for the remaining interest in Schneider in a share exchange valued at $51 million. "Schneider has been a terrific business for Smithfield, having consistently contributed to our results. However, it is an even better business for Maple Leaf, due to the many synergies between the two companies," said Joseph W. Luter, III, chairman and chief executive officer of Smithfield Foods. This sale is an attractive opportunity for Smithfield, and we believe that we are receiving full value for these assets. We remain strongly committed to our strategy of opportunistic food industry transactions, both domestically and internationally," he said. The acquisition is expected to close by year-end or early 2004, subject to normal conditions, including obtaining clearance from the Canadian Competition Bureau. * * * As reported in Troubled Company Reporter's July 17, 2003 edition, Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating and senior secured notes ratings on Smithfield Foods Inc., on CreditWatch with negative implications. The 'BB' senior unsecured and 'BB-' subordinated debt ratings on Smithfield Foods were also placed on CreditWatch with negative implications. SOLECTRON CORP: Narrows Fourth-Quarter Net Loss to $179 Million --------------------------------------------------------------- Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and supply-chain management services, reported GAAP fiscal fourth-quarter sales of $2.8 billion. Fourth-quarter total company sales were $3.0 billion, which is at the upper end of the company's guidance for sales of $2.6 billion to $3.0 billion. This compares with $2.8 billion in the third quarter of fiscal 2003 and $3.1 billion in the fourth quarter of fiscal 2002. (Solectron defines total company sales as sales including continuing and discontinued operations.) The company reported a net loss in the fourth quarter of $179 million, or 22 cents per diluted share, compared with a GAAP net loss of $2.6 billion, or $3.21 per diluted share, in the year- earlier quarter. Excluding $146 million in restructuring and impairment charges, Solectron had a pro forma net loss of $34 million, or 4 cents per diluted share, in the fourth quarter of 2003. The company's guidance was for a pro forma net loss of 6 to 2 cents per share. "In the fourth quarter, we continued to improve in several important areas," said Mike Cannon, president and chief executive officer. "Total company revenue increased 5 percent from the third quarter, reflecting overall demand improvement. We secured several important customer wins, and the end-markets we serve are recovering. During the quarter we improved gross margins, operating expenses, and inventory turns, in addition to reducing our outstanding debt." The company also made progress towards selling assets that are not central to its strategy. As of year-end, certain of these assets had met the criteria required by Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and accordingly are reported as discontinued operations in the GAAP results. Each line item within the GAAP financial statements excludes amounts related to these operations, and the company has combined these amounts into "discontinued operations" line items for all periods presented. Fiscal 2003 Summary Total company revenues for 2003 were $11.7 billion, compared with $12.3 billion in fiscal 2002. The company reported a GAAP net loss of $3.5 billion, or $4.18 per diluted share, compared with a GAAP net loss of $3.1 billion, or $3.98 per diluted share, in fiscal 2002. Fiscal 2003 Highlights (on a total company basis) -- Revenue stabilized during the year and increased in the fourth quarter. -- Operating expenses were reduced nearly 20 percent. -- Inventories declined 23 percent. -- The cash-to-cash cycle improved 23 percent. -- Total debt decreased by approximately $1 billion during the year. "Solectron enters fiscal 2004 as a much different company than it was a year ago. Over the last three quarters, we installed a new leadership team, and we began implementing a business strategy and organization alignment that will allow us to better serve our customers," Cannon said. "I am pleased with our progress in a year characterized by major transition, and I expect continued progress in the coming year, including Solectron's return to profitability." First-Quarter Guidance Fiscal first-quarter guidance is for sales of $2.7 billion to $3.1 billion, and for pro forma EPS, excluding restructuring and impairment and other unusual items, to range from a 4-cent loss to a 1-cent loss. This guidance is based on the current continuing operations of Solectron. If additional assets planned for divestiture qualify as discontinued operations prior to quarter- end, the company's GAAP results would change accordingly. 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, California, and had sales of $12.3 billion in fiscal 2002. SPECIAL METALS: Judge Howard Confirms Plan of Reorganization ------------------------------------------------------------ Special Metals Corporation (SMCXQ.PK) announced that Judge William S. Howard of the U.S. Bankruptcy Court for the Eastern District of Kentucky approved the Company's Plan of Reorganization at a confirmation hearing held in Lexington Thursday. "The confirmation of the Plan of Reorganization is the most significant accomplishment in the Company's reorganization process," said Dennis L. Wanlass, Special Metals' Chief Operating and Restructuring Officer. "Based on [Thurs]day's ruling, the Company will now proceed to implement the details of the Plan of Reorganization to meet a targeted emergence date of October 20, 2003." 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. STARWOOD HOTELS: Selling Sheraton North Charleston Hotel -------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) has signed a binding agreement to sell the 296-room Sheraton North Charleston Hotel to Cary, North Carolina-based Main Street Hotel, LLC. The sale, which is subject to standard closing conditions, is expected to occur during the fourth quarter. The hotel, which will undergo a renovation, will continue to fly the Sheraton flag under a franchise agreement, and will be renamed the Sheraton Hotel North Charleston - Convention Center. The hotel will be managed by Cary, North Carolina-based First American Hotels, Inc. Proceeds from this sale, coupled with other hotel sales in North America and Italy announced previously this year, will total more than $1.1 billion and will be used to retire existing debt and for other general corporate uses. Starwood Hotels & Resorts Worldwide, Inc. (Fitch BB+ Convertible Debt Rating, Negative) is one of the leading hotel and leisure companies in the world with 740 properties in more than 80 countries and 105,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis, The Luxury Collection, Sheraton, Westin, Four Points by Sheraton, W brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, visit http://www.starwood.com For more information on First American Hotels, Inc., please visit www.firstamericanhotels.com SUN HEALTHCARE: Highland Capital Discloses 4.96% Equity Stake ------------------------------------------------------------- James Dondero, President and a limited partner of Highland Capital Management, LP, reports in a regulatory filing with the Securities and Exchange Commission that Highland Capital owns 488,856 beneficial shares of Sun Healthcare common stock. This represents a 4.96% equity stake in the company's issued and outstanding shares. Highland Capital's affiliate, Highland Crusader Offshore Partners, LP, beneficially owns 75,500 shares. This represents a 0.77% equity stake in the company's issued and outstanding shares. Highland Capital is an investment advisory firm in accordance with Rule 13d-1(b)(1)(ii)(E) of the Securities Exchange Act of 1934. Mr. Dondero attests that the Sun Healthcare securities were: -- acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of Sun Healthcare; and -- not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. (Sun Healthcare Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNIVERSAL HOSPITAL: Commences Tender Offer for 10-1/4% Sr. Notes ---------------------------------------------------------------- Universal Hospital Services, Inc., announced that on September 24, 2003 it commenced a cash tender offer for all $135,000,000 outstanding principal amount of its 10-1/4% Senior Notes due 2008 (CUSIP Nos. 91359LAC3 and 91359LAF6). In connection with the tender offer, UHS is soliciting holders to consent to proposed amendments to the indenture governing the notes, which will eliminate substantially all of the restrictive covenants, certain related events of default and certain other terms. The tender offer will expire at 12:01 a.m. New York City time, on Thursday, October 23, 2003, unless extended or earlier terminated (as that date may be extended, the "Expiration Time"). Holders who validly tender their notes prior to 5:00 p.m., New York City time, on October 7, 2003 (as that date may be extended, the "Consent Payment Deadline"), will receive total consideration of $1,051.25 per $1,000 principal amount of notes tendered. The total consideration is the sum of a tender offer price of $1,031.25 per $1,000 principal amount of notes tendered and a consent payment of $20 per $1,000 principal amount of notes tendered. Holders who validly tender their notes after the Consent Payment Deadline and prior to the Expiration Time will receive only the tender offer consideration and will not receive the consent payment. No tenders will be valid if submitted after the Expiration Time. All payments will include accrued and unpaid interest on the principal amount tendered to, but not including, the payment date. Holders who validly tender notes prior to the Consent Payment Deadline will, by tendering those notes, be consenting to the amendments to the indenture. Holders may not consent to the amendments without tendering their notes and may not revoke their consents without withdrawing the previously tendered notes to which the consents relate. UHS may amend, extend or, subject to certain conditions, terminate the tender offer and the consent solicitation. The terms and conditions of the tender offer and the consent solicitation, including the conditions of UHS' obligation to accept the notes tendered and pay the purchase price for them, are set forth in an Offer to Purchase and Consent Solicitation Statement dated September 24, 2003. This press release does not constitute an offer or solicitation to purchase or a solicitation of consents with respect to the notes. That offer or solicitation will be made only by means of the Offer to Purchase and Consent Solicitation Statement. UHS has retained Goldman, Sachs & Co. to act as the exclusive Dealer Manager and Solicitation Agent in connection with the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation and requests for documents may be directed to Goldman, Sachs & Co. at (800) 828-3182 (toll free) or Global Bondholder Services Corporation, the Information Agent in connection with the tender offer and consent solicitation, at (866) 873-6300 (toll free). The tender offer and consent solicitation are the first step in the proposed recapitalization that UHS announced on September 15. In addition to the tender offer and consent solicitation, the proposed recapitalization is expected to involve the infusion of additional equity financing from an existing investor, private equity fund manager J.W. Childs Associates, L.P., a new investor, The Halifax Group, L.L.C., and certain members of management; the repurchase of a portion of the company's outstanding equity; a private offering of a new series of approximately $250 million of senior notes; and the negotiation of a new revolving secured credit facility. Each part of the recapitalization transaction is expected to be conditioned upon negotiation and completion of satisfactory agreements, final approvals and customary closing conditions. UHS will be issuing the new equity and new senior notes in transactions that will not be and have not been registered under the Securities Act of 1933, as amended, or any state securities laws and those securities 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 applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any security. Based in Bloomington, Minnesota, UHS -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $52 million -- is a leading, nationwide provider of medical equipment outsourcing and services to the health care industry, including national, regional and local acute care hospitals and alternate site providers, such as nursing homes and home care providers. We service customers across the spectrum of the equipment life cycle as a result of our position as the industry's largest purchaser, outsourcer and reseller of movable medical equipment. Our diverse customer base includes more than 2,800 hospitals and approximately 3,100 alternate site providers. We also have extensive and long-standing relationships with over 300 major medical equipment manufacturers and the nation's largest group purchasing organizations and integrated delivery networks. Our service offerings fall into three general categories: Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales, Remarketing and Disposables. US AIRWAYS: Sec. 1110 Modification Deadline Extended to Oct. 23 --------------------------------------------------------------- Despite continued best efforts, the Reorganized US Airways Debtors did not meet the August 15, 2003 deadline with respect to the modification of leases relating to 29 aircraft equipment. At the Reorganized Debtors' request, Judge Mitchell extended the time by which they may perform their outstanding obligations under Section 1110 of the Bankruptcy Code not later than October 23, 2003. Another extension is necessary, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, asserts, because: (a) the Reorganized Debtors and the relevant Aircraft Creditors are still negotiating certain aspects of the final documentation that will memorialize the material terms of the new financing; (b) the Outstanding Aircraft Equipment is not currently located in a jurisdiction that would allow for the Reorganized Debtors to obtain the most favorable tax treatment in connection with the closing of the new financing transactions; and (c) the Reorganized Debtors have been unable to take the Outstanding Aircraft Equipment out of international service for a sufficient period to permit transfer of title of the Outstanding Aircraft Equipment in accordance with Federal Aviation Authority regulations. The extension will: -- enable the parties to finalize the documentation of the agreements that will govern the Outstanding Aircraft Equipment on a go-forward basis; -- allow the Reorganized Debtors to complete the rationalization of their fleet contemplated by the Plan; and -- allow the Reorganized Debtors to close the new financing transactions in a jurisdiction that provides the most favorable tax treatment. So far, the Reorganized Debtors have successfully closed 160 finance transactions in connection with the Affected Aircraft and Engines. (US Airways Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) USG CORP: Court Stretches Lease Decision Period to March 4, 2004 ---------------------------------------------------------------- USG Corporation and its debtor-affiliates sought and obtained the Court's approval to extend the period within which they may assume or reject any prepetition unexpired non-residential real property lease until March 1, 2004. (USG Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-0900) TYCO: Brings-In Robert W. Frantz as VP, Environment and Health -------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced the appointment of Robert W. Frantz as Vice President, Environment, Health and Safety, a new position. Mr. Frantz will report to William B. Lytton, Executive Vice President and General Counsel. He joins Tyco from GE Engine Services, where he served as General Manager and Counsel, Environment, Health & Safety. Mr. Frantz will be responsible for the development of strategies, policies and programs that will unify the standards and achieve world-class performance in Environment, Health and Safety areas across Tyco's business units. Tyco Chairman and CEO Ed Breen said: "We believe that maintaining the highest possible environmental, health and safety standards throughout all our businesses is critical to Tyco's long-term growth. Our employees, neighbors and customers expect nothing less from us. Bob Frantz has a proven record of achievement in this area and we welcome him to the Company." Mr. Lytton said: "Bob Frantz has the right mix of experience and personal leadership ability for this important position. He will shape the Company's EH&S policies and procedures, while unifying the standards and performance in EH&S areas across Tyco's business units. Our goal for Tyco is not just compliance - it is excellence. I am confident that under Bob's leadership, we will achieve that goal." Mr. Frantz said: "I am tremendously excited to lead the Environment, Health and Safety initiatives at Tyco. Working with the Company's corporate and business division leaders, I plan to develop policies and programs that will drive a consistent culture of EH&S excellence, both by building on existing best practices and by introducing new programs. This is an outstanding personal opportunity at an outstanding Company and I look forward to implementing a world-class EH&S strategy that will advance Tyco's existing world-class businesses." Mr. Frantz has held a number of positions with increasing responsibility during his 18 years at GE. Most recently he was responsible for worldwide Environment, Health & Safety performance and programs at 45 global sites while serving as General Manager and Counsel, Environment, Health and Safety at GE Engine Services. Prior to joining GE Engine Services, Mr. Frantz spent 9 years at GE Corporate Environmental Programs, where he ultimately served as Manager and Senior Counsel, EH&S Operations. He was also Counsel - Environmental and Regulatory Matters at GE Plastics. Before joining GE, Mr. Frantz was an Assistant General Counsel at the Chemical Manufacturers Association, an associate at Hamel, Park, McCabe and Saunders law firm in Washington, DC and a trial attorney for the U.S. Department of Justice, Environment and Natural Resources Division. Mr. Frantz holds his law degree from Rutgers University School of Law and a Bachelor of Science degree in Economics from Rutgers University, Cook College. 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. VARSITY BRANDS: S&P Withdraws Ratings Following Acquisition ----------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Varsity Brands Inc. (S&P, B Long-Term Corporate Credit, Negative Implications) following its acquisition by senior management and an affiliate of Leonard Green & Partners L.P. in a transaction valued at $130.9 million, including the repayment of debt. The company also closed on its tender offer for its outstanding 10.5% senior notes due 2007, repurchasing approximately $46 million of the outstanding notes. Varsity Brands will proceed to redeem the remaining outstanding senior notes of about $20 million. WCI STEEL: Appoints Trumbull Group as Notice and Claims Agent ------------------------------------------------------------- Wci Steel, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Ohio to appoint The Trumbull Group LLC as Claims, Noticing and Balloting Agent. The Debtors have identified, at a minimum, 5,200 creditors, potential creditors and other parties in interest to whom certain notices, including notice of the commencement of the Chapter 11 case, and voting documents, must be sent. To relieve the Court and the Clerk's Office of these burdens, the Debtors engage Trumbull Group. Specifically, Trumbull Group will: a) prepare and serve required notices in these chapter 11 cases, including: i) notice of the commencement of these chapter 11 cases and the initial meeting of creditors under section 341(a) of the Bankruptcy Code; ii) notice of the claims bar date; iii) notice of objections to claims; iv) notice of any hearings on a disclosure statement and confirmation of a plan or plans of reorganization; and v) such other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b) within five days after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: i) a copy of the notice served; ii) an alphabetical list of persons upon whom the notice was served and their respective addresses; and iii) the date and manner of service; c) maintain copies of all proofs of claim and proofs of interest filed in these cases; d) maintain official claims registers in these cases by docketing all scheduled claims, proofs of claim and proofs of interest in a claims database that includes: i) the name and address of the claimant or interest holder and any agent thereof, if a proof of claim or proof of interest was filed by an agent; ii) the date a proof of claim or proof of interest was received by Trumbull and, if applicable, the Court; iii) the claim number assigned to the scheduled claim, proof of claim or proof of interest; iv) the asserted amount and classification of the claim; and v) the applicable Debtor against which the claim or interest is asserted or scheduled; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest in these cases and make the list available upon request to the Clerk's Office or any party in interest; h) provide access to the public for examination of copies of the proofs of claim or proofs on interest filed in these cases without charge during regular business hours; i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e); j) comply with applicable federal, state, municipal and local statues, ordinances, rules, regulations, orders and other requirements; k) provide temporary employees to process claims, as necessary; l) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and m) provide such other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors. Lorenzo Mendizabal, President of Trumbull Group reports that his firm's consulting services are: Administrative Support $50 per hour Assistant Case Management/ Data Specialist $85 to $80 per hour Case Manager $110 to $125 per hour Automation Consultant $140 to $160 per hour Sr. Automation Consultant $165 to $185 per hour Consultant $175 to $225 per hour Sr. Consultant $230 to $300 per hour Headquartered in Warren, Ohio, WCI Steel, Inc., is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steels at its Warren, Ohio facility. The Company filed for chapter 11 protection on September 16, 2003 (Bankr. N.D. Ohio Case No. 03-44662). Christine M. Pierpont, Esq., and G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P. represents the Debtors in their restructuring efforts. As of April 30, 2003, the Company listed $356,286,000 in total assets and $620,610,000 in total debts. WESTPOINT: Unsecured Panel Turns to Lehman for Financial Advice --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of WestPoint Stevens Inc., and its debtor-affiliates seeks the Court's authority to retain Lehman Brothers Inc. as its financial advisor, nunc pro tunc to July 30, 2003. The Committee explains that the services of a financial advisor are necessary and appropriate to evaluate complex financial and economic issues raised by the Debtors' reorganization proceedings. The Committee selected Lehman because of its expertise in providing financial advisory services in restructuring and distressed situations. Lehman is an investment-banking firm with principal offices in New York. It is a public company and has over $302,000,000,000 in assets with 13,000 employees in 38 industrial offices around the world. Lehman's professionals have extensive experience in the reorganization and restructuring of troubled companies. Lehman, in its capacity as financial advisor to the Committee, will: (a) review and analyze WestPoint's business, operations, properties, financial condition and prospects and financial projections; (b) evaluate WestPoint's debt capacity in light of its projected cash flows; (c) provide advice regarding the restructuring of WestPoint's existing indebtedness and assist in the determination of an appropriate capital structure; (d) give a valuation analysis of WestPoint and its assets on a going concern basis, including preparation of expert testimony relating to valuation; (e) attend meetings and assist in negotiations with the Debtors with respect to any proposed reorganization plan; (f) advise the Committee on the timing, nature, terms and value of any new securities, other consideration or other inducements to be offered pursuant to a restructuring; (g) assist the Committee in assessing strategic options, including the sale of the Debtors' businesses, and pre- confirmation and exit debt equity financing; (h) provide testimony, as necessary, in any court proceeding; and (i) provide the Committee with other appropriate general restructuring advice. Lehman will be compensated in this manner: (a) The Debtors will pay a cash retainer fee equal to $75,000 per month for the first six months, the retainer will be reduced to $50,000 per month after that. The first monthly retainer will be payable upon the execution of the Lehman Engagement Letter, and subsequent monthly retainers will be payable every first day of each month; (b) In consideration of Lehman as exclusive financial advisor to the Committee, the Debtors will pay $100,000 due upon the Effective Date of the Debtors' Plan; and (c) The Debtors will also pay all reasonable fees, disbursements and out-of-pocket expenses incurred by Lehman. The Committee maintains that the Fee Structure is both fair and reasonable under standards set forth in Section 328(a) of the Bankruptcy Code. Lehman may resign at any time and the Committee may terminate its services at any time as well by giving prior written notice. If Lehman resigns or the Committee terminates its engagement, the firm and its counsels will be entitled to receive all the amounts due up to the date of the resignation or termination. The Committee believes that the Debtors should provide Lehman with an indemnity, which they find appropriate in light of the cost of services in a non-bankruptcy context. Indemnification is a standard provision for investment bankers and financial advisors. Mark Shapiro, Managing Director of Lehman, assures the Court that the firm does not represent or hold any interest adverse to the Debtors, their estates, creditors, equity security holders, or affiliates, and is a "disinterested person" within the meaning of Section 101(14). (WestPoint Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPORT RESOURCES: Appoints Beatty, Dole and Semmens to Board -------------------------------------------------------------- The Board of Directors of Westport Resources Corporation (NYSE: WRC) appointed Michael L. Beatty, Richard D. Dole and Robert F. Semmens to serve on the Board effective October 1, 2003. Current directors Robert Belfer, Murry Gerber, and Robert Haas will resign from the Board, also effective October 1, 2003, maintaining the Board's current ten member size. Mr. Beatty is a member of The Beatty Law Firm in Denver, Colorado specializing in energy litigation. Prior to founding the law firm in 1998, Mr. Beatty was of counsel with the national law firm Akin, Gump, Strauss, Hauer & Feld L.L.P. From 1993 until 1995 he served as Chief of Staff to Colorado Governor Roy Romer. He previously served as Executive Vice President, General Counsel and a director of Coastal Corporation and as General Counsel of Colorado Interstate Gas Company. Prior to joining CIG, he was a tenured professor of law at the University of Idaho. He is a graduate of Harvard Law School. Mr. Beatty will serve on the Nominating and Governance Committee of the Board. Mr. Dole is currently President and co-founder of Benefits Access Solutions, LLC, a company formed in 2002 with insurance industry executives to provide financial services and benefit options to employees and members of corporations and organizations. BAS was an extension from his activities as Managing Partner of Innovation Growth Partners, LLC, a Houston-based company of experienced professionals and business leaders, which partners with organizations seeking strategic enhancement and growth. Prior to co-founding IGP in 2000, Mr. Dole served from 1998 until 2000 as Vice President and Chief Financial Officer of Burlington Resources International. From 1995 until 1998 he was national partner-in- charge of business process solutions of KPMG LLP. Prior to 1995 he was with Coopers & Lybrand, LLP, where he began his career in 1968 and served as Assurance and Business Advisory Partner in addition to various management positions such as Vice Chairman - process management, Southwest Region Director of merger, acquisition and corporate finance services, and National Chairman for the energy and natural resources industry practices (oil and gas, utilities and mining). Mr. Dole will serve on the Audit Committee of the Board. Mr. Semmens is currently an Adjunct Professor of finance at the Leonard N. Stern School of Business at New York University and a consultant on private equity finance. From 1993 until 2000 when the company was sold, Mr. Semmens was a Principal of the Beacon Group, a private investment and advisory firm specializing in energy investment. Prior to co-founding The Beacon Group, he was with the investment banking division of Goldman, Sachs & Co. where he specialized in corporate finance primarily in the energy industry. He holds juris doctor and master of management degrees from Northwestern University. Mr. Semmens will serve on the Compensation Committee of the Board. Don Wolf, Chairman and Chief Executive Officer of Westport, stated, "These changes reflect our growth and our ongoing success in attracting outstanding leadership for our company. Our retiring board members each represent major shareholders who have contributed greatly to our success. As a result of our expanded public float, representatives of our major shareholders have reduced their board representation to more accurately reflect their current ownership and to permit adding directors with a variety of experience and perspective to our Board. We are pleased to add members of such stature and experience. They will bring a broad range of energy industry, finance and legal expertise and proven leadership as we look to continue our record of sustained growth and value generation." Westport (S&P, BB Corporate Credit and Senior Unsecured, and B+ Senior Subordinated Debt Ratings) is an independent energy company engaged in oil and natural gas exploitation, acquisition and exploration activities primarily in the Gulf of Mexico, the Rocky Mountains, Permian Basin/Mid-Continent and the Gulf Coast. XCEL ENERGY: Delays Preferred Share Dividend Declaration -------------------------------------------------------- Xcel Energy (NYSE:XEL) has delayed its declaration of October dividend payments on its preferred and common stock. "The company has adequate cash on hand to pay the dividends and we hope to do so this year, but we are unable to make the payments at this time," said Dick Kelly, Xcel Energy's chief financial officer. " The Public Utility Holding Company Act requires the company have retained earnings at least equal to the dividend payment or receive a waiver of that requirement from the Securities and Exchange Commission." Kelly said Xcel Energy's retained earnings are negative due to charges at NRG Energy, a subsidiary in bankruptcy proceedings. Xcel Energy has applied to the SEC for a waiver to make the October dividend payments. The company has not yet received the waiver, nor is it assured the request will be granted. "I anticipate the company will have sufficient retained earnings by the end of October to declare and pay dividends on its preferred stock. Assuming NRG's plan of bankruptcy is confirmed by early December and earnings for the remainder of the year are as anticipated, we will have sufficient retained earnings to declare and pay the October common stock dividend in December as well as declare the common and preferred dividends payable in January 2004," Kelly said. Xcel Energy is a major U.S. electricity and natural gas company with operations in 12 Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com * Susan Barnes de Resendiz Joins Gardner Carton's Chicago Practice ------------------------------------------------------------------ Gardner Carton and Douglas LLP, a leading law firm with offices in Chicago and Washington D.C., is pleased to welcome Susan Barnes de Resendiz, a nationally recognized corporate bankruptcy and financial institutions lawyer, as counsel in its Chicago Corporate Restructuring and Financial Institutions Practice. Ms. Resendiz is admitted to practice in Ohio, Florida, the District of Columbia, and Texas and is an active member of the bar association in those states. She is also a member of the International Bar Association, International Womens Insolvency and Restructuring Confederation, American Bar Association (Chair, Subcommittee on Membership of the Business Bankruptcy Committee, and member of the Consumer Financial Subcommittee, Section of Business Law), and the Texas Association of Bank Counsel. Ms. de Resendiz has been listed in The Best Lawyers in America in both Cleveland and Houston, where she was a partner in a national law firm involved in many of the largest corporate bankruptcies in the United States. She also handled consumer credit class actions, defended against FTC enforcement actions, advised on consumer credit compliance issues, and lobbied Congress and federal banking agencies on bankruptcy and credit issues. She began her legal career as one of the first consumer credit lawyers hired by the Board of Governors of the Federal Reserve System in Washington, D.C., where she was responsible for the first restatement of Regulation Z and the implementation of regulations for the Fair Credit Billing Act. With Susan de Resendiz, we are further expanding our already highly recognized national insolvency practice with an attorney of noted national reputation and commitment to the practice, says Harold L. Kaplan, Chair of the Firms Corporate Restructuring Practice. The addition of Susan following Tracy Tregers joining us as a partner earlier in the summer reflects a further expansion of our commitment to our Corporate Restructuring Practice. The Corporate Restructuring Practice of Gardner Carton & Douglas has a national reputation particularly in representing indenture trustee and bondholder interests in major cases throughout the United States (representing in excess of $10.5 billion in bond defaults in the last year), as well as creditor committees and other interests. The practice Chair, Mr. Kaplan, was named one of thirteen Outstanding Bankruptcy Attorneys in the United States in 2001 by Turnaround and Workouts Magazine. Gardner, Carton & Douglas -- http://www.gcd.com-- was established in Chicago in 1910. The firms 230 attorneys practice in Chicago and Washington D.C. Diverse and geographically widespread, the firms extensive client base includes major domestic and foreign manufacturing and technology companies; universities; hospitals and other nonprofit organizations; commercial and investment banks; insurance companies and other financial service institutions; Native American tribes, universities and municipalities; broadcasters, common carriers and private communication users; advanced technology businesses; and individuals. * BOND PRICING: For the week of September 29 - October 5, 2003 -------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 9.875% 03/01/07 68 Adelphia Communications 10.875% 10/01/10 68 American & Foreign Power 5.000% 03/01/30 66 AMR Corp. 9.000% 09/15/16 72 Aurora Foods 9.875% 02/15/07 57 Burlington Northern 3.200% 01/01/45 55 Calpine Corp. 7.875% 04/01/08 69 Calpine Corp. 8.500% 02/15/11 69 Calpine Corp. 8.625% 08/15/10 70 Calpine Corp. 8.750% 07/15/07 74 Century Communications 8.875% 01/15/07 69 Cincinnati Bell Telephone 6.300% 12/01/28 74 Coastal Corp. 6.950% 06/01/28 70 Coastal Corp. 7.420% 02/15/37 73 Comcast Corp. 2.000% 10/15/29 33 Continental Airlines 7.033% 06/15/11 74 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 34 Crown Cork & Seal 7.500% 12/15/96 73 Cummins Engine 5.650% 03/01/98 67 Dan River Inc. 12.750% 04/15/09 68k Delta Air Lines 7.900% 12/15/09 75 Delta Air Lines 8.300% 12/15/29 65 Delta Air Lines 9.000% 05/15/16 68 Elwood Energy 8.159% 07/05/26 70 Enron Corp. 7.875% 06/15/03 19 Fibermark Inc. 10.750% 04/15/11 65 Finova Group 7.500% 11/15/09 51 Gulf Mobile Ohio 5.000% 12/01/56 63 IMC Global Inc. 7.300% 01/15/28 73 Internet Capital 5.500% 12/21/04 63 Level 3 Communications Inc. 6.000% 09/15/09 62 Level 3 Communications Inc. 6.000% 03/15/10 61 Liberty Media 3.500% 01/15/31 73 Liberty Media 3.750% 02/15/30 61 Liberty Media 4.000% 11/15/29 65 Loral Cyberstar 10.000% 07/15/06 60 Lucent Technologies 6.450% 03/15/29 69 Lucent Technologies 6.500% 01/15/28 69 Mirant Corp. 2.500% 06/15/21 48 Mirant Corp. 5.750% 07/15/07 48 Missouri Pacific Railroad 4.750% 01/01/30 71 Missouri Pacific Railroad 5.000% 01/01/45 63 Northern Pacific Railway 3.000% 01/01/47 52 Northwest Airlines 7.875% 03/15/08 74 NTL Communications Corp. 7.000% 12/15/08 19 Revlon Consumer Products 8.625% 02/01/08 53 Universal Health Services 0.426% 06/23/20 65 US Timberlands 9.625% 11/15/07 56 Viropharma Inc. 6.000% 03/01/07 51 Worldcom Inc. 6.250% 08/15/03 33 Worldcom Inc. 6.400% 08/15/05 33 Worldcom Inc. 6.950% 08/15/28 33 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 ***