/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/031104.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 4, 2003, Vol. 7, No. 218 Headlines ADVANSTAR COMMS: Acquires Cadence Magazine from CMP Media AIR CANADA: Wants Clearance for CND$80 Million AmEx Facility ALDERWOODS GROUP: Will Publish Third-Quarter Results on Nov. 11 ALLMERICA FIN'L: Insurer Fin'l Strength Ratings Up a Notch to BB ALON USA: S&P Assigns Low-B Corporate Credit & Bank Loan Ratings AMERICAN NATURAL: Closes Convertible Secured Debenture Financing AMES DEPARTMENT: Wants to Implement Performance Incentive Plan APPLICA: Credit Rating Cut to B on Weaker-Than-Expect Financials ARMSTRONG HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $1.3BB ARMSTRONG HOLDINGS: Gets Go-Signal to Reimburse PI Trust Costs BASUCH & LOMB: 3rd-Quarter Results Reflect Stronger Performance BEN HICKS AVIATION: Case Summary & 7 Largest Unsecured Creditors BERRY PLASTICS: S&P Assigns B- Rating to New $90MM Senior Notes BOB'S STORES: Gets Okay to Secure $20 Million DIP Financing CENDANT MORTGAGE: Fitch Rates Certificate Classes at BB/B CINCINNATI BELL: Proposed Sub. Notes Obtains Fitch's B Rating CITGO PETROLEUM: Reports Improved Third-Quarter 2003 Results COLUMBUS MCKINNON: EVP/CFO Robert L. Montgomery Plans to Retire CONSECO FIN.: Creditors Asks Court to Reconsider Order re Claims CONSECO INC: Intends to Foreclose on Stephen Hilbert's Estate CORRPRO COMPANIES: Enters Recapitalization and Refinancing Pact COVANTA ENERGY: Asks Court to OK Compromises with Heber Lessors CROWN CASTLE: Declares Quarterly Preferred Stock Dividend Rate DELTA FINANCIAL: Redeems Outstanding 9.5% Senior Notes Due 2004 DELTA FINANCIAL: Third-Quarter Results Show Vast Improvement DOMAN INDUSTRIES: Sept. 30 Net Capital Deficit Narrows to $405MM ELAN CORP: S&P Ups Junks Corporate Credit Rating to B- ELCOM INC: Vitale Caturano Appointed as KPMG Replacement ENRON CORP: Urging Court to Approve Crescent Lease Agreement EVERGREEN INT'L: S&P Cuts & Places Ratings on Watch Negative EXIDE TECHNOLOGIES: Will Present Global Identity at AAIW 2003 FAIRFAX FINANCIAL: Reports Improved Third-Quarter Fin'l Results FELCOR LODGING: S&P Keeps Watch on Ratings After Weak Q3 Results FFP OPERATING: Case Summary & 20 Largest Unsecured Creditors FOOTSTAR INC: Delays Completion and Release of Fin'l Restatement GENTEK INC: Court Waives Delaware Local Rule 3007-1(f)(ii) GENUITY: Court OKs Kirkland & Ellis as Debtor's Special Counsel GINGISS GROUP INC: Case Summary & 30 Largest Unsecured Creditors GLOBAL CROSSING: Seeks Approval of Flag Telecom Settlement Pact GOODYEAR TIRE: Brings-In Rick Navarro as VP Business Development HAWK CORP: Holding Third-Quarter Conference Call Today HAYES LEMMERZ: Begins Preparation to Restart Huntington Ops. HECLA MINING: Will Take Environmental Liabilities in 3rd Quarter HOME PRODUCTS: Weak Profitability Prompts S&P to Junk Ratings IFCO SYSTEMS: Expects Strong Growth for Third-Quarter 2003 J.P. MORGAN: Fitch Rates Class B-4 & B-5 Certificates at BB/B KMART CORP: Replaces Skadden Arps as Post-Emergence Counsel MAGELLAN HEALTH: Court Clears Justice Department Settlement Pact MANITOWOC COMPANY: Proposes $125-Million Senior Debt Offering MANITOWOC CO: S&P Rates $125-Mill. Senior Unsecured Notes at B+ MERRILL LYNCH: S&P Assigns Prelim. Ratings to 2003-KEY1 Notes MILACRON INC: Sept. 30 Balance Sheet Upside-Down by $25.7 Mill. MIRANT CORP: Court OKs Amendment to Prepetition Credit Agreement MSX INT'L: Schedules Third-Quarter Conference Call for Nov. 10 NORTHWEST AIRLINES: $225-Mill. Senior Notes Get S&P's B- Rating NORTHWEST AIRLINES: Fitch Rates $225-Mil. Convertible Notes at B NORTHWESTERN CORP: Issues Comment on Recent Share Price Increase NRG ENERGY: Implementing Proposed KERP and Severance Agreements ONEIDA LTD: Closing 5 Factory Sites as Part of Cost-Saving Plan OWENS CORNING: Balks At New York City's $10-Million Claim PACIFIC SHORES: Fitch Raises Two Low-B Preference Shares Ratings PENN NATIONAL: S&P Ups Ratings over Improved Operating Results PG&E NATIONAL: Noteholders Committee Taps Klee Tuchin as Counsel PICCADILLY CAFETERIAS: S&P Drops Ratings to D over Bankruptcy POLAROID CORP: Committee Wants Shareholders Claim Reclassified REDBACK NETWORKS: Case Summary & 20 Largest Unsecured Creditors RELIANT RESOURCES: Will Take After-Tax Charge of $1BB in Q3 2003 RELIANT: Fitch Says Impairment Charge Won't Affect Ratings REVLON INC: Sept. 30 Net Capital Deficit Widens to $1.7 Billion ROGERS WIRELESS: S&P Ratings Outlook Goes to Positive from Stable ROUGE INDUSTRIES: Turns to FTI Consulting as Financial Advisor RURAL/METRO: Wins Exclusive Services Contract in Tuczon, Arizona RYLAND GROUP: Credit Rating Upped to Investment-Grade Level SK GLOBAL AMERICA: Court Fixes November 24 as Claims Bar Date SKM LIBERTYVIEW CBO: Class B Note Ratings Downgraded to B+ STARWOOD HOTELS: Begins Search for New Chief Executive Officer STRUCTURED ASSET: Fitch Rates Classes B4 & B-5 Notes with Low-Bs TRI-UNION DEV'T: Files Plan and Disclosure Statement in Texas UICI: Look for Third-Quarter 2003 Operating Results Tomorrow UNITED AIRLINES: Intends to Pay Amendment Fees to DIP Lenders VERTIS INC: Third-Quarter 2003 Net Loss Balloons to $24 Million WAYLAND INVESTMENT: Fitch Affirms BB Rating for $60M Sub. Notes WEIRTON: Retiree Committee Taps Pascarella & Wiker as Accountant WHEELING: Secures Extension of Avoidance Action Protocol WOLVERINE TUBE: Third-Quarter 2003 Results Sink into Red Ink WORLDCOM INC: Hires Gibson Dunn & Crutcher as Special Counsel WORLDGATE COMMS: Look for Third-Quarter Results Tomorrow * Paul Glassman Joins Greenberg Traurig's Los Angeles Office * Large Companies with Insolvent Balance Sheets ********* ADVANSTAR COMMS: Acquires Cadence Magazine from CMP Media --------------------------------------------------------- Advanstar Communications Inc., publisher of Cadalyst magazine, has acquired Cadence magazine from CMP Media. Advanstar plans to incorporate Cadence into Cadalyst to provide readers and advertisers with one definitive print and online resource for the $3 billion computer-aided design (CAD) marketplace. "We are happy to create a combined publication that will become the market leader for advertisers and readers," said Robert L. Krakoff, Chairman and CEO of Advanstar Communications. "The acquisition demonstrates Advanstar's commitment to the CAD marketplace," said Dana Fisher, Group Publisher of Cadalyst. "Cadalyst celebrates its 20-year anniversary in 2004, and we look forward to continuing our legacy of editorial excellence, product reviews, quality circulation, Caddie awards and customer partnerships for many more years to come. The integration of Cadence with Cadalyst will strengthen these efforts, and enable us to provide readers and advertisers with the best information and marketing tools to help them grow their business." Editor-in-Chief Sara Ferris will head Cadalyst's editorial staff of writers and contributors. The magazine will continue to focus on innovations and customer needs in all CAD industry segments including CAD, CAE, CAM, AEC, MCAD, PLM and GIS, and be circulated each month to 60,000 qualified subscribers from both publications. The magazine's Web site http://www.cadalyst.comwill continue to be a repository of CAD technology and reviews, and the Cadalyst e- newsletters will continue to present key news in specific market sectors, as well as product buying information. Advanstar Communications Inc. -- http://www.advanstar.com-- is a worldwide business information company serving specialized markets with high quality information resources and integrated marketing solutions. Advanstar now has 115 business magazines and directories, 78 tradeshows and conferences, numerous Web sites, and a wide range of print and electronic direct marketing, database and reference products and services. In addition to the healthcare and pharmaceutical industries, Advanstar serves targeted market sectors in the art, automotive, beauty, e- learning, call center, digital media, entertainment/marketing, fashion & apparel, manufacturing and processing, powersports, science, telecommunications and travel/hospitality industries. The Company now has more than 1,400 employees and currently operates from multiple offices in North America, Latin America, Europe and Asia. Advanstar Communications Inc. (S&P, B Corporate Credit Rating, Stable) is a worldwide business information company serving specialized markets with high quality information resources and integrated marketing solutions. Advanstar has 100 business magazines and directories, 77 tradeshows and conferences, numerous Web sites, and a wide range of direct marketing, database and reference products and services. Advanstar serves targeted market sectors in such industries as art, automotive, beauty, collaboration/e-learning, CRM/call center, digital media, entertainment/marketing, fashion & apparel, healthcare, manufacturing and processing, pharmaceutical, powersports, science, telecommunications and travel/hospitality. The Company has over 1,200 employees and currently operates from multiple offices in North America, Latin America, Europe and Asia. For more information, visit http://www.advanstar.com AIR CANADA: Wants Clearance for CND$80 Million AmEx Facility ------------------------------------------------------------ In conjunction with the Affinity Card Agreements, Air Canada and its debtor-affiliates ask Mr. Justice Farley to approve a non- revolving term loan facility of up to CND80,000,000 that Amex Bank of Canada pledges to Air Canada. The Applicants will use the proceeds to fund their ordinary course operations as well as the costs and expenses arising in the CCAA Proceeding. Amex will advance the Loan, on the satisfaction of certain conditions, on or before September 30, 2004. Air Canada Executive Vice President and Chief Financial Officer, M. Robert Peterson, relates that the Amex Facility is essential. Through the Facility, Air Canada will obtain access to additional liquidity at a lower cost of funds compared with the $700,000,000 GE Capital CCAA Financing. The limited security requirement frees up Air Canada's other assets as security for GE Capital as required. Conditions Precedent to Advance Air Canada and Aeroplan will secure the Facility subsequent to these key events: -- The approval of the Amex Agreements and Amex Facility by the CCAA Court; -- The expiry of all appeal periods without motions brought before or orders granted by the courts having jurisdiction for such appeals; -- The entry into the definitive agreements, including each of the Amex Agreements and in respect of the Amex Facility, by Air Canada, Aeroplan and Amex; and -- The satisfaction of other conditions precedent, including receipt by Amex of borrower certificates, confirmation of security and other undertakings and specific documents as outlined in the Amex Facility. Deadline to Provide Financing Under the Facility, Amex's commitment to provide funding to Air Canada and to Aeroplan will terminate if the Advance is not made by September 30, 2004. Neither Amex nor any of its affiliates will have any liability to any person in connection with Amex's refusal to fund the Advance after September 30, 2004. Repayment The Applicants' obligations under the Facility will be set off, at Amex's option, against Amex's obligations under the Affinity Card Agreements. Any amounts repaid will not be re-advanced by Amex. Any balance outstanding under the Amex Facility on the maturity of the Loan will be paid in cash. Any Amex Payments that are due after the date that the outstanding principal balance of the Amex Facility has been repaid to Amex in full, will be paid for by Amex and by its affiliates to Air Canada or Aeroplan in accordance with the Affinity Card Agreements. Interest The Applicants will pay an interest monthly in arrears based on the average monthly Prime Rate of Bank of Montreal. The interest will be paid by wire transfer. The interest rate will increase by 2% per annum on the occurrence and during the continuance of an Event of Default. Security and Priority To secure all existing and future obligations of Air Canada and Aeroplan under the Facility, Amex will receive a fully perfected first priority security interest and first ranking charge on the Amex Agreements, all accounts receivable due by Amex under the Amex Agreements and all licenses and trademarks used by Amex specifically in connection with or related to the Co-Brand Agreement other than the "Air Canada" and "Aeroplan" trademarks and the AC Rondelle design mark. The Collateral is subject only to the CND10,000,000 Administrative Charge provided in the Initial CCAA Order and other charges as may be consented to by Amex. All Collateral will be free and clear of all other liens, encumbrances and claims of any kind. Term/Maturity Date The Facility will mature on the earlier of (i) an event of default and (ii) the two year anniversary date of the loan extension, subject to a six-month renewal term at Air Canada's, Aeroplan's or Amex's option upon the consent of the non- requesting party. The Amex Facility will be repaid and satisfied in full on the Maturity Date. Events of Default include: (i) Air Canada or Aeroplan's failure to pay any amount when due and payable under the Amex Facility loan and security documentation, subject to cure periods provided in the Amex Facility Documents; (ii) Air Canada or Aeroplan's default in the performance or observance of any covenant in the Amex Facility Documents in any material respect, subject to cure periods provided in the Amex Facility Documents; (iii) Any default of any representation or warranty contained in the Amex Facility Documents in any material respect, subject to cure periods provided in the Amex Facility Documents; (iv) The performance or compliance by Air Canada or Aeroplan with any of its obligations under the Amex Facility Documents becoming unlawful, or any obligation of Air Canada or Aeroplan ceasing to be a legal, valid, binding and enforceable obligation of such party, or the enforceability of any of the Amex Facility Documents being disputed by either Air Canada or Aeroplan, or any of the security ceasing to constitute a lien of the nature and priority contemplated in the parties' October 22, 2003 commitment letter; (v) The dismissal or conversion of the CCAA Proceeding or the U.S. Bankruptcy Proceeding without the implementation of a plan of compromise or arrangement by Air Canada and the other applicants in the CCAA Proceeding or the granting of relief from the stay under the CCAA Proceeding or the U.S. Bankruptcy Proceeding to any person, other than Amex, the effect of which has a material adverse impact on the ability of: * Air Canada or Aeroplan to repay the principal or interest on the Amex Facility, or any other amount owing to Amex; * Air Canada or Aeroplan to perform its obligations under the Amex Agreements; or * Amex to enforce its rights under any of the Amex Facility Documents or the Affinity Card Agreements; (vi) Expiry of the stay granted under the CCAA Proceeding or the U.S. Bankruptcy Proceeding, or any order extending the stay, without the implementation of a plan of compromise or arrangement by the Applicants; (vii) The amendment, variation or modification to, or rescission of, any provision of the Initial CCAA Order or the Approval Order or the making of a new CCAA Court or U.S. Bankruptcy Court order without Amex's prior written consent where the amendment, variation, modification, recession or grant, as the case may be, has a Material Adverse Effect; (viii) The default of any Applicant in the material observance or performance of any CCAA Court or the U.S. Bankruptcy Court order; (ix) The termination of any of the Affinity Card Agreements by Air Canada or Aeroplan other than in accordance with its or their terms or the termination by Amex of the Affinity Card Agreements or either of them in accordance with its or their terms as a result of a default by Air Canada or Aeroplan; (x) The occurrence of an event of default under the GE Capital CCAA Financing or the CIBC Credit Agreement and GE Capital or CIBC, as the case may be, accelerating the payment of any amount under the financing documentation entered into by, among others, GE Capital and Air Canada or CIBC and Air Canada, as the case may be; (xi) Except for the CCAA Proceeding and the U.S. Bankruptcy Proceeding or in connection therewith, either Air Canada or Aeroplan instituting proceedings for its winding up, liquidation or dissolution, or taking action to become a voluntary bankrupt, or consenting to the filing of a bankruptcy proceeding against it or consenting to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the whole or any material part of its property, or making an assignment for the benefit of creditors, or publicly announcing or admitting in writing its inability to pay its debts generally as they become due, or suspending or threatening to suspend transaction of all or any substantial part of its usual business; (xii) Except for the CCAA Proceeding and the U.S. Bankruptcy Proceeding, the institution of any proceedings in any court of competent jurisdiction by any person other than Air Canada or Aeroplan for the winding up, liquidation or dissolution of Air Canada or Aeroplan, or for the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the whole or any material part of the property of Air Canada or Aeroplan and either (A) such proceedings will remain un-dismissed or un-stayed for 15 days or more, or (B) an order or decree granting the relief or proceedings sought will be entered by a court of competent jurisdiction, whichever occurs first; (xiii) After the implementation of a plan of compromise or arrangement by the Applicants in the CCAA Proceeding and Air Canada's emergence from protection under the CCAA, the existence for three consecutive business days of one or more non-appealable judgments of a court of competent jurisdiction against Air Canada or Aeroplan or any of them, which would, in Amex's judgment, acting reasonably, have a Material Adverse Effect; or (xiv) If there will occur any event which would, in Amex's judgment, acting reasonably, have a Material Adverse Effect. On the occurrence of an Event of Default, and at any time thereafter if the Event of Default is continuing, Amex may declare all obligations in respect of the Amex Facility, including, without limitation, all accrued and unpaid interest, to be immediately due and payable to Amex in cash and may exercise all rights and remedies under the Amex Facility Documents. Amex will have all customary remedies, including, without limitation, rights of set-off, under the Amex Facility Documents. Financial and Other Reporting Air Canada and Ernst & Young Inc., the Court-appointed Monitor, will provide Amex on a weekly basis, with a rolling 13-week cash flow budget for Air Canada. Air Canada will also provide Amex with copies of all other information, other than collateral reports, provided to GE Capital under the CCAA Financing Agreement and to CIBC under the CIBC Credit Agreement as and when provided to GE Capital and to CIBC. (Air Canada Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALDERWOODS GROUP: Will Publish Third-Quarter Results on Nov. 11 --------------------------------------------------------------- Alderwoods Group, Inc. (NASDAQ:AWGI) intends to release its third quarter financial results for fiscal 2003 after market close on Tuesday, November 11, 2003. Following the release, Alderwoods Group will host a conference call to be held on Wednesday, November 12, 2003 at 11:00 a.m. eastern time. To participate in the conference call, please dial in approximately 5 minutes ahead of time to one of the following numbers: - Toll-free number for participants dialing from inside the United States or Canada is 1.800.428.5596 - The number for Toronto participants is 416.641.6450 The call will be available for replay until midnight on November 26, 2003 by calling 1.800.558.5253 and entering conference ID No.21163664. For further information; please contact Tamara Malone, Manager, Media and Investor Relations at 416.498.2778. ALLMERICA FIN'L: Insurer Fin'l Strength Ratings Up a Notch to BB ---------------------------------------------------------------- Fitch Ratings has upgraded the insurer financial strength ratings of Allmerica Financial Life Insurance and Annuity Company and First Allmerica Financial Life Insurance Company to 'BB' from 'BB- '. Fitch has concurrently upgraded its long-term, senior debt, and capital securities ratings on Allmerica Financial Corp. and its related entities. All of these ratings have been removed from Rating Watch Positive where they were placed in January 2003, and have been assigned Stable Rating Outlooks. In addition, Fitch has assigned 'BBB+' insurer financial strength ratings to AFC's property/casualty subsidiaries The Hanover Insurance Company and Citizens Insurance Corp. The Rating Outlook on these ratings is Stable. Fitch's decision to upgrade AFLIAC's and FAFLIC's insurer financial strength ratings incorporates the positive factors cited when it placed the ratings on Rating Watch Positive in January 2003, coupled with moderating surrender activity and with improvements in AFLIAC's and FAFLIC's capital positions. AFLIAC's NAIC risk-based capital ratio at September 30, 2003 was 349% compared to 244% at year-end 2002, the companies' net amount at risk declined to $3.3 billion at September 30, 2003 compared to $4.6 billion at year-end 2002, and their combined statutory surplus at September 30, 2003, was $547 million, a 13% increase over the year-end 2002 total. AFLIAC and FAFLIC are effectively in run-off and neither company can pay dividends in 2003 without regulatory approval. Going forward, Fitch believes that AFLIAC and FAFLIC will likely receive approval to pay future dividends. Fitch also believes that in its effort to maximize returns on capital, AFC will likely take dividends out of AFLIAC and FAFLIC but that it will balance this action with a desire to maintain capital levels required to mitigate surrender activity and retain assets at AFLIAC and FAFLIC. As a result, Fitch believes that AFLIAC's and FAFLIC's capitalization will continue to be commensurate with their current ratings. Fitch's upgrade of AFC's senior debt rating to 'BB+' reflects its belief that the company's credit-profile has stabilized significantly over the last year. Fitch estimates the company's current cash basis interest coverage at the holding company level, at 1.6 times. Although Fitch does not expect AFC to take dividends out of its property/casualty companies in 2003, cash basis interest coverage is approximately 4.8x if ordinary dividends currently available from its lead property/casualty subsidiary are included. Fitch estimates operating earnings-based interest coverage generated solely by AFC's property/casualty operation to be in a range of 3x-4x on a run-rate basis. Fitch's 'BBB+' insurer financial strength ratings on AFC's property/casualty subsidiaries The Hanover Insurance Company and Citizens Insurance Company of America reflect the companies' historically solid underwriting capabilities and good competitive positions in New England and Michigan. Partially offsetting these positives are the companies' relatively high operating leverage, especially in light of AFC's future dividend requirements, and the adverse impact peer rating agency downgrades have had on their ability to attract new profitable business. The ratings also reflect some uncertainty around a disclosure AFC made during its third quarter earnings conference call that it was reviewing its property/casualty subsidiaries' reserve adequacy. Fitch anticipates that the review will be completed in the fourth quarter 2003 and will result in a reserve charge for prior- accident year development. However, Fitch believes that the charge will be manageable in the context of the companies' current capital positions and rating levels. These ratings were initiated by Fitch as a service to users of Fitch ratings. The ratings are based primarily on publicly available information. Rating Actions First Allmerica Financial Life Insurance Co. -- Insurer financial strength/ Upgrade/'BB'/Stable. Allmerica Financial Life & Annuity Co. -- Insurer financial strength/Upgrade/'BB'/Stable. Allmerica Global Funding LLC $2 billion global note program -- Long-term issuer rating/Affirm/'BB'/Stable. Allmerica Financial Corp. -- Long-term issuer/Upgrade/'BB+'/Stable; -- Senior debt rating/Upgrade/'BB+'/Stable; -- Commercial paper rating/Withdrawn/'B'. Allmerica Financing Trust -- Capital securities rating/Upgrade/'BB-'/Stable. The Hanover Insurance Company -- Insurer financial strength /Assign/'BBB+'/Stable. Citizens Insurance Company of America -- Insurer financial strength/Assign/'BBB+'/Stable. ALON USA: S&P Assigns Low-B Corporate Credit & Bank Loan Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to independent petroleum refiner and retail marketer Alon USA Inc. At the same time, Standard & Poor's assigned its 'B' rating to Alon's proposed $100 million senior secured bank term loan due 2008. The outlook is stable. Dallas, Texas-based Alon had about $175 million of debt outstanding as of June 30, 2003. Proceeds from the term loan will be used to reduce outstanding bank debt, consisting of a $45.7 million term loan and approximately $35 million outstanding under its credit facility, with the remaining proceeds used for general corporate purposes and transaction fees. Ratings stability reflects Standard & Poor's expectation that the company will manage its operations and any growth plans in a manner that maintains adequate liquidity, even during a down cycle environment, and will continue to reduce its high leverage. "The ratings for Alon reflect the significant challenges the company faces as a small independent petroleum refiner and marketer with high book leverage and limited liquidity, participating in a competitive, erratically profitable industry that is burdened by excess capacity and high fixed-cost requirements for refinery equipment and regulation compliance," noted Standard & Poor's credit analyst Brian Janiak. "These weaknesses are partially offset by the company's significant advantage as a local refiner in physically remote markets and relatively modest spending necessary to meet upcoming clean fuels requirements," added Janiak. The stable outlook is predicated on the expectation that completion of the Longhorn pipeline will not result in a material deterioration of the company's business and financial profile. Alon USA operates a 60,000 barrels per day of crude oil throughput capacity refinery in Big Springs, Texas that serves relatively isolated, typically high margin niche markets in West Texas, New Mexico, and Arizona. The company also has a retail network in the southwestern U.S. that includes over 1,400 Fina branded retail sites. AMERICAN NATURAL: Closes Convertible Secured Debenture Financing ---------------------------------------------------------------- American Natural Energy Corporation (TSX Venture: ANR.U) has completed an additional financing consisting of US$305,000 in convertible secured debentures. This completes a total financing of US$12.0 million in convertible secured debentures with ANEC having closed an initial financing of US$11.7 million on October 21, 2003. The debentures are repayable on September 30, 2005 with interest payable quarterly commencing December 31, 2003 at 8% per annum. The outstanding principal of the debentures is convertible into common shares of ANEC at any time prior to maturity at a conversion price of US$0.45 per share, subject to antidilution adjustment, and the debentures are redeemable by ANEC at any time after October 1, 2004 if the average weighted price per share on the TSX Venture Exchange for a 20 consecutive trading day period prior to the date notice of redemption is given has exceeded 166-2/3% of the conversion price. A finder's fee in the amount of US$9,150 was paid to Middlemarch Partners Limited of London, England in connection with the additional financing. The additional funds are intended to be utilized in the exploration and development of its Bayou Couba oil and gas leases within its ExxonMobil Joint Development Project in St. Charles Parish, Louisiana. The Debentures are collateralized by substantially all of ANEC's assets. The debentures and any common shares issued upon conversion of the debentures will be subject to a statutory hold period of four months under applicable Canadian securities legislation and stock exchange policies. The offer and sale of the Debentures was not registered under the US Securities Act of 1933, as amended, and the Debentures and the shares issuable on conversion may not be offered and sold free of any restrictions on resale under the Act absent registration under that Act or an applicable exemption from the registration requirements. ANEC is a Tulsa, Oklahoma based independent exploration and production company with operations in St. Charles Parish, Louisiana. * * * Going Concern Uncertainty As reported in Troubled Company Reporter's August 29, 2003 edition, the Company announced its financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. The Company has no current borrowing capacity with any lender. It has sustained substantial losses in 2002 and 2001, totaling approximately $8.7 million and $1.0 million, respectively, a stockholders' deficit of $1.4 million at December 31, 2002, a working capital deficiency of approximately $6.0 million including current amounts due under borrowings of approximately $4.5 million, and negative cash flow from operations in each of 2002 and 2001, all of which lead to questions concerning the Company's ability to meet its obligations as they come due. The Company also has a need for substantial funds to develop its oil and gas properties. As a result of the losses incurred and current negative working capital and other matters described above, there is no assurance that the carrying amounts of its assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. The Company's ability to continue as a going concern is dependent upon adequate sources of capital and the ability to sustain positive results of operations and cash flows sufficient to continue to explore for and develop its oil and gas reserves. The independent accountants' report on American Natural Energy's financial statements as of and for the year ended December 31, 2002 includes an explanatory paragraph which states that the Company has sustained substantial losses, a stockholders' deficit, a working capital deficiency and negative cash flow from operations in each of 2002 and 2001 that raise substantial doubt about its ability to continue as a going concern. AMES DEPARTMENT: Wants to Implement Performance Incentive Plan -------------------------------------------------------------- Ames Department Stores, Inc., and its debtor-affiliates seek the Court's authority to: (a) implement an Employee Performance Incentive Program and an Expected Recovery Percentage Program to be distributed on a discretionary basis to the Debtors' remaining employees, including Rolando de Aguiar, Ames' president; and (b) provide for the continued employment of Mr. de Aguiar. According to Deryck A. Palmer, Esq., at Weil, Gotshal & Manges LLP, in New York, in light of the critical, time-intensive employment services the Debtors require while they wind down their business, the Debtors determined to create an incentive for their employees to continue working for them throughout the wind- down process. To this end, the Debtors, in concurrence with the Committee, formulated an employee severance, retention, and performance incentive program. The Wind-Down Severance, Retention, and Incentive Program was approved by the Court on October 10, 2002 and will continue unaffected. Mr. Palmer tells the Court that the Performance Incentive Program is designed to cover the Debtors' obligations to the Employees, with the exception of Mr. de Aguiar. On the other hand, the Expected Recovery Percentage Program is designed to cover the Debtors' obligations to Mr. de Aguiar. As of June 1, 2003, the Debtors had 34 full and part-time employees on their payroll. The Employees include certain former employees of Ames whose efforts were critical to maximizing creditor recoveries and will participate in the Performance Incentive Program. The Programs The Programs provide a mechanism to distribute incentive awards from two independent, self-funding pools to Employees and Mr. de Aguiar when the recoveries to creditors reach certain targets set by the Committee. The Performance Incentive Program will have one pool of funds and the Expected Recovery Percentage Program will have a separate pool. Distributions from the Pools will be administered solely by Mr. de Aguiar, who will determine what awards are to be made and which employees will be entitled to the awards. (A) Programs are Self-Funding Funding for the Pools will be based on the recoveries to creditors. The amount of administrative expense claims on the Debtors' books and records total $120,400,000. Based on the Debtors' current projections as of May 31, 2003, recoveries for administrative expense claimholders will be between 80.3% and 99.4% of the allowed amount of their administrative expense claims. In other words, the Debtors' anticipate they will have between $96,600,000 and $119,600,000 to distribute on account of the $120,400,000 in administrative expense claims. The midpoint for the anticipated recoveries to administrative expense creditors is 89.78% of the $120,400,000. With the input and consent of the Committee, the Debtors have established the Midpoint as the initial target under the Programs. When the Debtors achieve the Midpoint, the Performance Incentive Pool will be funded with $1,215,275 and the Expected Recovery Percentage Program Pool will be funded with $800,000. Any reduction in the amount of administrative expense claims will be credited towards the Debtors' goal of satisfying administrative expense claims. If recoveries to administrative expense creditors increase above the Midpoint, the Pools will be increased as well. Specifically, for each quarter percentage point increase above the Midpoint, the Performance Incentive Program Pool will be increased by $12,618 and the Expected Recovery Percentage Program Pool will be increased by $12,382. Thus, for each quarter percentage point the Debtors recover above the Midpoint, the Pools will be funded by an additional $25,000. In total, pursuant to the Programs, the Debtors will be entitled to distribute $2,015,275 to the Employees and Mr. de Aguiar upon achieving the Midpoint and an additional $25,000 for each quarter-point above the Midpoint. (B) Distribution Under the Programs The Debtors will not make any distributions pursuant to the Programs until they have reached the Midpoint. Once the Midpoint is reached, the Debtors will be free to make distributions pursuant to the Programs on a discretionary basis as the pools are funded. Continued Employment of Mr. de Aguiar Under the Key Management Executives Program, approved as part of the Wind-Down Severance, Retention, and Incentive Program, the Debtors guaranteed Mr. de Aguiar's employment for a minimum of one year commencing September 1, 2002 pursuant to his Employment Agreement with the Debtors. Mr. de Aguiar is also entitled to receive certain retention payments under the Wind-Down Severance, Retention, and Incentive Program on a weekly basis. The Debtors' commitment to guarantee employment to Mr. de Aguiar expired at the end of August 2003. The Debtors have continued to employ Mr. de Aguiar on a month-to-month basis since September 2003 under the same terms as his Employment Agreement. The Debtors propose to continue Mr. de Aguiar's Employment Agreement from October 2003 through July 1, 2004, subject to these provisions: (1) From October 2003 through January 2004, Mr. de Aguiar's base salary will remain unchanged but his Retention Payments will be reduced by 25%; (2) From February 2004 to April 2004, Mr. de Aguiar's Base Salary will be reduced by 25% and his Retention Payments will be reduced by 50%; (3) From May 2004 through July 1, 2004, Mr. de Aguiar's Base Salary will be reduced by 50% and his Retention Payments will be reduced by 75%. Mr. Palmer clarifies that the Debtors' renewal of Mr. de Aguiar's employment will be without prejudice to continue Mr. de Aguiar's employment at the conclusion of the ten-month term on a guaranteed basis or from month-to-month. As a result of these reductions in compensations, total earnings for Mr. de Aguiar for this period will amount to 51% of his annualized earnings for the previous year. To ensure Mr. de Aguiar's current compensation does not decline below the previous year's earnings, Mr. de Aguiar will be entitled to draw an advance against the Expected Recovery Percentage Program Pool at any time and from time to time, provided, however, that Mr. de Aguiar's weekly compensation in combination with any Advance will not exceed the previous year's earnings for the same period of time. Any Advance will be subject to disgorgement if the Midpoint is not achieved or if Mr. de Aguiar's employment is terminated for cause. In the event Mr. de Aguiar voluntarily terminates his employment and the Debtors achieve the Midpoint, any advance or distribution from the ERP will not be subject to disgorgement. Upon reaching the Midpoint, the funding for the Expected Recovery Percentage Program Pool will be reduced by the amount of any prior Advance. In the event Mr. de Aguiar's employment is terminated and the Debtors reach the Midpoint, the Expected Recovery Percentage Program Pool will continue to be funded, and Mr. de Aguiar will continue to receive distributions from the Expected Recovery Percentage Program Pool. Significance of the Programs Mr. Palmer assures the Court that the terms and provisions of the proposed Programs are fair and reasonable given the nature and magnitude of the Debtors' wind-down efforts. By rewarding success, the programs represent an economical and self-funding mechanism to provide incentive for the Debtors' few remaining Employees to attain administrative solvency, ensure successful liquidation of the Debtors' assets, and maximize recoveries for all creditors. Moreover, implementation of the programs will help ensure that Mr. de Aguiar and the other Employees continue to provide assistance, if necessary, to the Debtors for the duration of their required service. Absent approval of the Programs and Mr. de Aguiar's continued employment, the Debtors' wind-down efforts are likely to suffer irreparable harm because there exists a high probability that a substantial number of the remaining Employees and Mr. de Aguiar may voluntarily terminate their employment before the completion of the final phase of these Chapter 11 cases, with potentially adverse consequences to the Debtors' estates. Costs associated with the adoption of the Programs are more than justified to discourage resignations among the Debtors' few remaining employees, dispel the perceived risk of working for a liquidating Debtor, and obtain the value of the Employees' experience, knowledge and determination. Because the Programs are needed to retain the remaining Employees and Mr. de Aguiar, the payment rights of the Employees who participate in the programs and the continued employment of Mr. de Aguiar are "actual, necessary costs and expense of preserving the estate[s]," and will, therefore, have an administrative expense status under Section 503(b)(1)(a) of the Bankruptcy Code to the extent they become due. (AMES Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) APPLICA: Credit Rating Cut to B on Weaker-Than-Expect Financials ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on small appliance manufacturer Applica Inc., including its corporate credit rating to 'B' from 'B+. At the same time, these ratings were placed on CreditWatch with negative implications. Total debt outstanding as of Sept. 30, 2003, was $156.1 million. "The rating actions reflect Applica's weaker-than-expected financial results and credit protection measures for the 12 months ended Sept. 30, 2003. Applica's financial performance declined from significant price erosion and unit declines in the company's toaster oven and iron product lines, somewhat mitigated by higher sales of lower-margin products," said Standard & Poor's credit analyst Martin Kounitz. The small appliance industry is currently faced with accelerating price deflation of 15% or more, as Chinese manufacturers ship lower-priced goods through traditional sales channels, and U.S. retailers purchase products directly from overseas manufacturers. With lower sales volume and unabsorbed overhead, the company's EBITDA for the 12 months ended Sept. 30, 2003, fell 36% versus the same period the previous year. For the same period, lease-adjusted EBITDA coverage of interest expense was 2.3x, compared with 3.4x in 2002. Total debt to EBITDA increased to 4.1x from 3.3x in 2002, despite debt reduction of $85.6 million since September 2002. To improve profitability, management has decided to increase the amount of product lines that it outsources to lower-cost manufacturers. However, Standard & Poor's is concerned about the length of time required to stabilize operating performance and to return to historical operating strength. Standard & Poor's will meet with management to discuss its business and financial plans for improving the company's operating performance during this current challenging retail environment prior to resolving the CreditWatch listing. ARMSTRONG HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $1.3BB ---------------------------------------------------------------- Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) reported third quarter 2003 net sales of $851.4 million that were 0.6% higher than third quarter net sales of $846.5 million in 2002. Excluding the favorable effects of foreign exchange rates of $28.2 million, consolidated net sales decreased by 2.7%, primarily due to lower sales volume. Operating income of $17.8 million was recorded for the third quarter of 2003 compared to operating income of $52.4 million in the third quarter of 2002. For the nine-month period ending September 30, 2003, net sales were $2,453.2 million, an increase of 1.4% from the $2,420.2 million reported for the first nine months of 2002. Excluding the favorable effects of foreign exchange rates of $105.6 million, consolidated net sales decreased 2.9%. An operating loss in the first nine months of 2003 of $4.3 million compared to operating income of $148.5 million for the first nine months of 2002. Results for the third quarter reflect lower selling, general and administrative (SG&A) costs that were partially offset by higher raw material costs and the effects of lower sales volumes, while the year-to-date performance reflects lower sales and higher raw material costs partially offset by lower SG&A expenses. Segment Highlights for the Third Quarter 2003 Resilient Flooring net sales were $315.6 million in the third quarter of 2003 and $315.1 million in the third quarter of 2002. 2003 sales compared to 2002 were favorably impacted by $9.4 million from the effects of foreign exchange rates in translation. Operating income of $20.8 million in the quarter declined by $0.7 million from the operating income in the third quarter of 2002 of $21.5 million. 2003 included $5.4 million of costs related to ceasing production of its residential stencil product line. In addition, lower SG&A expenses were partially offset by the effects of overall lower sales volume. Wood Flooring net sales of $183.7 million in the third quarter of 2003 increased 1.9% from $180.3 million in the prior year. This increase was driven primarily by improved pricing and increased volume in certain products. An operating loss of $9.9 million was recorded in the third quarter of 2003 compared to operating income of $10.0 million in the third quarter of 2002. $15.6 million of the $19.9 million decline in operating income was primarily due to charges from the closure of a manufacturing plant in Port Gibson, Mississippi. Also contributing to the decline in operating income were increases in lumber and manufacturing costs and a $2.0 million impairment of an office building determined to be held for sale, partially offset by lower selling expenses. Textiles and Sports Flooring net sales of $73.3 million increased in the third quarter of 2003 compared to $68.6 million in the third quarter of 2002. Excluding the favorable effects of foreign exchange rates of $9.6 million, net sales decreased 6.3% due to weak European markets. Operating income of $0.2 million in the third quarter of 2003 increased by $1.3 million from the operating loss of $1.1 million in the third quarter of 2002. 2003 included a $3.7 million restructuring charge for European manufacturing- related severances. 2003 results reflect lower selling and advertising costs and improved manufacturing costs that were partially offset by the lower sales volume. Building Products net sales of $227.9 million in the third quarter of 2003 increased from $225.8 million in the prior year. Excluding the favorable effects of foreign exchange rates of $9.2 million, sales decreased by 3.0%, primarily due to lower sales volume in commercial markets, partially offset by improved pricing in the U.S. commercial market. Operating income decreased to $32.4 million from operating income of $34.6 million in the third quarter of 2002. This decrease resulted from lower sales volume and increased natural gas costs, partially offset by improved production expenses and improved U.S. commercial market pricing. Operating income for the third quarter of 2003 benefited by approximately $1.2 million due to the effect of foreign exchange rates. Cabinets net sales in the third quarter of 2003 of $50.9 million decreased from $56.7 million in 2002 due primarily to reductions in volume. An operating loss of $3.2 million in 2003 compared to an operating loss of $0.3 million in the prior year. The operating loss was predominantly due to the negative effects of lower volume. Additionally, Cabinets recorded a $0.8 million impairment related to an office building determined to be held for sale. Armstrong anticipates charges of approximately $8 million during the fourth quarter from its announced Wood Flooring plant closure in Warren, Arkansas. More details on the Company's performance can be found in its Form 10-Q, filed with the SEC today. References to performance excluding the effects of foreign exchange are non-GAAP measures. Management believes that this information improves the comparability of business performance by excluding the impacts of changes in foreign exchange rates when translating comparable foreign currency amounts. Armstrong Holdings, Inc. is the parent company of Armstrong World Industries, Inc., a global leader in the design and manufacture of floors, ceilings and cabinets. In 2002, Armstrong's net sales totaled more than $3 billion. Based in Lancaster, PA, Armstrong operates 58 plants in 14 countries and approximately 15,700 employees worldwide. More information about Armstrong is available on the Internet at http://www.armstrong.com ARMSTRONG HOLDINGS: Gets Go-Signal to Reimburse PI Trust Costs -------------------------------------------------------------- Armstrong World Industries obtained the Court's authority to: -- reimburse the Trustees of the Asbestos PI Trust for the reasonable attorneys' fees and out-of-pocket expenses incurred by the Trustees in connection with the establishment of the Asbestos PI Trust, and such other actions as are necessary to have the Asbestos PI Trust operational by the Effective Date of the Plan; -- if the Trustees undertake activities prior to confirmation, reimburse the members of the Trustees' Advisory Committee for reasonable out-of-pocket expenses incurred in connection with such activities and pay the TAC members a reasonable hourly rate established by the Trustees for meetings attended or other conduct of Asbestos PI Trust business; -- pay the Trustees for meetings attended at the per diem to be included in the Asbestos PI Trust Agreement and to be agreed upon by the Asbestos PI Claimants' Committee and the Future Claimants' Representative; and -- pay the premiums for errors and omissions insurance to be issued on the Trustees' behalf. AWI wants to make these payments without further Court approval. All pre-confirmation fees and expenses of the Future Claimants' Representative and counsel to the Future Claimants' Representative in connection with the establishment of the Asbestos PI Trust will be paid in accordance with the current procedures for fee applications in AWI's Chapter 11 case. (Armstrong Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) BASUCH & LOMB: 3rd-Quarter Results Reflect Stronger Performance --------------------------------------------------------------- Bausch & Lomb (NYSE:BOL) reported earnings per share of $0.60 for the quarter ended September 27, 2003, compared to $0.17 per share reported in the prior-year period. Worldwide sales of $508.8 million grew nine percent (or five percent on a constant-currency basis) over the $466.7 million reported in 2002. The prior-year period earnings per share included certain non- recurring items discussed below. Excluding such items, comparable- basis earnings per share were $0.48 in 2002. For the first nine months of 2003, net sales were $1.47 billion, an increase of $130.0 million or 10 percent over the prior year, and a three percent increase on a constant-currency basis. Earnings per share from continuing operations were $1.44, compared to $0.74 in 2002. Excluding the impact of non-recurring items, comparable-basis 2002 earnings per share from continuing operations were $1.13. Bausch & Lomb Chairman and Chief Executive Officer Ronald L. Zarrella said, "We are pleased with the positive momentum in our Company's financial performance. Our third-quarter results demonstrated sustained solid growth in the majority of our businesses, combined with continued progress in executing our cost-saving initiatives as well as a favorable currency environment. Based on our expectation that underlying trends will continue, we foresee comparable-basis fourth-quarter earnings per share of approximately $0.79." Zarrella continued, "Looking ahead to next year, our revenues should grow in the mid-single digits. Additional savings from ongoing profitability initiatives, combined with lower interest expense following the recent refinancing of debt, should yield 2004 earnings per share in the range of $2.50 to $2.60." Liquidity Highlights Cash and investments at the end of September totaled $458.2 million, representing a cash outflow of $6.9 million in the first nine months of 2003. The Company generated free cash flow (defined as cash generated before the payment of dividends, the borrowing or repayment of debt, stock repurchases, the acquisition of businesses and intangible assets, and divestitures) of $79.8 million in the first nine months of 2003, compared to $150.3 million in the year-ago period, primarily reflecting higher cash outflows associated with foreign currency hedging contracts and tax payments in 2003, as well as cash inflows associated with the liquidation of shares of Charles River stock in the prior-year period. Bausch & Lomb indicated that it continues to project full-year free cash flow of approximately $130 million in 2003, with an objective to generate free cash flow at least equal to net earnings in 2004. Company Announces Registration of Securities Bausch & Lomb also announced today that it is filing a Registration Statement on Form S-3 with the Securities and Exchange Commission (SEC) in satisfaction of certain registration rights granted to the holders of convertible notes it issued in August 2003. When declared effective by the SEC, the registration statement will be available for use by the holders to sell the previously issued $160 million aggregate principal amount of floating rate convertible notes due in 2023 and all of the shares of Bausch & Lomb common stock issuable upon conversion of those notes. The Company will not receive any proceeds from the resale by the holders of the notes or the common stock issuable upon conversion of the notes. The registration statement relating to these securities is being filed with the SEC but will not be effective immediately. The securities may not be sold nor may offers to buy be accepted prior to the time the registration becomes effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Bausch & Lomb (Moody's, Ba1 Senior Notes Rating) is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary in 2003, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2002 revenues were $1.8 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at http://www.bausch.com BEN HICKS AVIATION: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ben Hicks Aviation, Inc. 2404 Roosevelt Drive Arlington, Texas 76016 Bankruptcy Case No.: 03-90304 Type of Business: Service Chapter 11 Petition Date: October 29, 2003 Court: Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: St. Clair Newbern, III, Esq. Law Offices of St. Clair Newbern III, P.C 1701 River Run Rd., Suite 1000 Ft. Worth, TX 76107 Tel: 817-870-2647 Total Assets: $1,362,117 Total Debts: $2,767,866 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ First Source Bank Purchase Money $1,692,685 (Aircraft Division) Value: $1,300,000 P.O. Box 783 South Bend, IN 46624 Ben Hicks & Assoc. Unsecured loans $983,108 2404 Roosevelt Dr. Arlington, TX 76016 Honeywell Trade Debt $34,829 The Brants Company Insurance $19,500 Pro Aviation Trade Debt $17,350 Midcoast Aviation Trade Debt $15,232 Flight Management Services Hangar Rent/ $5,160 Lease Commission BERRY PLASTICS: S&P Assigns B- Rating to New $90MM Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Evansville, Indiana-based Berry Plastics Corp.'s proposed $90 million 10.75% senior subordinated notes due 2012, an add-on issuance under Rule 144A with registration rights. At the same time, Standard & Poor's revised its outlook on Berry, a 100%-owned operating subsidiary of BPC Holding Corp. to stable from positive following the company's announced agreement to acquire Landis Plastics, Inc. for $228 million, including existing indebtedness. Standard & Poor's also affirmed its 'B+' corporate credit rating on the company. Berry is a leading manufacturer and supplier of rigid open-top containers, plastic injection molded aerosol overcaps, closures, drinking cups, and housewares. Total debt, prior to the Landis transaction, was about $604 million at Sept. 30, 2003. "While pro forma leverage is not expected to increase materially, the outlook revision reflects a lower level (than previously anticipated) of debt reduction and improvement to credit measures, therefore diminishing prospects for achieving a financial profile consistent with a higher rating in the intermediate term," said Standard & Poor's credit analyst Liley Mehta. The company likely will remain very aggressively leveraged, given the acquisition driven growth strategy and potential integration challenges related to Landis, its largest acquisition to date. Landis manufactures injection molded and thermoformed plastic containers for dairy and other food products, with annual sales of $212 million in 2002. The acquisition is to be funded through proceeds from the senior subordinated notes offering, cash on hand, an equity contribution of about $62 million (including $10.5 million rollover from Landis management), and a $50 million term loan under a proposed amendment to the company's senior secured credit facility. The acquisition would substantially increase Berry's scale of operations, and would provide an expanded customer base, including tier 1 food companies (particularly in the dairy and yogurt segments), cross-selling opportunities, and a broader distribution base. The ratings on Berry reflect its below-average business profile and very aggressive debt leverage. With annual sales of about $527 million, privately held Berry's business position reflects large market shares in its niche segments, a well-diversified customer base, and strong customer relationships, advantages that provide some barriers to entry. BOB'S STORES: Gets Okay to Secure $20 Million DIP Financing ----------------------------------------------------------- Bob's Stores, Inc., and its debtor-affiliates owe Fleet Retail Finance, Inc., and Foothill Capital Corporation, now known as Wells Fargo Foothill, LLC, $49.9 million on account of secured prepetition borrowings. The Debtors relate that given their current financial condition and capital structure, they are unable to obtain unsecured credit allowable under Bankruptcy code Section 503(b) as an administrative expense. Financing on a postpetition basis is not otherwise available without the Debtors granting claims having priority over and all administrative expenses of the kinds specified in Section 503(b) and 507(b). To prevent an irreparable damage to the Debtors' businesses, the Court grants their request to enter into a DIP Loan Agreement with the Lenders and use its cash collateral up to an aggregate of $20,000,000. The DIP indebtedness will have the highest administrative priority under Section 364(c)(1) of the Bankruptcy Code, and will have priority over all other cost and expenses of administrative of any kind. The Debtors provide the Court with a Weekly Budget projecting their cash receipts and cash disbursements through January 2004: 31-Oct 7-Nov 14-Nov 21-Nov ------ ----- ------ ------ Cash Receipts 6,622 6,520 8,044 10,541 Total Disbursements 6,230 11,772 8,031 10,009 Net Cash Flow 392 (5,252) 13 535 Total Borrowing Base 58,958 60,968 61,915 60,944 Ending Loan Balance 50,164 55,436 55,403 54,871 Availability 8,795 5,552 6,512 6,073 28-Nov 5-Dec 12-Dec 19-Dec ------ ----- ------ ------ Cash Receipts 7,300 14,123 13,589 13,589 Total Disbursements 6,838 9,359 5,319 5,329 Net Cash Flow 462 4,753 8,270 10,210 Total Borrowing Base 61,152 60,804 56,319 55,054 Ending Loan Balance 54,409 49,656 41,386 31,176 Availability 6,743 11,148 14,933 23,879 26-Dec 2-Jan 9-Jan 16-Jan ------ ----- ----- ------ Cash Receipts 14,726 4,699 3,535 4,016 Total Disbursements 2,918 6,749 5,698 7,792 Net Cash Flow 12,798 (2,050) (2,163) (3,781) Total Borrowing Base 43,954 37,892 36,832 41,275 Ending Loan Balance 19,378 21,427 23,590 27,371 Availability 24,572 16,465 13,242 13,904 A retail clothing chain headquartered in Meriden, Connecticut, Bob's Stores, Inc., filed for chapter 11 protection on October 22, 2003 (Bankr. Del. Case No. 03-13254). Adam Hiller, Esq., at Pepper Hamilton and Michael J. Pappone, Esq., at Goodwin Procter, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of more than $100 million. CENDANT MORTGAGE: Fitch Rates Certificate Classes at BB/B --------------------------------------------------------- Cendant Mortgage Capital LLC $270.5 million mortgage pass-through certificates, series 2003-9 classes I-A-1 through I-A-10, II-A-1 through II-A-6, I-P, I-X, R-I, R-II, and R-III certificates (senior certificates) are rated 'AAA' by Fitch. In addition, the $9.2 million class I-B-1 and $2.7 million class II-B-1 certificates are rated 'AA', the $1.2 million class I-B-2 and $212,488 class II-B-2 certificates are rated 'A', the $602,905 class I-B-3 and $169,991 class II-B-3 certificates are rated 'BBB', the $401,937 privately offered class I-B-4 and $127,493 privately offered class II-B-4 certificates are rated 'BB' and the $301,453 privately offered class I-B-5 and $84,995 privately offered class II-B-5 certificates are rated 'B'. The 'AAA' rating on the Group I senior certificates reflects the 6.0% subordination provided by the 4.60% class I-B-1, the 0.60% class I-B-2, the 0.30% class I-B-3, the 0.20% privately offered class I-B-4, the 0.15% privately offered class I-B-5, and the 0.15% privately offered class I-B-6 (which is not rated by Fitch). The 'AAA' rating on the Group II senior certificates reflects the 4.00% subordination provided by the 3.15% class II-B-1, the 0.25% class II-B-2, the 0.20% class II-B-3, the 0.15% privately offered class II-B-4, the 0.10% privately offered class II-B-5, and the 0.15% privately offered class II-B-6 (which is not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the servicing capabilities of Cendant Mortgage Corporation, which is rated 'RPS1-' by Fitch Ratings. The Group I certificates represent ownership in a trust fund, which consists primarily of 421 one- to four-family conventional, primarily 30-year fixed rate mortgage loans secured by first liens on residential mortgage properties. As of the cut-off date (October 1, 2003), the mortgage pool has an aggregate principal balance of approximately $200,968,355, a weighted average original loan-to-value ratio of 68.09%, a weighted average coupon of 5.66%, a weighted average remaining term of 358 months and an average balance of $477,360. The loans are primarily located in Massachusetts (20.71%), California (19.17%) and New Jersey (14.15%). The Group II certificates represent ownership in a trust fund, which consists primarily of 166 one- to four-family, primarily 15- year fixed rate mortgage loans secured by first liens on residential mortgage properties. As of the cut-off date, the mortgage pool has an aggregate principal balance of approximately $84,995,286, a weighted average original loan-to-value ratio of 57.01%, a weighted average coupon of 5.14%, a weighted average remaining term of 179 months and an average balance of $512,020. The loans are primarily located in California (17.45%), New York (17.12%) and New Jersey (15.95%). All of the mortgage loans were either originated or acquired in accordance with the underwriting guidelines established by Cendant Mortgage Corporation. Any mortgage loan with an OLTV in excess of 80% is required to have a primary mortgage insurance policy. Approximately 1.05% and 4.29% of the Group I and Group II loans, respectively, are pledged asset loans. These loans, also referred to as 'Additional Collateral Loans', are secured by a security interest, normally in securities owned by the borrower, which generally does not exceed 30% of the loan amount. Ambac Assurance Corporation provides a limited purpose surety bond, which guarantees that the Trust receives certain shortfalls and proceeds realized from the liquidation of the additional collateral, up to 30% of the original principal amount of that Additional Collateral Loan. Citibank N.A. will serve as Trustee. For federal income tax purposes, an election will be made to treat the trust fund as three real estate mortgage investment conduits. CINCINNATI BELL: Proposed Sub. Notes Obtains Fitch's B Rating ------------------------------------------------------------- Fitch Ratings has assigned a 'B' rating to Cincinnati Bell, Inc.'s proposed issuance of $540 million subordinated notes due January 2014. The proceeds from the proposed offering are expected to refinance the company's 6.75% subordinated convertible notes due July 2009. Fitch has affirmed the following ratings for Cincinnati Bell, Inc. and its subsidiaries: CBB's senior secured bank facility at 'BB-', CBB's 7.25% senior secured notes due 2023 at 'BB-', CBB's 7.25% senior unsecured notes due 2013 at 'B+', CBB's 16% senior subordinated discount notes at 'B', and CBB's 6.75% convertible preferred stock at 'B-'. Fitch Ratings has also affirmed the 'BB+' senior unsecured rating of Cincinnati Bell Telephone. The Rating Outlook for CBB and CBT is Stable. Fitch's ratings for CBB reflect the following key points: -- The strength and stability of the company's incumbent local exchange and wireless businesses; -- CBB's highly leveraged balance sheet relative to its peer group; -- Expectation that the company is positioned to generate sustained levels of free cash flow that will be utilized to reduce debt levels. Cash interest expense for CBB is expected to be reduced in 2004 due mainly to an expected re-pricing of its existing bank facility. However, in the near term, some of the bank facility interest savings will be offset by the cash interest payments of the new subordinated notes, which replace the 6.75% subordinated convertible notes that did not require cash interest payments until June 2004. Debt levels at CBB have declined during 2003, but remain high and were incurred by the company in connection with its former broadband business. The company's local exchange business generates the vast majority of EBITDA and continues to grow, albeit at a moderate pace, which is reflective of the local exchange industry. It is expected that leverage will remain high for the foreseeable future, but should trend down as free cash flow is used to reduce debt and EBITDA continues its slow growth. After the divestment of the company's broadband business, the remaining businesses reflect a much lower business risk. The local exchange business dominates its service territory and represents a stable and predictable source of free cash flow generation. The company's access lines losses and revenue growth have been reflective of second line losses and the current economic cycle, but not to the extent experienced by the Regional Bell Operating Companies. Fitch expects that the local exchange operations will encounter additional competitive pressures as the cable companies introduce their telephony product to the market. Cincinnati Bell Wireless is the market share leader in the Cincinnati and Dayton BTAs and provides an avenue for CBT to offer a bundled service package. Free cash flows during 2003 could be impacted by additional capital expenditures required to upgrade its wireless network from TDMA to a GSM platform. The network upgrade is needed to remain competitive and to capture roaming revenue from AT&T subscribers utilizing CBW's network. Fitch still anticipates that CBW will generate free cash flow through the network upgrade process, however free cash flow could be affected by competitive and pricing pressures as subscriber growth slows. CITGO PETROLEUM: Reports Improved Third-Quarter 2003 Results ------------------------------------------------------------ Luis Marin, CITGO Petroleum Corporation's President and CEO, announced that the company's third quarter net income was $103- million and net income for the nine month period ending September 30, 2003 was $351-million. In comparison, 2002 net income for the third quarter was $57-million and for the first nine months of 2002 was $138-million. Operating income (income before interest and income taxes) for the third quarter of 2003 was $193-million, which includes depreciation and amortization expenses totaling $83-million. In comparison, 2002 third quarter operating income was $108-million, which includes depreciation and amortization expenses totaling $76-million. For the nine months ending September 30, 2003, operating income was $640-million, including depreciation and amortization expenses totaling $245-million. In comparison, in the first nine months of 2002, CITGO's operating income was $271-million, including depreciation and amortization expenses totaling $221-million. Refinery crack spreads continue to run at levels well above the previous year. The strength in the crack spreads reflects strong product demand due to an unseasonably cool first quarter followed by good demand in motor fuels. In addition, refiners had an unusually strong turnaround season. Product inventories have been in the low end of their five year range over most of the year, only just now reaching average levels at the beginning of the fourth quarter. "We positioned ourselves to take advantage of the strong market in the third quarter by performing exceptionally well on both the refining and marketing sides of the business," stated Marin. "At our Lake Charles, La. and Lemont, Ill. refineries we are on pace to establish new annual processing records. In addition, we achieved a 98-percent average utilization rate in our refining system, which compares favorably with the industry average of about 95-percent. Our year-to-date safety performance continues to be among the industry leaders and our environmental performance continues to improve as well," Marin said. "At the Lake Charles refinery we are moving forward with the Conversion Optimization Project, which is scheduled for completion in April 2005, as well as some regulatory projects within our refining system that are required to meet the new fuel specifications," Marin continued. "Specifically, the Lemont refinery's Tier-II gasoline unit is scheduled for start-up in December of this year, while at Lake Charles the Tier-II unit is scheduled for completion in 2004," Marin concluded. CITGO's capital expenditures for the third quarter of 2003 were $106-million compared with $128-million for the same quarter in 2002. Capital expenditures for the first nine months of 2003 were $315-million compared with $478-million for the first nine months of 2002. CITGO Petroleum Corporation is a leading energy company based in Tulsa, Okla., with approximately 4,300 employees and annual revenues of around $20 billion. CITGO is a direct, wholly-owned subsidiary of PDV America, Inc., a wholly-owned subsidiary of PDV Holding, Inc. CITGO's ultimate parent is Petroleos de Venezuela, S.A., the national oil company of the Bolivarian Republic of Venezuela and its largest supplier of crude oil. CITGO operates fuels refineries in Lake Charles, La., Corpus Christi, Texas, and Lemont, Ill., and asphalt refineries in Paulsboro, NJ and Savannah, Ga. The company has long-term crude oil supply agreements with PDVSA for a portion of the crude oil requirements at these facilities. CITGO is also a 41-percent participant in LYONDELL-CITGO Refining LP, a joint venture fuels refinery located in Houston, Texas. CITGO's interests in these refineries result in a total crude oil capacity of approximately 865,000 barrels per day. Serving more than 13,000 branded, independently owned and operated retail locations, CITGO is also one of the five largest branded gasoline suppliers within the United States. As reported in Troubled Company Reporter's August 13, 2003 edition, Fitch Ratings upgraded the senior unsecured debt rating of CITGO Petroleum Corporation to 'BB-' from 'B+' and the rating of CITGO's $200 million secured term loan to 'BB+' from 'BB'. With the payment of the $500 million maturity of senior notes on August 1, Fitch is withdrawing its rating on PDV America, Inc. CITGO is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., the state-owned oil company of Venezuela. The Rating Outlook for the debt of CITGO is Stable. COLUMBUS MCKINNON: EVP/CFO Robert L. Montgomery Plans to Retire --------------------------------------------------------------- Columbus McKinnon Corporation (Nasdaq: CMCO), announced that its Executive Vice President and Chief Financial Officer, Robert L. Montgomery, Jr., age 65, intends to retire following the appointment of a new Chief Financial Officer and an appropriate transition period. The Company is engaged in a search for and evaluation of candidates for the position and anticipates naming a new CFO within the next few months. Mr. Montgomery commented on his decision, "At this point in my life, I feel ready for retirement and am comfortable taking that step based on the significant progress we have made operationally and financially in recent years. With the successful completion of our recent debt refinancing, we have significantly improved our financial flexibility and stability as we continue to pay down debt and manage in this environment of lower industrial spending. The high quality of CM people and its products gives me great confidence in Columbus McKinnon's future." Columbus McKinnon President and Chief Executive Officer Timothy T. Tevens commented, "Bob Montgomery has made many significant contributions to Columbus McKinnon throughout his almost 30-year career with the Company. Bob was instrumental in establishing us as the leading manufacturer of hoists and chain in North America and expanding our presence in international markets. We appreciate Bob's flexibility in planning his retirement to provide us with the time needed to select a replacement and transition his responsibilities and wish him well in his future endeavors." Columbus McKinnon (S&P, B Corporate Credit and CCC+ Subordinated Debt Ratings, Negative) is a leading designer and manufacturer of material handling products, systems and services which efficiently and ergonomically move, lift, position or secure material. Key products include hoists, cranes, chain and forged attachments. The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how. Comprehensive information on Columbus McKinnon is available on its web site at http://www.cmworks.com CONSECO FIN.: Creditors Asks Court to Reconsider Order re Claims ---------------------------------------------------------------- Eight creditors of Conseco Finance Debtors ask U.S. Bankruptcy Court Judge Doyle to reconsider the Order dismissing their claims: Claimant Claim No. Claim Amount ---------- ---------- ------------- Clifford & Barbara Harper 49675-002768 $400,000 William & Peggy Holley 49675-002765 65,000 Cynthia Lee 49675-002774 115,000 Matthew & Virgil Myers 49675-002266 70,000 Samuel Montrose 49675-002267 147,000 Carlos & Betty Moore 49675-002766 173,000 Carla Smith 49675-002767 125,000 Brenda Robinson 49676-001416 106,000 The CFC Debtors objected to the Creditors' Claims in their Fourth Omnibus Objection to Claims in early June 2003, holding that their books and records showed no liability. However, Bren J. Pomponio, Esq., at Mountain State Justice, Inc., in Charleston, West Virginia, insists that the CFC Debtors do have liability. The claims arise out of the loans originated by Conseco Finance Servicing Corp. Because the loans were securitized by CFSC, the Creditors were unaware that the objections sought to bar all claims and defenses against non-debtor third parties that hold the loans. However, the holder of the Creditors' loans recently took the position that these claims have been extinguished in the bankruptcy proceeding. Based on the Notice, which was confusing and inadequate, the Creditors were not aware that the objections referred to their claims. The Notice referred to claims in an exhibit, but the exhibit was not attached. As a result, the Creditors did not respond to the Objections in the time because it was unclear that the Notice applied to their Claims. Mr. Pomponio explains that the Court is poised to dismiss valid and legitimate claims causing extreme hardship to the Creditors, including probable loss of their homes. In the interest of justice, the Order dismissing the Creditors' claims should be set aside and the claims should be reinstated. Mr. Pomponio contends that the Debtors would not be prejudiced by the reinstatement of the Claims. (Conseco Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO INC: Intends to Foreclose on Stephen Hilbert's Estate ------------------------------------------------------------- Conseco, Inc. is attempting for foreclose its former CEO's 23,000-square foot, French-style mansion located on 116th Street in Carmel, Indiana. Stephen Hilbert borrowed millions of dollars under Conseco's D&O Officer Loan Program. The mansion is mortgaged to Conseco to secure repayment of the debt. Mr. Hilbert reportedly defaulted on a $10,000,000 interest payment due in 2002. (Conseco Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) CORRPRO COMPANIES: Enters Recapitalization and Refinancing Pact --------------------------------------------------------------- Corrpro Companies, Inc. (Amex: CO) has entered into a non-binding letter of intent with an undisclosed investment firm with respect to the recapitalization and refinancing of the Company. The proposal is subject to a number of conditions, including that the parties secure commitments for senior and subordinated debt financing and that the parties enter into definitive agreements. In addition, the proposed transaction would require approval from Corrpro's shareholders as well as from the Company's existing senior lenders. There can be no assurance that the proposed transaction will be consummated, and if consummated, what the terms for such transaction will be. Under the terms of the proposal, Corrpro would issue new preferred stock along with warrants to purchase its common stock to the investment firm. The proposal also provides for the issuance of warrants to the subordinated lender. In addition, as part of the proposal, an amount of shares of common stock would be reserved for future issuance as incentive compensation. With respect to the other required financing, the parties have received preliminary indications of interest from two firms, one a potential source of senior financing and the other a potential source of subordinated financing. Both of these firms are currently in the process of conducting due diligence with respect to the Company. The issuance of the warrants contemplated under the proposal would result in significant ownership dilution to the existing holders of common shares upon the exercise of such warrants. Management expects such dilution to be in excess of 50%. If and when the definitive agreements relating to the proposed transaction are executed, more detailed information regarding the proposed recapitalization and refinancing, including information with respect to dilution to the common holders, will be provided in the materials transmitted to shareholders in connection with any meeting of shareholders called to approve the transaction. The Company anticipates that any such shareholders' meeting, which may be combined with its annual meeting for the election of directors, would be held sometime in January 2004. "Execution of the letter of intent is a significant step in the continuing process of achieving an appropriate capital structure given current market conditions," stated Joseph W. Rog, Chairman, President, and Chief Executive Officer of Corrpro. "Combined with the successful implementation of our business restructuring plan and our strong operating results during our fiscal year which began April 1, 2003, we believe that upon completion of the transaction, the Company will be well-positioned to meet our growth expectations and accomplish our continuing business plan objectives." The Company is currently operating under forbearance agreements with its current lenders that expire October 31, 2003. The Company is actively negotiating with its existing lenders for an extension of these forbearance agreements. As part of these extensions, the Company plans to negotiate arrangements with its lenders to, among other things, extend the maturity of the senior bank facility beyond October 31, 2003 and defer the October 31, 2003 principal payments due on its senior notes. There can be no assurance, however, that any extension will be obtained, or on what terms such extension may be obtained. Any failure to obtain such an extension would have a material adverse effect on the Company. Corrpro, headquartered in Medina, Ohio is the leading provider of corrosion control engineering services, systems and equipment to the infrastructure, environmental and energy markets around the world. Corrpro is the leading provider of cathodic protection systems and engineering services, as well as a leading supplier of corrosion protection services relating to coatings, pipeline integrity and reinforced concrete structures. COVANTA ENERGY: Asks Court to OK Compromises with Heber Lessors --------------------------------------------------------------- Heber Field Company is the assignee of rights under 375 geothermal rights leases with respect to real property located in Imperial County, California on the Heber Known Geothermal Resource Area. The Heber KGRA is a geothermal resource located beneath the surface of the property that is the subject of the Leases. Vincent E. Lazar, Esq., at Jenner & Block, in Chicago, Illinois, relates that the Heber KGRA produces hot water, steam and geothermal fluid, which can be accessed by drilling production wells. Pursuant to its rights under the Leases, HFC and its predecessors constructed; and HFC along with Second Imperial Geothermal Company now maintains and operates Heber Field -- a system of wells, pumps, pipes and other equipment which extracts and transports hot water, steam, brine and other Lease Products from the Heber KGRA. Although HFC requires some surface access to the Leased Property and is entitled under most Leases to that access, in general, the Lessors retain the residual right to use the surface for agricultural or other purposes. The Lessors consist of the Lessor Group and the Non-Member Lessors. The Lessor Group is a group of persons who lease to HFC certain rights in real property located in Imperial County, California. Lease Products from the Heber KGRA are supplied to Heber Geothermal Company and SIGC Power Plants, pursuant to written agreements between HFC and the Power Plants. The Power Plants use the Lease Products to operate two independent power plants that generate electricity, and in turn are paid by Southern California Edison Company for that energy, as well as capacity, under two long-term power purchase agreements. The Leases generally run for an initial fixed period, but are renewed indefinitely so long as the Leased Property continues to produce Lease Products. Mr. Lazar points out that: (a) Although there are slight variations among the forms of the Leases, the basic provisions in each Lease give HFC the right to extract Lease Products from the Leased Property in exchange for a royalty payment, which, with few exceptions is equal to 10% of the value of the Lease Products "at the well" or at the "point of origin," less certain specified deductions. One lease provides for a 12.5% royalty; (b) Certain third parties have entered into agreements providing that they are entitled to "overrides" of between 2.5% to 10% of the royalties paid to the Lessors, as additional payments; (c) Certain of the Leases provide the Lessors with the right to inspect HFC's books and records with respect to matters pertaining to the payment of royalties to them; (d) The Leases also contain numerous other provisions regarding the timing of royalty payments, the timing for drilling to commence, surface access, payment of taxes, and other miscellaneous issues; (e) A number of the Leases, as well as additional agreements -- the Surface Rights Agreements -- also provide for rental payments for HFC's use of surface land for pipelines, wells and other structures; and (f) Sixteen of the Leases and other agreements contain "most favored nation" clauses relating to royalty, rental and other rates used by HFC to calculate payments to the Lessors, pursuant to which HFC agreed to use rates no less favorable than those found in other subsequently executed leases and agreements, under certain conditions defined in those agreements, in calculating the royalty, rental and other payments owed to the Lessors. Many of these "most favored nation" clauses became moot once geothermal operations began, and are no longer relevant. Heber Geothermal Company commenced commercial operations in 1985, and has operated continuously since that time. An agreement between HGC and HFC -- negotiated before the two entities were under common ownership -- provides that HFC is compensated for Lease Products HFC delivered to HGC for approximately 50% of HGC's gross revenues from electricity sales. Thus, HFC historically has calculated the Lessors' royalties based on its gross revenues received from HGC -- 50% of HGC's electricity sales less certain permitted expenses. Second Imperial Geothermal Company commenced commercial operations in 1993. An agreement between SIGC and HFC provides that SIGC will compensate HFC for all amounts it owes the Lessors under the Leases. At the time of the commencement of SIGC's commercial operations, SIGC and HFC determined that HFC's revenue from SIGC for purposes of calculating royalties paid to the Lessors would be imputed to be 39.4% of SIGC's gross revenues from electricity sales. Mr. Lazar relates that HFC's actual revenues received from SIGC have been, and are, substantially less than 39.4% of SIGC's gross revenues from electricity sales. Therefore, with respect to SIGC, HFC historically has calculated the Lessors' royalty based on 39.4% of the gross revenues received by SIGC from electricity sales less certain permitted expenses. The Lessor Group's Claims Mr. Lazar informs the Court that the members of the Lessor Group constitute 80% of the value of the Leases, as determined by reference to aggregate annual royalty payments. After the Petition Date, the Lessor Group members filed proofs of claim in the Covanta Energy Debtors' bankruptcy cases alleging aggregate damages exceeding $68,000,000 and claiming that HFC or its predecessors underpaid royalties to them. The proofs of claim also allege easement violations, violations of "most favored nations" clauses, and certain less significant claims. In particular, the Lessor Group members asserted that royalties should have been calculated based on the gross revenues from electricity sales earned by the Power Plants, or at a minimum that the imputed gross revenue rate with respect to SIGC should have been 50% of SIGC's gross electricity sales. In addition, a limited number of the Lessor Group members assert violations and breaches of agreements relating to easements, surface rights, and most favored nation clauses, and seek additional damages with respect to those alleged breaches. The Debtors dispute the validity of the Lessor Group's claims, and assert that the 39.4% imputed revenue rate used to pay SIGC- related royalties is appropriate in light of numerous factors, including but not limited to differences in the quality of the resource within the Heber KGRA, the location of the SIGC plant relative to the heat source of the Heber KGRA, and the relative cost and risk associated with development and operation of the SIGC plant. The Debtors also assert that the Lessors have in fact been overpaid for a number of years as a result of: -- the Debtors' failure to take certain deductions to which they are entitled under the Leases; -- the Debtors' payment of royalties based on capacity payments received from Southern California Edison, which are attributable to the ability of the Power Plants to produce electricity, not the actual provision of electricity using Lease Products; -- the fact that HFC actually receives less revenue from SIGC than the imputed 39.4% presently used to calculate royalties; and -- the fact that both the 50% rate paid by HGC to HFC and the 39.4% imputed rate used with respect to SIGC are over- market. Finally, the Debtors dispute many of the alleged violations of the Surface Rights Agreements. The Compromise According to Mr. Lazar, the Debtors and the Lessor Group have conducted extensive informal discovery. Since December 2002, the parties have been engaged in extensive and protracted settlement negotiations. Accordingly, the parties sought and obtained the Court's approval to enter into a settlement agreement, which provides that: (a) In addition to cure amounts, the Debtors also will make a settlement payment to the Lessor Group in the single lump sum amount of $2,175,000, to be distributed among members of the Lessor Group; (b) The Debtors will pay the Lessor Group $450,000, in full and complete satisfaction of their claims for attorneys' fees and out-of-pocket costs incurred through July 14, 2003, in the investigation and prosecution of their claims in the Debtors' bankruptcy cases and negotiation of the Settlement Agreement; (c) The Debtors will pay the Lessor Group's reasonable attorneys' fees and costs incurred in the negotiation and drafting of the documents required under the Settlement Agreement, including amendments to the Leases and other agreements among the parties, up to a maximum amount of $100,000; (d) The Debtors and the Lessor Group agree to take all necessary steps to amend the Lessor Group's individual leases and amend the Unit Agreement governing the allocation of the Heber KGRA among the Lessors; and (e) The parties agree to provide each other with releases of all past, present and future claims relating to their rights under the Leases and the claims asserted in the Proofs of Claim, but reserve their rights with respect to certain claims less significant and specifically enumerated like most favored nation and alleged easement violation disputes, which the parties anticipate will be resolved by additional settlement or litigation of the individual claim. (Covanta Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) CROWN CASTLE: Declares Quarterly Preferred Stock Dividend Rate -------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) announced that the quarterly dividend on its 6.25% Convertible Preferred Stock will be paid on November 17, 2003 to holders of record on November 1, 2003 in shares of the Company's common stock at a rate of 68.763 shares of common stock per 1,000 shares of Preferred Stock. Contact Regarding Dividend Payments: Patti Knight, Mellon Investor Services at 214-922-4420. Crown Castle International Corp. (S&P, B- Corporate Credit Rating, Stable Outlook) engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. The Company offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 United States markets, to more than 95 percent of the UK population and to more than 92 percent of the Australian population. Crown Castle owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle, visit: http://www.crowncastle.com DELTA FINANCIAL: Redeems Outstanding 9.5% Senior Notes Due 2004 --------------------------------------------------------------- Delta Financial Corporation (AMEX: DFC) announced that, on October 30, 2003, it redeemed at par all its outstanding 9.5% Senior Notes due August 2004. The aggregate redemption price, including principal and accrued interest, was approximately $11 million. The Company used its existing cash to fund the redemption. "Redeeming the Senior Notes helps strengthen our financial position by eliminating the unsecured long-term debt from our balance sheet. Furthermore, this will save us several hundred thousand dollars in interest expense by removing the debt scheduled to mature within the next year," stated Richard Blass, Executive Vice President and Chief Financial Officer. "The redemption of the Senior Notes is another step we have taken as part of our ongoing effort to further strengthen the Company, as we continue to position ourselves for long-term growth," concluded Mr. Blass. Any unexercised warrants, which were issued in connection with Delta's 9.5% Senior Notes due 2004 under an Indenture, dated December 21, 2000, have expired pursuant to their terms, as described in our September 29, 2003 press release and our related report on Form 8-K regarding this transaction. Founded in 1982, Delta Financial Corporation is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming residential mortgage loans. Delta's loans are primarily secured by first mortgages on one-to- four family 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 $8.8 billion of its mortgage loans 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. 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. DELTA FINANCIAL: Third-Quarter Results Show Vast Improvement ------------------------------------------------------------ Delta Financial Corporation (Amex: DFC), a specialty consumer finance company that originates, securitizes and sells non- conforming mortgage loans, reported net income for the three months ended September 30, 2003 of $41.6 million, or $2.24 per diluted share, compared to $0.39 per diluted share for the comparable period in 2002. Net income was favorably impacted by an income tax benefit of $30.5 million or $1.64 per diluted share. Total revenues for the quarter ended September 30, 2003 increased to $35.9 million from $21.8 million, a 65 percent increase from the third quarter of last year. Total diluted shares for the quarters ended September 30, 2003 and September 30, 2002 were 18.6 million and 17.1 million, respectively. Third Quarter Highlights -- Record loan originations of $524.8 million, represented a sequential increase of 51% over Q2 03, and a year-over-year increase of 145% over Q3 02. -- Non-GAAP net income increased by 142% and Non-GAAP diluted EPS grew by 127% year-over-year from Q3 02. -- Revenues were 65% higher than one year ago in Q3 02. -- Approximately 96.5% of third quarter 2003 total revenues were cash revenues. -- Direct cost to originate as a percentage of loan production decreased year-over-year by 38%, to 1.8% from 2.9% in Q3 02. -- The Company sold three of its excess cashflow certificates for $10.2 million, representing a slight premium to their carrying value. -- The Company completed a $435 million asset-backed securitization. Post-Quarter Highlights -- Friday, Delta redeemed all of its outstanding 9.5% senior notes due 2004, in the aggregate principal amount of $10.8 million, eliminating all of the Company's unsecured long-term debt. -- In October, Delta increased its warehouse capacity (from its existing warehouse providers) from $400 million to $500 million and reduced its funding costs. The Company's Non-GAAP net income for the three months ended September 30, 2003 was $10.9 million, or $0.59 per diluted share for the three months ended September 30, 2003, an increase of 142 percent over the $4.5 million, or $0.26 per diluted share, for the comparable period last year. Non-GAAP earnings guidance for the year would have been in the range of $2.05 to $2.15 per diluted share, an increase from the previously stated earnings guidance of $1.75 per diluted share. The increase reflects better than anticipated loan originations in the second half of 2003 and takes into account compression of our net interest margin due to volatility, interest rates and spreads - including seasonally higher spreads in the fourth quarter securitization market historically demanded by asset-backed investors. Hugh Miller, President and Chief Executive Officer, stated, "Our strong bottom line results reflect continued demand from asset- backed investors for our mortgage products, record loan origination levels, and cost efficiencies recognized through the use of our proprietary loan origination technology. However, as expected and explained in our last quarterly release, our results were also impacted by compression of the net interest spread we earned in our third quarter securitization." "In addition, the results illustrate our ability to grow in a changing interest rate environment. Since approximately 80 percent of our customers are using the equity in their homes to either consolidate their debt or access capital, they tend to be less sensitive to rising rates, as our mortgage products typically present a more financially attractive alternative to the consumer. With a growing consumer debt market, we believe there will continue to be strong demand for our lower interest rate solution to high interest rate debt obligations," added Miller. For the nine months ended September 30, 2003, the Company reported net income of $60.0 million, or $3.21 per diluted share, which was also favorably impacted by the income tax benefit of $30.2 million or $1.63 per diluted share. Non-GAAP net income for the nine months increased by 174 percent to $29.3 million, or $1.55 per diluted share, compared to $10.7 million, or $0.63 per diluted share, for the same period one year ago. Total revenue for the nine months ended September 30, 2003 increased to $96.5 million from $63.0 million, a 53 percent increase from the same period last year. Total diluted shares for the nine months ended September 30, 2003 and September 30, 2002 were 18.5 million and 17.0 million, respectively. Over the past six quarters, approximately 93.2 percent of the Company's total revenues have been comprised of cash. The balance of Delta's revenue that is non-cash is comprised of the excess cashflow certificates it retains, where cash flows are received over time, not upfront at the time these certificates are recorded as revenue. In the third quarter 2003, 96.5 percent of Delta's total revenues were cash revenues. Loan Originations Delta originated a record $524.8 million of mortgage loans in the third quarter 2003, a 145 percent increase over the $214.4 million of mortgage loans originated during the comparable period last year and a 51 percent increase over the $348.2 million mortgage loans originated in the second quarter of 2003. Mr. Miller commented, "Our record loan origination volume this quarter is predominantly a product of an increase in the number of account executives and loan officers, continued enhancements to our technology and our improved customer service levels. In addition, the magnitude of our increase in loan production was bolstered by our capturing additional business from the "Alt-A" market as our mortgage rates, in some cases, were lower than those of traditional lenders." Mr. Miller further stated, "We have a business model that is proving itself to be successful, enabling us to grow our originations over 140 percent year-over-year, even as we have improved our loan credit quality. Despite our fairly significant growth, our loan production to date represents only a very small portion of the overall non-conforming market, creating a significant opportunity for us to continue to grow loan originations and capture additional market share. We intend to continue to take financial and operational measures to capture these opportunities and, to that end, we plan to expand two more retail origination centers by the end of 2003 and increase the number of loan officers and account executives by 25 percent over the next six months. Furthermore, we plan on increasing our wholesale presence in the Midwest and the New England area." Miller concluded, "Since technology has been instrumental to our growth, we will continue our focus and investment in that area to further reduce the cost and time associated with the loan origination process. By the end of 2003, we expect to be the first non-conforming mortgage company to have all our origination processes on one platform, Click and Close(TM), which we believe will result in an even more efficient and profitable loan origination program." Loan Distribution Channels During the third quarter of 2003, wholesale and retail loan originations represented 60 percent and 40 percent, respectively, of Delta's total loan production, compared to 59 percent and 41 percent for the same period last year. Wholesale production from Delta's network of independent brokers for the third quarter 2003 grew 148 percent over the comparable period in 2002. Delta's retail loan production for the third quarter 2003 increased 139 percent over the same period in 2002. Non-GAAP Presentation At September 30, 2003, the Company reversed a deferred tax asset valuation allowance which it established in 2000. Management and the Audit Committee of the Board of Directors believed that the reversal was appropriate at this time in light of the Company's eight consecutive quarters of profitability and positive cash flow, coupled with the impending retirement of all its long-term unsecured debt. As described in the Company's recent press releases and securities filings, Delta has recorded minimal taxes in its results of operations over the prior seven quarters - from the fourth quarter of 2001 through the second quarter of 2003 - as a result of the valuation allowance against the Company's deferred tax asset, which was primarily generated by net operating losses in 2000 and 2001. Also described by the Company in its previous releases and filings, the reversal of the valuation allowance has two significant effects: -- First, the Company has recorded additional income equal to the amount of the valuation allowance reversal in the third quarter (which was partially offset by a change in our effective tax rate) reflected in its income tax line item. -- Second, going forward, the Company's financial statements will reflect an effective income tax rate of 39%, even though it expects to continue to pay only minimal cash taxes (either alternative minimum tax or excess inclusion income tax, as well as minimal state taxes) until its net operating losses are fully utilized. Secondary Marketing (Securitization and Loan Sales) In the third quarter, Delta completed a $435 million senior- subordinate securitization structure under its Renaissance mortgage shelf and issued a NIM note (net interest margin note backed by the excess cashflow certificate received from the securitization). Similar to the structure of Delta's four most recent securitizations, this securitization contained a pre- funding feature under which Delta delivered approximately $350 million of mortgage loans to the securitization trust in the third quarter, and delivered the remaining mortgage loans in October 2003. This structure is designed to reduce execution and interest rate risk on the additional loans delivered to the securitization trust in the ensuing quarter, which the Company would otherwise seek to securitize or sell later in that quarter. Delta also sold approximately $12.2 million of mortgage loans on a whole-loan basis during the third quarter and delivered approximately $98 million of mortgage loans relating to its second quarter securitization in July. Diluted Share Count The eight percent and nine percent increase in the Company's diluted weighted-average number of shares outstanding for the three and nine months ended September 30, 2003 over the respective comparable periods in the prior year, was primarily the result of the dilutive effect of warrants and employee stock options the Company had issued in prior periods. However, the diluted shares in the third quarter of 2003 were lower than the second quarter of 2003. Under the treasury stock method, warrants and employee stock options become dilutive (i.e., increase the number of diluted shares outstanding) when their exercise price is below the then market price of the common stock. The greater the difference between the exercise price and market price, the greater the dilution. Accordingly, the significant increase in Delta's stock price over the past several months - from $1.10 on December 31, 2002 to $6.42 on September 30, 2003 - was the primary cause of the increased dilution. 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 brokers and the Company's retail offices. Since 1991, Delta has sold approximately $8.8 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. 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. DOMAN INDUSTRIES: Sept. 30 Net Capital Deficit Narrows to $405MM ---------------------------------------------------------------- Rick Doman, President & CEO of Doman Industries Limited, announced the Company's third quarter 2003 results. Third Quarter Highlights - During the quarter the Company continued its efforts to restructure in a manner that would bring about a stable financial structure and viable operations. Subsequently, the B.C. Supreme Court extended the CCAA stay of proceedings until November 27, 2003. Financial restructuring costs for the third quarter were $1.7 million and cumulatively have totalled $9.9 million. - Sales for the quarter were $158.9 million - North American sales were $83.2 million while sales to the Far East, including Japan, were $46.6 million and sales to Europe and elsewhere were $29.1 million. - Solid wood sales for the quarter were $100.5 million and pulp sales were $58.4 million. - EBITDA for the quarter was negative $9,955,000 compared to negative $25,707,000 for the previous quarter. - EBITDA for the solid wood segment of negative $1.8 million compared favorably to the negative $4.5 million for the previous quarter but was negatively impacted by softwood lumber duties and the strong Canadian dollar. Due in part to these factors, which affect working capital requirements, there were curtailments in our logging, sawmill and pulp operations. - Duties on softwood lumber exports to the U.S. were $10.4 million, compared to $8.5 million in the previous quarter. - The Company has now completed its sawmill restructuring plan, resulting in significant cost reductions when operating on a normalized basis. - EBITDA for the pulp segment was negative $6.7 million compared to negative $19.8 million for the previous quarter. - Cash flow provided by operations in Q3 of 2003 improved to positive $18.2 million from negative $16.3 million in the previous quarter. The Company is on track in the management of its cash and had a deposit balance of $19.8 million and available revolving credit of $30.4 million at September 30, 2003. Earnings Net earnings for the nine months ended September 30, 2003 were $10.7 million compared to a net loss of $77.2 million for the same period in 2002. For the three months ended September 30, 2003 the Company reported a net loss of $55.2 million compared with a net loss of $73.8 million for the same period in 2002. The strengthening Canadian dollar, which averaged U.S. $0.72 for the third quarter of 2003 compared to U.S. $0.64 for the third quarter of 2002 reduced quarterly operating earnings by approximately $14 million from the third quarter of 2002. Solid Wood Segment Sales in the solid wood segment decreased to $100.5 million in the current quarter from $119.8 million in the same period of 2002 as a result of lower average sales realizations for lumber, reflecting the stronger Canadian dollar and a lower cedar content in the sales mix. In addition, reduced logging activity in the current quarter resulted in lower outside log sales. For the nine months year to date, sales in the solid wood segment were $293.0 million compared to $345.2 million for the same period in 2002. EBITDA for the solid wood segment in the third quarter of 2003 was negative $1.8 million compared to $4.5 million in the second quarter of 2003 and $19.3 million in the third quarter of 2002. Results in the third quarter were adversely impacted by (i) the stronger Canadian dollar (ii) a $10.4 million provision for countervailing and anti-dumping duties on softwood lumber shipments to the U.S. (iii) extensive downtime in the sawmill and logging operations. Logging operations, in particular, were curtailed and production in the third quarter of 2003 was reduced to 472 km3 compared to 754 km3 in the second quarter of 2003 and 782 km3 in the third quarter of 2002. The average lumber price (net of duty and selling expenses) was $444 per mfbm in the third quarter compared to $410 per mfbm in the previous quarter and $542 in the third quarter of 2002, when sales included a higher cedar content. Pulp Segment Pulp sales in the third quarter of 2003 increased to $58.4 million from $55.8 million in the same period of 2002 as a result of higher sales volumes and US $ prices offset in large part by the stronger Canadian dollar. The average list price of NBSK in the third quarter of 2003 was US$520 per ADMT compared to US$487 per ADMT in the same quarter of 2002. For the nine months year to date, pulp sales were $153.6 million compared to $120.3 million for the same period in 2002. EBITDA for the pulp segment in the third quarter of 2003 was negative $6.7 million compared to negative $19.8 million in the immediately preceding quarter and $4.7 million in the third quarter of 2002. The Squamish pulp mill operated for 75 days in the third quarter of 2003, producing 59,462 ADMT. NBSK list prices averaged approximately US$520 per ADMT in the third quarter of 2003 which was below the second quarter prices. The improvement in EBITDA in the third quarter of 2003, compared to the second quarter, reflected the fact that the second quarter's results had been impacted by scheduled maintenance work which had cost approximately $12 million. The Port Alice dissolving sulphite mill operated for 51 days in the third quarter of 2003 in order to satisfy customer requirements. A small upward trend in prices was not enough to offset the currency impact of the stronger Canadian dollar and sales allowances payable under a marketing agreement with Cellmark Pulp & Paper Inc. Liquidity Cash flow from operations in the third quarter of 2003, before changes in non-cash working capital, was negative $38.3 million compared to negative $10.3 million in the third quarter of 2002. After changes in non-cash working capital, cash provided by operations in the third quarter of 2003 was $18.2 million compared to cash used in operations of negative $17.6 million in the third quarter of 2002. Investing activities used negative $2.0 of funds in the third quarter of 2003 compared to negative $9.4 million in the same quarter of 2002. Reduced logging activity resulted in $4.1 million being spent on road construction in the third quarter of 2003 compared to $8.5 million in the same period in 2002. Bank indebtedness decreased by $13.2 million in the third quarter of 2003. The Company's cash balance at September 30, 2003 was $19.8 million. In addition, $30.4 million was available under the revolving credit facility. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $405 million. Market and Operational Review Lumber prices in the U.S. as measured by SPF 2 x 4 lumber averaged approximately US$316 per mfbm in the third quarter of 2003 compared to US$255 per mfbm in the same period of 2002 and US$245 per mfbm in the second quarter of 2003. Although U.S. housing start statistics remain strong, with a seasonally adjusted annual rate in September of 1,888,000, lumber prices have come off from the highs reached in the summer. A positive resolution to the U.S. softwood lumber dispute continues to be sought. NAFTA and WTO decisions have provided strong support to the Canadian position and the recent initiatives by Premier Gordon Campbell to meet with Vice President Dick Cheney provides encouragement that a settlement may be near. The three year labour agreement with the Industrial, Wood and Allied Workers (IWA) expired in June 2003. Negotiations between Forest Industrial Relations (FIR) representing employers, and the IWA broke off when the IWA applied to the Labour Relations Board (LRB) to have FIR members vote on the IWA's recent proposal. FIR has objected to this process to the LRB but has agreed to hold its objections in abeyance until the vote, scheduled for November 7, is complete. The Company generally enjoys a good relationship with the IWA and is optimistic that a settlement can be reached. NBSK pulp markets have strengthened since August with list prices to Europe ending the third quarter at US$530 per ADMT. Norscan producers' pulp inventories decreased by 151,000 tonnes in September to 1.68 million tones and it is anticipated inventories will continue to trend down as Chinese buyers restock. Prices increased to US$545 per ADMT in October and further increases are expected although the timing and magnitude will depend upon paper demand. Prices for dissolving sulphite pulp, manufactured at the Company's Port Alice pulp mill improved slightly in the third quarter of 2003 but the gains were offset by the stronger Canadian dollar and increased marketing costs. The Company intends to operate Port Alice for at least 30 days in the fourth quarter in order to satisfy customer requirements. Progress continues to be made in the Company's ongoing efforts to finalize a plan to reduce costs and ensure an adequate fibre supply is available so that the mill can increase production and operate on a profitable and sustainable basis. Concluding Remarks In conclusion, Rick Doman stated, "The Company and its employees have worked very hard over the past year, under severe market conditions, to maintain and improve the value of its operations. We have consolidated our sawmill facilities into six highly efficient mills and expect that once the softwood dispute settles and the restructuring is complete the Company will resume normal production levels and the significant cost reductions will have a positive impact on our solid wood operations. The Board wishes to express its appreciation to all our employees for their continued efforts. The Board's energies continue to be focussed on implementing a restructuring plan that is in the best interest of the Company and its stakeholders." CCAA Proceedings On October 10, 2003 the Company announced that the Supreme Court of British Columbia had issued an order, in connection with proceedings under the Companies Creditors Arrangement Act, extending the stay of proceedings to November 27, 2003. In addition to extending the stay of proceedings, the order also authorized the Company to engage in a process, under the direction of its financial adviser, UBS Securities LLC, and under the supervision of the Monitor and direction of the Court, to solicit proposals to refinance its existing indebtedness. Following are significant key steps in the process: - By November 10, 2003 each potential investor wishing to participate further in the refinancing solicitation process must deliver to UBS an initial non-binding expression of interest to provide the required financing. - On November 27, 2003 the Company will apply to Court to report on the status of the Refinancing Solicitation Process and seek directions on the continuation of the process. - If the Company, the Monitor, Tricap and representatives of the informal unsecured noteholder Committee agree on a particular binding refinancing proposal, a motion to Court will occur on December 18, 2003, seeking authorization to file a revised Plan of Arrangement and Compromise to implement such refinancing proposal. - If there is no agreement on the selection of a binding refinancing proposal, then the Company, the Committee and Tricap are all at liberty to seek authorization to file a revised Plan of Arrangement and Compromise and the Court will on December 18, 2003, be asked to consider all proposed refinancing proposals to determine which proposal is to be presented to the Company's creditors in accordance with the CCAA. - A plan of Arrangement and Compromise will be presented to creditors for approval on or before January 28, 2004 with a projected implementation date of no later than February 20, 2004, subject to further order by the Court. Going Concern There can be no assurance that the Company will successfully emerge from its reorganization proceedings. Approval of a plan and emergence from reorganization proceeding are subject to a number of conditions. As a result of the CCAA proceedings and the suspension of interest payments due on its long-term debt, the Company is in default of its long-term debt covenants under its secured and unsecured notes. The Company's consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its obligations in the normal course of business. There is doubt about the appropriateness of the use of the going concern assumption because of the CCAA reorganization proceedings and circumstances relating to this event, including the Company's current debt structure, recent losses and cash flow. As such, realization of assets and discharge of liabilities are subject to significant uncertainty. The consolidated financial statements do not reflect adjustments that would be necessary if the going concern basis was not appropriate. If the going concern basis was not appropriate for these consolidated financial statements, then significant adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. The appropriateness of the going concern basis is dependent upon, among other things, confirmation of a plan of reorganization, future profitable operations and the ability to generate sufficient cash from operations and financing arrangements to meet obligations. If a plan is confirmed by the Court the reorganized Company will be required to adopt fresh start accounting and report in accordance with Canadian GAAP. This accounting will require that assets and liabilities be recorded at their fair value at the date of emergence from the Company's reorganization proceedings. As a result, the reported amounts in the consolidated financial statements could materially change, because they do not give effect to the adjustments to the carrying value of assets and liabilities that may ultimately result from the adoption of fresh start accounting. ELAN CORP: S&P Ups Junks Corporate Credit Rating to B- ------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Elan Corp. PLC to 'B-' from 'CCC+', and the subordinated debt rating to 'CCC' from 'CCC-'. The ratings have been removed from CreditWatch, where they were placed on Oct. 30, 2003, following the announcement of a convertible debt and equity offering. The 'CCC' senior unsecured debt rating on Elan Capital Corp. Ltd.'s newly issued $400 million convertible notes due 2008 have been affirmed. The outlook is stable. The actions are in response to the completion of Elan's offering of the $400 million convertible notes, as well as the issuance of 35 million shares. Combined, Elan raised $573.3 million, which will be used to retire the roughly $500 million in outstanding LYONs debt that was maturing in December 2003. Elan has essentially retired a portion of its debt with equity, as well as extended the maturities of its debt, enabling itself to conserve on-hand cash of roughly $1 billion in order to fund R&D and ongoing operations and repay $840 million in Elan Pharmaceutical Investment debt coming due in 2004-2005. The $400 million notes due 2008 are guaranteed by the parent, Elan Corp. PLC, and are senior unsecured. However, the notes are subordinated to the outstanding $450 million Elan Pharmaceutical Investments II subordinated debt due in June 28, 2004, and to the $390 million in subordinated EPIL III debt maturing in March 15, 2005. "The ratings and outlook reflect Dublin, Ireland-based Elan's still-significant near-to-intermediate debt maturities and expected losses and negative cash flows in the intermediate term," said Standard & Poor's credit analyst David Lugg. "These factors are partially offset by the company's roughly $1 billion of cash and investments on hand and the prospect of further asset divestitures to raise cash." The prospective retirement of the LYONs relieves near-term financial pressure on Elan. However, the company's operations continue to generate losses and consume cash at a high rate, especially as it spends heavily to support its R&D program. Indeed, Elan may not be profitable until 2005. Moreover, its most promising product prospect, Antegren, which is being developed to treat Crohn's disease and multiple sclerosis, is not expected to reach the market before 2006. ELCOM INC: Vitale Caturano Appointed as KPMG Replacement -------------------------------------------------------- Elcom International, Inc. (OTC Bulletin Board: ELCO), a leading international provider of remotely-hosted eProcurement and private eMarketplace solutions, announced that Vitale, Caturano & Company has been appointed as Elcom's new auditing firm, replacing KPMG. Vitale, Caturano & Company is one of the top 100 accounting firms in the U.S., with international affiliates worldwide. Vitale, Caturano & Company has approximately 200 partners and associates headquartered in Boston, Massachusetts. As per SEC Regulations, Elcom will file a Form 8-K which indicates that KPMG has represented that they have not had any significant disagreements with Elcom over accounting policies or published financials. Robert J. Crowell, Elcom's Chairman and CEO stated "We are very pleased to welcome Vitale, Caturano & Company as Elcom's auditing firm. We believe that Elcom will benefit from this local relationship in many ways on a going forward basis." Company Product Offerings For detailed information on our PECOS(TM) technology and optional Dynamic Trading functionality, please visit our website at www.elcominternational.com/products.htm Elcom International, Inc. (OTC Bulletin Board: ELCO) -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $1 million -- is a leading international provider of remotely-hosted eProcurement and private eMarketplace solutions. Elcom's innovative remotely-hosted technology establishes the next standard of value and enables enterprises of all sizes to realize the many benefits of eProcurement without the burden of significant infrastructure investment and ongoing content and system management. PECOS Internet Procurement Manager, elcom, inc.'s remotely-hosted eProcurement and eMarketplace enabling platform was the first "live" remotely-hosted eProcurement system in the world. Additional information can be found at http://www.elcominternational.com Vitale, Caturano & Company is one of the top 100 accounting firms in the nation and is a proud member of Baker Tilly International - - a prestigious global network of accounting and consulting firms. More information can be found at http://www.vitale.com Information Associated with Fairness Disclosure Regulation (Regulation FD) Under Regulation FD (Fairness Disclosure) promulgated by the Securities and Exchange Commission, the Company would like the investing public and its stockholders to be aware of the following general information which, from time to time, the Company may wish to discuss with other parties. The Company wishes its shareholders in the public marketplace to know that Elcom has experienced a significant increase in activity under its contract with Cap Gemini Ernst & Young for the Scottish Executive. This increase in activity can be attributed to the National Health Services of Scotland agreeing to join the eProcurement Scotland program. In addition, and potentially because of this, various Councils and other Agencies of the Scottish Executive. We are extremely pleased by this increase in activity and believe it will begin producing results during this quarter. ENRON CORP: Urging Court to Approve Crescent Lease Agreement ------------------------------------------------------------ Enron Corporation currently maintains its corporate headquarters in Enron Center North located at 1400 Smith Street in Houston, Texas. Enron is presently occupying 625,000 square feet at Enron Center North under the terms of a Forbearance Agreement with JPMorgan Chase Bank that expires on March 31, 2004. The Forbearance Agreement also contemplates an auction sale of Enron Center North on or before November 15, 2003 and a closing date for the sale on or before December 31, 2003. Due to the uncertainty with respect to the future ownership of Enron Center North and other factors that make it unlikely that Enron could negotiate a new long-term lease agreement for Enron Center North that met its need during its Chapter 11 case and beyond, Enron elected to look for new office space for its employees in Houston, Texas. In this regard, Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, informs the Court that Enron retained the real estate brokerage firm of Trione & Gordon LLP to conduct a thorough search and survey of alternative office space in Houston. After the exhaustive review of available spaces, Enron, with Trione's assistance, determined that its future business needs would best be served by relocating its corporate offices to 4 Houston Center. To relocate Enron's offices, Mr. Rosen relates that Enron intends to enter into an Office Lease with Crescent Real Estate Equities Limited Partnership for the 191,657 rentable square feet in the Building -- the Premises. Salient terms of the Lease are: A. Premises The Premises constitute 191,657 rentable square feet located on floors 5, 6, 8, 15 and 16 of the Building. Enron may elect to lease up to 52,000 rentable square feet of additional space located on floors 8, 10, 11, 13 and 15 by notifying Crescent. B. Term The Lease provides for a term of five years and two months, commencing not earlier than January 1, 2004 or later than April 1, 2004, at Enron's option. For the first two months of the Lease, the rent will be abated. Enron has the option to extend the Lease at 90% of Fair Market Rates for either: (i) two terms of five years, or (ii) one term of 10 years. Enron will be entitled to reduce the amount of rentable square feet at the time any option to extend is exercised, without the payment of any termination fee, provided the gross amount does not go below an agreed minimum rentable square feet. C. Rent $9.85 per rentable square foot per year D. Operating Expenses Enron will pay its pro rata share of operating expenses each year, which are estimated to be $8.66 per rentable square foot in 2003. E. Capital Improvements and Furniture Crescent will build out the Premises at Crescent's sole cost and expense in accordance with the preliminary outline specifications. Crescent will furnish the Premises at its sole cost and expense and will transfer title to the furniture to Enron upon the commencement of the Lease. F. Preferential Rights Subject to the rights of existing tenants, Enron will have the preferential right to lease up to 50,000 square feet of additional space at the same rental rate as the balance of the space under the Lease and will have the continuing right of first refusal on the Preferential Space. G. Reduction Option. Depending on whether or not a Chapter 11 plan is confirmed in Enron's Chapter 11 bankruptcy case by April 1, 2004, Enron will have the right to reduce the Premises by up to either 100,000 or 200,000 rentable square feet in return for the payment of a termination fee, which is calculated as all unamortized up-front capital and commission expenses allocated to each terminated space for the remaining balance of the term at an 8% annual rate. H. Parking Enron will receive 360 unreserved and 40 reserved parking spaces located, at Crescent's option, in the 4 Houston Center Garage, First City Tower Garage, Houston Center Garage 1 or the 5 Houston Center Garage. Parking charges for the initial 62 months of the Lease Term will be abated. I. Broker Fee Crescent will pay Trione a real estate fee equal to 4% of the gross aggregate rent under the Lease. Assuming Enron is authorized to enter into the Lease, Mr. Rosen informs Judge Gonzalez that Enron will sublease to Prisma and CrossCountry -- the Subtenants -- a portion of the Premises on substantially the same terms, covenants, conditions and provision as the lease. The Subtenants will each bear their pro rata share of the rent and operating expenses due under the Lease. The Subleases will further provide that the Subtenants will be obligated for any termination fee or other payments incurred under the Subleases or as a result of their actions. Furthermore, the Lease provides that Enron may partition the Premises at any time within two years of the date of Plan confirmation to separate that portion occupied by the Subtenants from the remainder of the Premises. Upon partition: -- Enron will be released from any further obligation or liability under the Lease with respect to the partitioned space; -- the Subtenants will enter into new primary leases with Crescent; and -- the Subleases will terminate. Mr. Rosen asserts that the execution of the Lease is in the best interest of the Debtors' estates because: (a) the Lease allows Enron to reduce the size of its current office space by 69%; (b) the Lease allows Enron to reduce its monthly lease costs from $1,050,000 to $295,631; (c) the Lease provides flexibility in that it allows Enron to reduce the Premises by up to 100,000 square feet in annual increments of not less than 15,000 square feet and not more than 25,000 square feet if the plan is confirmed and by up to 100,000 square feet in the first year of the Lease and not less than 15,000 square feet and not more than 25,000 square feet per year thereafter if the plan is not confirmed by paying a termination fee, or increase the Premises by an additional 52,000 square feet, depending on Enron's future needs. Enron also has a preferred expansion right for an additional 50,000 square feet; (d) the Lease allow Enron to sublease the Premises or partition the Lease to Prisma and CrossCountry. In either case, Enron, Prisma and CrossCountry will share in the economies of scale of a large office lease and the related cost savings. In the case of a partition of the Lease, Enron will be relieved from future obligations and liabilities associated with Prisma's and CrossCountry's occupancy of their portion of the Premises; and (e) Enron believes the rental costs under the Lease are fair and reasonable and are at market rates for comparable property in the Houston, Texas area. Accordingly, pursuant to Section 363 of the Bankruptcy Code, Enron seeks the Court's authority to enter into the Lease with Crescent. (Enron Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 609/392-0900) EVERGREEN INT'L: S&P Cuts & Places Ratings on Watch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Evergreen International Aviation Inc. to 'B-' from 'B', the senior secured rating to 'B' from 'B+', and the senior second secured rating to 'CCC+' from 'B-'. All ratings were placed on CreditWatch with negative implications. The rating actions reflect the company's recent weaker-than- expected operating performance and Standard & Poor's concern that continuing operating pressures and upcoming debt service requirements could place further pressure on already constrained liquidity. The McMinnville, Oregon-based airfreight transportation company has about $365 million of lease-adjusted debt outstanding. "Evergreen's liquidity position is currently tight and is likely to become even more constrained over the near term," said Standard & Poor's credit analyst Lisa Jenkins. The company has a $12.8 million interest payment and a $2 million retirement plan payment due Nov. 15, 2003. At Aug. 31, 2003, the company had $5.5 million of cash and about $7.3 million of borrowing capacity (which is determined by a borrowing base) under its bank facility. Financial risk is heightened by the company's significant debt burden and the cyclical and competitive nature of the industry in which it competes. Evergreen derives the majority of its revenues and operating profits from Evergreen International Airlines, its airfreight transportation subsidiary, which operates a fleet of older B-747-100 and B-747-200 widebody freighters and smaller DC-9 freighter aircraft. The company also provides ground logistics services, aircraft maintenance and repair services, helicopter and small aircraft services, and aviation sales and leasing. Evergreen serves both military and commercial customers. The company's airfreight transportation subsidiary has been benefiting from continuing strong demand for military flying in recent quarters. However, the company's ground logistics operation (Evergreen Aviation Ground Logistics Inc.; EAGLE) is currently experiencing a decline in revenues, which is putting pressure on both earnings and cash flow generation. During the first half of fiscal 2004 (fiscal year 2003 ended Feb. 28, 2003), revenues increased by 5.7% over the comparable period of fiscal 2003 but operating income declined by 25% year-over-year. Net income for the first half of fiscal 2004 was $7.9 million. This compares with $13.0 million in the first half of fiscal 2003. EAGLE's profit pressures have arisen primarily as a result of reduced demand from the U.S. Postal Service. Unless EAGLE can adjust its cost structure to reflect the reduced level of demand for its services, profit pressures are likely to continue over the near to intermediate term. Standard & Poor's will meet with management to discuss the company's near-term operating outlook and cash flow forecast. If the company's liquidity deteriorates further, ratings are likely to be lowered. EXIDE TECHNOLOGIES: Will Present Global Identity at AAIW 2003 ------------------------------------------------------------- Exide Technologies, (OTC Bulletin Board: EXDTQ) -- http://www.exide.com-- a global leader in stored electrical- energy solutions, will have a strong presence this week in Las Vegas at Automotive Aftermarket Industry Week (AAIW) 2003, the automotive industry's largest international aftermarket trade gathering. AAIW is composed of two separate but related exhibitions that run concurrently. The Aftermarket Automotive Products Expo (AAPEX) 2003, housed at the Sands Convention Center, is the largest automotive aftermarket trade show in the world, sponsored by the Automotive Aftermarket Industry Association (AAIA) and Motor Equipment & Manufacturers' Association (MEMA). The SEMA Show 2003, held at the Las Vegas Convention Center and sponsored by the Speciality Equipment Market Association (SEMA), is the premier automotive specialty products trade event. A third trade organization, the Automotive Warehouse Distributors Association (AWDA), hosts supplier/buyer meetings in conjunction with the exhibitions. A 35-member team from Exide's global Transportation Business Group will exhibit under the powerful theme It All Starts Here to accompany its presence at the event. Exide's futuristic AAPEX exhibit, located on the Automotive Parkway in space #5600 on the upper level, will feature the Company's innovation and progress in products and aftermarket services, present the impact of technological partnerships, as well as Exide's solid turnaround accomplishments as the Company prepares to emerge from Chapter 11 restructuring later this year. In addition, Exide will host a press conference to discuss significant customer wins, contract extensions with key business partners, and the status of Chapter 11 restructuring. Exide press materials also will be available at the Company's exhibit as well as in the AAPEX and SEMA press rooms. The theme will be carried further at SEMA, where the Exide exhibit, located in the Mobile Electronics section in space #20025, will feature the leading Exide Select Orbital XCD battery as well as a 1948 Chevrolet Fleetline low rider automobile. The car, the Lowrider Magazine "Bomb" of the year for 2002 and 2003, is equipped with 10 Orbital XCD batteries that power the hydraulics, audio and video systems -- showing the many uses of this technologically-advanced battery for both audio and specialty applications. "Exide's presence at AAIW 2003 is of threefold importance," said David G. Enstone, Exide Technologies President - Transportation Global Business Unit. "It positions our Company as both the partner of choice for our aftermarket customers as well as a systems solutions supplier on the forefront of technological leadership. And, it presents Exide's transformation into the unified, efficient global producer and service provider that it has become." AAIW 2003 opens in Las Vegas on November 4 and runs through November 7. More information is available at http://www.aaiwshow.com http://www.aapexshow.com http://www.semashow.org as well as at http://www.exide.com 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. Industrial uses include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS); 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 FAIRFAX FINANCIAL: Reports Improved Third-Quarter Fin'l Results --------------------------------------------------------------- Fairfax Financial Holdings Limited continued to produce excellent underwriting performance in the 2003 third quarter. The combined ratio of its insurance and reinsurance operations was 97.0% for the quarter, with each of Northbridge, Crum & Forster and OdysseyRe producing a combined ratio below 100%, and 97.8% for the nine months ended September 30, 2003. Lower interest and dividends (reflecting almost half of the investment portfolio being held in cash and short term investments) and substantially reduced realized gains, as well as increased runoff and interest costs, resulted in pre-tax income dropping significantly and in a net loss after income taxes and non-controlling interests of $20.0 million in the quarter. Net earnings for the nine months ended September 30, 2003 were a record $380.8 million. During the 2003 third quarter, net premiums written by Northbridge, Crum & Forster and OdysseyRe, expressed in local currency on a consistent basis, increased 39.1%, 36.9% and 38.6% respectively over the third quarter of 2002. Net premiums written in the 2003 third quarter decreased by 15.1% in Canadian dollars over the previous year, but increased 27.8% excluding the effect of changes in foreign exchange rates, TIG's discontinued MGA- controlled program business and the premium for TIG's adverse development cover, while realized gains on investments declined to $44.1 million from $465.8 million in 2002. At September 30, 2003, the pre-tax unrealized gain on portfolio investments was $340.7 million (compared to $207.9 million at December 31, 2002), of which approximately $120 million was realized in October 2003. There were 14.0 and 14.1 million weighted average shares outstanding in the third quarter and nine months, respectively, ended September 30, 2003 compared to 14.3 million in each of the same periods in 2002. Fairfax's detailed third quarter report can be accessed at its Web site at http://www.fairfax.ca Fairfax Financial Holdings Limited (S&P, BB Counterparty Credit Rating, Stable) is a financial services holding company, which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims management. FELCOR LODGING: S&P Keeps Watch on Ratings After Weak Q3 Results ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on hotel owner FelCor Lodging Trust Inc., including its 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing follows FelCor's weaker-than-expected operating performance in its third quarter ended Sept. 30, 2003, and Standard & Poor's expectation that debt leverage will be higher than previously anticipated at year end," said Standard & Poor's credit analyst Craig Parmelee. "If a rating action is ultimately taken, Standard & Poor's does not expect that ratings will decline by more than one notch," added Mr. Parmelee. In resolving the CreditWatch listing, Standard & Poor's will discuss with management its operating strategies and earnings assumptions during the next several quarters, with a particular emphasis on reviewing the time required for credit measures to recover to levels more in line with the current ratings. Asset sale progress and liquidity will also be areas of emphasis. FFP OPERATING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: FFP Operating Partners, LP 2841 Glenda Avenue Fort Worth, TX 76117 Tel: 817-838-4711 Bankruptcy Case No.: 03-90171 Type of Business: The Debtor, together with other subsidiaries of FFP PARTNERS, L.P., owns and operates convenience stores, truck stops, and self- service motor fuel outlets over a twelve state area. See, also, coverage of the Chapter 11 filing in the Fort Worth Star-Telegram at http://www.dfw.com/mld/dfw/business/7130502.htm Chapter 11 Petition Date: October 23, 2003 Court: Northern District of Texas (Ft. Worth) Judge: Barbara J. Houser Debtor's Counsel: Mark Joseph Petrocchi, ESq. Colvin and Petrocchi 801 Cherry St., Unit 35 Ft. Worth, TX 76102 Tel: 817-336-7883 Estimated Assets: $10 Million to $50 Million Estimated Debts: $50 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citgo Petroleum Corporation $5,530,672 PO Box 3758 Tulsa, OK 74102-3758 Grocery Supply Company $2,604,197 130 Hillcrest Sulphur Springs, TX 75482 Conoco Branded $773,981 1330 Plaza Office Bldg. 315 Johnstone Bartlesville, OK 74004 Marathon Ashland $505,507 539 S. Main St. Rm. 10174M Findlay, OH 45840 Diamond Shamrock Branded $374,962 1 Valero Way San Antonio, TX 78249 Fina Hybrid $316,270 PO Box 517030 Dallas, TX 517030 Rice Wholesale Co., Inc. $191,431 Frito Lay Inc. $173,118 Sysco Food (San Antonio) $143,188 Southwest Division Coca-cola $142,063 Davidson Oil $136,097 Affiliated Food Inc. $83,354 Bordens $97,077 Big Red/7up Bottling S Tex $79,038 Cenex $67,215 Louisana Coca-cola $46,903 Sysco Food (Dallas) $33,779 The Premcor Refining Group Inc. $38,341 Tom's Foods (Atlanta) $40,170 TXU Energy $93,969 FOOTSTAR INC: Delays Completion and Release of Fin'l Restatement ---------------------------------------------------------------- Footstar, Inc. (NYSE: FTS) announced that while the restatement of its financial statements for fiscal years 1997 through June 2002 is ongoing, the Company did not release financial statements for the five-and-one-half year period by the previously announced date of October 31, 2003. Since the Company did not release restated financial statements, it is providing further detail on the results of its internal investigation, its operating results for the restatement period, fiscal year 2002 and the first half of fiscal year 2003, and an update on its outlook for fiscal year 2003, as well as the waiver and extension until January 30, 2004 of the requirement to provide audited financial statements that the Company has received from a syndicate of banks led by Fleet National Bank concerning the Company's $345 million senior secured credit facility. The Company now expects that the restatement will reduce earnings by an aggregate amount ranging from $51 million to $55 million pre-minority interest and taxes (or $31 million to $38 million after minority interest and taxes) over the five-and-one-half-year restatement period, compared to the range it had previously announced in its September 15, 2003 press release of $48 million to $53 million pre-minority interest and taxes (or $29 million to $32 million after minority interest and taxes). Rather than the $48.2 million announced in its September 15, 2003 press release, the Company now expects the reduction in earnings will be $52.3 million pre-minority interest and taxes, as detailed in the restatement summary below. The Company continues to expect that the restatement will not affect the over $10 billion in revenues generated during the five-and-one-half-year period or net cash flows. Credit Facility Waiver The Company continues to have the benefit of its $345 million senior secured credit facility with a syndicate of banks led by Fleet National Bank, which was recently increased by $20 million in September 2003. The Company has obtained a new waiver from its bank group extending to January 30, 2004 its requirement to provide audited financial statements for the fiscal year 2002, as well as unaudited financial statements for the third quarter of fiscal year 2002 and the first three quarters of fiscal year 2003. As a condition for the new waiver, the Company has agreed with its lenders that the Company will be subject to a prepayment premium of 100 basis points on all terminations or reductions of commitments under the $255 million revolving portion of the credit facility that are made on or prior to July 31, 2004. In addition, the time period for the previously agreed prepayment premium on the term loan portion of the credit facility was extended from May 24, 2004 to July 31, 2004. All other terms of the credit facility remain unchanged. As of September 27, 2003, there was $90 million outstanding under the term portion of the credit facility and approximately $180 million outstanding under the revolving portion of the credit facility (including letters of credit). Based upon the borrowing base availability calculation contained in the credit facility, as of September 27, 2003, the Company had approximately $27 million of availability remaining after the application of the required $20 million in minimum excess availability. While the Company is continuing to consider whether its indebtedness under the credit facility should be classified as current, the Company believes that the classification of this indebtedness as current will not have any effect on the covenants or representations of the Company under the credit facility. The new waiver is also conditioned on a requirement that the Company represent that the maximum impact on earnings with respect to the restatement will not exceed $55 million in the aggregate. If the final impact of the restatement on the Company's earnings exceeds $55 million in the aggregate, the Company would have to seek a further amendment and waiver from its lenders in order to avoid an event of default under the credit facility. Further Information on Internal Investigation As discussed below, the previously disclosed investigation conducted under the oversight of the Audit Committee determined that there were numerous instances of incorrect accounting as well as significant internal control failures at the Company. The Company is addressing the incorrect accounting and internal control failures identified during the investigation, also as discussed below. The investigation determined that during the period at issue: -- Some members of senior management and some employees in finance-related positions failed to fulfill their responsibilities to ensure that the Company's accounting and financial reporting were accurate and to instill a culture that focused on robust internal controls and internal audit, i.e., to establish and maintain a proper tone at the top. -- The Company did not design or maintain the systems, processes or controls, or hire and retain personnel necessary to ensure that its financial results would be reported accurately. An undue focus was placed on controlling and reducing costs, without sufficient consideration of the potential impact on the Company's internal controls. This resulted in failures in internal control over financial reporting. These failures in internal controls were masked by manual entries, and these failures also permitted the improper recording of manual entries. Over time certain members of senior management knowingly used manual entries to reach incorrect accounting results. Examples included: manual journal entries in which accounts payable balances were written off and corresponding reductions were made to certain operating expenses; and offsetting unrelated items, such as unrecoverable receivables and vendor credits with unmatched receipts (accounts payable) and thereby misrepresenting the actual results of operations of the Company. The system did not contain adequate controls over manual entries, and management did not appropriately document the process for making manual entries. -- With respect to the Company's acquisition of Just For Feet in 2000, it was determined that the original purchase price allocation contained errors as a result of the Company not utilizing all of the detailed information available at that time. When it should have become clear to some members of management after the acquisition of Just For Feet that the allocation of the purchase price relating to inventory should have been adjusted, these members of senior management allowed incorrect entries to be made to the Company's income statement rather than making such adjustments to the purchase price allocation. This resulted in overstating profitability and gross margins in 2000. They also did not adequately disclose the impact of those adjustments to the Board or to the internal or independent auditors, nor did they ensure that the Company's public disclosures regarding the adjustments were adequate. -- The problems caused by the Company's inadequate control over financial reporting and the misuse of manual entries by certain members of senior management were compounded by the repeated failure of such members of senior management and some employees in finance-related positions to attach sufficient importance to the role of the internal auditors or to follow up in a timely manner with the Audit Committee or the independent auditor on issues raised by the internal auditors. -- The deficiencies in the internal control systems as well as the human intervention in such systems resulted in inaccurate financial statements, which are being restated. As a result, the Company has taken and is taking steps to remediate the issues that were raised in the investigation. The Company's Chairman and Chief Executive Officer, as well as four key finance employees are no longer with the Company, and the Company's accounting and other finance-related staffing is in the process of being increased and upgraded to enhance the effectiveness of the Company's financial reporting, internal controls and public disclosure. On September 15, 2003, the Company announced the implementation of its Remediation Plan and Disclosure Controls policy. The Company is committed to focusing its management team and associates on the effective implementation of this Remediation Plan and Disclosure Controls policy. As part of this effort, the Company recently hired Richard Robbins as Senior Vice President of Financial Reporting. In this new position, Mr. Robbins oversees the Company's accounting and financial reporting functions and reports directly to Steve Wilson, the Company's Chief Financial Officer. Mr. Robbins also has a dotted-line responsibility to the Chief Executive Officer with respect to financial reporting matters. Mr. Robbins has over 30 years of experience in public accounting with Arthur Andersen, where he was a Partner for 24 years until 2002. Since 2002, Mr. Robbins has provided financial, accounting and operational consulting services to private and public companies. Update on Restatement All financial information provided in this press release is unaudited. The final impact of the restatement will depend upon the final determinations being made by the Company and the completion of the audit and review by KPMG LLP. As a result, there may be changes to the financial information provided in this press release that are material, individually or in the aggregate, to the Company's financial condition, results of operations or liquidity. Fiscal Year 2003 Outlook In addition, the Company provided its current expectations for its financial performance in fiscal year 2003, as follows: -- Due to the continued highly promotional retail environment in the discount footwear market, sales are expected to be lower than planned at Meldisco. As a result, net sales for fiscal year 2003 are now expected to be in the range of $1,990 million to $2,020 million. The Company had previously anticipated that net sales in fiscal year 2003 would be in the range of $2,010 million to $2,030 million. -- The Company now expects a fiscal year 2003 operating loss in the range of $0 to $5 million versus the previously anticipated profit range of $0 to $10 million, after net unallocated corporate expense of approximately $17 million and depreciation and amortization expense of approximately $50 million. This reflects the lower than anticipated sales at Meldisco described above, as well as additional costs related to the delay in the completion of the investigation and restatement, which the Company now expects to total $14 million in fiscal year 2003, compared to its previous estimate of $12 million. -- Meldisco's operating profit for fiscal year 2003 is now expected to be approximately $31 million versus the previously anticipated $33 million, after depreciation and amortization expense of approximately $16 million, due to the lower than planned sales and higher markdowns driven by the continued promotional environment in the discount footwear market described above, as well as additional restatement expenses. -- The Athletic segment is now expected to produce an operating loss of approximately $14 million in fiscal year 2003 versus the previously anticipated $11 million, after depreciation and amortization expenses of approximately $30 million, due to additional expenses related to the investigation and restatement, higher depreciation and amortization expense and higher than anticipated losses in startup ventures such as Consumer Direct. -- The Company's full year blended rate of interest is now expected to be 11.4% (including increased fees) in fiscal year 2003, down slightly from the Company's previous expectation of 11.7%. -- Fiscal year end 2003 inventory is now expected to be approximately $360 million, which is approximately the same as expected fiscal year end 2002 inventory. The Company had previously anticipated inventory at fiscal year end 2003 to be $340 million. Although there are fewer stores in operation in 2003, some additional early receipts related to the timing of the Chinese New Year factory shutdown have increased this expected fiscal year end 2003 inventory. Footstar, Inc. is a leading footwear retailer. The Company offers a broad assortment of branded athletic footwear and apparel through its two athletic concepts, Footaction and Just For Feet and their websites, www.footaction.com and www.justforfeet.com, and discount and family footwear through licensed footwear departments operated by Meldisco. As of September 27, 2003, the Company operated 438 Footaction stores in 41 states and Puerto Rico, 92 Just For Feet superstores located predominantly in the Southern half of the country, and 2,504 Meldisco licensed footwear departments and 37 Shoe Zone stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. GENTEK INC: Court Waives Delaware Local Rule 3007-1(f)(ii) ---------------------------------------------------------- Rule 3007-1(f)(ii) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware states that: "[n]o more than two substantive objections may be filed each calendar month, unless the Court orders otherwise." The GenTek Debtors anticipate that the Plan Effective Date could be as early as 10 days after entry of the Confirmation Order. Rather than moving to extend the time for filing objections to those claims for which the claim objection deadline is the effective date, or delaying the Effective Date, the Debtors seek a waiver of Local Rule 3007-1(f)(ii). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Wilmington, Delaware, points out that the waiver will preserve the Debtors' ability to make distributions in a timely fashion with respect to claims that will be allowed and entitled to be paid beginning with the Effective Date. As of October 2003, the Debtors have filed 12 omnibus objections seeking reduction, reclassification and disallowance of claims. Due to the objection deadline imposed by the Plan, the Debtors will need to file additional substantive omnibus objections before the Effective Date. The Debtors believe that they may exceed the maximum number permitted under Local Rule 3007- 1(f)(ii). As of September 19, 2003, there are almost 600 claims that are potentially subject to objections that would need to be filed. Although Local Rule 3007-1(f)(ii) permits the Debtors to file four substantive omnibus claim objections between September 19, 2003 and an Effective Date that occurs before the end of October 2003, due to the type and nature of the claims and the various grounds of objections that may be raised, and because the Debtors are currently completing their claims review, it may not be practicable to object to the maximum number of 150 claims in each of the four substantive objections. Out of an abundance of caution, the Debtors ask the Court to waive Local Rule 3007-1(f)(ii). The Debtors assure the Court that they will attempt to adhere to the number of substantive omnibus claim objections allowable, to the extent practicable. However, to the extent not practicable, granting the waiver and thus, permitting the Debtors to file all remaining substantive objections to claims subject to the Effective Date objection deadline is vital to ensuring that the Debtors: -- will not have to request a last minute extension of time to object to these claims or delay the occurrence of the Effective Date, to the prejudice of claimants with claims not subject to dispute; and -- will not have to risk the deemed allowance of the claims, to the prejudice of all parties-in-interest. Accordingly, the Court waives Local Rule 3007-1(f)(ii) and allows the Debtors to file more than two substantive omnibus claim objections in each calendar month, until the Plan Effective Date. (GenTek Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY: Court OKs Kirkland & Ellis as Debtor's Special Counsel --------------------------------------------------------------- The Genuity Debtors sought and obtained the Court's authority to expand the scope of Kirkland & Ellis' employment as special counsel to include additional legal services with respect to matters involving Level 3 Communications, Inc. and Level 3 Communications, LLC, nunc pro tunc to June 7, 2003. Level 3 acquired the assets of Genuity Inc. and its subsidiaries pursuant to an Asset Purchase Agreement dated November 27, 2002. By letter dated June 2, 2003, Level 3 alleges that it is entitled to a $39,300,000 purchase price adjustment under the Asset Purchase Agreement. The Debtors responded to Level 3 with what they believe to be the appropriate purchase price adjustment. The Debtors want Kirkland & Ellis to represent them in any arbitration or litigation proceedings regarding the purchase price adjustment and any challenges to, or appeals from, the proceedings. Kirkland & Ellis will also assist the Debtors in seeking Bankruptcy Court approval of any compromises of the purchase price adjustment disputes. Erin T. Fontana, Esq., at Ropes & Gray, in Boston, Massachusetts, relates that Kirkland & Ellis represented an affiliate of Level 3 from 1996 to 2001, as well as from 1998 to 2001 in matters unrelated to the Debtors, the Debtors' reorganization cases or Level 3's Claims against or interests in the Debtors, for which it received $111,140 and $37,440. However, Kirkland & Ellis' past representation of Level 3 and its affiliate will not affect its representation of the Debtors on the additional matter for which the Debtors seek to retain them. Joseph Serino, Jr., a partner of Kirkland & Ellis, attests that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm does not hold any interest adverse to the Debtors' estates. The Debtors intend to compensate Kirkland & Ellis based in part on its guideline hourly rates, which are periodically adjusted. Kirkland & Ellis' rate schedules include separate rates for certain professional staff and clerical personnel who record time spent working on matters for Genuity. Kirkland & Ellis' standard rates for work of this nature range from $255 to $730 per hour for attorneys and $135 to $225 per hour for legal assistants and other professional staff. The attorneys who have been and are expected to be active in providing the additional services for the Debtors, and the current hourly billing rate for each attorney, are: Partners/Associates Practice Rate ------------------- -------- ---- William H. Pratt Litigation $730 Joseph Serino, Jr. Litigation 525 Scott R. Samay Litigation 460 Daniel Rottenstreich Litigation 445 Joshua B. Simon Litigation 345 The Debtors also intend to reimburse Kirkland & Ellis for its reasonable out-of-pocket expenses. Mr. Serino maintains that except for sharing arrangements among Kirkland & Ellis, its affiliated law practice entities and their members, Kirkland & Ellis has no agreement with any other entity to share any compensation received, nor will it make any agreement, except as permitted under Section 504(b)(1). (Genuity Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) GINGISS GROUP INC: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: The Gingiss Group, Inc. 2101 Executive Drive Addison, Illinois 60101 Bankruptcy Case No.: 03-13364 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Gary's Operating, Inc. 03-13366 GII Acquisition, Inc. 03-13367 Gingiss International, Inc. 03-13368 Gingiss Formalwear, Inc. 03-13369 Type of Business: The Debtor is a national men's formal wear rental and retail company. Chapter 11 Petition Date: November 3, 2003 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: James E. O'Neill, Esq. Laura Davis Jones, Esq. Pachulski Stang Ziehl Young Jones & Weintraub 919 North Market Street 16th Floor PO Box 8705 Wilmington, DE 19899-8705 Tel: 302-652-4100 Fax: 302-652-4400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $50 Million to $100 Million Debtors' 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ After Six Trade $1,023,133 Attn: Bill Hines 410 Athena Drive Athens GA 30601 Herbert Sperber Debt $1,400,000 7065 E. Foothill Drive Paradise Valley, AZ 85253 Alan Horwits Debt $721,835 940 Hawk Hill Trail Palm Desert, CA 92211 Fabian Couture (First Trade $650,403 Nighter) Attn: Alan Weis 205 Chubb Avenue Lyndhurst, NJ 07071 Frankel Services $518,242 Attn: Sage Wagner 111 East Wacker Drive Chicago, IL 60601 Chaplin Trade $448,759 Attn: Ken Pendley 15580 E. Hinsdale Circle Englewood, CO 80112 Elite Formalwear Trade $371,936 (Factor Kislak Bank) Attn: Mary Jo Eaton 2280 S.W. 70th Avenue Davie, FL 33317 Ernst & Young Audit & Tax $288,955 Attn: Joseph McCormack 233 South Wacker Drive Chicago, IL 60606 Tuxacco/West Mill Clothes Trade $275,138 Attn: Howard Ziplow 247 Rittenhouse Circle Bristol, PA 19007 Barclay Shoe Company Trade $192,474 Mel Howard (Factor CIT Financing $165,671 Group) Lou Tomsik Debt $143,003 FormalCorp. Trade $126,091 Santana Formal Accessories Trade $121,091 United Parcel Service Shipping Services $104,080 Robert M. & Carolyn Debt $116,824 Hoffman Tux One Debt $100,000 Taylor Made Software Inc. Services $96,190 Wayne Hoggatt Debt $95,703 TMP Worldwide Services $83,556 Tuxedo Park Trade $79,556 Don & Margaret Thompson Debt $77,292 Robert Dancey Debt $70,920 Peerless Clothing Int'l Trade $69,012 Inc. YPM Inc. Trade $63,769 Formal Wear, Inc. Consulting Agreement $63,670 M Graphics Service $57,382 Latham & Watkins Legal Services $56,395 Arch-Itech Solutions Services $55,869 Matthew T. Poy Debt $53,260 GLOBAL CROSSING: Seeks Approval of Flag Telecom Settlement Pact --------------------------------------------------------------- Paul M. Basta, Esq., at Weil Gotshal & Manges, LLP, in New York, states that Debtor Global Crossing Services Europe Limited is party to two agreements with Flag Telecom Global Network Limited: -- an Indefeasible Right of Use Agreement dated as of July 2, 2001; and -- a capacity purchase agreement dated June 29, 2001. Under the IRU Agreement, Flag Telecom sold network system capacity to GX Services amounting to $43,350,000. GX Services paid $40,000,000 on June 29, 2001 and the remainder on July 3, 2001. The IRU Agreement required that GX Services activate and draw down the purchased capacity by December 31, 2002, or otherwise forfeit its rights to the capacity. According to Mr. Basta, GX Services did not activate or draw down any of the network capacity paid for under the IRU Agreement by the December 31, 2002 deadline. Under the Capacity Agreement, GX Services sold network capacity to Flag Telecom for $32,500,000. Flag Telecom paid the entire amount upon execution of the Capacity Agreement. Like the IRU Agreement, Mr. Basta notes, the Capacity Agreement required that Flag Telecom activate and draw down the capacity purchased by December 31, 2002, or otherwise forfeit its rights to the capacity. In addition to the right to activate and draw down its purchased capacity on the GX Debtors' network, under the Capacity Agreement, Flag Telecom was entitled to activate and draw down capacity on the networks owned by Asia Global Crossing Asia Pacific Commercial Ltd., including the East Asia Crossing System. On September 28, 2001, GX Services and Flag Telecom executed an amendment to the Capacity Agreement. Pursuant to the Amendment, GX Services sold an additional $10,000,000 of capacity to Flag Telecom. Furthermore, the parties agreed that the $10,000,000 worth of capacity under the amendment and $15,000,000 worth of capacity under the Capacity Agreement, for a total of $25,000,000, would be allocated so that Flag Telecom could activate the capacity on East Asia. The remaining $17,500,000 of network capacity under the Amended Capacity Agreement was to remain available for activation anywhere on the Global Crossing network. On October 1, 2001, GX Services executed an assumption and assignment agreement with Asia Pacific Commercial to assign to Asia Pacific Commercial the obligation to provide the capacity on East Asia Crossing System. Around the time the parties executed the Asia Commercial Assignment, GX Services paid $15,000,000 and procured Flag Telecom's $10,000,000 payment to Asia Pacific Commercial in furtherance thereof. However, due to a clerical error, the Asia Commercial Assignment only reflected payments to Asia Pacific Commercial aggregating $15,000,000, rather than the $25,000,000 actually paid to it, and only effected an assignment of obligations in respect of $15,000,000 of capacity on East Asia Crossing System. To date, Mr. Basta informs Judge Gerber that Flag Telecom has activated $9,000,000 worth of network capacity on the GX Debtors' Network and $9,000,000 of the capacity on East Asia Crossing System. However, due to changes in the telecommunications market and the GX Debtors' revised business plan, the GX Debtors do not immediately require the capacity they purchased from Flag Telecom. In addition, the GX Debtors' current business plan does not incorporate the additional capital expenditures that would be required to activate the capacity purchased from Flag Telecom. Thus, the GX Debtors did not activate any of the network capacity purchased under the IRU Agreement. According to Mr. Basta, the GX Debtors face potential liabilities of: (i) $10,000,000 of capacity for the disputed Asia Pacific Commercial obligations under the Asia Commercial Assignment -- the Disputed Capacity; (ii) $15,000,000, in the event that Asia Pacific Commercial does not perform its obligations regarding the Undisputed Capacity; and (iii) forfeiture of the $43,350,000 paid to Flag Telecom for capacity not activated by December 31, 2002. Although the GX Debtors made repeated attempts to resolve the error under the Asia Commercial Assignment, Asia Pacific Commercial refused to recognize the additional $10,000,000 payment the GX Debtors made. Following extensive arm's-length negotiations, the GX Debtors and Flag Telecom reached a settlement agreement, embodied in amendments to the Original Agreements. Specifically, the parties agree that: (a) Flag Telecom waives its rights to activate the Disputed Capacity on East Asia Crossing System; (b) Flag Telecom waives its rights under the Capacity Agreement to activate any additional capacity on the GX Debtors' Network; (c) Flag Telecom releases the GX Debtors from any liability with respect to the Undisputed Capacity on East Asia Crossing System; (d) If: (i) Asia Pacific Commercial, as a result of insolvency or bankruptcy on or before November 7, 2005, makes the Undisputed Capacity unavailable to Flag Telecom; and (ii) the GX Debtors are in need of capacity between cities on Flag Telecom's Network, then the GX Debtors will use reasonable efforts to purchase the necessary capacity from Flag Telecom, up to the aggregate value of the Undisputed Capacity. Section 5(d) of the Capacity Agreement will govern the GX Debtors' purchase of any Necessary Capacity; (e) GX Services waives its rights to activate $18,635,000 of capacity on Flag Telecom's Network, and retains only its rights to activate $24,715,000 of the capacity purchased under the IRU Agreement; and (f) The deadline by which the GX Debtors must draw down capacity under the IRU Agreement is extended to December 31, 2009. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Mr. Basta asserts that the Settlement Agreement is a fair resolution of the outstanding issues between the parties. Flag Telecom has potentially millions of dollars of claims against the GX Debtors for network capacity due under the Capacity Agreement. Moreover, due to the error in the Asia Commercial Assignment and the GX Debtors' settlement with Asia Pacific Commercial, the GX Debtors cannot recover any amounts from Asia Pacific Commercial related to the Asia Commercial Agreement. Furthermore, Mr. Basta points out that absent the Settlement Agreement, the GX Debtors would have been forced to either draw down the network capacity under the IRU Agreement by December 31, 2002 or lose all rights to the $43,350,000 already paid to Flag Telecom under the Capacity Agreement. The GX Debtors had no immediate need for the capacity purchased under the IRU Agreement. In addition, had the GX Debtors drawn down the capacity by the December 31, 2002 deadline, they would have incurred significant operation and maintenance charges. By entering into the Settlement Agreement, the GX Debtors will be able to: (i) eliminate their exposure regarding the Disputed Capacity and any potential liability regarding the Undisputed Capacity on East Asia Crossing System; (ii) reduce the amount of network capacity Flag Telecom can activate under the Capacity Agreement; (iii) extend the time they have to activate capacity under the IRU Agreement; and (iv) avoid paying operation and maintenance charges until the have a need for the network capacity. Accordingly, the GX Debtors ask the Court to approve the Settlement Agreement and Release with Flag Telecom, which includes the assumption of agreements as of the Effective Date. (Global Crossing Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) GOODYEAR TIRE: Brings-In Rick Navarro as VP Business Development ---------------------------------------------------------------- The Goodyear Tire & Rubber Company (NYSE: GT) named Rick Navarro, vice president, business development, effective Nov. 1, 2003. He will report to Clark E. Sprang, senior vice president, business development. Navarro will be responsible for developing and coordinating strategies to achieve business growth and profitability through acquisitions, divestitures, mergers and joint ventures for Goodyear. "Rick is a proven leader with a 25-year track record of success in business development in numerous industries," said Robert J. Keegan, chairman and chief executive officer, in making the announcement. "His focus has been on creating sustainable competitive advantages that generate superior returns for shareholders. "Rick's experience in using Six Sigma process improvement tools will play an important role in our drive to make it an integral part of the Goodyear culture." Navarro joins Goodyear from Solectron Corp., where he was senior vice president of corporate development. Prior to joining Solectron in 2002, he had been vice president, corporate development for the aerospace business of Honeywell International Inc. since 1997. Before moving to Honeywell in 1993, Navarro held leadership positions involving business development and mergers and acquisitions for Citicorp; Bank of America and Citibank, N.A. He began his career in 1972 as an engineer for Rockwell International, where he led structural design work on the Space Shuttle, Skylab, the Soyuz Docking Module and the Apollo Command Module. Navarro earned a Bachelor of Science degree in engineering from the University of California, Los Angeles in 1972 and a Master of Business Administration degree in finance from Stanford University's Graduate School of business in 1975. Goodyear (Fitch B+ Senior Secured and B Senior Unsecured Debt Ratings, Negative) is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 85 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 92,000 people worldwide. HAWK CORP: Holding Third-Quarter Conference Call Today ------------------------------------------------------ In conjunction with Hawk Corporation's (NYSE: HWK) third quarter 2003 earnings release, you are invited to listen to its conference call that will be broadcast live over the Internet today at 11:00 a.m. Eastern with the management of Hawk Corporation. What: Hawk Corporation Third Quarter 2003 Earnings Release When: Today, November 4, 2003 @ 11:00 a.m. Eastern Where: http://www.Hawkcorp.comor http://www.firstcallevents.com/service/ajwz392883729gf12.html How: Live over the Internet - Simply log on to the web at the address above Contact: Thomas A. Gilbride, Vice President - Finance, 216.861.3559. If you are unable to participate during the live webcast, the call will be archived later in the afternoon on the Company's site http://www.Hawkcorp.com To access the call, click on News & Reports-News-Conference Calls & Presentations. Hawk Corporation -- whose Corporate Credit Rating has been upgrade by Standard & Poor's to 'single-B' -- is a leading worldwide supplier of highly engineered products. Its friction products group is a leading supplier of friction materials for brakes, clutches and transmissions used in airplanes, trucks, construction equipment, farm equipment and recreational vehicles. Through its precision components group, the Company is a leading supplier of powder metal and metal injected molded components for industrial applications, including pump, motor and transmission elements, gears, pistons and anti-lock sensor rings. The Company's performance automotive group manufactures clutches and gearboxes for motorsport applications and performance automotive markets. The Company's motor group designs and manufactures die-cast aluminum rotors for fractional and subfractional electric motors used in appliances, business equipment and HVAC systems. Headquartered in Cleveland, Ohio, Hawk has approximately 1,700 employees and 16 manufacturing sites in five countries. Hawk Corporation is online at: http://www.hawkcorp.com HAYES LEMMERZ: Begins Preparation to Restart Huntington Ops. ------------------------------------------------------------ Hayes Lemmerz International, Inc. (OTC Bulletin Board: HAYZ) has obtained agreement from government agencies to begin testing safety and other plant systems at its Huntington Operations in preparation for resumption of operations at the plant on a schedule still to be determined. Chairman and CEO Curtis Clawson also expressed his condolences to those affected by the October 29 explosion that occurred in one part of the plant. "Our hearts go out to the families, friends, and co-workers of the three employees affected by this accident," he said. "Safety is always our highest priority, and we are intensely focused on learning the cause of this accident to help us protect our employees at all of our facilities," he added. Clawson and other senior Hayes Lemmerz officers flew to the facility, located near Ft. Wayne, Indiana, early on October 30. They visited the families of affected employees to express their condolences directly, and spoke with employees at the plant. The Company said that its manufacturing and machining areas at its Huntington Operations were not affected by the explosion in the aluminum chip reprocessing system, located in the northwest corner of the building. The plant employs about 250 people, of which about 80 were on duty at the time of the incident. Of the three maintenance associates who were in the area of the explosion, one has died as a result of injuries, one remains hospitalized, and one was treated and released at a local hospital. Production at the plant, which makes aluminum wheels, was suspended due to the explosion. Customers were advised individually of specific product supply situations. Hayes Lemmerz International, Inc. is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 43 plants, 3 joint venture facilities and 11,000 employees worldwide. HECLA MINING: Will Take Environmental Liabilities in 3rd Quarter ---------------------------------------------------------------- Hecla Mining Company (NYSE:HL) will take an accrual on its third quarter financial statements to reflect the company's current estimate of its environmental liabilities. The majority of this accrual is for the Coeur d'Alene Basin in response to a United States District Court ruling in September, which held that Hecla has some liability for yet-to-be determined natural resource damages and response costs due to its historic mining practices. The court held that joint and several liability is not appropriate, and that Hecla's tailings-related liability will be based on an allocation of 31% of the historic mine tailings production in the Coeur d'Alene Basin. The court also stated "that there has been an exaggerated overstatement by the Federal Government and the (Coeur d'Alene) Tribe" of environmental impacts in the Coeur d'Alene Basin in northern Idaho. But, because some liability was determined, a second phase of the trial, scheduled to begin in January 2005, will address what damages are recoverable and what cleanup relief is appropriate. The company is currently estimating that total costs for potential liability for historical environmental impacts in northern Idaho's Coeur d'Alene Basin, plus updated estimates for the Grouse Creek mine reclamation and other properties, require an additional accrual of $23.1 million. The environmental accruals taken in the third quarter, while having a significant impact on net income, should not have a material impact on the company's current and future plans. The company made the decision to take the accrual after a meeting Friday by the audit committee of Hecla's Board of Directors. Hecla President and Chief Executive Officer Phillips S. Baker, Jr., said, "These accruals do not materially impact our business, but are required accounting entries. And let me reiterate that we are actually quite pleased with the judge's ruling in the Coeur d'Alene Basin litigation. Of the $23.1 million total third-quarter environmental accrual, $16 million was in response to claims for environmental impacts in the Coeur d'Alene Basin and $6.8 million was taken for reclamation at the Grouse Creek mine in central Idaho. Based upon the court's September 2003 order, the company has attempted to outline a range of potential liability for the Basin cleanup, and has estimated a range of potential liability of $18 million to $58 million, with no amount within this range being more likely than any other at this time. Accounting rules state that when no best estimate within the range can be determined, the minimum liability should be accrued. Meanwhile, Hecla continues to successfully manage and close out environmental projects. This year, reclamation has been completed on four idle properties. A former industrial minerals property in Piedmont, South Dakota, has been given final release, as has the Middle Buttes gold mine in California. Work is complete at the Siddoway scoria rock property in Idaho and is awaiting final inspection and reclamation bond reduction, and regulatory agencies have accepted the site work, reclamation and reseeding at the Shumake gold mine in California. Hecla Mining Company (S&P, CCC+ Corporate Credit Rating, Positive), headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 112-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB. Hecla's Home Page can be accessed on the Internet at: http://www.hecla-mining.com HOME PRODUCTS: Weak Profitability Prompts S&P to Junk Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on household goods manufacturer Home Products International Inc. to 'CCC+' from 'B'. At the same time, Standard & Poor's lowered the senior secured rating on the company to 'B-' from 'B+' and the subordinated debt rating to 'CCC-' from 'CCC+'. The outlook is negative. Total debt outstanding at Home Products as of Sept. 27, 2003, was $126.2 million. "The downgrade reflects significantly weaker-than-expected profitability resulting from reduced sales volumes and higher raw material costs, in turn a result of reduced liquidity and credit ratios that are substantially below Standard & Poor's expectations," said credit analyst Martin S. Kounitz. The ratings are based on Home Products' sensitivity to fluctuations in the price of plastic resin (the company's primary raw material), vulnerability of its products to competition based on price, the company's concentrated customer list, and its high debt leverage. Chicago, Illinois-based Home Products manufactures ironing boards and plastic houseware items, including hangers and storage boxes, sold under the HOMZ trademark. The household goods market is highly competitive. Moreover, revenues are concentrated. About 70% of Home Products' sales are to its three major customers, Kmart Corp., Wal-Mart Stores Inc., and Target Corp. As Kmart has closed stores, Home Products' sales have been hurt. IFCO SYSTEMS: Expects Strong Growth for Third-Quarter 2003 ---------------------------------------------------------- Based on preliminary figures, IFCO Systems N.V. (Frankfurt:IFE1) expects to report a net profit of approximately US$4.9 million for Q3 2003 in comparison to US$3.6 million in Q3 2002, an increase of 38% year over year. Sustainable cost management and an increase in revenues were the key factors for this result. For the first nine months of 2003, IFCO Systems N.V. expects to report a net profit of approximately US$8.0 million compared to a net loss of US$95.6 million in the same period of the previous year. IFCO Systems N.V. will publish detailed figures for its third quarter 2003 on Nov. 4, 2003. * * * As previously reported in Troubled Company Reporter, Standard & Poor's withdrew its double-'C' bank loan rating on IFCO Systems N.V.'s $178 million secured bank credit facility. At the same time Standard & Poor's withdrew its corporate credit and subordinated debt ratings on the company, which was lowered to 'D' on March 15, 2002, after IFCO failed to make its interest payment on its 10.625% senior subordinated notes due 2010. J.P. MORGAN: Fitch Rates Class B-4 & B-5 Certificates at BB/B ------------------------------------------------------------- Fitch rates J.P. Morgan Mortgage Trust's mortgage pass-through certificates, series 2003-A1, as follows: -- $262.4 million classes 1-A-1, 2-A-1, 3-A-1, 4-A-1 through 4-A-6, and A-R senior certificates 'AAA'; -- $3.5 million class B-1 certificates 'AA'; -- $1.5 million class B-2 certificates 'A'; -- $943,700 class B-3 certificates 'BBB'; -- $539,200 privately offered class B-4 certificates 'BB'; -- $404,400 privately offered class B-5 certificates 'B'. Fitch does not rate the $404,762 privately offered class B-6 certificates. The 'AAA' rating on the senior certificates reflects the 2.70% subordination provided by the 1.30% class B-1, 0.55% class B-2, 0.35% class B-3, 0.20% privately offered class B-4, 0.15% privately offered class B-5 and 0.15% privately offered class B-6 certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the primary servicing capabilities of Cendant Mortgage Corporation, rated 'RPS1-' by Fitch. The trust consists of four cross-collateralized groups of 540 conventional, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate scheduled balance of $269,634,761. The average unpaid principal balance of the aggregate pool as of the cut-off date is $499,324. The weighted average original loan-to-value ratio is 67.72%. The mortgage loans in Group 1 consist of 228 one- to four-family residential properties, with aggregate principal balance of $119,257,130 as of the cut-off date (Oct. 1, 2003). The mortgage pool has a weighted average LTV of 68.35%, with a weighted average mortgage rate of 4.78%. Loans originated under a reduced loan documentation program account for approximately 24.15% of the pool, cash-out refinance loans 18.85%, and second homes 6.37%. The average loan balance is $523,058 and the loans are primarily concentrated in California (19.07%), New Jersey (14.10%) and Florida (7.60%). The mortgage loans in Group 2 consist of 98 one- to four-family residential properties, with aggregate principal balance of $40,629,684, as of the cut-off date. The mortgage pool has a weighted average LTV of 72.34%, with a weighted average mortgage rate of 4.64%. Loans originated under a reduced loan documentation program account for approximately 9.36% of the pool, cash-out refinance loans 11.44%, and second homes 3.38%. The average loan balance is $414,589 and the loans are primarily concentrated in California (19.59%), New Jersey (12.11%) and Illinois (8.57%). The mortgage loans in Group 3 consist of 31 one- to four-family residential properties with aggregate principal balance of $13,971,902, as of the cut-off date. The mortgage pool has a weighted average LTV of 63.43% with a weighted average mortgage rate of 4.98%. Loans originated under a reduced loan documentation program account for approximately 10.74% of the pool, and cash-out refinance loans 23.75% of the pool. The average loan balance is $450,707 and the loans are primarily concentrated in California (35.19%), New Jersey (20.75%) and Florida (12.37%). The mortgage loans in Group 4 consist of 183 one- to four-family residential properties with aggregate principal balance of $95,776,044, as of the cut-off date. The mortgage pool has a weighted average LTV of 65.59%, with a weighted average mortgage rate of 5.13%. Loans originated under a reduced loan documentation program account for approximately 26.51% of the pool, cash-out refinance loans 25.91%, and second homes 10.76%. The average loan balance is $523,366 and the loans are primarily concentrated in California (20.97%), New Jersey (10.89%) and New York (9.32%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Wachovia Bank, N.A. will serve as trustee. J.P. Morgan Acceptance Corporation I, a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, the trustee will elect to treat all or portion of the assets of the trust funds as comprising multiple real estate mortgage investment conduits. KMART CORP: Replaces Skadden Arps as Post-Emergence Counsel ----------------------------------------------------------- On August 19, 2003, U.S. Bankruptcy Court Judge Sonderby approves the transition of all remaining residual work on the Kmart Debtors' post-emergence wind-down of their Chapter 11 process from Skadden, Arps, Slate, Meagher & Flom, in Illinois, to other legal service providers. The Debtors will now be represented by Wilmer, Cutler & Pickering and Barrack, Ferrazzano, Kirschbaum, Perlman and Nagelberg. In the Anchorage, Alaska adversary proceeding, the Debtors will be represented by J. M. Harrison & Associates. Skadden Arps will be deemed to have withdrawn from representing the Debtors in their jointly administered bankruptcy cases and adversary proceedings. All appearances filed by attorneys from Skadden will be deemed withdrawn. Kmart's successor counsels will be responsible for establishing a new telephone hotline and e-mail address for public inquiries regarding the Debtors' Chapter 11 cases: Information Hotlines -------------------- Kmart Vendor/Supplier (toll-free) 1-877-453-5693 Kmart Associates & Employee (toll-free) 1-248-637-1150 Investor Relations 1-248-463-1040 Media Relations 1-248-463-1021 Counsel ------- Wilmer, Cutler & Pickering Attention Andrew Goldman, Esq. 399 Park Avenue New York, NY 10022 Tel: 1-212-230-8800 Fax: 1-212-230-8888 Co-Counsel ---------- Barack, Ferrazzano, Kirschbaum, Perlman & Nagelberg 333 West Wacker Drive, Suite 2700 Chicago, IL 60606 Tel: 1-312-984-3100 Fax: 1-312-984-3150 (Kmart Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-0900) MAGELLAN HEALTH: Court Clears Justice Department Settlement Pact ---------------------------------------------------------------- Magellan Health Services, Inc., and its debtor-affiliates obtained the Court's approval for a Settlement Agreement entered into by the Debtors and the United States Department of Justice. The agreement between the Debtors and the Justice Department settles the Claims for $1,100,000 cash. Magellan will pay the Settlement Amount on or before the effective date of the Debtors' Plan. In the event that the Bankruptcy Court does not confirm the Plan by November 15, 2003, the Settlement will be null and void unless Magellan pays the Settlement Amount by that date. Backgrounder Before June 17, 1997, Magellan Health Services, Inc. owned and operated numerous psychiatric facilities operating under the name of Charter Behavioral Health Systems. During that time, the Charter Psychiatric Facilities submitted claims for payment to the Medicare program. Since 2000, the United States Department of Justice, on behalf of the Office of Inspector General of the Department of Health and Human Services, conducted inquires and investigations regarding the Medicare claims and the Debtors' compliance with certain federal laws. As a result of the investigations, the Justice Department asserted certain potential civil and administrative claims against Magellan for improperly admitting patients and submitting claims to Medicare for medically unnecessary treatment of those patients from 1993 to June 17, 1997. The Justice Department asserted potential claims in excess of $4,000,000 against the Debtors. Because there is substantial uncertainty regarding the amount, if any, of the Claims and the extent to which the Justice Department can successfully prosecute the claims, the Debtors believe that litigation of the Claims would necessarily involve substantial time and expense. Consequently, the Debtors engaged in extensive discussions with the Justice Department regarding a possible settlement of the Claims. (Magellan Bankruptcy News, Issue No. 17: Bankruptcy Creditors' Service, Inc., 609/392-0900) MANITOWOC COMPANY: Proposes $125-Million Senior Debt Offering ------------------------------------------------------------- The Manitowoc Company, Inc. (NYSE: MTW), announced its intention, subject to market and other conditions, to raise approximately $125 million, through a public offering of unsecured senior notes due 2013. In addition, Manitowoc's obligations will be guaranteed by certain of its U.S. subsidiaries. Manitowoc will use the net proceeds from the sale of the notes offered to refinance outstanding indebtedness under its Credit Agreement. The Manitowoc Company, Inc. (S&P, BB- Corporate Credit Rating, Stable Outlook) is one of the world's largest providers of lifting equipment for the global construction industry, including lattice- boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. MANITOWOC CO: S&P Rates $125-Mill. Senior Unsecured Notes at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on The Manitowoc Co. Inc., and assigned its 'B+' senior unsecured debt rating to the company's proposed $125 million senior notes due in 2013. The proceeds from the offering will be used to permanently reduce its existing secured credit facility. The rating on the unsecured notes incorporates Standard & Poor's expectations that the company will continue to pay down its senior secured debt beyond scheduled amortizations. The refinancing eliminates concern about near-term amortization requirements. All other ratings were affirmed. The outlook on the Manitowoc, Wis.-based company is stable. Manitowoc has about $600 million in debt outstanding."The refinancing eliminates near-term amortization requirements," said Standard & Poor's credit analyst John Sico. "The amended credit facility is also expected to have revised covenants, which should provide an adequate cushion in the near term. The company expects to generate about $100 million in cash flow from operations in 2003, while capital expenditure requirements and dividends are modest." Although the company has leading positions in all of its three segments -- cranes, food-service equipment, and marine services -- earnings and cash flow are less diverse, as Manitowoc has placed significant emphasis on the crane business, which now accounts for about two-thirds of company revenues. The deterioration in the crane business has resulted from a severe decline in nonresidential construction spending in 2003 and 2002. "Although challenges in the crane operations are likely to continue for the near term, we expect the company to continue to be able to generate free cash flow to gradually pay down debt over time to support the ratings at the current level," Mr. Sico said. MERRILL LYNCH: S&P Assigns Prelim. Ratings to 2003-KEY1 Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Merrill Lynch Mortgage Trust 2003-KEY1's $1.0 billion commercial mortgage pass-through certificates series 2003-KEY1. The preliminary ratings are based on information as of Oct. 29, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, B, C, D, and E are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.84x, a beginning loan-to-value (LTV) of 78.6%, and an ending LTV of 66.9%. PRELIMINARY RATINGS ASSIGNED Merrill Lynch Mortgage Trust 2003-KEY1 Commercial mortgage pass-thru certs series 2003-KEY1 Class Rating Amount ($) A-1* AAA 201,373,000 A-2* AAA 521,502,000 B* AA 34,305,000 C* AA- 15,834,000 D* A 25,069,000 E* A- 10,555,000 A1-A AAA 179,617,000 F BBB+ 11,875,000 G BBB 7,917,000 H BBB- 10,555,000 J BB+ 5,278,000 K BB 5,278,000 L BB- 3,958,000 M B+ 6,597,000 N B 2,639,000 P B- 1,320,000 Q N.R. 11,874,925 WW-X N.R. 21,000,000 WW-1 N.R. 4,134,000 WW-2 N.R. 4,145,000 WW-3 N.R. 12,721,000 XC AAA 1,055,546,925 XP AAA 1,026,249,000 * Classes A-1 through E are offered publicly. Interest-only class. Notional amount. N.R. -- Not rated. MILACRON INC: Sept. 30 Balance Sheet Upside-Down by $25.7 Mill. --------------------------------------------------------------- Milacron Inc. (NYSE: MZ) reported a loss in the third quarter of 2003 but said that cost-reduction measures and the implementation of Lean manufacturing strategies helped improve manufacturing margins and generate positive cash flow from operations. In the third quarter of 2003, Milacron had sales of $170 million down slightly, despite favorable currency translation effects, from $173 million in the third quarter of 2002. The company reported a net loss in the quarter of $67.7 million, or $2.01 per share, which included, on an after-tax basis, a $52.3 million non- cash charge for goodwill impairment in the company's mold technologies segment, $6.3 million in restructuring costs and $2.0 million in losses from discontinued operations, as well as $1.9 million in tax expense. This compared to net earnings of $14.5 million, or $.43 per share, in the year-ago quarter, which included, after tax, a one-time gain on divestitures of $29.4 million and a tax benefit of $3.9 million, as well as $1.1 million in restructuring costs and $10.4 million in losses from discontinued operations. Thus, despite lower sales, Milacron was able to reduce its pre-tax loss from continuing operations before restructuring costs and the goodwill charge to $5.2 million in the most recent quarter, down from $7.3 million in the third quarter last year. New orders in the third quarter of 2003 were $176 million versus $179 million a year ago. With orders exceeding shipments, the backlog grew to $92 million, up from $85 million at the beginning of the quarter and from $80 million a year ago. Manufacturing margins were 18.3%, up slightly from 18.2% in 2002 and from 16.7% and 15.5% in the first two quarters of 2003, respectively. The operating loss before interest and taxes was $58.0 million and included restructuring costs of $6.4 million and the goodwill charge of $52.3 million. Excluding restructuring and goodwill charges, earnings before interest and taxes improved to $0.7 million compared to an operating loss of $0.8 million in the year- ago quarter. Net cash provided by operating activities was $1.8 million, as the company reduced inventories by almost $9 million in the quarter. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $25.7 million. "We made a lot of progress in the quarter," said Ronald D. Brown, chairman, president and chief executive officer. "We completed our cost-cutting initiatives in North America, and in Europe we saw good improvement in our blowmolding machinery operation in Italy. By focusing more resources outside our traditional markets of North America and Europe, which were soft in the first two months of the quarter, we took advantage of increasing demand in Asia, especially China. Overall, with a strong emphasis on working capital management through the implementation of Lean manufacturing strategies, we reduced inventories and generated positive cash flow from operations," Brown said. Segment Results Machinery Technologies-North America (machinery and related parts and services for injection molding, blow molding and extrusion supplied from North America and India) Sales of $72 million were down from $74 million in the year-ago quarter. New orders for the quarter also declined, to $74 million from $79 million in 2002. Helped by cost-reduction measures taken early in the quarter but penalized by ongoing pricing pressure, pre-tax operating earnings before restructuring costs were $0.9 million, down from $1.5 million a year ago. Machinery Technologies-Europe (machinery and related parts and services for injection molding and blow molding supplied from Europe) Despite favorable currency translation effects, sales of $33 million were down from $35 million in the year-ago quarter, while new orders increased to $37 million from $35 million. The segment cut its pre-tax operating loss before restructuring costs to $0.4 million, down from a loss of $1.5 million a year ago, primarily as a result of improving results in its blowmolding machinery operation in Italy. Operating results were held back, however, by delays in implementing previously announced cost- cutting measures in injection molding machine operations in Germany. Mold Technologies (mold bases and related parts and services, as well as maintenance, repair and operating supplies for injection molding worldwide) Sales were $39 million in the third quarter, down from $41 million a year ago, despite favorable currency translation effects. Excluding restructuring charges, the segment had a slight pre-tax operating profit of $0.1 million compared to $0.4 million last year. Industrial Fluids (water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide) Sales of $26 million were up from $25 million in the third quarter a year ago, primarily due to favorable currency translation effects. Pre-tax operating earnings improved to $4.8 million from $3.4 million a year ago. Goodwill Writedown In its annual review of intangible assets, the company revised downward estimated future cash flows in its mold technologies segment, which resulted in a non-cash goodwill impairment charge of $52.3 million, with no tax benefit. The charge is preliminary and may be adjusted in the fourth quarter based on further analysis. Cash Position and Financial Flexibility Milacron ended the third quarter with $62 million in cash, down from $67 million at the beginning of the quarter, as positive net cash provided by operations was offset by restructuring charges and losses from discontinued operations. Overall, the company expects cash flow in the fourth quarter to be similar to that of the third quarter. During the quarter, Milacron's bank group amended the company's revolving credit agreement, relaxing certain financial covenants to address the extended downturn in the plastics industries and to allow the implementation of further cost-cutting initiatives. Milacron is currently engaged in discussions with a number of potential lenders to replace by year-end both its revolving credit facility and its receivables securitization program, which together have approximately $80 million outstanding. At the same time, the company is actively pursuing a variety of options to refinance its public debt, which consists of $115 million of 8-3/8% notes due in March 2004 and EUR115 million of 7-5/8% bonds due in April 2005. Outlook With the backlog of unfilled orders currently growing and given the seasonal trend of accelerated machinery deliveries in the final months of the year, fourth-quarter sales are expected to show sequential improvement over the third quarter and approach levels of the fourth quarter a year ago. "In the fourth quarter we should experience the full benefit of the cost-cutting measures we've recently completed in North America," Brown said. "Therefore, we expect results from continuing operations in the fourth quarter to improve over those of the third quarter and approach break-even on an operating basis excluding restructuring costs. "As for the longer term, at this time we have very little visibility into 2004. On the assumption that there continues to be a moderate improvement in world economies in the first half of the year, this would likely lead to a recovery within our machinery businesses in the second half. Under this scenario, we believe we can return to sustained profitability in the second half of 2004. "Regardless of the economy, we will continue to focus our resources on providing our customers with the technology and service they need to improve their overall competitiveness. We will work hard to implement cost-saving measures in our European operations and we will pursue growth opportunities to serve our customers wherever they are throughout the world," he said. First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with about 3,500 employees and major manufacturing facilities in North America, Europe and Asia. For further information, visit http://www.milacron.com MIRANT CORP: Court OKs Amendment to Prepetition Credit Agreement ---------------------------------------------------------------- The U.S. Bankruptcy Court authorizes the Mirant Debtors' entry into the Amendment Agreement only to the extent that it will apply to 71 designated Letters of Credit aggregating $750,608,553. * * * Mirant Corporation is the borrower under a Four-Year Facility Agreement dated as of July 17, 2001 among Mirant, Credit Suisse First Boston, as administrative agent, and certain banks and other financial institutions as lenders. Under the Four-Year Credit Facility, the Prepetition Lenders agreed to make available to Mirant a working capital and letter of credit facility of up to $1,125,000,000 in aggregate principal amount. The salient terms of the Amendment Agreement are: (a) All Existing Letters of Credit -- including Evergreen Letters of Credit -- will be capable of being extended pursuant to the terms of the Amendment Agreement; (b) Existing Letters of Credit may be extended, at the election of Mirant, to a date -- the Relevant Termination Date -- which is the earlier of: (i) the date falling six months after the relevant Scheduled Expiry Date for the Existing Letter of Credit -- or a date not falling not later than one year after the Scheduled Expiry Date, as may be required by the terms of the underlying agreement with the relevant Beneficiary with respect to which the Existing Letter of Credit was issued; (ii) the Relevant Termination Date Mirant specifies in a written Extension Notice; or (iii) September 30, 2004; (c) If Mirant wishes to extend any Existing Letters of Credit, it will be required to provide a written notice to the Issuing Bank, requesting the extension and providing all relevant information for the purposes thereof, within a specified period prior to the Scheduled Expiry Date of the relevant Existing Letter of Credit; (d) If the relevant Beneficiary does not deliver an acknowledgement accepting the terms of the extension within a specified period of time, notwithstanding the Extension Notice, the Existing Letter of Credit will expire on the Scheduled Expiry Date; (e) The relevant Beneficiary of an Extended Letter of Credit must be the same entity as the Beneficiary of the Existing Letter of Credit; (f) The face amount of the Extended Letter of Credit may be equal to the then undrawn amount of the relevant Existing Letter of Credit, or a lesser amount elected by Mirant; (g) The relevant Beneficiary's rights to draw on the Extended Letter of Credit will be substantially the same as those set out in the Existing Letter of Credit being so extended; and (h) The Issuing Bank may make modifications to the terms of an Extended Letter of Credit as may be necessary to reflect the terms of the relevant extension, including with respect to Evergreen Letters of Credit, removing the provision providing for the automatic renewal. (Mirant Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) MSX INT'L: Schedules Third-Quarter Conference Call for Nov. 10 -------------------------------------------------------------- MSX International will hold a conference call to discuss third quarter 2003 financial results at 2:00 p.m. EST on Monday, November 10, 2003. To listen to the call, dial 212-676-5242 and provide reservation number 21164687. A replay of the call will be available beginning at 4:00 p.m. EST Monday, November 10, 2003 at 800-633-8284 (Domestic) or 402-977- 9140 (International), with the same reservation number. MSX International (S&P, B+ Corporate Credit, B- Subordinated Debt and B+ Senior Secured Credit Facility Ratings), headquartered in Southfield, Mich., is a global provider of technical business services. The company combines innovative people, standardized processes and today's technologies to deliver a collaborative, competitive advantage. MSX International has over 7,000 employees in 25 countries. Visit their Web site at http://www.msxi.com NORTHWEST AIRLINES: $225-Mill. Senior Notes Get S&P's B- Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Northwest Airlines Corp.'s (B+/Negative/--) $225 million 7.625% convertible senior notes due 2023, and affirmed all ratings on Northwest Airlines and unit Northwest Airlines Inc. (B+/Negative/- -). The notes and Northwest Airlines Corp.'s other senior unsecured debt are rated lower than the corporate credit rating because a high proportion of secured debt and leases in the company's capital structure places unsecured creditors in an essentially subordinated position. "Northwest, like other large U.S. airlines, faces weak revenues, substantial debt and pension obligations, and a need to lower its labor costs," said Standard & Poor's credit analyst Philip Baggaley. "However, the airline's credit profile benefits from substantial liquidity, with $2.8 billion of unrestricted cash (the largest amount, relative to the company's size, of any large U.S. airline, excepting Southwest Airlines Co.), and ongoing stringent cost-cutting efforts," the analyst continued. Northwest, the fourth-largest U.S. airline, has a domestic route system focused on hubs in Minneapolis, Minnesota, and Detroit, Mich. The company also offers extensive Pacific routes (mostly to Japan) and transatlantic service through a successful joint venture with KLM Royal Dutch Airlines. With the pending acquisition of KLM by Air France, Northwest and domestic partner Continental Airlines Inc. are expected to join the SkyTeam global alliance led by Delta Air Lines Inc. and Air France. Northwest reported net earnings of $47 million in the third quarter ended Sept. 30, 2003, compared with a loss of $46 million in the year- earlier quarter. The profit, while narrow, was one of the better performances among large U.S. airlines in that period, reflecting some revenue improvement and continued cost-control efforts. Still, Northwest tends to have a greater seasonal change in revenues than most U.S. airlines, benefiting disproportionately from summer travel, and losses are expected in the next several quarters. Northwest's management is seeking to negotiate concessions from the airline's labor groups, but faces a challenge in persuading unions to accept needed cost-saving changes given the company's ample near-term liquidity. The pilot union is considered to be most receptive to these proposals, while the mechanics appear unlikely to cooperate. Ratings could be lowered if the nascent recovery in earnings and cash flow generation falters due to renewed industrywide revenue weakness or the company's inability to reduce operating costs. NORTHWEST AIRLINES: Fitch Rates $225-Mil. Convertible Notes at B ---------------------------------------------------------------- Fitch Ratings has assigned a rating of 'B' to the $225 million in convertible senior unsecured notes issued by Northwest Airlines Corp. The privately placed notes, guaranteed by Northwest's operating subsidiary Northwest Airlines, Inc., carry a coupon rate of 7.625% and mature in 2023. The Rating Outlook for Northwest is Negative. The 'B' rating for the convertible notes reflects concerns over Northwest's ability to generate levels of operating cash flow sufficient to strengthen its balance sheet in light of large cash obligations that must be met during 2004 and 2005. The airline is engaged in negotiations with its labor unions to achieve pay and benefit concessions. If successful in this effort, Northwest could lower unit operating expenses to levels seen at other restructured network carriers (in particular, American and United). Without progress on labor cost reduction, however, a return to sustained profitability will be difficult to achieve even in an improving industry demand environment. Collective bargaining negotiations with the Air Line Pilots Association officially commenced in August, and the company has been in talks with its ground employees' union (the International Association of Machinists and Aerospace Workers) since late 2002. Northwest reported net income of $42 million in the third quarter as the carrier benefited from a revival of leisure demand in the seasonally strong summer months. Passenger revenue per available seat mile increased by 5% in the quarter, primarily as a result of a 7% decline in mainline capacity and a better-than-expected load factor performance. Significant recovery of demand in Atlantic and Pacific markets from the bleak period following the Iraq War and the SARS crisis appears to be contributing to Northwest's better revenue performance. In addition, the carrier continues to enjoy a stage length adjusted unit revenue premium versus the rest of the industry in domestic markets. Non-labor cost reduction appears to be proceeding faster at Northwest than at other carriers. In spite of a 7% decline in available seat mile capacity during the September quarter, unit costs did not increase markedly. Excluding fuel and special items, operating cost per available seat mile increased by only 1% in the third quarter. Despite stubbornly high fuel costs, hedging gains of about $30 million in the quarter brought Northwest's average jet fuel price down to 76 cents per gallon (excluding taxes). This price was well below the industry average for the quarter. Northwest's credit profile has clearly benefited from the company's focus on cash conservation during the industry's revenue crisis. Liquidity remains a source of relative strength. As of September 30, Northwest reported an unrestricted cash balance of $2.8 billion. This represented approximately 30% of projected 2003 total revenues--the strongest liquidity position of all the U.S. network carriers. The issuance of the $225 million in convertible notes, in addition to $150 million raised in a similar deal in May, signals the company's ability to access the capital markets- albeit on a limited basis--at a time of continuing turmoil in the industry. Calendar year 2003 pension plan contributions have now been satisfied, with the airline contributing a total of $413 million to its plans. This consists of both cash and stock in its non- public regional airline subsidiary, Pinnacle Airlines. Pending the outcome of pension funding reform initiatives in Washington, Northwest has not provided guidance regarding its expected 2004 cash funding requirements. Given the level of underfunding in its defined benefit plans, however, it is safe to assume that the airline faces several years of heavy pension plan contributions- perhaps exceeding this year's total of $413 million. Good asset returns and rising interest rates in 2003 should reduce the size of Northwest's current pension liability at the time of re- measurement on December 31. Scheduled debt maturities over the next several quarters are large, with $641 million due in 2004 and $1.44 billion due in 2005. In an effort to reduce some of the liquidity pressure associated with these maturities, Northwest on October 30 announced the launch of an exchange offer under which holders of $850 million of unsecured notes maturing between 2004 and 2006 could receive Class D pass-through certificates backed by 64 aircraft. The newly created Class D certificates carry a coupon rate of 10.5%. Northwest would not receive cash proceeds from the exchange but could reduce fixed cash obligations significantly during a period of continuing liquidity pressure between 2004 and 2006. Fitch will continue to focus on Northwest's ability to deliver significant reductions in unit labor costs in an effort to respond to the competitive challenges now posed by low-cost carriers and the restructured network airlines. Without near-term success on the labor front, it will be difficult for Northwest to maintain its liquidity position and begin the process of rebuilding its balance sheet. NORTHWESTERN CORP: Issues Comment on Recent Share Price Increase ---------------------------------------------------------------- NorthWestern Corporation (OTC Pinksheets: NTHWQ), which filed for Chapter 11 reorganization on Sept. 14, 2003, reported that it knows of no reason for the recent increase in the price of the Company's common shares. NorthWestern had previously stated in its public filings that if the Company filed for protection under the U.S. Bankruptcy Code, its common stockholders could lose their entire investment. NorthWestern reiterated that the planned sale of noncore assets will not change the Company's previously stated belief that there is no value in the Company's common stock as a result of its bankruptcy filing. NorthWestern Corporation is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving more than 598,000 customers in Montana, South Dakota and Nebraska. NorthWestern also has investments in Expanets, Inc., a nationwide provider of networked communications and data solutions to small and mid-sized businesses; and Blue Dot Services Inc., a provider of heating, ventilation and air conditioning services to residential and commercial customers. More information on NorthWestern's financial restructuring is available at http://www.northwestern.com NRG ENERGY: Implementing Proposed KERP and Severance Agreements --------------------------------------------------------------- At the NRG Energy Debtors' request, Judge Beatty approves the implementation of these Employee Retention and Severance Agreements: (a) the Senior Key Employee Retention Plan effective as of March 1, 2003 and as amended from time to time; (b) Severance Agreements with six members of the Debtors senior management team; (c) the Key Employee Retention Plan effective as of August 1, 2002 and as amended from time to time; and (d) the Amended and Restated Key Executive Retention, Restructuring Bonus and Severance Agreement for Scott J. Davido, the Senior Vice President, General Counsel and Corporate Secretary of NRG, which was approved on August 5, 2003. According to Kelly K. Frazier, Esq., at Kirkland & Ellis, in New York, the Debtors' ability to implement and timely effectuate the Reorganization Plan by the end of the year may be seriously jeopardized absent the continued dedication and on-going services of the Debtors' senior management team and other key employees. The Debtors believe that the most effective way to protect against attrition and to improve morale among the employees is to implement the key employee retention plans and severance agreements. Senior Management KERP The Debtors implemented the Senior Key Employee Retention Plan effective as of March 1, 2003, subsequently amended on July 21, 2003 to retroactively increase the percentage amount of incentive payments received by certain SKERP Participants. The SKERP provides for retention incentive payments to six members of the Debtors' senior management team payable in three installments. The SKERP Participants are: Name Title Tenure ---- ----- ------ Ershell C. Redd, Jr. Senior Vice President, 10/16/02 Commercial Operations Member of the Board of Directors for NRG and certain other Debtors effective as of 5/14/03 John P. Brewster Vice President, 4/01/00 Worldwide Operations William T. Pieper Vice President & Controller 3/20/95 George P. Schaefer Vice President & Treasurer 12/18/02 Denise Wilson Vice President, Administrative Services 9/18/00 Guy Smith Vice President, International 8/4/97 The SKERP provides that each of the SKERP Participants will receive a retention incentive payment equal to a certain percentage of their base salary, in a range of 65% to 80%. All of the SKERP Participants collectively will be entitled to receive a retention incentive in an amount not to exceed $866,750 in the aggregate. Of that amount, $205,874 was already paid to the SKERP Participants in accordance with the SKERP prior to the Petition Date, on April 11, 2003. Thus, two payments remain: (1) $227,501; and (2) $433,375, which will be paid to the SKERP Participants on the earlier of December 31, 2003 or the Effective Date. An individual SKERP Participant will be entitled to receive a retention payment if he or she is employed on a scheduled retention payment date, or, if not employed, only in the event that the Debtors terminate the SKERP Participant's employment without cause or the SKERP Participant dies or becomes disabled. Any future payments under the SKERP will be conditioned on the receipt by the Debtors of a general release of all claims by the SKERP Participant. Senior Management's Severance Agreements The Severance Agreements provide for varying amounts of payments to each of the SKERP Participants if the employees are terminated through no fault of their own as a result of: -- an involuntary termination by the Debtors without cause; or -- voluntary resignation as a result of a material and adverse change in the duties and responsibilities for which the employee was hired. Therefore, a SKERP Participant will not be eligible for Severance Pay if he or she: -- fails to perform his or her assigned duties satisfactorily through the designated date of termination; -- is terminated by the Debtors for cause; or -- dies, retires or becomes disabled while employed by the Debtors. With the exception of Ershel Redd, the Severance Agreements provide that the applicable SKERP Participant will receive Severance Pay equal to: (a) either one or one and one-half times the annual base salary; and (b) the costs associated with a SKERP Participant's health benefits under COBRA for a period of 12 months from the effective date of separation. In addition, William Pieper also will receive one and one-half times his target bonus, which is equal to an additional 45% of his base salary. The Severance Pay, if any, is payable upon termination in a lump sum or in the form of salary continuation until paid in full, as determined in the Debtors' sole discretion. There are no cure amounts due under any of the Severance Agreements. The SKERP Participants, other than George Shaefer and John Brewster, are eligible for the benefits under their Severance Agreements only after execution of a general release of all claims against the Debtors. Mr. Shaefer and Mr. Brewster is required to execute a general release of all claims against the Debtors in order to be eligible to receive any payments under their Severance Agreements. In the unlikely event that all SKERP Participants were terminated and were eligible to receive Severance Pay, the total maximum liability under all of the Severance Agreements, based on current base salaries, is estimated to be $2,136,000 in the aggregate. The Severance Agreements are designed to serve as a security element for, and relieve anxiety of, the SKERP Participants during this critical stage in the Debtors' Chapter 11 cases. Retention Plan for Other Key Executives and Management The KERP provides for $3,910,000 to be paid out in increments, to approximately 90 employees who have either been identified as key to the Debtors' business and the restructuring efforts or critical employees at varying levels of seniority and rank who are critical to the day-to-day operations of the Debtors' business. In developing the KERP, the Debtors' management went through a process, working closely with their advisors, to accomplish three tasks: (a) design plan economics consistent with the market for retention programs in similar situations and responsive to the perceived needs of the Debtors; (b) develop the controls, provisions and requirements of the KERP that are both common in similar plans and responsive to the unique circumstances of the Debtors' situation; and (c) identify and classify those employees who would be eligible for retention bonuses and any other benefits under the KERP. Under the KERP, employees are divided into two tiers, -- Tier I Employees and the Tier II Employees -- based on the Debtors' internal grading system, which in turn is based on an employees' level of responsibility and accountability at the company as benchmarked against market level compensation. Each eligible Tier I and Tier II Employee will receive a retention incentive payment equal to 40% and 30% of their base salary for scheduled payments on October 31, 2002, February 28, 2003, and July 31, 2003. In addition, pursuant to the most recent amendment to the KERP, effective as of July 21, 2003, approximately 61 of the eligible Tier I and Tier II Employees will receive an additional retention incentive payment equal to 20% and 15% of their base salary, which additional retention incentive payment is payable on the earlier of December 31, 2003 or the Effective Date -- the Supplemental Bonus. Prior to the Petition Date, the Debtors have made two payments to eligible Tier I and Tier 11 Employees: (1) on October 31, 2002, $638,076 -- representing 25% of the total aggregate retention payment at that time; and (2) on February 28, 2003, $592,691 -- representing 25% of the total aggregate retention payment at that time. Thus, two payments remain: (1) $1,193,682 -- representing 50% of the total aggregate retention payment, excluding the Supplemental Bonus -- which will be paid to eligible participants as soon as practicable; and (2) $1,179,275 on account of the Supplemental Bonus, which will be paid to eligible participants on the earlier of December 31, 2003 or the Effective Date. An individual KERP participant will be entitled to receive a retention payment if he or she is employed on a scheduled retention payment date, or, if not employed, only in the event that the Debtors terminate the participant's employment without cause or the participant dies or becomes disabled. The KERP also provides for a discretionary retention bonus fund in an aggregate amount not to exceed $300,000 for the purpose of awarding retention bonuses to employees who are not otherwise eligible for participation in the SKERP or KERP, as to be determined by and at the discretion of the Debtors' senior management. The maximum amount of any discretionary retention bonus awarded to an individual employee will not exceed $20,000, unless a higher amount is approved by the Board. Any future payments under the KERP be conditioned on the receipt by the Debtors of a general release of all claims, other than future claims for those participants that are currently employed by the Debtors, by the KERP participant. The Employment Agreement with Mr. Davido Ms. Frazier tells the Court that effective October 7, 2002, Scott J. Davido was employed as the Senior Vice President, General Counsel and Corporate Secretary of NRG. Mr. Davido is responsible for all legal and regulatory matters and communications, and is intricately involved in the Debtors' restructuring efforts and Chapter 11 cases. Effective as of the Petition Date, Mr. Davido also was appointed to the Board, and currently is Chairman of the Board. Because of Mr. Davido's integral role in the restructuring process, on January 7, 2003, the Board conditionally approved a Key Executive Retention, Restructuring Bonus and Severance Agreement for Mr. Davido. Pursuant to the Davido Retention Agreement, on the Effective Date, Mr. Davido will receive a restructuring bonus aggregating $750,000, which bonus will be paid in a lump sum within 30 days after the Effective Date. Payment of the restructuring bonus is conditioned on the Effective Date occurring by the date specified in the Plan, unless the condition to the Effective Date is waived under the Plan in accordance with its terms. The Davido Retention Agreement also provides for severance benefits to Mr. Davido equal to: (1) two times the sum of: -- Mr. Davido's base salary; and -- the greater of Mr. Davido's average annual bonus earned over the two most recent full fiscal years prior to the Effective Date of his termination or the target annual bonus established for the bonus plan year in which the termination occurs; (2) a net cash payment for the costs of health benefit premiums under COBRA for a period of 18 months from the effective date of termination; (3) the pro rata portion of any unpaid targeted annual incentive; (4) a cash payment for earned but unpaid vacation and paid time off; and (5) reimbursement for the costs of an outplacement service for a two-year period after the effective date of termination in an amount not to exceed $15,000. The Debtors estimate that the total aggregate liability on account of the severance benefits under the Davido Retention Agreement will not exceed $1,901,019. The severance pay under the Davido Retention Agreement, if any, is payable, net of appropriate withholdings, as determined in the Debtors' sole discretion either in: (1) 30 equal monthly installments, or (2) one lump sum within a reasonable period of time, commencing or paid at a time not to exceed 120 days after the effective date of termination. Mr. Davido is eligible for the benefits set forth in the Davido Retention Agreement only after execution of a release of all claims against the Debtors. Moreover, in the event of Mr. Davido's termination, the restructuring bonus and the severance pay are payable only if the termination is through no fault of Mr. Davido as a result of: -- an involuntary termination by the Debtors without cause; or -- the voluntary resignation as a result of a significant and material adverse change or reduction in the compensation, benefits, duties and responsibilities of Mr. Davido. The Davido Retention Agreement also contains non-competition, non-disclosure, and non-solicitation provisions enforceable against Mr. Davido in the event that Mr. Davido's employment with the Debtors is terminated. The Debtors determined that the postpetition costs associated with the continuation and adoption of the Retention and Severance Agreements will not exceed $8,121,000 in the aggregate. Ms. Frazier contends that the costs will be substantially less -- at most only $4,084,000 -- to the extent that the SKERP Participants and Mr. Davido remain employed by the Debtors. The Debtors will pay the contemplated payments under the Retention and Severance Agreements. The Debtors assert that it has sufficient unrestricted cash reserves -- $76,900,000 as of August 14, 2003 -- from which to satisfy these administrative obligations. (NRG Energy Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) ONEIDA LTD: Closing 5 Factory Sites as Part of Cost-Saving Plan --------------------------------------------------------------- In conjunction with a proposal that was announced on August 27, Oneida Ltd. (NYSE:OCQ) has decided to close five factory sites because of substantial negative manufacturing variances. The affected locations include: Buffalo China dinnerware factory and decorating facility in Buffalo, N.Y.; dinnerware factory in Juarez, Mexico; flatware factory in Toluca, Mexico; holloware factory in Shanghai, China; holloware factory in Vercelli, Italy. Anticipated savings from the closings will be approximately $12 million annually. Oneida will incur a total charge of approximately $46 million in association with the closings, as was previously noted by the company on August 27 when it announced that the actions were being considered. The company will continue to market the affected products from those sites, using independent suppliers. The factory closings are expected to be completed during the fourth quarter of Oneida's current fiscal year. No final decisions have been made at this time regarding the proposed closure of the Buffalo China warehouse in Buffalo, N.Y., and negotiations are continuing. "After reviewing our options at each of these locations over the past several weeks, we determined they must be closed in order for our company to operate in a profitable and cost-efficient fashion over the long term," said Peter J. Kallet, Oneida Chairman and Chief Executive Officer. "This was an extremely difficult action to approve. These sites have been a vital part of our company, and we recognize the ramifications of this decision for all of the affected employees. We understand the hardships and uncertainties that they will face." Commitment to Quality, and to Restoring Profitability "At the forefront of our strategy is our commitment to continue providing customers with the best quality products, both new and existing, throughout our sales channels," Mr. Kallet concluded. "As we take actions to help restore our profitability and help improve our shareholder value, we remain focused on long-term goals to increase market shares across all our product lines and be the world's most complete tabletop supplier." Oneida Ltd. is a leading source of flatware, dinnerware, crystal, glassware and metal serveware for both the consumer and foodservice industries worldwide. As reported in Troubled Company Reporter's August 29, 2003 edition, Oneida secured from the required lenders a waiver of the financial covenants under its credit agreements through the end of the second quarter. At July 26, 2003, Oneida's balance sheet shows that its total current liabilities outweighed its total current assets by about $36 million. OWENS CORNING: Balks At New York City's $10-Million Claim --------------------------------------------------------- Pursuant to a February 12, 1999 settlement agreement, the City of New York and the Owens Corning Debtors resolved all claims of New York City against the Debtors relating to the alleged presence of asbestos-containing materials in buildings, properties and facilities the City owned, leased, maintained, controlled and utilized and any other governmental or quasi-governmental agencies or units, including buildings, facilities and properties which may have been disposed of, for $750,000 plus certain interest. Under the Settlement Agreement, the $750,000 was to have been paid in increments, with $250,000 due on February 15, 1999, $250,000 due on February 15, 2000, and $250,000 due on February 15, 2001. The Settlement Agreement provided that New York City waives all claims and releases Owens Corning from all liabilities for property damages which the City accrues on account of or in any way arising from asbestos-containing materials. The Settlement Agreement also provides that "[i]n no event shall a breach of the Agreement revive any of the claims released herein." Before the Petition Date, Owens Corning duly made all payments required under the Settlement Agreement. It did not, however, make the payment due on February 15, 2001. On April 15, 2002, New York City filed Claim No. 8060 asserting a general unsecured claim for $300,000. The Claim consists of: (1) the $250,000 payment due under the Settlement Agreement on February 15, 2001; (2) accrued interest; and (3) $35,000 of legal fees allegedly due under the Settlement Agreement. On August 5, 2003, New York City amended the Claim to assert a general unsecured claim for $10,000,000. A two-page exhibit to the Amended Claim indicates that the basis for the Claim is alleged asbestos-containing material at five New York City properties. The Amended Claim makes no reference to the Settlement Agreement. The Debtors object to the Amended Claim. The Debtors ask the Court to disallow and expunge the Amended Claim in its entirety, in favor of the Original Claim. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, explains that the Settlement Agreement resolved all alleged liability of the Debtors to New York City with respect to asbestos-containing materials. To the extent the Debtors breached the Settlement Agreement by failing to make the final payment due under that, the Settlement Agreement expressly provides that "[i]n no event shall a breach of the Agreement revive any of the claims released herein." Thus, New York City's filing of the Amended Claim is directly contrary to the express terms of the Settlement Agreement, which released all New York City claims against the Debtors relating to asbestos-containing material. In the event the Court does not disallow the Amended Claim, the Debtors deny any liability to New York City on account of alleged asbestos-related property damage. The Debtors demand strict proof of the amount asserted. (Owens Corning Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC SHORES: Fitch Raises Two Low-B Preference Shares Ratings ---------------------------------------------------------------- Fitch Ratings upgrades three classes and affirms three classes of notes issued by Pacific Shores CDO. The following three classes of Pacific Shores CDO have been upgraded: -- $23,372,513 class C notes upgraded to 'A' from 'BBB'; -- $21,500,000 class 1 preference shares to 'BBB-' from 'BB-'; -- $7,000,000 class 2 preference shares to 'BBB-' from 'BB-'. The following three classes of Pacific Shores CDO have been affirmed: -- $532,000,000 class A first priority senior secured floating-rate notes 'AAA'; -- $96,000,000 class B-1 second priority senior secured floating-rate notes 'AA'; -- $16,000,000 class B-2 second priority senior secured floating-rate notes 'AA'. Pacific Shores CDO is a collateralized debt obligation, which closed in February 2002. The portfolio consists of residential mortgage-backed securities (RMBS; 58.5%), asset-backed securities (ABS; 17.3%), commercial mortgage-backed securities (CMBS; 13.2%), corporate securities (6.9%), and CDOs (4.2%). The upgrade rating action on the class C notes reflects the deleveraging of the CDO, as the principal balances of the class C notes have been paid down by approximately 16.5% over the past 15 months from excess spread in the transaction. This is due to the equity cap structured into the CDO, whereby excess spread is paid to the equityholder in an amount that equates to a dividend yield of 30% per annum, and any excess spread above the cap is then diverted to pay down the principal balance of the class C notes. Therefore, although the CDO is currently in its revolving period, during which time any principal receipts from the collateral are reinvested in new collateral unless a coverage test is tripped, the CDO may still amortize the class C notes from interest if there are excess proceeds. Fitch views this equity cap feature as being positive for the rated notes of the CDO, as it traps excess spread that would otherwise flow out of the deal and directs it to pay down the most expensive liabilities without reducing the credit enhancement to the senior notes. The upgrade rating action on the class 1 and class 2 preference shares reflects total distributions of $10.83 million paid from excess spread. The rating on the preference shares addresses the ultimate return of principal and a 2% IRR. Fitch has reviewed the credit quality of the individual assets comprising the portfolio and has conducted cash flow modeling of various default timing and interest rate scenarios. According to the Sept. 29, 2003 trustee report the class A/B overcollateralization was 108.92% and the class C OC was 104.98% relative to test levels of 105.25% and 101.75% respectively. The report also indicated that the overall credit quality of the portfolio has experienced no significant credit migration since closing, with a current weighted average rating factor of 11.9 vs. an initial WARF of 10.6, relative to a test level of 18. Although the collateral pool contains exposure to sectors of concern to Fitch, including approximately 1.4% in aircraft lease and 10.7% in manufactured housing, Fitch is comfortable with the overall credit quality of portfolio. Fitch will continue to monitor this transaction. PENN NATIONAL: S&P Ups Ratings over Improved Operating Results -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Penn National Gaming Inc., including its corporate credit rating to 'BB-' from 'B+'. The outlook is stable. Total debt outstanding (excluding the debt outstanding at the company's Hollywood Casino Shreveport unrestricted subsidiary) was approximately $998 million at Sept. 30, 2003. Wyomissing, Pennsylvania-headquartered Penn National is a casino owner and operator. "The upgrade reflects the company's continued steady operating results for the nine months ended Sept. 30, 2003, which has resulted in an improvement in credit measures that are in-line with the new ratings," said Standard & Poor's credit analyst Michael Scerbo. "In addition, the higher ratings reflect Standard & Poor's expectation that the company's good operating momentum will continue in the near term, resulting in significant discretionary cash flow generation, which could be used to further reduce debt balances and provide cushion to complete any growth opportunities that may arise," Mr. Scerbo added. Ratings reflect Penn National's lack of overall brand identity, a portfolio of casino properties that are not generally market leaders, competitive conditions in the markets the company serves, and management's historically aggressive growth strategy. These factors are offset by the company's relatively diverse portfolio of casino assets, niche market positions, continued steady operating results, expected significant free cash flow generation, and minimal near-term maturities. For the nine months ended Sept. 30, 2003, EBITDA (excluding Shreveport and earnings from joint ventures) was approximately $183 million, a significant increase over the prior-year period due to the HWCC acquisition during the 2003 period. Same-store EBITDA (excluding the acquired assets in Aurora & Tunica) also increased by more than 20% during this period. Standard & Poor's expects Penn National to continue to pursue external growth opportunities in the future to further expand its portfolio of gaming assets. These opportunities could include the potential legalization of slot machines at racetracks in Pennsylvania. Penn National currently owns and operates two racetracks within the state. In the event slots are legalized, Penn National would likely increase its capital spending plans in an effort to install machines at its existing facilities in the near term. PG&E NATIONAL: Noteholders Committee Taps Klee Tuchin as Counsel ---------------------------------------------------------------- The Official Noteholders' Committee, appointed in PG&E National Energy Group Debtors' bankruptcy cases, sought and obtained the Court's authority to retain Klee, Tuchin, Bogdanoff & Stern LLP as its reorganization counsel nunc pro tunc to August 6, 2003 in connection with the NEG Debtors' Chapter 11 cases. As counsel, Klee Tuchin will: (a) advise the Noteholders' Committee regarding matters of bankruptcy law as they relate to the NEG Debtors' cases; (b) represent the Noteholders' Committee in proceedings or hearings in the United States Bankruptcy Court for the District of Maryland in accordance with its statutory right to appear and be heard on any issue in the NEG Debtors' cases; (c) advise the Noteholders' Committee concerning the requirements of the Bankruptcy Code, federal and local rules relating to the administration of the NEG Debtors' cases, and the effect of these cases on the Noteholders' Committee; (d) advise and assist the Noteholders' Committee in the negotiation and confirmation of a reorganization plan; and (e) advise and assist the Noteholders' Committee in the investigation, litigation and settlement of NEG claims relating to PG&E Corporation, USGen New England, Inc., and other affiliated entities. However, the firm will not be responsible for: (a) appearances before any court or agency other than: -- the Unites States Bankruptcy Courts; -- appellate courts with jurisdictions over appeals from such courts; and -- the Office of the United States Trustee; (b) the provision of substantive legal advice outside the insolvency area, like: -- corporate law, -- energy law, -- employment law, -- partnership law, -- non-bankruptcy taxation, -- securities law, -- torts, -- environmental law, -- non-bankruptcy labor issues, -- criminal law, or -- real estate law. Klee Tuchin will not be required to devote attention to, form professional opinions as to, or advise the Noteholders' Committee with respect to the NEG Debtors' disclosure obligations under federal securities or other non-bankruptcy laws or agreements. Marlene Deleon, Chairperson of the Noteholders' Committee, relates that Klee Tuchin is well qualified to represent the Noteholders' Committee as its reorganization counsel. Klee Tuchin has extensive experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under Chapter 11. Klee Tuchin attorneys practice insolvency and bankruptcy law. In accordance with Section 330(a) of the Bankruptcy Code, Klee Tuchin will be compensated on an hourly basis, plus reimbursement of actual, necessary expenses and other charges incurred. Klee Tuchin's standard hourly rates are: Partners/attorneys of counsel $385 - 675 Associates 225 - 335 Law Clerks/Paralegals 150 - 160 The attorneys directly responsible to provide services to the Noteholders' Committee and their hourly rates are: Kenneth N. Klee $675 Lee R. Bogdanoff 540 Daniel J. Bussel 540 Laura l. Buchanan 385 The hourly rates are subject to periodic adjustments to reflect economic and other conditions. Ms. Deleon states that Klee Tuchin has become familiar with the NEG Debtors' financial condition and businesses as a result of its co-representation -- along with Chadbourne & Parke LLP -- of an ad hoc group of certain holders of 10-3/8% Senior Note due 2011, before August 4, 2003. As of October 17, 2002, the Ad Hoc Group engaged Klee Tuchin as reorganization counsel, and Chadbourne & Parke as tax, regulatory and corporate counsel, to assist in the Ad Hoc Group's negotiations with the NEG Debtors' major creditors regarding the global restructuring of NEG's debt. The Ad Hoc Group dissolved on August 6, 2003, the date the Noteholders' Committee held its initial organization meeting. Ms. Deleon says that Klee Tuchin will continue to develop a close working relationship with other co-counsels retained by the Noteholders' Committee to avoid any duplication of services in these cases. Ms. Deleon discloses that NEG Debtors had paid Klee Tuchin $800,000 as retainer in addition to $998,401 in aggregate fees and expenses incurred for the period from June 29, 2003 to the Petition Date on account of its representation of the Ad Hoc Group. Pursuant to an agreement between Klee Tuchin and the NEG Debtors, Klee Tuchin will return the retainer to the NEG Debtors less any unpaid fees and disbursements for services before the actual date of employment of Klee Tuchin as the Noteholders' Committee's reorganization counsel. Daniel J. Bussel, a partner of Klee Tuchin, attests that the firm does not represent any interest adverse to the Noteholders' Committee in the matters for which it has been retained. Klee Tuchin does not have any connection either with the NEG Debtors, their creditors, other parties-in-interest, or with the United States Trustee and is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. (PG&E National Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392- 0900) PICCADILLY CAFETERIAS: S&P Drops Ratings to D over Bankruptcy ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Piccadilly Cafeterias Inc. to 'D' from 'CC'. The rating action follows the company's announcement that it filed for Chapter 11 protection in the United States Bankruptcy Court for Southern District of Florida (Bankr. Case No. 03-27976) (Ray, J.) with a deal in hand to sell substantially all of its assets for $54 million to a joint venture formed by TruFoods Corporation and H.I.G. Capital. "Piccadilly experienced prolonged sales declines as it struggled to attract a younger segment of the population," said Standard & Poor's credit analyst Robert Lichtenstein. "The company's sales were also negatively affected by a reduction in shopping mall traffic related to the general economic downturn." As a result of its poor operating performance, the company's liquidity position deteriorated. Liquidity was also hurt by the company's rising pension funding requirements. TruFoods operates and franchises Arthur Treacher's Fish & Chips, Pudgie's Famous Chicken, Wall Street Deli and Burritoville restaurants. H.I.G. is a private equity and venture capital firm with more than $1 billion under management. Jack McGregor is serving as interim CEO for Piccadilly. Jorge Freeland, Esq., at White & Case represents the Company in its chapter 11 case. POLAROID CORP: Committee Wants Shareholders Claim Reclassified -------------------------------------------------------------- Maribeth L. Minella, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, informs the Court that 256 objectionable Shareholder Claims were filed against the Polaroid Debtors. Some of the largest Shareholder Claims are: Claim Claim Claimant No. Amount -------- ----- ------ Carrington, Leslie A. 5206 $427,464 Cohen, Lawrence J. 5022 289,407 Dipillo, Edmondo 6116 332,593 Flucckiger, Joseph T. 4858 385,000 Hennigan, Thomas R. 5301 1,070,107 Hurkett, William N. Jr. 1688 303,948 Hurkett, William N. 380 303,948 Lawrence, Sandra B. 5777 1,147,000 Morgan, Stephen J. 5876 937,500,000 Nippor, Polaroid Kabushiki Kaisha 1353 6,586,482 According to Ms. Minella, the 256 Shareholder Claimants assert either or both of these claims against the estates: (a) claims arising from the ownership of the Debtors' equity securities; or (b) claims arising from damages related to the purchase or the sale of the Debtors' equity securities. A. The Shareholders Claims Must be Reclassified The Debtors had previously notified all creditors that they were not required to file proofs of claim based exclusively on an ownership interest in the stock of the Debtors. Ms. Minella relates that the ownership of the Debtors' stock constitutes an equity interest, but does not constitute a "claim" against the Debtors' estates as defined in Section 101(5) of the Bankruptcy Code. B. The Shareholder Claims Must be Subordinated Section 510(b) mandates the subordination of claims arising from the purchase or the sale of debt and equity securities. Courts have construed Section 510(b) as being broad enough to include fraud, violations of securities laws, breach of contract, and related causes of action against a debtor. Subordination of claims under Section 510(b) applies equally to claims arising from the purchase or the sale of debt securities and equity securities. C. The Shareholder Claims Must be Expunged Generally, holders of equity interests will receive distributions, if any, pursuant to the terms and conditions set forth in a Chapter 11 plan, after the general unsecured creditors are made whole pursuant to the plan. Under the Third Amended Joint Plan of Reorganization, holders of equity interests will not receive any distribution since general unsecured creditors will not be made whole. Accordingly, the Committee asks the Court to: (a) reclassify the Shareholder Claims as equity interests, to the extent that the claims are based on the claimants' status as owners of the Debtors' equity interests; (b) statutorily subordinate the Shareholder Claims, to the extent that the claims are seeking any recovery in connection with damages arising as the result of the purchase or the sale of the Debtors' equity securities; and (c) expunge the Shareholder Claims. Ms. Minella notes that to the extent that any of the individuals or entities that filed the Shareholder Claims holds valid equity interests in the Debtors as of the applicable record date, the requested disallowance of their claims will not impair any entitlements they have, if any, under the Plan with respect to those equity interests. (Polaroid Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) REDBACK NETWORKS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Redback Networks, Inc. 300 Holger Way San Jose, California 95134 Bankruptcy Case No.: 03-13359 Type of Business: The Debtor is a leading provider of advanced telecommunications networking equipment. The Debtor's business enables carriers and service providers to deploy high-speed access and services to the Internet and corporate networks. Chapter 11 Petition Date: November 3, 2003 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Bruce Grohsgal, Esq. Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 N. Market Street 16th Floor Wilmington, DE 19801 Tel: 302-778-6403 Fax: 302-652-4400 -and- G. Larry Engel, Esq. Jonathan N.P. Gilliland, Esq. Morgan Lewis & Bockius, LLP One Market Spear Street Tower San Francisco, CA 94105 Tel: 415-442-1000 Fax: 415-442-1001 Total Assets: $591,675,000 Total Debts: $652,869,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wells Fargo, National Unsecured Debenture $481,184,000 Association, Indenture Trustee 707 Wilshire Boulevard, 17th Floor Los Angeles, CA 90017 Jeanie Mar Tel: 213-614-3349 Creedon Capital Mgmt. LLC Unsecured Debenture $108,440,000 123 Second Street Suite 120 Sausalito, CA 94965 David Goldstein Tel: 415-332-0111 Fax: 415-331-7811 Citadel Investment Group Unsecured Debenture $59,000,000 One Market Plaza Spear Tower San Francisco, CA 94104 Mitch Cone/Sergio Castellan Tel: 415-354-7206 Fax: 312-977-0298 Ramius Capital Group LLC Unsecured Debenture $53,500,000 666 Third Avenue, 26th Floor New York, NY 10017 Mauricio Gomez Tel: 212-845-7986 Fax: 212-845-7997 Oaktree Capital Mgmt. Unsecured Debenture $37,227,000 333 S. Grand Avenue 28th Floor Los Angeles, CA 90071 Holly Kim/Brian Beck Tel: 213-830-6415 Fax: 213-830-8828 Credit Suisse First Unsecured Debenture $24,370,000 Boston One Cabot Square London, UK, E14 4QD Joe Downey Tel: 44-20-7888-8888 FaxL 44-20-7888-1600 Barclays Capital Unsecured Debenture $15,000,000 Securities Five The North Colonnade Canary Wharf London, UK E14 4Bb David Kilgore Tel: 44-20-7773-3888 Fax: 415-765-4760 Westchester Capital Mgmt. Unsecured Debenture $13,537,000 100 Summit Lake Drive Valhalla, NY 10595 Roy Behren Tel: 914-741-5600 J.P. Morgan Private Unsecured Debenture $11,850,000 Banking 200 White Clay Center Drive Newark, DE 19711-5466 Lori Thomas Tel: 302-634-5295 Taconic Capital Advisors Unsecured Debenture $11,700,000 375 Park Avenue Suite 1904 New York, NY 10152 John Jachman Tel: 212-209-3156 Fax: 212-209-3180 Lehman Brothers Inc. Unsecured Debenture $11,490,000 745 7th Avenue 2nd Floor New York, NY 10019 Chris Weldon Tel: 212-526-5613 Fax: 212-526-3738 Deutsche Bank Securities Unsecured Debenture $9,376,000 (NY) 1251 Ave of the Americas 36th Floor New York, NY 10020 Klaus Albert Tel: 212-469-8000 Jana Partners Unsecured Debenture $6,500,000 536 Pacific Avenue San Francisco, CA 94133 Barry Risenstein Tel: 415-989-8001 CRT Capital Group LLC Unsecured Debenture $4,508,800 262 Harbor Drive Stamford, CT 06902 Allison Bellini Tel: 203-569-6440 Fax: 203-629-6497 Jabil Circuits Inc. Trade Claim $3,674,211 30 Great Oaks Blvd. San Jose, CA 95119 Jim Wemer Tel: 408-361-3318 Fax: 408-361-3350 BNY Capital (Bank of NY) Unsecured Debenture $3,000,000 32 Old Ship 15th Floor New York, NY 10286 Douglas Carleton Tel: 800-269-9864 Citigroup Global Markets Unsecured Debenture $3,000,000 390 Greenwhich Street New York, NY 10013 Peter Grant Tel: 212-723-4930 DDJ Capital Mgmt. Unsecured Debenture $3,000,000 141 Linden St., Ste 4 Wellesley, MA 02482 David Breazzano Tel: 781-283-8500 Fax: 781-283-8555 Lydian Asset Management Unsecured Debenture $2,500,000 495 Post Rd. East Westport, CT 06880 Tel: 203-226-6422 Triage Capital Management Unsecured Debenture $2,050,000 401 City Avenue, Suite 526 Bala Cynwyd, PA 19004 John Wenzel Tel: 610-668-0404 RELIANT RESOURCES: Will Take After-Tax Charge of $1BB in Q3 2003 ---------------------------------------------------------------- Reliant Resources, Inc. (NYSE: RRI) will record a non-cash, after- tax charge of approximately $1 billion in the third quarter of 2003 attributable to the company's previously disclosed review of the goodwill associated with its wholesale energy segment. The non-cash charge will have no effect on the company's or its subsidiaries' compliance with its debt agreements, and does not change the company's outlook for 2003 adjusted income from continuing operations of $0.10 per share. SFAS No. 142 requires goodwill to be tested periodically. Reliant initiated its goodwill impairment test after reaching an agreement in July 2003, to sell its 588-megawatt, Desert Basin plant in Casa Grande, Arizona. The sale, which has since been completed, required the company to allocate a portion of the goodwill in the wholesale energy segment to the Desert Basin plant and test the remaining goodwill for impairment. The majority of the wholesale energy goodwill resulted from the company's acquisition of Orion Power Holdings, Inc. in February 2002. After the charge related to the goodwill impairment and completion of the Desert Basin plant sale, the company's wholesale energy segment will have remaining goodwill of approximately $400 million. The company's goodwill evaluation entails an update in the estimate of the fair value of its wholesale energy segment and incorporates a number of assumptions and estimates regarding future cash flow, market prices and regulatory conditions as well as other factors related to the outlook for wholesale energy markets. In addition to this interim goodwill impairment test, the company will be required to conduct its annual goodwill impairment test in the fourth quarter of 2003 in accordance with SFAS No. 142. Additionally, the company's ongoing evaluation of its wholesale energy business could lead to decisions to mothball, retire or dispose of assets. Any of these events could result in additional impairment charges related to goodwill and tangible assets. Outlook for 2003 Excluding the goodwill impairment charge and the charge related to the FERC settlement announced October 2, 2003, the company maintains its 2003 earnings outlook for adjusted income from continuing operations of $0.10 per share. In addition to the items mentioned above, the earnings outlook excludes certain other items listed in the table below. 2003 Earnings/Loss Per Share from Continuing Operations Outlook Reconciliation Adjusted income from continuing operations outlook $0.10 Accrual for payment to CenterPoint Energy under Texas deregulation legislation (0.10) Net reduction of California-related reserves 0.19 October 2, 2003 FERC settlement (0.08) Gains recorded in prior periods that will be realized/collected in 2003 (EITF No. 02-03) (0.14) Approximate goodwill impairment (3.41) Approximate loss from continuing operations outlook (on GAAP basis) $($3.44) Webcast of Earnings Conference Call Reliant Resources has scheduled its third-quarter 2003 earnings conference call for 10:30 a.m., central time, Monday, November 10, 2003. Interested parties may listen to a live audio broadcast of the conference call at http://www.reliantresources.com A replay of the call can be accessed approximately two hours after the completion of the call. Reliant Resources, Inc. based in Houston, Texas, provides electricity and energy services to retail and wholesale customers in the U.S. and Europe, marketing those services under the Reliant Energy brand name. The company provides a complete suite of energy products and services to approximately 1.7 million electricity customers in Texas ranging from residences and small businesses to large commercial, industrial and institutional customers. Its wholesale business includes approximately 22,000 megawatts of power generation capacity in operation, under construction or under contract in the U.S. The company also has nearly 3,500 megawatts of power generation in operation in Western Europe. For more information, visit http://www.reliantresources.com As reported in Troubled Company Reporter's October 7, 2003 edition, Fitch anticipated no change in Reliant Resources, Inc.'s credit ratings or Rating Outlook based on the announcement that RRI had reached a settlement agreement with the Federal Energy Regulatory Commission with respect to certain western energy market investigations. RRI's ratings are as follows: - senior secured debt 'B+'; - senior unsecured debt 'B'; - convertible senior subordinated notes 'B-' RELIANT: Fitch Says Impairment Charge Won't Affect Ratings ---------------------------------------------------------- Fitch Ratings anticipates no change in Reliant Resources, Inc.'s credit ratings or Rating Outlook based on the announcement that RRI will record an approximate $1 billion non-cash goodwill impairment charge for the third quarter ended Sept. 30, 2003. RRI's ratings are as follows: -- Senior secured debt 'B+'; -- Senior unsecured debt 'B'; -- Convertible senior subordinated notes 'B-'; -- Rating Outlook Stable. The impairment charge follows RRI's review of its wholesale energy segment goodwill booked largely in conjunction with the February 2002 acquisition of Orion Power Holdings, and is not unexpected given the significant decline in wholesale power market conditions since that time. Fitch's current ratings for RRI incorporate the evaluation of the company's power generating assets, including ORN, at a value materially less than the original book value. Fitch does not expect the impairment charge to have an adverse impact on RRI's near-term liquidity position. Importantly, the charge will not result in the breach of any financial covenants under RRI's existing bank credit facilities. Fitch notes that RRI's existing financial covenants are largely cash flow based and include a series of EBITDA/Interest and Funded Debt/EBITDA tests. RRI was in compliance under these tests for the quarter ended June 30, 2003. In addition, RRI does not have any significant corporate level debt maturities until the final maturity of its secured credit facility on March 15, 2007. REVLON INC: Sept. 30 Net Capital Deficit Widens to $1.7 Billion --------------------------------------------------------------- Revlon, Inc. (NYSE:REV) announced results for the third quarter and nine months ended September 30, 2003. The Company indicated that it remains on track to achieve four objectives: (A) Achieving moderate full-year sales growth; (B) Generating full-year color cosmetics market share growth for Revlon and Almay combined; (C) Strengthening its retail partnerships; and (D) Strengthening the capability of the Revlon organization. Commenting on the Company's performance, Revlon President and Chief Executive Officer Jack Stahl stated, "We continue to make progress to strengthen our brands, take actions to grow our business with our retail customers, and build our organization. We recognized that this would be a year of significant investment, much of it one-time in nature, to reenergize our brands and strengthen our overall business. The Revlon leadership team has developed the long-term strategies that we believe will deliver profitable and sustainable growth, and we have begun to implement a number of strategic initiatives to drive efficiency and productivity across the organization. Despite the prevailing softness in the U.S. color cosmetics category, which has slowed our rate of progress, we are absolutely confident that the actions we are taking will build and capitalize on the strength of the Company's brands and enable us to achieve our objective of long- term, profitable growth." The Company indicated that, according to ACNielsen, market share for the Revlon and Almay brands combined advanced 0.2 share points versus year-ago to 22.4% for the quarter, further building on the 0.4 share point gain achieved in the third quarter last year. The Revlon brand registered its fifth consecutive quarterly share increase versus year-ago, advancing 0.6 share points to 17.3% for the quarter, while Almay market share declined by 0.4 share points to 5.1%. Total Company market share, including the Ultima brand, which is sold only at select retail outlets, was even with year- ago for the quarter. For the first nine months of 2003, market share for the Revlon brand advanced 0.7 share points versus year- ago to 17.1%, and Almay market share advanced 0.1 share points to 5.5%. Reflecting reduced distribution and the Company's strategy to focus its resources on the Revlon and Almay brands, Ultima brand share declined 0.4 share points in the nine-month period versus year-ago. The Company indicated that it has secured commitments for incremental shelf space at several key U.S. accounts for color cosmetics for 2004 as well as new distribution for color cosmetics, hair color and beauty tools. "The increasing support by our key retail partners coupled with our strengthening organizational capabilities are important indicators that we are moving in a positive direction," Mr. Stahl stated. The Company indicated that, as of October 29, 2003, it had utilized $248 million under its $250 million Bank Credit Agreement, all of a $100 million MacAndrews & Forbes Term Loan, and $20 million of the $65 million MacAndrews & Forbes Line of Credit. Reaffirming the Company's position on liquidity, Mr. Stahl stated, "As I have indicated in the past, I am confident that Revlon will continue to have access to the resources we need to execute our growth plan." Third Quarter Results Net sales in the third quarter of 2003 declined approximately 2% to $316.5 million, compared with net sales of $323.2 million in the third quarter of 2002, reflecting lower sales in North America, partially offset by growth and favorable foreign currency translation in International. Excluding the favorable impact of foreign currency translation, net sales declined approximately 5%. In North America, net sales for the quarter declined approximately 9% to $212.1 million, versus $232.0 million in the third quarter of 2002. This performance largely reflected the benefit in the 2002 period of the prepayment of approximately $12 million of certain minimum licensing royalties as well as timing of shipments tied to the Company's fourth quarter promotional event. For the quarter, consumption of Revlon and Almay brands combined advanced approximately 1%, in a category that was flat versus year-ago. In International, net sales grew 14% to $104.4 million, versus $91.2 million in the third quarter of 2002, reflecting favorable foreign currency translation and strength in several key markets, partially offset by softness in Brazil, Mexico and certain distributor markets in Russia and Central and Eastern Europe. Excluding the favorable impact of foreign currency translation, International net sales were up approximately 5% versus year-ago. The Company indicated that during the quarter it incurred charges of approximately $5 million associated with the implementation of its growth plan, including growth plan related severance. The Company's growth plan, the implementation of which was accelerated in the fourth quarter of 2002, involves, among other things, increasing the effectiveness of its advertising and in-store promotional marketing, increasing the effectiveness of its in- store wall displays, discontinuing select products and adjusting prices on several others, and further strengthening the new product development process and other organizational capabilities to accelerate the execution of the plan. The Company further indicated that it continues to expect its growth plan and related actions will result in charges (excluding brand support expenses and training and development costs) over the 2002 to 2004 period of up to $160 million, $135 million of which has been recognized to date, including $104 million charged in 2002. Operating loss in the quarter was $7.9 million, versus operating income of $21.8 million in the third quarter of 2002, and Adjusted EBITDA in the current quarter was $14.6 million, compared with Adjusted EBITDA of $48.9 million in the same period last year. This performance primarily reflected the impact of the aforementioned $12 million of licensing revenue in the year-ago period, as well as higher brand support, growth plan charges of approximately $5 million, and lower gross margins in the current period, reflecting unfavorable product mix and lower production volumes. In addition to growth plan charges of approximately $5 million, operating loss in the current quarter also included charges totaling $0.6 million for restructuring and additional consolidation costs, while the third quarter of 2002 included charges totaling approximately $4.2 million for restructuring, additional consolidation costs, and executive severance. Similarly, Adjusted EBITDA, in addition to growth plan charges of approximately $5 million in the current quarter, also included $0.4 million for restructuring, while the third quarter of 2002 included charges totaling $4.0 million for restructuring, additional consolidation costs and executive severance. Adjusted EBITDA is a non-GAAP measure that is defined in the footnotes of this release and which is reconciled to its most directly comparable GAAP measures, net loss and cash flow used for operating activities, in the accompanying financial tables. Net loss in the third quarter was $54.7 million, or $0.78 per diluted share, compared with a net loss of $22.1 million, or $0.41 per diluted share, in the third quarter of 2002. Cash flow used for operating activities in the third quarter of 2003 was $49.1 million, compared with cash flow used for operating activities of $8.5 million in the third quarter of 2002. At September 30, 2003, the Company's balance sheet shows a working capital deficit of about $40 million, and a total shareholders' equity deficit of about $1.7 billion. Nine-Month Results Net sales advanced approximately 3% to $930.8 million for the first nine months of 2003, compared with net sales of $906.8 million in the same period last year, largely driven by growth and favorable foreign currency translation in International. Excluding the favorable impact of foreign currency translation, net sales for the first nine months were even with last year. In North America, net sales of $641.8 million for the first nine months were slightly lower than net sales of $645.4 million in the same period last year. International net sales of $289.0 million advanced approximately 11% versus net sales of $261.4 million in the year-ago period. Excluding the favorable impact of foreign currency translation, International net sales grew approximately 3% in the nine-month period. Operating loss in the first nine months of 2003 was $15.2 million, versus operating income of $21.9 million in the first nine months of 2002. Operating loss in the first nine months of 2003 included approximately $31 million of charges associated with the Company's growth plan as well as charges totaling $1.5 million for restructuring and additional consolidation costs, while the first nine months of 2002 included charges totaling approximately $19.0 million for restructuring, additional consolidation costs, and executive severance. Adjusted EBITDA in the first nine months of 2003 was $58.6 million, compared with Adjusted EBITDA of $104.1 million in the first nine months of 2002. Adjusted EBITDA in the current nine- month period included approximately $29 million of charges associated with the Company's growth plan, as well as $0.9 million for restructuring, while Adjusted EBITDA in the first nine months of 2002 included expenses totaling $18.4 million for restructuring, additional consolidation costs, and executive severance. Net loss was $141.2 million, or $2.36 per diluted share, in the first nine months of 2003, compared with a net loss of $107.1 million, or $2.00 per diluted share, in the first nine months of 2002. Cash flow used for operating activities in the first nine months of 2003 was $183.9 million, compared with cash flow used for operating activities of $110.9 million in the first nine months of 2002. Revlon is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to become the world's most dynamic leader in global beauty and skin care. Websites featuring current product and promotional information can be reached at http://www.revlon.comand http://www.almay.com Corporate investor relations information can be accessed at http://www.revloninc.com The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). ROGERS WIRELESS: S&P Ratings Outlook Goes to Positive from Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Canadian nationwide wireless operator Rogers Wireless Inc. to positive from stable, based on the expectation that credit metrics will continue to improve in the near to medium term through strengthening operating performance. At the same time, the ratings on RWI, including the 'BB+' long-term corporate credit rating, were affirmed. "RWI's operating performance through the first nine months of 2003 has been better than expected; full year 2003 EBITDA will be materially higher than expectations earlier in the year, resulting in credit metrics which are improving more quickly than expected," said Standard & Poor's credit analyst Joe Morin. Growth in wireless subscribers should continue through 2004, driving additional improvements in EBITDA and cash flows. The company reduced debt in the third quarter from free cash flow, and RWI is expected to be discretionary free cash flow positive through 2004 and beyond. Standard & Poor's expects that excess funds will be used to further reduce debt. The ratings on Toronto, Ontario-based RWI are assigned on a stand- alone basis, separate from parent Rogers Communications Inc., (56% ownership), given the material influence from AT&T Wireless' 34% indirect ownership in RWI. As such, the ratings on RWI could move higher than its parent RCI. The ratings also consider the company's relatively high leverage and other financial parameters, which are currently weak. These weaknesses are supported by RWI's average business risk profile as a competitive nationwide wireless operator. The ratings take into account continuing improvement in the company's operating results and financial performance; the stability of the Rogers AT&T franchise in the Canadian wireless industry reflected in its large subscriber base; national distribution channels; and a nationwide footprint. The ratings also reflect expectations for continued, albeit slower, subscriber growth, as penetration in Canada continues to lag other developed countries, as well as growth prospects for wireless data. As a pure play wireless operator, RWI continues to see strong competition from incumbents Bell Canada and Telus Communications Inc., which remain strong and fully integrated telecom operators. Nevertheless, RWI's large base of existing customers, brand identity, quality digital network, and national distribution channels, have allowed it to compete on a relatively equal footing with the two large integrated operators. The Canadian wireless sector is expected to continue to grow in the medium term, with penetration rates increasing by approximately 3%-4% per year for the next two years. The industry as a whole has also benefited recently from relative stability in other key business drivers: average revenue per user, churn, and cost of acquisition. Pricing discipline has been of paramount importance to the three leading operators and has helped in achieving the recent stability. The completion of Microcell Telecommunications Inc.'s (the fourth and final nationwide operator) restructuring in April 2003 and Bell's recent bundling initiatives, although competitive threats, should not lead to any serious pricing disruption in the market. RWI's reported operating income increased by 39% to C$552 million in the first nine months of 2003 as compared with the first nine months of 2002. Although revenue growth was expected, operating performance is ahead of expectations due to higher EBITDA margins, supported by lower operating, sales, and marketing expenses, and a more favorable mix of subscribers. The positive outlook reflects that leverage and other credit protection measures are expected to improve through continued growth and lower debt levels. The pace of improvement will be dictated by market growth, and the ability of all operators to maintain pricing discipline in a competitive environment. Demonstrated progress towards improved credit ratios could result in an upgrade in the medium term. ROUGE INDUSTRIES: Turns to FTI Consulting as Financial Advisor -------------------------------------------------------------- Rouge Industries, Inc., and its debtor-affiliates are asking for approval from the U.S. Bankruptcy Court for the District of Delaware to employ and retain FTI Consulting, Inc., as financial advisors, nunc pro tunc to the Petition Date. The Debtors tell the Court that they are familiar with the professional standing and reputation of FTI. The Debtors understand that FTI has a wealthy of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases. In its capacity, FTI Consulting will: a) assist the Debtors in the preparation of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; b) assist the Debtors with information and analyses required pursuant to the Debtors' Debtor-In-Possession financing including, but not limited to, preparation for hearings regarding the use of cash collateral and DIP financing; c) assist with the identification and implementation of short- to cash management procedures; d) provide advisory assistance in connection with the development and implementation of key employee retention and other critical employee benefit programs; e) assist and advice the Debtors with respect to the identification of core business assets and the disposition of assets or liquidation of unprofitable stable operations; f) assist with the identification of executory contracts and leases and performance of cost/benefit evaluations with respect to the affirmation or rejection of each; g) assist in the valuation of the present level of operation and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; h) assist in the preparation of financial information for distribution to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; i) attend at meetings and assistance in discussions with potential banks and other secured lenders, any official committee(s) appoint Chapter 11 cases, the U.S. Trustee, other parties in interest and pro hired by the same, as requested; j) provide analysis of creditor claims by type, entity and individual claim, in assistance with development of databases, as necessary, to track such claims; k) assist in the preparation of information and analysis necessary for the confirmation of a plan in these Chapter 11 proceedings; l) assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; m) provide litigation advisory services with respect to accounting and tax mat with expert witness testimony on case related issues as required by Debtors; and n) render such other general business consulting or such other assistance as Debtors' management or counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in this proceeding. Robert M. Caruso submits that FTI Consulting is a "disinterested person" as defined within Section 101(14) of the Bankruptcy Code. FTI Consulting has agreed to be compensated monthly: October $250,000 November $250,000 December $200,000 Monthly thereafter $200,000 Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. Del. Case No. 03-13272). Donna L. Harris, Esq., Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $558,131,000 and total debts of $558,131,000. RURAL/METRO: Wins Exclusive Services Contract in Tuczon, Arizona ---------------------------------------------------------------- Rural/Metro Corporation (Nasdaq:RURLC) announced that its Southwest Ambulance division has been awarded the exclusive contract to continue providing non-emergency ambulance services to the Southern Arizona Veterans' Administration Health Care System in Tucson, Arizona. The five-year contract was awarded in a competitive bidding process and begins on November 1, 2003. Jack Brucker, President and Chief Executive Officer, said, "We are very pleased to count the Veterans' Administration System among our valued customers in Southern Arizona, as we continue to meet our objective to sustain and grow market share in existing service areas." SAVAHCS is comprised of a 302 bed teaching hospital in Tucson, as well as five community based outreach clinics located in Casa Grande, Green Valley, Safford, Sierra Vista, and Yuma, Arizona. The SAVAHCS provides primary care and subspecialty health care in surgery, medicine, neurology, and mental health. Advanced rehabilitation is provided through the Geriatrics & Rehabilitation Care Center and the Southwestern Blind Rehabilitation Center. Barry Landon, President of Southwest Ambulance, said, "Our Southern Arizona team is dedicated to providing top-quality service to our patients and customers. We are gratified to once again be the successful bidder on this contract and to maintain our long-standing relationship with the Veterans' Administration in Tucson." Southwest Ambulance has provided medical transportation services to the Veterans' Administration healthcare facilities in Southern Arizona for nearly 40 years. The company provides more than 2,700 ambulance transports each year from the facilities, which are located not only in Tucson, but also throughout the region in Douglas, Nogales, Safford, Sierra Vista, and Yuma. Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services in 26 states and more than 400 communities throughout the United States. For more information, visit the company's Web site at http://www.ruralmetro.com At June 30, 2003, Rural/Metro Corp.'s balance sheet shows a total shareholders' equity deficit of about $209 million. RYLAND GROUP: Credit Rating Upped to Investment-Grade Level ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on The Ryland Group Inc. to 'BBB-' from 'BB+'. In addition, ratings on $547 million of the company's senior unsecured and senior subordinated notes are raised. The outlook is stable. "The upgrade acknowledges a materially improved financial profile that complements one of the most conservative operating strategies in the homebuilding industry. This well-diversified homebuilder has maintained a cautious organic growth strategy and disciplined focus on affordably priced homes while improving margins, generating strong returns, and reducing leverage levels," said Standard & Poor's credit analyst James Fielding. Longer-term demographic trends should continue to drive demand for Ryland's affordably priced homes, while the homebuilder's geographically diversified operating platform should help to insulate the overall earnings stream from potential swings in demand in individual markets. Furthermore, Ryland is expected to continue to grow its homebuilding operations in a comparatively conservative and disciplined manner, which limits the likelihood of negative event risk to the credit profile. Southern California-based Ryland is one of the nation's leading homebuilders, selling 10,324 entry-level and first- or second-time move-up homes through the first nine months of 2003. SK GLOBAL AMERICA: Court Fixes November 24 as Claims Bar Date ------------------------------------------------------------- U.S. Bankruptcy Court Judge Blackshear further orders that: -- November 24, 2003, 5:00 p.m., is the last day by which all entities, including individuals, partnerships, corporations, estates and trusts, holding prepetition claims against SK Global America, Inc. are permitted to file proofs of claim against the Debtor; -- Governmental Units have until January 19, 2004 to file proofs of claim; -- holders (i) of claims which are listed on the Debtor's Schedules, in an amount and manner of classification with which the holder agrees and are not described as disputed, contingent, or unliquidated, or (ii) that have already filed a proof of claim or interest with the Court, may, but are not required to, file a proof of claim; -- each proof of claim, must be properly filed and: (a) made in substantial conformity with Official Form 10 in accordance with Rule 9009 of the Federal Rules of Bankruptcy Procedure; and (b) actually received on or before the Bar Date by: If sent by mail: The United States Bankruptcy Court Southern District of New York Re: SK Global America, Inc. Claims Processing P.O. Box 5183, Bowling Green Station New York, New York 10274-5183 If sent by hand delivery or overnight courier: Clerk of the Bankruptcy Court Southern District of New York Re: SK Global America, Inc. Claims Processing One Bowling Green, Room 534 New York, New York 10004-1408; -- if the Debtor amends or supplements the Schedules subsequent to October 17, 2003, the Debtor will give notice of any amendment or supplement to the affected claimholders, and the holders will have 30 days from the date of the notice to file proofs of claim or be barred from doing so, and will be given notice of the deadline; and -- any entity that is required to file a proof of claim but fails to do so on or before the Bar Date will not, for the claim, be treated as creditor for purposes of voting or receiving any distribution under any Chapter 11 plan, and will be forever barred from voting and asserting the claim against the Debtor or its estate and property. (SK Global Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) SKM LIBERTYVIEW CBO: Class B Note Ratings Downgraded to B+ ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B floating-rate and class B fixed-rate notes issued by SKM LibertyView CBO I Ltd., an arbitrage CBO transaction managed by LibertyView Capital Management Inc., and collateralized primarily by high-yield bonds. At the same time, the ratings are removed from CreditWatch, where they were placed Sept. 15, 2003. Concurrently, the rating on the class A-2 notes is affirmed and removed from CreditWatch negative, where it was also placed Sept. 15, 2003. Additionally, the 'AAA' rating assigned to the class A-1 notes is affirmed, based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the notes since the transaction was originated in April 1999. These factors include a negative migration in the overall credit quality of the assets within the collateral pool securing the rated notes, par erosion of the collateral pool, and a decline in the weighted average coupon generated by the performing assets within the pool. Following the Oct. 10, 2003 payment date, a mandatory redemption (mandated by the failure of the transaction's overcollateralization ratios) of $17.439 million and $27.535 million was made to the class A-1 and A-2 notes, respectively. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE SKM LibertyView CBO I Ltd. Rating Class To From B floating B+ BB/Watch Neg B fixed B+ BB/Watch Neg RATING AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE SKM LibertyView CBO I Ltd. Rating Class To From A-2 AA AA/Watch Neg RATING AFFIRMED SKM LibertyView CBO I Ltd. Class Rating A-1 AAA TRANSACTION INFORMATION Issuer: SKM LibertyView CBO I Ltd. Co-issuer: SKM LibertyView CBO I Corp. Current manager: LibertyView Capital Management Inc. Underwriter: Goldman Sachs & Co. Trustee: JPMorganChase Transaction type: Cash flow arbitrage high-yield CBO TRANCHE INITIAL LAST CURRENT INFORMATION REPORT ACTION ACTION Date (MM/YYYY) 10/1999 6/2003 10/2003 Class A-1 note rtg. AAA AAA AAA Class A-2 note rtg. AAA AA AA Class A OC ratio 136.565% 124.138% 124.855% Class A OC ratio min 125.0% 125.0% 125.0% Class A-1 note bal $95.00mm $85.272mm $67.833mm* Class A-2 note bal $150.00mm $134.641mm $107.105mm* Class B floating rtg. A- BB B+ Class B fixed rtg. A- BB B+ Class B OC ratio 119.495% 107.094% 107.712% Class B OC ratio min 110.0% 110.0% 110.0% Class B floating bal $10.00mm $10.00mm $10.00mm Class B fixed bal $25.00mm $25.00mm $25.00mm *Following $44.974 million mandatory redemption to the class A notes on the Oct. 10, 2003 pay date. PORTFOLIO BENCHMARKS CURRENT S&P Wtd. Avg. Rtg.(excl. defaulted) B S&P Default Measure(excl. defaulted) 4.72% S&P Variability Measure (excl. defaulted) 2.79% S&P Correlation Measure (excl. defaulted) 1.14 Wtd. Avg. Coupon (excl. defaulted) 9.097% Wtd. Avg. Spread (excl. defaulted) 4.458% Oblig. Rtd. 'BBB-' and Above 2.40% Oblig. Rtd. 'BB-' and Above 34.18% Oblig. Rtd. 'B-' and Above 67.07% Oblig. Rtd. in 'CCC' Range 13.81% Oblig. Rtd. 'CC', 'SD' or 'D' 19.12% Obligors on Watch Neg (excl. defaulted) 5.905% S&P RATED OC (ROCs) PRIOR TO ACTION(1) AFTER ACTION(1) Class A-1 notes(Insured) N/A(2) N/A(2) Class A-2 notes 106.94%(AA) 106.94%(AA) Class B floating 100.39%(BB) 102.48%(B+) Class B fixed 100.39%(BB) 102.48%(B+) (1)Following $44.974 million mandatory redemption to the class A notes on the Oct. 10, 2003 pay date. (2)ROC is not published for insured tranches because the insurance policy, rather than the tranche credit support, determines the public rating. STARWOOD HOTELS: Begins Search for New Chief Executive Officer -------------------------------------------------------------- Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Hotels & Resorts Worldwide, Inc., said he intends to step down as Chief Executive Officer once a new Chief Executive has been hired and is on board. Mr. Sternlicht will co-chair a newly formed search committee of the Board of Directors to help identify and select his successor. Upon the CEO's selection, Mr. Sternlicht will become Executive Chairman of Starwood. "I'm very proud of Starwood and have never been more optimistic about the company's positioning in the industry. As Executive Chairman, it is my intention to reduce my day-to-day role and focus on long term strategy, provide guidance on capital investment and real estate matters, nurture the expansion of our W brand, and fill a meaningful ambassadorial role for the Company. I feel a great sense of responsibility and proprietorship for the Company, but it has become increasingly difficult for me to fulfill that global responsibility in the face of the needs of my family and my other activities. Additionally, I believe a growing "best practice" in corporate governance is the separation of the Chairman and Chief Executive Officer positions," stated Mr. Sternlicht. Senator George Mitchell, on behalf of the Starwood Board of Directors, said, "Barry Sternlicht's dynamic leadership of Starwood is evident in the prestige of the Starwood name today. The creation of the W brand and his many innovations has influenced the entire industry. His creativity and vision enabled the company to integrate a once disparate collection of individual hotel assets into a global powerhouse. We respect his decision to step down from the position of CEO, but look forward to his continuing to play a leadership role at Starwood as Executive Chairman of the Board. He is one of the premier deal makers in the real estate industry and the Board is pleased he remains willing to serve as Executive Chairman." "Starwood has successfully navigated the unprecedented storm impacting the travel sector and has emerged as not only a survivor, but in terrific shape. Our balance sheet is now strong, our treasure chest of brands is powerful and gaining strength, we have a deep pool of talented management led by Bob Cotter, our Chief Operating Officer, tremendous unexploited value in our extraordinary real estate asset base, a very full pipeline of product and service innovations (both visible and invisible to the customer), and an equally exciting development pipeline highlighted by the global growth of W and our other brands. On the macro side, the lack of new construction in the upscale category, should lead to several years of solid growth for our Company," said Sternlicht. "Starwood today is a creative, innovative, compassionate and ethical company. It is time, however, to bring in a new CEO who can guide the Company day-to-day to achieve a new level of excellence and to help us realize our truly extraordinary potential. As a major shareholder, I remain committed to the Company's future success and will do all I can to ensure that the Company continues to excel during the transition and beyond," said Sternlicht. During Sternlicht's tenure as CEO, which began in the spring of 1995 with the acquisition of Hotel Investors Trust, Starwood grew from a nearly bankrupt REIT with an equity market capitalization of less than $10M, into the world's largest hotel company (measured by EBITDA), with an enterprise value exceeding $11B. He is credited with the rapid growth of the firm and the successful integration of Westin Hotels and ITT Sheraton, the acquisition and expansion of Vistana, now Starwood Vacation Ownership, and the disposition of more than $8B in assets including the sale of Caesars World in 1999. Mr. Sternlicht also conceived of and has led the expansion of the W Hotels brand, led expansion of the St. Regis brand, the entrance of the Company into vacation ownership, the establishment of the nation's #1 frequent guest program, which pioneered no blackout dates, and the introduction of innovations including the Westin Heavenly Bed, Heavenly Bath, Heavenly Crib, Westin Workout, and Sheraton Sweet Sleeper among many others. 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 STRUCTURED ASSET: Fitch Rates Classes B4 & B-5 Notes with Low-Bs ---------------------------------------------------------------- Fitch rates Structured Asset Securities Corporation's mortgage pass-through certificates, series 2003-23H, as follows: -- $291.8 million classes 1A1, 2A1, 1A-IO, 1A-PO, 2A-IO and R certificates 'AAA'; -- $2.5 million class 1B1 certificates 'AA'; -- $353,000 class 2B1 certificates 'AA'; -- $2.2 million class 1B2 certificates 'A'; -- $316,000 class 2B2 certificates 'A'; -- $1.4 million class B3 certificates 'BBB'. Additionally, the following classes are rated by Fitch and are being offered privately. -- $753,000 class B4 certificates 'BB'; -- $601,000 class B-5 certificates 'B'. The 'AAA' rating on the Group 1 (1A1, 1A-IO, 1A-PO and R) senior certificates reflects the 3.05% total credit enhancement provided by the 0.95 % class 1B1, 0.85% class 1B2, 0.45% class B3, 0.25% privately offered classes B4, 0.20% privately offered classes B5 and 0.35 class B6 certificates. The 'AAA' rating on the Group 2 (2A1 and 2A-IO) senior certificates reflects the 3.05% total credit enhancement provided by the 0.95% class 2B1, 0.85% class 2B2, 0.45% class B3, 0.25% privately offered classes B4, 0.20% privately offered classes B4 and 0.35% privately offered class B6 certificates. Fitch believes that the amount of credit enhancement will be sufficient to cover credit losses, including limited bankruptcy, fraud and special hazard losses. In addition, the ratings reflect the quality of the mortgage collateral, the strength of the legal and financial structures, and the master servicing capabilities of Aurora Loan Services, Inc., rated 'RMS2+' by Fitch. The Group 1 certificates represent ownership interest in a trust fund that consists primarily of a pool of 30-year fixed-rate, conventional, first lien, residential mortgage loans. As of the cut-off date (Oct. 1, 2003), the mortgages in Pool 1 have an aggregate principal balance of approximately $263,825,792, a weighted average original loan-to-value ratio of 101.65%, a weighted average coupon of 5.998%, a weighted average remaining term of 354 months and an average balance of $133,448. The loans are primarily located in Pennsylvania (6.30%), Michigan (6.30%), North Carolina (6.23%), and South Carolina (5.87%). As of Oct. 1, 2003, the mortgages in Pool 2 have an aggregate principal balance of approximately $37,160,826, a weighted average OLTV of 101.60%, a WAC of 6.248%, a WAM of 356 months and an average balance of $171,248. The loans are primarily located in North Carolina (26.71%), Maryland (14.94%) and Michigan (11.74%). The mortgage loans were originated by various originators or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines. Approximately 93.77% of the mortgage loans in Pool 1, were originated or acquired in accordance with the borrower advantage underwriting guidelines. Approximately 6.23% of the mortgage loans in Pool 1 and all of the mortgage loans for Pool 2, were originated or acquired in accordance with the pro mortgage underwriting guidelines. The largest percentage of servicers for the mortgage loans in Pool 1 is as follows: 54.59% GMAC Mortgage Corporation, 22.30% SunTrust Mortgage, Inc., and 15.76% Aurora Loan Services, Inc. The remainder of the Pool one mortgage loans will be serviced by various other servicers. Aurora will service all of the Pool 2 mortgage loans. SASCO, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. TRI-UNION DEV'T: Files Plan and Disclosure Statement in Texas ------------------------------------------------------------- Tri-Union Development Corporation and its debtor-affiliates filed their Chapter 11 Plan of Reorganization and the accompanying Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of Texas. Full-text copies of the documents are available for a fee at: http://www.researcharchives.com/bin/download?id=031028235312 and http://www.researcharchives.com/bin/download?id=031028235431 The Plan provides for the classification and treatment of the 12 groups of claims and interests: Class Description Treatment ----- ----------- --------- 1 Allowed Priority Unimpaired; shall be paid by the Unsecured Claims Plan Trustee from the Priority Unsecured Non-Tax Claim Reserve over 72 months together with 6% interest 2 Allowed Secured Unimpaired; shall be satisfied by Claims of Taxing either i) the transfer to the Authorities holder of the Class 2 constituting the Collateral of such Claimholder or ii) the sale of any Trust Property securing the Class 2 with payment being made out of the proceeds of such sale, or iii) payment by the Plan Trustee of the Claim in 72 equal monthly installments of principal plus 6% per annum or iv) an agreement reached between the Claimholder and the Plan Trustee 3A Allowed Secured Unimpaired; shall be Allowed Claims of Bank of Secured Claims in all respects and America, N.A. for all purposes and all of the Debtors' respective obligations, indebtedness and liabilities and shall be reinstated and reaffirmed and all payments required to be made by the Debtors under the Hedge Documents during the pendency of the Bankruptcy Case shall be indefeasibly paid by the Debtors in full and in cash to BOA 3B Allowed Secured Impaired; are deemed allowed as Claims of The i) an Allowed Secured Claim in the Noteholders amount of $111,335,582.19 and ii) an Allowed General Unsecured Claim in the amount of $20,000,000. 3C Allowed Secured Impaired; shall be satisfied by Claims Not the transfer to the holder of the Included Class 3C Allowed Secured Claim of Within Another any Trust Property constituting Class Under The the Collateral of such Claimholder Plan 3D Allowed P&A Claims Impaired; On the Effective Date, all obligations for the Allowed P&A Claims of the MMS related to the Debtors' Operated Federal Waters Offshore Properties shall be transferred to the Trust. 3E Allowed Secured Impaired; shall be paid in 72 Claims of M & M monthly installments of principal Lienholders and interest together with interest at 6% per annum. 3F Allowed Royalty Impaired; shall (i) receive Claims deferred Cash payments (in 12 equal monthly installments of principal plus 6% per annum), or (ii) receive, pursuant to abandonment by the Plan Trustee, possession of and right to foreclose its Lien on the Collateral securing such Claim, or (iii) be treated in accordance with an agreement between the Plan Trustee and such Claimant. 4A Allowed General Each holder shall receive Unsecured Claims Distributions of Available Cash on Against Tri-Union account of its Trust Creditor Interest in accordance with the Trust Agreement. 4B Allowed General Shall be treated in accordance with Unsecured Claims the terms and conditions of the Against Operating Trust Agreement 5 Allowed Shall be treated in accordance with Subordinated the terms and conditions of the Claims Trust Agreement 6 Equity Interests Impaired; Will receive no distribution under the Plan Headquartered in Houston, Texas, Tri-Union Development Corporation is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. The Company filed for chapter 11 protection on October 20, 2003 (Bankr. S.D. Tex. Case No. 03- 44908). Charles A Beckham, Jr., Esq., Eric B. Terry, Esq., JoAnn Lippman, Esq., and Patrick Lamont Hughes, Esq., at Haynes & Boone represent the Debtors in their restructuring efforts. As of March 31, 2003, the Debtors listed $117,620,142 in total assets and $167,519,109 in total debts. UICI: Look for Third-Quarter 2003 Operating Results Tomorrow ------------------------------------------------------------ UICI (NYSE: UCI) will be releasing third quarter operating results on Wednesday, November 5, 2003 after the market closes. UICI will be hosting a teleconference call on Thursday, November 6, 2003 at 11:00 a.m. eastern time (10:00 a.m. central time). The conference dial-in number is (877) 847-5346 -- please use passcode 551082. The conference call will also be webcast live on UICI's web site at http://www.uici.netand at http://www.streetevents.com/ Please give yourself time to download and install necessary audio software. An on-line replay of the webcast will also be available on UICI's web site for up to 30 days following the call. If you cannot participate at the designated time, you may call (888) 203-1112, using passcode 551082, to hear a recording of the teleconference call on Thursday, November 6, 2003 from 12:00 p.m. central time to Sunday, November 9, 2003, 11:59 p.m. central time. * * * On July 21, 2003, UICI reported the discovery of a shortfall in the type and amount of collateral supporting two of the securitized student loan financing facilities entered into by three special financing subsidiaries of AMS. The problems at one of the financing facilities (the EFG-III LP commercial paper conduit facility) are of three types: insufficient collateral, a higher percentage of alternative loans (i.e., loans that are privately guaranteed as opposed to loans that are guaranteed by the federal government) included in the existing collateral than permitted by the loan eligibility provisions of the financing documents and failure to provide timely and accurate reporting. The problems related to the second financing subsidiary (AMS-1 2002, LP) consist primarily of a higher percentage of alternative loans included in the existing collateral than permitted by the loan eligibility provisions of the financing documents, and the failure to provide timely and accurate reporting. In addition, AMS and the other four special financing subsidiaries of AMS have failed to comply with their respective reporting obligations under the financing documents. As announced on July 24, 2003, AMS has obtained waivers and releases from interested third parties, as described more fully below, with respect to four of the six securitized student loan financing facilities. The waiver and release agreements were entered into with Bank of America and Fleet Bank (the providers of a liquidity facility that supports the EFG-III, LP commercial paper facility), Bank One (the trustee under the indentures that govern the terms of the debt securities issued by each of AMS' special financing subsidiaries) and MBIA Insurance Corporation (the financial guaranty insurer of debt securities issued by four of the seven AMS financing subsidiaries). The waiver and release agreement for the EFG-III, LP (one of AMS' special purpose financing subsidiaries) commercial paper securitized student loan facility calls for UICI's contribution of $48.25 million ($1.75 million on July 24, 2003, $36.5 million on July 31, 2003 and $10.0 million on August 15, 2003) in cash to the capital of AMS, all of which, as of July 31, 2003, UICI had contributed to AMS. The financial institutions agreed to waive all existing defaults under the relevant financing documents with respect to EFG-III, LP and EFG Funding (both of which are exclusively involved in the commercial paper program) until January 1, 2004, which date will be automatically extended for successive 90-day periods through September 30, 2004 if the outstanding amount of commercial paper is reduced to agreed-upon levels from its current outstanding amount (approximately $440 million). As previously announced, AMS has agreed to partially address the under-collateralization problem by transferring to EFG-III, LP approximately $189 million of federally-guaranteed student loan and other assets that meet loan eligibility requirements under the financing documents and by transferring approximately $34.4 million of uninsured student loans that do not meet loan eligibility requirements under the financing documents. In addition, AMS will contribute to EFG-III LP $46.5 million of the $48.25 million in cash contributed to AMS by UICI either in the form of cash or federally guaranteed student loans. These various transfers by AMS will substantially eliminate the shortfall in collateral amount with respect to the EFG-III LP commercial paper conduit facility. With respect to the AMS-1 2002, LP facility, as of July 24, 2003, the interested parties agreed to waive, for a period of 90 days, all defaults, amortization events and events of default based solely on defaults arising prior to July 24, 2003 resulting from non-federally insured student loans included in the collateral in excess of the maximum percentage limit for such loans as set forth in the documents governing the financing, which waiver is not extendable. In addition, with respect to four other student loan financing facilities, the interested parties agreed to waive, as of July 24, 2003, all immaterial previously-existing defaults resulting from inaccurate or untimely reporting or any other reporting deficiency by the applicable issuer under each such facility, AMS or any other affiliate of AMS, for a period of 90 days, which period is not extendable. Upon expiration of the 90- day waiver period, all then uncured events of default shall be reinstated and be in full force and effect. UICI believes that it has no obligations with respect to the indebtedness of AMS' special financing subsidiaries or with respect to the obligations of AMS relating to such financings. Nonetheless, in exchange for UICI's capital contribution to AMS as described above, the financial institutions named above have agreed to release UICI from any and all existing claims or suits (other than claims for fraud at the UICI level) that could arise relating to the AMS student loan financing facilities. UNITED AIRLINES: Intends to Pay Amendment Fees to DIP Lenders ------------------------------------------------------------- The United Airlines Debtors ask the U.S. Bankruptcy Court for the Northern District of Illinois for authority to enter into a waiver and amendment to the Bank One DIP Facility and pay amendment fees to the DIP Lenders. James H.M. Sprayregen, Esq., at Kirkland & Ellis, recounts that in recent weeks, the Debtors and the DIP Lenders amended the DIP Credit Facilities to modify certain provisions and to document waivers of alleged technical defaults. Pursuant to the Waivers and Amendments, the DIP Lenders consent to: (1) the Debtors' discontinuation or modification of service along any airline routes connected to the San Francisco/Taipei route by waiving corresponding alleged technical defaults; (2) the Debtors' restructuring of indebtedness to Export Development Canada; (3) UAL Corporation's transfer of its ownership interests in Orbitz, Inc., and Orbitz LLC to United; (4) United's sale of its interest in Orbitz; (5) the sale or other disposition of the Debtors' ownership interests in Hotwire, Inc.; (6) the capital contributions by UAL to United; and (7) the Deposit, assignment of fuel supply agreements, third- party sale agreements, sublease of infrastructure agreements and the transfer of historical pipeline capacity, as contemplated in the Jet Fuel Agreement with Morgan Stanley Capital Group. The Debtors must pay fees to the Club DIP Lenders and Bank One to complete the Waivers and Amendments, namely: (a) An amendment fee to the paying agent for each Club DIP Lender who signed the Waiver and Amendments, equal to 1/10th of 1% of each Club DIP Lender's total commitment on October 10, 2003 -- with a total fee not to exceed $895,000; (b) An arrangement fee to JPMorgan Chase and Citicorp USA of $500,000 in the aggregate; and (c) $300,000 in amendment fees to Bank One. Mr. Sprayregen warns that failure to pay the Amendment Fees will deny the Debtors the substantial financial benefits, protections and waivers being offered. The Fees allow the Debtors to conclude transactions that cure alleged technical defaults under the DIP Credit Facilities. They provide the Debtors with enhanced operational and financial flexibility. For example, the Debtors will be able to restructure and optimize fleet capacity by discontinuing the San Francisco/Taipei route, prepay a portion of the Loans from the proceeds of sale of their interests in Orbitz and Hotwire and reduce working capital through the Jet Fuel Supply Agreement. (United Airlines Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) VERTIS INC: Third-Quarter 2003 Net Loss Balloons to $24 Million --------------------------------------------------------------- Vertis Inc., reported results for the three and nine months ended September 30, 2003. For the quarter ended September 30, 2003, net sales were $390.9 million, or 4.6% below the quarter ended September 30, 2002. For the nine months ended September 30, 2003, net sales amounted to $1,139.5 million, or 6.6% below the comparable 2002 nine-month period. The decline in net sales for the nine months was largely the result of competitive pricing pressures, sluggish direct mail business domestically as well as in Europe, and weak advertising agency business at the company's Advertising Technology Services segment. Donald Roland, chairman, president and chief executive officer, stated, "The challenging economic conditions have continued to put pressure on retail sales, and have dampened advertising spending. Pricing, including the impact of product configurations, remained highly competitive in the third quarter and our agency-related business remained below 2002 levels. The cost management and restructuring efforts we proactively implemented have resulted in a lower cost structure, which mitigated a portion of the negative impact of the decline in net sales." Earnings before interest, taxes, depreciation and amortization amounted to $31.4 million in the third quarter, a decline of $15.0 million, or 32.3% versus the third quarter of 2002. Included in these results is approximately $6.8 million and $2.8 million of restructuring costs in the 2003 and 2002 periods, respectively. For the nine months ended September 30, 2003, EBITDA amounted to $113.8 million, an increase of $71.3 million when compared to the nine months ended September 30, 2002. The nine month periods ended September 30, 2003 and 2002 include $6.8 million and $5.8 million of restructuring charges, respectively. In addition, the nine months ended September 30, 2002, includes an after-tax charge of $108.4 million due to adopting Statement of Financial Accounting Standards No. 142 as it relates to goodwill and other intangibles. Excluding the effects of SFAS No. 142 in 2002, EBITDA through September 30, 2003, would have been less than the comparable 2002 nine-month period by $37.1 million or 24.6%. The decline in EBITDA, excluding the effects of SFAS No. 142, was the result of the difficult market conditions which offset both lower costs and a $10.1 million recovery from a settlement to a legal proceeding recorded in the first quarter of 2003. The recovery is included in "Other, net" on the company's Condensed Consolidated Statement of Operations. Vertis reported a net loss of $24.0 million in the third quarter and a $101.8 million net loss through the first nine months of 2003 versus net losses of $5.3 million and $125.7 million in the comparable 2002 periods. The net loss in the nine months ended September 30, 2003, reflects a non-cash tax provision of $48.8 million to provide a valuation allowance against previously recorded deferred tax benefits related to net operating loss carryforwards, as required by Statement of Financial Accounting Standards No. 109. The valuation allowance was recorded in the second quarter due to the continuation of the poor economic climate and the projected increase in annual interest expense resulting from the high-yield bond offering completed in June 2003. The 2002 net loss reflects the $108.4 million after-tax cumulative effect of adopting SFAS No. 142 as it relates to goodwill and other intangibles. In addition to providing third quarter results, the company updated earlier earnings guidance issued on July 31, 2003. At that time, Vertis had indicated that it expected EBITDA for the full year 2003 in the range of $196 to $206 million. Dean D. Durbin, chief financial officer, commented, "The advertising market conditions that have been negatively impacting our segments continued into the third quarter. In addition, we incurred $6.8 million of restructuring costs in the quarter; these costs were not included in the earlier guidance. Excluding restructuring costs incurred through September and any other restructuring costs that may be incurred in the fourth quarter, the company is cautiously optimistic that its full year results will approximate the low-end guidance issued on July 31, 2003." Vertis (S&P, B+ Corporate Credit Rating, Negative Outlook) is a leading international provider of integrated marketing solutions that seamlessly combines advertising, direct marketing, media, imaging and progressive technology. The company's product and service offerings include: consumer and media research, media planning and placement, creative services, digital media production, targetable advertising insert programs, fully integrated direct marketing programs, circulation-building newspaper products, and interactive marketing. Serving more than 3,000 local, regional, national and international customers, Vertis is a privately held company. Vertis clients encompass numerous Fortune 500 companies across diverse industries, including ad agencies, automotive, consumer packaged goods, durable goods and manufacturing, financial services, fragrance and beauty, food and grocery, healthcare, media and publishing, newspapers, retailers and technology. To learn more about Vertis, visit http://www.vertisinc.com WAYLAND INVESTMENT: Fitch Affirms BB Rating for $60M Sub. Notes --------------------------------------------------------------- Fitch Ratings affirms two classes of Wayland Investment Fund I, LLC. These rating actions are effective immediately. -- $67,000,000 senior secured revolving credit facility 'BBB'; -- $60,000,000 senior subordinated notes 'BB'. Wayland Investment Fund I, LLC is a market value collateral debt obligation that closed in Dec. 23, 1997. The fund is managed by CFSC (Cargill Financial Services Corp) Wayland Advisers, Inc., based in Minnetonka, Minnesota. Wayland Advisers is an indirect, wholly-owned subsidiary of Cargill, Incorporated. At inception, the investment manager targeted a portfolio of 20% bank loans, 40% high yield bonds and mezzanine debt, and 40% of distressed debt. The mezzanine debt and the distressed debt are collectively referred to as 'special situation assets'. At the Oct. 19, 2003 valuation date, the fund's approximate collateral mix was 20% in performing bank loans, 11% in performing high yield bonds, and 68% in special situation assets. The fund is paying down the senior secured revolving credit facility as directed by the second amendment to the credit agreement dated Nov. 15, 2002. The asset manager has been able to opportunistically divest of some assets in order to pay down the senior secured revolving credit facility, which is evidenced by the outstanding amount decreasing from $221,000,000 as of the Nov. 15, 2002 valuation date, to $67,000,000 as of the Oct. 17, 2003 valuation date. As the fund continues to delever, the fund's already large obligor exposures continue to grow as a percentage of the total market value of the fund. As of the Oct. 17, 2003 valuation date, the top three obligors accounted for 55% of the total market value of the portfolio. Fitch discussed the nature of the obligors with the asset manager who communicated a good level of comfort with the positions and familiarity with each transaction. Additionally, approximately 24% of the market value of the portfolio is relatively illiquid. The large obligor exposures, as well as the amount of illiquid assets, remain of concern and Fitch will continue to monitor the portfolio closely as the fund continues to further divests of assets and pay down the rated liabilities. At this time Fitch believes that the current ratings, which were adjusted on Aug. 15, 2002, appropriately reflect the current risk to the noteholders. Based on the fund's ability to sell assets and significantly pay down the senior secured revolving facility, Fitch has affirmed the rated liabilities of Wayland Investment Fund I LLC. WEIRTON: Retiree Committee Taps Pascarella & Wiker as Accountant ---------------------------------------------------------------- The Official Committee of Retirees of the Weirton Steel sought and obtained the Court's authority to retain Pascarella & Wiker, LLP, as its accountant effective as of September 26, 2003. Pursuant to the engagement letter between the Retirees' Committee and P&W dated September 29, 2003, the scope of P&W's retention relates to retiree benefits. To the extent appropriate, P&W will: (a) assist the Retirees' Committee in analyzing and reviewing the Debtor's acts, conduct, assets, liabilities, operations and financial condition; (b) prepare insights on the industry in which the Debtor operates and advise the Retirees' Committee on the current state of the restructuring markets; (c) assess and develop alternatives regarding the Debtor's future direction; (d) review and analyze the Debtor's financial statements, schedules and monthly operating reports; (e) evaluate and assist in the preparation of a formalized reorganization plan; (f) evaluate, analyze, advise and provide expert testimony or reports on related fraudulent conveyance transactions, preference actions, other litigation matters, and other Bankruptcy-related matters; (g) provide other specialized financial analysis services as deemed necessary by the Retirees' Committee like business valuation services, strategic partner searches, financial restructuring assistance, negotiation assistance, etc.; and (h) provide other services, as mutually agreed upon. James D. Newell, Esq., at Klett, Rooney, Lieber & Schorling, in Pittsburgh, Pennsylvania, relates that P&W was founded by its named partners in 1998. P&W consultants have experience in both public accounting and private industry, and are highly seasoned professionals with a minimum of 10 years experience. P&W offers its clients bankruptcy support, including creditor services, debtor services and trustee services. Furthermore, P&W is familiar with the Debtor's business and industry, and will be able to rapidly familiarize itself with the Debtor's case and current financial situation, and be able to assist the Retirees' Committee in fulfilling its duties at a minimized cost. P&W will be compensated for its services based on these hourly rate schedules: Partners $225 Directors 195 Senior Consultants 125 Other Sub-contractors 125 - 325 In addition, P&W will be reimbursed for all reasonable and necessary out-of-pocket expenses. Charles J. Pascarella, a partner of P&W, assures the Court that P&W: (1) has no connection with the Debtor, its creditors or other parties-in-interest, their attorneys or accountants, the United States Trustee, or the Retirees' Committee or its Members; (2) does not hold any interest adverse to the Debtor's estate, and (3) is a "disinterested person" as defined within Section 101(14) of the Bankruptcy Code. P&W will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new facts or circumstances are discovered, P&W will supplement its disclosure to the Court. (Weirton Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHEELING: Secures Extension of Avoidance Action Protocol -------------------------------------------------------- The Wheeling-Pittsburgh Debtors obtained U.S. Bankruptcy Court Judge Bodoh's approval to extend certain of the procedures previously approved in connection with the commencement by Debtor Wheeling-Pittsburgh Steel Corporation of adversary proceedings to: The Debtors obtained the Court's approval to: (1) avoid and recover certain preferential or fraudulent transfers received by various entities or individuals from WPSC; and (2) disallow claims of the recipients of those transfers against WPSC. These procedures are extended in each Avoidance Action: (a) in each Avoidance Action, WPSC may seek issuance of a second summons from the Clerk of Court to serve on the defendant, together with a copy of the filed Avoidance Complaints, by January 12, 2004, or within a longer period as Judge Bodoh may order; and (b) the Court will suspend the scheduling of a pretrial conference, the disclosure requirements and all other proceedings arising in the Avoidance Action, pending the issuance of the summons and its service upon the defendants. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392- 0900) WOLVERINE TUBE: Third-Quarter 2003 Results Sink into Red Ink ------------------------------------------------------------ Wolverine Tube, Inc. (NYSE: WLV) reported a net loss of $31.7 million or $2.58 per share for the third quarter of 2003, compared with net income of $1.8 million, or $0.15 per diluted share in the third quarter of 2002. The third quarter results included a $23.2 million goodwill impairment charge and a previously announced restructuring charge of $6.4 million ($4.3 million after tax). Excluding these items, this net loss would have been $4.3 million or $0.35 per share in the third quarter of 2003. Net sales for the third quarter of 2003 were $144.1 million compared with $134.8 million in the year- earlier period. Total pounds of product shipped were 80.5 million pounds, compared to 77.2 million pounds in the prior year. Gross profit for the third quarter of 2003 decreased to $6.2 million from $14.5 million in the third quarter of 2002. Cash flow from operations was $19.4 million in the third quarter of 2003, compared to $16.5 million in the prior year. Free cash flow generated in the quarter was $17.8 million, compared to $14.4 million in the third quarter of 2002. Free cash flow is defined as cash flow from operations less capital expenditures. Results for the three and nine-month periods ended September 28, 2003, are outlined in the accompanying tables. Commenting on the announcement, Dennis Horowitz, Chairman, President and Chief Executive Officer said, "The third quarter financial results were disappointing and to a large extent reflect issues that we have spoken about before, including rising energy, healthcare and pension costs, a leaner product mix, pricing pressures and the adverse impact of the strong Canadian dollar. Exacerbating the impact of the aforementioned on operating profit was a confluence of events which negatively affected manufacturing efficiencies, including, lower than anticipated volumes at our Booneville facility, an unsuccessful union organizing attempt at our Decatur facility and the east coast blackout which affected our London, Ontario, Canada operations." Third Quarter Results by Segment Shipments of commercial products totaled 53.5 million pounds, a 5.7 percent increase from last year's third quarter shipments of 50.6 million pounds. Net sales were $106.1 million, up 5.1 percent from last year's third quarter sales of $101.0 million. Gross profit was $5.9 million, compared to last year's third quarter gross profit of $11.7 million. The decrease in gross profit reflects the shift in mix from the higher value added technical and enhanced surface tube to lower value smooth tube and the aforementioned costs and manufacturing issues. Shipments of wholesale products totaled 22.4 million pounds, a 7.2 percent increase over last year's third quarter shipments of 20.9 million pounds. Net sales were $28.5 million, up 15.7 percent from last year's third quarter sales of $24.6 million. Gross profit was $38 thousand, compared to $1.9 million in last year's third quarter. Again, the cost issues discussed above, along with rapidly increasing copper prices and short supply of recycled materials, have impacted this quarter's operations as compared to the third quarter of last year. Shipments of rod, bar and other products totaled 4.6 million pounds, a 20.7 percent decrease from last year's third quarter shipments of 5.8 million pounds. Net sales were $9.5 million, compared to $9.2 million in the third quarter of 2002. Gross profit was $330 thousand, down from last year's $862 thousand. Gains in our European distribution facility were more than offset by losses in North America in rod and bar, which were due to declines in volume and price. Outlook Commenting on the outlook for the Company, Horowitz said, "As we look forward, we are finally beginning to sense an improvement in the industrial sector of the North American economy. Also, the demand from our China facility remains strong and our Portugal facility continues to expand, albeit at a rate and pace below our expectations, reflecting the lackluster European economy. Productivity and efficiencies at our facilities have returned to more normal levels and we will benefit financially from the workforce reduction that was previously announced." Horowitz continued, "We anticipate recording an additional restructuring charge of $2.5 million to $5.0 million in future quarters, for the Booneville closure. At the same time, while overall business conditions are still challenging, early indications are that the fourth quarter will show improvement over our recently completed third quarter, even given our normal seasonality." Wolverine Tube, Inc. (S&P, BB- Corporate Credit Rating, Negative Outlook) is a world-class quality partner, providing its customers with copper and copper alloy tube, fabricated products, metal joining products as well as copper and copper alloy rod, bar and other products. Internet addresses: http://www.wlv.comand http://www.silvaloy.com WORLDCOM INC: Hires Gibson Dunn & Crutcher as Special Counsel ------------------------------------------------------------- The Worldcom Debtors want to employ Gibson, Dunn & Crutcher LLP as special counsel, nunc pro tunc to July 29, 2003. Gibson Dunn will represent the Debtors in connection with the Department of Justice's investigation and related matters that focus on certain of the Company's alleged practices concerning the routing of telephone calls. According to Robert Blakely, WorldCom's Chief Financial Officer, the Debtors selected Gibson Dunn as special counsel because of the firm's knowledge and expertise. Gibson Dunn has considerable experience representing clients in the course of federal and state investigations in a variety of substantive areas including antitrust, procurement fraud, financial institution fraud, securities fraud, state and federal environmental violations and regulatory compliance, health care fraud, immigration fraud, tax offenses, RICO, money laundering, and civil and criminal forfeiture. The team that has been assembled to work on this matter includes former federal prosecutors as well as those who have spent their careers as defense lawyers. The Debtors believe that Gibson Dunn has the necessary background to deal effectively with all of the potential legal issues arising from and associated with the Department of Justice's investigation. The Debtors propose to compensate Gibson Dunn based on the firm's customary hourly rates. The hourly billing rates for attorneys at Gibson Dunn are: Partners $445 - 850 Associates 210 - 485 Paralegals 85 - 260 These rates are subject to periodic adjustment for normal rate increases and promotions. The Debtors will also reimburse Gibson Dunn for all out-of-pocket expenses incurred. Wayne A. Schrader, Esq., a partner of Gibson Dunn, attests that the firm does not hold or represent an interest adverse to the Debtors' estates. Gibson Dunn is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Schrader discloses that Gibson Dunn currently represents Silver Lake Partners LP Silver Lake's purchase of WorldCom bonds. This representation, Mr. Schrader assures the Court is not related to Gibson Dunn's engagement with the Debtors. Gibson Dunn also represents WorldCom bondholder, Merrill Lynch, in a lawsuit brought under the Employment Retirement Income Security Act, in which Merrill Lynch and certain of the Debtors are named as co-defendants. Mr. Schrader informs the Court that the Debtors, Silver Lake and Merrill Lynch have agreed to waive all actual and potential conflicts arising from the representations. Gibson Dunn is also implementing an ethical screen whereby no attorney or paralegal who works on behalf of Merrill Lynch or Silver Lake may work on behalf of the Debtors in connection with Gibson Dunn's work as special counsel, and vice versa. (Worldcom Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDGATE COMMS: Look for Third-Quarter Results Tomorrow -------------------------------------------------------- WorldGate Communications Inc. (Nasdaq: WGAT) plans to release earnings for the third quarter ending September 30, 2003 after the close of business on Wednesday, November 5, 2003. The Company has also scheduled a conference call for 8:30 a.m. Eastern Time, on Thursday, November 6, 2003 to discuss its earnings release and provide a general business update. The conference call telephone number is (706) 679-8458. The conference ID is #3778845. WorldGate is in the business of developing, manufacturing and distributing video phones for personal and business use, to be marketed with the Ojo brand name. The Ojo video phone is designed to conform to industry standards protocols, and utilizes proprietary enhancements to the latest technology for voice and video compression. Ojo video phones are designed to operate on the high-speed data infrastructure currently provided by cable and DSL providers. WorldGate has applied for patent protection for its unique technology and techno-futuristic design that contribute to the functionality and consumer appeal offered by the Ojo video phone. WorldGate believes that this unique combination of design, technology and availability of broadband networks allows for real- life video communication experiences that were not economically or technically viable a short time ago. * * * Liquidity and Going Concern Considerations In its Form 10-Q filed with Securities and Exchange Commission, the Company reported: As of June 30, 2003 the Company had cash and cash equivalents of $763. The operating cash usage for the three and six months ended June 30, 2003 was $1,123 and $2,449, respectively. Subsequent to June 30, 2003, the Company entered into a definitive asset purchase agreement to sell to TVGateway, LLC certain interactive television intellectual property rights and certain software and furniture also related to the ITV business and currently being used by TVGateway, for $2.4 million in cash, to be paid at closing which is expected to be in September or October, 2003. In addition, concurrently with the execution of the Agreement, WorldGate and TVGateway entered into a redemption agreement pursuant to which TVGateway redeemed WorldGate's equity interest in TVGateway for $600,000 in cash, paid concurrently with the execution of the redemption agreement. The purchase price for these assets in the aggregate will be $3 million, and will be used to fund continuing operations, as well as to develop and distribute new products and services for the broadband market. The initial $600,000 payment, in addition to the cash on hand, is expected to provide sufficient funds to continue operations through the closing of the Agreement. In connection with this transaction the Company will incur certain costs associated with soliciting shareholder approval for the transaction as well as certain advisor fees for the transaction. Upon closing of the TVGateway transaction and receipt of the $2.4 million from TVGateway (less these associated costs,) the Company projects it will have sufficient funding to continue operations into the first quarter of 2004, assuming no additional funding is received. The Company has retained a royalty free license to the intellectual property rights and assets sold to TV Gateway and plans to continue providing the WorldGate service to its customers. Accordingly the Company expects to continue to receive revenues from the operation of this business, although given the Company's going concern considerations no assurances can be provided as to the amount and collectability of such revenues or to the period such revenues will continue to be received. The Company has no outstanding debt and its assets are not pledged as collateral. The Company continues to evaluate possibilities to obtain additional financing through public or private equity or debt offerings, bank debt financing, asset securitizations or from other sources. Such additional financing would be subject to the risk of availability, may be dilutive to our shareholders, or could impose restrictions on operating activities. There can be no assurance that this additional financing will be available on terms acceptable to the Company, if at all. The Company has limited capacity to further reduce its workforce and scale back on capital and operational expenditures to decrease cash burn given the measures it has already taken to reduce staff and expenses. The unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Therefore, the financial statements do not include any adjustments relating to the Company's ability to operate as a going concern. The appropriateness of using the going concern basis in the future, however, will be dependent upon the Company's ability to address its liquidity needs as described above. There is no assurance that the Company will be able to address its liquidity needs through the measures described above on acceptable terms and conditions, or at all, and, accordingly, there is substantial doubt about the Company's ability to continue as a going concern beyond the first quarter of 2004, assuming the receipt of proceeds from the TVGateway transaction. * Paul Glassman Joins Greenberg Traurig's Los Angeles Office ------------------------------------------------------------ Paul R. Glassman, Esq., has joined Greenberg Traurig LLP as a shareholder in the Firm's Los Angeles office. Ms. Glassman focuses his practice exclusively in the area of bankruptcy law and is a prominent member of the Southern California bankruptcy bar. He represents debtors, creditors committees, secured creditors and other parties in every aspect of complex bankruptcy cases and related litigation and workouts. His clients include major financial institutions, real estate companies, and corporations across a wide number of industries including high tech, entertainment and health care. In recent years, Glassman has handled many significant representations in large bankruptcy cases including representation of a committee of cities owed over $ 1 billion in the Orange County bankruptcy case and a committee of landlords in the Sizzler bankruptcy case. He has authored numerous articles on bankruptcy in the Business Lawyer, the American Bankruptcy Law Journal and other publications and has lectured frequently. He is currently a member of the Executive Committee of the Los Angeles County Bar Association's Commercial and Bankruptcy Law Section and was previously chair of its Bankruptcy Committee. Glassman has been a member of the Board of Trustees of the Los Angeles County Bar Association and president of the Century City Bar Association. He earned his B.A., magna cum laude and Phi Beta Kappa, and an M.A. in economics from the University of Pennsylvania, and his J.D. from Stanford University Law School where he was a member of the law review. "The addition of Paul to Greenberg Traurig not only adds a major talent to our national and local capabilities, but immediately enhances the capacity of our interdisciplinary reorganization, bankruptcy & restructuring capabilities, and further augments our ability to serve clients," said Richard F. Davis, managing shareholder of the Los Angeles office." "Greenberg Traurig's platform will allow me to provide quality representation to clients in all aspects of bankruptcies and related litigation and workouts" said Glassman. Greenberg Traurig LLP is a full-service international law firm that provides business-oriented solutions to clients worldwide. The firm has been ranked in The National Law Journal's list of five-year growth leaders and is No. 19 on the publication's NLJ 250 listing of the country's largest law firms. The firm's attorneys combine legal, business and governmental experience with creativity to produce results for a broad spectrum of clients, ranging from emerging companies to Fortune 500 corporations. Greenberg Traurig has more than 1,000 lawyers and governmental professionals practicing in 20 offices throughout the United States and Europe: Amsterdam; Atlanta; Boca Raton, Fla.; Boston; Chicago; Denver; Fort Lauderdale, Fla.; Los Angeles; Miami; Morristown, N J.; New York; Orlando, Fla.; Philadelphia; Phoenix; Tallahassee, Fla.; Tysons Corner, Va.; Washington, D.C.; West Palm Beach, Fla.; Wilmington, Del.; and Zurich. For additional information about Greenberg Traurig, visit the firm's Web site at http://www.gtlaw.com/ * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Aphton Corp APHT (11) 16 (5) Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (44) 295 18 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Blount International BLT (369) 428 91 Cincinnati Bell CBB (2,104) 1,467 (327) Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Caraco Pharm Labs CPD (20) 20 (2) Centennial Comm CYCL (579) 1,447 (98) Echostar Comm DISH (1,206) 6,210 1,674 D&B Corp DNB (19) 1,528 (104) WR Grace & Co. GRA (222) 2,687 587 Graftech International GTI (351) 859 108 Hexcel Corp HXL (127) 708 (531) Integrated Alarm IASG (11) 46 (8) Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (186) 484 139 Inkine Pharm INKP (6) 14 5 Gartner Inc. IT (29) 827 1 Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Lodgenet Entertainment LNET (101) 298 (5) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 631 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 Maguire Properti MPG (159) 622 N.A. MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) ON Semiconductor ONNN (525) 1,243 195 Petco Animal PETC (11) 555 113 Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp RAD (93) 6,133 1,676 Ribapharm Inc RNA (363) 199 92 Sepracor Inc SEPR (392) 727 413 Sigmatel Inc. SGTL (4) 18 (1) St. John Knits Int'l SJKI (76) 236 86 Solutia Inc. SOI (249) 3,342 (231) I-Stat Corporation STAT 0 64 33 Syntroleum Corp. SYNM (1) 47 14 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (60) 1,618 173 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) Ultimate Software ULTI (7) 31 (10) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Tech VLNC (17) 36 4 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland 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 ***