/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040102.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 2, 2004, Vol. 8, No. 1 Headlines 3D SYSTEMS: Appoints Fred R. Jones as VP and Chief Fin'l Officer 21ST CENTURY HOLDING: Raises Earnings Guidance for Year 2004 AES CORP: Brazilian Units Completes $2.3-Bil. Debt Restructuring AIR CANADA: Board of Directors Reconfirms Selection of Trinity AMERCO: Continuing JPMorgan Cash Collateral Use Until Feb. 28 ANALYTICAL SURVEYS: 2003 Year-End Net Loss Reaches $4 Million ASSISTED LIVING: Executes $88 Mill. Debt Refinancing Arrangement AURORA FOODS: Gets Approval to Pay Vendors' PACA and PASA Claims BRIDGE INFORMATION: Agrees to Stay Objection to ADP Claims CENTRAL WAYNE: Case Summary & 20 Largest Unsecured Creditors CHAMPIONLYTE: Receives Initial Purchase Order from Tree of Life CHANNEL MASTER: Selling Assets to Andrew Corp. for $15 Million CHAPARRAL RESOURCES: Liquidity Issues Raise Going Concern Doubt CLEARLY CANADIAN: Continuing Initiatives to Secure New Funding COEUR D'ALENE: Bolivian & Alaskan Mine Prospects Look Good COMMONWEALTH BIOTECH.: Ability to Continue Operations Uncertain CONGOLEUM: Files Prepackaged Chapter 11 Asbestos Case in Trenton CONSECO INC: S&P Assigns Prelim. Junk Ratings to $3 Bill. Shelf CONTINENTAL AIRLINES: Extends F-R Note Exchange Offer to Monday COVANTA ENERGY: Provides Business Plan Under Second Joint Plan CREDIT SUISSE: S&P Lowers Classes I-M-2 & II-M-2 Ratings to B DELPHAX TECHNOLOGIES: Delays Filing of SEC Form 10-K by 15 Days DII INDUSTRIES: Final DIP Financing Hearing Slated for Feb. 11 DIXIE GROUP: Completes Sale of Yarn Production Plant to Shaw DRESSER INC: Makes Voluntary Debt Prepayment of $15 Million ENRON: Broadband Unit Selling Metromedia Claims to Liquidity ENTERPRISE TECH.: Recurring Losses Raise Going Concern Doubt EXIDE: Judge Carey Denies Confirmation of Low-Ball Value Plan EXIDE: Committee Wants to Commence Adversary Case against R2 FANSTEEL INC: Court Allows Modifications to Amended Joint Plan FEDERAL-MOGUL: Gets OK to Enter into Agreements with F-M Gorzyce FINZER IMAGING: Case Summary & 20 Largest Unsecured Creditors FRIEDMAN'S INC: 2003 Annual Report on Form 10-K Will Be Late GEM KINGDOM: Case Summary & 20 Largest Unsecured Creditors GINGISS GROUP: Selling 127 Locations to May Department Stores GLAS-AIRE: Must Generate Sufficient Cash Flow to Continue Ops. GRUPPO TMM: Closes Additional $25MM Under Receivables Facility GTC TELECOM: Sept. 30 Balance Sheet Upside-Down by $6.7 Million HAYNES INT'L: Sept. 30 Net Capital Deficit Narrows to $97 Mill. HOST MARRIOTT: Sells Plaza San Antonio Marriott Hotel for $34MM IFCO SYSTEMS: Three New Members Elected to Board of Directors IMPSAT FIBER NETWORKS: Issues $16 Million Seven-Year Bond INTERNATIONAL WIRE: Continues Recapitalization Discussions INTERPOOL INC: Further Delays Filing of 2002 Report on Form 10-K INTERPOOL: Fitch Junks Preferred Stock Rating & Keeps Neg. Watch IT GROUP INC: Files Chapter 11 Plan and Disclosure Statement JUPITER MARINE: Former Auditors Air Going Concern Uncertainty KAISER ALUMINUM: Feb. 29 Fixed as Louisiana PI Claims Bar Date LAIDLAW: Discloses Identity of Company's New Executive Officers LES BOUTIQUES: Sylvain Toutant Resigns as Pres., CEO & Director MIRANT CORP: Asks Court to Fix March 12, 2004 as MAEC Bar Date NANOPIERCE TECH.: Ability to Meet Liquidity Needs Uncertain NATIONAL CENTURY: Keeps Solicitation Exclusivity Until Feb. 17 NATIONAL STEEL: Secures Clearance for EPA Settlement Agreement NEW YORK WATER: S&P Cuts Credit Rating to BB with Stable Outlook PENN TREATY AMERICAN: Recommences Sales of Insurance in Kentucky PG&E: USGEN Asks Court to Clear Brayton Facility Upgrade Pact PINNACLE ENTERTAINMENT: Repurchases Shares Held by Ex-Chairman RELIANT RESOURCES: Prepays $917M of Debt; Cancels $300M Facility RENT-WAY INC: Commences Exchange Offer for 11-7/8% Senior Notes ROBOTIC VISION: Opens Acuity CiMatrix Sales Office in Shanghai RURAL CELLULAR: Commences Trading on Nasdaq National Market SCIENTIFIC GAMES: Will Close Clifton, New Jersey Office SEA CONTAINERS: Rail Unit Gets OK to Bid for Kent Rail Franchise SELECT MEDICAL CORP: Opens Second Hospital in Wichita, Kansas SENIOR HOUSING: Closes $86-Mill. Purchase and Lease Transactions SHARK INDUSTRIES: Turns to Steven Nosek for Bankruptcy Advice SOLUTIA INC: Court Okays Trumbull's Appointment as Claims Agent SOUTHWALL TECH.: Appoints George Boyadjieff as New Chairman SPEIZMAN IND.: SouthTrust Bank Agrees to Forbear Until March 31 SPIEGEL: Court Approves BDO Seidman's Engagement as Accountants STOLT OFFSHORE: Obtains Further Waiver Extension Until April 30 SYMBOL: Federal Appeals Court Dismisses Appeal vs. Metrologic TECH LABORATORIES: Must Generate Fresh Funds to Continue Ops. TECHCANA: Fin'l Workout Efforts Yield Positive Results in 2003 THAXTON GROUP: Seeks Nod to Employ Rayburn Cooper as Co-Counsel TRI-UNION: Secures OK to Hire Burns Wooley as Litigation Counsel UNIFI INC: Continuing Joint Venture Talks with Kaiping Polyester VERIDIEN: Losses and Capital Deficit Raise Going Concern Doubt VIDEO WITHOUT BOUNDARIES: Funds Insufficient to Meet Cash Needs VOLUME SERVICES: Declares Cash Dividend Payable on January 20 WCI COMMUNITIES: Expands into NW Florida with New Acquisition WILLIAMS CONTROLS: Sept. 30 Net Capital Deficit Widens to $17MM WORLDCOM: State of New Jersey Has Until April 1 to File Claims * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles and Other Disasters ********* 3D SYSTEMS: Appoints Fred R. Jones as VP and Chief Fin'l Officer ---------------------------------------------------------------- 3D Systems Corp., (Nasdaq: TDSC) has named Fred R. Jones vice president and chief financial officer effective immediately. "We are very pleased that Fred Jones has joined 3D Systems as chief financial officer," said Abe Reichental, 3D Systems' president and chief executive officer. "Fred has built strong financial operations' teams, managed financial aspects of major mergers and acquisitions, added focus to return on capital and provided strong credibility with capital market participants. His demonstrated leadership and strategic skills in financial matters, extensive experience in working as a senior financial executive with major publicly held companies, and his recent experience implementing internal control programs mandated by the Sarbanes- Oxley legislation are exactly what 3D Systems needs to support the execution of our business strategy and to provide the highest degree of integrity in our financial reporting." Jones brings to 3D Systems a strong finance background, having provided CFO services through his own consulting firm and having previously served as chief financial officer for two NYSE-listed firms: Thomas & Betts Corporation (NYSE:TNB) and Joy Technologies, Inc. He also served as president of ABB Financial Services, Inc. following ABB's acquisition of Combustion Engineering, Inc., where he was treasurer. He previously held finance positions at The Penn Central Corporation and The First National Bank of Chicago. Jones holds a bachelor's degree in computer science from the University of Missouri at Rolla and an MBA in finance from Stanford University. The Company also announced that Robert M. Grace, Jr. has joined the Company as Vice President, General Counsel and Secretary. Grace formerly worked at Sealed Air Corporation (NYSE:SEE) for more than 22 years where he held the positions of General Counsel and Secretary and more recently Special Counsel in charge of all legal aspects of M&A and financing activities. Grace graduated from Williams College in 1969 with highest honors in Economics and from Columbia University Law School in New York City in 1972 where he was a Harlan Fiske Stone Scholar. He is a member of the New York Bar and of numerous organizations involved with corporate law practice, including the American Society of Corporate Secretaries, the American Bar Association, the International Bar Association, the Corporate Counsel Association and the New York State Bar Association. "Having had the privilege of working with Bob for more than 20 years, I was very pleased that he chose to join me as a critical player in our new management team," said Abe Reichental. "I am confident that I can rely on his exceptional talents and capabilities to help our Company meet the challenges and develop the opportunities ahead." Founded in 1986, 3D Systems(R), the solid imaging company(SM), provides solid imaging products and systems solutions that reduce the time and cost of designing products and facilitate direct and indirect manufacturing. Its systems utilize patented proprietary technologies to create physical objects from digital input that can be used in design communication, prototyping, and as functional end-use parts. 3D Systems offers a wide range of imaging, communication rapid prototyping and on demand manufacturing systems including the MJM product line (InVision(TM) 3-D printer and ThermoJet(R) solid object printer), SLA(R) (stereolithography) systems, SLS(R) (selective laser sintering) systems, and Accura(R) materials (including photopolymers, metals, nylons, engineering plastics, and thermoplastics). More information on the company is available at http://www.3dsystems.com/ * * * Going Concern Uncertainty The Company's condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company incurred operating losses totaling $14.4 million and $21.4 million for the nine months ended September 26, 2003 and the year ended December 31, 2002, respectively. In addition, the Company had a working capital deficit of $4.4 million and an accumulated deficit in earnings of $35.8 million at September 26, 2003. These factors among others raise substantial doubt about the Company's ability to continue as a going concern. Management's plans include raising additional working capital through debt or equity financing. In May 2003, the Company sold approximately 2.6 million shares of its Series B Convertible Preferred Stock for aggregate consideration of $15.8 million and the Company repaid $9.6 million of the U.S. Bank term loan balance with a portion of the net proceeds. Management intends to obtain debt financing to replace the U.S. Bank financing, and in July 2003, management accepted a proposal from Congress Financial, a subsidiary of Wachovia, to provide a secured revolving credit facility of up to $20.0 million, subject to its completion of due diligence to its satisfaction and other conditions. In October 2003, Congress determined not to extend a commitment of financing to the Company. In October 2003, management accepted a proposal from Silicon Valley Bank to provide a revolving line of credit up to $12.0 million. In October 2003, Silicon Valley Bank preliminarily approved this credit facility. Any credit facility will be subject to completion by Silicon of its due diligence and other customary closing conditions. Management continues to pursue alternative financing sources. Additionally, management intends to pursue a program to improve its operating performance and to continue cost saving programs. However, there is no assurance that the Company will succeed in accomplishing any or all of these initiatives. 21ST CENTURY HOLDING: Raises Earnings Guidance for Year 2004 ------------------------------------------------------------ 21st Century Holding Company (Nasdaq:TCHC), a vertically integrated financial services holding company, is raising its guidance for calendar year 2004. President and Chairman of the Board, Edward J. Lawson, announced that he is raising the guidance for the Company's calendar year 2004 from $2.50 to $3.00 per share to $3.25 to $3.75 per share on a GAAP basis, before dilution. Revenue guidance is also being raised from 20-30% growth rate to a 40-50% growth target for all of 2004 and 2005. For calendar year 2003 ending December 31, 2003, the Company continues to believe it will meet or exceed its previous guidance of $2.25 to $2.45 per share. Mr. Lawson said, "I am making these changes to our guidance now due to a surge in growth in our property and general liability lines of business. I believe that these trends, coupled with expansion into other states, will continue to drive earnings and revenue over the next several years." Mr. Lawson continued, "I would also like to take this opportunity to wish all of our shareholders a warm, happy and prosperous new year." The Company, through its subsidiaries, underwrites standard and non-standard personal automobile insurance, flood insurance, general liability insurance, mobile home insurance and homeowners' property and casualty insurance in the State of Florida. The Company underwrites general liability in the state of Georgia as a surplus lines carrier. In addition, the Company has underwriting authority and process' claims for third party insurance companies. In addition to insurance services, the Company offers premium finance services to its insureds as well as insureds of third party insurance companies. Lastly, the Company offers other ancillary services including licensing of its tax preparation software products, electronic income tax filing, tax preparation and tag and title transfer services. The Company offers single and master franchise opportunities to individuals through its subsidiaries Fed USA Insurance/Financial Services and EXPRESSTAX(R) Franchise Corporation. As previously reported in Troubled Company Reporter, 21st Century Holding Company said that AM Best reaffirmed ratings for Federated National Insurance Company ("B" rated) and American Vehicle Insurance Company ("B+" rated) and changing their outlook from negative to stable. AES CORP: Brazilian Units Completes $2.3-Bil. Debt Restructuring ---------------------------------------------------------------- The AES Corporation (NYSE: AES) announced that several of its Brazilian subsidiaries have reached agreement regarding the successful restructuring of approximately $2.3 billion of non- recourse debt associated with those businesses. Negotiations with Banco Nacional de Desenvolvimento Economico e Social to restructure approximately $1.2 billion in outstanding loans owed to BNDES by several of AES's Brazilian subsidiaries have been completed. The parties signed definitive documentation in Rio de Janeiro, concluding nearly eighteen months of negotiations. As a result of the restructuring, AES and BNDES have created a new company, Brasiliana Energia, which will hold AES' direct and indirect interests in AES Eletropaulo, AES Uruguaiana and AES Tiete. AES Sul will be contributed upon the successful completion of its financial restructuring. Pursuant to the shareholders' agreement signed between AES and BNDES, AES controls Brasiliana Energia through its ownership of a majority of the voting shares of the company. AES will own 50.1% of the common shares and BNDES will own 49.9% of the common shares plus non-voting preferred shares that will provide BNDES with approximately 53% of the total capital of Brasiliana Energia. AES equity interests in Eletropaulo, Uruguaiana and AES Tiete together with $90 million contributed by AES and its Brazilian subsidiaries will be applied to reduce the outstanding debt owed to BNDES from $1.2 billion to $510 million. The remaining outstanding balance of $510 million (which remains non-recourse to AES) will be payable over an 11 year period. Closing of the transaction is subject only to approval from Agencia Nacional de Energia Eletrica and the Brazilian Central Bank, both of which are expected to be received no later than January 2004. AES also announced today that Eletropaulo had reached agreement with its private creditors to reschedule approximately 2.3 billion reais ($787 million) of outstanding debt over the next five years. The agreement with Eletropaulo creditors resolves all outstanding defaults and accelerations with its operating company lenders. As the result of this transaction, 70% of the reprofiled debt will be demoninated in Brazilian Reais (compared with 34% today). Additionally, as a result of the reprofiling transaction, approximately 75% of Eletropaulo's debt will be denominated in Brazilian Reais (compared with 58% Monday). Closing of the Eletropaulo reprofiling transaction is subject to definitive documentation to be entered into no later than February 16, 2004. Lastly, AES Tiete Holding, Ltd through its subsidiary AES IHB Cayman, Ltd has reached agreement with $300 million aggregate principal amount of 11.5% trust certificates due December 2015 to obtain the required consents for the transaction with BNDES and to restructure various payment terms of the obligations. Paul Hanrahan, President and Chief Executive Officer of AES, stated, " We are extremely pleased that all of the hard work over these last 18 months has concluded by reaching these significant milestones. Our agreement with BNDES is particularly important to us because we now have the stability necessary to move forward with our businesses in an attractive and promising electricity market in South America's largest economy. The Brazilian government has made great strides over the past year to reconstitute a stable electricity market that once again will be attractive for new investment." "With the completion of these transactions, we now have a sustainable capital structure for our Brazilian businesses. Throughout these difficult months, BNDES has constructively engaged with us in a search for mutually acceptable solutions." said Joseph C. Brandt, Executive Vice President and Chief Operating Officer of AES. "We are enthusiastic about working together as partners. We also appreciate the hard work, expression of confidence and support shown to us by the commercial banks and bondholders at Eletropaulo and Tiete. " AES -- whose senior unsecured debt is rated at 'B' by Fitch -- is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 118 facilities totaling over 45 gigawatts of capacity, in 28 countries. AES's electricity distribution network sells 89,614 gigawatt hours per year to over 11 million end-use customers. For more general information visit http://www.aes.com/ AIR CANADA: Board of Directors Reconfirms Selection of Trinity -------------------------------------------------------------- Air Canada's Board of Directors met Sunday afternoon, December 21, 2003, to consider the improved offer from Trinity Time Investments received late Friday evening as well as the court sanctioned final Cerberus offer submitted on December 10. The Board received the advice of the Seabury Group and Merrill Lynch as well as independent legal counsel. Following its deliberations, the Board reconfirmed its selection of Trinity Time Investments as the company's equity plan sponsor. Apples-to-Apples Basis In a letter dated December 22, 2003, R. E. Brown, chairman of Air Canada's Board of Directors, informs Mr. Justice Farley that, in arriving at a conclusion, the Board took into account both financial and non-financial considerations. "The analysis received by the Board made it clear that, when analyzed on an apples-to-apples basis, the Trinity and Cerberus proposals do not produce significantly discrepant economic outcomes," Mr. Brown says. Mr. Brown relates that, by making use of assumptions that the Board considered reasonable, including comparable, capitalizations of the emergent Air Canada under the two proposals, the analyses indicated that the Cerberus proposal might provide marginally better economic results at the lower end of the expected range of likely equity market values for the enterprise as a whole, with a superior economic result under the Trinity offer at higher value levels. "But even modest changes in projected financial results of the restructured Air Canada would have a major impact on these outcomes," Mr. Brown points out. In this context, non-financial considerations assumed particular salience. The Board considered a number of them,, including the synergies and benefits each offeror asserted for its proposal. Mr. Brown says that the support of major creditors, like Deutsche Bank Securities Inc. and General Electric Capital Corporation, to the Trinity proposal was significant. Cerberus Offers Choices to Air Canada On December 10, 2003, Cerberus Capital Management LP tendered a revised offer incorporating modifications to certain key financial terms and conditions in the Trinity Investment Agreement approved by the CCAA Court. The Cerberus Offer presents two investment options to Air Canada's Board of Directors: -- Option A (a) Cerberus would pay CND650,000,000 for 25% of the fully diluted equity of Air Canada Enterprise; (b) A CND450,000,000 Rights Offering would be made available to creditors; (c) At Air Canada's request, Cerberus would support a grant to creditors who subscribe for shares under the Rights Offering of an over-allotment of shares not otherwise taken up by the creditors which would require Cerberus to seek from Deutsche Bank an amendment to the Deutsche Bank Standby Agreement approved by the CCAA Court on December 8, 2003; (d) If Cerberus was successful negotiating the redemption of the note issued to General Electric Capital Aviation Services before the Applicants exit from CCAA protection, that portion of the equity of Air Canada Enterprise into which it otherwise would have been convertible would be allocated to unsecured creditors on a pro-rata basis; (e) The price for shares to be purchased by Deutsche Bank as the standby purchaser and those creditors who exercise their option to subscribe for equity under the Rights Offering, would be set at a 19.96% discount to the price paid by Cerberus -- effectively adjusting the pricing so that it will be identical to the pricing contained in the Trinity Investment Agreement; (f) The conversion price of the GECAS Note into equity would be set at a 19.96% discount to the price paid by Cerberus; (g) Five-year warrants for additional equity in Air Canada Enterprise would be issued to those creditors who subscribe for shares in the Rights Offering. The Creditor Warrants would have an exercise price equivalent to a CND5,000,000,000 equity valuation and would be subject to a dilution formula with a cap at 15% of the equity of Air Canada Enterprise; (h) Senior Notes of up to CND500,000,000 would be made available to those creditors that elect not to receive equity as part of the restructuring; (i) A cash pool of between CND25,000,000 and CND100,000,000 would be made available to a convenience class of creditors; (j) At the option of Air Canada or if the GECAS Note is not redeemed, the equity investment from Cerberus would be reduced to CND550,000,000 with a proportional reduction in the amount of fully diluted equity to be allocated to Cerberus; and (k) Cerberus would reimburse Air Canada for the payment of the CND19,500,000 Break Fee to Trinity. -- Option B (a) Cerberus would pay CND275,000,000 for 10.38% of the fully diluted equity of Air Canada Enterprise; (b) The over-allotment provisions and the GECAS Note retirement options under Option A would, if agreements could be reached with Deutsche Bank and GECAS, also be offered to Air Canada under Option B; (c) A Rights Offering ranging from CND600,000,000 to CND825,000,000 would be made available to creditors. Deutsche Bank would be offered the right to backstop CND450,000,000 of the Rights Offering on the terms contained in the Standby Agreement and Cerberus would backstop the remainder of the Rights Offering of between CND150,000,000 and CND375,000,000. Cerberus' investment would be adjusted upward on a dollar-for- dollar basis to the extent Cerberus' backstop of the Rights Offering falls below CND375,000,000. Deutsche Bank and Cerberus would purchase unexercised Rights Offering Shares on a pro-rata basis which would require Cerberus to seek from Deutsche Bank an amendment to the Standby Agreement; and (d) The subscription price for shares under the Rights Offering, would be set at a price that is a 21.47% discount to the price paid by Cerberus -- effectively adjusting the pricing so that it will be identical to the pricing contained in the Trinity Investment Agreement. Under both Option A and Option B, these provisions apply: (i) At Air Canada's request, Cerberus would support a grant to creditors who subscribe for shares under the Rights Offering of an over-allotment of shares not otherwise taken up by creditors; and (ii) Should it be possible for Cerberus to retire the GECAS Note prior to the Applicants' exit from CCAA protection, that portion of the equity of Air Canada Enterprise into which it otherwise would have been convertible would be allocated to creditors on a pro-rata basis; Other Salient Terms Air Canada Board Composition of the 12 members of the Board under either option is: * 4 selected by Cerberus -- 1 would be selected by a participant in the Rights Offering if more than CND650,000,000 was raised through the Rights Offering; * 1 management director; * 2 nominees selected by Deutsche Bank; and * 5 nominees selected by a committee comprised of the CEO, a member of the Unsecured Creditors' Committee and Cerberus; Remaining directors must be satisfactory to Cerberus. Voting Control Voting control of the Class A shares to held by Cerberus would be calculated as the greater of: -- 25% of the total number of votes attached to all outstanding shares; and -- The percentage of the total votes that is equal to the lessor of: (a) The maximum percentage set forth in the Canada Transportation Act and the Air Canada Public Participation Act; and (b) The percentage of the total equity that the number of Class A shares represent. Conditions Precedent Conditions precedent in favor of Cerberus contain these changes as against the Trinity Investment Agreement: -- Agreements with the Office of the Superintendent of Financial Institutions and relevant labor and retiree groups regarding the amount and timing of cash flow, funding requirements and amortization of solvency deficiencies will be on terms at least as favorable to Air Canada as that provided in the written presentation from Air Canada to the OSFI on October 27, 2003; and -- Cerberus does not require comfort or assurance from relevant governmental agencies in connection with charges for airport ground rents, navigation charges and security charges. Other Terms (a) A representation by Air Canada that material agreements like the Star Alliance, GE and Amex Card agreements are accurately reflected in, and are consistent with, the Applicants' business plans; (b) Removal of the "fiduciary out" language in the Trinity Investment Agreement and the elimination of the concept of "Superior Proposal" in connection with the Board's consideration of competing investment proposals; (c) Air Canada will provide Cerberus with copies of all documents before filing them with any governmental authority and Air Canada would accept and make all reasonable changes suggested by Cerberus; and (d) Cerberus to receive written evidence from any governmental authority regarding the compliance of the contemplated transactions with the Canada Transportation Act and the Air Canada Public Participation Act regarding foreign ownership and control. Expense Reimbursement Air Canada is to reimburse Cerberus for its expenses: (a) Cerberus' reasonable expenses incurred through November 8, 2003; plus (b) An expense reimbursement to be paid on the Closing, or from time-to-time before the Closing, calculated as the lesser of: * CND12,000,000; and * The actual out-of-pocket costs less the amount already reimbursed by Air Canada for costs incurred to November 8, 2003. Retention of Messrs. Robert Milton, Air Canada Key Officers President and Chief Executive Officer; Calin Rovinescu, Chief Restructuring Officer; and Montie Brewer, Executive Vice President, Commercial will be retained. Cerberus wants each officer to enter into employment agreements satisfactory to it as conditions to Closing. In lieu of a restricted stock grant to Messrs. Milton and Rovinescu, Cerberus would support a CND10,000,000 aggregate cash bonus by the Board of Directors of Air Canada Enterprise to the two executive officers, to be paid over a four-year period. Management Stock Option Cerberus would support the establishment of a management stock option plan program on the Closing Date not to exceed 5% of the fully diluted shares of Air Canada Enterprise of which no more than 3% will be issued on the Closing Date. Trinity Secures GECAS, Deutsche Bank Support Trinity Time Investments entered into an agreement with GE Capital that requires Trinity or its assignee, which includes Air Canada, to purchase (i) the GECAS Note and (ii) the GECAS warrants for 4% of the fully diluted equity of Air Canada Enterprise, which are to be made available to GE Capital. The GECAS Note and the GE Warrants are instruments created under the Global Restructuring Agreement executed by Air Canada with GE Capital. Trinity advised both the Applicants and Ernst & Young, Inc., the Court-appointed Monitor, that the GECAS Note and the GE Warrants will be cancelled when the Applicants exit from CCAA protection under the terms of the GECC Agreement and that all of the fully- diluted equity associated with the GECAS Note and the GE Warrants will be transferred to the Applicant's unsecured creditors. GECAS will receive a cash payment from Trinity in a single agreed amount for both the GECAS Note and the GE Warrants -- which amount equals the face value of the GECAS Note plus an additional agreed amount. On December 19, 2003, Trinity submitted a revised investment offer to Air Canada's Board. Pursuant to the new provisions of the Amended Trinity Investment Agreement, Trinity will permit Air Canada to repay the GECAS Note at its principal amount of $106,000,000 plus a 9% early redemption premium. The GE Warrants will be cancelled upon the Applicants' exit from CCAA without payment or other consideration payable by the Applicants. Under all circumstances the consideration to be received by GECC for the cancellation of the GE Warrants will be shouldered by Trinity. Trinity promises to make the transactions contemplated by the GECC Agreement effective immediately on the Closing. Assuming that the Applicants' Global Restructuring Agreement with GE Capital is approved and that the GE Capital-Trinity transactions are consummated, the Applicants' unsecured creditors will receive an additional 9.56% of the fully diluted equity of Air Canada Enterprise. The Monitor received and reviewed a copy of the GECC Agreement. The GECC Agreement, however, is subject to confidentiality agreements and cannot be disclosed. Trinity also entered into an agreement with Deutsche Bank that is based on the consideration Trinity made available to Deutsche Bank for certain amendments to be allowed by Deutsche Bank to the Standby Purchase Agreement. The amendment is subject to further clarification. The Amended Standby Purchase Agreement provides to creditors who elect to purchase equity pursuant to the Rights Offering an opportunity to receive an over-allotment of equity to a maximum of one-half of the un-subscribed Rights Offering Shares. As an example, if 40% of the shares under the Rights Offering are subscribed, then an additional 30% -- which is one-half of the un-subscribed Rights Offering shares of 60% -- of the Rights Offering Shares can be subscribed by creditors pursuant to the over-allotment provision. The Amended Standby Purchase Agreement also contains provisions to address the issue of the re- allocation of Rights Offering Shares relating to disputed claims. Other Revisions to the Trinity Investment The condition in favor of Trinity with respect to the pension plans issues is amended by the addition of an assurance that Trinity agrees to accept the Applicants' position as set out in their October 27, 2003 letter to the OSFI. The condition requiring government assurances is clarified by the addition of language that Trinity does not require any legislative amendment. The language concerning the treatment of a competing investment proposal and the "fiduciary out" is removed and any reference to a "Superior Proposal" is eliminated from the Amended Trinity Investment Agreement. An additional covenant is added which requires Air Canada to accept reasonable changes suggested by Trinity in connection with any filing or submission to any governmental entity. Trinity seeks additional funding from Air Canada for its reasonable actual out-of-pocket expenses incurred through December 19, 2003. Trinity proposes the development of management equity linked compensation arrangements, which will provide a maximum of 5% of the fully diluted equity -- maximum of 3% on Closing -- through a combination of options and stock grants to all management in the aggregate. These limits are the same as under the Cerberus Offer. Trinity amends its previous proposal requiring that on the Closing, each of Messrs. Milton and Rovinescu will hold not less than 0.25% of the equity. The amount is raised to not less than 1% of the total equity within 3 years. The equity shares will be acquired under the management equity linked compensation arrangements and included in the maximum 5% allocation. Seabury's Analyses Seabury Securities LLC, the Applicants' financial adviser, performed detailed financial analyses that compare the Cerberus Offer and the Amended Trinity Investment Agreement. The financial analyses considered these matters affecting the ultimate recovery to the Applicants' creditors: -- The amount of equity allocated to those creditors who do not participate in the Rights Offering; -- The amount of equity allocated to creditors pursuant to the Rights Offering and possible over-allotment privileges; -- The potential dilutive effects of various financial instruments, like the GECAS Note, the GE Warrants, Management stock grants or options and the Creditor Warrants; -- The potential benefits to the Applicants -- and hence, the creditors -- from the early retirement of the GECAS Note and GE Warrants; -- The potential equity valuation of Air Canada Enterprise upon exit from CCAA and forecast potential equity valuations one to two years following emergence from CCAA; -- The potential adjustments to the equity valuation for cash raised or utilized on Closing, and cash raised pursuant to the Creditor Warrants; -- The potential value of Creditor Warrants to creditors who hold Creditor Warrants under the Cerberus Offer; -- Assumptions concerning the expected creditor participation rates in the Rights Offering and the over-allotment; and -- Assumptions concerning the potential amount of aggregate Allowed Claims for purposes of distribution under the CCAA restructuring plan. On December 18, 2003, the Air Canada Board employed Merrill Lynch to provide independent financial advice. In accordance with its mandate, Merrill Lynch confirmed to the Board that it agreed with the financial methodology, assumptions and calculations used by Seabury. Seabury presented a summary of the potential equity allocations under different scenarios: Trinity Cerberus Cerberus Stakeholder Dec. 19 Option A Option B ----------- ------- -------- -------- Equity Plan Sponsor 31.13% 25.00% 19.39% GE Capital 0.00% 9.57% 9.57% Creditors - Claims 44.30% 40.79% 37.39% Creditors - Rights Offering 16.17% 10.81% 19.82% Total Creditors 60.47% 51.60% 57.22% Deutsche Bank Standby Agreement 5.39% 10.81% 10.81% Management 3.00% 3.00% 3.00% Existing Shareholders 0.01% 0.01% 0.01% ======= ======== ======== Seabury assumes under the Amended Trinity Agreement Analysis that 50% of the creditors exercise their Rights pursuant to the Rights Offering plus an over-allotment by creditors of another 25% of the Rights Offering Shares. Seabury also assumes the retirement of the GECAS Note and the GE Warrants. Seabury assumes under Option A of the Cerberus Offer that 50% of the creditors exercise their Rights pursuant to the Rights Offering with no ability to subscribe for an over-allotment. Seabury also assumes a CND650,000,000 investment from Cerberus to reflect an equivalent capitalization. The equity allocation under Option A does not reflect a retirement of the GECAS Note since Cerberus has not completed those arrangements. Seabury assumes under Option B that 50% of the creditors exercise their Rights pursuant to the Rights Offering with no ability to subscribe for an over-allotment. Seabury also assumes that amendments are made to the Standby Agreement to allow for pro- rata take-up between Deutsche Bank and Cerberus of the unexercised Rights Offering Shares. The equity allocations also assume that the over-allotment arrangements between Trinity and Deutsche Bank cannot be duplicated by Cerberus. Seabury reports the financial impact of the arrangements Trinity entered with GE Capital and Deutsche Bank: (i) There is a 9.56% reduction in equity allocated to GE Capital in connection with the GECAS Note and the GE Warrants and a corresponding reallocation to the Applicants' unsecured creditors; and (ii) There is an increase in the amount of equity that creditors may acquire under the Rights Offering -- at the same price paid by Trinity -- and, consequently, a decrease in the amount of equity that may be available to Deutsche Bank under the Amended Standby Agreement. Both of the impacts increase the amount of equity available to the Applicants' unsecured creditors and, therefore, potentially increasing the overall recovery for creditors under the Amended Trinity Investment Agreement. Valuation and Creditor Recovery Assumptions Many financial creditors have valued the post-CCAA Air Canada equity in a range of up to CND5,000,000,000 or more. In its analysis, Seabury assumed a variety of potential equity valuations within the range of CND2,650,000,000 to CND7,000,000,000 -- with the most likely range at +/- CND3,750,000,000 -- and the effect of such assumed values on the ultimate recovery to stakeholders. Assuming the total Allowed Claims are CND10,000,000,000, Seabury developed a range of potential stakeholder recoveries: Total Equity Trinity Cerberus Cerberus Valuation Creditor Dec. 19 Option A Option B ---------------- -------- ------- -------- -------- CND2,650,000,000 Participating 0.116 0.127 0.121 Creditor Non-Participating 0.115 0.114 0.111 Creditor Blended Recovery 0.115 0.120 0.116 3,750,000,000 Participating 0.200 0.202 0.206 Creditor Non-Participating 0.163 0.157 0.152 Creditor Blended Recovery 0.182 0.179 0.179 5,000,000,000 Participating 0.296 0.289 0.302 Creditor Non-Participating 0.219 0.205 0.199 Creditor Blended Recovery 0.257 0.247 0.251 7,000,000,000 Participating 0.449 0.431 0.456 Creditor Non-Participating 0.307 0.282 0.274 Creditor Blended Recovery 0.378 0.356 0.365 ======= ======= ======= The Seabury Estimated Recoveries reflect that: -- Cerberus Option A results in higher recoveries to creditors at the lower assumed equity valuation when Cerberus invests CND650,000,000; -- the Amended Trinity Investment Agreement results in higher creditor recoveries at the middle and higher expected equity valuation ranges, particularly recoveries to Non-Participating Creditors; and -- Cerberus Option B, which represents a very different equity structure, provides for lower overall recoveries to creditors on a blended basis with greater recoveries to the Participating Creditors, but at the expense of Non-Participating Creditors who realize lower recoveries. Other Qualitative Considerations The Board also considered certain qualitative factors associated with the Cerberus Offer and the Amended Trinity Investment, including: (i) Cerberus Option B is not responsive to producing an equity plan sponsor that would have significant ownership and the ability to provide meaningful leadership in Air Canada Enterprise; (ii) Relative certainty of regulatory approvals in a timely fashion respecting foreign ownership restrictions and control issues; (iii) The relative ability to bring leadership and to assist the Applicants in achieving closure to outstanding restructuring initiatives like the pension deficit funding agreements and aircraft purchase and funding arrangements; (iv) Timeline to close the equity funding and related agreements and ability to manage potential Material Adverse Changes; (v) Ability of management to work with the equity plan sponsor; and (vi) The equity plan sponsor's contribution to Air Canada's business prospects. (Air Canada Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945- 7000) AMERCO: Continuing JPMorgan Cash Collateral Use Until Feb. 28 ------------------------------------------------------------- Under a Court-approved Stipulation with JPMorgan Chase Bank, the AMERCO Debtors are authorized to use the Cash Collateral and JPMorgan is granted with adequate protection. The Stipulation provides a December 31, 2003 Termination Event. To ensure that the substantial progress the Debtors have made toward their reorganization efforts are not jeopardized, the Debtors and JPMorgan, as administrative agent of the lenders under the June 28, 2002 Credit Agreement, agree to modify the Amerco and AREC Final Order on Cash Collateral so that the Debtors' rights to use the cash collateral is extended up to and including February 28, 2004. Judge Zive approves the parties' agreement in all respects. (AMERCO Bankruptcy News, Issue No. 16 Bankruptcy Creditors' Service, Inc., 215/945-7000) ANALYTICAL SURVEYS: 2003 Year-End Net Loss Reaches $4 Million ------------------------------------------------------------- Analytical Surveys, Inc. (Nasdaq: ANLT), the leading provider of utility-industry data collection, creation and management services for the geographic information systems (GIS) markets, announced financial results for its fiscal year ended September 30, 2003. Revenue for the fiscal year was $15.0 million compared with $19.1 million in fiscal 2002. Net loss available to common shareholders was $3.9 million, or $4.75 per diluted share, versus net earnings available to common shareholders of $4.5 million, or $2.42 per diluted share, last year. Net earnings in 2002 were impacted by several non-operational items, including a substantial gain on the extinguishment of debt and a significant income tax benefit. Net loss in 2003 incorporated several costs associated with consolidation of the Company's operations, including the closure of ASI's Indianapolis facility and the relocation of its headquarters to San Antonio, Texas. The decline in 2003 revenue was attributed to sluggishness within the domestic GIS market. This resulted in a decrease in the quantity and size of contracts on which the Company has been working. ASI ended fiscal 2003 with an order backlog of $7.9 million versus $19.5 million at the end of last year. Norman Rokosh, president and CEO, said, "Spending on IT services by our utility market customers has been slower to accelerate than the broader economy. However, we are currently experiencing a notable increase in customer interest for our new GIS data- maintenance services. We have achieved a significant increase in new service contracts signed since our September 30, fiscal year end. "We are gratified by our success during the past year at reducing costs and improving corporate efficiencies," Rokosh added. "Collectively, G&A expense, salaries and subcontractor costs were down 23% from fiscal 2002 levels. We also resolved several administrative issues that proved a significant drain on management's time and attention. In April, we regained compliance with Nasdaq's listing requirements, and in September we finalized a successful settlement with the Securities and Exchange Commission regarding the 1999 restatement of ASI's financial results. Subsequent to our fiscal year end, we announced we had prevailed in an arbitration case brought by two former owners of our Texas subsidiary relating to a 1998 acquisition by ASI. "With these issues behind us and signs of increased market activity on the horizon, we are encouraged about the prospects for the coming year," Rokosh said. "Finally, I would like to thank our employees, our industry partners and our shareholders for their continued support of ASI." Analytical Surveys Inc. provides technology-enabled solutions and expert services for geospatial data management, including data capture and conversion, planning, implementation, distribution strategies and maintenance services. Through its affiliates, ASI has played a leading role in the geospatial industry for more than 40 years. The Company is dedicated to providing utilities and government with responsive, proactive solutions that maximize the value of information and technology assets. ASI is headquartered in San Antonio, Texas and maintains operations in Waukesha, Wisconsin. For more information, visit http://www.anlt.com/ * * * Liquidity and Going Concern Uncertainty In its 2003 Annual Report file with the Securities and Exchange Commission's Form 10-K, Analytical Surveys reported: "We currently do not have a line of credit with any lender. The terms of our senior secured convertible note restricts our ability to secure additional debt and also contain customary default provisions, which if triggered and exercised, would make it difficult for us to meet the debt payments. During the fiscal years of 2000 through 2003, we experienced significant operating losses with corresponding reductions in working capital and net worth, excluding the impact of debt forgiveness. Our revenues and backlog have also decreased substantially during the same period. These factors, among others raise substantial doubt about our ability to continue as a going concern. We rely solely on cash flow from operations to fund future operations and expenditures. We attempt to negotiate new contracts to minimize negative cash flow and frequently monitor and forecast our cash availability. There is no assurance that the cash flow from operations will be sufficient to meet our capital requirements. "Historically, our principal source of liquidity has consisted of cash flow from operations supplemented by secured lines-of-credit and other borrowings. We did not have a working capital line-of- credit as of September 30, 2003. Other borrowings consist of a $1.9 million senior secured convertible debenture and redeemable preferred stock. "On March 31, 2003, we made our final bank debt payment, paying in full a $175,000 unsecured promissory note that matured on March 31, 2003. The $1.9 million senior secured convertible note, which has a face value of $2.0 million maturing April 2, 2005, bears interest at an annual rate of five percent, but interest is not payable until maturity. The senior secured convertible note must be converted at maturity to Common Stock as described below. "The senior secured convertible note is convertible at any time into Common Stock at a price equal to the lesser of (i) $4.00, (ii) 90% of the average closing bid prices of the Common Stock for the 90 trading days ending the trading date immediately preceding the closing date of April 2, 2002 (calculated to be $4.69), and (iii) 90% of the average closing bid prices for the 3 trading days having the lowest closing bid price during the 20 trading days immediately prior to the conversion date, but under any event, the number of shares issuable upon full conversion of the note must constitute at least 38% of the issued and outstanding shares, on a fully diluted basis, as of the date of full conversion. If at the time of conversion of the note, the price of the Common Stock has dropped below $4.00 per share, the number of shares of Common Stock issuable upon conversion of the note and upon exercise of the warrants would increase. Similarly, if ASI issues shares of Common Stock at a price of less than $4.00 per share, the conversion price and the exercise price decrease to that lower price, and the number of shares issuable under the note and the warrants would therefore increase. At the time of conversion, any unpaid interest is to be paid in shares of Common Stock. "If the note had been converted in full on September 30, 2003, the conversion price would have been $1.19, and we would have issued 1,806,722 shares to redeem the principal and accrued interest. The note is subject to mandatory conversion in three years and is secured by all of our assets. All amounts and prices have been adjusted to reflect the one-for-ten reverse split of Common Stock that became effective October 2, 2002. "The holder of the senior secured convertible note, Tonga Partners, L.P., also received warrants to purchase an additional 500,000 shares of Common Stock (subject to adjustment). One whole warrant entitles Tonga to acquire an additional share of Common Stock at an exercise price equal to 115% of the conversion price of the note. Assuming an exercise price of $1.37 per share (115% of $1.19), the aggregate exercise price for the warrants would be $685,000 for the issuance of 500,000 shares of Common Stock, but the shares issuable upon conversion of the note and exercise of warrants are to be no less than 55% of the outstanding Common Stock (unless Tonga exercises the warrants in a cashless exercise where Tonga uses the value of some of the warrants to pay the exercise price for other warrants). "On November 6, 2003, we issued 261,458 shares of our Common Stock pursuant to the partial conversion of the senior secured convertible debenture. The shares were issued at a price of $1.24 for an aggregate conversion of $300,000 of principle payable and $24,208 of interest payable. The $2 million debenture was exchanged for the shares and a $1.7 million debenture bearing the same terms. The newly issued shares increased our total common shares outstanding from 823,965 to 1,085,423. Tonga owned 24% of our outstanding shares immediately after the partial conversion. "Pursuant to the conversion, the exercise price of 75,000 shares underlying the warrant was set at $1.43 per share. The exercise price of the remaining shares will be set accordingly upon the conversion, if any, of the remainder of the note. "We are required to register the shares underlying the note and warrants. Also, ASI is generally restricted from issuing additional equity securities without Tonga's consent, and the Holder has a right of first refusal as to certain subsequent financings. In addition, we are obligated to continue the listing of our Common Stock on the Nasdaq SmallCap Market pursuant to the Note and Warrant Purchase Agreement entered into with Tonga, our controlling beneficial shareholder, and any breach of this obligation might result in the acceleration of the Company's obligations under the senior secured convertible note payable to Tonga. "As part of the transaction, Tonga was granted the opportunity to appoint a majority of ASI's board of directors and, as a result, controls ASI. In addition, upon exercise of the warrants and conversion of the note, Tonga will own a majority of the Common Stock, thereby giving Tonga additional control over ASI. "On December 28, 2001, we issued 1.6 million shares of no par value Series A Preferred Stock, at an original issue price of $2.00 per share. We are entitled to redeem the shares within one year of issuance at $1.00 per share ($1.6 million), and the redemption price increases $.20 per year until the fifth anniversary, at which time the shares must be redeemed at a price of $2.00 per share. As of the date of this report, we have not redeemed the shares. The agreement calls for a mandatory payment of $800,000 by the third anniversary. The preferred stock earns a dividend at the annual rate of 5.00% of the then redemption price on a cumulative, non-participating basis and has a liquidation preference equal to the then redemption value of shares outstanding at the time of such liquidation. "During the fiscal years of 2000 through 2003, we experienced significant operating losses with corresponding reductions in working capital and net worth, excluding the impact of debt forgiveness, and do not currently have any external financing in place to support operating cash flow requirements. Our revenues and backlog have also decreased substantially during the same period. Our senior secured convertible note also contains customary default provisions, which if triggered and exercised, would make it difficult for us to meet these debt payments. "To address the going concern issue, management has implemented financial and operational restructuring plans designed to improve operating efficiencies, reduce and eliminate cash losses and position ASI for profitable operations. In fiscal 2002, we improved our working capital position by reducing our bank debt through the issuance of preferred stock and convertible debt and with the collection of a $1.2 million federal income tax refund. The consolidation of our production operations in fiscal 2003 to two solution centers has resulted in lower general and administrative costs and improved operating efficiencies. Additionally, the relocation of our corporate headquarters has resulted in additional savings realized with a smaller corporate staff and efficiencies in occupancy and travel related expenses. Our sales and marketing team is pursuing market opportunities in both our traditional digital mapping and newly launched data management initiatives. We continue to focus on cost control as we develop the data management initiative. "The financial statements do not include any adjustments relating to the recoverability of assets and the classifications of liabilities that might be necessary should we be unable to continue as a going concern. However, we believe that our turnaround efforts, if successful, will improve operations and generate sufficient cash to meet our obligations in a timely manner. "In the absence of a line of credit and limitations on securing additional debt, we depend on internal cash flow to sustain operations. Internal cash flow is significantly affected by customer contract terms and progress achieved on projects. Fluctuations in internal cash flow are reflected in three contract-related accounts: accounts receivable; revenues in excess of billings; and billings in excess of revenues. Under the percentage of completion method of accounting: "Accounts receivable" is created when an amount becomes due from a customer, which typically occurs when an event specified in the contract triggers a billing. "Revenues in excess of billings" occur when we have performed under a contract even though a billing event has not been triggered. "Billings in excess of revenues" occur when we receive an advance or deposit against work yet to be performed. "These accounts, which represent a significant investment by us in our business, affect our cash flow as projects are signed, performed, billed and collected. At September 30, 2003, we had multiple contracts with four customers, each of which accounted for more than 10% of our consolidated revenues in fiscal 2003. One customer accounted for 58% of total accounts receivable and revenue in excess of billings at September 30, 2003. At September 30, 2002, three customers represented 72% (43%, 17% and 12%, respectively) of the total balance of net accounts receivable and revenue in excess of billings. Billing terms are negotiated in a competitive environment and, as stated above, are based on reaching project milestones. We anticipate that sufficient billing milestones will be achieved during fiscal 2004 such that revenue in excess of billings for these customer contracts will begin to decline. "Our operating activities used $0.9 million cash in fiscal 2003 and provided positive cash flow of $2.3 million in fiscal 2002 and $0.3 million in fiscal 2001. Contract-related accounts described in the previous paragraph declined $1.5 million, $6.0 million, and $8.7 million in fiscal 2003, 2002, and 2001, respectively. Accounts payable and accrued expenses increased $0.5 million in fiscal 2003 and decreased $2.0 million in fiscal 2002 and $3.5 million in fiscal 2001. The decrease in fiscal 2001 reflects the Company's reduced size of operations, in part due to the sale of our Colorado Springs, Colorado office. Prepaid expenses remained constant in fiscal 2003, decreased by $0.5 million in fiscal 2002 and increased by $0.2 million in fiscal 2001. "Cash provided by investing activities principally consisted of proceeds from sales of assets, offset by the purchases of equipment and leasehold improvements. In fiscal year 2001, we enhanced cash flow by $8.6 million from the sale of assets, primarily from the sale of Colorado assets. We purchased equipment and leasehold improvements totaling $0.2 million, $0.4 million, and $0.4 million in 2003, 2002, and 2001, respectively. "Cash used by financing activities for fiscal years 2003, 2002, and 2001 was $0.1 million, $0.5 million, and $10.1 million, respectively. Financing activities consisted primarily of net borrowings and payments under lines of credit for working capital purposes and net borrowings and payments of long-term debt used in operations and the purchase of equipment and leasehold improvements. We reduced debt by $6.0 million with proceeds from the sale of our Colorado Springs, Colorado office in fiscal 2001." ASSISTED LIVING: Executes $88 Mill. Debt Refinancing Arrangement ---------------------------------------------------------------- Assisted Living Concepts, Inc. (OTCBB:ASLC), a national provider of assisted living services, announced the refinance of its Junior and Senior Notes and the secured loan provided by GE Capital, which have a total principal amount of approximately $88 million. The Jr. Notes were due to mature on January 2012, and would have converted to cash pay interest of 12% in 2005. The Sr. Notes were due to mature on January 2009 and accrued interest at 10%. The GE Capital loan had a maturity of December 2004, and a minimum interest rate of 8%. These facilities are being replaced by a loan from Red Capital, as lender for Fannie Mae, in the amount of $38.4 million and a new loan from GE Capital in the amount of $50 million. The loan from Red Capital has a fixed interest rate of 6.24%, and matures in 10 years. The loan from GE is comprised of a $35 million term loan and a $15 million revolving loan, both of which accrue interest at LIBOR plus 4.0% and have an initial interest rate of 5.75%. The term loan matures in 5 years, and the revolving loan matures in 2 years but may be extended annually thereafter. Each of the loans is to subsidiary companies and is non-recourse to ALC, subject to a limited guaranty by ALC. The Company's weighted average interest rate is expected to decrease from 7.36% in 2003 to 5.76% in 2004, based on the initial GE interest rate, which is subject to change. Under the terms of the Junior and Senior Indentures, all of the Junior and Senior Notes are being redeemed, and final payment of all principal and interest will be made on or about January 30, 2004. In addition, the Indentures are being legally defeased, satisfied and discharged. The Company expects to record a charge in the 4th quarter of 2003 for approximately $3.0 million in connection with the write off of deferred finance and other costs associated with the Notes and the old GE Capital facility. "We are very pleased with the new loans, which essentially complete the restructuring of our balance sheet by replacing the agreements that the Company entered into upon emerging from bankruptcy in 2002," said Steven Vick, Chief Executive Officer. "Completion of these transactions will not only lower our interest expense substantially, but will provide increased financial flexibility." ALC owns, leases and operates 177 assisted living residences with 6,838 units for older adults who need help with the activities of daily living, such as eating, bathing, dressing and medication management. The Company has operations in Oregon, Washington, Idaho, Nebraska, Iowa, Arizona, Texas, New Jersey, Ohio, Pennsylvania, Indiana, Louisiana, Michigan and South Carolina. * * * Liquidity and Capital Resources In its most recent Form 10-Q filed with the Securities and Exchange Commission, Assisted Living reported: "At September 30, 2003, we had working capital of $1.1 million and unrestricted cash and cash equivalents of $10.9 million. "Net cash provided by operating activities was $7.3 million during the nine months ended September 30, 2003. The primary sources were net income of $2.8 million and $5.1 million for depreciation and amortization. "Net cash provided by investing activities was $5.1 million during the nine months ended September 30, 2003. The primary sources were the release of $4.3 million of restricted cash related to the amended agreements with U.S. Bank and the sale of properties for $2.6 million. These sources were offset by purchases of property and equipment totaling $2.5 million. "Net cash used in financing activities was $8.7 million during the nine months ended September 30, 2003, all of which related to payments on long-term debt. Of this amount, $4.3 million released from U.S. Bank was used to partially pay down the amount outstanding on the G.E. Capital Credit Facility. "Related to the New Notes, in June 2003 the Company received a notice of default from the Trustee indicating that the Company failed to comply with a non-financial covenant under the Indentures pertaining to the New Notes that requires the Company to deliver an annual opinion stating that all filings, recordings or other actions that are necessary to maintain the Liens under the Collateral Documents (as such terms are defined under the Indentures pertaining to the New Notes) have been done, or that no such action is required. The Company has delivered the required annual opinions to the Trustee and has received notice from the Trustee that the Default referenced in the Notice has been cured. "In July 2003, the Company completed an open market purchase of a portion of the Company's outstanding 10% Senior Secured Notes due 2009 and Junior Secured Notes due 2012. The transaction included the purchase of $147,889 principal amount of Senior Secured Notes and $34,178 principal amount of Junior Secured Notes. Because the purchase of the Junior Notes is not permitted under the Indentures and constitutes a Default there under, and the purchase of the Senior Notes may not be permitted and could constitute Default there under, although this issue is not clear, the Company cancelled the purchase transaction with the seller in September 2003. "The Company has a series of reimbursement agreements with U.S. Bank for letters of credit that secure certain of our Revenue bonds payable, which total approximately $23.9 million as of September 30, 2003. An amendment to these agreements signed in September 2003 released $4.3 million of previously restricted cash to the Company, extended the expiration of the letters of credit to January 2005, amended the annual fees to be 2% of the stated amount of the letters of credit, and set in place new financial covenants. The Company was in compliance with these new covenants at September 30, 2003. Failure to comply with these covenants would constitute an event of default, which would allow U.S. Bank to declare any amounts outstanding under the loan documents to be due and payable. Any such default could have a material adverse effect on the Company. "Our credit agreements with U.S. Bank contain certain restrictive and financial covenants, including certain financial ratios. The agreements also require us to deposit $500,000 in cash collateral with U.S. Bank in the event certain regulatory actions are commenced with respect to the properties securing our obligations to U.S. Bank. U.S. Bank is required to release such deposits upon satisfactory resolution of the regulatory action. As of the date of this filing, no such deposits have been required. "The Company leases 37 of its facilities, representing 1,426 units, from LTC Properties, Inc. In accordance with the Company's plan of reorganization, effective January 1, 2002, the Company entered into a Master Lease Agreement with LTC under which 16 leases were consolidated. This Master Lease Agreement provides for aggregate rent reductions of $875,000 per year and restructures the provision related to minimum rent increases for the 16 properties for the initial remaining term. The Master Lease Agreement and other LTC lease agreements also provides LTC with the option to exercise certain remedies, including the termination of the Master Lease Agreement and the other LTC leases, upon the occurrence of an Event of Default. A change of control of the Company is deemed to be an Event of Default. A change of control is deemed to occur if, among other things, (i) any person, directly or indirectly, is or becomes the beneficial owner of thirty percent (30%) or more of the combined voting power of the Company's outstanding voting securities, (ii) the stockholders approve under certain conditions a merger or consolidation of the Company with another corporation or entity, or (iii) the stockholders approve a plan of liquidation or sale of all or substantially all of the assets of the Company. If the surviving entity has a net worth of $75 million or more, the change of control does not constitute an Event of Default. In addition, there are cross default provisions in the LTC leases. At the same time that the Company entered into the Master Lease Agreement, it also amended 16 other leases with LTC under which the renewal rights of certain of those leases are tied together differently than previously with certain other leases. "An Event of Default under the LTC leases including a change of control of the Company that resulted in the termination of the LTC leases would significantly impair the Company's cash flow from operations and could have a material adverse effect on the Company. "Under the Senior Notes and Junior Notes the Company is required to make an offer to repurchase the Senior Notes and the Junior Notes upon the occurrence of a change of control of the Company. A change of control as defined in the Indentures includes, among other things, the acquisition by any person or group of beneficial ownership greater than 50% of the total voting power of the common stock of the Company. The Change of Control Offer must be at a price equal to 101% of the principal amount of the Senior Notes and Junior Notes, together with accrued and unpaid interest. The occurrence of a change of control under the Indentures could have a material adverse effect on the Company. "As indicated in Amendment No. 9 to Schedule 13D/A, filed with the SEC on June 13, 2003 on behalf of BRU Holding Co., LLC, BET Associates, L.P., and Bruce E. Toll, Bruce Toll has acquired beneficial ownership of 1,110,426 shares (17.26%) of common stock of the Company. The Filing Persons further indicated that they have acquired the Company's securities for investment purposes but are currently re-evaluating their position and possible alternative future courses of action, including the possibility of seeking to acquire control of the Company, although no specific plan or proposal has been formulated. According to Amendment No. 12, to Schedule 13D/A, filed with the SEC on October 20, 2003, Bruce Toll has acquired beneficial ownership of 1,795,161 shares of common stock of the Company, or 27.91% of the Company's common stock, (based on 6,431,925 shares of common stock outstanding) and the Filing Persons have no intent to purchase additional shares which would increase their beneficial ownership percentage in excess of 29.9%. In the event the Filing Persons purchase a block of 50,000 or more shares of common stock during the period from September 18, 2003 through September 17, 2004, Mr. Toll as agreed to purchase an additional 557,214 shares of common stock from National Healthcare Investments, Inc. at the highest amount paid for a block of 50,000 or more shares of common stock during such twelve-month period. W. Andrew Adams, the Company's Chairman of the Board, is President, Chief Executive Officer and Chairman of the Board of Directors of National Healthcare Investments, Inc. "Certain of our leases and loan agreements, including the LTC leases, contain covenants and cross-default provisions such that a default on one of those agreements could cause us to be in default on one or more other agreements which would have a material adverse effect on the Company. "Our ability to make payments on and to refinance any of our indebtedness, to satisfy our lease obligations and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. "Based upon our current level of operations, we believe that our current cash on hand and expected cash flow from operations are sufficient to meet our liquidity needs for at least the next twelve months. "There can be no assurance, however, that our business will generate sufficient cash flow from operations, or that currently anticipated cost savings and operating improvements will be realized on schedule, both of which may be necessary to enable us to pay our indebtedness, to satisfy our lease obligations and to fund our other liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness, on or before maturity. There can be no assurance that we will be able to refinance any of our indebtedness, on commercially reasonable terms or at all." AURORA FOODS: Gets Approval to Pay Vendors' PACA and PASA Claims ---------------------------------------------------------------- The Aurora Foods Debtors do not believe that certain of their vendors sold them goods before the Petition Date that constitute "perishable agricultural commodities" under the Perishable Agricultural Commodities Act, and possibly "livestock" or "poultry" under the Packers and Stockyard Act. Consequently, there should be no valid PASA claims. As a protective measure, however, the Debtors seek the Court's permission to address and resolve valid PASA & PACA Trust Claims, in the event their vendors may have rights under PACA and PASA. The PACA and PASA Statutory Schemes Eric M. Davis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, relates that certain of the Debtors' vendors sold goods covered by PACA and PASA statutes. PACA establishes a statutory trust in favor of vendors of covered commodities, and provides that: "Perishable agricultural commodities received by a commission merchant, dealer or broker in all transactions, and all inventories of food or other products derived from perishable agricultural commodities, and any receivables or proceeds from the sale of the commodities or products, will be held by the commission merchant, dealer, or broker, in trust, for the benefit of all unpaid suppliers or sellers of the commodities or agents involved in the transaction, until full payment of the sums owing in connection with the transactions has been received by the unpaid suppliers, sellers, or agents." PASA, on the other hand, creates a virtually identical statutory trust scheme for the delivery of "livestock," "poultry," and other eligible goods. The legislative history expressly notes that the PACA trust was modeled on trust amendments to PASA. The statutory trusts created under PACA and PASA are composed of: (a) the purchaser's inventory of PASA & PACA Goods; (b) products derived from PASA & PACA Goods; and (c) accounts receivable and proceeds obtained with respect to the sale of PASA & PACA Goods or products derived therefrom, among other things. The cases construing PACA and PASA consistently hold that PACA and PASA trust assets do not become "property of the estate" under Section 541 of the Bankruptcy Code. Third Circuit interprets that, "the [PACA] trust provision . . . provides unpaid suppliers with priority over secured lenders with regard to PACA trust assets held in trust by produce purchasers. It effectively vitiates a lender's security interest in trust assets held by produce purchasers vis-a-vis unpaid produce suppliers." Therefore, the distribution of assets to beneficiaries of PASA & PACA statutory trusts falls outside both: (i) the priority scheme established by the Bankruptcy Code; and (ii) the plan process (i.e., trust beneficiaries may be paid outside, and before, a confirmed plan of reorganization). The distribution of trust assets to PASA & PACA trust beneficiaries, however, remains under the control of the bankruptcy court presiding over the relevant bankruptcy case. Both PACA and PASA impose certain procedural steps that must be taken by a seller in order to preserve its rights as a trust beneficiary. For example, under PACA, an unpaid supplier of perishable agricultural commodities must have provided written notice of intent to preserve the benefits of the trust to the dealer within 30 calendar days: (1) after expiration of the time prescribed by which payment must be made, as set forth in regulations issued by the Secretary; (2) after expiration of the other time by which payment must be made, as the parties have expressly agreed to in writing before entering into the transaction; or (3) after the time the supplier, seller, or agent has received notice that the payment instrument promptly presented for payment has been dishonored. The written notice to the dealer will contain information, in sufficient detail, to identify the transaction subject to the trust. When the parties expressly agree to a payment time period different from that established by the Secretary [of Agriculture] [i.e., ten days], a copy of the agreement will be filed in the records of each party to the transaction and the terms of payment will be disclosed on invoices, accountings, and other documents relating to the transaction. Mr. Davis points out that failure to comply with these requirements renders the claim concerning the PASA & PACA Goods a general unsecured claim. Proposed Treatment In light of the statutory trusts created by PACA and PASA, and the Debtors' bankruptcy filing, the Debtors believe a number of its Vendors will give written notices under PACA and PASA to preserve their rights under these statutes. Mr. Davis explains that valid claims under PACA and PASA, even claims arising prior to the Petition Date, would be entitled to payment from the applicable statutory trust, ahead of all other creditors of the Debtors and outside of a reorganization plan. To qualify for payment, PASA & PACA Trust Claimants must provide the Debtors and their counsel: -- written notice of the existence of the PASA & PACA Trust Claims; and -- copies of invoices or other billing documents evidencing the delivery of the alleged PASA & PACA Goods to the Debtors' facilities. Mr. Davis emphasizes that any PASA or PACA Trust Claimant who accepts payment from the Debtors on account of its valid PASA or PACA Trust Claim will be deemed to have waived any and all claims, of whatever type, kind, or priority, against: (a) the Debtors; (b) their property and estates; or (c) any funds and other property held in trust by the Debtors that do not constitute "property of the estate," but only with respect to invoices or goods included in the Notice. The Debtors ask the Court to preserve their ability to contest any invoice of a PACA or PASA Trust Claimant on ordinary, non- bankruptcy grounds like prior payment, defective or spoiled goods, or non-delivery. Accordingly, the Court approves the Debtors' request. Judge Walrath authorizes the Debtors to pay valid prepetition PASA & PACA Trust Claims to the extent that the claims are determined to be valid. (Aurora Foods Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) BRIDGE INFORMATION: Agrees to Stay Objection to ADP Claims ---------------------------------------------------------- Automatic Data Processing, Inc., on behalf of itself and as agent for Wilco International Limited and ADP Financial Information Services, Inc., timely filed proofs of claim for $989,355, against the Bridge Information Systems Debtors. ADP also disputed the Plan Administrator's allegation that the Debtors made preferential transfers to ADP amounting to $3,710,025. By letter dated December 17, 2002, the Plan Administrator demanded ADP to return the amount of the Preference Claim. In a Court-approved stipulation, ADP and the Plan Administrator agree that: (a) the Plan Administrator's request, to the extent it seeks to reduce or disallow the Claim, is stayed and there will be no allowance or disallowance of the Claim until the time when: (1) the parties settle the Preference Claim and the Court approves the Settlement by a final order; or (2) the Court enters a final order resolving the Preference Claim and, in the meantime, the parties reserve all of their rights relating to the Claim; (b) the Plan Administrator will not make any distributions to ADP in connection with the Claim until the time the Claim has been allowed either by settlement or by final order; and (c) the Plan Administrator and ADP reserve all rights and defenses. (Bridge Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL WAYNE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Central Wayne Energy Recovery LP 750 East Pratt Street Baltimore, Maryland 21202 Bankruptcy Case No.: 03-82780 Type of Business: The Debtor owns a waste-to-energy system facility that converts the heat energy generated by incinerating waste to electricity, is a proven, environmentally sound technology that is helping to ensure the preservation of land and other natural resources. Chapter 11 Petition Date: December 29, 2003 Court: District of Maryland (Baltimore) Debtor's Counsel: Maria Chavez Ruark, Esq. Piper Rudnick LLP 6225 Smith Avenue Baltimore, MD 21209 Tel: 410-580-3000 Estimated Assets: $10 to $50 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wilmington Trust $93,389,000 Rodney Square North Wilmington, DE 19899-0001 COSI Central Wayne, Inc. $6,597,120 111 Market Place, Suite 200 Baltimore, MD 21202-7110 CE Wayne I, Inc. $3,727,646 750 East Pratt Street Baltimore, MD 21202 Black & Veatch Limited of Trade Debt $1,000,000 Michigan P.O. Box 802295 Kansas City, MO 64180-2295 John J. Riley, Treasurer $974,617 City of Dearborn Hghts, 6045 Fenton Dearborn Heights MI 48127 Babcock Borsig Power Trade Debt $651,988 P.O. Box 3496 Boston, MA 02241-3496 John J. Riley, Treasurer $379,806 City of Dearborn Hgts, 6045 Fenton Dearborn Heights MI 48127 Constellation Power, Inc. $376,660 111 Market Place, Suite 200 Dearborn Heights, MI 48127 CMS Energy Trade Debt $288,231 P.O. Box 7247-8311 Philadelphia, PA 19170-8311 Caterpillar Financial Trade Debt $173,316 Services Corp. Alliance Energy Services Trade Debt $117,219 Nedrow Refractories Company Trade Debt $99,568 Kalamazoo Boiler Company Trade Debt $91,748 Clean Environmental Services Trade Debt $83,503 Monarch Welding & Trade Debt $69,802 Engineering, Inc. Delray Mechanical Trade Debt $61,119 Corporation Longhorn Leasing Trade Debt $54,730 Inland Waters Pollution Trade Debt $48,535 Control, Inc. Conestoga-Rovers & Trade Debt $41,198 Associates Capital Waste, Inc. Trade Debt $40,885 CHAMPIONLYTE: Receives Initial Purchase Order from Tree of Life --------------------------------------------------------------- ChampionLyte Beverages, Inc., a wholly owned subsidiary of ChampionLyte Holdings, Inc. (OTC Bulletin Board: CPLY) has received an initial purchase order from Tree of Life Northeast to distribute sugar-free ChampionLyte(R). The purchase order was placed through ChampionLyte Beverages' national broker Alldiet, Inc. According to its Website, Tree of Life provides customized service to more than 15,000 retail stores throughout the United States and Canada. Its retail customers range from neighborhood health and natural food stores to regional, multi-regional and national supermarket chains and independents. "Tree of Life is another example of how sugar-free and zero carb ChampionLyte(R) is being welcomed by health and natural food distributors," said Eli Greenstein, president of Alldiet and a ChampionLyte Holdings' director." Alldiet, Inc., based in Great Neck, N.Y. and Boca Raton, Fla., markets sugar-free products to major health food distributors, drug store chains, supermarket chains and major diet plans. A significant advantage of ChampionLyte(R) is that it replaces electrolytes, especially after exercise, without the ingredients that would cause weight gain -- particularly sugar. For example, if a man or woman runs on a treadmill for 30 minutes they would burn about 150 calories. By drinking one of the popular major brand sports drinks that contain 33 to 37 grams of sugar (that's 33 to 37 individual one-gram packs of sugar) after working out on a treadmill, they would either cancel out the calories they just burned off, or actually gain more calories than burned during the workout. ChampionLyte Holdings, Inc. is a fully reporting public company whose shares are quoted on the OTC Bulletin Board under the trading symbol CPLY. Its recently formed beverage division, ChampionLyte Beverages, Inc., a Florida corporation, manufactures, markets and sells ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market. Its The Old Fashioned Syrup Company subsidiary manufactures, distributes and markets three flavors of sugar-free syrups. The products are sold in more than 20,000 retail outlets including some of the nation's largest supermarket. * * * On June 25, 2003, Radin Glass & Co, LLP was dismissed as the independent auditor for Championlyte Holdings Inc. and Massella Roumbos LLP was appointed as the new independent auditor for the Company. Radin Glass & Co, LLP 's report on the financial statements for the year ended December 31, 2002 contained an explanatory paragraph reflecting an uncertainty because the realization of a major portion of the Company's assets is dependent upon its ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. CHANNEL MASTER: Selling Assets to Andrew Corp. for $15 Million -------------------------------------------------------------- Channel Master Holdings, Inc., and its debtor-affiliates want to sell substantially all of their assets to Andrew Corporation for $15 million or to any higher bidder that might emerge. On the Petition Date, the Debtors report $60 million in tangible and intangible assets, excluding goodwill, and $95 million in liabilities. Of these liabilities, $13,300,000 consists of accounts payable, including those of the foreign subsidiaries. In part, the Debtors completed a financial restructuring in December 2002. The financial restructuring was insufficient, and in consultation with its Lender Group, the Debtors determined that a sale of the companies as a going concern is the best method to maximize value of the assets of the Debtors and that a stand-alone restructuring is not a feasible alternative. The Debtors hired SG Cowen Securities to market their assets and secure a buyer or investor. Prepetition, SG Cowen contacted 24 parties and Andrew Corporation inked a definitive agreement. The Debtors have determined that they cannot continue to operate without additional funding. Such funding is severely limited and is sufficiently only to permit the Debtors either to complete this sale process or to conduct an orderly liquidation of the Debtors' assets. Delaying a sale could seriously jeopardize the value of the Debtors' business and the remaining value for the Debtors' creditors. The values realized from an orderly liquidation are far less than the proposed sale purchase price and, therefore, it is very mush in the interests of creditors to realize the sale value now. The Debtors assure the Court that the Agreement with Andrew Corporation is the product of good faith and arm's-length negotiation. Thus, the Debtors submit that the proposed sale of substantially all of their assets is entirely consistent with the guidelines set forth in the Third Circuit. Headquartered in Smithfield, North Carolina, Channel Master Holdings, Inc., with the Debtor-affiliates, are leading designer and manufacturer of high-volume, superior quality antenna products for the satellite communications industry both in the U.S. and internationally. The Company filed for chapter 11 protection on October 2, 2003 (Bankr. Del. Case No. 03-13004). David B. Stratton, Esq., at Pepper Hamilton LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. CHAPARRAL RESOURCES: Liquidity Issues Raise Going Concern Doubt --------------------------------------------------------------- Chaparral Resources, Inc.'s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a working capital deficiency as of September 30, 2003. In addition, the Company has experienced limitations in obtaining 100% export quota for the sale of its hydrocarbons. These conditions create uncertainties relating to the Company's ability to meet all expenditure and cash flow requirements through the next twelve months. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company is seeking to alleviate these conditions by obtaining 100% export of all hydrocarbons produced from the Karakuduk Field through discussions with the Government of Kazakhstan. On July 17, 2003, the Company took the first step toward the commencement of arbitration proceedings in Switzerland for the breach of the Agreement by the Government of Kazakhstan by initiating a required three-month period of consultation with the Government. The Government indicated an interest in trying to resolve this matter during the consultation period. Although the consultation period has expired, the Company and the Government are continuing to negotiate a possible resolution of this matter. If the matter cannot be resolved in a satisfactory manner, the Company has reserved its right to commence formal arbitration proceedings pursuant to its contractual arrangements with the Government. In addition, the Company is attempting to obtain additional debt financing to cover any cash flow deficiencies that may occur and refinance the Company's loan with JSC Kazkommertsbank in order to reduce the Company's current interest rate of 14% and alleviate the Company's current working capital deficiency. No assurances can be provided, however, that if arbitration is instituted, it will be successful or that if successful, the Company will be able to enforce the award in Kazakhstan, or that the Company will be able to export 100% or a significant portion of its production, and that the Company will be able to obtain additional financing and cash flow from operations to meet working capital requirements in the future. A payment of principal and interest was due on the KKM Credit Facility on November 6, 2003. The Company paid the current interest due, but the Company and Kazkommertsbank have agreed to defer the repayment of $1 million in principal to a date that is currently being negotiated. The Company's operations for the nine months ended September 30, 2003 resulted in a net income of $1.01 million compared to a net income of $4.04 million for the nine months ended September 30, 2002. The $3.03 million decrease in net income is the result of several factors: (i) higher sales revenue during 2003, offset by (ii) higher transportation and depletion costs, (iii) a $5.34 million extraordinary gain recognized as a result of the restructuring of indebtedness during 2002, (iv) recognition of a $1.02 million gain as a result of the adoption of SFAS 143 on January 1, 2003, and (v) lower interest costs. Revenues were $39.59 million for the nine months ended September 30, 2003 compared with $32.47 million for the nine months ended September 30, 2002. The $7.12 million increase is the result of higher oil volumes sold and higher prices received for oil during the nine months ended September 30, 2003. During the nine months ended September 30, 2003, Chaparral sold approximately 1,917,000 barrels of crude oil, recognizing $39.59 million, or $20.65 per barrel, in revenue. Comparably, the Company sold approximately 1,881,000 barrels of crude oil, recognizing $32.47 million in revenue, or $17.26 per barrel, for the nine months ended September 30, 2002. The result is a favorable price variance of $6.51 million and a favorable volume variance of $0.61 million. Transportation costs for the nine months ended September 30, 2003 were $7.92 million, or $4.13 per barrel, and operating costs associated with sales were $4.2 million, or $2.19 per barrel. Comparatively, transportation costs for the nine months ended September 30, 2002 were $7.03 million or $3.74 per barrel, and operating costs associated with sales were $5.95 million, or $3.16 per barrel. The increase in transportation costs per barrel is mainly due to higher tariffs imposed on the Company during 2003. The decrease in operating cost per barrel is mainly due to (i) higher volumes of oil sold during the period, (ii) significantly lower transportation costs from the wellhead to entry point of the KTO export pipeline, following the commission of the KKM pipeline, and (iii) lower work-over cost for the current year due to the increase in capital activities during 2003. Depreciation and depletion expense was $12.90 million for the nine months ended September 30, 2003 compared to $9.71 million for the nine months ended September 30, 2002. The $3.19 million increase is the result of higher oil volumes sold and higher effective depletion rates during 2003. During the nine months ended September 30, 2003, the Company recognized a total depletion expense of $12.33 million or $6.43 per barrel, compared to $9.16 million or $4.87 per barrel in depletion expense for the nine months ended September 30, 2002. The increase in the effective depletion rate of $1.56 per barrel is due to increased estimated capital expenditures for the development of the field for future years and reductions to the Company's estimated proved reserves. Interest expense decreased from $4.45 million for the nine months ended September 30, 2002 to $3.36 million for the nine months ended September 30, 2003. The $1.09 million decrease is due to the lower financing costs of Company restructured indebtedness. Its cost of financing the development of the Karakuduk Field has improved from a pre-restructuring annual interest rate of LIBOR plus 19.75% compounded daily during the first five months in 2002, to a simple fixed annual interest rate of 14%, generating savings of approximately $600,000 per quarter. In addition, interest expense for the period ended September 30, 2003 reflects a loan discount of $178,000 and is net of capitalized interest of $371,000. General and administrative costs increased from $4.84 million for the nine months ended September 30, 2002 to $5.13 million for the nine months ended September 30, 2003. The $290,000 increase was due to higher legal fees as a result of the Company's arbitration proceedings of $118,000 and higher labor costs of $352,000 due to a production bonus given to the employees of the Company for achieving 10,000 barrels per day in production and 1 million tons (approximately 8 million barrels) cumulative production, net of $180,000 in cost savings in other general and administrative areas. CLEARLY CANADIAN: Continuing Initiatives to Secure New Funding -------------------------------------------------------------- Clearly Canadian Beverage Corporation (OTCBB:CCBC) (TSX:CLV) is continuing to work with its financial advisor, MNC Multinational of Montreal, in an attempt to secure a strategic partnership and additional working capital funding for the Company. Also, the Company is pursuing the opportunity of selling certain business units and assets in an effort to raise more funding for operating activities. Although the Company is optimistic with its prospects for its beverage products for 2004 and beyond, the Company will require additional immediate and long term financing in order to implement its current strategic business plan and maintain current and ongoing operations. The Company's 2004 business plan will focus on expanding sales for its core brand, Clearly Canadian(R) sparkling flavoured water, and will be supported by the significant reorganization made to the Company's distribution system and sales team in 2003. Based in Vancouver, B.C., Clearly Canadian markets premium alternative beverages and products, including Clearly Canadian(R) sparkling flavored water, Clearly Canadian O+2(R) and Tre Limone(R) which are distributed in the United States, Canada and various other countries. Clearly Canadian also holds the exclusive license to manufacture, distribute and sell certain Reebok beverage products in the United States, Canada and the Caribbean. Additional information on Clearly Canadian may be obtained on the world wide web at http://www.clearly.ca/ At Sept. 30, 2003, Clearly Canadian's balance sheet reports a working capital deficit of about $1.3 million. COEUR D'ALENE: Bolivian & Alaskan Mine Prospects Look Good ---------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest primary silver producer, said that ongoing optimization and feasibility work at both its San Bartolome (Bolivia) silver project and Kensington (Alaska) gold project have significantly improved their expected project economics, with development timetables at the two properties currently estimated to add to company gold and silver production in 2006. Based on current information, Coeur plans silver production at San Bartolome of 6 million ounces per year at an average cash operating cost of approximately $2.50 per ounce. At Kensington, based on current information, Coeur estimates production averaging 100,000 ounces of gold per year at an average cash operating cost of approximately $195 per ounce. Final construction decisions on both properties are expected in the second quarter of 2004, with an 18-month construction timeframe for each mine. "We are very pleased with the excellent progress updates from our ongoing efforts to further enhance Coeur's two world-class development projects, which are expected to increase company-wide silver production by 41% and gold production by 89% over current levels, at very low cash operating costs," said Dennis E. Wheeler, Chairman and Chief Executive Officer. "Both of these fully-owned Coeur projects are key components of our strategic plan to grow low-cost silver and gold production and cash flow for our shareholders, capitalizing on continued strong market demand for both metals. No fatal flaws have been identified in either project at this stage of the feasibility studies. The final feasibility studies will, of course, define final project parameters and provide the basis for the construction decision." San Bartolome San Bartolome has an anticipated mine life of approximately 14 years. Capital costs to construct the mine are estimated at $80 million. Proven and probable reserves measure 123 million ounces of silver, contained in silver-bearing gravel deposits that can be hauled directly to processing facilities. The deposits are located near Potosi, Bolivia, in a region with historical silver production of over two billion ounces. In addition, Coeur has established that tin can be commercially recovered, which has significantly benefited project economics. The final feasibility study and necessary permits at San Bartolome are expected in the second quarter of 2004, with a construction decision following. Kensington The Kensington Gold Project is located approximately 45 miles north of Juneau, Alaska and contains an estimated 1.8 million ounces of proven and probable gold reserves and 1.4 million ounces of resources. Following re-engineering and optimization work, capital costs necessary to place Kensington into production are currently estimated at $75 million, with a current mine life of at least ten years. Coeur believes that significant exploration potential exists at Kensington and intends to continue an active exploration program upon commencement of mine development. Coeur anticipates receiving all necessary permits for Kensington during the second quarter of 2004, and plans to reach a final decision on developing the mine after completion of the permitting. Coeur d'Alene Mines Corporation (S&P, CCC Corporate Credit Rating, Positive) is the world's largest primary silver producer, as well as a significant, low-cost producer of gold, with anticipated 2003 production of 14.6 million ounces of silver and 112,000 ounces of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. COMMONWEALTH BIOTECH.: Ability to Continue Operations Uncertain --------------------------------------------------------------- The financial statements of Commonwealth BioTechnologies Inc. have been prepared assuming the Company will continue as a going concern. The Company incurred losses totaling $93,920 during the nine-month period ended September 30, 2003 and has a history of losses that have resulted in an accumulated deficit of $8,957,833 at September 30, 2003. In addition, the Company has had negative cash flows in three of the past five years. The years in which the Company reached positive cash flows were years in which equity offerings were completed. Management has taken a number of steps to improve cash flow and liquidity. Beginning in the summer of 2001, the Company reduced personnel levels, curtailed research and development expenses, reduced marketing expenditures, and deferred directors' fees and a portion of officers' compensation. The Company has also reduced or delayed expenditures on items that are not critical to operations. There can be no assurance that any funds required during the next twelve months or thereafter can be generated from operations or that if such required funds are not internally generated that funds will be available from external sources such as debt or equity financing or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds will be available on attractive terms or that they will not have a significantly dilutive effect on the Company's existing shareholders. There is substantial doubt about the Company's ability to continue as a going concern. The Company's prior independent auditors have included a paragraph emphasizing "going concern" in their report on the Company's 2002 financial statements. CONGOLEUM: Files Prepackaged Chapter 11 Asbestos Case in Trenton ---------------------------------------------------------------- Congoleum Corporation (AMEX:CGM) announced Wednesday that it obtained the asbestos claimant votes necessary for approval of its pre-packaged Chapter 11 plan of reorganization, and filed a chapter 11 petition in Trenton, New Jersey. Congoleum will now seek bankruptcy court confirmation of the plan as promptly as possible. Congoleum is pursuing a pre-packaged bankruptcy proceeding as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. The balloting agent tabulating the votes on the proposed plan of reorganization advised Congoleum that the overwhelming majority of votes cast were cast in favor of the plan and were more than sufficient to satisfy the requirements of the bankruptcy code. Under the terms of the plan, when confirmed, Congoleum will contribute certain insurance rights and a note for approximately $2.7 million (subject to a future revaluation) to a trust to be formed pursuant to the plan for the benefit of asbestos personal injury claimants. All current and future asbestos claims against Congoleum will be channeled to the trust and Congoleum will have no further liability for such claims. The terms of the plan also provide that Congoleum's other creditors will be paid in full and its shareholders will maintain their equity holdings in Congoleum. Congoleum also indicated that it expects to record a charge of approximately $3.7 million in the fourth quarter of 2003 to increase its reserve for estimated costs required to complete its reorganization. Roger S. Marcus, Chairman of the Board, commented "This filing marks another major milestone in resolving our asbestos problem. Our next challenge is to get our plan confirmed by the court as quickly as the process allows. We believe the steps taken over the past year to prepare for this filing will be extremely helpful in accomplishing this. Until then, we expect to conduct business as usual. I thank our employees, suppliers, customers, and investors for their continued support through this endeavor." Plan Documents Copies of the plan and disclosure statement have been filed by Congoleum with the Securities and Exchange Commission: JOINT PREPACKAGED PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE OF CONGOLEUM CORPORATION, CONGOLEUM SALES, INC., and CONGOLEUM FISCAL, INC. http://www.sec.gov/Archives/edgar/data/23341/000117152003000320/ex99-2.txt DISCLOSURE STATEMENT IN SUPPORT OF THE DEBTORS' PLAN: http://www.sec.gov/Archives/edgar/data/23341/000117152003000320/ex99-3.txt They can also be obtained by visiting Congoleum's website at http://www.congoleum.com/investor_relations/investor_1.shtml Professionals Congoleum is represented in its chapter 11 proceeding by: Norman L. Pernick, Esq. Domenic E. Pacitti, Esq. SAUL EWING LLP 200 Delaware Avenue Wilmington, Delaware 19899 Tel: (302) 421-6800 Fax: (302) 421-6813 - and - Jeffrey C. Hampton SAUL EWING LLP Centre Square West 1500 Market Street Philadelphia, Pennsylvania 19102-2186 Tel: (215) 972-7777 Fax: (215) 972-7725 SSG Capital Advisors serves as Congoleum's financial advisors. Congoleum also retained Gilbert Heintz & Randolph LLP to advise and assist it in the negotiation of a settlement with the Claimants' Representative and the formulation of a prepackaged plan of reorganization. Congoleum retained Kenesis Group as a consultant to assist Congoleum in the negotiation of the settlement of and the processing of certain Asbestos Claims. In addition, Dughi, Hewit & Palatucci, P.C. has served as Congoleum's insurance and coverage litigation counsel and Segal McCambridge, Singer & Mahoney Ltd. has served as litigation counsel to Congoleum to coordinate defense for Asbestos Claims. The Futures Representative engaged the law firm of Swidler Berlin Shereff Friedman, LLP as his legal counsel and CIBC World Markets Corp. as his financial advisor. The Futures Representative and his professionals conducted their own due diligence review, including consulting with advisors to the Company and the Claimants' Representative. A Pre-Petition Asbestos Claimants' Committee -- consisting of Perry Weitz, Esquire, Joe Rice, Esquire, Steve Kazan, Esquire, Russell Budd, Esquire, Bryan Blevins, Esquire, John Cooney, Esquire and Matt Bergmann, Esquire -- organized to represent present claimants. The members of the Pre-Petition Asbestos Claimants' Committee represent a majority of the holders of Asbestos Personal Injury Claims and a diverse mix of the types of such Asbestos Claimants. While the Pre-Petition Asbestos Claimants' Committee did not have a role in the bulk of the negotiation of the Plan Documents, it has reviewed and approved such documents. The Committee hired L. Tersigni Consulting, P.C. to conduct a due diligence investigation of (a) the business affairs of Congoleum, (b) the equity value of Congoleum, and (c) the feasibility of a plan of reorganization. The Pre-Petition Asbestos Claimants' Committee has also been apprised of the results of the due diligence investigation undertaken by LTC and considered such results in connection with its review and approval of the Plan. LTC's due diligence review has consisted of a thorough investigation of the past and present business activities of Congoleum and the relationship between Congoleum and its Affiliates. Congoleum cooperated with LTC in its investigation and produced numerous documents in response to the requests of LTC. CIBC completed a similar investigation for the Future Claimants' Representative. Congoleum Corporation is a leading manufacturer of resilient flooring, serving both residential and commercial markets. Its sheet and tile products are available in a wide variety of designs and colors, and are used in remodeling, manufactured housing, new construction and commercial applications. The Congoleum brand name is recognized and trusted by consumers as representing a company that has been supplying attractive and durable flooring products for over a century. CONSECO INC: S&P Assigns Prelim. Junk Ratings to $3 Bill. Shelf --------------------------------------------------------------- On Dec. 29, 2003, Standard & Poor's Ratings Services assigned its preliminary 'B-' senior unsecured debt, 'CCC' subordinated debt, and 'CCC-' preferred stock ratings to Conseco Inc.'s $3 billion universal shelf registration, which was filed with the SEC on Dec. 5, 2003. If securities are issued from this shelf, the proceeds are anticipated to be used for a recapitalization of the holding company. If a recapitalization does occur, Standard & Poor's will analyze the resulting structure to determine if any rating actions are warranted. Conseco's current capital structure was settled upon to allow the company to emerge from bankruptcy, which it did on Sept. 10, 2003. Although the structure achieved its purpose, with what Standard & Poor's projects to be a statutory fixed-charge coverage run rate of about 1.4x in 2004, it has left the company with little margin for error and susceptible to any economic or business downturns. The debt-servicing requirements associated with the current capital structure clearly serve as an impediment to any upward movement in the ratings. Another ratings constraint is the current lack of an earnings track record for the new Conseco. Reported results since bankruptcy emergence have been generally positive. However, it will take three to five quarters of actual results to determine how effective management has been at re-attracting the independent agent force to sell Conseco products and if the products are priced appropriately to deliver a stream of statutory earnings sufficient to generate the capital needed to fund additional growth. The major weakness in Conseco's insurance operations is its long-term care business at Conseco Senior Health Insurance Co. (CCC/WatchNeg/--), and it remains to be seen how the ongoing earnings losses at this entity will ultimately be rectified. Ratings List Conseco Inc.'s $3 billion universal shelf registration Preliminary senior unsecured debt rating B- Preliminary subordinated debt rating CCC Preliminary preferred stock rating CCC- CONTINENTAL AIRLINES: Extends F-R Note Exchange Offer to Monday --------------------------------------------------------------- Continental Airlines, Inc. (NYSE: CAL) extended the expiration date for its offer to exchange up to $97,000,000 aggregate principal amount of its unregistered Floating Rate Secured Subordinated Notes due 2007, which were issued on May 9, 2003, for a like principal amount of Floating Rate Secured Subordinated Notes due 2007 that have been registered under the Securities Act of 1933, as amended. The exchange offer will now expire at 5:00 p.m., New York City time, on January 5, 2004, unless extended further. All other terms of the exchange offer remain unchanged. As of 5:00 p.m., New York City time, on December 29, 2003, the original expiration date, Continental Airlines, Inc. was advised by the exchange agent that an aggregate principal amount of approximately $94,000,000 of Old Subordinated Notes had been validly tendered in the exchange offer. Requests for assistance regarding the exchange offer or for copies of the exchange offer materials should be directed to the exchange agent, Wilmington Trust Company, Corporate Trust Reorg Services, 1100 North Market Street, Wilmington, Delaware 19890-1615, telephone: (302) 636-6469, facsimile: (302) 636-4145. Continental Airlines (S&P, B Corporate Credit Rating, Stable Outlook) is the world's seventh-largest airline with more than 2,200 daily departures to 127 domestic and 96 international destinations throughout the Americas, Europe and Asia. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 41 million passengers per year. Fortune ranks Continental one of the 100 Best Companies to Work For in America, highest among major U.S. carriers in the quality of its service and products, and No. 2 on its list of Most Admired Global Airlines. For more company information, visit http://www.continental.com/ COVANTA ENERGY: Provides Business Plan Under Second Joint Plan -------------------------------------------------------------- During the pendency of the Chapter 11 Cases, the Covanta Energy Debtors' primary objectives have been to dispose of those remaining non-core assets and to maintain the successful operation of its core Waste To Energy, Independent Power Projects and Water projects. Since the Petition Date, the Core Operations have continued to perform well. In 2002, the WTE projects achieved records in all major performance categories. The facilities processed over 10,270,000 tons of waste and sold over 4.966 GWh of electricity. Anthony J. Orlando, President of Covanta Energy Corporation, reports that the WTE projects' operating performance through November 2003 is on track to surpass last year's production levels. As of November 30, 2003, the WTE projects have processed over 9,530,000 tons of waste and have sold over 4,490 GWh of electricity. These production levels represent a waste processing performance of 165,000 tons more than last year's production level through November. The domestic IPP facilities also performed well in 2002 and 2003, meeting their key production goals and posting a net electrical production of 1,507 through November 2003. In 2002 and 2003, the Debtors conducted its typical comprehensive scheduled maintenance and plant preservation program, including semi-annual boiler maintenance outages as well as several major turbine/generator overhauls. Mr. Orlando states that the development of the business plan was performed as part of the Debtors' regular and recurring budgeting process, with additional years of operation added to the focus. The Debtors' strategic business plan has three primary components: A. Maintenance of Core Operations The Debtors took steps at the onset of the Chapter 11 Cases to insure that its clients, partners and vendors understood the nature of the bankruptcy proceedings and that the Debtors intended to continue its tradition of operating excellence. During their Chapter 11 Cases, the Debtors continued to achieve operational success at its Core Operations. With few exceptions, the Business Plan was based on continued operation or ownership of the Debtors' existing Core Operations. B. Disposal of Remaining Non-Core Operations As of the Petition Date, the Debtors had, as significant non-core assets remaining, the Aviation Fueling Assets and the Arenas. During the course of the Chapter 11 Cases, the Debtors had been actively working to dispose of these assets in a structured environment. The Business Plan assumes that those and the other non-core operations will not be part of Reorganized Covanta. Since the Petition Date, the Debtors sold assets and resolved a number of issues pertaining to the non-core operations, including: (a) the sale, or disposal of its interests in the Argentine Assets, its interests in the Team and Corel Centre, the Aviation Fueling Assets and certain equipment, furniture and fixtures at former non-core operations; (b) the collection of deferred purchase prices; and (c) the settlement of certain claims held by Covanta. C. Corporate Overhead Costs Shortly after the Petition Date, the Debtors re-evaluated its corporate overhead structure and embarked on a reorganization to eliminate organizational redundancy and streamline overall costs. The Debtors also focused on more tightly aligning its corporate functions with the requirements and expectations of the ongoing WTE, IPP and Water projects. The Debtors implemented a reduction in force in September 2002 that eliminated 87 corporate positions, the closure of satellite development offices and the reduction in all other costs not related directly to maintaining operations at their current high levels. As part of the reduction in force, WTE and domestic IPP headquarters management were combined and numerous other structural changes were instituted to improve management efficiency. These changes reduced annual overhead cost by $20,000,000. In addition, further reductions in overhead staff will be effected primarily with respect to geothermal operations, most notably the closure of its Fairfax Virginia office, which housed its corporate staff responsible for asset management of its domestic IPP operations. Neither reduction affected the staffing at any of the facilities. (Covanta Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) CREDIT SUISSE: S&P Lowers Classes I-M-2 & II-M-2 Ratings to B ------------------------------------------------------------- Standard & Poor's lowered its rating on class I-M-2 from Credit Suisse First Boston Mortgage Securities Corp.'s mortgage pass- through certificates series 2002-18 loan group one to 'B' from 'A' and removed it from CreditWatch, where it was placed Oct. 2, 2003. At the same time, the rating on class II-M-2 of series 2002-19 loan group two from the same issuer is lowered to 'B' from 'A'. Concurrently, ratings are affirmed on 33 other classes from the same two transactions. The CreditWatch removal of the rating on I-M-2 class reflects the fact that a servicer investigation into early payment defaults determined that there were no extraneous reasons for such defaults. Therefore, the losses already incurred by the collateral will not be remedied. As a result, the rating is lowered to 'B' from 'A', reflecting the actual credit support available to the class. The actual credit support, as of November 2003, was approximately 0.45%, significantly lower than its original level of 2.25%. The credit support percentages comprise the current overcollateralization and credit to excess interest cash flow. The deterioration of the credit support resulted from the net losses incurred by the transaction during three remittance periods. These losses were well in excess of the excess interest cash flow produced during the same periods, resulting in the write-down of the o/c to its current level of 0.23%. The o/c target is 0.50% of the original pool balance. Total delinquencies, as of November 2003, were 15.52%, with serious delinquencies (90-plus, foreclosure, and REO) of 11.47%. Cumulative realized losses were 0.42%. The lowered rating on class II-M-2 of series 2002-19 loan group two resulted from the monthly net losses (which were well in excess of monthly excess interest) incurred by the collateral. The actual credit support, as of November 2003, was approximately 0.14%, significantly less than its original level of 2.50%. The credit support percentages comprise the current o/c and credit to excess interest cash flow. During the November 2003 remittance period, the transaction incurred a net loss of $345,995, with less than $9,000 in excess to cover that loss. As a consequence of the losses, the o/c has been reduced to its current level of 0.28% from its target of 0.50%. As of the November remittance period, total delinquencies were 16.13%, with serious delinquencies of 13.25%. Cumulative realized losses were 0.28%. Furthermore, both transactions have negatively projected excess interest cash flow until the interest only (IO) class for each transaction matures. The IO classes have a maturity of 30 months from the closing date. The IO class will mature in 11 months for series 2002-18 and 12 months for series 2002-19. The negatively projected excess interest cash flow resulted from the significant paydown of the collateral for each transaction. As the collateral balances shrink, the interest cash flow also shrinks. However, since the IO classes receive a fixed percentage of interest on a fixed notional balance until maturity, they will consume an increasing share of the available interest each month. The projections show that in about two months, the mortgage pools will no longer be able to generate sufficient interest cash flow to cover their respective certificate interest payment obligations. Standard & Poor's will continue to closely monitor the performance of these transactions and make appropriate rating adjustments as needed. The affirmed ratings reflect adequate actual and project credit support percentages at this time. Credit support for these transactions is provided by subordination, overcollateralization, and excess interest cash flow. The collateral consists of fixed- rate, fist lien mortgage loans secured by one- to four-family residential properties. The mortgage loans had original maturities of not more than 30 years. RATING LOWERED AND OFF CREDITWATCH Credit Suisse First Boston Mortgage Securities Corp. Mortgage-backed pass-through certificates Rating Series Class To From 2002-18 I-M-2 B A/Watch Neg RATING LOWERED Credit Suisse First Boston Mortgage Securities Corp. Mortgage-backed pass-through certificates Rating Series Class To From 2002-19 II-M-2 B A RATINGS AFFIRMED Credit Suisse First Boston Mortgage Securities Corp. Mortgage-backed pass-through certificates Series Class Rating 2002-18 I-A-3, I-A-4, I-A-5, I-A-IO, I-PP, II-A-1 AAA 2002-18 I-X, II-PP AAA 2002-18 I-M-1, II-B-1 AA 2002-18 II-B-2 A- 2002-18 II-B-3 BBB 2002-19 I-A-4, I-A-5, I-A-15, I-A-16, I-A-17, I-A-18 AAA 2002-19 I-A-19, II-A-2, II-A-3, II-A-4, II-A-5 AAA 2002-19 III-A-1, I-P, I-X, III-P, II-A-IO, II-PP AAA 2002-19 C-B-1 AAA 2002-19 C-B-2, II-M-1 AA 2002-19 C-B-3 A- DELPHAX TECHNOLOGIES: Delays Filing of SEC Form 10-K by 15 Days --------------------------------------------------------------- Delphax Technologies Inc. (Nasdaq: DLPX) said it would delay the filing of its Annual Report on Form 10-K with the Securities and Exchange Commission while it continues negotiations for a new credit facility. In a filing Monday on Form 12b-25 with the Securities and Exchange Commission, the company reported that it is in ongoing negotiations with a new lender to replace its existing credit facility that matures on December 31, 2003. The negotiations and documentation of the transaction with the proposed new lender have not been completed as of December 29, 2003 when the Annual Report on Form 10-K is due. Consequently, the company expects to file the Annual Report on Form 10-K within 15 days. Delphax Technologies Inc. is a global leader in the design, manufacture and delivery of advanced digital print production systems based on its patented electron-beam imaging (EBI) technology. Delphax digital presses deliver industry-leading throughput for both roll-fed and cut-sheet printing environments. These flagship products are extremely versatile, providing unparalleled capabilities in handling a wide range of substrates from ultra lightweight paper to heavy stock. Delphax provides digital printing solutions to publishers, direct mailers and other printers that require systems capable of supporting a wide range of commercial printing applications. The company also licenses and manufactures EBI technology for OEM partners that create differentiated product solutions for additional markets. There are currently over 4,000 installations using Delphax EBI technology in more than 60 countries worldwide. Headquartered in Minneapolis, with subsidiary offices in Canada, the United Kingdom and France, the company's common stock is publicly traded on the National Market tier of the Nasdaq Stock Market under the symbol: DLPX. Additional information is available on the company's Web site at http://www.delphax.com/ * * * Old Credit Agreement Problems In its Form 10-Q filed with the Securities and Exchange Commission, Delphax Technologies reported: "Effective December 20, 2001, the Company entered into a bank credit agreement, secured by substantially all the assets of the Company. The credit agreement provides for term and revolving loans. The term loan portion of the credit facility was advanced as a single borrowing on December 20, 2001, in the amount of $4.0 million, $2.8 million of which remained outstanding as of June 30, 2003. No amount repaid or prepaid on any term loan may be borrowed again. The Company may borrow on a revolving loan basis up to the lesser of the revolving credit commitment or the then current borrowing base. "On December 18, 2002, the lender and the Company amended the credit agreement. Under the amendment, installment payments of $250,000 were due and paid on the term loan on December 31, 2002, March 31, 2003 and June 30, 2003, with another installment of $250,000 due September 30, 2003, and the balance of the term loans due on December 31, 2003. The amendment reduced the revolving credit commitment from $12.5 million as of December 31, 2002, to $11.5 million effective on January 1, 2003, and $10.5 million effective on July 1, 2003, and the facility matures and comes due on December 31, 2003. As of June 30, 2003, revolving loans outstanding were $10.4 million. The revolving credit commitment is subject to a commitment fee of 0.5% per annum on the unused portion of the commitment. Term loans and revolving loans, at the Company's election, may be outstanding at one of two rates, the bank's prime rate plus 1% or the bank's adjusted LIBOR rate plus 4%, provided that $3.0 million of the principal amount of the revolving loans bear interest at the fixed rate of 7.35% per annum. As of June 30, 2003, $9.3 million was outstanding at the bank's adjusted LIBOR rate plus 4%, $3.0 million at 7.35%, $900,000 at the bank's prime rate plus 1% and in total, at a weighted average interest rate of approximately 6.9%. "On August 11, 2003, the lender and the Company entered into a second amendment to the Company's credit agreement. The amendment increases the lender's revolving credit commitment from $10.5 million to $12.0 million, relaxes certain financial covenants in the credit agreement and waives financial covenant defaults that would have existed as of June 30, 2003 absent the amendment. There is no change in the maturity date, interest rates or principal payment schedule for the loans under the credit agreement. "The Company believes, but cannot assure, that it will be able to fully meet the terms of the amended agreement. The Company's ability to fund its future working capital requirements is dependent upon its ability to extend or renegotiate financing before the end of the current term of the facility. If necessary, the Company believes it has the ability to secure alternative forms of financing to meet its working capital requirements. However, the pricing of these alternative forms of financing may not be as favorable as the current credit facility." DII INDUSTRIES: Final DIP Financing Hearing Slated for Feb. 11 -------------------------------------------------------------- Eric T. Moser, Esq., at Kirkpatrick & Lockhart, in Pittsburgh, Pennsylvania, informs the Court that historically, DII Industries and Kellogg, Brown & Root have financed their business operations through the revenue realized by existing engineering and construction contracts, the companies' revenue backlog, the available cash reserves, intercompany loans from Halliburton Company and discrete financing arrangements. DIP Financing Negotiations Mr. Moser relates that the Debtors began exploring options for postpetition financing because of their increased need for working capital and to have sufficient reserves to maintain the operation of their businesses in the ordinary course. Many of the Debtors' projects and engineering and construction services contracts also require that a bond or a letter of credit be posted to secure the Debtors' performance under the contracts. To resolve their mounting financial concerns, the Debtors explored options for debtor-in-possession financing from third party sources. In the late spring and early summer of 2003, the Debtors conducted a joint study with J.P. Morgan Chase Bank regarding financing alternatives from various third party lenders. As part of that study, JPMorgan conducted significant due diligence regarding the Debtors' assets and liabilities and businesses, including, without limitation, interviews with numerous of the Debtors' employees, and approached various third party lenders to explore options for DIP financing. The lenders were interested in providing receivables-based lending. Receivables-backed financing, the Debtors concluded, wouldn't be sufficient to meet the companies' potential financing needs. Halliburton to the Rescue Due to the nature of the Debtors' businesses, no lender was willing to commit an amount anywhere near what has been offered by Halliburton Energy Services, Inc. and Halliburton. Since the Debtors were unable to locate any alternative sources of financing, their best alternative was to seek postpetition financing from HESI and Halliburton. The Debtors commenced discussions with HESI and Halliburton concerning a potential postpetition credit facility in September 2003 that would be sufficient to address their working capital needs. The Debtors, HESI and Halliburton ultimately reached an agreement on the material terms of a DIP facility in December 2003. Without the proposed DIP financing by HESI and Halliburton, the Debtors fear they may not have sufficient funds to finance their business operations. The Debtors' continued financial viability and their ability to successfully reorganize depends heavily on the HESI financing. $350,000,000 Revolving Facility Until June 30, 2004, in million-dollar increments, HESI agrees to lend $150,000,000 to DII Industries and Kellogg Brown & Root, Inc. on a revolving basis and Halliburton will provide letter of credit accommodations. In its sole discretion, HESI may increase its lending commitment to $350,000,000. All obligations of DII Industries and KBR are guaranteed by the other Debtors. Pursuant to the DIP Financing Agreement and the Debtors' cash management strategy, DII Industries and KBR will make intercompany loans to the other Debtors and their non-debtor affiliates to enable these entities to meet their working capital needs. The terms of the DIP Agreement are: Revolving Credit Loans HESI will, in its discretion, make revolving credit loans to DII Industries and KBR at any time and from time to time during the Availability Period. Commitment An aggregate amount not to exceed $150,000,000, subject to HESI's right, in its sole discretion, to increase the commitment from time to time to an aggregate amount equal to the lesser of: (i) $350,000,000; and (ii) the maximum amount authorized by the DIP Financing Orders then in effect. Availability Period The period from and including the Effective Date to but excluding the earlier of the Maturity Date and the Date of Termination of the Commitment. Letter of Credit Halliburton will, in its sole Accommodations discretion, cause the issuance of letters of credit for the account of DII Industries or KBR or any of their subsidiaries at any time during the Availability Period. Maximum Amount The aggregate maximum amount of all outstanding financial accommodations made by HESI and Halliburton to DII Industries and KBR will not exceed $350,000,000. Interest Each Loan will bear interest at the Prime Rate plus 2%. In the event of a default, the interest rate increases by 2%. Prepayment The Loans may be prepaid at any time in whole or in part without premium or penalty. Maturity Date The earlier of: (i) June 30, 2004; and (ii) the date HESI terminates the Commitment due to an Event of Default. Super-Priority Administrative Expense Claim and $10,000,000 Carve-Out The Debtors will provide HESI and Halliburton with an allowed super-priority administrative expense claim in their cases pursuant to Section 364(c)(1) of the Bankruptcy Code. HESI and Halliburton's Claim will have priority over all administrative expenses of the kinds specified in Sections 503(b) and 507(b), subject only to a consensual Carve-Out. The DIP Financing Agreement provides a Carve-Out from HESI ad Halliburton's super-priority claim for: (1) the payment of allowed and unpaid fees and expenses for professionals retained by the Debtors or any statutory committee appointed in the cases in an aggregate amount not to exceed $10,000,000; and (2) the payment of any unpaid fees owed to the United States Trustee pursuant to 28 U.S.C. Sec. 1930 and to the Clerk of the Bankruptcy Court. The DIP Financing Agreement contains representations and warranties, and affirmative and negative covenants binding on the Debtors that are typical of DIP financing. The Debtors believe that to the extent, if any, that they have other secured creditors, these creditors are adequately protected as required by Sections 361, 363, or 364 as their liens are unaffected by the financing provided under the DIP Financing Agreement. Events of Default The DIP Financing Agreement sets forth various Events of Default, which permit HESI and Halliburton to terminate the obligation to provide financial accommodations, including, without limitation: (i) the failure to make payments when due after applicable cure periods; (ii) breaches of representations, warranties and covenants; (iii) dismissal of the Debtors' cases, conversion of the cases to cases under Chapter 7 of the Bankruptcy Code or the appointment of a Chapter 11 trustee or examiner; and (iv) the entry of an order granting stay relief to other secured creditors holding liens in excess of $500,000. On an Event of Default, and at any time during the continuance of the event, HESI or Halliburton may, on notice to the Debtors, terminate the commitment and declare the Loans then outstanding to be due and payable in whole or in part. The automatic stay provided under Section 362 will be deemed automatically vacated five business days after HESI and Halliburton provide the Default Notice. On an interim basis, Judge Fitzgerald permits the Debtors to obtain up to $350,000,000 in postpetition financing from HESI and Halliburton. HESI and Halliburton are granted allowed super- priority administrative expense claims for any and all amount owed by the Debtors in connection with the DIP Facility. The Court, however, rules that the Interim DIP Financing Order is without prejudice to any party-in-interest's right to assert avoidance or other claims against HESI or Halliburton. Judge Fitzgerald will convene a hearing on February 11, 2004 to consider final approval of the DIP Facility. Objections to the Financing may be filed until January 23, 2004. (DII & KBR Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIXIE GROUP: Completes Sale of Yarn Production Plant to Shaw ------------------------------------------------------------ The Dixie Group, Inc. (Nasdaq/NM:DXYN) completed the previously announced sale of its Ringgold, Georgia, spun carpet yarn production facility to Shaw Industries Group, Inc. for a cash purchase price of approximately $6.7 million. Specific terms were not disclosed. The transaction, which will be recorded in the Company's fiscal quarter ending March 27, 2004, is not expected to result in a material net gain or loss. Dixie's Chairman and Chief Executive Officer Daniel K. Frierson, said, "Proceeds from this sale, plus funds generated from working capital reductions, will be used to reduce debt under the Company's Senior Credit Agreement, thereby strengthening our balance sheet and improving our financial flexibility." The Dixie Group (S&P, B+ Corporate Credit Rating, Positive) -- http://www.thedixiegroup.com-- is a leading carpet and rug manufacturer and supplier to higher-end residential and commercial customers serviced by Fabrica International, Masland Carpets and to consumers through major retailers under the Dixie Home name. DRESSER INC: Makes Voluntary Debt Prepayment of $15 Million ----------------------------------------------------------- Dresser, Inc., made an optional debt prepayment in the amount of $15 million, which was applied to its senior term loan B on Dec. 24, 2003. For the year, the Company has reduced its senior term loan B by a total of $22.5 million through optional prepayments. Headquartered in Dallas, Texas, Dresser, Inc. (S&P, BB- Corporate Credit Rating) is a worldwide leader in the design, manufacture and marketing of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry. Dresser has a widely distributed global presence, with over 7,500 employees and a sales presence in over 100 countries worldwide. The Company's Web site can be accessed at http://www.dresser.com/ ENRON: Broadband Unit Selling Metromedia Claims to Liquidity ------------------------------------------------------------ Pursuant to Section 363 of the Bankruptcy Code and Rule 6004 of the Federal Rules of Bankruptcy Procedure, Enron Broadband Services, Inc., seeks the Court's permission to sell and assign its $3,749,983 general unsecured claim against Metromedia Fiber Network, Inc., et al. to Liquidity Solutions, Inc., or its assignee for $487,498 -- 13% of the Claim's face value. Metromedia filed for Chapter 11 protection on May 20, 2002. Pursuant to a court order, October 18, 2002 was fixed as the last day for filing claims against Metromedia. Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York, informs Judge Gonzalez that EBS timely filed its Claim on October 16, 2002. The EBS Claim asserts a prepetition obligation due and owing by Metromedia to EBS under certain lease, IRU and collection agreements between Metromedia and EBS relating to fiber-optic networks maintained by both EBS and Metromedia. Metromedia has not contested the EBS Claim. By an August 21, 2003 Court Order in the Metromedia cases, their Second Amended Plan of Reorganization was confirmed pursuant to Section 1129 of the Bankruptcy Code. Under the Metromedia Plan, Mr. Berger tells the Court that the EBS Claim was designated as a Class 7 Subsidiary Unsecured Claim. Holders of Class 7 Subsidiary Unsecured Claims will receive a pro rata distribution of a portion of the new common stock of the reorganized Metromedia. The Metromedia Disclosure Statement projects that the treatment of Class 7 Claims is estimated to result in a recovery of about 7.4% as of the projected stock distribution date. Thus, Mr. Berger asserts that the contemplated sale of the EBS Claim should be approved because: (a) the sale will generate a meaningful cash recovery for EBS's estate in lieu of the shares of stock in reorganized Metromedia that it would otherwise receive and then have to liquidate; (b) EBS believes that the value to be received represents a significant premium over the estimated value of the reorganized Metromedia stock; and (c) the sale transaction was negotiated by the parties in good faith and at arm's length. Mr. Berger further relates that other than the DIP Liens, there is no lien against the EBS Claim. To the extent that any liens, claims or encumbrances exist, EBS proposes to attach the lien, claim or encumbrances to the sale proceeds, with the same validity, enforceability, priority, force and effect that they now have, subject to the rights, claims, defenses and objections of the Debtors. (Enron Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERPRISE TECH.: Recurring Losses Raise Going Concern Doubt ------------------------------------------------------------ To date, Enterprise Technologies Inc. has not been profitable. The Company faces all the risks common to companies in their early stages of development, including under-capitalization and uncertainty of funding sources, high initial expenditure levels and uncertain revenue streams, an unproven business model, and difficulties in managing growth. Its recurring losses raise substantial doubt about its ability to continue as a going concern. It is the Company's belief that it will continue to incur losses for at least the next 12 months and management believes the Company has sufficient cash to satisfy its operations for at least the next twelve months. However, additional funding may be necessary if the Company begins to develop any other technology-based ventures. Enterprise does not expect that sufficient cash will be generated from operations to fund its growth for the foreseeable future. As a result, management expects to aggressively pursue additional sources of funds, the form of which will vary depending upon prevailing market and other conditions and may include a sale transaction or the issuance of equity securities. The Company has explored the possibility of selling or merging with another Company. Although the Company has not entered into any binding agreement to effect such a transaction, the Board of Directors of the Company does consider such offers and would consider all of the terms of any such offer as part of its fiduciary duty to determine whether any such transaction is in the best interest of the Company's stockholders. If the Board of Directors does determine that a sale or merger of the Company is in the best interests of the Company's stockholders, the Board of Directors may determine to pursue such a transaction and the consideration to be paid in connection with such transaction would be used to expand the Company's business and fund future operations. There is no assurance that the Company will be able to raise funds through a sale or equity transaction, or if such funding is available, that it will be on favorable terms. Enterprise Technologies' common stock is currently traded on the over-the- counter market on an electronic bulletin board. EXIDE: Judge Carey Denies Confirmation of Low-Ball Value Plan ------------------------------------------------------------- Judge Carey declined to confirm Exide Technologies' Fourth Amended Plan of Reorganization earlier this week. A free copy of Judge Carey's 50-page Opinion is available at no charge at: http://bankrupt.com/misc/3401ConfOp.pdf Judge Carey finds and concludes that: * Exide is properly valued at $1.4 to $1.6 billion; * the $1 billion valuation on which Exide's Lender-supported Fourth Amended Plan is premised is too low; * the Plan is unfair to unsecured creditors; * the third-party releases buried in the Plan are inappropriate; * the Plan's exculpation provisions are too broad; * the Subordination Injunction is improper; and * the Plan will not be confirmed. Back to the Negotiating Table Judge Carey wants Exide, the Banks and the Committee to renew negotiations on a consensual exit from Chapter 11 and to report back on the status of such negotiations on or before January 22, 2004. Exide responded by saying that the Company will seek to renew negotiations with its creditors on the terms of the Plan. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld, LLP, representing a committee of Exide's unsecured creditors, said his client looks forward to those talks. Business and Usual Craig H. Muhlhauser, Chairman, Chief Executive Officer and President of Exide Technologies, said, "While not the outcome we were hoping to achieve, we will work with all creditor groups to address the issues that have been raised. The Company believes it has secured the necessary extensions in its DIP financing and standstill agreements to provide sufficient time for the creditor groups to engage in meaningful discussions on the terms of a consensual plan. In the meantime, I want to assure our customers that this ruling has no effect on our continued commitment to meet their needs worldwide and our ability to operate in the ordinary course of business, and I want to thank them, our suppliers and employees for their continued support." About Exide 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 three global business groups -- transportation, motive power and network power -- provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications. Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, fuel-cell load leveling, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive-power applications including lift trucks, mining and other commercial vehicles. Further information about Exide and its financial results are available at http://www.exide.com EXIDE: Committee Wants to Commence Adversary Case against R2 ------------------------------------------------------------ R2 Investments LDC and R2 Top Hat Ltd. served as ex officio members of the Official Committee of Unsecured Creditors of the Exide Technologies Debtors and owed fiduciary and confidentiality duties to the Committee. As a member of the Committee, R2 routinely received privileged and confidential information from the Committee and its financial and legal advisors. On October 1, 2003, the Court authorized the Committee to examine R2 pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. Pursuant to the Order, the Committee subpoenaed documents from R2 and took depositions of present and former R2 employees. Aaron A. Garber, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, reports that through the 2004 Examination, the Committee obtained evidence that during the time R2 was an ex officio Committee member and was in possession of highly confidential and privileged information, R2 violated its fiduciary and confidentiality duties to the Committee and its constituents. R2 implemented a plan to profit at the unsecured creditors' expense by buying up Exide secured debt to gain both profit and control in the restructuring process, then engaged in secret negotiations with Angelo Gordon Capital Funding Partners L.P., the single largest Bank Debtholder and a member of the secured creditors steering committee, to support a plan that attempts to hand Exide to secured creditors at the unsecured creditors' expense. R2 also extracted a promise from Angelo Gordon to prematurely terminate the process by which the Debtors were seeking a sale of their business -- a result it knew would eliminate the possibility that the Committee could influence changes to the process to make it a meaningful exercise and severely damage the Committee and its constituents. These actions were all planned and performed by the same R2 personnel that were actively involved on the Committee. Before the Petition Date, the Debtors' bondholders formed an informal committee to collectively represent their interests vis- .-vis the Debtors during the prepetition stage. R2 was a key member of that informal bondholders' committee and participated actively alongside its legal counsel. Through its analyst, Rebecca Pacholder, R2 assembled as many bondholders friendly to R2 as it could rally to come on board the informal committee. Once the Committee was formed on April 28, 2002, R2 campaigned for the Committee members to grant it ex officio membership. The Committee did so. As an ex officio Committee member, R2 actively participated in each Committee meeting, aggressively lobbying bondholders to take various positions. R2 employees or agents, Ms. Pacholder, Michael Diament, Scott McCarty, and William Hollaway each attended meetings and were heavily involved both behind the scenes and at meetings in the Committee's decision- making, strategizing, and negotiating. R2 served on certain subcommittees formed by the Committee to deal with critical issues like the Key Employee Retention Plan and the success fees and terms of engagement for Blackstone and Alix Partners wherein R2 was the Committee's primary negotiator. R2 was also the only Committee member attending the Debtors' due diligence meetings. As an ex officio Committee member, R2 assumed express fiduciary duties by virtue of the Committee's By-laws. These By-laws impose on R2 strict confidentiality obligations. R2 confirmed its confidentiality obligations and further affirmed its alliance with the Committee's interests by letter dated February 20, 2003. Mr. Garber states that R2 participated in countless conference calls, meetings and discussions, and engaged in correspondence, in which confidential and privileged information was discussed, strategies were developed, and plans were implemented on the Committee's behalf with the Committee's legal advisors, Akin Gump Hauer & Feld LLP and financial advisors, Jefferies & Company, Inc. Throughout its tenure as an ex officio Committee member -- and especially because of its self-imposed dominant role in every aspect of the Committee's functions -- R2 was given access to highly confidential financial information and protected legal material. Pursuant to the confidentiality clause of the Committee By-laws, Jefferies presented its analyses to the Committee, including R2, and responded to R2's questions and requests with the understanding that this information was for the Committee's sole benefit, and would neither be disclosed outside the Committee nor used other than in furtherance of the Committee's statutory duties. Furthermore, R2 solicited and received privileged information directly from the Committee's legal counsel on numerous occasions in regular meetings and correspondence, and in response to R2's direct requests to Akin Gump to facilitate its chosen roles as lead negotiator and strategist for the Committee. Each communication between R2 and Akin Gump contained information that R2 was entitled to only because of its status as Committee member. This information was not intended to be used for anything other than Committee business. Notwithstanding R2's guarantees of confidentiality, R2 misused this confidential information. According to Mr. Garber, R2 produced to the Committee a schedule of its trading in Exide debt. The Schedule revealed that, while it was serving on the Committee and receiving confidential information, and engaging in privileged and confidential discussions regarding the Debtors' future and the plans and analyses of the Committee and its advisors, R2 began buying large amounts of secured debt. Starting in September 2002 and continuing throughout is tenure as an ex officio Committee member, but without prior notice to the Committee, its constituents or the Court, R2 purchased over $47,000,000 of secured debt. Majority of these purchases occurred between the beginning of R2's discussions with Angelo Gordon and the present. R2 also traded in unsecured debt, ceasing its purchase of unsecured bonds in November 2002, which coincides with the start of R2's discussions with Angelo Gordon. Disturbingly, Mr. Garber notes that there was no confidentiality "wall" placed between the R2 personnel engaged in these trades and those in possession of confidential and privileged information. In fact, it appears that the R2 personnel who were making R2's Exide debt trading decisions were the very same people who were actively involved on the Committee. While in possession of highly confidential and privileged information obtained as a result of its Committee membership, R2 made two separate proposals to acquire a controlling interest in the Debtors. Under the first proposal submitted to the Debtors in January 2003, R2 proposed to invest $100,000,000 in cash in return for 40% of the equity in the Reorganized Debtors. The combination of the new $100,000,000 equity investment plus R2's secured claim would result in R2 ultimately owning 66.5% of the Debtors. Under this proposal, the unsecured creditors would get nothing. On March 14, 2003, R2 made a second proposal for the Debtors' reorganization, which explained R2's belief that it was an inappropriate time for the Debtors to be attempting to raise equity capital. R2 also attached an alternative proposal providing for a $200,000,000 loan from R2 to address the Debtors' near term liquidity needs. While R2 was serving as an ex officio Committee member, Mr. Diament and Mr. McCarty sought out and had discussions with Todd Arden and Jeff Aronson of Angelo Gordon concerning various aspects of the Debtors' bankruptcy, including their financial considerations. The communications between R2 and Angelo Gordon, when viewed collectively and in the context are damning, and the end result proves the point. On April 30, 2003, while R2 was an ex officio Committee member, R2 and Angelo Gordon concluded their negotiations and agreed that the Private Equity Process would be terminated at R2's demand, in exchange for certain considerations by R2. According to Mr. Diament and Mr. McCarty, Angelo Gordon and R2 came to an agreement where: (a) R2 would support the Stand-alone Restructuring Plan that had been designed by Angelo Gordon; (b) New Exide would emerge from bankruptcy as a private company with no additional debt upon emergence; (c) R2 would receive two seats on the Board of Directors of New Exide; and (d) R2 would remove its name from the adversary proceeding filed by the Committee. Mr. Garber relates that there were conversations between R2 and Angelo Gordon leading up to the April 30 meeting. R2's agreement to go along with the Bank Group's strategies contradicts what R2 knew was in the Committee's best interest and its constituents. For instance, Mr. McCarty conceded that part of the strategy for the Bank Group was to push the Debtors out of bankruptcy, which, R2 acknowledges, is not in the Committee's best interest. Similarly, having been privy to the Committee's confidential discussions regarding an analyses of the Private Equity Process, R2's negotiators with Angelo Gordon were well aware that a premature termination of the Private Equity Process would render the existing private equity bids meaningless and misleading, as in indicia of the value of the enterprise, and would eliminate the Committee's ability to influence changes to the process to make it a meaningful exercise, and all of which would severely prejudice the unsecured creditors' interests. On January 16, 2003, the Committee and R2 filed an adversary proceeding against Credit Suisse First Boston and Salomon Smith Barney. In connection with the Adversary Proceeding, the Committee and R2 entered into a Joint Prosecution Agreement pursuant to which the parties acknowledge their desire and purpose to share and exchange "strategies, legal theories, confidence, information, and documents which may be useful in each parties' efforts." Pursuant to the Joint Agreement, the Committee and its counsel revealed confidential and privileged information to R2 and its counsel for the purposes set forth in the Joint Agreement. The Committee believed that R2 had become a prime and zealous advocate of the claims against the Adversary Proceeding defendants. The evidence shows, however, that while R2 was teaming up as co-plaintiff with the Committee, it was also pursuing a deal with Angelo Gordon. Under this deal, R2 assured Angelo Gordon that it would terminate its role as the Committee's co-plaintiff in the adversary proceeding, which was a material part of the deal struck at the April 30th meeting. Thus, R2's collaboration with the Committee may have been intended only to give it leverage in its secret discussions with Angelo Gordon. Notwithstanding its agreement to abandon the Adversary Proceeding, R2 cannot deny the merits of the Adversary Proceeding. Taken together, the facts outlined demonstrate that R2 breached its fiduciary and confidentiality duties to the Committee. At some point, R2 determined that its parochial interests lay in siding not with the unsecured creditors, but the holders of secured debt. Instead of resigning from the Committee at that point, however, it remained on the Committee and continued to access the confidential, non-public information provided to Committee members. With that information in hand, R2 engaged in a campaign of secured claims trading that allowed it to not only increase its likelihood of realizing a profit at the expense of other claimholders but more importantly to increase its leverage over the reorganization processes to the point where it could ultimately negotiate the April 30, 2003 deal to surrender the Debtors' estates to secured creditors at the expense of the unsecured class. R2's exploitation of its ex officio membership and disregard of its fiduciary duties resulted in direct and substantial harm to the Committee and its constituents. Pursuant to Sections 105, 510(b), and 1109(b) of the Bankruptcy Code, the Committee seeks the Court's authority to commence an adversary proceeding against R2 seeking to equitably subordinate all claims that R2 holds against the Debtors' estates on the grounds that it breached its fiduciary duties and violated confidentiality agreements pertaining to its membership on the Committee. Unless the Court grants the Committee's request, unsecured creditors risk forfeiture of valuable rights and the potential for an increased distribution. Mr. Garber contends that the Committee is the body best suited to prosecute an equitable subordination action against R2 because: (a) the Committee has already taken action with respect to R2, including the 2004 examination; (b) the Debtors will not bring an action, as indicated by the release of claims both generally and as to R2 as set forth in the Plan; and (c) the unsecured creditors stand to benefit if the prosecution of an action for equitable subordination against R2 is successful. (Exide Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) FANSTEEL INC: Court Allows Modifications to Amended Joint Plan -------------------------------------------------------------- Fansteel Inc. (Pinksheets: FNSTQ) announced that, after a hearing conducted on December 22, 2003, the United States District Court for the District of Delaware, the court responsible for overseeing the Company's Chapter 11 cases, approved and entered an order confirming the modifications to the amended joint plan of Plan of reorganization for Fansteel and its U.S. subsidiaries. The Plan, as modified, provides for the implementation of a settlement of disputes with the State of Oklahoma regarding the required transfer of an OPDES water discharge permit to FMRI, a newly formed special purpose subsidiary of Fansteel. The NRC, the official committee of unsecured creditors, and the PBGC as well as other creditors supported the modifications to the Plan. Gary Tessitore, Fansteel's President and Chief Executive stated that "While the Company has yet to fulfill all of the conditions to an effective date, we consider the settlement with the State of Oklahoma to be a resolution of the major hurdle to the effectiveness of the Second Amended Plan. The Company believes that it is likely it will be able to satisfy the remaining conditions for an anticipated effective date of January 23, 2004." As previously reported, on January 15, 2002, Fansteel Inc. and its U.S. subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in Wilmington, Delaware. The cases have been assigned to the Honorable Judge Joseph J. Farnan, Jr. and are being jointly administered under Case Number 02-10109. The Company and its U.S. subsidiaries' first amended joint plan of reorganization was confirmed on November 17, 2003. FEDERAL-MOGUL: Gets OK to Enter into Agreements with F-M Gorzyce ---------------------------------------------------------------- Federal-Mogul Bradford Limited is the Debtors' principal English operating company and the operator of a piston and pin- manufacturing facility in Bradford, England. Federal-Mogul Gorzyce S.A., on the other hand, is an indirect subsidiary of Debtor Federal-Mogul Corporation located in, and incorporated under, the laws of Poland. Both Bradford and Gorzyce are members of the Debtors and their non-debtor affiliates' Pistons Global Product Group. Bradford also carries on other business at its facility in addition to the manufacture of pistons, like: -- manufacturing gasoline and light vehicle diesel pins; -- providing certain engineering technology; and -- providing sales support to the Pistons Group. The manufacturing operations of the Bradford pistons business utilize a large quantity of assets located at the Bradford facility that are used in the making and selling of gasoline and light vehicle diesel pistons and piston castings, like machinery, tooling, and similar items. The Bradford Pistons Business also consistently maintains inventories of raw materials, consumables, spares and finished goods, as well as related technology, know- how, and customer goodwill. As Bradford carries on its business as an agency company of T&N Limited, under English law, T&N is the beneficial owner of the assets used in the Bradford Pistons Business, and Bradford is its legal owner. To avoid significant disruption to the operations of the Federal- Mogul Pistons Group, most of the equipment, machinery and tooling -- the Chattels -- used in the manufacturing operations of the Federal-Mogul Bradford Limited Pistons Business will be transferred to Federal-Mogul Gorzyce S.A.'s facility in Poland, periodically throughout 2004. The Debtors believe that relocating the manufacturing operations of the Bradford Pistons Business to Gorzyce, where labor and overhead costs are significantly lower, will lead to substantial improvement in the financial performance of the business and a reversal of recent operating losses. Michael P. Migliore, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub, P.C., in Wilmington, Delaware, relates that the Debtors intend to wind down their piston-manufacturing operations in Bradford in an orderly fashion, as the assets used in the operations are transferred to Gorzyce. In view of the operations transfer, T&N Limited and Federal-Mogul Bradford Limited seek the Court's authority to enter into a: (a) Chattel Lease of the Plant, Machinery and Tooling; and (b) License Agreement of the Know-How used in the pistons- manufacturing business of Bradford to Federal-Mogul Gorzyce S.A. T&N Limited and Federal-Mogul Bradford additionally seek the Court's permission to grant Gorzyce the option to purchase, among others, the Chattels and the Know-How License used in the Bradford Pistons Business. Specifically, the transactions provide that: A. The Terms The Chattel Lease and the Know-How License will each have a five-year primary term. The Debtors propose that: -- the lease covering the Chattels will be entered into not later than January 1, 2004; and -- the license covering the Know-How to be entered into prior to June 30, 2004. B. The Purchase Option The agreements will contain the Purchase Option, under which Gorzyce may purchase: (a) the Chattels, the Know-How License, and the Customer Goodwill outright to a confirmed Chapter 11 Plan of the Debtors, consistent with Section 524(g)(3)(A)(ii) of the Bankruptcy Code; and (b) the inventories of raw materials, consumables and maintenance spares -- the Goods -- held by the Bradford Pistons Business, at a time of Gorzyce's choosing. C. The Consideration Gorzyce will pay Bradford: (a) GBP800,000 as initial payment, upon entering into the Chattel Lease, with GBP360,000 as quarterly rental payments for five years; (b) Royalty payments equal to the greater of GBP200,000 or 2% of the value of product sales for the use of the Know-How License; and (c) GBP1,000,000 as purchase price for the Goods payable at the time as Gorzyce elects to purchase the Goods, but not later than June 30, 2004. These amounts are exclusive of value added tax in the United Kingdom, which will be paid by Gorzyce to the extent applicable. Under the Purchase Option, the purchase price for: -- the Chattels will equal the amount of the unpaid lease payments for the remainder of the lease term; and -- the Know-How and the Customer Goodwill will be equivalent to GBP1,000,000, less than the amount of royalty payments made by Gorzyce to Bradford under the Know-How License. E. The Guaranty Gorzyce's obligations under the Chattel Lease, Know-How License and related agreements will be guaranteed by Federal- Mogul Holding Deutschland GmbH, a direct non-Debtor subsidiary of Federal-Mogul Corporation located in Germany. F. The Trading Indemnity (a) Gorzyce agrees to indemnify Bradford and the Bradford Administrators for $17,000,000, against any trading losses that would result during the period from January 1, 2004 to the date of Bradford's emergence from Chapter 11 and administration proceedings, which will likely include the period that the pistons-manufacturing operations of the Bradford Pistons Business will be wound down and transferred in stages to Gorzyce; (b) Interim payments of the Trading Indemnity can be required by the Bradford Administrators if, prior to emergence, Bradford's trading losses exceed GBP4,500,000, in which case Gorzyce will make an interim payment of the Trading Indemnity equal to the amount by which the trading losses exceed GBP4,500,000; and (c) The Bradford Administrators can also require interim payments of the Trading Indemnity to be made if there are any trading losses after June 30, 2005 -- as measured from January 1, 2004 -- up to a maximum aggregate amount of GBP10,000,000, in the event the Debtors have not emerged from their Chapter 11 proceedings by the date. The Purchase Option Mr. Migliore relates that the cumulative effect of the agreements, prior to the exercise of the Purchase Option, will allow Gorzyce to function as a subcontractor to Bradford for the manufacturing aspects of the Bradford Pistons Business. After Gorzyce's exercise of the Purchase option, Gorzyce intends to appoint Bradford as its distributor to customers in the United Kingdom of the products -- the manufacturing of which is to be transferred from Bradford to Gorzyce. Bradford, in turn, will continue the sales and marketing aspects of the business relating to the UK customers. The Customer Goodwill The Customer Goodwill to be acquired by Gorzyce, including beneficial ownership of the customer contracts, will be that relating to the Bradford Pistons Business other than with respect to the Ford Puma engine, which will remain with Bradford. Legal title to the customer contracts to which Bradford is presently a party will remain with Bradford and will not be assumed or assigned to Gorzyce. Instead, Bradford will purchase piston assemblies manufactured by Gorzyce and the Izmit factory of Dereli Holding AS, and sell the assemblies on to the third-party customers of the Bradford Pistons Business. Dereli Holding AS is a joint venture, 50% owned by Federal-Mogul Corporation. To address potential warranty claims that may be made by customers against Bradford on account of parts manufactured by Gorzyce, Gorzyce will provide Bradford with a parts warranty that will be substantially co-extensive with that provided by Bradford to its customers. All Bradford's assets not related to the manufacturing operations of the Bradford Pistons Business will remain at the Bradford facility. The Debtors estimate $17,000,000 as value of the assets including the land and buildings at the Bradford facility, of which $3,400,000 are accounts receivable relating to the Bradford Pistons Business. The Effect on Labor The contemplated move of the manufacturing operations of the Bradford Pistons Business to Gorzyce will require the Debtors to make certain redundancy, that is severance payments to those Bradford employees that are terminated as a result of the shifting operations to Gorzyce yet remain with the Bradford Pistons Business until the termination. Payment to employees has two components: (1) Severance Component -- which refer to payments made to all employees at the facility, reflecting site contracts, established practice, and contingencies, totaling $10,700,000; and (2) Enhanced Severance Payment -- which includes a loyalty bonus payable to all employees to secure cooperation during the wind-down of the business and retention payments that will only be made in the event that the recipient of a payment remains with the business through the date of his or her termination in connection with the cessation of the business. The retention payments will be made throughout 2004 and 2005. The enhanced severance payments total to $4,760,000. With the exception of the required statutory severance payments, Mr. Migliore asserts that the payments are products of the Debtors' intensive, arm's-length negotiations with union and employee representatives at the Bradford Facility. The Trading Indemnity Mr. Migliore relates that in the event that Gorzyce makes a payment under the Trading Indemnity, the payment will be refunded by Bradford to Gorzyce at such time Bradford's trading results after January 1, 2004 show a consistent profit, which is expected to be no later than December 31, 2005. For purposes of determining whether an interim payment is warranted, but not for the purpose of the Trading Indemnity itself, trading losses will be calculated taking account of the: -- severance payments; -- any purchase price received by Bradford for the Goods; and -- premiums, rentals or royalties received by Bradford under the Chattel Lease and Know-How License. The Debtors believe that the Trading Indemnity represents a fair allocation of the risk that Bradford might incur trading losses. This is the Debtors' opportunity to structure the transfer of assets used in the piston manufacturing operations at Bradford so as not to disrupt the ability of the Pistons Group to meet its customer obligations during the transfer of the Bradford Pistons Business to Gorzyce. Additionally, Gorzyce agreed to indemnify Bradford with respect to the non-subordinated prepetition trade creditors of Bradford, whose claims -- both unsecured claims and those entitled to priority under English law -- equal GBP3,400,000. The indemnity will apply by the later of December 31, 2005 or Bradford's emergence from its Chapter 11 proceedings. Payments on the indemnity will be distributed to all non-subordinated creditors of Bradford on a pro rata basis. Subordination of Contracts To implement these transactions, certain of the Debtors have agreed to subordinate their intercompany claims against Bradford: Federal-Mogul Export Services Limited GBP1,350,873 Federal-Mogul Products, Inc. 198,581 Leeds Piston Ring Engineering Limited 4,440,000 Sintration Limited 5,545,000 T&N Limited (Branch Capital Account) 10,694,703 T&N Limited (Loan Account) 3,630,776 The Debtors envision that, as part of their over all reorganization process, a number of the Debtors and their non- Debtor affiliates will enter into subordination agreements with respect to their prepetition claims against one another. The subordination aims to: -- preserve the recoveries envisioned for non-affiliated creditors of Bradford; and -- secure the support of Bradford's creditors for the proposed relocation of the Bradford Piston Business's manufacturing operations to Gorzyce. Mr. Migliore asserts that relocating the manufacturing operations of the Bradford Pistons Business to Federal-Mogul Gorzyce S.A, where labor and overhead costs are significantly lower, will lead to substantial improvement in the financial performance of the business and a reversal of recent operating losses. * * * The Court authorizes the Debtors to enter into the Chattel Lease and the Know-How License. Additionally, Judge Newsome permits the Debtors to enter into other agreements that are necessary to effect the transactions, including, without limitation, a master agreement incorporating the terms of all the transactions, including, but not limited to the Purchase Option and the sale of Goods. Following execution of the lease agreement respecting the Chattels, Bradford and T&N will be authorized to transfer possession of the Chattels to Gorzyce. Moreover, subject to execution of the master agreement and any necessary additional agreement, Bradford is authorized to sell the Goods to Gorzyce, which sale will be free and clear of all liens, claims and encumbrances. Those of the Debtors holding intercompany claims against Bradford are authorized to enter into agreements as may be necessary to subordinate claims to those of Bradford's non-subordinated, third party prepetition trade creditors. (Federal-Mogul Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) FINZER IMAGING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Finzer Imaging Systems, Inc. fka Finzer Businss Systems, Inc. 11001 East 51st Avenue Denver, Colorado 80239 Bankruptcy Case No.: 03-35452 Type of Business: The Debtor is a leading world manufacturer and distributor of office automation equipments such as copy machines. Chapter 11 Petition Date: December 23, 2003 Court: District of Colorado (Denver) Judge: Howard R. Tallman Debtor's Counsels: David M. Miller, Esq. Lee M. Kutner, Esq. Kutner Miller Kearns, P.C. 303 East 17th Avenue Suite 500 Denver, CO 80203 Tel: 303-832-2400 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Vectra Bank Trade Debt $350,000 Special Asset Group, 3rd Floor 1650 S. Colorado Blvd. Denver, CO 80222 Frontier Business Solutions Trade Debt $245,000 Markusson Green Jarvis, P.C. Trade Debt $50,459 Hein & Associates, LLP Trade Debt $37,611 Velocity Express Contact Trade Debt $33,718 Dell Financial Services $30,622 Vectra Bank $29,152 U.S. Bank $25,872 De Lage Landen Trade Debt $22,402 Financial Services Equitrac Corporation Trade Debt $17,879 Safeco Insurance Trade Debt $16,846 U.S. Bank - Visa $12,593 Public service Co. of Utilities $10,400 Colorado China Dragon Gourmet Trade Debt $8,400 Enterprises, Inc. 4815 List Drive Business Trade Debt $6,320 Center Dworkin, Chambers Legal Services $6,246 & Williams, P.C. Dixon and Snow, P.O. Legal Services $5,249 Diligenz Trade Debt $4,449 Appleone Trade Debt $4,318 HotJobs.Com Trade Debt $4,200 FRIEDMAN'S INC: 2003 Annual Report on Form 10-K Will Be Late ------------------------------------------------------------ Friedman's Inc. (NYSE: FRM) announced that the filing of its annual report on Form 10-K with the Securities and Exchange Commission (SEC) for the fiscal year ending September 27, 2003, which was due with the SEC on December 29, 2003, will be delayed. The principal reasons for the delay are the previously disclosed restatement of the Company's financials for at least the last three fiscal years, the formal investigation being conducted by the SEC and the Department of Justice, and the audit committee's continuing investigation of these matters. Based on the current status of these matters, Friedman's expects to file its Form 10-K by the end of February 2004. The Company expects to provide preliminary financial information for the restated periods and the year ended September 27, 2003 prior to that date. On January 7, 2004, the Company intends to announce sales results for its first fiscal quarter ended December 27, 2003. The Company has been notified by its lenders that it is in default under certain provisions of its credit agreement. As the preliminary financial information becomes available, the Company will be in discussions with its lenders regarding these matters in an attempt to resolve them prior to the filing of its annual report. At present, the Company's lenders continue to provide the Company with the benefits of its credit agreement, with certain limited exceptions, although they have the right to terminate their support at any time. Friedman's Inc. is a leading specialty retailer of fine jewelry based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers. At December 29, 2003, Friedman's Inc. operated a total of 710 stores in 20 states, of which 482 were located in power strip centers and 228 were located in regional malls. Friedman's Class A Common Stock is traded on the New York Stock Exchange (NYSE Symbol, FRM). As of December 8, 2003, Crescent Jewelers, the Company's west coast affiliate, operated 179 stores in six western states, 102 of which were located in regional malls and 77 of which were located in power strip centers. On a combined basis, Friedman's and Crescent operate 889 stores in 25 states of which 559 were located in power strip centers and 330 were located in regional malls. GEM KINGDOM: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Gem Kingdom, Inc. 404 Sunport Lane, Suite 100 Orlando, Florida 32809 Bankruptcy Case No.: 6:03-bk-14913 Type of Business: The Debtor is a world leader in the importing and wholesale distribution of minerals, crystals, crystal cluster, amethyst cathedrals and geodes, points, spheres and products manufactured from Genuine Gemstones. See http://www.gemkingdom.com/for more information. Chapter 11 Petition Date: December 23, 2003 Court: Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: Frank M. Wolff, Esq. Wolff Hill McFarlin & Herron PA 1851 West Colonial Drive Orlando, FL 32804 Tel: 407-648-0058 Fax: 407-648-0681 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 Tax $152,076 Insolvency East Group Properties $101,598 Rostirolla Serras e Pedras $74,861 Ltda. Rua Dr Jose Atilio Vera Copersol Ind. Com. De $52,335 Pedras LTDA. Lagranha e Cia $39,805 Holland & Knight LLP $30,797 Federal Express $28,263 Bri Pedras $27,690 Noble Stones Com. Imp. Exp. $26,359 LTDA J B Hunt $25,190 David S. Burke / Award $21,703 Communication Nelcir De Lima / $18,988 for Copersol Rua Prudente de Moraes Emery Forwarding $18,426 Priority One Brokers $15,004 Joel Arem $15,000 Julio Benigno Fernandez $10,275 Florida Design's Sourcebook $9,730 Newcourt Financial $9,715 Wing Wo Hing Trading Co. $9,039 The Hartford $8,368 GINGISS GROUP: Selling 127 Locations to May Department Stores ------------------------------------------------------------- The May Department Stores Company (NYSE: MAY) announced the purchase of certain assets of the Gingiss Group in a cash transaction. May is acquiring 125 company-owned Gingiss Formalwear and Gary's Tux Shop stores and two Gingiss Group service centers located in Addison, Ill., and Van Nuys, Calif. Gingiss is a leading national tuxedo rental and sales retailer, based in Addison, Ill. May will operate the Gingiss and Gary's Tux stores as part of its Bridal Group, which includes David's Bridal, Priscilla of Boston and After Hours Formalwear. "We are pleased that Gingiss is joining our growing national network of Bridal Group businesses and will help contribute to May's pursuit of younger customers," said Gene Kahn, May's chairman and chief executive officer. "May's bridal business has great synergy. The links between our Bridal Group businesses and our department stores' wedding registries are critical to our strategy of attracting young-adult customers to our department stores and especially to our home stores." Robert Huth, head of May's Bridal Group and president and chief executive officer of David's Bridal, said, "We continue to make strategic acquisitions that expand our national presence. Acquiring Gingiss further enhances our ability to serve engaged couples by creating a premier chain of tuxedo stores which will complement David's Bridal." During 2003, May acquired 225 tuxedo stores, including 125 Gingiss Formalwear and Gary's Tux Shop stores, 25 Modern Tuxedo stores, and 64 Desmonds Formalwear stores. In addition, May's Bridal Group has opened 30 David's Bridal stores and nine After Hours Formalwear stores to date this year. The May Department Stores Company now will operate 448 department stores under the names of Lord & Taylor, Famous-Barr, Filene's, Foley's, Hecht's, Kaufmann's, L.S. Ayres, Meier & Frank, Robinsons-May, Strawbridge's, and The Jones Store, as well as 210 David's Bridal stores, 462 After Hours Formalwear stores, and 10 Priscilla of Boston stores. May operates in 46 states, the District of Columbia, and Puerto Rico. Headquartered in Addison, Illinois, The Gingiss Group, Inc., a national men's formal wear rental and retail company, filed for chapter 11 protection on November 3, 2003 (Bankr. Del. Case No. 03-13364). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represent the Debtors in their restructuring efforts. The Debtors listed debts of over $50 million in their petition. GLAS-AIRE: Must Generate Sufficient Cash Flow to Continue Ops. -------------------------------------------------------------- Glas-Aire Industries Group Ltd., a Nevada corporation, was incorporated on September 29, 1992. The Company manufactures and distributes wind deflector products to automobile manufacturers in the United States, Canada and Japan. The Company incurred a net loss of $1,281,775 and $3,385,414 for the years ended December 31, 2002 and 2001 respectively. At June 30, 2003 it had a working capital deficiency of $1,700,036. Glas-Aire has historically met its cash requirements to sustain its operations from funds from operation and debt financing. The Company estimates its current cash requirements to sustain operations for the next twelve months through June 2004 to be $13,200,000. However, there can be no assurance that the Company will generate sufficient cash flow from operations to address all cash flow needs. Additionally, the Company's primary lender has indicated that, although the loans remain on a demand basis, the loans may be repaid in accordance with the terms and conditions outlined in the banking agreement. This includes amortized payments on the non-revolving facilities. Thus, the Company will continue making periodic payments on the debt. Management believes that the Company will be able to maintain these credit facilities on a going forward basis; however, there can be no assurance that this will occur. These conditions raise substantial doubt about the Company's ability to continue as a going concern. GRUPPO TMM: Closes Additional $25MM Under Receivables Facility -------------------------------------------------------------- Grupo TMM, S.A. (NYSE: TMM and BMV: TMM A) has closed an additional $25 million of certificates under its receivables securitization program, which now totals $76.3 million. The additional certificates have the same terms and conditions as the existing certificates originally issued on August 19, 2003, and also require monthly amortization of principal and interest and mature in three years. Funding for the additional securitization certificates was arranged by the U.S.-based Maple Commercial Finance Group, a division of Toronto-based Maple Financial Group Inc., and funding was provided by affiliate Maple Bank GmbH, a German commercial bank. Mexico City-based Axis Advisors LP acted as structuring agent and co-arranger, and provided financial advisory services to the company. The foregoing is announced as a matter of record only, and does not constitute an offer to sell securities or the solicitation of an offer to buy securities. Headquartered in Mexico City, Grupo TMM is a Latin American multimodal transportation company. Through its branch offices and network of subsidiary companies, Grupo TMM provides a dynamic combination of ocean and land transportation services. Grupo TMM also has a significant interest in TFM, which operates Mexico's Northeast railway and carries over 40 percent of the country's rail cargo. Grupo TMM's Web site address is http://www.grupotmm.com/and TFM's Web site is http://www.tfm.com.mx/ GTC TELECOM: Sept. 30 Balance Sheet Upside-Down by $6.7 Million --------------------------------------------------------------- GTC Telecom Corporation provides various services including, telecommunication services, which includes long distance telephone and calling card services, Internet related services including Internet Service Provider access and business process outsourcing services. GTC Telecom Corp., was organized as a Nevada Corporation on May 17, 1994 and is currently based in Costa Mesa, California. The Company trades on the Over-The-Counter Bulletin Board under the symbol "GTCC". As of September 30, 2003, the Company has negative working capital of $4,607,183, liabilities from the underpayment of payroll taxes, an accumulated deficit of $15,573,021, and a stockholders' deficit of $6,685,436; in addition, through September 30, 2003, the Company historically had losses from operations and a lack of profitable operational history, among other matters, that raise substantial doubt about its ability to continue as a going concern. The Company hopes to continue to increase revenues from additional revenue sources and/or increase margins through continued negotiations with MCI/WorldCom and other cost cutting measures. In the absence of significant increases in revenues and margins, the Company intends to fund operations through additional debt and equity financing arrangements. The successful outcome of future activities cannot be determined at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. HAYNES INT'L: Sept. 30 Net Capital Deficit Narrows to $97 Mill. --------------------------------------------------------------- Haynes International, Inc., reported audited financial results for its fiscal year ended September 30, 2003. Net revenue decreased 21.1% to approximately $178.1 million, compared to approximately $225.9 million in fiscal 2002. The Company reported a net loss of approximately $63.0 million for fiscal 2003, compared to net income of approximately $0.9 million for fiscal 2002. The net loss for the fiscal year ending September 30, 2003, was largely attributable to a valuation allowance of $54.7 million recorded at September 30, 2003 against all of the Company's US deferred tax assets as a result of management's determination that it is more likely than not that certain future tax benefits will not be realized. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $97 million. The Independent auditor's report on the Company's consolidated financial statements for the fiscal year ended September 30, 2003, includes a statement to the effect that the possibility that the Company may not generate sufficient liquidity to meet its financial obligations as they come due and may be unable to maintain compliance with its debt covenants during fiscal 2004 raises substantial doubt about its ability to continue as a going concern. Richard C. Lappin, Chairman of the Board of Haynes International, Inc., said that the Company has retained the professionals at Conway, Del Genio, Gries & Co. LLC, a New York-based advisory firm specializing in corporate restructurings and mergers and acquisitions, to assist it in undertaking a financial restructuring designed to strengthen the Company's balance sheet and achieve sustainable cash flows. "A timely, orderly restructuring will allow us to respond more effectively to changing market conditions and preserve and enhance our financial foundation," stated Francis Petro, Chief Executive Officer of Haynes International, Inc. Francis Petro also stated that, "Our industry has been hit hard by a combination of negative market conditions, including pricing pressures from foreign competitors, rising raw material and energy costs and declining commercial aerospace and land-based gas turbine business." Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, high performance alloys, primarily for use in the aerospace and chemical processing industries. HOST MARRIOTT: Sells Plaza San Antonio Marriott Hotel for $34MM --------------------------------------------------------------- Host Marriott Corporation (NYSE: HMT) closed on the sale of the Plaza San Antonio, a Marriott franchised hotel in San Antonio, Texas for total consideration of approximately $34.4 million. The proceeds are expected to be used to repay debt obligations or for other corporate purposes. Host Marriott Corporation (S&P/B+/Stable) is a lodging real estate company, which owns 122 upscale and luxury full-service hotel properties primarily operated under Marriott, Ritz-Carlton, Four Seasons, Hyatt, Hilton and Swissotel brand names. For further information on Host Marriott Corporation, visit the Company's Web site at http://www.hostmarriott.com/ IFCO SYSTEMS: Three New Members Elected to Board of Directors ------------------------------------------------------------- The Extraordinary General Meeting of IFCO Systems N.V. (Frankfurt:IFE1) accepted the resignation of the former Directors C, Mr. Jeremy Brade, Mr. Antonius C.M. Heijmen and Mr. Richard J. Moon, from the board under full discharge effective Dec. 29, 2003. Mr. Michael Phillips, Mr. Ralf Gruss and Dr. Philipp Gusinde were elected as the new Directors C to the Board of Directors of IFCO Systems N.V., effective immediately. The Extraordinary General Meeting of IFCO Systems N.V. also adopted the 2002 Annual Accounts and discharged the members of the Board of Directors for the fulfillment of their duties during the financial year 2002. IFCO Systems is a world-wide logistics service provider with approximately 160 locations in Europe and North America. IFCO Systems operates a pool of more than 65 million RPCs (Reusable Plastic Containers) globally, which are used as a logistic system predominantly for fresh produce by leading grocery retailers. In the United States, IFCO Systems also provides a national network of pallet management services. With more than 45 million wooden pallets recycled annually, IFCO Systems is the market leader in this industry. In 2002 IFCO Systems generated revenues of 380.7 million USD. * * * 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. IMPSAT FIBER NETWORKS: Issues $16 Million Seven-Year Bond --------------------------------------------------------- Impsat Fiber Networks, Inc., a leading provider of integrated broadband data, Internet and voice telecommunications services in Latin America, announced the issuance of a Ps45 billion (US$16.1 million) bond. Overview The Company announced the issuance by Impsat S.A., the Company's operating subsidiary in Colombia (Impsat Colombia), of a Ps45 billion (US$16.1 million) bond. The bond, which was issued at par on December 18, 2003, has a seven-year term. The coupon of the bond will bear CPI + 8% per annum, and interest will be payable quarterly in arrears. Principal will be payable in two installments of 50% each, the first at the end of the fifth anniversary of issuance and the second at the final maturity date. Duff & Phelps de Colombia granted this issue a AA+ credit rating. The proceeds of the offering have been used to partially prepay a syndicated loan made to Impsat Colombia by a group of Colombian banks. The prepayment of such loan releases Impsat Colombia from certain financial restrictions and subjects it to more favorable financial covenants. "This is an exceptional way to close this year," CEO Ricardo Verdaguer said. "This is our first attempt to raise money in the capital markets since our financial restructuring and the results were outstanding. To have successfully completed a seven-year term bond offering less than nine months after our emergence from Chapter 11 demonstrates the market's confidence in the Company's operational prospects. Further, this kind of achievement reinforces the efforts we have made towards strengthening the Company's capital structure." The bond, which was oversubscribed, is listed on the Bolsa de Valores de Colombia (the Colombian stock exchange) and was offered and sold in Colombia to qualified investors in accordance with Regulation S under the U.S. Securities Act of 1933 (the "Securities Act"). The bond is not and will not be registered under the Securities Act or the securities laws of any state in the United States, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the Securities Act and any applicable state securities laws. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful. Impsat Fiber Networks, Inc. is a leading provider of fully integrated broadband data, Internet and voice telecommunications services in Latin America. Impsat operates an extensive pan-Latin American high capacity broadband network in Brazil, Argentina, Chile and Colombia using advanced technologies, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. The Company has also deployed thirteen facilities to provide hosting services Impsat currently provides services to more than 2,700 national and multinational companies, government entities and wholesale services to carriers, ISPs and other service providers throughout the region. The Company has local operations in Argentina, Colombia, Venezuela, Ecuador, Brazil, the United States, Chile and Peru. Visit http://www.impsat.com/for more information. INTERNATIONAL WIRE: Continues Recapitalization Discussions ---------------------------------------------------------- International Wire Group, Inc., continues to be actively engaged in discussions regarding a recapitalization with an Ad-Hoc Committee of holders of its 11.75% Senior Subordinated Notes and the largest equity holder of its parent company. Members of the Ad-Hoc Committee are being represented by Stroock & Stroock & Lavan LLP and Houlihan Lokey Howard & Zukin. Chief Executive Officer Joseph Fiamingo said, "Over the last few weeks we have been working cooperatively with the Ad Hoc Committee to facilitate its due diligence review. The Company and the Ad Hoc Committee have exchanged recapitalization proposals and we believe we are narrowing the gap on our outstanding issues. We look forward to a continuing meaningful dialogue and hope that we can reach agreement with the Ad Hoc Committee and our equity holders regarding a consensual recapitalization in the not too distant future." International Wire Group, Inc., headquartered in St. Louis, Missouri, is a leading manufacturer and marketer of wire products, including bare and tin-plated copper wire and insulated copper wire. The Company's products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics that are utilized by a wide variety of customers primarily in the appliance, automotive, electronics / data communications and general industrial / energy industries. The Company manufactures and distributes its products in 22 facilities strategically located in the United States, Mexico, France, Italy and the Philippines. As previously reported, Standard & Poor's Ratings Services lowered its ratings on International Wire Group Inc. to 'D' following the company's announcement to forego making the Dec. 1, 2003, interest payment on its 11.75% senior subordinated notes. INTERPOOL INC: Further Delays Filing of 2002 Report on Form 10-K ---------------------------------------------------------------- Interpool, Inc. (NYSE:IPX) anticipates an additional delay in the completion of its restated 2000 and 2001 financial statements and 2002 financial statements and the filing of its Annual Report on Form 10-K for 2002 with the Securities and Exchange Commission. This additional delay will be necessary to allow Interpool and its auditors to complete further analysis of the accounting for a pending claim by Interpool under its insurance policy covering lease defaults. This analysis was prompted by a comment by a representative of the Securities and Exchange Commission at a mid- December conference on accounting, which precipitated the need for further review by Interpool and its auditors of Interpool's accounting for this insurance contract. Although Interpool had hoped to file its 2002 Form 10-K with the Securities and Exchange Commission by December 31, 2003, Interpool stated that it will now be necessary to reconsider the effect on its restated 2000 and 2001 financial statements of the claim submitted by Interpool to its insurance carriers and that this will delay the completion and filing of the 2002 Form 10-K. Interpool's independent auditors, KPMG LLP, advised Interpool management on December 26, 2003, that it may be necessary for Interpool to change its accounting for this insurance claim. As previously announced, Interpool's 2002 Form 10-K has been delayed since March 2003 because Interpool has been engaged in a restatement of its historical financial statements for 2000 and 2001 and because of a now-completed internal inquiry into Interpool's accounting and related matters conducted by special counsel engaged by the Audit Committee of Interpool's Board of Directors. The new accounting issue under consideration relates to a previously disclosed claim submitted by Interpool to its insurance carriers, seeking to recover amounts owed by a significant customer based in South Korea. The customer had defaulted on its lease payments and commenced insolvency proceedings in 2001. Interpool maintained insurance related to such lessee defaults, which covered certain per diem rental charges as well as loss, damage and recovery costs related to the equipment on lease that were billable to the lessee under the terms of the lease. Interpool recorded the recoverable per diem rental charges in its 2001 revenues and recorded other amounts recoverable under the terms of the insurance policy as they would have been recorded if no default under the lease had occurred. This accounting treatment was approved by Interpool's former auditors, Arthur Andersen LLP. At December 31, 2002, Interpool had recorded a receivable of $33.2 million related to this claim. On December 26, 2003, KPMG advised Interpool that remarks by a member of the SEC accounting staff at a mid-December conference (as subsequently expanded upon through additional staff comments) appeared by analogy to suggest that classification of, and correspondingly the accounting for, the lease contract and the lease default insurance contract may need to be separated. This would suggest that revenue recognition for a portion of the amounts recoverable under the insurance contract should be deferred until Interpool actually receives payment from its insurance carriers. Interpool and KPMG are currently analyzing the impact of this potential change on the accounting used by Interpool in the consolidated financial statements to be issued. Interpool noted that any such accounting change would have no effect on Interpool's cash flow or on the strength and collectibility of its insurance claim. While Interpool, in consultation with KPMG, will complete its analysis and make any required changes to its financial statements as promptly as practicable, Interpool management now expects that this analysis will delay the completion of Interpool's audited 2000, 2001 and 2002 financial statements and 2002 Form 10-K beyond the previously announced target date of December 31, 2003. Until the extent of any potential changes is determined, Interpool is not able to predict whether it will be possible to complete and file the Form 10-K by January 9, 2004, the date on which numerous waivers previously granted by Interpool's financial institutions are scheduled to expire. If Interpool concludes that the Form 10-K cannot be filed by that date, it will seek further extensions of these waivers. Interpool also stated that, if it is determined that recognition of revenue relating to a portion of the insurance claim must be deferred until the claim is paid, it would cause the reduction in Interpool's restated stockholders' equity as of December 31, 2001 to be greater than Interpool's previous estimate of 2% of its December 31, 2001 stockholders equity as originally reported. As previously announced, Interpool's insurance claim is disputed by its insurance carriers, who commenced legal proceedings in December 2002 seeking rescission of Interpool's customer default insurance coverage or, in the alternative, a declaration that the premiums paid for this insurance were inadequate. The insurance carriers also dispute the timing of notice of the loss and the amount of the loss. Interpool is vigorously pursuing its claim for recovery and believes that it has strong claims under the insurance policy and defenses to the arguments asserted by the insurance underwriters. Although it is impossible to give assurances as to the ultimate outcome of this proceeding in view of the uncertainties inherent in any litigation, based upon the progress of this case to date and the merits of its position, and after consultation with external counsel, Interpool believes that the facts as they have been developed through discovery, and the applicable law, should entitle it to a recovery in the full amount of its claim. Interpool also stated that, in light of the additional delay in completing and filing its 2002 Form 10-K with the SEC, it anticipates that The New York Stock Exchange potentially will suspend trading in Interpool's common stock and other listed securities and commence delisting proceedings. Interpool said that if the New York Stock Exchange takes such action, the company would request that trading be allowed to resume when its Form 10-K is filed. It is Interpool's understanding that the New York Stock Exchange has an appeal process available that the company may avail itself of in due course. Interpool noted that, except for its delayed reports, it believes it is in compliance with all New York Stock Exchange listing requirements. If the common stock is suspended from trading on the New York Stock Exchange, Interpool would attempt to make alternative arrangements to maintain a trading market for its securities. Interpool is one of the world's leading suppliers of equipment and services to the transportation industry. It is the world's largest lessor of intermodal container chassis and a world-leading lessor of cargo containers used in international trade. INTERPOOL: Fitch Junks Preferred Stock Rating & Keeps Neg. Watch ---------------------------------------------------------------- Fitch Ratings lowers Interpool, Inc.'s senior secured, senior unsecured, and preferred stock ratings to 'BB-', 'B', and 'CCC+' from 'BB+', 'BB', and 'B+', respectively. The ratings remain on Rating Watch Negative where they were placed on Oct. 10, 2003. Approximately $295 million of debt and trust preferred securities are affected by Fitch's actions. The rating actions follow the announcement by Interpool that it will not be able to file its 2002 10-K by Dec. 31, 2003. Interpool's independent auditors, KPMG LLP, advised Interpool management on Dec. 26, 2003, that it may be necessary for Interpool to change its accounting for a portion of a $33 million insurance claim, which was filed in 2001 for equipment leased to South Korean steamship line that subsequently filed for bankruptcy. Interpool recognized a portion of this unpaid claim as revenue in both 2001 and 2002. As a result, Interpool will need to revise its income statement and balance sheets for fiscal years 2001 and 2002. While management does not believe that these revisions will have an impact on Interpool's cash flow during these periods, the adjustments are likely to cause shareholders' equity to decline by more than 2%, which had been previously estimated by the company. More importantly, these revisions and subsequent reauditing by KPMG will place significant pressure on management to complete the 2002 10-K by Jan. 9, 2004 - the expiration date of the existing waivers by the company's lenders for the completion of the 10-K. If Interpool is unable to file its 10-K by Jan. 9, 2004, management will be forced to seek a fourth waiver from its lenders. While the lenders have been cooperative thus far, there is no guarantee that management will be able to secure another waiver. Therefore, this could set off a series of events that would unfavorably impact Interpool and would be outside of management's control. Fitch notes that the New York Stock Exchange suspended trading of Interpool's common equity, trust preferred securities, and convertible redeemable subordinated debentures today. Fitch views Interpool's situation as being very fluid and will be closely monitoring the company as events unfold over the near term. Tracing its roots to 1968 and based in Princeton, NJ, Interpool, Inc. through its subsidiaries is the largest lessor of domestic chassis and one of the largest lessors of marine containers in the world. IT GROUP INC: Files Chapter 11 Plan and Disclosure Statement ------------------------------------------------------------ The IT Group, Inc. Debtors delivered their Joint Plan of Reorganization and Disclosure Statement to the Bankruptcy Court on December 17, 2003. The Plan contemplates the liquidation of all remaining assets of the Debtors and the resolution of all outstanding claims against and interests in the Debtors' Estates. According to Harry J. Soose Jr., IT Group's Chief Executive Officer, the central component of the Plan is the compromise and settlement of any and all claims and causes of action. In addition, all of the Debtors' remaining Assets will be liquidated for the benefit of the allowed Claims against the Debtors in accordance with the Plan, including the prosecution of Avoidance Actions and Estate Causes of Action. The Plan is filed as a joint Plan for all of the Debtors for purposes of administrative convenience and efficiency. The Plan provides for the substantive consolidation of the Debtors for all purposes under the Plan. Voting on the Plan, confirmation of the Plan, and Distributions under the Plan will be considered and accomplished on a consolidated basis. Substantive Consolidation All of the Debtors' assets and liabilities will be substantively consolidated. Specifically, on the Effective Date: -- all intercompany claims by and among the Debtors will be eliminated; -- all assets and liabilities of the Debtors other than IT Group will be merged or treated as though they were merged into and with the assets and liabilities of IT Group; -- all guarantees of the Debtors of the obligations of any other Debtor and any joint or several liability of any of the Debtors will be deemed to be one obligation of the consolidated Debtors; -- all Equity Interest owned by any of the Debtors in any other Debtor will be treated as though they were extinguished; and -- each and every Claim filed or to be filed in these Chapter 11 Cases against any of the Debtors will be deemed filed against the consolidated Debtors, and will be deemed one Claim against the consolidated Debtors. IT Group Subsidiary Guarantees All claims based on the Debtors' guarantees of collection, payment of performance of any obligation made by any Subsidiary, which is not a Debtor and all claims against any Subsidiary for which any of the Debtors are jointly and severally liable, in each case which arise prior to the Effective Date, will be discharged, released, extinguished and of no further force of effect. Merger of IT Group Corporate Entities On the Effective Date, any or all of the Debtors, other than IT Group, and Subsidiaries of the Debtors may, as the sole option of the Debtors and the Committee, be: (a) merged into one or more of the Debtors; or (b) dissolved. Upon occurrence of any merger, all assets of the merged entities will be transferred to and become the assets of the surviving entity, and all liabilities of the merged entities, except to the extent discharged, released or extinguished pursuant to the Plan and Confirmation Order, will be assumed by and will become the liabilities of the surviving entity. All mergers and dissolutions will be effective as of the Effective Date pursuant to the Confirmation Order without any further action by the stockholders or directors of any of the Debtors. Shaw Stock In accordance with the Plan Settlement, title to: -- 10% of the Shaw Stock will vest in the Reorganized IT Group, free and clear of all Claims, Equity Interests, liens, security interests, encumbrances, and other interests, except as expressly provided in the Plan; and -- 90% of the Shaw Stock will be distributed to holders of Allowed Lender Claims in accordance with the Plan, free and clear of all Claims, Equity interests, liens, security interests, encumbrances, and other interests, except as otherwise expressly provided in the Plan. Subject to the Plan, the Reorganized IT Group may sell or otherwise dispose of the Shaw Stock for the benefit of holders of Allowed General Unsecured Claims to effectuate Distributions to the holders in accordance with the Plan. Formation of Trust A trust will be formed and constituted in accordance with the Trust Agreement on the Effective Date. The Trustee's compensation will be disclosed at, or prior to the Confirmation Hearing, in an amount agreed to by the Creditors' Committee and the Citicorp USA, Inc. Upon entry of the Final Decree: (a) the Trust will be dissolved without further action by Reorganized IT Group or the Oversight Committee; and (b) the Trustee will be discharged from any further duties under the Trust Agreement. Formation of Reorganized IT Group The Plan calls for the merger of any or all of the Debtors entities into one surviving entity, the Reorganized IT Group, which will receive the Debtors' remaining assets. Accordingly, all Assets of the Debtors, including the Estate Cause of Action and Avoidance Actions, will vest in Reorganized IT Group to be liquidated and distributed to holders of Allowed Claims in accordance with the Plan. The Reorganized IT Group will issue New Common Stock, which will be held in trust for the benefit of holders of allowed Claims against the Debtors. These actions will be taken with respect to Reorganized IT Group: (a) the New Charter and the New By-Laws will be duly adopted; and (b) the issuance of the New Common Stock will be authorized. Except as otherwise provided in the Plan, the post-Effective Date management of the Reorganized IT Group will be the general responsibility of the Plan Administrator, subject to the direction and supervision by the Oversight Committee as provided in the Plan. The Plan Administrator, subject to the supervision of the Oversight Committee, will direct the management of the Reorganized IT Group. Vesting of Assets of Debtors Title to all of the Assets of the Debtors will vest in the Reorganized IT Group, free and clear of all Claims, Equity Interests, liens, security interests, encumbrances, and other interests. Subject to the Plan and direction by the Oversight Committee, the Reorganized IT Group may use, acquire and otherwise dispose of its Assets free of any restrictions of the Bankruptcy Code, on and after the occurrence of the Effective Date. Reconstitution of Board of Directors If applicable, the initial board of directors of the Reorganized IT Group will be composed of the individuals identified at, or prior to the Confirmation Hearing. From and after the Effective Date, the current board of directors of the IT Group will be dissolved and the board of directors of the Reorganized IT Group will be selected and determined in accordance with the provisions of the New Charter and the New By-Laws for Reorganized IT Group. The New Charter and the New By-Laws Pursuant to the Plan, the charter and by-laws of Reorganized IT Group will be amended and restated in substantially the form of the New Charter and New By-Laws, to, among other things: (a) prohibit the issuance of nonvoting equity securities as required by Section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of the New Charter as permitted by applicable law; and (b) otherwise effectuate the provisions of the Plan. Cancellation of Instruments and Agreements Except as otherwise provided, all promissory notes, share certificates, instruments, indentures, or agreements evidencing, giving rise to, or governing any Claim or Equity Interest will be deemed cancelled and annulled without further act or action under any applicable agreement, law, regulation, order, or rule, and the obligations of the Debtors under the promissory notes, share certificates, instruments, indentures, or agreements will be discharged. The Indentures will survive confirmation of the Plan solely to effectuate Distributions to be made to holders of the Old Notes as provided and to enforce the rights, duties and administrative functions of the Indenture Trustee with respect to the Distributions. Nothing in the Plan will be deemed to impair, waive or discharge the Indenture Trustee's charging lien or any other rights or obligations of the Indenture Trustee under the Indentures. On the final Distributions to the holders of the Old Notes pursuant to the Plan, the Indentures will be cancelled and deemed terminated, and the Indenture Trustee will be discharged of any further duties, without any further act or action under any applicable agreement, law, regulations, order, or rate and the obligations of the Debtors under the Indentures will be discharged. Causes of Action Avoidance Actions and Estate Causes of Action will be retained by, and vested in, the Reorganized IT Group upon the occurrence of the Effective Date. Except as otherwise provided in the Plan, the Debtors' rights to commence and prosecute the Causes of Action, including Avoidance Actions and Estate Causes of Action, will be preserved notwithstanding consummation of the Plan. Any recovery realized by the Reorganized IT Group on behalf of the Debtors on account of the Causes of Action will be the property of Reorganized IT Group and, except as otherwise provided in the Plan, distributed to holders of Allowed Claims in accordance with the Plan. Employee Matters On the occurrence of the Effective Date: A. The Debtors will remit any payments outstanding as of the Effective Date that are due and payable pursuant to the terms of a certain Severance Retention Program approved by the Bankruptcy Court on August 29, 2002; and B. The Soose Loans and accrued interest will be deemed to be forgiven. Within three business days of the Effective Date, the Debtors will remit all federal, state and local withholding taxes and all related interests associated with the loan forgiveness and the corresponding salary gross-up so that Harry J. Soose, Jr., incurs no personal out-of-pocket expenses. Appointment of the Disbursing Agent The Reorganized IT Group, acting through the Plan Administrator, will be appointed to serve as the Disbursing Agent for all of the Debtors. All Cash necessary for the Disbursing Agent to make payments and Distributions pursuant to the Plan will be obtained from existing Cash balances and the disposition of the Assets pursuant to the Plan. Sources of Cash Pursuant to the Plan Settlement, an Administrative Reserve will be held in an account maintained by the Reorganized IT Group to fund post-Effective Date administrative and related costs associated with administration of the Chapter 11 Cases and implementation of the Plan including, without limitation, the fees and costs of the Disbursing Agent, the Reorganized IT Group, the Plan Administrator, the Chief Litigation Officer and the Oversight Committee pursuant to the Plan, excluding costs relating to the IT Environmental Liquidating Trust. To the extent the Administrative Reserve is insufficient to fund administration of the Chapter 11 Cases and implementation of the Plan, the Bankruptcy Court may approve an Administrative Surcharge against the Litigation Recoveries upon application by the Plan Administrator, the Chief Litigation Officer, the Committee Designees or the Oversight Committee, upon notice to the Reorganized IT Group, the Plan Administrator, the Chief Litigation Officer, the Oversight Committee, the Agent and any other party in interest as directed by the Bankruptcy Court. Discharge of the Debtors The rights afforded in the Plan and the treatment of all Claims and Equity Interests will be in exchange for and in complete satisfaction, discharge, and release of all Claims and Equity Interests of any nature whatsoever, including any interest accrued thereon from and after the Petition Date, against the Debtors or any of their Estates, Assets, properties, or interests in property. Except as otherwise provided, all Claims against and Equity Interests in the Debtors will be satisfied, discharged, and released in full. The Debtors will not be responsible for any obligations, except those expressly assumed by any of the Debtors in the Plan. All Persons will be precluded and forever barred from asserting against the Debtors, the Reorganized IT Group, their successors or assigns, or their Assets, properties, or interests in property any other or further Claims based on any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date, whether or not the facts of or legal bases therefore were known or existed prior to the Effective Date. Dissolution of Creditors' Committee The appointment of the Committee will terminate on the later of: (a) the Effective Date; and (b) the date the last order of the Bankruptcy Court allowing or disallowing a Fee Claim becomes a Final Order. On the termination, the members of the Committee will be released and discharged of and from all further authority, duties, responsibilities, and obligations relating to and arising from and in connection with the Chapter 11 Cases, and the Committee will be deemed dissolved, unless prior thereto the Bankruptcy Court will have entered an order extending the existence of the Committee. The decisions of the Committee through the dissolution date will be deemed ratified and approved in all respects. The Debtors and the Committee foresee that the Effective Date will be on or before March 2004. Of course, there can be no certainty that the Effective Date will occur by that date, and the satisfaction of many of the conditions to the occurrence of the Effective Date is beyond the control of the Plan Proponents A full-text copy of IT Group's Disclosure Statement is available for free at: http://bankrupt.com/misc/IT_Disclosure_Statement.pdf A full-text copy of IT Group's Reorganization Plan is available for free at: http://bankrupt.com/misc/IT_Reorg_Plan.pdf (IT Group Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) JUPITER MARINE: Former Auditors Air Going Concern Uncertainty ------------------------------------------------------------- Jupiter Marine International Holdings, Inc., a Florida corporation, was incorporated on May 19, 1998. On May 26, 1998, JMIH acquired all of the outstanding shares of common stock of Jupiter Marine International, Inc., a boat manufacturing company, which was incorporated under the laws of the State of Florida on November 7, 1997. On February 17, 2000, JMIH purchased certain of the assets of Phoenix Marine International, Inc., mostly consisting of molds for inboard powered sportfishing boats. JMIH formed a new wholly owned subsidiary, Phoenix Yacht Corporation to hold these assets. The Company, from its inception, has experienced poor cash flows and has met its cash requirements by issuing, through private placements, its common and preferred stock. Additionally, the Company has met its financial obligations through third party loans. The Company anticipates that funds received from these sources and cash generated from operations should be sufficient to satisfy the Company's contemplated cash requirements for at least the next twelve months. After such time, the Company anticipates that cash generated from operations will be sufficient to fund its operations, although there can be no assurances that this will be the case. The Company extended to November 30, 2003 its revolving line of credit with a financial institution. The credit line was also increased to $500,000 from $250,000. The note on the line of credit bears interest at the financial institution's index rate plus 2% (6.0% at July 26, 2003). The note is collateralized by all of the Company's assets and is personally guaranteed by Carl Herndon, President of the Company. The Company sells it product to independent dealers. During the years ended July 26, 2003 and July 27, 2002, the Company's sales to major customers were approximately 59% (four customers) and 58% (two customers) of its net sales, respectively. The Company's accounts receivable at each year end are substantially due from these customers. On July 26, 2002, the Board of Directors the Company approved the engagement of Spicer, Jeffries & Co. as independent auditors of the Company for the fiscal year ended July 27, 2002, to replace the firm of BDO Seidman, LLP, who were dismissed as the Company's auditors, effective July 26, 2002. The dismissal of BDO was approved by the Company's Board of Directors. The reports of BDO on the Company's financial statements for fiscal years ended July 29, 2000 and July 28, 2001 were modified to include an explanatory paragraph wherein they expressed substantial doubt about the Company's ability to continue as a going concern. In connection with the audits of the Company's financial statements of Jupiter Marine International Holdings, Inc. and Subsidiaries as of July 26, 2003 and July 27, 2002, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the years then ended, there was no such explanatory paragraph included by the auditing firm of Spicer, Jeffries & Co. KAISER ALUMINUM: Feb. 29 Fixed as Louisiana PI Claims Bar Date -------------------------------------------------------------- In a Court-approved stipulation, the Kaiser Aluminum Debtors and certain Louisiana Personal Injury Claimants agree that the deadline for the Louisiana Personal Injury Claimants to file Hearing Loss and Coal Tar Exposure Claims is extended to February 29, 2004. Should the parties reach an agreement relating to the handling, method of compensation, and liquidation of the Hearing Loss and Coal Tar Exposure Claims in connection with any reorganization plan, the parties stipulate that the Claims addressed by the Agreement will no longer be subject to the February 29, 2004 General Bar Date. This is without prejudice to the Debtors' right to later request for the establishment of one or more bar dates with respect to the Claims. (Kaiser Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAIDLAW: Discloses Identity of Company's New Executive Officers --------------------------------------------------------------- As of November 24, 2003, Laidlaw International, Inc.'s executive officers are: Name Position ---- -------- Kevin E. Benson Director, President and Chief Executive Officer Douglas A. Carty Senior Vice President and Chief Financial Officer Ivan R. Cairns Senior Vice President and General Counsel Wayne R. Bishop Vice President and Controller D. Geoffrey Mann Vice President, Treasurer Jeffrey W. Sanders Vice President, Corporate Development (Laidlaw Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) LES BOUTIQUES: Sylvain Toutant Resigns as Pres., CEO & Director --------------------------------------------------------------- Mr. Sylvain Toutant announced that he is leaving his position as president and Chief Executive Officer of Les Boutiques San Francisco and a member of the Board of Directors. Mr. Toutant has held this position since mid-September and informed the members of his Board of Directors that he no longer wished to continue. Since assuming his position, Mr. Toutant has taken the measures that the situation demanded, permitting the Company to file for protection under the Companies' Creditors Arrangement Act and providing it with the possibility of remedying the situation. However, Mr. Toutant, who has a highly specialized expertise in the retail sector, noted that the business' present situation requires another kind of expertise. MIRANT CORP: Asks Court to Fix March 12, 2004 as MAEC Bar Date -------------------------------------------------------------- Ian T. Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas, recalls that on November 18, 2003, the MAEC Debtors -- Mirant Americas Energy Capital LP and Mirant Americas Energy Capital Assets LLC -- filed for Chapter 11 protection. MAEC, formerly known as Southern Producer Services LP, engaged in the business of lending money to smaller oil and gas production companies located primarily in Texas and Louisiana that drilled in Texas and Louisiana or offshore on the continental shelf in the Gulf of Mexico. MAEC's relationship to these companies was that of a traditional lender. According to Mr. Peck, the MAEC Debtors' assets consist of $2,400,000 cash in bank accounts MAEC held. The Debtors did not provide any funding to the MAEC Debtors since the Initial Debtors' Petition Date. On December 7, 2001, Mr. Peck relates that Stroud Investments 2001 Ltd., and Stroud Oil Properties, Inc., filed a lawsuit in the 272nd Judicial District Curt of Brazos County, Texas against Predator Development Company LLC. Stroud had been a borrower under one of the loans MAEC made and which had been sold to Lehman Commercial Paper, Inc. and H/Z Acquisition Partners LLC. On June 16, 2003, Predator filed an Original Third-Party Petition against Mirant, MAEC and MAECA. On July 25, 2003, Predator filed a Motion for Severance in the Brazos Lawsuit, asking the Texas State Court to sever out any and all claims, counterclaims or third party claims by, between or among Stroud, Predator, and MAEC and MAECA, and make them the subject of a separate suit thereby leaving the claims involving Mirant stayed and isolated in its own cause. The Texas State Court denied Predator's Severance Motion and stayed all claims against Mirant, MAEC and MAEC pending further Court order. On September 9, 2003, Predator filed a Motion for Severance of Claims in the Brazos Lawsuit, asking the Texas State Court to sever out any and all claims or counterclaims among Stroud and Predator and make them the subject of a separate suit thereby leaving the claims involving Mirant, MAEC and MAECA stayed and isolated in its own cause. Again, the Texas State Court denied Predator's request. Predator filed a Stay Relief Motion to complete the pending State Court Litigation involving Non-Debtor Entities. The MAEC Debtors determine that their assets should be protected and administered in the orderly fashion provided by the Bankruptcy Code. Accordingly, to allow for an orderly administration of all of the Debtors' operations, Chapter 11 petitions were prepared and filed for the MAEC Debtors. By this motion, the Debtors ask the Court, pursuant to Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure, to establish March 12, 2004 as the last day for all MAEC Debtors' creditors to file a claim. Furthermore, the Debtors ask Judge Lynn to rule that the Bar Date applies to all known and unknown creditors, subject to these exceptions: A. Co-Debtor or Sureties The Debtors ask the Court to establish April 11, 2004 as the last day by which parties, including the Debtors, could file claims of co-debtors, sureties or guarantors under Section 501(b) of the Bankruptcy Code. B. Non-Debtor Parties to Rejected Executory Contracts or Unexpired Leases The Debtors ask the Court to establish the later of either the Bar Date or 30 calendar days after the entry of an order approving the rejection of an executory contract or lease, as the last day for filing claims arising out of the rejection of an executory contract or unexpired lease. C. Entities Asserting Claims Arising from the Recovery of a Voidable Transfer The Debtors ask the Court to establish the later of either the Bar Date or the first business day that is at least 30 calendar days after the mailing of the notice of entry of any order approving the avoidance of the transfer, as the Bar Date for filing claims arising out of a voidable transfer. D. Entities Asserting Claims Arising from the Assessment of Certain Taxes The Debtors ask the Court to establish the later of either the Bar Date or the first business day that is at least 30 calendar days after the date the relevant tax claim arises, as the bar date for filing claims arising from the assessment of certain taxes described in Section 502(i). E. Governmental Units Pursuant to Bankruptcy Rule 3003(c)(1), the bar date for filing proofs of claim by governmental units is May 17, 2004 at 5:00 p.m. Prevailing Eastern Time. F. Creditors Holding Claims that Were Reduced by Amendments to the Debtors' Schedules The Debtors propose that if an amendment to the Schedules reduces the liquidated amount of a scheduled claim, or reclassifies a scheduled, undisputed, liquidated, non- contingent claim as disputed, unliquidated, or contingent, the affected claimant may file a proof of claim on the later of the Bar Date or the first business day that is at least 30 calendar days after the mailing of the notice of the amendment in accordance with Bankruptcy Rule 1009, but only to the extent the proof of claim does not exceed the amount scheduled for the claim before the amendment. The Debtors further propose that creditors not be entitled to an extension of the Bar Date if a Schedule amendment increases the scheduled amount of an undisputed, liquidated, non- contingent claim. G. Holders of Administrative Claims The Debtors propose that neither the Bar Date nor any other deadline proposed applies to requests for payment of administrative expenses arising in the MAEC Debtors' cases under Sections 503, 507(a)(1), 507(b), 330(a), 331 or 364 of the Bankruptcy Code. The Debtors anticipate that an administrative claims bar date will be established as part of any confirmation order entered in these cases. These entities need not file a proof of claim against the MAEC Debtors' estates: (a) any person or entity that has already properly filed, with the Clerk of the United States Bankruptcy Court for the Northern District of Texas, a proof of claim against the MAEC Debtors using a claim form which substantially conforms to Official Form No. 10; (b) any person or entity whose claim has been paid by the MAEC Debtors; (c) any directors, officers or employees of the MAEC Debtors as of the MAEC Debtors' Petition Date that have or may have claims against the MAEC Debtors for indemnification, contribution, subrogation or reimbursement; (d) a Debtor having a claim against a MAEC Debtor; (e) any direct or indirect non-debtor subsidiary of a MAEC Debtor having a claim against a MAEC Debtor; and (f) any professional whose retention in these Chapter 11 cases has been approved by the Court. In filing proofs of claim, the Debtors propose these procedural requirements: 1. Claims filed before the entry of the Order Establishing a Bar Date The Debtors propose that any claim that was filed with the Clerk of the United States Bankruptcy Court for the Northern District of Texas before the entry of the Bar Date Order, that substantially conforms to the Official Form No. 10, will be deemed properly filed, subject to the right of the Debtors or any other party-in-interest to object to the allowance thereof. 2. Transfers of Claims The Debtors propose that if a timely filed claim is transferred, the transferee must both: (i) file a notice of transfer of the claim with the Claims Agent, in accordance with Bankruptcy Rule 3001(e), by forwarding the notice to the Claims Agent; and (ii) serve a copy of the notice of transfer on the Debtors' counsel. 3. Form of Proof of Claim Due to the size and complexity of these Chapter 11 cases, with the assistance of the Claims Agent, Bankruptcy Services, LLC, the Debtors will prepare a proof of claim form tailored to conform to these cases, based on Official Form 10. The Debtors' proposed substantive modifications to the Official Form include: (a) adding a list of both of the Debtors, their case numbers, and their respective trade names and former names; (b) providing room for BSI to add the name and address of each creditor; (c) allowing the creditor to correct any incorrect information contained in the name and address portion; (d) adding additional categories to the "Basis of Claim" section; and (e) certain instructions. The Debtors ask the Court to approve the Proof of Claim and the substantive modifications to Official Form 10. 4. Substance of Proof of Claim The Debtors propose that proofs of claim against the MAEC Debtors' estates be: (a) written in the English language; (b) denominated in lawful currency of the United States as of the MAEC Debtors' Petition Date; and (c) supported by evidence in accordance with the requirements of applicable laws and rules. 5. Place and Time for Filing Proofs of Claim Proofs of claim must be filed so that they are actually received by BSI, on or before the Bar Date (or alternative deadline for filing special claims), by 5:00 p.m. Prevailing Eastern Time. 6. No Prejudice Regarding Claim Objections Notwithstanding the fact that the MAEC Debtors have scheduled a claim as liquidated and undisputed, the Debtors will not be precluded from objecting to any claim, whether scheduled or not. If the creditors fail to timely or properly file a proof of claim in accordance with the Bar Date Order, this should be grounds for disallowance of the claim, render the creditor ineligible for distributions under any confirmed Chapter 11 plan of reorganization and render the claimant bound by the terms of any confirmed plan of reorganization. The Debtors intend to mail notices of the Bar Date to interested parties by January 12, 2004 to: * all known creditors reflected in the Schedules; * all parties that have requested special notice in these cases; and * all other parties-in-interest as required by Rules 2002(i), (j), and (k) of the Federal Rules of Bankruptcy Procedure. Mr. Peck reports that, with the assistance of AlixPartners LLC, the Debtors are preparing the Schedules of Assets and Liabilities, Statements of Financial Affairs, and Schedules of Executory Contracts and Unexpired Leases for the MAEC Debtors. The Debtors anticipate filing the Schedules on or before January 13, 2004. The Schedules will include a substantially complete and accurate list of all of the MAEC Debtors' potential creditors and interest holders, as well as an accurate estimate of the magnitude of claims against the MAEC Debtors' estates. According to Mr. Peck, the Bar Date provides a deadline to identify any possible unknown claim against the MAEC Debtors' estates and to give parties additional certainty regarding the magnitude of claims against the MAEC Debtors' estates. Mr. Peck contends that the proposed Bar Dates are reasonable because it gives creditors ample time to determine whether to file claims against the MAEC Debtors' estates. (Mirant Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) NANOPIERCE TECH.: Ability to Meet Liquidity Needs Uncertain ----------------------------------------------------------- NanoPierce Technologies Inc.'s financial statements for the three months ended September 30, 2003 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $454,864 for the three months ended September 30, 2003, and an accumulated deficit of $21,528,484 as of September 30, 2003. The Company has not recognized any significant revenues from its PI technology, and the Company expects to use cash in operations during the next year. In addition, a letter of intent with Meshed Systems, GmbH, in which Meshed Systems was to make a 100,000 Euro investment in EPT for a 51% equity interest was cancelled in November 2003. The Company has also experienced difficulty and uncertainty in meeting its liquidity needs. These factors raise substantial doubt about the Company's ability to continue as a going concern. To address its current cash flow concerns, the Company issued 769,231 shares of common stock in exchange for $100,000 cash during the three months ended September 30, 2003. The Company is in discussions with investment bankers and financial institutions attempting to raise additional funds to support current and future operations. This includes attempting to raise additional working capital through the sale of additional capital stock or through the issuance of debt. Currently, the Company does not have a revolving loan agreement with any financial institution, nor can the Company provide any assurance it will be able to enter into any such agreement in the future, or be able to raise funds through a further issuance of debt or equity in the Company. The Company is engaged in the design, development and licensing of products using its intellectual property, the PI Technology. The PI Technology consists of patents, pending patent applications, patent applications in preparation, trade secrets, trade names, and trademarks. The PI Technology improves electrical, thermal and mechanical characteristics of electronic products. The Company has designated and is commercializing its PI Technology as the NanoPierce Connection System (NCS(TM)) and has begun to market the PI Technology to companies in various industries for a wide range of applications. NATIONAL CENTURY: Keeps Solicitation Exclusivity Until Feb. 17 -------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates obtained the Court's approval extending the period during which they have the exclusive right to solicit acceptances of their joint plan of liquidation through and including February 17, 2004. (National Century Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL STEEL: Secures Clearance for EPA Settlement Agreement -------------------------------------------------------------- The Environmental Protection Agency filed numerous proofs of claim against the National Steel Debtors, asserting claims under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. for unreimbursed environmental response costs incurred by the United States at two sites owned and operated by the Debtors. The EPA also filed Proofs of Claim pursuant to the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Emergency Planning and Community Right- to-Know Act, 42 U.S.C. Section 11001, and the CERCLA for at least $27,500 per day for civil penalties. The Debtors dispute the amount of the EPA Claims. To expeditiously and efficiently resolve the EPA Claims, the Debtors sought and obtained the Court's authority to enter into negotiations with the EPA, which resulted in a settlement agreement. Pursuant to the Settlement Agreement, the Debtors agree that the EPA will be allowed these general unsecured claims: (a) a general unsecured claim for $115,565 for the response costs at the Abby Street/Hickory Woods Subdivision Site located in Buffalo, New York; (b) a general unsecured claim for $5,200 for the response costs at the Rasmussen Dump Site located in Green Oak Township, Michigan; and (c) a general unsecured claim for $2,100,000 for civil penalties. In consideration for the Allowed Claims, the EPA covenants not to bring civil or administrative action against the Debtors pursuant to Sections 106 and 107 of CERCLA and Section 7003 of RCRA. The Debtors ascertain that there is sufficient business justification for them to enter into the EPA Settlement Agreement. The Settlement Agreement avoids the uncertainty and costs associated with litigating the EPA Claims. (National Steel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEW YORK WATER: S&P Cuts Credit Rating to BB with Stable Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on water utility New York Water Service Corp., to 'BB' from 'BBB'. Standard & Poor's also lowered its senior secured rating at New York Water to 'BBB-' from 'BBB+'. All ratings were removed from CreditWatch, where they were placed on Nov. 7, 2003. The outlook is stable. As of June 30, 2003, the company had $16.6 million of debt outstanding. "These rating actions result from the weak financial performance of New York Water's unrated parent company, Utilities & Industries Management Corp., primarily due to losses at its newspaper business and the weak economy's effect on the company's spring manufacturing business," noted Standard & Poor's credit analyst Andrew Watt. New York Water's stand-alone financial profile is characterized by low debt leverage and good earnings protection measures. Total debt to total capital is about 43%. For the 12-months ended June 30, 2003, adjusted pretax income interest coverage was 3.9x, and ROE was almost 11%. For the fiscal-year ended March 31, 2003, the utility had net cash flow of $1.5 million, but no discretionary cash flow, due to capital expenditures. Adjusted funds from operations (FFO) interest coverage was 4.5x, and adjusted FFO to average total debt was about 28%. The stable outlook assumes consistent operating performance at the water utility and adherence to the requirement to maintain $8 million in treasury securities. The stable outlook also assumes steady financial performance on a consolidated basis. If credit- protection measures weaken because of adverse business conditions or because excess cash is distributed to the parent, the ratings could be lowered. PENN TREATY AMERICAN: Recommences Sales of Insurance in Kentucky ---------------------------------------------------------------- Penn Treaty American Corporation (NYSE: PTA) received approval to recommence sales of long-term care insurance in the state of Kentucky. Electronic rate books for its currently approved product line are now available for licensed agents. Printed rate books will be available for ordering on Wednesday December 31, 2003. Penn Treaty American Corporation (S&P, CCC- Counterparty Credit Rating, Stable), through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, United Insurance Group Agency, Inc., Network Insurance Senior Health Division and Senior Financial Consultants Company, is primarily engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long-term nursing home and home health care. PG&E: USGEN Asks Court to Clear Brayton Facility Upgrade Pact ------------------------------------------------------------- USGen New England, Inc. owns and operates a fossil-fueled power plan in Somerset, Massachusetts, known as the Brayton Point Facility. The Brayton Point Facility produces power through four separate boiler units. In May 2001, the Massachusetts Department of Environmental Protection promulgated new regulations requiring fossil-fueled power plants to further reduce air emissions. The regulation require, among other things, reductions in nitrogen oxide and sulfur dioxide emissions by October 1, 2006, pursuant to an Emissions Control Plan for each facility. Failure to implement the ECP could force USGen to cease operating the Brayton Point Facility as early as October 2004. On June 7, 2002, USGen received a Final Approval by the DEP of its ECP for the Brayton Point Facility. The Plan proposed the installation of two Selective Catalytic Reduction Systems to control nitrogen oxide and the Flue Gas Desulfurization System to control sulfur dioxide, all of which were to be installed by October 1, 2006. In 2003, USGen began to investigate the possibility of using lower sulfur coals as a less capital-intensive means of complying with the DEP Regulations in the near term, allowing deferral of the installation of the FGD System. By late September 2003, USGen successfully completed its testing of lower sulfur coals, and in October 2003, sought DEP approval to defer installation of the FGD System. On November 26, 2003, the DEP approved USGen's request to implement the ECP using a phased approach. The first phase will include installation of SCR Systems on two boiler units for nitrogen oxide reductions by October 1, 2006, and the use of a combination of lower sulfur coals and Early Reduction Credits -- reduction of sulfur dioxide emissions below its historical actual emissions, achieved between the effective date of the DEP Regularizations on May 11, 2001 and October 1, 2006 -- for sulfur dioxide compliance. The second phase will include installation of the FGD System with an expected in-service date of October 1, 2010. As the use of alternative fuels was included as an option in the ECP for the Brayton Point Facility, no amendments or revisions to the ECP were deemed necessary by the DEP. By this motion, USGen seeks the Court's authority to enter into a contract with Babcock Power Environmental Inc. for the design, engineering, procurement, construction and installation of material and equipment in connection with the ECP at the Brayton Point Facility. John Lucian, Esq., at Blank Rome LLP, in Baltimore, Maryland, explains that Babcock Power was determined to have best complied with the technical, legal and economic aspects of the detailed specifications of the ECP. In addition, Babcock Power is the leading supplier of selective catalytic reduction equipment in the United States. Its proposed equipment was technically superior, and its bid, over Babcock & Wilcox's and Wheelabrator Air Pollution Control's bids, contained the lowest firm price. Mr. Lucian informs the Court that the base contract price for the design, fabrication and installation of the two SCR Systems is $96,777,581, exclusive of insurance. The base contract price for design, fabrication and installation of the FGD System is $79,162,200, exclusive of insurance. Mr. Lucian maintains that USGen's imminent need focuses on the SCR Systems to reduce nitrogen oxide emissions. Based on the preliminary success with the testing of lower sulfur coal, USGen does not need to begin fabrication and installation of the FGD System immediately and is cautiously optimistic that the FGD System may be deferred for several years, if not longer. To maximize the preservation of estate resources, USGen intends only to proceed with the two SCR Systems and proceed with the FGD System in the future as circumstances may require. Mr. Lucian reminds the Court that the failure to perform the upgrades could jeopardize USGen's permit and licenses to operate the Brayton Point Facility and could result in a shutdown of operations. Babcock Power is guaranteeing completion of the ECP by the October 2006 compliance deadline or else Babcock Power will be obligated to pay a stipulated per diem payment to USGen. The guarantee is conditioned upon Court approval of the contract with Babcock Power by no later than January 6, 2004, so that Babcock Power may promptly begin work without jeopardizing critical path requirements. If USGen does not obtain Court approval by January 6, 2003, Babcock Power will not guarantee completion of the work by the October 1, 2006 compliance date and will increase the contract price substantially. Mr. Lucian assures the Court that the terms of the contract between USGen and Babcock Power represent the best economic terms available to USGen to accomplish the DEP requirement within the time constraints. In addition, Mr. Lucian represents that the proposal to implement only the SCR Systems at this time is in the best interest of creditors because it preserves the estate resources. The DEP Regulations contain provisions for future reductions in emissions of mercury and carbon dioxide, but the DEP has not yet issued final regulations with specific standards for those emissions categories. (PG&E National Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) PINNACLE ENTERTAINMENT: Repurchases Shares Held by Ex-Chairman -------------------------------------------------------------- Pinnacle Entertainment, Inc. (NYSE: PNK) said that on December 19, 2003 it settled the previously announced exercise to repurchase 1,758,996 shares of its common stock held by the Company's former chairman, R.D. Hubbard. The option exercise price was $10 per share. The shares repurchased from Mr. Hubbard represented approximately 6.8% of the Company's outstanding common stock. In addition, the Company announced that on December 23, 2003 it completed the repurchase of 249,990 shares of its common stock from the R.D. and Joan Dale Hubbard Foundation, also at a price of $10 per share. The Company entered into the stock purchase agreement with the Hubbard Foundation on December 22, 2003. Following these repurchases, approximately 23.9 million shares of the Company's common stock remain outstanding, compared to approximately 25.9 million at December 31, 2002. Pinnacle Entertainment owns and operates seven casinos (four with hotels) in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is also developing a major casino resort in Lake Charles, Louisiana. Pinnacle Entertainment (S&P, B Corporate Credit Rating, Stable) owns and operates seven casinos (four with hotels) in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is also developing a major casino resort in Lake Charles, Louisiana. RELIANT RESOURCES: Prepays $917M of Debt; Cancels $300M Facility ---------------------------------------------------------------- Reliant Resources, Inc., (NYSE: RRI) prepaid a total of $917 million of debt, cancelled a $300 million senior priority credit facility, which has never been used, and obtained an amendment to its bank credit facilities that will give the company greater flexibility to purchase selected generating assets to support its retail business in Texas. "The amendment we have obtained is consistent with our recent announcement that we are unlikely to exercise our option to purchase CenterPoint Energy Inc.'s 81 percent interest in Texas Genco, Inc.," said Joel V. Staff, chairman and chief executive officer. "We have modified our bank credit facilities in a way that will allow us, when opportunities arise in the future, to purchase individual generating assets to serve our Texas retail customers. The early pay down of our bank debt and the cancellation of our $300 million senior priority credit facility are very tangible signs of the progress we have made in beginning to rebuild the financial strength of the company." Reliant has prepaid approximately $917 million of debt with funds from an escrow account that had been established, under terms of its bank credit facilities, for the possible purchase of CenterPoint's stake in Texas Genco. Approximately $784 million was used for the permanent prepayment of the company's bank term loans, and $133 million was used to pay down its revolving credit facility, which can be re-borrowed over time. As aggregate term loan prepayments in 2003 now exceed $2 billion, the company has fully satisfied all "soft amortization" targets contained in its bank credit facility, avoiding the associated fees and warrants. Reliant has no further amortization requirements under these credit facilities until their maturity in 2007. In addition to the bank debt prepayments, Reliant cancelled its $300 million senior priority credit facility that would have matured in December 2004 in order to eliminate the associated costs. Since obtaining the facility in March 2003, the company has made changes to its business operations to reduce liquidity needs, and it has never used the facility. Under the amendment to its bank credit facilities, Reliant has gained the ability to purchase up to $1 billion of individual generating assets from Texas Genco and others to support its Texas retail business and to raise debt to finance any such asset acquisitions. It retains the right to purchase the stock of Texas Genco either through the option mechanism in January 2004 or outside the option mechanism by September 2004. Reliant Resources, Inc., based in Houston, Texas, provides electricity and energy services to retail and wholesale customers in the U.S., marketing those services under the Reliant Energy brand name. The company provides a complete suite of energy products and services to more than 1.7 million electricity customers in Texas ranging from residences and small businesses to large commercial, industrial and institutional customers. Reliant also serves large commercial and industrial clients in the PJM (Pennsylvania, New Jersey, Maryland) Interconnection. The company has approximately 20,000 megawatts of power generation capacity in operation, under construction or under contract in the U.S. 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-' RENT-WAY INC: Commences Exchange Offer for 11-7/8% Senior Notes --------------------------------------------------------------- Rent-Way, Inc. (NYSE: RWY) commenced an exchange offer for its 11-7/8% Senior Secured Notes due 2010. Pursuant to the exchange offer, $205 million of Rent-Way's 11-7/8% Senior Secured Notes due 2010, which have been registered under the Securities Act of 1933, as amended, are being offered for exchange for $205 million of its outstanding 11-7/8% Senior Secured Notes due 2010, which were issued on June 2, 2003 in a transaction exempt from registration. The exchange offer will expire at 5:00 p.m., New York City time, on January 29, 2004. The newly issued notes have substantially identical terms to the previously outstanding notes, except that the new notes have been registered under the Securities Act of 1933 and will not be subject to restrictions on transfer. The exchange offer was made to satisfy Rent-Way's obligations under a registration rights agreement entered into with the initial purchaser of the outstanding notes at the time such notes were originally issued. Manufacturers and Traders Trust Company will act as exchange agent for the exchange offer. Rent-Way has filed a registration statement, including a prospectus and other related documents, on Form S-4 with the United States Securities and Exchange Commission in connection with this exchange offer. The terms of the newly issued notes are set forth in the prospectus. Rent-Way (S&P, B+ Corporate Credit Rating, Stable) is one of the nation's largest operators of rental-purchase stores. Rent-Way rents quality name brand merchandise such as home entertainment equipment, computers, furniture and appliances from 753 stores in 33 states. ROBOTIC VISION: Opens Acuity CiMatrix Sales Office in Shanghai -------------------------------------------------------------- Robotic Vision Systems, Inc. (RVSI) (RVSI.PK) announced that its Acuity CiMatrix division has opened a sales office in Shanghai, People's Republic of China, and has appointed Andrew Lee as Managing Director, Asia. This move strengthens RVSI's presence in the Asia-Pacific region, where the division also operates a sales office in Singapore. "With its numerous manufacturing operations, the Asia-Pacific market offers many opportunities for RVSI's direct part marking, traceability, and machine vision solutions," said Ray England, RVSI's Vice President of Worldwide Sales and Marketing. "By opening the Shanghai office and assigning Andrew Lee to oversee a growing network of distributors in the region, RVSI is seeking to aggressively expand its market share in Asia. We welcome Andrew to his new role and look forward to his success." "I am accepting this assignment for RVSI, and I welcome the opportunity to strengthen and extend the company's distribution network in the region," Mr. Lee said. "RVSI's solutions are already deployed by large manufacturers in the area, and I look forward to building upon this success." RVSI's new office in Shanghai is located at Ln. 1038, No. 171 Huashan Road, Suite 1202, Shanghai, PRC (Tel: +86 138-1766-4478). As further evidence of RVSI's growing strength in the Asia-Pacific market, RVSI Acuity CiMatrix also announced its selection as preferred vendor for a significant international traceability program being implemented in the Philippines by a European-based automotive electronics manufacturer. The manufacturer, an internationally recognized supplier of advanced technology automotive electronics, has a product line that includes electronic steering systems, airbag control units, and roll-over sensors. These devices carry lengthy service warranties and require extensive retention of manufacturing and repair records. The Data Matrix (a two-dimensional barcode symbol) etched onto each part provides unit-level traceability of the part across its full service life. Acuity CiMatrix is supplying HawkEye 1500-series smart cameras that will be used to read Data Matrix marks etched on components manufactured and assembled in the manufacturer's facilities. The HawkEye 1500-series readers provide easy setup, line changeover, and maintenance while delivering consistently high read- and up- times. The program has thus far resulted in Data Matrix reader orders from facilities in the Philippines. "This is an important contract with long-term potential for RVSI," said Mr. England. "The customer is implementing a global traceability project built around Data Matrix marks etched directly on printed circuit boards. They found that their existing supplier's systems could not read these marks with any consistency, and so they set out to find a vendor that could. After extensive, head-to-head testing that included the latest generation of Data Matrix reading system from its incumbent supplier, the customer chose RVSI and placed orders for more than 100 of our HawkEye 1500-series direct part mark readers. "The same specification that resulted in our selection as vendor of choice is being implemented by the customer's key subcontractors, which gives us opportunities to replicate this success at their facilities in Europe and Asia," Mr. England said. Robotic Vision Systems, Inc. (NasdaqSC: ROBVE) -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $13 million -- has the most comprehensive line of machine vision systems available today. Headquartered in Nashua, New Hampshire, with offices worldwide, RVSI is the world leader in vision-based semiconductor inspection and Data Matrix-based unit- level traceability. Using leading-edge technology, RVSI joins vision-enabled process equipment, high- performance optics, lighting, and advanced hardware and software to assure product quality, identify and track parts, control manufacturing processes, and ultimately enhance profits for companies worldwide. Serving the semiconductor, electronics, aerospace, automotive, pharmaceutical and packaging industries, RVSI holds approximately 100 patents in a broad range of technologies. For more information visit http://www.rvsi.com/ RURAL CELLULAR: Commences Trading on Nasdaq National Market ----------------------------------------------------------- Rural Cellular Corporation (RCCC) has been approved for listing on The Nasdaq National Market. Rural Cellular Corporation announced that its Class A Common Stock has been approved for listing on The Nasdaq National Market. The move from the Over-The-Counter Bulletin Board to The Nasdaq National Market became effective at the opening of regular trading on Tuesday, December 30, 2003. Rural Cellular Corporation's Class A Common Stock will continue to trade under the symbol RCCC. Richard P. Ekstrand, President and Chief Executive Officer, commented: "This step toward bringing greater visibility and trading advantages to our equity holders reflects the confidence we maintain regarding the strength of our business." Rural Cellular Corporation, based in Alexandria, Minnesota, provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 14 states. For additional information on the Company and its operations, visit its Web site at http://www.rccwireless.com/ At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $528 million. SCIENTIFIC GAMES: Will Close Clifton, New Jersey Office ------------------------------------------------------- Scientific Games Corporation (Nasdaq: SGMS) will close its Clifton, New Jersey office. The company anticipates savings of at least $5.0 million annually from the closing, which is expected to be completed by June 2004. Lorne Weil, chairman and CEO of Scientific Games, said, "Although it is never easy to make these decisions, it is vital that we bring all of our on-line lottery systems people together under one roof. When we acquired IGT OnLine Entertainment Systems in November, Scientific Games gained some exceptional talent. We spoke repeatedly about the terrific synergies available to us and the opportunities for growth that the acquisition would deliver but we must make this move to take full advantage of them. By integrating game development, field operations, and customer service we will maximize our effectiveness in the on-line market." Scientific Games Corporation (S&P, BB- Corporate Credit Rating, Stable Outlook) is the leading integrated supplier of instant tickets, systems and services to lotteries, and the leading supplier of wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut and the Netherlands and is a leading supplier of prepaid phone cards to telephone companies. Scientific Games' customers are in the United States and more than 60 other countries. For more information about Scientific Games, please visit its Web site at http://www.scientificgames.com/ SEA CONTAINERS: Rail Unit Gets OK to Bid for Kent Rail Franchise ---------------------------------------------------------------- Sea Containers Ltd., (NYSE: SCRA and SCRB) -- http://www.seacontainers.com/-- passenger and freight transportation operator, marine container lessor and leisure industry investor, announced that its United Kingdom rail subsidiary, GNER Holdings Ltd., had been given the green light by Britain's Strategic Rail Authority, to bid for the new Integrated Kent Rail Franchise which will provide services between London and southeast England from 2005. Three other companies have also pre-qualified to bid. Bids will be submitted in 2004 with a view to the new franchisee taking over in 2005. The Integrated Kent Franchise differs from GNER's existing franchise in that it is primarily a commuter service while GNER's franchise is primarily long distance. However, GNER believes the main problems today on the routes of the Integrated Kent Franchise are poor quality service, stations and punctuality. GNER has demonstrated it has the ability to provide service and travel conditions of the highest quality and it intends to apply this expertise to a transformation of existing conditions on the Integrated Kent Franchise routes. The new franchise will serve the inner London terminals of Victoria, Charing Cross, Blackfriars, Cannon Street, Waterloo East and London Bridge and connect them with Hastings, Ashford, Folkestone, Dover and Ramsgate. It is expected the franchise will include new train services using the high speed Channel Tunnel Rail Link between Folkestone and St. Pancras station in London. In revenue terms this new franchise should generate in excess of GBP375 million ($650 million) per annum. The term of the new franchise is expected to be at least 7 years. As a separate matter, GNER and Network Rail have signed an agreement settling GNER's claims for loss of revenue and other costs arising out of the Hatfield rail disaster in October, 2000. The agreement provides that GNER will refund GBP4.5 million ($7.9 million) of track access charges over-withheld from Network Rail. The agreement does not have any adverse earnings impact on GNER. GNER has also agreed to cap any continuing claims against Network Rail resulting from Hatfield at the level of normal performance penalties payable under GNER's track access agreement. As previously reported, Standard & Poor's Ratings Services revised its outlook on Sea Containers Ltd. to stable from negative, citing the company's improving earnings and diminished near-term refinancing risk. At the same time, Standard & Poor's ratings on Sea Containers, including the 'BB-' corporate credit rating, were affirmed. SELECT MEDICAL CORP: Opens Second Hospital in Wichita, Kansas ------------------------------------------------------------- Select Medical Corporation (NYSE: SEM) opened a new long-term acute care hospital located in Wichita, Kansas. Select Specialty Hospital - Wichita (Central Campus) is a 35-bed hospital located within Via Christie Regional Medical Center. Select Specialty Hospital - Wichita will treat patients with serious and often complex medical conditions such as respiratory failure, neuromuscular disorders, cardiac disorders, non-healing wounds, renal disorders and cancer. Robert A. Ortenzio, Select Medical's President and Chief Executive Officer, commented, "We are pleased to open our fourth hospital in Kansas and to expand our specialty acute care services in Wichita." Select Medical Corporation (S&P, BB- Corporate Credit Rating, Stable) is a leading operator of specialty hospitals in the United States. Select operates 77 long-term acute care hospitals in 24 states. Select operates four acute medical rehabilitation hospitals in New Jersey. Select is also a leading operator of outpatient rehabilitation clinics in the United States and Canada. Select operates approximately 829 outpatient rehabilitation clinics in the United States and Canada. Select also provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and worksites. Information about Select is available at http://www.selectmedicalcorp.com/ SENIOR HOUSING: Closes $86-Mill. Purchase and Lease Transactions ---------------------------------------------------------------- Senior Housing Properties Trust (NYSE: SNH) closed an $86.6 million purchase and lease transaction with NewSeasons Assisted Living Communities, Inc. NewSeasons owns and operates assisted living communities in Pennsylvania and New Jersey. In the transaction which closed today, SNH purchased 10 of these communities with resident capacity of 1,019 for $86.6 million. Simultaneously, NewSeasons leased these communities from SNH for an initial term ending in 2017, plus tenant renewal option terms thereafter for a total of 30 years. The rent payable to SNH will average approximately $9.3 million/year during the initial lease term; although it will commence at a lower rate of approximately $8 million/year and then increase at agreed times during the lease term. NewSeasons is a subsidiary of Independence Blue Cross, or IBC. IBC is a large regional health insurance company based in Philadelphia, Pennsylvania serving approximately 2.9 million lives in the southeastern Pennsylvania marketplace. IBC has annual revenues of approximately $8.5 billion. IBC has guaranteed NewSeasons' financial obligations to SNH. Six of the 10 communities which SNH has purchased are located in Pennsylvania and four are located in New Jersey. The occupancy of these communities at present is approximately 81%. One hundred percent of the revenues at these communities are paid by residents from their private resources. SNH purchased the 10 communities free and clear of all mortgage debts. SNH funded this purchase by drawings under its revolving bank credit facility. In addition to the transaction which closed Monday, SNH, NewSeasons and IBC have entered an agreement for the possible expansion of their business relationships by adding up to four assisted living communities with resident capacity for 540. These four communities are currently encumbered by mortgage debts. SNH will purchase these communities if and when these mortgage debts are prepaid or assumed on terms mutually acceptable to SNH, NewSeasons, IBC and the lenders, respectively. If all four of these communities are purchased, SNH's purchase price will be $28.4 million, the communities will be added to the lease for the 10 properties and the rent payable will be increased pro rata to the purchase price paid. Senior Housing Properties Trust (S&P, BB- Corporate Credit Rating, Stable Outlook) is a real estate investment trust, or REIT, which invests in senior housing properties, including apartment buildings for aged residents, independent living properties, assisted living facilities and nursing homes. SHARK INDUSTRIES: Turns to Steven Nosek for Bankruptcy Advice ------------------------------------------------------------- Shark Industries, Ltd., asks for authority from the U.S. Bankruptcy Court for the District of Minnesota to appoint Steven B. Nosek, Esq., as its Counsel in these Chapter 11 cases. The Debtor discloses that it lacks the necessary skills and knowledge to formulate a Plan of Reorganization, nor does it wish to proceed pro se during the pending bankruptcy proceedings without securing the advice of and representation by competent legal counsel. The Debtor selected Mr. Nosek because of his knowledge of the company's financial affairs and business operations and because of his proven competency in the field of bankruptcy. As Counsel, Mr. Nosek's services will include: * pre-petition planning and analysis of the Debtor's financial situation, * planned use of cash collateral, post-petition financing, and the rendering of advice and assistance to determine if Debtor should file a Petition for Relief under Title 11 of the United States Code, * preparation and filing of a Petition for Relief, Statement of Financial Affairs, and other documents required by the Court, * representation of the Debtor at expected adversary proceedings, * meeting of creditors and formulation of a Plan of Reorganization of the Debtor's business. The Debtors ask for permission to pay Mr. Nosek his fees and costs under paydown provisions which would allow the Counsel to issue monthly statements to the Debtor and the U.S. Trustee and receive payment for 80% of attorney's fees and 100% of incurred costs, all prior to obtaining approval of the Court. Mr. Nosek will make interim applications and one final application for compensation. Holdbacks will be paid only after the Court approves a formal fee application. The Debtor believes that Mr. Nosek is disinterested within the meaning of Section 327 of the U.S. Bankruptcy Code. Shark Industries Ltd. business is the sale of automotive after market products. The Debtor filed for Chapter 11 relif on November 14, 2003, (Bankr. Minn. Case No. 03-37759). Steven B. Nosek, Esq., represents the Debtor in its restructuring efforts. When the debtor filed for protection from its creditors, it listed total assets of $4,418,000 and total debts of $4,564,000. SOLUTIA INC: Court Okays Trumbull's Appointment as Claims Agent --------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates believe that their Chapter 11 cases will involve thousands of creditors and other parties-in-interest to whom certain notices, including the notice of the commencement of these cases and the initial meeting of the Debtors' creditors, must be sent. This large number of creditors and parties-in-interest may impose administrative and other burdens upon the Clerk of the Court during these cases. Thus, to relieve the Court and the Clerk of the Court of these burdens, the Debtors sought and obtained permission to employ The Trumbull Group, LLC and Trumbull Services, LLC as the official claims and noticing agent in their Chapter 11 cases. Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, in New York, informs the Court that Trumbull is a data processing firm that specializes in claims processing, noticing and other administrative tasks in Chapter 11 cases. The Debtors seek to engage Trumbull, which is on the list of claims agents approved by the Clerk of the Court, to transmit certain designated notices, maintain claims files and a claims register, assist the Debtors with preparation of creditor lists and schedules and statements of financial affairs, and assist with administrative functions relating to each of these matters. The Debtors believe that Trumbull is well qualified to provide these services. Mr. Reilly notes that Trumbull has performed identical or substantially similar services in several large Chapter 11 cases, The Debtors propose to engage Trumbull pursuant to the terms and conditions set forth in an agreement dated October 27, 2003. Consistent with the Retention Agreement, the Debtors anticipate that Trumbull will perform these services as the Claims and Noticing Agent: (A) Prepare and serve required notices in these Chapter 11 cases, including: * notice of the commencement of these Chapter 11 cases and the initial meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code; * notice of any claims bar date; * notice of any objections to claims; * notice of any hearings on a disclosure statement and confirmation of a reorganization plan, together with related objection deadlines; and * any other notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these Chapter 11 cases; (B) File with the Court a certificate or affidavit of service with respect to any notice, within five business days of serving the notice, that includes: -- a copy of the notice served; -- an alphabetical list of persons upon whom the notice was served; and -- the date and manner of service; (C) Maintain a list of the Debtors' creditors; (D) Maintain copies of all proofs of claim and proofs of interest filed in these cases until the cases are closed; (E) Maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes these information for each claim or interest asserted: * the name and address of the claimant or interest holder and any agent, if the proof of claim or proof of interest was filed by an agent; * the date the proof of claim or proof of interest was received by the Court; * the claim number assigned to the proof of claim or proof of interest; * the asserted amount and classification of the claim; and * the name of the Debtor against which the claim or interest is asserted; (F) Implement necessary security measures to ensure the completeness and integrity of the claims registers; (G) Transmit to the Clerk of the Court a copy of the claims registers on a weekly basis, unless requested by the Clerk of the Court on a more or less frequent basis; (H) Maintain an up-to-date mailing list for all entities that have filed proofs of claim or interest in these cases and make the list available upon request to the Clerk of the Court or, at the expense of the requesting party, to any party-in-interest; (I) Provide access to the public during regular business hours, without charge, for examining copies of the proofs of claim or interest filed in these cases; (J) Record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of these transfers to the extent required by this Bankruptcy Rule; (K) Provide temporary employees to process claims, as necessary; (L) Assist the Debtors with the solicitation and tabulation of votes in connection with any reorganization plan; (M) Comply promptly with further conditions and requirements as the Clerk of the Court or the Court may at any time prescribe; (N) Provide other claims processing, noticing, consulting and related administrative services as may be requested from time to time by the Debtors; and (O) Assist the Debtors with, among other things, the preparation of their schedules of assets and liabilities, statements of financial affairs and master creditor lists and any amendments, and the reconciliation and resolution of claims and other related services and technical support in connection with all these matters. The Debtors propose to pay Trumbull for its services from the assets of their estates. The compensation and fees to be provided to Trumbull are set forth in a Retention Agreement and are subject to adjustment by Trumbull on the first year anniversary of the Retention Agreement and every twelve months after, provided that Trumbull grants the Debtors 60 days notice of any increase in compensation or fees. The Debtors believe that the compensation and fees sought by Trumbull are fair and reasonable. Before the Petition Date, the Debtors paid Trumbull a $10,000 retainer in accordance with the Retention Agreement. The Retention Agreement contemplates that invoices will be paid upon submission from the retainer, which will then be replenished by the Debtors within 30 days of receiving the invoices. At the conclusion of Trumbull's engagement, the retainer will be applied to pay Trumbull's outstanding invoices or, if there are no invoices outstanding, will be returned to the Debtors. The Debtors propose to pay, in the ordinary course of business, Trumbull's fees and expenses for services under the Retention Agreement upon the submission of monthly invoices summarizing, in reasonable detail, the services for which compensation is sought. Trumbull will maintain detailed records of any actual and necessary costs and expenses incurred in connection with the services performed under the Retention Agreement. Trumbull will also submit to the United States Trustee, on a monthly basis, copies of the invoices submitted to the Debtors. Because Trumbull would be an administrative agent and adjunct to the Court, the Debtors do not believe that Trumbull is a "professional" whose retention is subject to approval under Sections 327 and 328 of the Bankruptcy Code or whose compensation is subject to the Court's approval under Sections 330 and 331. Nevertheless, Trumbull complies with the standards for employing or retaining these professionals. Lorenzo Mendizabal, Trumbull's President, assures the Court that: -- neither Trumbull nor any of its employees holds or represents any interest adverse to the Debtors' estates or creditors; -- Trumbull is a "disinterested person" pursuant to Sections 101(14) and 1107(b) of the Bankruptcy Code. (Solutia Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHWALL TECH.: Appoints George Boyadjieff as New Chairman ----------------------------------------------------------- Southwall Technologies Inc. (Nasdaq:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the electronic display, automotive glass and architectural markets, announced that on Dec. 19, 2003, the Southwall board of directors appointed George Boyadjieff as its new chairman. The appointment was a condition of the recently announced bank guarantee and equity financing package led by Needham & Company, Inc. Boyadjieff succeeds Joseph P. Reagan, who will continue as a Southwall director. As the chairman emeritus and recently retired chief executive officer of Varco International, Inc. (NYSE:VRC), Boyadjieff led the diversified oilfield equipment manufacturer and service provider to over $1.3 billion in fiscal 2002 revenues. After joining Varco in 1969, he served as CEO from 1991 through 2002 and chairman of the board from 1998 to 2003. "I'm very pleased to have the opportunity to help guide Southwall in restructuring the business," said Boyadjieff. "We have a solid management team in place and exciting potential growth opportunities in front of us, particularly in the flat panel display market." "George brings a wealth of business experience and knowledge to Southwall," commented Thomas G. Hood, president and chief executive officer. "We are fortunate to have someone with George's background on board and are looking forward to his contributions as our business gains momentum during 2004." Southwall Technologies Inc., designs and produces thin film coatings that selectively absorb, reflect or transmit light. Southwall products are used in a number of automotive, electronic display and architectural glass products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall is an ISO 9001:2000-certified manufacturer and exports advanced thin film coatings to over 25 countries around the world. Southwall's customers include Audi, BMW, DaimlerChrysler, Hewlett-Packard, Mitsubishi Electric, Mitsui Chemicals, Peugeot-Citroen, Pilkington, Renault, Saint-Gobain SEKURIT, and Volvo. * * * Liquidity and Going Concern Uncertainty In its most recent Form 10-Q filed with the Securities and Exchange Commission, Southwall Technologies reported: Liquidity: "Our cash and cash equivalents increased by $0.4 million from $2.0 million at December 31, 2002, to $2.4 million at June 29, 2003. Cash provided by operating activities for the first six months of 2003 increased by $1.7 million, from $0.07 million provided during the first six months of 2002, to $1.8 million provided during the first six months of 2003. The increase in cash provided by operating activities was primarily the result of a decrease in accounts receivable and inventory, and partially offset by a reduction in accounts payable and accrued liabilities. The cash used in investing activities decreased by $0.3 million, from $2.6 million during the first six months of 2002, to $2.4 million during the first six months of 2003. The decrease in cash used in investing activities was primarily the result of lower capital expenditures and a reduction in restricted cash. Cash generated from financing activities decreased by $0.5 million, from $1.6 million during the first six months of 2002, to $1.1 million during the first six months of 2003. The decrease was primarily attributable to significantly less cash received through the exercise of employee stock options, partially offset by additional borrowings from our lines of credit during the first six months of 2003. "We entered into an agreement with the Saxony government in May 1999 under which we receive investment grants. Since 1999 through June 29, 2003, we had received $6.4 million cumulatively of the grants and accounted for these grants by applying the proceeds received to reduce the cost of our fixed assets of our Dresden manufacturing facility. If we fail to meet certain requirements in connection with these grants, the Saxony government has the right to demand repayment of the grants (see Note 6 - Government Grants and Investment Allowances, in the notes to condensed consolidated financial statements included herewith). Since 1999 through June 29, 2003, we had also received $5.7 million in investment allowances, which are reimbursements for capital expenditures, from the Saxony government and those proceeds were also applied to reduce the cost of our fixed assets of our Dresden manufacturing facility. We expect to receive approximately $1.0 million in investment allowances in the second half of 2003, based on investments made during 2002. The funds received have been applied to reduce the cost of our fixed assets of our Dresden manufacturing facility. Additionally, we have received $0.5 million of Saxony government grants that as of June 29, 2003 were recorded as an advance until we earn the grant through future expenditures. The total annual amount of investment grants and investment allowances that we are entitled to seek varies from year to year based upon the amount of our capital expenditures that meet certain requirements of the Saxony government. Generally, we are not eligible to seek total investment grants and allowances for any year in excess of 33% of our eligible capital expenditures for that year. We expect to continue to finance a portion of our capital expenditures in Dresden with additional grants from the Saxony government and additional loans from German banks, some of which may be guaranteed by the Saxony government. However, we cannot guarantee that we will be eligible for or will receive additional grants in the future from the Saxony government. Under the terms of our grant agreement with the Saxony government, we are required to meet investment and hiring targets by June 30, 2006. If we fail to meet those targets, the Saxony government is permitted to require us to repay all grants and investment allowances previously received by us from the Saxony government. Borrowing arrangements: "On May 16, 2003, the Company entered into a $10.0 million receivable financing line of credit agreements with a financial institution that expires on May 16, 2004, subject to automatic one- year renewals unless terminated at any time by either party. The line of credit bears an annual interest rate of 7% above the financial institution's Base Rate (which was 4% at June 29, 2003), and is calculated based on the average daily accounts receivable against which the Company has borrowed. Half of the $10.0 million line of credit is represented by a $5.0 million credit line, guaranteed by the United States Export-Import Bank. Availability under the EXIM line is limited to 90% of eligible foreign receivables acceptable to the lender. The remaining $5.0 million portion of the $10.0 million credit line is supported by domestic receivables. Availability under the domestic line of credit is limited to 70% of eligible domestic receivable acceptable to the lender. The financial institution reserves the right to lower the 70% and 90% of eligible receivable standards for borrowings under the credit agreements. In connection with the line of credit, the Company granted to the bank a lien upon and security interest in, and right of set off with respect to all of the Company's right, title and interest in all personal property and other assets, but not certain of the Company Dresden assets and properties. The borrowing arrangements require the Company to maintain minimum net tangible net worth of $33.0 million, current ratio of at least 0.70, and revenues equal to or greater than 80% of revenues projected. As part of the agreements, the Company incurred and paid a one-time commitment fee of $0.1 million in the second quarter of 2003, which will be amortized over the life of the agreements. As of June 29, 2003, the Company had approximately $3.0 million of borrowings outstanding and $1.8 million of availability under the line of credit. The Company was in compliance with all financial covenants as of June 29, 2003. "At December 31, 2001 and 2002, we were not in compliance with certain of the covenants of the guarantee by Teijin of the Japanese bank loan. Teijin and the Japanese bank waived the defaults under Teijin's guarantee of the loan that may exist for any measurement period through and including September 30, 2003 arising out of our failure to comply with the minimum quick ratio, tangible net worth and maximum debt/tangible net worth covenants. The waiver was conditioned on our agreement to prepay $2.5 million of the debt out of the proceeds of our follow-on public offering, which prepayment of $2.5 million along with a scheduled principal payment of $1.25 million was made on November 6, 2002. On May 6, 2003, we made a scheduled payment of $1.25 million. Under the terms of the loan agreement, the remaining balance of $1.25 million outstanding under this loan at June 29, 2003 is due on November 6, 2003. Accordingly, we have classified it as current. "Our borrowing arrangements with various German banks as of June 29, 2003 are described in Note 5 - Term Debt in the condensed consolidated financial statements. We are in compliance with all of the covenants of the German bank loans, and we have classified $9.5 million outstanding under the German bank loans as a long- term liability at June 29, 2003. "We are in default under a master sale-leaseback agreement with respect to two of our production machines. We have withheld lease payments in connection with a dispute with the leasing company. An agent purporting to act on behalf of the leasing company has recently filed suit against us to recover the unpaid lease payments and the alleged residual value of the machines, totaling $6.5 million in the aggregate. The leasing company holds a security interest in the production machines and may be able to repossess them. As a result, we have classified all $3.3 million outstanding under those agreements as short-term capital lease liabilities as of June 29, 2003. Capital expenditures: "We anticipate spending approximately $4.0 million in capital expenditures in 2003, approximately $1.2 million of which will consist of progress payments for a production machine (PM 10) in Dresden, approximately $1.5 million of which will be used to install a new enterprise resource planning system, and approximately $1.3 million of which will be used to maintain and upgrade our production facilities in Palo Alto and Tempe. For the first six months of 2003, we incurred $2.2 million in capital expenditures, compared to $3.2 million in capital expenditures for the same period in 2002. Financing needs: "We have prepared our consolidated financial statements assuming we will continue as a going concern and meet our obligations as they become due. We incurred a net loss in the first six months of 2003, and expect to incur net losses through the remainder of 2003. These factors together with our working capital position and our significant debt service and other contractual obligations at June 29, 2003 raise substantial doubt about our ability to continue as a going concern. We will continue to look for additional financing to fund our operations. However, we cannot provide any assurance that alternative sources of financing will be available at all or on terms acceptable to us. If we are unable to obtain additional financing sources, we may be unable to satisfactorily meet all our cash commitments required to fully implement our business plans. "In December 2002, we restructured our operations to reduce our cost structure by reducing our work force in Palo Alto and vacating excess facilities after consolidating our operations in Palo Alto. These actions are expected to help improve our operating results in 2003 but will continue to impact our operating cash flows until our lease commitments for the excess facilities expire in December 2004." SPEIZMAN IND.: SouthTrust Bank Agrees to Forbear Until March 31 --------------------------------------------------------------- Speizman Industries, Inc. (OTC Bulletin Board: SPZN) reported that, effective December 31, 2003, it entered into a Seventh Amendment and Forbearance Agreement relating to its credit facility with SouthTrust Bank, extending the maturity date until March 31, 2004. The credit facility as amended provides a revolving credit facility up to $8.0 million and an additional line of credit for issuance of documentary letters of credit up to $4.5 million. The availability under the combined facility is limited to a borrowing base as defined by the bank. The Company, as of December 27, 2003, had borrowings with SouthTrust Bank of $7.2 million under the revolving credit facility and had unused availability under both lines of $1.4 million. Speizman Industries is a leader in the sale and distribution of specialized industrial machinery, parts and equipment. The Company acts as exclusive distributor in the United States, Canada, and Mexico for leading Italian manufacturers of textile equipment and is a leading distributor in the United States of industrial laundry equipment representing several United States manufacturers. For additional information on Speizman Industries, visit the Company's Web site at http://www.speizman.com/ As reported in Troubled Company Reporter's April 7, 2003 edition, Speizman Industries, effective March 31, 2003, entered into a Sixth Amendment and Forbearance Agreement relating to its credit facility with SouthTrust Bank, extending the maturity date until December 31, 2003. The credit facility as amended provides a revolving credit facility up to $10.0 million and an additional line of credit for issuance of documentary letters of credit up to $7.5 million. The availability under the combined facility is limited to a borrowing base as defined by the bank. The Company, as of March 31, 2003, had borrowings with SouthTrust Bank of $4.8 million under the revolving credit facility and had unused availability of $2.5 million. SPIEGEL: Court Approves BDO Seidman's Engagement as Accountants --------------------------------------------------------------- The Spiegel Group Debtors sought and obtained the Court's authority to employ BDO Seidman, LLP as their independent public accountants nunc pro tunc to December 1, 2003. BDO is a national professional services firm providing assurance, tax, financial advisory and consulting services to private and publicly traded businesses. For more than 90 years, BDO has provided quality service and leadership through the active involvement of its most experienced and committed professionals. BDO serves clients through more than 35 offices and 200 alliance firm locations nationwide. As a member firm of BDO International, BDO serves clients by leveraging a global distribution network of resources comprised of nearly 600 member firm offices in 100 countries. In March 2003, the Debtors entered into a consent and stipulation with the Securities and Exchange Commission resolving, in part, claims asserted in an action brought against the Debtors by the SEC. Under the Stipulation, the Debtors consented to the appointment of an independent examiner by the United States District Court for the Northern District of Illinois Eastern Division to review their financial records since January 1, 2000, and to provide a report to the Illinois District Court and other parties regarding their financial condition and financial accounting. On September 5, 2003, the independent examiner submitted a report to the Illinois District Court and other parties. The Independent Examiner's Report identified accounting issues and raised concerns about the audit work KPMG LLP performed. Due to the questions raised in the Independent Examiner's Report, the Debtors concluded that their interests would be best served by bringing in new auditors. Accordingly, on November 17, 2003, the Debtors terminated KPMG's engagement. BDO has stated its desire and willingness to act as the Debtors' independent public accountants and render the necessary professional services they require. Moreover, the Debtors believe that BDO is well qualified to serve as their independent public accountants. BDO will provide assurance, tax, financial advisory and consulting services typical of a national independent public accounting firm including: (a) Audit Auditing the Debtors' consolidated balance sheet as of December 31, 2003 and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ending in accordance with auditing standards generally accepted in the United States of America and expressing an opinion on the Debtors' financial statements based on that audit. (b) Reviews of Interim Financial Information Review of the unaudited condensed quarterly financial statements to be filed with the Securities and Exchange Commission for the quarters ended March 31, June 30, and September 30, 2003, and of the unaudited financial information for the quarter ending December 31, 2003 to be included in a note to the annual financial statements to be included in Form 10-K. (c) Other Services In addition, BDO will apply auditing procedures to financial statements for the years ended December 31, 2002 and 2001, as required and as requested by the Debtors. However, BDO can give no assurances that those procedures will result in a report from them regarding those earlier period financial statements. At the Debtors' request, BDO may also provide consulting services with respect to current business, operational, accounting, and auditing matters affecting them. James L. Garrity, Jr., Esq., at Shearman & Sterling, in New York, maintains that the functions to be performed by BDO will ensure the most economic and effective means for the Debtors to be represented in and during their Chapter 11 cases while continuing to operate their businesses. The Debtors will compensate BDO based on the time expended in rendering the professional services at billing rates commensurate with the experience and position of the professional performing the services and will be computed at the hourly billing rates customarily charged by BDO: Partners $400 - 600 Senior Managers 300 - 400 Managers 200 - 300 Seniors 140 - 225 Associates 85 - 160 The Debtors will also reimburse BDO for its reasonable out-of pocket expenses and internal charges for certain support activities. James J. Gerace, a partner at BDO, assures the Court that the firm does not hold or represent any interest adverse to any of the Debtors with respect to the matters on which it is to be employed. Mr. Gerace also attests that BDO has no relationship to the Debtors, any of the Debtors' significant creditors, certain other parties-in-interest in their Chapter 11 cases, or to the attorneys that are known to be assisting them in their Chapter 11 cases. BDO is a "disinterested person" as the term is defined is Section 101(14) of the Bankruptcy Code. As required by applicable law, the Debtors will not indemnify BDO from claims that arise from its work product. The BDO Engagement Letter, however, provides that the Debtors agree to indemnify BDO from any and all claims that may arise from any differences between the electronic version of the financial statements and audit report presented on the Debtors' web site, now and in the future, and the signed version of the financial statements and audit report provided to the audit committee and the Debtors' management by BDO. (Spiegel Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) STOLT OFFSHORE: Obtains Further Waiver Extension Until April 30 --------------------------------------------------------------- Stolt Offshore S.A. (Nasdaq: SOSA; Oslo Stock Exchange: STO) obtained an extension from December 15, 2003 until April 30, 2004 of the waiver of banking covenants. Stolt Offshore continues discussions with its lenders towards a long-term agreement. Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas SYMBOL: Federal Appeals Court Dismisses Appeal vs. Metrologic ------------------------------------------------------------- Metrologic Instruments, Inc. (NASDAQ: MTLG), experts in optical image capture and processing solutions for a variety of point-of- sale, commercial and industrial applications, announced that in a decision entered on December 23, 2003, the United States Court of Appeals for the Second Circuit dismissed Symbol Technologies, Inc.'s (NYSE: SBL) appeal against Metrologic for lack of jurisdiction. Symbol had appealed the earlier decision of the United States District Court for the Eastern District of New York, which had granted Metrologic's motion for summary judgment on Symbol's breach of contract claims in the action between the parties. Metrologic designs, manufactures and markets bar code scanning and high-speed automated data capture systems solutions using laser, holographic, camera and vision-based technologies. Metrologic offers expertise in 1D and 2D bar code reading, portable data collection, optical character recognition, image lift, and parcel dimensioning and singulation detection for customers in retail, commercial, manufacturing, transportation and logistics, and postal and parcel delivery industries. In addition to its extensive line of bar code scanning and vision system equipment, Metrologic also provides laser beam delivery and control systems to semi-conductor and fiber optic manufacturers, as well as a variety of highly sophisticated optical systems. Metrologic products are sold in more than 110 countries worldwide through Metrologic's sales, service and distribution offices located in North and South America, Europe and Asia. Symbol Technologies, Inc. delivers enterprise mobility solutions that enable anywhere, anytime data and voice communication designed to increase productivity, reduce costs and realize competitive advantage. Symbol systems and services integrate ruggedized mobile computing, advanced data capture, wireless networking and mobility software for the world's leading retailers, transportation and logistics companies, manufacturers, government agencies and providers of healthcare, hospitality and security. More information is available at http://www.symbol.com/ * * * As reported in Troubled Company Reporter's September 19, 2003 edition, Symbol Technologies reached agreement with its bank group to extend the Company's credit facility waiver for 60 days. The waiver allows Symbol additional time to become current with its periodic filings with the Securities and Exchange Commission. As part of the agreement, Symbol reduced the credit facility from $350 million to $100 million. The credit agreement originally was signed in late 1998 and will expire by its terms in January 2004. The previously reported investigations by the SEC and the U.S. Attorney's office are ongoing. The Company intends to file with the SEC its 2002 Annual Report on Form 10-K as well as Forms 10-Q for the 2003 first and second quarters upon the completion of their audits by the Company's external auditors. TECH LABORATORIES: Must Generate Fresh Funds to Continue Ops. ------------------------------------------------------------- As a result of operating losses and negative cash flows experienced during 2001 and 2002, and continuing in 2003, Tech Laboratories Inc. has a tenuous liquidity position. If sales do not improve or alternate financing is not obtained, substantial doubt exists about Tech Labs' ability to continue as a going concern. Sales were $32,619 for the third quarter of 2003 as compared to $42,597 for the similar period of 2002. This decrease was due to the continuing effects of the economic downturn. Cost of sales of $28,338 for the third quarter of 2003 has inreased by $7,962 compared to the same period of 2002, primarily due to inefficiencies caused by the sales decline. Selling, administrative, and general expenses decreased by $421,112 compared to the same period of 2002 due to reductions in marketing, sales, and administrative expense necessitated by sales reductions offset by accruals of executive salaries not paid to date, in 2003. Loss from operations of $223,768 improved $3,172 compared to a loss of $226,940 for the prior period as a direct result of cost reductions. The Company's operating activities generated a negative cash flow of $22,550 during the nine months ended Sept. 30, 2003, as compared to a negative cash flow of $755,715 during the nine months ended Sept. 30, 2002. TECHCANA: Fin'l Workout Efforts Yield Positive Results in 2003 -------------------------------------------------------------- TechCana announces that during the period covering its last financial year, subsidiary Pan-O-Starr inc., generated sales in the amount of $1.4M, which resulted in operation losses of $3.2M. Because of these poor results, the company took certain steps towards major financial restructuring during the year. This required exercise greatly reduced the company's internal activities as well as its credibility in the marketplace. The funds absorbed by the subsidiary and the running costs of the company have practically eaten up all of the remaining capital contributions which amounted to $1.5M as outlined in the consolidated statements ending July 31, 2003. On a positive note, financial restructuring has resulted in reducing the debt and realizing gains on settlement of debt in the amount of $3.1M. This operation has allowed closing of the financial year with benefits amounting to $0.4M which, translates into a profit of $0.03 per share on a fully diluted basis. In this context, the company has also gone ahead with striking out pre-launch capitalization costs and the cost of capitalized financing which amounts to approximately $0.5M. These amounts have been charged back to the administration and financial costs of the company. Stagnation of sales over the last months of this financial year was the cause of significant cash drain on the company so it was decided to cease manufacturing operations as of last July 11. A significant investment program that included the purchase of equipment amounting to approximately $0.5M has been put on the back burner in order to give us time to evaluate the competitive positioning of POS in the manufacturing of birch furniture panels. Various studies are underway which might result in the realignment of the company's original mission. Studies and discussions are underway with various potential strategic partners making it possible to take appropriate action early in 2004. All possible efforts will be taken to allow the re-launching of this company into a niche market that is profitable in the short term while ensuring the company's future in the marketplace. Keep in mind that uncertainty brought about by the revival of the company and the lack of a well defined business plan outlining the future of POS would bring back the complete long-term debt to short term liabilities and cause balance of payment problems consequently which would in turn destabilize TechCana's financial situation on a consolidated basis. Management is of the opinion that certain arrangements with secured creditors are possible with a well defined business plan and the possibility of new injection of funds. Management and members of the Board of Directors are confident that studies presently underway and discussions being held with various potential partners will allow re-launching of POS early in 2004. THAXTON GROUP: Seeks Nod to Employ Rayburn Cooper as Co-Counsel --------------------------------------------------------------- The Thaxton Group, Inc., and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to employ the legal services of Rayburn, Cooper & Durham, PA as Co- Counsel in these bankruptcy cases. The Debtors selected Rayburn Cooper, among other reasons presented to the Court, for the knowledge the firm has acquired from its prepetition employment by the Company. In this engagement, Rayburn Cooper will: a) give Debtors legal advice with respect to its powers and duties as debtors in possession in the continued operation of their businesses and management of their assets and properties; b) assist in taking all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalves, the defense of any actions commenced against the Debtors, the negotiation of disputed in which the Debtors are involved, and in preparation of objections to claims filed against the Debtors' estates; c) assist in preparing on behalf of the Debtors all necessary schedules, statements, applications, answers, orders, reports, motions and notices for the sale of assets and other legal papers in connection with the administration of the estates; d) advise and assist in formulating and preparing a plan of reorganization on behalf of the Debtors, the related disclosure statement, and any revisions, amendments relating to such documents, and all related materials; and e) perform all other legal services for Debtors as debtors in possession which may be necessary in these cases. The schedule of billing rates for Rayburn Cooper professionals is: Attorneys --------- C. Richard Rayburn, Jr. $400 per hour Albert F. Durham $330 per hour W. Scott Cooper $280 per hour Paul R. Baynard $250 per hour Patricia B. Edmondson $215 per hour James B. Gatehouse $205 per hour G. Kirkland Hardymon $205 per hour Sherry L. Huckabee $170 per hour David S. Melin $155 per hour J. Christopher Riddle $140 per hour John R. Miller, Jr. $125 per hour Heather N. Johnson $115 per hour Ross R. Fulton $115 per hour Paralegals ---------- Shannon L. Myers $ 85 per hour Julia L. Robinson $ 85 per hour Lisa S. Kelly $ 70 per hour Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtor in their restructuring efforts. When the Company filed for protection from it creditors, it listed $206,000,000 in total assets and $242,000,000 in total debts. TRI-UNION: Secures OK to Hire Burns Wooley as Litigation Counsel ---------------------------------------------------------------- Tri-Union Development Corporation and Tri-Union Operating Company sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, to retain Burns, Wooley, Marseglia & Zabel, LLP as Special Litigation Counsel. Tri-Union is a co-defendant in a state court lawsuit brought by royalty owners and other non-operating working interest owners for unpaid royalties and underpaid working interest in wells operated by Tri-Union and in which it is a working interest owner. The case was originally styled Helton v. Tri-Union, Cause No. 97-28512 and was pending before the 80th Judicial District Court of Harris County, Texas until it was dismissed for want of prosecution. For the past two years, the State Court Action was abated pending resolution of an adversary created when Tri-Union removed the claims against it to the bankruptcy court. Burns Wooley represents the Debtors in the Helton Litigation. In addition, Burns Wooley was retained for five other oil and gas litigation matters. The Debtors selected Burns Wooley to act as special litigation counsel because of its extensive experience and knowledge of the Helton Litigation and other oil and gas litigation matters. The interruption and duplicative costs associated with obtaining substitute counsel to replace Burns Wooley at this point would harm the Debtors, their bankruptcy estates and their creditors. Consequently, the Court gave the Debtors an authority to continue employing Burns Wooley in the Helton Litigation and in any other oil and gas litigation matters. Thomas A. Zabel, Esq., reports that Burns Wooley will bill the Debtors at its current hourly rates: Partners $200 to $350 per hour Of Counsel and Special $250 to $300 per hour Associates $165 to $200 per hour Legal Assistants $50 to $100 per hour 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. UNIFI INC: Continuing Joint Venture Talks with Kaiping Polyester ---------------------------------------------------------------- Unifi, Inc. (NYSE: UFI) announced that discussions related to a joint venture with Kaiping Polyester Enterprises Group are continuing into 2004. The company originally announced that negotiations were expected to conclude by the end of calendar 2003. Brian Parke, chief executive officer for Unifi said, "The negotiations are continuing with satisfactory progress and results. However, this is an extremely complicated deal that requires an extraordinary amount of work to bring to the point of closure and implementation. We are moving toward the approval stage, but we want to be realistic in our expectations as to how long this final process may take. Obviously, at this time there are no assurances that we will close the proposed deal." Unifi Inc. (NYSE: UFI) (S&P, B+ Corporate Credit and Senior Unsecured Debt Ratings, Negative Outlook) is one of the world's largest producers and processors of textured yarns. The company's primary business is the texturing, dyeing, twisting, covering, and beaming of multi-filament polyester and nylon yarns. Unifi's textured yarns are found in home furnishings, apparel, and industrial fabrics, automotive, upholstery, hosiery, and sewing thread. For more information about Unifi, visit http://www.unifi-inc.com/ VERIDIEN: Losses and Capital Deficit Raise Going Concern Doubt -------------------------------------------------------------- Veridien Corporation is a Health Care company incorporated in Delaware focusing on infection control and other Healthy Lifestyle products. The Company has developed patented and unique products including Surface Disinfectants, Antiseptic Hand Cleansers, Instrument Presoak and SUN PROTECTION PRODUCTS. The flagship product, VIRAHOL, Hospital Disinfectant/Cleaner & Instrument Presoak, is now being marketed as VIRAGUARD, Hospital Disinfectant/Cleaner & Instrument Presoak. VIRAGUARD, Hospital Disinfectant/Cleaner & Instrument Presoak and VIRAGUARD, Hospital Surface Disinfectant Towelette are EPA registered disinfectants designed for effective disinfecting, cleaning and deodorizing of hard, inanimate nonporous surfaces. VIRAGUARD, Antiseptic Hand Gel and VIRAGUARD, Antimicrobial Hand Wipes, which are regulated by the FDA and utilize Veridien's patented formulation, are effective against germs when soap and water hand washing is not possible. The Company has incurred losses since its incorporation. At September 30, 2003, the Company had an accumulated deficit of $34,576,104. Historically, the principal source of financing for the Company's research and development and business activities have been through sales, equity offerings, and debt. As of September 30, 2003 and September 30, 2002 it had working capital deficits of approximately $3,838,617 and $2,634,354 respectively. Its independent certified public accountants stated in their report on the 2002 consolidated financial statements that due to losses from operations and a working capital deficit, there is substantial doubt about the Company's ability to continue as a going concern. Veridien is addressing the going concern issue in virtually every aspect of its operation. It continues to cut operating expenses and are successfully changing its product mix such that the Company is achieving improved margins. Because of its significant losses incurred since inception, it has become substantially dependent on (1)loans from officers, directors, and third parties, (2)private placements of its securities, (3) revenue from sales, and (4)liquidation of its marketable securities to fund operations. VIDEO WITHOUT BOUNDARIES: Funds Insufficient to Meet Cash Needs --------------------------------------------------------------- Video Without Boundaries now provides products and services in the converging digital media on demand, enhanced home entertainment and emerging interactive consumer electronics markets. VWB is focused on home entertainment media products and solutions that enhance the consumer experience, while providing new revenue opportunities for online music and movie content providers. VWB is becoming a supplier of broadband products, services and content including its ability to deliver broadcast quality digital video and web interactivity at transfer rates as low as 56K. Video Without Boundaries a provider of streaming digital media and video on demand services, has recently taken actions to reduce the company's operating cost. These changes will also balance the company's investment across its two key markets: streaming digital media and video on demand services. Due to the continued decline in economic activity and weakened capital and business spending for emerging technology products and services, VWB has redirected its human and capital resources towards its most profitable products and services, while reducing its exposure to unprofitable markets. The company is attempting to develop new business partnerships in regards to its streaming media business within the home entertainment marketplace. Over the last 12 months, all major PC, consumer electronics, and set-top box manufactures have added streaming media players within their products to capitalize on the growth of broadband connections and streaming content offered over the Internet. With more than 10 million broadband households and nearly 35 million broadband-enabled screens, VWB is attempting to capitalize on the growth of this market through its professional services division and potential new partnerships and business ventures. As of September 30, 2003 the Company had cash and net working capital of $70,856 and a deficit $1,143,687, respectively. The Company believes that its current working capital, and cash generated from operations will not be sufficient to meet the Company's cash requirements for the next twelve months without the ability to obtain profitable operations and/or obtain additional financing which the Company is in negotiation to receive. Its independent public accountant has included as a footnote in their report on the Company's financial statements, stating that certain factors raise substantial doubt about Video Without Boundaries' ability to continue as a going concern. If the Company is not successful in generating sufficient cash flow from operations or in raising additional capital when required in sufficient amounts and on acceptable terms, these failures could have a material adverse effect on the Company's business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of the Company's then-current stockholders would be diluted. There can be no assurance that the Company will be able to raise any required capital necessary to achieve its targeted growth rates and future continuance on favorable terms or at all. VOLUME SERVICES: Declares Cash Dividend Payable on January 20 ------------------------------------------------------------- Volume Services America Holdings, Inc. (AMEX:CVP)(TSX:CVP.UN) announced that its Board of Directors has approved a cash dividend of U.S.$0.088 per share of common stock, to be payable on January 20, 2004 to shareholders of record at the close of business on January 9, 2004. Each of the Income Deposit Securities issued by the company in its recent public offering includes one share of common stock. The amount of the dividend reflects both the anticipated monthly dividend of U.S.$0.066 per share for the period beginning December 20, 2003 and ending January 19, 2004, plus U.S.$0.022 per share for the period beginning December 10, 2003 and ending December 19, 2003. Centerplate, the tradename for Volume Services America Holdings, Inc.'s operating businesses, is a leading provider of catering, concessions, merchandise and facilities management services for sports facilities, convention centers and other entertainment venues. Visit the company online at http://www.centerplate.com/ * * * As previously reported, Moody's Investors Service withdrew all its ratings for Volume Services, Inc. Withdrawn Ratings - B1 $184 million secured Bank Loan rating - B3 $100 million 11.25% senior subordinated notes (2009) rating - B1 Senior implied rating, and - B2 Long-term issuer rating. WCI COMMUNITIES: Expands into NW Florida with New Acquisition ------------------------------------------------------------- Building on its success of developing lifestyle-rich, luxury residential communities, WCI Communities, Inc. (NYSE:WCI) acquired 400 acres in Perdido Key near Pensacola, Florida. WCI's acquisition marks the company's first expansion into Northwest Florida, a housing market that has expanded sharply since 1999. WCI acquired the property from previous owners under Chapter 11 bankruptcy protection with approvals intact, and WCI will repay secured and unsecured creditors 100-percent of their claims prior to starting development activity. Terms of the sale were not disclosed. The 400 acres purchased by WCI on Perdido Key consists of 116 acres of protected preserve and 165 acres of developable land. The purchase also includes a 200 foot-wide beachfront site on the Gulf of Mexico immediately adjacent to the south of the primary piece of property. "As developable waterfront property becomes scarce, the opportunity to acquire property such as Perdido Key is rare. With WCI's expertise in developing leisure-oriented master-planned communities, we believe our development of Lost Key will be an economic benefit and a natural addition to the area," stated Wanda Cross, WCI's division president responsible for the development of Lost Key. According to Cross, the existing property is permitted for 2000 units, but WCI is in early planning stages in terms of the overall site plan. The number of housing units, architecture, and amenities to be included have yet to be finalized. The company will release details of the site development as the project progresses in 2004. A pivotal element of the purchase is Lost Key Golf Club, an 18-hole championship golf course designed by Arnold Palmer. Lost Key is an Audubon International Silver Signature Golf Course, built in conjunction with Audubon International's Principle's of Sustainability, encompassing natural resources and preserving the flora and fauna of the Key. Lost Key Golf Club remains open to the public and WCI has named Greg Jones, previously Club Manager at WCI's Tarpon Cove in Naples, Florida as the new Club Manager; and Ray Hafner, previously with WCI's Venetian Golf and River Club in Venice, Florida, as Lost Key's Head Golf Professional. Based in Bonita Springs, Florida, WCI (S&P, BB- Corporate Credit Rating, Positive) has been creating amenity-rich, leisure-oriented master-planned communities for more than 50 years. WCI's award- winning communities offer primary, retirement, and second home buyers traditional and tower home choices with prices from the mid-$100,000s to more than $10 million and currently feature more than 600 holes of golf and 1,000 boat slips as well as country club, tennis and recreational facilities. The company also derives income from its 28-office Prudential Florida WCI Realty division, its mortgage and title businesses, and its amenities division, which operates many of the clubhouses, golf courses, restaurants, and marinas within its 30 communities. The company currently owns and controls developable land of approximately 14,000 acres. WILLIAMS CONTROLS: Sept. 30 Net Capital Deficit Widens to $17MM --------------------------------------------------------------- Williams Controls, Inc., (OTC: WMCO) announced its results for the fourth quarter and full year ended September 30, 2003. Net sales of $14,000,000 for the fourth quarter ended September 30, 2003 were 5.2% lower than the net sales of $14,771,000 recorded for the corresponding quarter last year. Net sales for the year ended September 30, 2003 decreased to $51,919,000 compared to $52,504,000 for the comparable period in fiscal 2002. The Company reported a net loss allocable to common shareholders of $908,000 or $0.05 per share (diluted) for the fourth quarter 2003 compared to net income allocable to common shareholders of $1,704,000 or $0.03 per diluted share for the corresponding 2002 quarter. For the year ended September 30, 2003, net loss allocable to common shareholders was $1,075,000 or $0.05 per share, compared to a net loss of $1,604,000 or $0.08 per share for the year ended September 30, 2002. As previously announced, on September 30, 2003 the Company sold the assets of its passenger car and light truck product lines. Excluding the estimated losses related to these product lines, pro forma net income allocable to common shareholders for the fourth quarter ended September 30, 2003 was $1,046,000, or $0.03 per diluted share and $3,881,000, or $0.16 per diluted share for the full year ended September 30, 2003. Net sales for heavy truck and transit bus product lines increased $992,000 for the year ended September 30, 2003; however, total net sales decreased in fiscal 2003 when compared to 2002, as a direct result of lower sales volumes in the passenger car and light truck product lines, which decreased $1,289,000. Net income from continuing operations for the full year ended September 30, 2003 was $816,000 compared to a net loss from continuing operations of $2,345,000 in fiscal 2002. Included in income from continuing operations for fiscal 2003 is a $951,000 gain related to a settlement with a former customer, and beginning in the fourth quarter of 2003 Series B Preferred stock dividends and accretion, which totaled $731,000. These dividends and accretion are now classified as interest expense as a result of classification requirements required by the adoption of Statement of Financial Accounting Standards No. 150. Prior to the fourth quarter of 2003, these dividends and accretion were recorded after Net income (loss). Reflected in the loss from continuing operations for fiscal 2002 is a loss on impairment of a former investment with Ajay for $3,565,000. Excluding these items, net income from continuing operations for the year ended September 30, 2003 was $596,000 compared to income of $1,220,000 for the year ended September 30, 2002. The Company attributes the earnings decline to start-up problems related to several of the Company's passenger car and light truck contracts, higher warranty costs for passenger car, light truck and heavy truck electronic throttle control systems and higher manufacturing costs in heavy truck and transit bus related primarily to the strike by the Company's union employees at the Portland facility for most of fiscal 2003. A new five year agreement was reached in August, 2003 which settled the strike. Year to year declines in gross margin of $3,647,000 were partially offset by reduced administrative costs of $1,461,000. Net sales in the fourth quarter 2003 were $771,000, or 5.2%, lower than the corresponding quarter in the prior year due to lower unit sales volumes in the heavy truck and transit bus product lines. The net loss from continuing operations in the fourth quarter of fiscal 2003 was $908,000 compared to income from continuing operations of $498,000 for the same quarter of 2002. This decrease in fourth quarter net income from continuing operations resulted from higher than anticipated startup costs associated with product launches in the passenger car and light truck product lines, the recording of additional warranty reserves and as discussed above the $731,000 of Series B Preferred stock dividends and accretion being recorded as interest expense starting in the fourth quarter of fiscal 2003. Gross margins in the fourth quarter of fiscal 2003 were $1,642,000 lower than the margins in the fourth quarter of fiscal 2002. This gross margin reduction was partially offset by reduced research and development, selling and administrative costs of $552,000. Net income (loss) allocable to common shareholders for the fourth quarter of 2003 was a loss of $908,000 or $.05 per diluted share compared to income of $1,704,000 or $.03 per diluted share in the fourth quarter of fiscal 2002. Net income allocable to common shareholders for the fourth quarter of fiscal 2002 includes a charge for dividends and accretion on preferred stock of $684,000, or $.01 per diluted share, whereas the fourth quarter ended September 30, 2003 does not include a charge for dividends and accretion as these are recorded as interest expense as explained above. For the year ended September 30, 2003, net loss allocable to common shareholders includes a charge for dividends and accretion on preferred stock of $2,011,000, or $.10 per diluted share compared to $1,566,000 or $.08 per diluted share for the corresponding period in fiscal 2002. Net income loss allocable to common shareholders for the quarter and year ended September 30, 2002 also include a $923,000 gain related to the conversion of Series A Preferred stock to Series A-1 Preferred stock. Net income (loss) allocable to common shareholders included gains from discontinued operations of $967,000 for the fourth quarter of 2002 and $120,000 and $1,384,000 for the years ended September 30, 2003 and 2002, respectively. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $17 million. Williams Controls' Board Chairman Gene Goodson stated, "Unfortunately, we continued to have higher than expected passenger car and light truck launch costs and that combined with some lingering manufacturing problems in our heavy truck line kept our gross margins depressed." He continued, "Through the sale of our passenger car and light truck product lines and the settlement of the strike at our Portland facility we expect our gross margins to improve and our operating costs to decrease." He concluded, "Additionally, industry projections show an improvement in the truck market for next year, and we believe that we are positioned to take advantage of that improved market. We appreciate the continued support of our customers and suppliers as Williams positions itself for growth." Williams Controls is a designer, manufacturer and integrator of sensors and controls for the motor vehicle industry. For more information, visit the Company's Web site at http://www.wmco.com/ WORLDCOM: State of New Jersey Has Until April 1 to File Claims -------------------------------------------------------------- The State of New Jersey timely filed certain proofs of claim for unpaid state taxes and penalties owed by the Worldcom Debtors to New Jersey. New Jersey also asserts that it may have additional claims apart from those earlier filed. The Debtors and New Jersey resolved to settle the issue relating to the Additional Claims. The Settlement provides that the State of New Jersey will be allowed to file new or amended proofs of claim relating to the Additional Claims until March 1, 2004. New Jersey will have the unilateral right to extend the Bar Date for Additional Claims to no later than April 1, 2004 upon written notice. Notices must be sent to MCI by registered mail, return receipt requested, on or before March 1, 2004, through: Douglas A. Richards and Alfredo R. Perez, Esq., Weil, Gotshal & Manges, LLP, 700 Louisiana Street Suite 1600, Houston, TX 77002 (Worldcom Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles and Other Disasters ----------------------------------------------------------- Author: Sallie Tisdale Publisher: BeardBooks Softcover: 270 pages List Price: $34.95 Review by Henry Berry Order your own personal copy at http://www.amazon.com/exec/obidos/ASIN/1587981645/internetbankrupt An earlier edition of "The Sorcerer's Apprentice" won an American Health Book Award in 1986. The book has been recognized as an outstanding book on popular science. Tisdale brings to her subject of the wide and engrossing field of health and illness the perspective, as well as the special sympathies and sensitivities, of a registered nurse. She is an exceptionally skilled writer. Again and again, her descriptions of ill individuals and images of illnesses such as cancer and meningitis make a lasting impression. Tisdale accomplishes the tricky business of bringing the reader to an understanding of what persons experience when they are ill; and in doing this, to understand more about the nature of illness as well. Her style and aim as a writer are like that of a medical or science journalist for leading major newspaper, say the "New York Times" or "Los Angeles Times." To this informative, readable style is added the probing interest and concern of the philosopher trying to shed some light on one of the central and most unsettling aspects of human existence. In this insightful, illuminating, probing exploration of the mystery of illness, Tisdale also outlines the limits of the effectiveness of treatments and cures, even with modern medicine's store of technology and drugs. These are often called "miracles" of modern medicine. But from this author's perspective, with the most serious, life-threatening, illnesses, doctors and other health- care professionals are like sorcerer's trying to work magic on them. They hope to bring improvement, but can never be sure what they do will bring it about. Tisdale's intent is not to debunk modern medicine, belittle its resources and ways, or suggest that the medical profession holds out false hopes. Her intent is do report on the mystery of serious illness as she has witnessed it and from this, imagined what it is like in her varied work as a registered nurse. She also writes from her own experiences in being chronically ill when she was younger and the pain and surgery going with this. She writes, "I want to get at the reasons for the strange state of amnesia we in the health professions find ourselves in. I want to find clues to my weird experiences, try to sense the nature of being sick." The amnesia of health professionals is their state of mind from the demands placed on them all the time by patients, employers, and society, as well as themselves, to cure illness, to save lives, to make sick people feel better. Doctors, surgeons, nurses, and other health-care professionals become primarily technicians applying the wonders of modern medicine. Because of the volume of patients, they do not get to spend much time with any one or a few of them. It's all they can do to apply the prescribed treatment, apply more of it if it doesn't work the first time, and try something else if this treatment doesn't seem to be effective. Added to this is keeping up with the new medical studies and treatments. But Tisdale stepped out of this problem- solving outlook, can-do, perfectionist mentality by opting to spend most of her time in nursing homes, where she would be among old persons she would see regularly, away from the high-charged atmosphere of a hospital with its "many medical students, technicians, administrators, and insurance review artists." To stay on her "medical toes," she balanced this with working occasional shifts in a nearby hospital. In her hospital work, she worked in a neonatal intensive care unit (NICU), intensive care unit (ICU), a burn center, and in a surgery room. From this combination of work with the infirm, ill, and the latest medical technology and procedures among highly-skilled professionals, Tisdale learned that "being sick is the strangest of states." This is not the lesson nearly all other health-care workers come away with. For them, sick persons are like something that has to be "fixed." They're focused on the practical, physical matter of treating a malady. Unlike this author, they're not focused consciously on the nature of pain and what the patient is experiencing. The pragmatic, results-oriented medical profession is focused on the effects of treatment. Tisdale brings into the picture of health care and seriously-ill patients all of what the medical profession in its amnesia, as she called it, overlooks. Simply in describing what she observes, Tisdale leads those in the medical profession as well as other interested readers to see what they normally overlook, what they normally do not see in the business and pressures of their work. She describes the beginning of a hip-replacement operation, the surgeon "takes the scalpel and cuts--the top of the hip to a third of the way down the thigh--and cuts again through the globular yellow fat, and deeper. The resident follows with a cautery, holding tiny spraying blood vessels and burning them shut with an electric current. One small, throbbing arteriole escapes, and his glasses and cheek are splattered." One learns more about what is actually going on in an operation from this and following passages than from seeing one of those glimpses of operations commonly shown on TV. The author explains the illness of meningitis, "The brain becomes swollen with blood and tissue fluid, its entire surface layered with pus...The pressure in the skull increases until the winding convolutions of the brain are flattened out...The spreading infection and pressure from the growing turbulent ocean sitting on top of the brain cause permanent weakness and paralysis, blindness, deafness...." This dramatic depiction of meningitis brings together medical facts, symptoms, and effects on the patient. Tisdale does this repeatedly to present illness and the persons whose lives revolve around it from patients and relatives to doctors and nurses in a light readers could never imagine, even those who are immersed in this world. Tisdale's main point is that the miracles of modern medicine do not unquestionably end the miseries of illness, or even unquestionably alleviate them. As much as they bring some relief to ill individuals and sometimes cure illness, in many cases they bring on other kinds of pains and sorrows. Tisdale reminds readers that the mystery of illness does, and always will, elude the miracle of medical technology, drugs, and practices. Part of the mystery of the paradoxes of treatment and the elusiveness of restored health for ill persons she focuses on is "simply the mystery of illness. Erosion, obviously, is natural. Our bodies are essentially entropic." This is what many persons, both among the public and medical professionals, tend to forget. "The Sorcerer's Apprentice" serves as a reminder that the faith and hope placed in modern medicine need to be balanced with an awareness of the mystery of illness which will always be a part of human life. ********* 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. 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 2004. 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 ***